Envisioning and Building Smart Cities

By Frank-Jürgen Richter

August 26, 2022

Skimming through our past clearly shows how people started getting attracted to cities as centers of trade, culture, education, and economic opportunity. The benefits of dense settlement provided economies of scale, reducing transport costs, running amenities and sewerage, better exchange of ideas, and use of natural resources. Most of the large markets were also based in cities. Cities are also the trading hub and business lifeline of nations.

Cities are very vital, particularly for developing economies. It is also equally important to manage the sudden spurt of population to cities, which places immense stress on its governance and management. A clear example is the city of Jakarta that is home to more than 10 million people. Regular flooding coupled with rising pollution levels in the city has prompted the Indonesian government to shift its capital from Jakarta to the forest-island of Borneo.

Cities present a multitude of opportunities, but to truly realize its potential, governments will need to first address some basic fundamentals around its livability. This is the theme of one of the topics at the upcoming Horasis India Meeting, which will be held between 25 to 26 September, 2022 in Vietnam. The meeting will bring together 300 of the most senior members of Horasis to suggest ways in which developing economies can realize more from growing urbanization.

Engines of Growth

Cities are engines of growth as they are centers of art, culture, education, innovation and trade. It is also a lifeline for many seeking better livelihoods. Cities are places where many come to fulfil their dreams of either completing their studies or finding their dream jobs.

Take the case of India, home to several cities. Mumbai is its financial hub, while Delhi is its capital or governance hub. When it comes to startup hubs, the southern city Bangalore comes first to mind. Cities are also startup hubs where young minds can dabble with business ideas. Cities also provide platforms such as accelerator programs and pitching sessions where young ideas can be germinated into a business plan.

Vietnam is betting big on its smart city Binh Duong. It is becoming a favorite with foreign investors. The city is home to more than 3,400 companies from 64 countries. In 2021, the city brought in a trade surplus of US$6.8 billion, with exports totaling US$31.5 billion and imports of US$24.6 billion. The city successfully contributed US$2.6 billion to the state’s budget in 2021, which was 4% higher than the year earlier.

Challenges Confronting Cities

To truly leverage the potential that cities bring, governments and administrations need to first address the plethora of challenges it faces. Cities are urbanizing at a rapid rate. Some cities have become megacities boasting of nearly 20 million people living and commuting in it.

The immediate impact of overcrowded cities is a strain to its utilities. Collapsing housing systems with cramped transport systems and longer commuting hours are a common sight in large metropolitan cities. The issue of pollution is a rapidly rising concern in developing cities. Take the case of Delhi, India’s capital which is regularly shrouded with dangerous air quality levels. The city regularly faces very poor to hazardous air quality levels, greatly impacting people’s health. Some have turned the poor quality of air into a business opportunity by launching India’s first oxygen bar, where customers can walk in to breathe in pure oxygen in seven different aromas.

Vietnamese cities face another challenge. Although the country has abundant freshwater sources, Hanoi its second largest city, faces lack of fresh drinking water. The waters around Hanoi have shown evidence of arsenic contamination and poses severe risk to around 7 million people living in this area, exposing them to serious medical problems such as cancer and neurological and skin issues.

Opportunities Abound

Growing urbanization also brings with it capabilities, the foremost of which is the melting pot of cultures, ideas and people. This not only makes cities a formidable breeding ground for startups, but also helps fuel innovation that can change the lives of people.

Cities also provide a test bed for the pilot run of new innovations as you get a blend of different demographics in one area. This also helps businesses realize quick growth as cities are also where the most of spending and living is done.

Vietnam’s rural population has declined significantly in the past decades. Vietnam’s rural population was 76% in 2000 in comparison to the overall population. This has declined to 62% in 2021. This highlights the increasing migration of rural population to urban cities in Vietnam. Same is the case in Indian cities, which is witnessing a swell of migrating labor and young graduates from small towns.

But governments in both the countries face a turning point where they need to determine policies that allow a seamless partnership being formed with private players to allow the development of sustainable and resilient cities.

Photo Caption: An early morning view of Hanoi’s business district.