Urbanization Dividend: ASEAN’s Next Growth Cities

Gentlemen, thank you very much for joining us today. Just to note that we will be using simultaneous interpretation for this session as well. So thank you for joining me. As you heard, rapid urbanization is creating a new generation of economic hubs across Southeast Asia and raising expectations about how cities should work. From smart infrastructure and connected transport to integrated communities and digital services, technology is reshaping how cities are built, managed and experienced. As investment flows beyond traditional urban centres, which cities will emerge as the region's next magnets for business, talent and capital? And what will it take to make them smarter, better connected and more livable? So my panel covers the whole value chain. Alex Pham here from Vinhomes, T.C. Chu from Arup, Ishan Palit from TUV SUD, and also our director from the Ho Chi Minh City Government Department of Finance, who can bring a city-level perspective. Thank you very much, gentlemen, for joining us. Alex, let's start with you. From townships to economic hubs, what transforms a large-scale residential development into a self-sustaining growth city with jobs, businesses and economic activity of its own? And how transferable is Vinhomes' integrated township model to other ASEAN markets? A couple of big questions there for you. Thank you very much. So being one of the... Leading developers in Vietnam, so these are the questions that we keep asking ourselves as well. So I think building homes and building infrastructure for a city would create a development, would create an urban environment. However, to turn that urban environment into an economic hub. And a growth center will depend on how you are going to connect the agents within that urban environment, particularly how you are going to connect the people, the businesses, and the services together, because the idea of an urban center being more efficient economic The economic hub is, if we can create enough productive density to bring people together, to bring business together, to bring essential services together, the total economic output, the aggregate economic output will be greater than if these agents are operating. So, again, just to turn back to your question, I think building infrastructure in homes is just one side of the story. The more important side of the story is to how we can create sort of connectivity infrastructure to connect all the people and the businesses and the services together. So that's sort of the key for us. Thanks very much. I'm going to come back to that second part of the question around. ASEAN and your experience of that a little bit later. But TC, perhaps I could come to you first. Perhaps you could just briefly explain where Arup sits within this ecosystem. But I'd like to pick up on what Alex was just saying there around connectivity, urban mobilization, and making sure that this is thought through. So over to you. Sure, thank you. I mean, obviously, from our perspective, we pull together our global experience in supporting, learning from our successes and our mistakes to try to shape what ASEAN Ambition is trying to do in building. Frankly, there is no shortage of ambition in building city and urban city. The key is to make sure that, you know... The planning and the consideration in terms of the city development before we come to a country infrastructure nation building concept is to make sure that we can combine economic opportunity, livability and lovability and connectivity and the confidence in the ability to deliver those key infrastructure projects. That is crucial and essential. I think Alex, you rightly highlighted The connectivity challenges, but I think that unless we can demonstrate to the future generation there is something worthwhile and we design a city, we place consideration, we will not be able to encourage investor. More importantly is that we also take due recognition that climate impact is affecting city and the opportunity to come for us is to at the same time of developing a city. Interconnect the city, we build resilience into it so that we can treat flooding issue and the future resilience of the city at the right mode and the right approach. Thank you very much. That issue, that word resilience comes up a lot in business planning around supply chains and dealing with risk, but also critical when thinking about the urban environment. Sean, if I could come to you. And again, explain where TÜV SÜD sits within this and your focus on... Resilience, sustainability, and so on. Yeah, so I mean, for those of you who don't know, TÜV SÜD basically certifies and tests various different things from, I like to say, nuclear power plants to shoes and everything in between. Our role in these cities and in what's been going on with urbanization this is mainly around actually making sure that The ability to grow and the ability to become these large urban centers is sustainable. you So if you look, I mean, very every mega city that is developing is in Asia, pretty much. Europe and North America don't have cities this size, much. but the issues that come with these These mega cities need public-private partnership to be able to resolve. So if you think about the level of pollution and these cities that are choking, you need to have the infrastructure to electrify a vehicle fleet. If you don't have the infrastructure to electrify a vehicle fleet, you will not be able to have electric mobility. And when you do that, Along with it comes so many risks. I mean, if you have charging stations that erupt in fires, you're not going to be able to encourage people to adopt. The electrification of the fleet, I mean, this is something that you see all the time in Singapore, we worked with Comfort, which is the largest taxi provider, to train all their drivers and all their mechanics to handle these huge batteries, because otherwise, you have a lot of risks that, you know, you would not be able to control. And you need to build standards, you need to build infrastructure that can make sure that these technologies are adopted safely. Because if you don't, you will curtail adoption and that will impact how these cities develop. I mean, try walking around in New Delhi You know, in the winter, you choke. I mean, that's what, you know, if you don't control that and you don't have an ability to have a positive impact there, it's very difficult. Thank you very much for these opening thoughts. Mr. Tuan, I'd like to come to you and get the view from Ho Chi Minh City Government. We've been hearing about the importance of working public and private partnerships. That's one area. But perhaps we could hear a little bit more about Ho Chi Minh City's strategy and vision when it comes to urbanization. Well, after merging Ho Chi Minh City with Bà Rịa Vũng Tàu and Bình Dương into a new Ho Chi Minh City, we are now... We are reshaping our space, so the People's Council just recently approved the master plan for the city for 2025-2050 term with a 100-year vision in which we restructure the development space of the city after the merger with five drivers of growth. We are also We are aiming at attracting investors into projects, firstly strategic infrastructure projects, and then projects in high-tech sphere. And we attract investors, like we heard from the previous panelists. Mentioning a lot about IFC, so we also want to attract capital flows. We have a lot of incentives in the policies to attract capital flows into the city through IFC, and we also want to prioritize the investment projects into logistics. Energy, green energy and sustainability, and with such direction, the city asked for the central government to give us, besides the incentives for the investors, we also want them to give us a policy. And the government approved the urban development law with a lot of empowerment for the city so that we can be more proactive in the way we attract investors to the city. And in terms of PPP... We also pay a lot of attention to attracting investors into PPP, especially investment into strategic infrastructure projects in our priority list. Thank you very much for those thoughts from Ho Chi Minh City. Alex, I'll come back to you. Let's stay on this aspect of relationship with government, public and private and so on. Can you explain how that relationship has worked with FinHomes? What's worked? What could be better? Yeah I guess building a city is a complex sort of task, no one alone could be able to take on the task by themselves, because city is one of the biggest challenge for a CFO like myself, it's one of the biggest cash flow problem is we have to spend a lot of money upfront, you know investing Thank Roads and railways, and the returns is only in the future. It might take years or decades to get it back, your returns. And government budgets sometimes is not enough to to invest in a lot of the infrastructure. Private enterprises sometimes are not willing to take on the risk, and the banks don't have enough trusts. to, you know, to lend to private investors. So the only solution to these problems is to have all parties working together in cohesion. So we need to have sort of the support from the governments with their clear vision, with their governments, agencies, working with the private sectors. We have pioneers, we need pioneers who are willing to take the risks. FinHomes, again, is one of the examples of how we are always the leaders, always put our feet up front to move towards new areas where things are still very undeveloped and willing to take on that risk. And obviously, we need all the partner supports for consultancies and especially the bank financing partners as well. So all of these have to work together in a trusting. So the environment in order to move the city forward, and this is a basic requirement for any city to be able to grow into the future. I'll come back to TC and Ishan on this as well, because as we were hearing, it takes... It takes a village, it takes a lot of people to build a city. As you look out over activities in Southeast Asia, where do you see best practice? Where do you see things going right? And conversely, what lessons can we learn from projects that haven't delivered on lovable cities, TC? Sure. And Alex, I think you cited some very, very... I think any city to succeed, we cannot work in silo because there is a need for us to think about the total ecosystem, the total system, not just about building a railway project to solve the problem or building adequate energy to solve the problem. You really got to look at the total integrated because we are so much connected now to achieve that. And first of all, the ambition is there. The initial planning is always there, but then we got to then look at the dynamic about capability of our resources to execute and take the plan into action. Let me start an example of perhaps what I personally observe as not so good an example from Thailand, for example. You look at the excitement that was generated about seven years ago when we talk about the Eastern Economic Corridor, where we want to connect the three seaports and the three airports with the high-speed rail coming to create the linkages. You look at now. Seven years into the place, we are still in a discussion mode because the effect of government seeking PPP external investment funding creates challenges because you start thinking about other areas without. Pulling together the coordinated effort about the impact of one project affecting another project. So that kind of relationship is quite crucial these days that to the investor of this world, they want to look at certainty and they want to, they are not frightened of risk, but they want to make sure that the risk is not a, is a converging type of risk with both. Public sector and the blended financing are the right approach we can resolve the issue and build a longer-term future that is successful and more to come in that respect. But sometimes the ambition get driven, the lack of coordinated parties that drive their own little, you know, narrow agenda create that confusion that slow down the whole processes. Thank you. Ishan, come to you on this, because you mentioned earlier on air quality as one of the sort of risks to deal with. We could also be thinking about flooding and whatever it might be. So what are some of the principles that you need to keep in mind when you're working within these mega complex projects as well to make sure that these urban environments are resilient, are sustainable, and as we heard from Mr. Tan, there's a hundred year plan for it. Firstly, I'll actually, the best practice question, that's an easy one. That's Singapore. I mean, they got it right. I remember about 10 years ago, sitting on a, I think it was Channel News Asia, one of these panels, and talking about... green buildings and it was with the Singapore Green Building Council and they were developing the standard for green building certification in Singapore and at that point in time and now I'm answering the question that you asked I mean one of the things that has to work is that all of these regulations all of these standards all of these directions need to make economic sense if it doesn't make economic sense it's not going to be adopted and it's going to you're going to run into a lot of resistance. Sure enough with energy prices where they are today a lot of the activities around sustainable buildings and energy efficiency and those kind of topics suddenly makes a lot of economic sense. Because One is that there is a shortage of energy, but even if you do have energy, it's expensive as hell. So the return on investment to have buildings with triple glazed windows and HVAC systems that are super efficient, it works now. That economics works. And so Singapore got it right a long time ago by putting these into the standards of what they expected out of buildings. I think other mega cities We need to look at that and say, hey, not only is this about climate change and not only is this about avoiding flooding, but it is about economics, it's about independence, it's about energy, it's about resilience. Alex, let me come to you directly on that. All of that costs, the triple glazing costs, the re-engineering things so that they are very resilient and sustainable and so on. How do you balance that out? And particularly when you're looking to develop new urban areas in parts of the world which are emerging economies. Yeah, I think it's, before we talk about the cost, I think it's important for all parties, all the agents to understand at the end of the day, the whole idea of building cities is to make lives better for the people. So all of the costs that we are talking about, all of the money that we spend, at the end of the day, we need to ask the question whether people's lives, whether people... Urban dwellers are seeing the improvements in their lives. And the cost needs to be put in perspective with the benefits that it's bringing in for the people. Yes, when we spend money to build greener buildings, when we spend money to put more trees, more parks, you might not see the return directly in your dollars terms. But the return is going to come from the improvement in productivity. So when people are coming home happy. They're more likely to come back to the office early the next day. If you come home and there's no parks and no entertainment, the kids and the wife and the husbands are not happy, it's very likely that you will... Put a sick leave tomorrow. So all of these costs, all of these benefits have to come from how the lives of the people are going to be improved in the future. And that needs to be taken into perspective. And that will make people understand that all of this will be having values, not directly in dollars term, but indirectly through the improvement in the outputs and the lives of the people that live in cities. You gave a brilliant example previously when we were speaking about mobility in Hanoi and public transport. I wonder if you could share that one again. I love it, yes. So as an urban economist, I have the privilege of traveling through many cities around the world, and one of the things that I like to observe is taking the public buses. How's this? And because the public buses in economics, we actually have the thing called the bus index. We look at how the bus tickets cost relatively to the... ...earnings of the people because the bus is actually the means of transport that brings people together, not just the professional but also the working classes and other type of people as well. So the quality of the bus is actually a demonstration of whether the economic output or the economic advancement of a country is trickling down. To the masses, to the working class, to the professionals, working classes. And back to Vietnam, my home country. And, um, I left Vietnam 24 25 years ago and I can tell you the buses that we used to take as a kid is just just horrible there's no no air conditioning the windows are all open or open and just just the wind and the heat but today if you and again I challenge you and encourage you to take the buses Especially, again, kudos to the Ho Chi Minh City governments as well. There's the buses in Ho Chi Minh City Number one, a lot of the buses are free. Number two is the air conditions and a lot of them are electric buses as well. I heard there are, I heard, I don't know if that's correct, but there are more electric buses in Ho Chi Minh than the petrol, the ICE buses. So the Ho Chi Minh City government is really making a great effort in transforming public infrastructure. And that is actually how we would value a city. It's not the buildings, it's not the shiny skyscrapers, but it's the condition of the people that are living in that city and how they're being improved. And that's how I would define a great city. Thank you. So Mr Tan, if I could come to you. I'm hearing about the importance of a shared positive experience of livability, of improvement to nature, people having happy lives are more productive, more sustainable urban environment. How much do these issues focus in Ho Chi Minh City's strategy and thinking about building out the urban environment? As I just said, the city, one of the key priorities of the city is building and attracting green energy, sustainable development cities and The people is always kept at the center of all activities, and like other panelists already said, when investors come here, like Alex just said, Investors, when they invest in the city, they always want the city government to accompany them. And like T.C. said, when city grows, investors come, they want, of course, their projects to be effective, and return should be quick, and other people related. Thank you very much, Mr. President. We focus on green energy, green infrastructure, those are our priorities. Recently the city supported a lot of investment projects into green infrastructure, so those are our viewpoints and activities. Thank you very much for that as well. Let's just focus on on the green aspect and particularly around mobility. We heard a little bit about EVs earlier on. TC would like to come to the mass transit systems as well, train systems. Again, looking out across ASEAN, I think there's a lot of activity taking place. Where do you see projects that are well connected, are well thought out, and that are going to contribute to that density and what was the productive density that Alex was talking about? Well, from our perspective, we have a mission that we want to shape a better world. Guided by that principle, we were very fortunate enough to have the blessing of the Ho Chi Minh City government. We did the master planning work of the 700 kilometers of metro system that they want to build. And we did that not just to build or to design a mass transit system. We have to think about the total ecosystem, about the first and the last mile, the place, the connection, and how. Those stations can become a revenue generator, like a transit-oriented development, to defray that. In part of those considerations, we start to think about how can we make sure that green consideration, reutilization of material, optimization of this can be implemented. And realistically speaking, if you look at the city government here and across ASEAN countries, Designing green building, designing the construction methodology that allow modularization in construction approach to optimize use of material so that we do not extract excessively natural material out of fragile world. At the same time, the city are also beginning to recognize that when we build infrastructure, it is not building the infrastructure for this generation. There is a need to consider how the future generation is going to actually renew the asset. Nothing lasts forever. So when they come to the renewal process, can they renew it at the right cost base that will be affordable to the future generation? All these considerations are critical to the success of future cities that are built for the younger and future generations. And we cannot exploit that by... Exploiting what we say is good for now is what is good for the future. Thanks. And just on that point, Ishan, if I could ask you for your quick comments as we move into the last couple of minutes on the principles to keep in mind for designing that future city with a particular focus on Southeast Asia. So, I mean, at the end of the day, you need to have a city that is sustainable, you need to have a city where people can come and work and be confident that You know, they are comfortable, that they are safe, that they are secure, safety, security and sustainability is absolutely core to any city being successful and being this productive density and a successful ecosystem. And if you can achieve that, you will have a very successful city. Thank you. Mr. Tuan, maybe just a last quick thought from you on your hope on expectations around foreign investors getting involved in helping to build Ho Chi Minh City out. Well, actually, for investors, the city does hope that investors would come here to grow with us, to develop together with us, and in return, we create the transparent and clear and confident investment environments for your customers when you come here and work with us. We also build particular policies for our prioritized sectors. We already make it clear, like we are talking about green infrastructures. We already have incentives, policies for these relevant activities, so your investment activity could be effective contributing to the city. Thank you very much. Alex, final word from you. As you think about your strategy going forward, what one thing do you keep front and center? You talked about productive density and livability and so on, but what's your sort of north star that's guiding your strategy? A North Star right now is one of the problems that many cities face as well, which is affordability. How can we not only build a great city where people want to come and live, but how can we keep that city affordable that The people here want to stay and can afford to stay, so I think affordability is a challenge but also the opportunity for not just ourselves but many other developers as well. But my strategy to affordability is we have to understand affordability correctly. Affordability is not just about the prices of the homes, affordability is about whether Whether people have... Access to jobs, entertainment, environments, the kids go to school, and whether they have access to all of that in an affordable way as well, because the total cost of living is more important than cheap housing, not just the house of the homes, but transport costs, the cost to use public facilities and green spaces. A small development, a cheap development, so a cheap house, but then if you live in a small development, but it takes you three hours to travel to work, it's not affordable at all. And that's going to distinguish between a productive density and unproductive density, because sometimes we might risk the risk of building a lot of highly density. It's cheap housing but at the end of the day it's not affordable at all given all the costs of living and access to jobs and opportunities. So I would say that's the guiding star for us to build the next generation of cities in Vietnam and around the world. Well, a great way to end the session. Thank you very much. Affordability, resilience, holistic thinking and planning, livability and investability as well, all great principles to keep in mind. Gentlemen, thank you very much for your insights today and please join me in thanking them, my guests for their efforts.