Let the APAC Smart City beauty pageant begin

From China to Singapore and Korea, Asia is leading the way in digitally-enabled cities

The results are in: Singapore is officially home to the largest number of award-winning smart city projects in APAC, with China a close second, according to IDC. Asian nations certainly have a more pressing need than many to improve the quality of services, reduce costs and boost sustainability in their urban centres. But are competitions like this a genuinely good indicator of how innovative governments are being around the world? And if so, where are the opportunities for investment from western technology players?

Onwards and upwards

Smart city developments are certainly on the rise. Frost & Sullivan anticipates the global market will be worth $1.56 trillion by 2020. Meanwhile, MarketsandMarkets predicts growth from $411 billion in 2014 to $1.1 trillion by 2019 – that’s a CAGR of 22.5%. From energy and buildings to mobility, transport, education, healthcare and government – the market covers a huge breadth of interconnected sectors and technology providers.

All over the world, projects are making urban centres cleaner, more efficient places in which to live. They also represent a great investment opportunity for technology providers and even nation states. The French government, for example, has pledged to spend over €2 billion on smart city projects in India as prime minister Narendra Modi looks to come good on his promise to kick start 100 such projects on the sub-continent. 

Governments across Asia are under pressure like never before to press ahead with smart city projects. In the developing countries of the region it’s down to rapid urbanisation on an unprecedented scale, while in developed nations demand is being driven by ageing infrastructures, according to McKinsey director, Jonathan Woetzel.

Singapore on top

But are competitions like this helpful, or even accurate? Few can dispute Singapore’s position at the top of the smart city tree. It has helped the city state immensely, of course, that it is blessed with an affluent government, relatively small population and land mass, and a political system favouring longevity and stability in a way that many westerners find baffling. In fact, its unique characteristics have enabled the government to forge ahead with a “Smart Nation” project launched last year, Infocomm Development Authority (IDA) executive deputy chairman, Steve Leonard, told me.

“This vision will see Singapore pulling together its fast-growing community of start-ups, large pools of risk capital, world-ranked universities, R&D institutes, big corporates, together with the commitment of the Government, to tackle difficult yet critical global challenges arising from the realities of an ageing population and urban density, that have an impact on areas such as healthcare, transportation and resources sustainability,” he said via email. “Our goal is to bring about better quality of life and opportunities for people.”

It seems to be working. IDC awarded four projects to the republic out of a total of 14 for its 2015 Asia Pacific Top Smart City Winners. These included an Intelligent Transport Systems (ITS) initiative featuring smart traffic monitoring and control, incident management, parking guidance and even a Green Man+ project to extend road crossing times for elderly and disabled pedestrians. Also singled out was a Smart Water project involving network sensors underground to prevent excessive leaks. It means only 5% of water in Singapore is lost before it reaches the customer as opposed to 24% in the UK.

Second place at the awards went to China with three projects. These included Chengdu City’s “Life 88” online social welfare platform and Hangzhou City’s Integrated Smart Citizen Card for connected health. This is where I start to get a bit sceptical about the value of these smart city ‘beauty contests’. China is certainly a big enough country to have pockets of innovation going on. But its welfare system is by all accounts a nightmare – and has at various times been described as “inflexible”, “fragmented” and “unfair”.

Nor was there any place on the list for Seoul – regarded by many as one of the ‘smartest’ cities on the planet.  In fact, its Songdo International Business District is a $35 billion project built on reclaimed land near Incheon airport. Among other whizz-bang features, it includes waste disposal units which suck rubbish straight out of citizens’ homes and into a waste collection plant.

Opportunity knocks?

However, IDC Government Insights program manager, Gerald Wang, defended the competition, and the programs it seeks to promote as examples of best practice.

“Yes, these initiatives are 'headline-grabbing' initiatives designed to attract foreign investment, make governments look good, and attract the right mix of 'talent',” he told me by email. 

“However, the smart city end-goals go beyond that into enhancing open ecosystems and partnerships, bring about better civic engagement, creating a climate for innovation and ultimately bring about sustainability and scalability for the longevity of cities.”

So how ripe an investment opportunity for western tech firms is Asia’s smart city market? According to IDC’s five stage model, most of the region’s projects (80%) were still stuck in stage one as of last year. That means lots of “siloed, tactical and small scale operations”. Certainly plenty of opportunity for investors to get in early, one might think. And Wang claimed that due to a shortfall of funding from central governments, cities (and their local authorities) “need to continually invest in innovation and seek foreign direct investment and funding, i.e. strategic sourcing techniques that leverage either private-public partnerships, build-operate-transfer models or even social crowdfunding models.”

Don’t believe all the hype you read about cities of the future springing up all over Asia, however. A lack of legacy infrastructure in some developing countries might have enabled them to “leapfrog the digital divide” in smart city building, but a lack of experience in managing “enterprise-wide ICT solutions” means progress can be slow and cautious, Wang warned.

“This is because, the end goal, as I reiterate, is for long-term sustainability and survivability, where a single misstep can lead to a loss in confidence and credibility; all critical factors for sustained socio-economic stability, especially in today's 'fickle' and globalized worldwide economy,” he concluded.