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Paving the way to a smart city via data and digital technology 

Jul 05. 2018
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SOUTHEAST Asia’s future is tied to the fate of its cities.

Today the region’s urban areas are home to one-third of its total population but generate more than two-thirds of the region’s GDP, according to a new report from the McKinsey Global Institute (MGI), in collaboration with the Centre for Liveable Cities in Singapore. 

Urbanisation is fueling economic growth, but the breakneck pace has left many cities struggling to provide adequate housing, infrastructure, and services to meet the needs of a surging population.

While the urban challenges across Southeast Asia have been growing in scope, new technologies that could tackle some of these issues have reached maturity. 

The report, titled Smart cities in Southeast Asia, finds that cities across the region can incorporate data and digital technologies into infrastructure and services—all with an eye to solving specific public problems and making the urban environment more livable, sustainable, and productive. The research, studying dozens of current applications, finds that cities in the region could use digital solutions to improve some qualityof-life indicators by 10-30 per cent. It expands on global research released last month by MGI on how the current generation of smart city technologies can perform in a variety of urban settings worldwide.

Smart cities are poised to have significant and broad-based impact in Southeast Asia cities across Southeast Asia are primed to take advantage on smart solutions. Dozens of smart solutions are available today focusing on every domain of city life: mobility, social infrastructure, the built environment, utilities, security, community, and the economy. As they begin their smart transformation, each city is setting its own priorities regarding which ones to deploy. MGI finds that smart cities could have a substantial impact across Southeast Asia to deliver a better quality-of-life. Among its findings:

-Smart solutions could remove up to some 270,000 kilotons of greenhouse gas emissions annually.

-Some 5,000 lives lost each year to traffic accidents, fires, and homicides could be saved through mobility solutions, crime prevention, and better emergency response.

-Intelligent traffic and transit solutions could save up to 8 million man-years in annual commuting time. 

-Deploying smart healthcare solutions for the urban population could reduce the region’s disease burden by 12 million disability-adjusted life years—in other words, not only extending overall life expectancy but adding years of good health. -By creating more efficient and productive environments for business and hiring, Southeast Asia could add almost 1.5 million jobs.

-Residents could also save as much as $16 billion annually as smart solutions contribute to better housing options and lowering energy bills.

-The current generation of smart applications can help cities make significant or moderate progress toward meeting 70 percent of the Sustainable Development Goals.

“Urbanization can propel Southeast Asia to the level of economic and human development, but only if growth is managed well,” said Jonathan Woetzel, Senior Partner and Leader of McKinsey’s Special Cities Initiative. “Cities need to act now to address growing environmental stresses and particularly to combat climate change and improve their resilience.”

There is already a wave of innovation across the region. It includes digital citizen apps, homegrown ride-hailing apps, data-driven transit planning, intelligent traffic systems, data-driven disaster risk assessment, advanced construction techniques, smart energy meters, and much more. Low-income cities may be able to jumpstart progress by creating open data portals, which make raw information available for private-sector innovation that does not require any public investment.

The report notes that private-sector companies that find ways to contribute to the public good and expand choices for urban residents can find substantial market opportunities across Southeast Asia.

MGI estimates that smart mobility applications could create up to $70 billion in value, while opportunities to make the built environment smarter could be worth more than $25 billion. But the report cautions that companies with aspirations to become urban solution providers need to navigate a dynamic and complex ecosystem. Companies need an intimate understanding of a city’s context so they can anchor their offerings and value proposition to the real needs of residents, and they may need to add new government relations capabilities.

Contributed MCKINSEY GLOBAL Institute (MGI), in collaboration with the Centre for Liveable Cities in Singapore. 


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