Asean cities set to face this as middle-class households quadruple

PETALING JAYA: Asean cities could face urbanisation challenges as middle-class households are set to quadruple by 2030, according to the Economist Intelligence Unit (EIU).

The EIU has projected that the number of middle-class households in Asean would grow to over 161 million by 2030 from 38 million in 2015.

“The EIU anticipates, however, that this surge in the urban consumer class will translate into an ever increasing strain on infrastructure and a much higher demand for services.

“As a result, Asean cities will continue to grapple with urbanisation management challenges, which they must address in order to create more liveable and more competitive centres of sustained growth,” the EIU said in a report.

“With a combined gross domestic product (GDP) of US$2.4 trillion, Asean boasts the sixth-largest economy in the world.

“The EIU forecasts that the region’s growing economic integration, aided by Asean-led initiatives, will pay off to see it expand by 5% a year on average over the next five years, despite the challenging global environment,” the EIU’s lead Asean analyst Miguel Chanco said in a statement.

The largest 50 cities in Asean will continue to drive an overwhelming share of the bloc’s economic development in the coming decades.

It projected that the combined population of four major Malaysian cities - Kuala Lumpur, Penang, Johor Baru and Ipoh - would account for 40% of the country’s population, but will contribute 66% to national personal disposable income by 2030.

Nevertheless, despite their relatively high population growth rates, the report forecasts that cities in Thailand will suffer from a significant contraction in the labour force, surpassed only by cities in Japan and Germany.

Malaysia, the second most highly urbanised nation in Asean after Singapore, is projected to see Kuala Lumpur, its capital and largest city, contribute almost one third to the country’s population by 2030.

Figures from the EIU’s market explorer service show that, while the combined population of the four major Malaysian cities - Kuala Lumpur, Penang, Johor Baru and Ipoh - adds up to a little over 36% of the national population, it contributes 60% to the total national personal disposable income, with these shares expected to increase to 40% for the population and 66% for income by 2030.

The EIU’s cities economist Roxana Slavcheva said the rapid urbanisation it saw in Asean in recent decades had created the potential for enormous economic gains.

Slavchecva added that these gains could only be realised, however, if city governments learn to manage their rapidly growing urban centres effectively and efficiently.

In addition, the EIU said rapid urbanisation and fast-rising income levels in Asean countries intensify environmental problems as well.

It said greenhouse-gas emissions per capita in the region generally follow the same growth trajectory as GDP per capita, with the exception of cities in Vietnam, which pollute more than expected considering the country’s relatively low income levels.

The trend is not limited to Vietnam, however, as many other major cities in Asean, such as Bangkok, also suffer from the same problem.

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