Competitive Cities: A Game Changer for Malaysia

As an upper-middle income country with a majority of its population living in cities, Malaysia is situated among the countries that prove urbanization is key to achieving high-income status. Asking “How can we benefit further from urbanization?” Malaysian policymakers have identified competitive cities as a game changer in the 11^th Malaysia Plan. To this end, the World Bank has worked with the government to better understand issues of urbanization and formulate strategies for strengthening the role of cities through the report, “Achieving a System of Competitive Cities in Malaysia.”

While Malaysia’s cities feature strong growth, low poverty rates, and wide coverage of basic services and amenities, challenges still remain. 

Its larger cities are characterized by urban sprawl, particularly in Kuala Lumpur, where population density is low for an Asian metropolis. This inefficient urban form results in high transport costs and negative environmental impacts. This is matched by low economic density, indicating Malaysia’s cities can do better in maximizing the economic benefits from urban agglomeration.  



A second challenge hampering Malaysia’s cities is the highly centralized approach to urban management and service delivery, a system that impedes the local level, and obstructs service delivery and effective implementation of urban and spatial plans.

Third is a growing recognition of the importance of promoting social inclusion to ensure that the benefits of urbanization are widely shared.

Thus, a set of key recommendations have been identified to increase the competitiveness of Malaysia’s cities:

• Foster Urban Economic Growth: Encouraging more flexible and efficient utilization of land, and coordinating this with the development of connective infrastructure could increase economic density in many Malaysian cities. To improve efficiency, incentives can be provided to cluster services and knowledge-based sectors in large cities, while systematically relocating land-intensive manufacturing industries to smaller cities and towns. Initiatives to repurpose old industrial districts could include catalytic projects to make the city’s spatial structure more efficient, livable and sustainable.
• Ensure urban environmental sustainability: Furthering the use of public transport would reduce pollution, sprawl and congestion.  Integrating climate change and risk-reduction considerations into urban planning and management would increase urban resilience in Malaysia’s cities.
• Strengthen institutions for city competitiveness: To increase the effectiveness and efficiency of urban service delivery in Malaysia, management and decision-making roles could be shifted to local level, particularly for areas such as: intra-urban highways and federal intra-urban roads; public transportation; drainage and flood mitigation; and solid waste management.  Investing in building capacity at the local level, and revising the system of fiscal transfers to local authorities to be more transparent, predictable and formula-based would help strengthen local service delivery. 
• Foster social inclusion: Strengthening programs for at-risk urban youth would help to prevent school dropouts and encourage entry into the labor market. Social inclusion can be facilitated through better spatial integration of housing and transport, while safe neighborhood programs can foster a sense of belonging which may have powerful impacts on Malaysian youth.  
• Promote innovation through information:  Accessing data in Malaysia has historically been difficult.  Providing more open access to data can create new business opportunities, help solve civic problems, and allow Malaysia to benefit from data-enabled urban management. More could be done to use the data to facilitate collaborative decision-making among government agencies and between government and citizens, ultimately enhancing the competitiveness of cities.

Many of the changes identified involve shifting from existing norms and require sustained efforts and political will to implement. The benefits for Malaysia would far outweigh the costs as it offers opportunities to harness the benefits of urbanization and achieve a system of competitive, sustainable and inclusive cities.