Urbanisation in Asia

:
Lessons Learned and Innovative Responses

Dean Forbes
Flinders University

Michael Lindfield
Australian Housing and Urban Research Institute May 1997

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ISSN 0818-4815 ISBN 0 642 22063 8 © Commonwealth of Australia 1998

The views expressed in this publication are those of the authors and not necessarily those of hte Australian Agency for international Development (AusAID). This research forms part of the AusAID Initiated Research Program, assisted and managed by the International Issues and Donor Coordination Section, AusAID. Design: AusAID Public Affairs Section Typeset by: Design One Solutions, Canberra

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Urbanisation in Asia i

PREFACE
This Report presents the findings of a study on urbanisation in the four Asian case study cities and a review of best practice in support of urban poverty alleviation and sustainable development conducted by the Australian Housing and Urban Research Institute (AHURI) in conjunction with Flinders University and the University of Queensland (UQ) for AusAID. This report was prepared by Professor Dean Forbes of Flinders University and Mr. Michael Lindfield of AHURI. Professor John Western, Dr. Adil Khan, Ms. Andrea Lanyon and Dr. Samuel Hussein of UQ prepared the Cambodia, Philippine and India case studies. Professor Forbes prepared the Vietnam case study. The case studies were conducted in association with partners, mainly institutions involved in the sector, in the countries concerned - Urbanet in the Philippines, The Times Research Foundation in India, The Institute for Urban Development and Technology in Vietnam and Dr Chow Meng Tarr in Cambodia. Mr Michael Lindfield and Ms Michelle Manicaros (AHURI) were responsible for the main report. Mr. John Rooth (AHURI) edited the text and Shally Ho (AHURI) prepared the text for publication. Thanks are also due to Professor Robert Stimson and Mr. Brian Roberts of AHURI for comments and AHURI advisors Messrs John Courtney and Neil Collier.

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. . . . . . . . . . . . . . . . . . . .6. . . . . . . . . . . . . . . . .2 NEED IN THE URBAN SECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6. .5 GLOBALISATION IMPACT ON CITIES IN SOUTH-EAST ASIA . . . . . . . . CITIES AND GLOBALISATION .45 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 1 AN URBANISING WORLD . . . .1 THE PURPOSE AND ORGANISATION OF THE STUDY . . . . . . . . . . . . . . .1 The Scale and Scope of Urbanisation . . . . . . . . . . . . . . . .1.4. . . . . . . . . . . . .3. . . . . . . . . . . . . . . . . . . . . . . .26 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 2. . . . . . . . . .3. . . . . . .52 4. . . . . . . . . . . . . . . . . . .31 2. . .31 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2. . . . . . . .39 3. . . . . .10 1. . . . . . . . . . .1 URBAN INSTITUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2. . . . . . . . . . . . . . . . . . . . . . . .4. . . . .10 1. . . . . . . . . . . .7 GLOBALISATION IMPLICATIONS . . . . . . . . . . . .3 Management Strategies for Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 3. . . . . . . . . . . . . . . . . . . . . .2 Disparities in Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 GLOBALISATION AND THE POOR . . . . . . . . . . . . . . . . . . . . . . .2 Organisational and Financial Dimensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 URBANISATION OVERVIEW AND IMPLICATIONS FOR DEVELOPMENT ASSISTANCE IN THE SECTOR . . . . . . . . . . . . . .46 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 2. . . . . . . . . . . . .4 The ‘Enabling’ Paradigm and Urban Institutions . . . . . . . . . . . . . . . . . . . . . . . . . .4 INDUSTRIAL COUNTRIES’ STAKE IN SUCCESSFUL INTEGRATION OF DEVELOPING COUNTRIES . . . . . . . . . . . . . . . . . . .39 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 3. . . .2 GLOBALISATION FORCES . . . . . . . . .3 Integration and Growth . . . . . . . . . . . . .37 3 THE URBAN SECTOR CONTEXT . . . . . . . . . . . . . . . .1 Goals of Improved Urban Management . . . . .2 Urban Development and the Poor . . .52 4. . . . . . . . . . .4 MULTILATERAL AGENCIES AND IFIS . . . . . . . . . . . .1. . . . . . . . . . . . . . . . . . . . . .49 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Institutional Framework . . . .1. Inequality and Poverty . . . . . . . .9 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1. . . . . . . . . . .43 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Problems and Issues . . . . . . . . . . . . . . . .47 3. . . . . . . . .18 1. . . . . . . . . . . . . . .32 2. . . . . . . . . . . . . . . . . . . . . . .34 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 3. . . . . . . . . . . . . . . .2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 2. .1 Basic Services . . . .43 3. . . . . . . . . .3. . . . . . . . . . . . . . . . . . . . . . .27 2. . . . . . . . . . .50 4. . . .2 Twinning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 2. . . . . . .3 MANAGEMENT OF URBAN CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2. . . . . . . . . . . .1 Urban Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Infrastructure . . . . . . . . . .1 The Role of Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Growth. . . . . . . .1 GLOBALISATION ISSUES . . . . .6 CITIZENS. . . . . . . .Urbanisation in Asia iii TABLE OF CONTENTS ABBREVIATIONS . . . . . . . . . . . . . . . . . . . .54 4. . . . . . . . . . . . . . .54 Ausaid . . . . . . . . . . . . . . . . . . .43 3. . . . . . . . . . . . . . . . . . . . . . . . .1 ACTORS IN THE FIELD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 4. . . . . . . . . . . . . .2. . . . . . . . . . . . . . . . . . .48 4 AID IN THE URBAN SECTOR .2 URBAN MANAGEMENT . . . .25 2 URBAN INSTITUTIONS AND MANAGEMENT . . . . . . .1 Municipal Foreign Policy (MFP) . . . . . . . . . . . . . . . . . . . .39 3. . .2 TRENDS AND PATTERNS . . . . . . . . . . . . . . .3 THE UN SYSTEM . . . . . . . . . . . .47 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vi EXECUTIVE SUMMARY . . . .5 BILATERAL ASSISTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 1. . .

. .1. . . . . . . . . .71 5. . . .94 7.59 4. . . . . . . . . .79 6. . . . . . . . . . . . . .64 5.58 4. . . . .1. . . . .61 5 CASE STUDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 AUSTRALIAN AID IN THE URBAN SECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 5. . . . . . . . . . . . . . . .2. . . .59 4. . . . . . . . . . . . . . . .1 The Linkages of Poverty Alleviation and Sustainable Development . . .9 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . .78 6 BEST PRACTICE . . . . . . . . . . . . . . .1 Micro-Enterprise Development and the Informal Sector .2. . .66 5. . . . . . . . . . . . . . . . .2. . . . . . . . . . . . . . . . . . . . . . . . . . . .2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Experience in Support to Private Sector Participation in Development Assistance . . . . . . .1 Project Aid . . . . . . . .1. . . .73 5. . . . . . . .64 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Sector and Product . . . .88 7. . . . . . . . . . . . . . . . . . . .3 DELIVERY SYSTEMS VERSUS PROJECTS . . . . . . .73 5. . . . .87 7. CEBU. . . . . . . . . . . .3 Other Forms of Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3. . . . . . . . . . . . . . .1. . . . . . . . . .3 Private-Sector Focused Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Partnerships and Investment Needs . . . . . . . . . . . . . . . . .2 The Needs of the Urban Sector in Asia and Australian Expertise . . . . . . . . . . . . . . . . . . . . .2. .2 AUSTRALIAN STRENGTHS AND OPPORTUNITIES IN THE URBAN SECTOR . . . . . .80 6. . . . . .83 6.2. . . . . . . . . .7. . . . . . . . . . . . . . . . .2 DESIGN OF DELIVERY SYSTEMS . . . . . . . . . . . . . . .2 Competitive Goods and Services in the Urban Sector . . . . . .1 Micro-Enterprise Development and the Informal Sector . . . . . . . . . . . . . . . . . . . . .87 7. . . . . . . . . . . . .58 4.3. . . . . . . . . . . . . . . . . . .2. . . . .62 5. . . . . . . . . . .7. .7 THE TYPES AND EXPERIENCE OF AID IN THE URBAN SECTOR . . . . . . .CALCUTTA. .2 Government-Focused Assistance . . . .87 7.2 Technical Assistance . . . .4 The Major Risks Involved . . .iv Urbanisation in Asia 4.87 7. . . . . . . . . . . . . . . .2 The Importance of Efficient and Equitable Markets at the City-wide/Regional Level . . . . . . . . . . . . . . . . . . . .99 Ausaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Rural-Urban Linkages . .59 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86 7 AUSTRALIAN EXPERIENCE AND EXPERTISE IN THE URBAN SECTOR .3 FURTHER LESSONS LEARNED FROM THE CASE STUDIES . . . . . . . . HANOI. . .3 Health and the Environment .3 Urban Investment and the Community. . . .1 METHODOLOGY AND CONCEPTS: POVERTY ALLEVIATION FOCUS DEVELOPMENT CONTEXT . . . .79 6.75 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Public and Private Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 CONCLUSIONS IN RESPECT OF THE CASE STUDIES . . . .7. . . . . . . . . . . . . . . . . . . . . .4 Focus .60 4. . . . . . . . . . . . .2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1. . . . . .4 CROSSCUTTING ISSUES . . . . . . . . . . . .1 Community-Focused Assistance . . . . . . . . . .7. . . . . . . . . . . . . . . . . . . . . . . . . .2 URBAN POVERTY AND SUSTAINABLE DEVELOPMENT . . . . . . . . . . . . . . .97 7. . . . . . . . . . . . . . . . . .82 6. . . . . . . . . . . . . . . . . . . . . . . . . . .2. . . . . . . . . . . . . . . . . . . . . . . .62 IN A SUSTAINABLE 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84 6. . . . . . . . . . . . . . . . . . . . . . . .95 7. . . . . . .1. . . . . . . . . . . . . . . . . . . . . PHNOM PENH . . . . . . . . . . . .58 4. . . . . . . . . . . . . . . . . . .1 THE NEEDS OF THE ASIAN URBAN SECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 The Importance of NGOs and CBOs at the Community-Level . .6 NON-GOVERNMENTAL ORGANISATIONS . . . . . . . .2. . . . . . . . . .82 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79 6. . . . . . . . . . . . . . . . .1 Introduction . . . . . . .94 7. . . . . . . . . . . . . . . . . . . . . . . . . .1. . . . . . . . . . . .68 5. . . . .1. . . . . . . . . . . . . . . . . . . . . . . . .73 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 OVERVIEW . . . .4 Lessons Learned in Applying Australian Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Sector-Specific Issues . . . . . . . . . . . . . . . . . .81 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Human Resource Development . . . . . . . . . . . . . .93 7. . . . . . .

55 TABLE 4. . . . . . . . . .2000 . . . . . . . . . . . . . . . . . . . . . . . .101 8.15 FIGURE 5. .5: PROJECT FUNDING OPPORTUNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116 BIBLIOGRAPHY . . . . . . . . . . . . . . . . 1970-2000 . . . . . . . . . . URBAN SERVICES AND URBAN MANAGEMENT. . .1: FRAMEWORK FOR EXPERTISE IN THE URBAN SECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . .105 FIGURE 8. .4 PUBLIC-PRIVATE PARTNERSHIPS .1: URBAN POPULATIONS AS PERCENT OF TOTAL. . . . . . . . . . . . .1: PARTNERSHIPS IN THE URBAN ECONOMY . . . . . . . . . . . . . . . . . . . . . . .56 TABLE 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111 Ausaid .Urbanisation in Asia v 8 MAJOR OUTCOMES OF THE RESEARCH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4: PROPOSED GOVERNMENT PARTNERSHIP DELIVERY SYSTEM . . . . . . . . .3: THE PROPORTION OF AID AND NON-CONCESSIONAL LOAN COMMITMENTS TO URBAN INFRASTRUCTURE. . . . . .5: BILATERAL AGENCIES’ OFFICIAL DEVELOPMENT FINANCE COMMITMENTS FOR URBAN-DEVELOPMENT BY PURPOSE. . . . . . . .3: CURRENT PROJECT GOVERNMENT DELIVERY SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . .2: PROPOSED COMMUNITY PARTNERSHIP DELIVERY SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . .104 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 CENTRAL ISSUES OF THE ANALYSIS . . . . . . . . . . . . . . 1980-93 . . . . . . . . . .57 LIST OF FIGURES FIGURE 1. . . . . . . . . . . . . . . . . .4: URBAN POVERTY IN SELECTED ASIAN COUNTRIES . . . . . .102 FIGURE 8. . . . . . . . . . . . . .2: AVERAGE ANNUAL GROWTH RATES OF ASIA’S URBAN POPULATION. .11 TABLE 1. . . . . . . . . . . . . . . . . . .2: SERVICE SECTOR OUTPUT AS A PERCENTAGE OF GDP . . . . . . . . . . . . 1970 . . . . . . . . . . . . .1: INFRASTRUCTURE SPENDING FORECAST FOR EAST ASIA. . . . . . . . . . . . . . . . . . .13 TABLE 1. . . . . . . . . 1970-2005 . . . . . 1970 -2005 . . . . . . . . . . . . . .5 URBAN SECTOR INITIATIVE REVIEWS . . . . . . . . . . . . .115 8. . . . . . . . . . . . . . . .105 FIGURE 8. . . . . . . . . . . . . . . . . . . . .1: CURRENT COMMUNITY . . . . . . .1: CONCEPTUAL FRAMEWORK FOR UNDERSTANDING SUSTAINABLE DEVELOPMENT IN THE CONTEXT OF THE FOUR ISSUE CATEGORIES . . . . . . . . . . . . . . . . .16 TABLE 1. . . . . . . . . . . . . . . . . . .FOCUSED DELIVERY SYSTEM . . . .4: THE PRIORITY GIVEN BY BILATERAL AID PROGRAMMES TO DIFFERENT PROJECT CATEGORIES WITHIN ‘SOCIAL AND ADMINISTRATIVE INFRASTRUCTURE’. . . . . . . . . . . . . . . . . . . . . . . .101 FIGURE 8. . . . . . . . . .18 TABLE 4. .3 GOVERNMENT PARTNERSHIPS . . . . . . . .2 COMMUNITY PARTNERSHIPS . . . . . . . . . . . . . . . . . . . . .100 8. . . . 1995-2004 . . . . . . . 1950 . . 1980-93 . . . . . . .1: ASIA’S URBAN POPULATION. . . . .63 FIGURE 6. .53 TABLE 4. . . . . . .2000 . . . . . . . . . . . . . . . . . . . . 1991 . . . . . . . . . . . . . . . . . .117 LIST OF TABLES TABLE 1. . . . . . . . . . . . . . .13 FIGURE 1. . . . . . . . . . . . . . . . . . . .104 8. . . . . . . . . . . . . . . .82 FIGURE 7. . . .1990 VALUE) . . . . . . . . . . . . . . . . . . 1986-1990 (US$ MILLION CONSTANT . . . . . . . . . . . . . .3: ASIA’S ‘MILLION’ CITIES. . . . . . . . . . . . . . .93 FIGURE 8. . .50 TABLE 4. .2: AVERAGE ANNUAL GROWTH RATES OF URBAN POPULATION. . . . . . . . . . . . . . . . . . . . . . . . . . .87 FIGURE 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2: THE PROPORTION OF AID AND NON-CONCESSIONAL LOAN COMMITMENTS TO SHELTER-RELATED INFRASTRUCTURE AND BASIC SERVICES. . . .6 RECOMMENDATIONS . . . . . . . . . . . . .100 8. . . . . . .

vi Urbanisation in Asia ABBREVIATIONS ADB ADF AFDB AHURI AIDAB APEC ASBA ASEAN ASKI AusAID BOO BOT CBO CDB CEMS CMDA CMP CSIRO CSO DAC DHARD DIFF DSM DTP EBRD EC ECOSOC EFIC EMR EPZ ERB ESCAP ETM Asian Development Bank Asian Development Fund African Development Bank Australian Housing and Urban Research Institute Australian International Development Assistance Bureau (now AusAID) Asia-Pacific Economic Cooperation Alexandria Small Business Association Association of South-East Asian Nations Alalay Sa Kaunlaran Sa Gitnang Luzon Inc. Australian Agency for International Development Build-Operate-Own Build-Operate-Transfer Community Based Organisation Caribbean Development Bank Community Environmental Management Strategy Calcutta Metropolitan Development Authority Community Mortgage Programme Commonwealth Scientific and Industrial Research Organisation Community Service Obligation Development Assistance Committee Department of Housing and Regional Development (also Commonwealth Department of Health. Housing. Local Government and Community Services) Development Import Finance Facility Demand-Side Management Decentralised Training Programme European Bank for Reconstruction and Development European Community Economic and Social Council Export Finance and Insurance Corporation Extended Metropolitan Region Export Processing Zone Energy Regulatory Board Economic and Social Commission for Asia and the Pacific Elaborately Transformed Manufactures Ausaid .

Urbanisation in Asia vii FDI GDP GNP HDFC HUDCO IADB IBRD IDA IFC IFI IIED ILFS IMF KIP KMBI LGED LRT MEIP MFP MIGA MRT NGO NHA NIEIR ODA OECD OECF OUD PACAP PRCUD PSD PSI Quango RoW SCD SCI Foreign Direct Investment Gross Domestic Product Gross National Product Housing Development Finance Corporation Housing and Urban Development Corporation Inter-American Development Bank International Bank for Reconstruction and Development International Development Association International Finance Corporation International Financial Institution International Institute for the Environment and Development Infrastructure Leasing and Financing Services International Monetary Fund Kampung Improvement Programme Kabalikat Para sa Maunlad Na Buhay Inc. Local Government Engineering Department Light Rail Transit Metropolitan Environmental Improvement Programme Municipal Foreign Policy Multilateral Investment Guarantee Agency Mass Rapid Transit Non-Governmental Organisation National Housing Authority (Thailand and Philippines) National Institute of Economic and Industry Research Official Development Assistance Organisation for Economic Cooperation and Development Overseas Economic Cooperation Fund Office for Urban Development Philippine Australia Community Assistance Programme Pacific Rim Council for Urban Development Private Sector Development Private Sector Investment Quasi Non-Governmental Organisation Rights of Way Sustainable Cities Programme Sister Cities International Ausaid .

viii Urbanisation in Asia SDP SEZ SHG SME SPV SUME SUWE TA TSP TSPI UBS UBSP UDA UDC UMP UMTP UN UNCED UNCHS UNDP UNFPA UNICEF UNIDO US USAID USIR WTO Sustainable Development Project Special Economic Zone Self-Help Group Small and Medium Scale Enterprises Special Purpose Vehicle Schemes for Urban Micro-Enterprises Schemes for Urban Wage Employment Technical Assistance Total Suspended Particulates Tulay sa Pag-Unlad Inc Urban Basic Services Urban Basic Services Programmes Urban Development Authority Urban Development Corporation Urban Management Programme Urban Management Training Programme United Nations United Nations Conference on Environment and Development United Nations Centre for Human Settlements United Nations Development Programme United Nations Population Fund United Nations International Children’s Fund United Nations Industrial Development Organisation United States United States Agency for International Development Urban Sector Initiatives Review World Trade Organisation Ausaid .

with community. have equitable access to the benefits of such development. The analysis of the case studies was initially organised by four categories: Human Resource Development Best practice derived from the case studies suggests that: • More successful programmes of human resource development for poverty groups channel delivery through local NGOs and CBOs and do so in an incremental way . has been central to the analysis of four case studies .both in geographic coverage and scope of activity . in the light of a review of Australian capacity to support poverty alleviation and sustainable development. The study has made recommendations. In the context of assisting a country to take advantage of the growth of the international economy there is a need: • to strengthen public and private sector effectiveness in the promotion of productive and sustainable investment. and ensuring that all groups.and the home of the majority of humanity.Cebu (Philippines). also has significant implications for the formulation of development assistance activity.over the 10 years from 1990 to 2000. and that of rural households will have fallen by 29 percent to 56 million.Urbanisation in Asia 1 EXECUTIVE SUMMARY In view of the increasing importance of urban areas as the engines of economic growth in the rapidly developing economies of Asia . including the poor.over a considerable timeframe. it is necessary to review the major issues and problems of urbanisation and to assess their implications for the Australian development assistance programme. the poor need to be ‘empowered’ in terms of achieving a greater share of. and increased access to. government and private sector organisations. The United Nations Development Programme (1991) predicts that there will be an ‘urbanisation of poverty’ . the number of poor urban households in absolute poverty will have increased by 76 percent to 72 million. Phnom Penh (Cambodia) and Hanoi (Vietnam). through ensuring that competitive forces are at work to achieve efficient outcomes and that regulatory processes are not coopted by vested interests. the economy and society. LESSONS LEARNED FROM THE CASE STUDIES AND REVIEW OF BEST PRACTICE The case studies provided important lessons for the structuring of support to urban poverty alleviation and sustainable development. • • The principal focus of AusAID’s concern. effective financial systems and building the knowledge base. The concept of poverty encompasses not only low or inadequate income. many of these in cities. Some 20 to 25 percent of the world’s population lives in absolute poverty.80 percent of the Gross Domestic Product growth in developing countries is expected to come from urban economies in the 1990s . but the lack of access to basic physical necessities and assets (both tangible and intangible). Key to the operation of these systems is the concept of ‘partnerships’ . the issue of poverty alleviation. Ausaid . If poverty is to be alleviated. intimately associated with urbanisation. Calcutta (India). Globalisation. on more appropriate aid delivery systems to strengthen the capacity of recipient countries in these areas.

lack of potable water and substandard sanitation contribute to a poor environment for poverty groups. amongst whom the majority own or work in small enterprises which are generally perceived as informal or outside mainstream economic activity. Rural-Urban Linkages Lessons learned from the case studies show the diversity of links. Best practice delivery systems in this area embody the same principles as discussed in relation to human resource development above. fifty years of institutional strengthening and the presence of high levels of local professional capacity have not fundamentally changed the performance of Ausaid . Poverty alleviation assistance must focus on micro-enterprise development and the linkage of such enterprises to the formal sector which constitutes a market for higher margin goods and provides finance. Institutional Capacity Despite recent reforms in India. who. Poor quality and crowded housing. badly managed urban development can have negative consequences including: • • pollution. and social costs of badly managed/inequitable land development. Best practice in micro-enterprise development fosters sustained growth of such enterprises by channelling support. and markets for rural produce. perceive no benefits from protecting the environment. all of them with a positive impact on the rural economy.2 Urbanisation in Asia • To maximise impact. employment in satellites. This sector supplies up to 60 percent of employment and 30 percent of economic output. often through apex NGOs. However. such delivery is linked into formal sector educational systems which provide support and channels for students progressing to higher educational levels. which can exist between a city and its hinterland. These institutions require considerable institutional strengthening to undertake this role. employment for those within daily or short-term ‘commute’ distance. to skills development. in turn. Health and the Environment Lessons learned from the case studies reinforce the importance for poverty groups of the linkage between health and the environment. The Informal Sector and Micro-Enterprise Development The key to poverty alleviation is the generation of income for poor households. Specifically: • • • • remittances from urban workers. technology acquisition and access to credit at market rates. there are lessons to be learned in areas important for the design of more effective aid delivery systems: In Respect of Processes for Poverty Alleviation and Sustainable Development An essential lesson learned from the case studies is that even good initiatives in poverty alleviation will fail to achieve their potential and will not be replicable unless they are undertaken in the context of sustainable systemic reforms. In addition to the above lessons.

although the detail context is different.in the Philippines. intended as the primary funding agency. These are: • • support to micro-enterprise development. the Buenos Aires Water and Sewerage Concession provides an example of private infrastructure provision which has achieved significant efficiency and equity gains (in terms of increased coverage at lower real prices). suggested the need for external assistance. The study has identified two broad categories of potential support to poverty alleviation which utilise private initiatives.such as local governments.informal and formal .which have been successful at cost recovery and eliciting the cooperation of formal sector institutions . The World Bank.constitutes the driving force of the economy. The successful bidder tapped the international capital markets with the assistance of the IFC and undertook substantial rehabilitation works which dramatically improved the level of service. was not convinced the existing operator. the ASBA programme has served over 20.best practice is seen in Indonesia where the Integrated Urban Infrastructure Development Project has evolved effective techniques in this area over its twenty year history. ASBA covers the costs of its microfinance and technical assistance services entirely through the revenue generated from loan recovery. generating wealth with which poverty can be alleviated. possessed the organisational capacity to implement the required works and to achieve the levels of cost recovery required to make the project feasible. a private nonprofit NGO run by a Board of Directors from the local business community. Support to this type of institutional change process must be a long term. the private sector . The urgent necessity for extensive rehabilitation works and new investment amounting to some US$3. and Ausaid • . Obras Sanitarias de la Nacion. In the first category. is the institutional anchor for the programme and has achieved a range of outreach comparable to those of the most successful micro-finance ventures in the world.000.such as Sulabah International in the field of basic sanitation . coupled with the absolute lack of government funds. Effective and sustainable service delivery on a large scale has been achieved by Indian NGOs . In the last five years. The Bank therefore promoted a process of competitive bidding for a concession agreement which would involve implementation of the required investment programme. incremental process with concrete milestones against which performance can be judged.Urbanisation in Asia 3 the institutional structures which frustrate effective service delivery to poverty groups.000 clients and extended over 47. small scale finance for micro-enterprises and upgrading is limited and needs to be integrated into the wider finance system .95 billion. best practice is seen in the linking of financially viable micro-credit NGOs to the formal capital markets. Similarities occur in the following areas: • local government finance is weak although many initiatives are underway to strengthen capacity in this area . In the second category. The Alexandria Small Business Association (ASBA). Finance Financial constraints to poverty alleviation and sustainable development are similar across countries. and support to the sustainable private provision of urban infrastructure (to which the poor have access). to provide adequate water and sewerage coverage for Argentina’s capital. an example of USAID activity in Alexandria which launched a project to provide credit and business management assistance to SMEs shows the value of apex NGOs in catalysing local initiative. The Formal Private Sector and the Informal Private/Community Sector In all countries studied.

fully aid-funded projects (public to public) and fully commercial activities (private to private). The mix of Australian support among these categories in any given country should be designed in a report (the USIR) setting out an assessment of needs in respect of urban poverty alleviation and sustainable development given ongoing and planned activity of other donors. corporatised or private operating companies. and consultants .typically government regulatory agencies. AUSTRALIAN EXPERTISE IN SUPPORT OF POVERTY ALLEVIATION AND SUSTAINABLE DEVELOPMENT The current relationship among Australian public and private agencies and their Asian counterparts varies along a spectrum between direct. These are precisely the approaches. community and private sector. both public and private. aid projects need to focus on long-term engagement of. The forms of proposed partnerships are set out in more detail below. the organisations in each of the three categories of actors . one of the key characteristics of such services and products is that they are developed within a framework of public-private relationships .which enables complimentary services. Ausaid . PROPOSED INNOVATIVE RESPONSES Urban Sector Initiatives Review (USIR) In the light of the above lessons learned. and certain products. have a range of world class services and products which can be utilised in poverty alleviation activity and in support of sustainable development.4 Urbanisation in Asia • large scale finance for infrastructure development needs to be augmented by expanding the range of institutions and instruments available and by channelling external funds where local capital markets cannot provide the funding levels required . services and products needed in the new partnerships for poverty alleviation and sustainable development evolving in Asia. Australian urban sector institutions. address areas of need identified in the “lessons learned” analysis and are areas where Australia can contribute effectively. education and training. The difficulty for the development assistance programme is to evolve delivery systems which recognise and facilitate such relationships in order to maximise the efficiency of delivery. Infrastructure Leasing and Finance Services was catalysed by the IFC and local financial institutions is a model of financial sector institutional development which fulfils this role. and partnership with. Such a report should be concise (the German aid agency KfW requires such a report to be no more than twenty five pages) and focus on scoping potential projects. finance and management of housing and infrastructure provision. regulatory and monitoring systems (especially in the context of competition reforms).in India.government. Most importantly. especially extensively transformed manufacturers and specialist information technology products. The research has highlighted the increasing importance of public-private partnerships on both sides of the relationship. products and systems to be developed. In particular: • • • • planning.

for example. As power demand is estimated to grow around 10 percent per annum over the next decade. the objectives of such partnership projects in the public sector will be to: • • impart best practice in sustainable development of the investments for which the partner institution has responsibility. DSM can potentially reduce yearly power generation needs between 10-30 percent. consumers. but possibly a company) with an organisation undertaking similar activities in the recipient country. and entrepreneurial development. These are: • NGO-based community partnership projects should be formulated as part of an overall urban sector strategy identified in the USIR. supported by the World Bank. • Twinning in the Philippines Structured by the World Bank At a macro-scale. but also on other performance indicators in respect of the organisational performance of the implementing agency in the recipient country. a twinning programme. training programmes. establishing clear outputs and periodic reviews. facilitate the role of the private sector in providing services and/or investment by. In addition to these energy savings and realisation of environmental goals. The proposed delivery mechanism will involve the long-term association of an organisation (usually a government agency or a corporatised/privatised service provider.g. The organisation and sub-consultants will be chosen using normal AusAID selection processes based on Terms of Reference developed from the USIR scoping exercise. defining the regulatory framework including issues important to poverty groups such as community service obligations of service providers. The performance of the organisation managing the project will be assessed on the successful completion to budget and time of the project. With help from the Oregon’s Public Utility Commission. and support the relationship between the organisation and NGOs/Community Based Organisations (CBOs) representing community groups. NGOs. energy producers) cooperating in the formulation of ground rules for the design of DSM programmes. CBOs. the Philippine’s Energy Regulatory Board (ERB) is developing a regulatory framework for the provision of energy efficient and environmentally sound energy policies with a focus on Demand-Side Management (DSM). Ausaid .Urbanisation in Asia 5 Government Partnerships Broadly. Community Partnerships Two important principles are incorporated in the proposed delivery mechanism for Australian aid focused on the community-level and on poverty alleviation activities such as microenterprise development. It should continue over the duration of the design. whilst at the same time protecting the environment. skills transfer. as well as an enhanced quality of life for residents through improved energy services and environmental improvement. funding. The twinning programme is a cost-effective means of Technical Assistance with all vested interests (e. education and health/ environmental protection. between energy regulators in the Philippines and the United States is assisting the Philippines in improving energy efficiency. The introduction of DSM practices will likely realise a 1 to 3 percent saving in annual power demand. construction and initial period of operation of a major (sub-) project. staff competence is increased as is long-term institutional efficiency and capacity. The contract should be based on existing project implementation contracts. The strengths of twinning are found in the development of partnerships.

Training courses. FICONG also encourages NGOs and State organisations to develop more effective partnerships with residents’ associations in low-income communities. in order to ensure that such relationships are sustainable and not paternalistic. seminars and workshops are undertaken throughout Latin America in conjunction with a large network of affiliated institutions and organisations. The FICONG programme is implemented through a large network of NGOs and other settlement institutions. With these goals in mind. NGO Partnerships in Buenos Aires: the FICONG Programme International Institute for the Environment and Development (IIED) is a northern NGO based in London. funding. Again. The resulting greater participation for NGOs in projects has to be matched by a greater effectiveness among NGOs and a growth in the scale of their programmes. construction and initial period of operation of a major project. programmes should be designed so that Australian NGOs are associated with apex southern NGOs where possible.6 Urbanisation in Asia • Given that the central strength of NGO involvement is its close relationship to the community. in September 1991. as economic reform during the 1980s has often been accompanied by a withdrawal of the State from direct provision of services. It has supported IIED-America Latina in Buenos Aires over many years as a counterpart apex organisation in South America. It aims to enhance the capacity of NGOs and public agencies in responding to the needs of poorer groups and to increase their effectiveness and the scale of activities. If no relevant apex NGO exists. The role of NGOs has also been much increased in many countries. and Japan. Ausaid . the Netherlands. In particular. and supporting the relationship between the organisation and NGOs/CBOs representing community groups. there is a long tradition of specialist NGOs working with the inhabitants of low-income settlements (often illegal or informal settlements) in programmes to improve housing conditions or provide basic services. the role of the Australian NGO should be to foster one where possible. IIED-America Latina launched a new programme for the institutional strengthening and training of NGOs such as FICONG. In Latin America. but also on other performance indicators in respect of the organisational performance of the local NGO. facilitating the NGO/CBO linkages to the private sector and to government. Among the main supporters of the FICONG Programme are the Economic Development Institute of the World Bank and the bilateral aid programmes of Sweden. As with government partnerships as above. the performance of the organisation managing the project will be assessed on the successful completion to budget and time of the nominated project outputs. standardised procedures should be used to select and monitor NGO partners contracted and the contract with the Australian NGO should continue over the duration of the design. the objectives of such projects will be to: • • • impart best practice in sustainable development of the investments for which the partner institution has responsibility.

The mechanisms for support to micro-enterprise development are relatively well understood and such projects can be adapted to modified conventional delivery mechanisms as proposed in this study. but will constitute a contingent liability which (as in the case of World Bank guarantees) constitute “disbursement” of aid and for which provision should be made in the aid budget. The structuring of these projects therefore requires clear definition of community service and other obligations. Other indirect supports to private sector projects are possible. and support to the sustainable private provision of urban infrastructure (to which the poor have access). strengthening of government and/or community capacity to fund said CSOs on a sustainable basis should be undertaken. • These interventions should be scoped in the USIR as they require coordination across partnership groups. as was the case in respect of an IFC loan to the concessionaire in Buenos Aires. significant benefits will result from ensuring that private sector investment is poverty alleviating and environmentally sensitive. two additional areas of potential aid involvement in this field can be justified. However. In respect of private provision of infrastructure. The key constraint to efficient and equitable involvement of the private sector in urban infrastructure service delivery is the capacity of the public sector to manage such projects. This enhancement normally involves hedging (covering) an area (areas) of risk which cannot be hedged with commercially available financing instruments and insurance. protection of the environment). Such support would normally not take the form of revenue payments to a private company. Such activity can even be undertaken on a loan basis. In a case where a government cannot provide for needed/required community service obligations (CSOs). However. The support must be limited in terms of duration and amount. the task of supporting a particular project or programme in order to promote such activity is radically different from what might be called the ‘traditional model’ of aid delivery. such as the provision of equity through a local intermediary. Aid assistance in building capacity to manage such projects in the public sector would be provided under the government partnerships outlined above. there are two key streams of potential activities in support of the private sector : • • support to micro-enterprise development. Ausaid . This loan predominantly funded redundancy packages for surplus staff. which has world-class expertise in the field. some form of credit enhancement may be necessary. limited support should be provided to government in this area. In view of the increasing involvement of the private sector in urban service delivery and the potential impact of this involvement on poverty groups and on the environment. This is the case in Australia. this situation does not apply. In parallel.g. in respect of guaranteeing access to poverty groups. Such support will often not require cash input. These are: • In order that such projects as the Buenos Aires water and sewerage concession go ahead and achieve potential efficiency and equity gains. The objective of private sector partnership-based delivery systems is to provide the required finance for the least cost while fulfilling the social/allocative functions ascribed to the project (e. Direct equity input on the part of AusAID is inappropriate and administratively difficult. such as extension of networks to low income areas.Urbanisation in Asia 7 Public-Private Partnerships From analysis of the lessons learnt. but would be in the form of capital subsidies for infrastructure utilised by poverty groups or for environmental protection.

but should comprise regular debriefing on project progress and analysis of project outcomes based on evaluation reports and debriefings.8 Urbanisation in Asia RECOMMENDATIONS The analysis and outcomes of the research set out above enable four main recommendations to be made in the context of the current urban sector programme of AusAID. designing interventions for sustainable economic. focus of project (community. Recommendation Three: Recommendation Four: Ausaid . a ‘learning system’ for best practice in the urban sector in AusAID should be established. government or private sector) and organisation. The study has highlighted two areas in which more information is needed and for which better dissemination of best practice is required. and the provision of support to the public sector in the management of private sector initiatives. The system should not require more administrative documentation for project officers. Recommendation Two: Prototype community. and preparing a programme of development assistance in support of investments which meet both the approval of the recipient country and AusAID policy and administrative requirements. Structured by sector. Such a review should be drafted by a small team headed by AusAID staff and include members with experience in community partnerships and in private sector participation in order to ensure all target partnership groups are adequately addressed. this system should document best practice (including best practice in avoiding common problems). Based on the “Lessons Learnt” Database. monitoring systems and contract forms in order to ensure efficient and transparent procedures are used in implementation. social and environmental development. Regular review of this best practice should result in a review of AusAID guidelines. These are: Recommendation One: A prototype urban sector initiatives review should be trialed in order to judge its efficiency in: • • • identifying focus areas of poverty alleviation support. These are: • • the provision of support to NGOs/ CBOs in community-based projects. The review methodology should then be documented. government and public-private partnership projects identified by the review should be detailed in terms of their performance measures. monitoring systems and contract forms documented. Consultation with NGOs and the private sector will be required in regard to the performance measures.

Australia’s aid program must decide how to address the urbanisation of poverty . In Asia the percentage below the poverty line is lower (23 percent in 1988). For rural areas. economic and environmental change and.Urbanisation in Asia 9 1 1. The environmental sustainability of urban development is thus in question and. are also most closely related . in particular the poor people. cities and towns are sources of remittance payments.to our own urban regions. This review will provide an understanding of the scale of needs of people in urban areas. after all. These issues of poverty alleviation and sustainable development will be central and recurring themes of the study.the fact that the majority of the world poor will soon live in urban areas. cannot sustainably absorb. in turn.in terms of economic and social relationships . Concentrating economic activity and consumption in cities has both direct and indirect environmental impacts. the inter-relation and inter-dependencies between the alleviation of rural and urban poverty argue for a comprehensive approach focused on both rural and urban poverty alleviation in a geographically defined regional economy. and enable an assessment of the role the Australian development assistance programme can have in addressing these needs. sustainable development encompasses more than environmental sustainability. Indirect environmental impacts are evident in the depletion of environmental resources (such as forests) in order to satisfy consumption . Such an approach must take into account the environmental consequences of development. 1994) and while this development will provide resources to alleviate poverty. This region and the urban areas of the region. In some countries the incidence of urban poverty is higher than in rural areas (World Bank. markets for rural products. The remainder of this chapter will quantify this phenomenon and set out the major Ausaid . The ability of that system to deliver income to people. generally. 1992). In order to adequately describe the phenomenon of urbanisation in Asia in terms of these themes and to determine the most effective approach to support of poverty alleviation and sustainable development. the equitable distribution of these resources will need development assistance support. The breakdown of local and global ecosystems and the health consequences of such levels of pollution are manifest. The study focuses on Asia.the ‘footprint’ of the city is large. The objective of alleviating poverty requires that due consideration be given to the urban poor. foster productive investment and support efficient provision of infrastructure will determine its economic sustainability. The World Bank (1994b) has forecast that over half of the world’s absolute poor will be living in urban areas by the year 2000. but constitutes 42 percent of the world total. particularly high value-added activity. As the focus of much economic activity. sources of services and products used in agricultural production and markets for under-employed rural labour. this raises questions in respect of the sustainability of rural development predicated on urban markets (which. it is necessary to review the major issues and problems of urbanisation. It is estimated that the proportion of people living below the poverty line in cities in developing countries increased by 73 percent during the 1970-1985 period (Gilbert. Eighty percent of the Gross Domestic Product (GDP) growth in developing countries is expected to come from urban economies in the 1990s (Urban Management Programme (UMP). Development impact on equity and social cohesion will determine the political sustainability of a given urban system. is most non-subsistence rural development). the efficiency and equity with which urban areas are managed is important to both urban and rural citizens of a country. However. Sustainability must also be seen in terms of social and economic dimensions. As will be discussed in detail below. The direct environmental impacts are the result of producing levels of pollution which environmental resources (such as water bodies). rapid economic development. acting as waste sinks.1 AN URBANISING WORLD The Purpose and Organisation of the Study As urban areas are increasingly the engines of economic growth and the home of the majority of humanity. 1993). it is first necessary to build a picture of urban areas in the region. a region undergoing great social.

India. Vietnam. On the one hand. Cities and towns also have important roles as centres of artistic. the figure for Asia will be 42. of which Asia accounted for 589 million or 56 percent.10 Urbanisation in Asia issues relating to it. Chapter Eight details the findings of the study. It recommends the adoption of delivery systems more appropriate to the circumstances identified by the study as determining the effectiveness of development assistance support to poverty alleviation and sustainable development.1 percent of the world’s population will be living in urban places. By the end of the century. It has helped underpin improvements in living standards for a considerable proportion of the world’s population. It has been forecast that by the year 2000. Table 1. Cambodia . Chapter Seven assesses Australia’s skills in the urban sector with a view to identifying areas of ‘core competence’ which should be central elements in the development assistance activity for Australia. Again.1 The Scale and Scope of Urbanisation Urbanisation has been an essential part of most nations’ development towards a stronger and more stable economy over the last few decades. 1996a:61). In a global context. 1.038 million. particularly in Asia. more people in the world will be living in cities than in the countryside. On the other hand. Chapter Six sets out the conclusions of a review of best practice in urban projects by sector. Most of the world’s largest cities are in the world’s largest economies. Philippines.7 percent.conducted for the study. The countries in the South that urbanised most rapidly in the last 10 to 20 years are generally those with the most rapid economic growth (Asian Development Bank (ADB).2 Trends and Patterns 1. The following discussion of urbanisation trends is drawn substantially from Yeung (1994) who provides an excellent overview of the Asian urbanisation process. one in two urban dwellers in the world will live in Asia. These cases focus more specifically on the issues of poverty alleviation and sustainable development. By that time and for the first time in human history. the focus is the performance of community. the world’s urban population increased by 1. and of culture and education.2. needs to be understood in the context of the globalisation of the world economy. which is further evidence of this link between gross economic wealth and cities. Ausaid . 51. urbanisation. and to the skills of Australian institutions. the context of development assistance support to the urban sector needs to be understood. Calcutta.Cebu.1 gives the numbers and percentages of the urban population for Asia between 1970 and 2000 (regional and sub-regional figures indicated) compared to the world as a whole. Chapters Three and Four will place this picture in a dual context. especially the performance of local institutions. Chapter Five summarises the findings of four city case studies . Asia has been a rapidly urbanising continent. scientific and technological innovation. Chapter Two will focus on the institutions involved in managing urban systems and the commonly agreed management issues for those institutions. government and private sector institutions in support of poverty alleviation and sustainable development. and Phnom Penh. Hanoi. Between 1970 and 1990.

214 196 1.9 24.9 56.5 39.1 51.6 76.621 106 3.387 21.250 3.4 62.9 24.8 100.4 33.534 74.7 63.2 28.8 22.514 6.571 111 659 333.609 428 370 1.157 3.1 28.9 27.0 22.6 51.3 18.794 279 291 687 397 % 39.316 26.0 7.952 144.9 43.6 3.701 120.065 99.0 59.7 50.769 8.Urbanisation in Asia 11 Table 1.8 41.616 11.832 614.3 63.3 95.0 13.4 59.449 481.968 49 158.479 37.0 13.803 5.1 9.569 197.4 98.514 9.4 48.0 45.0 56.6 43.0 21.6 30.2 61.104 243.534 261 2.5 26.1 1980 Pop (000s) 1.078 554 % 45.265 687.0 98.9 10.293 770 7.614 88.8 32.3 24.0 24.5 14.255 14.2 34.5 3.3 93.9 90.1 49.7 51.884 34.679 82.197.4 9.736 31.5 80.8 94.542 43.074 32 109.701 10.269 30.5 46.9 59.0 37.9 98.1 81.3 37.929 6.0 22.7 17.784 380.953 63 1. of Korea Republic of Korea Macau Mongolia South-Eastern Asia Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam Southern Asia Afghanistan Bangladesh Bhutan India Iran (Islamic Rep.7 29.507 95.8 42.3 19.9 24.336 322.585.3 6.340 490.9 23. of) Maldives Nepal Pakistan Sri Lanka Western Asia Bahrain Cyprus Democratic Yemen Gaza Strip (Palestine) 1.438 776.503 5.5 18.3 27.8 43.602 2.946 3.190 12.380 2.005 81 230.837 39.0 100.372 11.820 147.375 526.473 5.354 2.6 24.5 25.6 2000 Pop (000s) 3.757.7 97.9 Ausaid .401 1. 1970 .894 80 812 20.3 40.9 21.352.4 89.920 583 455 1.6 11.6 22.661 16 450 16.8 32.678 317 854 86.2 56.145 132.0 52.6 27.3 36.7 17.2 51.4 37.995 238 556 57.9 57.6 100.2000 1970 Pop (000s) World Asia Eastern Asia China Hong Kong Japan Dem.414 8.064 2.291 35 909 23.R.370 4.196 50.6 32.4 5.741 721 % 51.750 7.775 2.1 20.2 22.4 39.6 21.3 22.514 431 4.2 53.215 195.997 18.6 91.7 52.1 15.070.738 22.723 12.1 77.3 19.5 11.2 78.1: Asia’s Urban Population.7 11.7 71.294 7.757 2.3 27.7 11.8 72.679 1.2 70.9 55.023 30.1 36.0 14.3 85.794 473 1.4 100.7 40.4 34. P.4 47.088 10.2 1990 Pop (000s) 2.3 23.6 22.3 29.2 16.8 33.995 10.3 3.1 82.773 649 1.4 94.460 86.609 14.1 42.7 83.441 1.851 19.523 37.021 19.477 4.170 1.7 77.4 19.108 18.9 7.548 149 336.0 59.390.350 218.040 13.600 328.1 21.357 3.824 153 959 56.0 17.817 173 251 481 287 % 36.446 61.075 4.0 29.1 32.3 18.782 16.2 13.1 19.789 12.4 27.

571 94 364 % 56.261 159 329 10.928 6.265 4.8 81.565 2. statistics.1: Asia’s Urban Population.5 1980 Pop (000s) 8. ‘urban area’ being ‘the area where residents derive substantial amounts of household income from non-rural economic activities focused on a particular town.9 percent for South-East Asia and 19.418 % 75.3 38.1 91.445 1. In general.9 97.‘urban’ being ‘non-rural’. Ausaid .0 77.799 3. New York.20. other than slow standardisation of statistical convention.8 46.5 percent to 32.843 4.3 86. is notable for its overall high level of urbanisation .6 89. This distinction is important because inter-city expressways do not constitute ‘urban infrastructure’ under the first definition. that is. 106-128) The definition of ‘urban’.895 329 456 16.3 93.6 83. from 24. pp.12 Urbanisation in Asia Table 1. the report will adopt broad definitions .4 42.7 43.3 81. continued 1970 Pop (000s) Iraq Israel Jordan Kuwait Lebanon Oman Qatar Saudi Arabia Syrian Arab Republic Turkey United Arab Emirates Yemen 5. or ‘non-rural’.2 50.3 7.753 1.5 77. ‘urban area’ and ‘urbanisation’ is problematic.1 indicates the proportion of the urban population for the world and Asia between 1980 and 2000.0 15.3 percent by 2000. This being said.162 579 1.0 2000 Pop (000s) 19.8 55.0 90.7 percent to 51. For example. In China many rural villages are counted in the estimates of some cities’ populations. not agriculture.3 1990 Pop (000s) 13. For Eastern Asia the percentage of those living in urban areas will increase more than two-fold. but do under the latter two.713 13.016 72 197 6.2 87.504 1.4 percent.6 60.949 2. Within Asia. Consequently.0 95.8 25. World Urbanisation Prospects 1990. UN Department of International Economic and Social Affairs.2 84.4 61. but would fit the third.455 824 970 % 66. In Indonesia where boundaries have not been adjusted in accord with new spatial development. ‘urban population’ meaning ‘the population of a city’ will vary according to the national convention as to where to draw administrative boundaries around a city.725 1.5 77. 1970 .105 2.8 74.941 49.2000.1 80. livestock and extractive industries.7 10.435 1.466 33 89 2.4 (Source: United Nations (UN). ‘of cities’. promoted mostly through the United Nations (UN) system.8 33.321 34. there are considerable intra-regional differences in both the size of the urban population and the level of urbanisation. and ‘urbanisation’ being ‘the process by which increasing proportion of a country’s people live within urban areas’.5 73.1 66.3 50.2 75.7 percent and is expected to increase to 70. 1991.4 5.2 15.7 43.274 1.254 2. For South-East Asia and Southern Asia the increase is slightly less .3 77. there is no practical way of ensuring consistency.973 4.in 1990 it reached 62. for example.2 percent to 36. The statistics presented here should thus be taken as indicative and the original references consulted for guidance as to the assumptions underlying and comparability of.3 91.796 2.3 48. Even if one general definition is taken. Power generation (consumed mostly in cities) would not fall under the first two definitions. city or group of cities.6 68.518 4.110 19. much of a city’s population can live in the surrounding ‘rural’ Kabupaten (Local Government District). Figure 1.295 % 71.240 2. cross-country comparisons can be misleading.8 59.488 4. ‘Urban’ can either mean ‘of a city’. Western Asia.8 percent for Southern Asia.236 2.933 9. detailed definition can be problematic.2 88.214 2.5 7.

of Korea Republic of Korea Macau Mongolia South-Eastern Asia Brunei Darussalam Cambodia Indonesia 2.06 4.41 1.51 2.53 3.16 0.82 3. 1970 -2005 Average annual growth rate (percent) 1970– 1975 World Asia Eastern Asia China Hong Kong Japan Dem.Urbanisation in Asia 13 Figure 1.54 3.33 2.38 3.88 0.09 2.94 1.63 3.82 2.22 4.01 2000– 2005 2.85 6.67 5.07 3.94 4.81 2.88 0.05 2.21 3.92 4. in 1990 there were 380 million urban dwellers in China.09 2.97 3.47 2. as indicated in Table 1.00 1.15 3.52 4.15 3.24 4.44 0.82 3. 95 million in Japan.39 2.2: Average Annual Growth Rates of Asia’s Urban Population.96 2.85 3.48 2.40 3.09 3.89 0.68 3. Table 1.05 0.31 5.18 4.63 1.07 3.00 4.31 3.09 4.00 1990– 1995 3.98 6.92 1975– 1980 2. 230 million in India.92 4.31 1.09 4. For example.55 3.46 4.39 2.05 4.1: Urban Population as Percent of Total.47 2.06 2.61 3.56 1995– 2000 2.24 3.39 3.30 3. 1970-2000 100 90 80 70 Population 60 50 40 30 20 10 0 World Asia Eastern Asia 1980 SouthEastern Asia 1990 Southern Asia 2000 Western Asia 1970 The urban populations in countries of Asia can be very large despite lower levels of urbanisation.66 0.1.54 4.09 2.94 2.38 4.72 1.37 1985– 1990 3.40 4.96 5.88 1980– 1985 3.36 Ausaid .19 4.77 2.90 2.49 2.40 2.72 -2. P.09 4. 56 million in Indonesia and 44 million in Korea.50 2.33 3.34 4.25 3.55 3.73 -2.07 4.54 5.R.58 4.31 1.09 4.44 2.

88 3.76 2.34 1.15 6.11 14.66 4.19 4.01 4.33 5.66 4.11 4.95 2.38 5.04 9.05 3.42 3.17 6.17 2.37 2.14 5.54 1.70 6.97 1.73 4.58 1975– 1980 4.80 5.04 4.19 1.42 1.16 4.40 0.04 2.52 4.84 3.59 2.82 3.76 5.16 3.14 4.40 5. 1991.84 9. continued Average annual growth rate (percent) 1970– 1975 Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam Southern Asia Afghanistan Bangladesh Bhutan India Iran (Islamic Rep.93 2.66 3.02 4.83 4.56 4.40 4.17 7. of) Maldives Nepal Pakistan Sri Lanka Western Asia Bahrain Cyprus Democratic Yemen Gaza Strip (Palestine) Iraq Israel Jordan Kuwait Lebanon Oman Qatar Saudi Arabia Syrian Arab Republic Turkey United Arab Emirates Yemen 5.24 1.66 3.45 4.33 7.87 1.22 4.84 3.56 4.14 Urbanisation in Asia Table 1.56 2.77 1.01 2000– 2005 5.61 1. pp.00 4.96 4.53 2.22 3.06 3.59 3.77 3.70 4.2: Average Annual Growth Rates of Asia’s Urban Population.23 5.46 5.91 6.25 4.78 4.36 3.55 3.96 7.11 6.49 5.13 4.63 4.87 2.87 1.43 6.43 3.08 3.66 3.28 4.50 2.75 3.31 3.87 6.68 3.35 2.50 5.82 3.86 4.15 1990– 1995 6.21 8.93 6.71 7.25 7.06 1.05 7.32 10. World Urbanisation Prospects 1990.74 3.38 1.15 6.11 3.32 5.95 4.82 1.73 5.96 4.26 8.98 1.73 6.11 4.01 1.37 6.26 2.21 3.56 1.27 7.00 6.03 4.25 3.07 4.75 3.60 4.02 5.72 3.35 3.95 3.05 2.83 5.15 4.17 2.47 3.08 1995– 2000 5.62 3.97 2.21 5.32 3.35 3.96 4.13 3.43 4.02 1.17 0. 1970 -2005.24 7.69 7.87 4.35 4.20 5.44 7.58 4.15 3.66 4.68 (Source: United Nations (UN).57 4.04 1980– 1985 5.48 4. 154-159) Ausaid .59 3.81 5. New York.28 3.50 4.51 6.40 8.83 9.08 1985– 1990 6.86 4.81 6.53 5.20 4.80 1.17 6.12 2.43 5. UN Department of International Economic and Social Affairs.48 2.91 6.76 1.23 3.77 1.69 3.48 2.09 3.71 1.39 3.11 2.47 6.02 4.16 4.71 2.36 5.35 4.72 3.46 2.85 2.24 3.35 8.76 4.74 3.65 4.99 3.95 1.87 4.49 4.91 4.89 4.17 5.09 29.74 4.44 1.39 3.63 3.57 4.23 4.25 8.51 4.69 6.51 3.13 3.74 2.25 4.43 6.03 8.90 3.11 4.42 2.95 3.26 3.16 1.30 5.49 3.00 4.58 4.15 -0.71 3.

5 5. Saudi Arabia. These growth rates have been consistently higher than for the world as a whole.Urbanisation in Asia 15 Figure 1.5 3. Figure 1.15 percent.0 0. with double or near double-digit annual growth rates recorded by countries such as Oman.14 percent in 19851990. Many of the cities in these countries became magnets drawing large numbers of workers from other countries of Asia (Blake and Lawless.2 shows that the annual growth rates for Eastern Asia increased markedly from 1970 to 1990 when it peaked.0 1.5 1. 1980). in Western Asia the newly found wealth in some of the Gulf nations since the early 1970s has accounted for high rates of urban population growth.0 Population 3.2.95 percent in 1970 to a peak of 5. In Western Asia the rate increased from 4. Generally urbanisation took longer to get underway but is expected to accelerate dramatically.2: Average Annual Growth Rates of Urban Population. urbanisation rates varied due to specific country conditions.0 2. Thus China’s urban population growth rates were almost 7 percent per annum during the 1980s.5 2. radically higher rates than earlier periods. There were only 24 ‘million’ cities in Asia in 1950.00 percent to a peak of 4. Elsewhere in Asia the annual growth rates are less pronounced. Finally.0 World Asia* Eastern Asia* SouthEastern Asia 1990–1995 Southern Asia* Western Asia* 1970–1975 1975–1980 1980–1985 1985–1990 2000–2005 1995–2000 *(Urban) Similarly. United Arab Emirates and Yemen.0 5.5 0. At the same time as the Asian population is becoming more urban. The sub-regional and country growth rates have reflected peculiar development patterns within them. while in Southern Asia over the same time period it increased from 4. 1970-2005 6. attaining almost East Asian levels in the 1990s. in China the higher sub-regional growth rates are increased by structural changes in China which allowed significant increases in rural-urban migration since 1978. Figure 1. Cities with a population of one million or more can be taken as an illustration.5 4.2 overviews the annual growth rates for urban areas in Asia for the period between 1970 and 2005 which are detailed by country in Table 1. in Southern Asia. For example.0 4. the proportion of the urban population concentrated in large cities is also increasing. but Ausaid .

these still contain a small proportion of the world’s population (United Nations Centre for Human Settlements (UNCHS). Calcutta is likely to have less than 13 million while Mexico City is likely to have less than 18 million. 1950 . Bangladesh and the Philippines lived in Seoul. The most recent censuses also found that many of the South’s largest cities had several million people less than had been predicted. Table 1. A heavy concentration of these cities is found in eight countries in Asia. Bombay. 1994:29) 1950 8 3 1 1 5 1 1 1 24 1960 13 5 2 1 7 1 2 1 38 1970 25 5 3 3 9 1 2 2 59 1980 33 6 4 4 10 1 3 3 77 1990 38 6 6 6 24 5 6 4 115 2000 38 6 6 6 24 5 6 4 115 However. 1991).3: Asia’s ‘Million’ Cities. Although there is a growing number of megacities. in some Asian countries there is a clear trend of concentration of population in the largest city. Projections indicate (see Table 1. or ‘megacities’. Some of these cities are said to perform ‘key functions in the global economy’ (see Chapter Three on globalisation) and may be called ‘world cities’ (Friedmann. In 1990. 17 of the 28 largest urban agglomerations in the world were located in Asia. the population size of some of these megacities is also exaggerated through boundaries being set for city-regions that include large numbers of people living outside the city’s built-up area. Jakarta.3). in the world. too much should not be made of this trend. Jakarta. Seoul. in 1990 more than one-half of Thailand’s urban population lived in Bangkok and one-third of the urban populations in the Republic of Korea. the so-called primate city. Indonesia and Pakistan (see Table 1. the prominence of Asia over time is even more pronounced. If the population threshold for a megacity is reduced to 8 million inhabitants. Thus.2000 Selected Countries China Japan Republic of Korea Indonesia India Iran Pakistan Turkey All Asia (Source: Yeung. less than 5 percent of the world population lived in megacities in 1990. Calcutta. When examining the largest urban agglomerations. by 1990 only 3 percent of the world’s population lived in megacities. including Sao Paulo and Mexico City. The predictions that cities such as Calcutta and Mexico City will have 30-40 million inhabitants by the year 2000 are not eventuating. As discussed above. 1992). 1996:xxvi). Karachi and Teheran accounted for almost 20 percent of their respective nation’s urban population (UN. Dhaka and Metro Manila respectively. 1986). Shanghai. Other ‘world cities’ have been identified in Pacific Asia (Yeung and Lo. but it has also taken place in the Republic of Korea. If megacities are considered to be cities with more than 10 million inhabitants. Istanbul. with no more ‘million’ cities being added to the year 2000.16 Urbanisation in Asia the number increased to 77 in 1980 and 115 in 1990. Further. their growth in numbers over the years has been especially dramatic in China and India. Tianjin and Tokyo had a population of close to or above 10 million. Ausaid . Cities such as Beijing.3) that the concentration of population in the current group of large cities will intensify.

Pryer. Chant and Radcliff. In many. causes and consequences (see. Rural industrialisation and urbanisation have proceeded in tandem. and international factors. regional and national social and economic change. research during the late 1980s and early 1990s found that the scale of urban poverty had been greatly underestimated . including: those relating to individuals or household structures and gender-relations within household. The process has been noted to occur in Java. had also grown (UNCHS. each having its own unique pattern of in-migration and out-migration that constantly changes. Because of the gradual gradation of land use and economic functions from the city to the surrounding rural areas. less stringent regulatory controls and unclear planning mechanisms prevailing in the ‘grey areas’ have spurred rapid development in these areas.Urbanisation in Asia 17 The links between rural and urban areas are extensive and there is considerable diversity in the scale and nature of migration. 1996:xxxvii). especially in Latin Ausaid . This cautions against seeking too many generalisations and general recommendations in regard to rural-urban migration. Table 1. in contrast to a city’s ‘hinterland’ which includes its demand for rural products. 1992. Although the number of people living in absolute poverty in rural areas is still higher than in urban areas.4 shows the extent of urban poverty derived from various sources. such as vulnerability and social exclusion. There are around 30. reflecting (among other things) changes in that centre’s economic base. Further. Cheaper land costs. economic and cultural factors. China. observed in many long-standing and rich agricultural regions of Asia. In Jabotabek. but pollution control is problematic. Simple transport modes like the bus or the scooter have been effectively extending the economic sphere of the cities. In each location the relative importance of the different factors is subject to constant change. Radcliff. Hugo. the existence of such EMRs has led to more stable rural populations (United Nations Development Programme (UNDP). These are Extended Metropolitan Regions (EMRs) which are regions of rural-urban integration. 1995). and substantial circular migration between city and countryside. Some of these differences will be discussed further in the sections below. Various studies have shown how female migration is of much greater volume and complexity than was previously believed and also how the migration of females differs in many ways from that of males in its form. for example. Such research showed how many aspects of deprivation.000 large urban centres in the South. to as far as 100 kilometres around them. Each detailed study of migrants in urban settings and of conditions in areas of out-migration reveals a long list of factors which influence migration. purchase or rent adequate shelter. McGee (1987) and Ginsburg (1990) have drawn attention to a predominantly Asian variant of urban agglomeration. Urban and rural poverty are also linked. The number of urban dwellers living in absolute poverty grew rapidly during the 1980s. local social. 1992. more than 90 percent of these live in the South (UNCHS. 1992. lacking the income or assets to ensure they have sufficient food and to build. In some areas. This is resulting in increasing importance of rural non-farm jobs as a source of employment and income.largely because poverty lines were set too low in relation to the cost of living in cities. Taiwan. labour market and age structure. centred on a number of large cities. and thus have taken pressure from the ‘core’ city. 1996). Recent studies have highlighted the extent to which migration patterns are also differentiated by gender. Between one-fifth and a quarter of the world’s population live in absolute poverty. this has facilitated substantial Foreign Direct Investment (FDI) flows for certain economic activities. economic and political changes within the region and nation and is influenced by such factors as crop prices. this integration takes the form of a process of urbanising the countryside where rural people do not have to change residence or move to the cities. more rapid growth in population and economic development has occurred in the fringe areas than in the city proper. Bangkok. composition. It also reflects social. Kuala Lumpur and other large cities in the region. the former being fed by the latter as people escaping from rural poverty have migrated to the city. Hugo. India and in other regions of Asia. 1996:xxxvii). 1992. land-owning structures and changes in agricultural technologies and crop mixes in surrounding areas and distant regions.

0 40.6 47.2. Three major issues and associated problems dominate current discussion in the sector.4 37.0 27. for example.0 54. The overwhelming bias in the analysis of Ausaid .3 42. the planning of support to Asian urbanisation.0 58.4 4.4: Urban Poverty in Selected Asian Countries Proportion of the population below the poverty line Country or Region Urban areas Rural areas Whole nation Date Separate rural/urban poverty lines Asia (excluding China) Bangladesh China India Indonesia Korea.4 4.1 31.0 72.1 20.7 16.2 0.3 11. These are: • • • poverty alleviation and urban economic development.2 25. Changing labour markets also brought less job security and lower wages. has reflected notable shifts in emphasis and conceptual underpinnings. and human resource development (education and health) and the quality of life in general. Table 1.5 17.4 1985 Yes 1990 Yes 1987 1984 1987 1984/85 Yes 1988 1985/86 Yes (Source: Hamid and Fouad.6 1984/85 49.3 19.0 1985/86 8.6 8.4 22. the urban environment and the sustainability of urban development. Republic of Malaysia Nepal Pakistan Philippines Sri Lanka 34. increasing the number of people with inadequate income. the subject did not receive systematic or wide-spread attention until the 1960s.6 1988 17.4 43.1 45.5 39. Poverty Alleviation and Urban Economic Development The increasing globalisation of the world economic system (see Chapter Three) has been recognised as an important aspect of urbanisation in Asia.7 43. not unlike that of the Third World as a whole.1 4.2 Problems and Issues Although urbanisation has been a concomitant of economic development in post-war Asia.5 38. Export Processing Zones (EPZs) established in many countries and cities. 1993) 1. Much of the growth in poverty was associated with deteriorating macro-economic conditions and structural adjustments.18 Urbanisation in Asia America and Africa and in the less successful Asian economies. Over the past three decades. with. These issues interrelate but are important to review at the outset of this study as they set the scene for later analysis. and of women in particular.

2. Prud’homme suggests that a possible explanation for this phenomenon is the size and accessibility of the labour market. Prud’homme (1995) shows that output per capita per worker is greater in urban than non-urban areas. For example. relative location of jobs and homes.5 for Calcutta. and transport efficiency. showing the impact of higher productivity and economies of scale common in urban areas.in particular. What is particularly important is that of the 46 large urban agglomerations in the region in 1990.66 for Shanghai. six in the middle-income countries and 30 in the low-income countries. Cities and EMRs. have per capita incomes of between US$500 and US$3. countries in the region and will further increase the role played by urban areas in these countries (see Chapter 3). In addition to these correlations between development and urbanisation. have per capita incomes of over US$3. the emergence of the global economy . The second.200 per year and levels of urbanisation between 70 and 100 percent. Michael Douglass (1993) argues. 10 were in the high income countries. rather than as habitat for all of those drawn into living in its expanding sphere. in Asian countries such as the Philippines has led to an increased concern with escalating health problems and other family and community crises (Douglass. with ratios of city GDP per capita to national GDP per capita of 1. also provide the best conditions for informal manufacturing. 1994). 1996a:61). Singapore and Taipei. New Zealand and the newly industrial economies of Hong Kong. Nevertheless. represented by Australia. There is a generally well-established correlation between economic development and level of urbanisation in the Asian region (ADB. As a result.92 for Manila. 3. But the negative impact of these programmes. which in turn implies three critical dimensions to city productivity: • • • overall population size. as well as richer. in nearly all countries the percentage contribution of urban areas to national GDP is significantly higher than the percentage of population in urban areas. This reinforces the point that it is the poorest countries that face the biggest problems of funding and managing infrastructure and services for their cities. commercial and other service enterprises to flourish since there is the widest potential for formal/informal Ausaid . The first. 1993). Specific city examples demonstrate this characteristic. Three broad groups of countries can be identified. Republic of Korea. Japan. there is clear evidence of the increasing importance of cities to the macro-economy. For the most part in the 1980s. The third group represented by South Asian countries. Metro Manila contributes some 33 percent of Philippine GDP with only 14 percent of the population.will benefit the economies of poorer.Urbanisation in Asia 19 the contemporary Asian city. and urban India contributes some 55-60 percent of national GDP with only 27 percent of the population producing 87 percent of national industrial output (Rockett. represented by the member countries of the Association of South-East Asian Nations (ASEAN). Despite obvious prosperity. is to treat it as an economic ‘engine of growth’. we have seen in the preceding sections that significant poverty persists in many Asian cities. especially on women and children. For example.45 for Bangkok and 3. plus Pakistan. Bangkok contributes 74 percent of Thailand’s manufacturing with only 10 percent of the population. the International Monetary Fund (IMF) and World Bank structural adjustment programmes treated poverty alleviation as a secondary issue. People’s Republic of China and other East Asian nations have incomes below US$500 and urbanisation levels below 28 percent. there is an important relationship between economic development and poverty alleviation in urban areas. Macro-economic changes within the region and in the region’s economic transactions with Organisation for Economic Cooperation and Development (OECD) countries .200 per year and urbanisation levels between 23 and 43 percent.

Details of best practice in such activity will be discussed in Chapter Four. he does not agree with the proposition that subsidies and other incentives available for investment in manufacturing. For example.the close connection between the relatively high impact of environmental problems on the poor and the inability of the poor to protect the environment (see below). deficient public transportation and road congestion and accidents. recovering costs for services by fees and taxes paid by city residents and businesses. allowing for higher urban costs of living. that (i) rural incomes are not uniformly below urban rates. as well as opportunities for domestic. this set of problems is closely linked to the poverty-environment nexus . The Urban Environment and the Sustainability of Urban Development The major issues raised in respect of the environment are set out clearly in UNDP/UNCHS/World Bank UMP Policy Paper on Environmental Strategies (UMP. resulting in cities becoming centres of informal sector activities where the marginal productivity of labour was close to zero. 1993). the growth of the EMR is both a cause and effect of the importance of informal employment in the region. spreading the growth of both formal and informal employment in manufacturing. may exceed them. In particular. services and agriculture into areas previously considered ‘rural’. The development of EMRs also blurs previous urban-rural distinctions. Given the extensive support for the objectives of poverty alleviation and economic development.20 Urbanisation in Asia business linkages. noting that various policy changes in the urban and rural sectors have restored some balance of policy impacts and financial transfers between urban and rural sectors. in turn. governments seek to make their cities more financially self-sufficient. in some cases. Ausaid . Such a scattered low density form of urbanisation provides the best chance for low-income households and business to gain access to land and still remain within a reasonable distance of formal employment and residential areas. the widespread availability of information on city conditions resulting from better communications means that potential migrants are likely to be much better briefed on the advantages and disadvantages of living and working in cities. retail and other service industry jobs. result in excessive urban unemployment. 1994). If this proposition were true. Harris (1990) agreed that in-migration to cities was a function of rural poverty. ESCAP (1993) agrees with this conclusion. it would result in a urban-rural wage gap which would encourage urban migration and. precarious housing. However. within a broad spectrum of international development agencies. poor urban and industrial waste management and air pollution (especially from particulates). It describes the critical and most immediate problems facing developing country cities as the health impacts of urban pollution that derive from inadequate water.such attributes are a natural response to the costs of entry to the formal sector and production methods and locations are designed to maximise the use of labour (Economic and Social Commission for Asia and the Pacific (ESCAP). intense interest has been shown in the development and use of mechanisms within development assistance projects and programmes which spread the benefits of economic growth both spatially and across income groups. drainage and solid waste services. and (iii) there is evidence that the majority of migrants who remain in cities improve their standards of living. especially rural migrant labour. This trend follows the more general analysis of informal sector activities . Harris noted that evidence for these arguments is not convincing. continue to lower returns to agriculture in most countries. support to micro-enterprise development and basic infrastructure projects is justified in these terms. Further. Collectively dubbed the ‘brown agenda’. sanitation. Important underlying or related issues typically involve inappropriate land uses. along with protectionist policies. In fact. (ii) informal sector incomes are not always below formal sector incomes and.

This lack of access by lower income families to serviced land. This linkage raises issues of equity (such as the willingness to pay for better environmental services and the issue of subsidising basic urban services for the poor) and of the changing nature of environmental problems at different income levels. Poverty. affordable shelter and basic environmental infrastructure and services has plagued fast growing developing country cities for several decades. tradeoffs are between the implementation of strategies for achieving effective environmental management and the short-term political and economic consequences of such strategies. While many subsidies have benefited the middle classes disproportionately. overcrowding. in confronting urban environmental problems. In many parts of the developing world urban poverty has grown faster than rural poverty because of the impact of macro-economic adjustment. shelter and essential services. The persistent neglect of the basic needs of the poor. On another level. Today. Among the poor those most vulnerable to environmental threats include women. Thus. economic development and the environment are inextricably linked. cottage industry workers and the elderly. degradation or loss of historical and cultural property. the tradeoffs are between the higher productivity of cities due to economies of scale and agglomeration. the costs of treating pollution-related illnesses and the cost of clean up activities). the degradation of environmentally fragile lands. Their inability to devote resources to environmental protection exacerbates urban environmental problems. and the increasing costs of providing environmental infrastructure and services to sustain this productivity (for instance. The need to cope with poverty leaves few resources to cope with environmental problems. On one level. inefficiencies in the urban economy and misallocation of public resources. children. inadequate sanitation is a major cause of sickness in cities and is a drain on urban economies (because of lost work days due to illness. Clearly. heating. About a quarter of the world’s urban population live in absolute poverty . The actions of the urban poor are the result of imperatives linked strongly to the urban labour markets and markets for land and housing. their removal sometimes impacted disproportionately on the poor as even a small adverse change can have a great impact on poverty groups who face higher prices for food. Confronted by improperly functioning land markets. the costs of pollution problems alone in developing countries exceed 5 percent of GDP (UMP. These tradeoffs occur at several levels. Important tradeoffs are also required when making difficult choices about the allocation of scarce resources among activities to ameliorate environmental problems and Ausaid . The UMP policy paper emphasises that. the occupation of areas prone to flooding or landslides. noise pollution and other problems. the brown emissions of cities resulting from energy use for cooking. there is an economic imperative to improving the situation of the urban poor allowing them to devote resources to environmental protection. 1994:2). Other examples of serious environmental effects on productivity abound. Such activity is thus an essential pre-condition for reducing urban environmental hazards. individual cities may also face many of the other green and social problems identified above. Similarly.some 450 million people . The urban poor are affected disproportionately by brown environmental problems and their actions. the poor often have little choice but to occupy hazardous or polluted areas. While the brown agenda is recognised broadly as a universal priority for low-income countries.and many more live in substandard conditions. overcoming traffic congestion in Bangkok and Jakarta). 30 percent of urban dwellers .lack any form of sanitation. together with mounting environmental problems. The weakest suffer the most. According to one estimate. efforts to reconcile tensions in environmental management are further complicated by the need to make difficult political and economic tradeoffs. such as the depletion of water and forest resources. are taking a heavy toll on urban health and productivity. industry and transport contribute significantly to such ‘global’ problems as climate change and acid rain.Urbanisation in Asia 21 These pressing problems according to the policy paper are also related to what may be considered more properly the ‘green’ and the ‘social’ issues of urban areas. Ways must be found to reduce their vulnerability and risk.

At the broader level. the political machinery and have gained from regulatory measures drafted to protect their special interests and from public investments. based on its standard of living. for all environmental decisions changing the status quo. as well as complex interactions among the many influential public and private actors. It will also require consideration of cultural and political factors. Even when political commitment to environmental protection exists. The concept of the ecological footprint describes how much carrying capacity is appropriated by any region. through the importing of resources from around the globe. Politicians are acutely aware that. This will vary depending on a region’s standard of living and is a per capita index which is an indication of the land area required (or consumed) to support a given population (Rees. or are part of. 1992). Instances of such organisation will be canvassed in the review of best practice summarised in Chapter Six. there will be winners and losers. but sometimes have found these agencies less effective than hoped and underestimated the extent of constraints emanating from political needs. The challenge is to make the transition to a genuine form of ‘environmental justice’ that is propoor. or whether to build new roads in response to growing consumer demand. Political tradeoffs must not be ignored. budget constraints force difficult choices . In accounting for this land. full costs and likely benefits of alternative interventions. the impact of cities in general needs to be better understood. 1992.for example. will require a realistic assessment of the urgency. Such allocation decisions require broad-based agreement on local priorities. the urban poor can create strong interest groups that can effectively lobby for shelter. sanitation and waste collection services while the poor go without. If organised. The ecological impacts and the carrying capacity of cities are increasingly seen as being important concepts in the sustainable debate. or invest in less polluting public transport systems.22 Urbanisation in Asia between those activities designed to meet other needs (such as basic health and education). Efforts to bring together community and government across the spectrum of formal and informal institutions are rare and not always successful. The aim of the EF/ACC is to provide society with a tool which indicates resource consumption and can be used in ranking development options based on their ecological impact. Rees & Wackernagel. 1994). local politicians may risk losing support. the total area becomes the ecological footprint or the carrying capacity ‘appropriated’ by that economy. Decision-making. “How much land in various categories is required to support the region’s population indefinitely at a given material standard?” (Rees. Development agencies have augmented the resources and capacity of environmental agencies. These impacts encompass both the impact of wastes and the impact of urban consumption . or health services programmes. In attempting to account for the importation of carrying capacities from other regions. The clearest example is the common instance of upper and middle-income households enjoying subsidised water. 1992). The losers often will be powerful special interest groups who have access to. whether to invest in a safe waste disposal site. In making the decision to remove subsidies and re-allocate resources. Again some examples of best practice will be reviewed in Chapter Six. which is defined by the question. services and neighbourhood infrastructure. Rees has put forward the concept of the Ecological Footprint on Appropriated Carrying Capacity (EF/ACC). Non-Government Organisations (NGOs) have fostered community interest groups. but often at the cost of alienating government institutions. Rees and Wackernagel reason that every major category of consumption of waste discharge requires the productive or absorptive capacity of a finite area of land or water (ecosystem).the city’s ecological footprint (Rees. Ausaid . Support to such processes has proved difficult to achieve through traditional development assistance channels. therefore. or education.

females are left to do farm work. female migrants tend to have fewer opportunities than males. • • • In the cases above. An example of such an approach is the Sustainable Cities Programme detailed in Chapter Six. and females gaining work in the informal sector. the National Institute of Urban Affairs in the Report on State of India’s urbanisation during the decade 1971 to 1981. and the majority of low-income households. 1993). high levels of in-migration and the subsequent exposure to urban lifestyles generates tensions . Crime levels are of increasing concern in many Asian cities. net migration for a little over 40 percent and reclassification for about 19 percent (ESCAP. Rural workers are drawn to urban coastal areas where wages are 2 to 3 times higher. Inevitably. Generally it would appear that rural migration has contributed 40 percent to urban growth in the last twenty years in most Asian countries. as well as in clerical. with the first employment for many migrants (both sexes) being occupationally lower than their initial expectations (United Nations Population Fund (UNFPA). internal migrants comprise 63. Human Resource Development and Quality of Life Cities can be characterised by extremes in the social. although that figure is much lower for more developed countries (ESCAP. urban women. 1996). in-migration from more traditional rural environments to urban areas comprises the largest of all migration flows in developing countries (Gedik. Available data indicate: • In the Philippines in 1991 the National Statistics Office estimated that 7. As the males leave rural areas in search of work. Upward mobility for males is greater than for females. China had an estimated 100 million migrant workers from rural areas. In 1993. natural increase accounted for 41 percent of the total urban increase. 1994). powerful and small group of society.Urbanisation in Asia 23 This tool can also be used in guiding policy decisions regarding development and its impacts. In India. especially in production and manufacturing. In Cambodia. Generally. Detailed data outlining the nature and extent of rural-urban migration are either non-existent or difficult to access. The relative degree of inequality is cause for concern as opportunities for the more advantaged continue to outweigh Ausaid . In 1994. In 1993 females comprised 70 percent of the farm workforce. Tensions arising from assimilation of rural migrants and the monetary imperatives of the urban poor are important. Contributions to this trend are many. and expected of. 50 million Chinese peasants migrated to urban areas. 1993). Such impacts need to be recognised by national and regional strategic planning systems in order to ameliorate them in the longer-term. For example. cultural and religious patterns of residents’ lives.sometimes great tensions. with 20 million migrating to the booming south-eastern provinces (Migration News. In order to foster capacity building in such systems.8 percent of the total current population of Phnom Penh due to past civil strife. including 8 million in Guandong Province bordering Hong Kong. with males more likely to enter formal sector jobs. a figure estimated to increase to 75 percent by the year 2000. expected behaviour of rural women may differ greatly from that exhibited by. a broad approach to environmental planning is required. sales and service occupations. The very density of many cities exacerbates contrast and tensions between different lifestyles.1 percent of Cebu City’s household population aged 5 years and older originated from outside the city limits five years prior to the census. often owning major landholdings and other critical assets. In-migrants are lured by the prospects of higher living standards only to find that the wealth produced in cities is not uniformly distributed. This is particularly likely when combined with the common polarisation in large cities between a rich. 1996).

They are thus less productive and the human capita potential of the country is not realised. female household headship does not seem to have risen much or at all since the 1960s.1 percent in Africa and 18. Single parent households. housing and basic services. these ‘demonstration effects’ of conspicuous consumption exacerbate crime. many of the factors responsible for female-headed household formation arise through urbanisation. education and income generation need to be designed with these characteristics in mind. urban sex ratios usually show more females than males and levels of female household headship are higher in urban areas. This generally means that the parent can only take on part-time. also face the difficulties of one adult having to combine income-earning with household management and child rearing. generate tensions in regard to lack of monetary success. There are large variations between regions and nations in the proportion of female-headed households and in the extent to which this proportion is changing. Escalating urban violence can thus only be halted in the long-term by reducing the bias towards the advantaged and in preventing its perpetuation in the next generation. Urban programmes. compared to 19. where males dominate rural-urban migration streams as in South Asia.2 percent in Latin America (Varley. for instance. the urbanisation process is itself frequently shaped by gender roles and relations. there is the scale and nature of female migration into urban areas (which is much influenced by decisions in rural households about who should migrate and for what reason). The World Bank has forecast that over half of the world’s absolute poor will be living in urban areas by the year 2000 (World Bank. Urbanisation and its outcomes brings changes in gender roles and relations and in gender inequalities (although with great variety in the form and intensity from place to place). In Asia 23 percent live below the poverty line (1988 data) constituting 42 percent of the world total. such as India and the Philippines. Then there is the influence on the urban labour market arising from constraints placed on women’s right to work outside the home by households and societies. In addition. most of which are female-headed. combined with the commercialisation and rapid increase in costs of land and inevitably longer journeys to work. On the one hand. For instance. fringe benefits. the willingness of new migrants to take low paid and/or part-time jobs in large cities. but is also felt in some middle-income countries such as the Philippines. they set up a goal of monetary success at any cost and by any means and. rural out-migration is female-selective. on the other hand. In some non-Asian countries. The impact of outright urban poverty is most obvious in the low-income countries of Bangladesh and India. and by the extent of the demand for female labour. and in some regions such as South Asia they are more characteristic of rural districts. particularly those focused on health. Female-headed households face greater difficulties than male-headed households because of the discrimination females face in. if any. The degree and nature of gender-selective movement to urban areas is often a major influence on both the frequency and the spatial distribution of female-headed households within countries. In general. 1996). is leading to the urbanisation of poverty.24 Urbanisation in Asia those available to the disadvantaged (UNFPA. Combined with assimilation tensions and monetary pressures. Gender-related issues also vary greatly among countries. while in others it has grown quite substantially. 1996). In some countries. This is particularly the case in respect of women. For instance. The urban poor are under-resourced in respect of their access to education and health services. labour markets and access to credit. urban sex ratios show more males than females and female-headed households are usually more characteristic of rural than urban areas. informal jobs with low earnings and few. the proportion of female-headed households can rise to more than a third of all households. only an estimated 13 percent of households in Asia and the Pacific are female-headed. the shifts in household survival strategies and changing patterns of employment. Ausaid . In the towns and cities of East and South-East Asia. As discussed above. This can be seen through the transformation of household structure. 1994b). Although female-headed households are not unique to urban areas.

Lessons learned in one country must therefore be adapted in another.Urbanisation in Asia 25 1. The institutions that manage urban systems are complex and are different in each country. particularly in respect of economic activity (especially land use). the difficulty of the task facing those responsible for dealing with the issues and problems will be apparent. The following chapter discusses the framework of urban institutions and describes the management objectives associated with addressing the issues and problems identified above. urban management is a central concern of current urban policy. Thus. Ausaid .3 Management of Urban Change Having canvassed the scale of urbanisation and the magnitude and complexity of the associated issues and problems. transport and environmental management.

towards the second half of the 19th Century. They can be. At independence. Central to this process is the capacity of local government.26 Urbanisation in Asia 2 2. therefore. for example. the ability of municipal governments to raise revenue and provide and maintain adequate services continued to deteriorate as city populations grew. because their financial and human resources were not maintained at levels commensurate with the requirements of rapidly growing urban areas. Career opportunities in local government were limited. transferred from city to city or between central and local government at the behest of the national government. governance in general and local governance in particular. Most of this money is used for capital investments in urban areas. They were often superseded by centrally appointed civil servants who had veto powers over the decisions of local councils. he sees his task as going beyond the mechanics of describing market transactions to describing the mechanics of the market. that local government structures were formalised.1 URBAN INSTITUTIONS AND MANAGEMENT Urban Institutions Urban institutions are the organisations which regulate and build the city and its infrastructure and the legal and cultural framework in which they operate. responsible for the delivery of services and the raising of revenue through various forms of property tax.1. In India. Local governments were. local governments became increasingly unable to maintain the local tax system. although many areas of state/province and national government are involved in managing cities as well. top management echelons at the local level were often filled by centrally or provincially appointed civil servants. local institutional and administrative development was either ignored or given low priority. Bangladesh and Indonesia. However. however. 35 percent of local funds are provided by the national government as loans or grants.1 Urban Government In the early colonial era the colonising powers essentially left existing local government structures intact. 2. even these nascent forms of representative local government were seen as running counter to the requirement for strong central government. As one of the proponents of ‘the new institutional economics’. suffers from a duality of government structures in many countries. Fifty years of practice in fostering development has resulted in a renewed focus on ‘capacity building’ of institutions and a step away from getting the mechanics of projects right to getting the management structures right. Instead of building local capacity to manage rapidly growing cities. It was only in later years. and in many countries still are. most local administrative decision-makers are members of the national civil service. local revenues were supplemented by central government grants. The following discussion setting the institutional context for the subsequent section on urban management is drawn substantially from Living in Asian Cities. North (1990) discussed the importance of institutions in fostering development in some depth. In addition to these shortcomings. other local taxes and the issue of licenses. a UNDP (1996) publication on Asian cities. local councils were given limited legislative and regulatory powers which were administered by centrally appointed bureaucrats. Formal government institutions are set up on the Western model. In other cases. In many countries. Theory (at least that of the new institutional economics) thus aligns with practice in its judgement of priority areas for focus. while governance itself is often carried out through informal channels and through personal Ausaid . and are. often based on domestic models from the colonising country. In Malaysia and Thailand. Thus. As a result of this post-independence focus on developing national political and administrative structures.

Although numbers of poor decreased in many countries. had two major impacts on urban areas. which have confirmed the inability of governments to meet the development challenge alone. they concentrated additional wealth among the already rich and. already a primate city. The success of projects like the Orangi Pilot Project (an upgrading project in Karachi) and Grameen Bank (a grass-roots bank in Bangladesh) indicate that. during the 1980s. In certain countries. participatory approaches included in such programmes as the Kampung Improvement Programme (KIP) in Indonesia. with catalytic support. ‘upward mobility’ was not possible for all of the large numbers of the resident poor in cities and poor migrants. while other more enterprising members of the community started small service or manufacturing ventures to meet their own needs. In this paradigm the government’s role is that of an ‘enabler’. the region’s cities still constituted powerful ‘magnets’. the growing supremacy of market-based capitalist economies and pressures resulting from the globalisation of the economy combined to produce a new paradigm. assisting the private sector and communities both to undertake productive investment and in the provision and maintenance of infrastructure to support that investment. the middle classes. these small-scale enterprises were not legally recognised by the government which was. The result was a rapid increase in urban slums. another important growth factor was that many peripheral villages became incorporated into urban areas. this approach is reinforced by critical reviews of government economic and social policies. In Asia. from 1980 to 1990. for example. together with advances in education and health care. Some of the poor found jobs in formal sector industries or the public sector. were usually ‘top-down’ and paternalistic. Thailand and the Million Houses Programme in Sri Lanka showed the advantages of participatory approaches even in government-initiated programmes. This dual system of governance results in government institutions being nontransparent and those controlling them averse to change in the status quo. The formal urban economy was unable to absorb the expanding labour force. disruption associated with the struggle for independence also added to urban migration.consisting of relatively high rural population growth and static land supply driving increased (relative) rural poverty. Ausaid .1. squatter settlements and illegal subdivisions where the poor worked at traditional labour-intensive modes of production. at least in the capitalist and mixed economy countries. more capital intensive activities. Policies towards the poor. Nevertheless. where these were explicitly formulated. the poor could provide for most of their own basic needs through their own resources. As discussed in the previous section. First. biased towards modern. There is a growing realisation that community participation is essential to poverty alleviation. the weak institutional base of local government meant that city planners and managers were unable to cope with this accelerated increase in urban populations. and in most cases still is. so that most of the rapid urban population growth in the 1950s and 1960s was due to rural-urban migration resulting from both pull factors and push factors . All of the policies and activities that have been described so far were implemented within a context in which the nation state and centralised government were taken as given. In Thailand. while the rest of the funds were shared by all other urban centres. Second. import substitution-based industralisation and its accompanying urbanbased distortion of resource flows.2 Urban Development and the Poor After World War II. as well as those of the lower middle classes. In some countries.Urbanisation in Asia 27 connections. they led to a rapid increase in urban populations as discussed in Chapter One. As cities expanded. to some extent. However. roughly 70 percent of total government investment in the urban sector was spent on Bangkok. the land-sharing projects in Bangkok. 2. However.

many countries have found that communitylevel provision of housing and infrastructure has required institutions at a grass-roots level. As part of the evolutionary process. Only when GDP per capita raises to Malaysian levels is there a wholesale movement into formal sector shelter and employment (replaced. Even when absolute incomes are rising. government control over city functioning has become marginal. For instance. arising from the exclusion of local authorities from the design and implementation of urban development projects. for example. In some cities. yet governments are reluctant to recognise its existence or made planning provisions for it. Over time. The counterparts also usually returned to their agencies at the completion of the project. This section will thus address the evolution of the institutional frameworks for infrastructure delivery and housing development and will discuss NGOs in a separate section. the poor remain relatively poor. National government institutional interventions at the local level in response to deteriorating urban systems have often exacerbated the already weak condition of local government. The chief means of these interventions was the semi-autonomous parastatal agency. and were staffed by international consultants who left both the project and the country on its completion.the management of infrastructure delivery and housing development. It is estimated that in some cities as much as 40 to 60 percent of the labour force is employed in this sector. that effectively bypassed local government. The expatriates usually had local counterparts seconded from other government agencies or departments. was the assumption that local agencies automatically had the capacity to absorb the routine management and maintenance functions once the project was handed over to them. in this case.a process which continues today. by an influx of Indonesian migrants). Often this was not the case. addressing the needs of poverty groups as they evolve and progress in terms of rising out of absolute poverty. with few exceptions. disadvantaged areas remain disadvantaged over long periods of time. These agencies took several forms. A range of such agencies responsible for different aspects of urban development were established throughout the region. flexible and incremental. 1996). outlining its linkages with the formal economy (see. The sustained failure of governments to effectively manage urban areas in line with the reality of economic activity has led to a sizeable portion of the population being alienated within the community with concomitant social consequences. thus leaving no increased capacity at local level. Garments and goods for export are prepared by informal sector subcontractors operating home-based ‘industries’. including special project offices set up to execute a particular project and then disbanded upon its completion. van Dijk. Nor does the population of these areas ‘turnover’ rapidly. or Quasi NonGovernmental Organisation (Quango). However. Such instances were not confined to projects run by foreign consultants. These institutions are generally NGOs or Community Based Organisations (CBOs). much research has been done on the informal sector.3 Institutional Framework Infrastructure Development Finding the most effective design for the institutional framework of urban management has been an incremental process in all countries . For instance.28 Urbanisation in Asia In the past few years. A frequent problem.1. such as increasing crime and corruption. the Tondo Ausaid . Anecdotes of continuous occupation of squatter areas over periods of more than twenty years are common. rarely from local government. Such project offices were often created for the design and execution of internationally-funded projects. this lack of wholesale ‘graduation’ out of poverty does not justify abandoning support to poverty alleviation activity it merely suggests that such support must be long-term. Broadly there are two main streams of activity . 2. the design and supervision of the World Bank-funded North East Lahore Sites and Services project in Pakistan was undertaken by a special project office contracted out to a local firm of consultants.

This style of development authority had a significant capital budget and. the Metropolitan Manila Commission was appointed by the nation’s President to coordinate the management of local services including fire-fighting. In addition to the establishment of quangos. in 1960. The Indonesian National Housing Corporation (Perumnas) and the National Ausaid . powers to borrow on the open market. In the 1960s and 1970s. The most significant of the quangos were the Urban Development Corporations (UDCs) or Authorities (UDAs) that were established in many cities in the region in the 1970s. so that supra-local bodies were needed to develop and plan cities from a regional perspective. or compete with. the private sector. federal and state government agencies have assumed direct responsibility for the delivery of local services. with other agencies. the project office had to be kept on as a separate management office in the NHA long after the formal completion of works. while the Housing and Urban Development Corporation (HUDCO) was established as a ‘second tier’ national housing bank in 1972. However. CMDA gradually took over project implementation and management functions. the development of land. however. frustrated by the inefficiency of the local implementing agencies and the complexities of coordinating them. lack of coordination.Urbanisation in Asia 29 Foreshore Dagat Dagatan Development Project office was set up within the Philippines National Housing Authority (NHA) specifically to manage the upgrading of the Tondo Foreshore. it would be closed. local support and resources. central governments in several countries in the region transferred the daily management of local services from municipal authorities to central agencies. It could also acquire and develop land and enter into partnerships with. including local government. However. This was because the metropolitan authorities were unable to absorb the loan recovery and infrastructure management functions that had been planned for them. Another rationale behind the creation of UDCs was that urban growth had exceeded municipal boundaries. For many. being required to implement development projects. By 1985 its staff had grown a hundred-fold to 4. this intervention comprised public provision of housing finance. the more powerful and successful UDCs. many city administrations were in a weaker relative position in respect of institutional capacity than at any time in the preceding 30 years. before it assumed de facto responsibility for the daily management of these services. sometimes. in India the majority of the state housing boards were set up in the early 1960s. finance and supervise the implementation of projects by a total of 89 different municipal and state agencies. Housing Development Direct public sector intervention in urban housing grew directly out of widespread and growing disillusion with the initial patterns of national development in the region. It was not long. In 1975. Many UDCs were intended to provide only project design. by the end of the 1980s. soon took over the implementation and management of projects and programmes as well. An example is the Calcutta Metropolitan Development Authority (CMDA) which was established in 1970 with a staff of 40 and a mandate to coordinate. in Malaysia. For a variety of reasons including. most central agencies failed to cope with the urbanisation pressures of the 1970s and 1980s. Thus. Ministries of housing and government housing departments and agencies were established for this purpose. finance and coordination services. when pressure was growing throughout the region for both economic and administrative reform (structural adjustment) based on deregulation. For instance. Because of its inability to coordinate these agencies. the model was the Singapore Housing Development Board which. emerged from a transformation of the Singapore Improvement Trust that had been in existence since 1924. these being divided between nine operational directorates. once complete. and/or the construction of dwellings for rent or sale. garbage collection and traffic control.200. The intention was that. For instance. rather than attempting to strengthen local capacity. decentralisation and the devolution of authority to locally accountable bodies.

an almost universal theme within the NGO community was. income generation and credit. followed by the gradual withdrawal from this role of ‘provider’. the Thailand NHA was established as a consolidated public housing agency by merging the Welfare Housing Office of the Public Welfare Department and the Slum Improvement (clearance) Office of the Bangkok Metropolitan Authority. NGO interventions on behalf of the poor have taken two main directions. While being less paternalistic and more participatory than government. sites and services projects and slum upgrading programmes that commenced in the 1970s and continued throughout the 1980s in most parts of the region.30 Urbanisation in Asia Housing Policy Board and Mortgage Bank were constituted in 1974. dissatisfaction with the status quo. in recent years many such NGOs have realised that cooperation with the government and organisations of the poor to meet their own needs is perhaps a more sustainable solution to the housing problem than outright protest. and the current ‘enablement’ paradigm of support-based partnerships between government. It was ideologically-driven and often did not focus on actions beyond resisting the establishment. The second strand derived from the tradition of charity. private sector. communities and individual households. this approach also created a dependency among the poor. Non-Governmental Organisations A product of the disillusion with central intervention was the formation of NGOs and their advocacy of alternative forms of development that were more in tune with the economic and social conditions of the poor. and still is. NGOs assumed many different sizes and forms. The history of direct public sector involvement in urban housing in the region has often been that of the initiation of ambitious housing programmes for low-income groups. and improvement of low-income settlements. Some have even moved into the sphere of policy advocacy and. have been instrumental in changing government policies towards eviction. The first strand was activist and opposed the powerful cliques in society on behalf of the poor who were organised to fight evictions. but not averse to building collaborative arrangements with it. the Urban Poor Associates in the Philippines. this strand was independent of the government. However. Essentially led by middle class activists. campaign for better working conditions and for redistribution of the benefits of development. These public low-income housing programmes failed to provide the quantity of appropriate/affordable housing required to meet burgeoning demand. The poor were assisted with the provision of services and infrastructure to improve their quality of life through provision of health and education facilities. the organised (or aided) self-help movement that was strongly promoted in the late 1960s and early 1970s. the Society of Community Organisations in Hong Kong and the Korean Coalition for Housing Rights are examples. at least in India and the Philippines. In almost all countries in the region at least two of the above policy approaches are currently being utilised. It has developed towards increasing the capacities of the poor to develop Ausaid . Within this context. In the same year. However. This policy sequence can be categorised as follows: • • • • the public works tradition of government-built housing and slum clearance programmes that is most readily identified in Asia with the post-independence period of the 1960s. The work of Youth for Voluntary Action in India.

2 Urban Management This section is based on the conclusions of a recent ADB seminar on Megacity Management in Asia which identified the following key management functions as applicable to all urban areas irrespective of size (although the emphasis placed on particular mechanisms will vary among cities of differing sizes) (ADB. the private sector: formal sector and informal sector. and arrangements for accountability and transparency in decision-making. maintenance and management of shelter and urban infrastructure is that of diversity in delivery systems involving many groups in a variety of roles. It is those management issues which will be the subject of the next section. It is only through such a process that urban poverty can be addressed effectively and policies for sustainable development formulated and implemented.the short and long-term strategies for city development to meet overall development goals within defined budgets and with agreed responsibilities for implementation by key public and private sector organisations.the organisation. in relation to their needs for support in the production. In housing and in the provision of other social and physical infrastructure. charging and assigned responsibilities to public and private sector organisations. Thus.1. it is important to realise that efficient and equitable development of the urban sector in Asia requires all three sectors and their sub-divisions. urban institutions undertaking an ‘enabling’ role need to be focused on key management areas. all of these systems involve the public. their pricing. maintenance and management of housing and other urban services and their ability to provide it. private and community sectors. 2. 2. 1996b:8): • Governance . to have effective capacity to undertake and maintain the investments required for that development. the agreed roles of public and private sector organisations. Ausaid . In addition to distinguishing between the three sectors. provincial/state government and local government. and the community sector: NGOs/CBOs. However. regional and local governments in the management of the megacity. it is also important to recognise their sub-divisions into: • • • the public sector: central government.4 The ‘Enabling’ Paradigm and Urban Institutions In understanding the nature of enablement. it is important to know who needs support and what institutional arrangements should provide it. a convergence of circumstances resulted in NGOs which were willing and capable of playing an active role in infrastructure delivery and shelter programmes more in tune with the ‘enabling paradigm’ currently being advocated in many quarters.the basic relationships between national. obviously vary from country to country. • Management of assets and services . maintenance and delivery of city services. The characteristics and capacities of each of these sub-sectors. the roles of various agencies that cross boundaries and the capacity for change.Urbanisation in Asia 31 and manage their own situations. Nevertheless. • Development policy and investment coordination . The nature of the production. and also towards mainstreaming alternative development approaches in government policies.

assessment and dissemination of data relating to many aspects of city development.avoidance of unnecessary foreclosure of future development options. charges and financing mechanisms to influence the demand for. public transportation and other services. . environmental protection and development requirements. These were: • to maximise the economic efficiency of cities .32 Urbanisation in Asia • Fiscal and regulatory functions . their present levels. and for strategic planning aimed at identifying major infrastructure. As part of implementing ‘enabling’ strategies.defined as: . with particular emphasis on the needs of low-income groups.in the context of the global economy. support mechanisms for the disadvantaged. • to maintain and improve the quality of life for residents of cities . With rapid growth and with so many agencies involved. • Monitoring functions . in some cases. reduced crime levels and improved physical and financial access to services.measured in terms of improved environmental conditions.use of taxes. and . The remainder of this section restates the management issues relevant to achieving the goals identified by the ADB seminar. provision of employment. 1996b:9). 2. or above.2. and the provision of regulatory frameworks for public and. 2. This would require changes in the roles of higher levels of government and in financing mechanisms and careful guidance of the process of institutional change.the regular collection. Several objectives for improved urban management were identified at the ADB seminar (ADB. private sector organisations and individuals.maximum economic efficiency in the use of development resources. including dissemination to the public and use of the data to monitor performance of service delivery and modify policies and programmes. there is a need for coordination both across sectors and across agencies within a sector. • to achieve more sustainable forms of urban development . attraction of new inward investment and contributions to the national economy. measured in terms of productivity.social equity in the distribution of city development benefits and costs.2 Organisational and Financial Dimensions Most large cities in the region are characterised by having more than one local government and a number of special purpose agencies responsible for water supplies.maximum efficiency in the use of financial sourcing and cost recovery mechanisms involving both public and private sector actions. Thus central governments should: • prudently pursue the decentralisation process. there is a need for decentralisation and development of more market-based approaches to the provision of services and more emphasis on privatisation. while maintaining renewable natural resources at. incorporating the following components of good practice: Ausaid .2.1 Goals of Improved Urban Management The performance of these functions must be measured against broader objectives of urban policy. . including the goods and services provided by the natural environment. use of and supply of urban services.

There are other constraints such as: the slow pace of decentralisation of revenue raising powers relative to that of responsibilities necessitating increased expenditure. but there are various constraints to be overcome. . Local governments should: • • • • take the lead in cooperating with CBOs and NGOs. A number of steps can be undertaken to improve financing to overcome these constraints.collecting. and . where necessary. deregulation and privatisation.strengthening local government capabilities and. . and introduce systems to support the efficient use of resources. using metropolitan institutions as necessary. encourage cooperation among cities by providing a legal framework for cooperation. Ausaid . Also. service users are often reluctant to pay higher charges. processing and distributing information on local government activities with comparability over space and time. They include: • making economic pricing a goal to be achieved by first attaining efficiency. The success of cities in financing urban development will depend on local policies for resource mobilisation. • • • • develop appropriate strategies for the whole urban hierarchy from megacities to the small towns.decentralising the responsibilities and resources simultaneously. Because most countries in the region are moving towards market-based reforms involving liberalisation. Property taxes are among the most under-exploited of taxes because of low assessments and infrequent reassessments. engage in regional cooperation. with Indonesia having a long history of Integrated Urban Development Projects which have progressively strengthened local government institutions. incorporating a set of integrated objectives and the means necessary to achieve them. using financial incentives or powers of persuasion.retaining certain functions for reasons of efficiency. lack of institutional capacity and deficiencies in financial management. followed by improvements in rates of collection to allow maximum cost recovery. legal powers to undertake more effective urban management. income redistribution and macroeconomic policy. with the Philippines providing an example of best practice in this regard. including incentives for achieving potential revenue targets and engaging in privatisation and/or public/private partnerships. develop long-term policies at the metropolitan level. provide a legal framework for privatisation and public/private partnerships. competition and cost reductions. it can be expected that cities will be in a stronger position to reinforce their resource base as they realise the gains from their competitive advantage.Urbanisation in Asia 33 . and provide financial assistance to local governments appropriate to their responsibilities in a form which encourages efficient use of resources and does not act as a disincentive to local revenue raising.

Land Management Effective land management is essential to support the role of cities in generating national economic growth and in improving quality of life.1). • instituting cross subsidies for community service obligations that are beneficial to the poor.2. cities could be allowed direct access to aid funding subject to central review (as in Indonesia). as they correspond to major institutional responsibilities.1 can be conceptualised as acting through three elements of the urban system: • physical concentrations of economic activity and housing and its associated infrastructure (land uses). • transport links between land uses. their overlapping responsibilities and the politically charged nature of land-related issues has made effective management of land difficult.3 Management Strategies for Sustainable Development Operational strategies to meet the objective of sustainable development as defined in Section 2. the costs are so significant as to reduce economic efficiency. subject to maintaining overall levels of supply sufficient to meet demand and avoiding distortions to the structure of markets.1. and a higher level of local government self-reliance. it is important to discuss the issues involved. • allocating an important role for central government transfers.2. transport and environment. Management of urban areas thus comprises three types of management .2. • allowing the informal sector to continue as the provider of goods and services and regularising. as far as possible. Even for those who can negotiate the system. • increasing local government and parastatal access to domestic and international private sector financing and to capital markets through revenue bonds and general obligation bonds. cost effective user charges. • developing computerised. in Section 2. such a financing mix will enable the formulation of projects which maximise the efficiency of financial sourcing (see objective. In addition. shared tax. the large number of organisations involved. 2. cost-based collection systems and incorporating requirements for periodic updating. Ausaid . its operations.34 Urbanisation in Asia • giving local government the responsibility for a property-based. and • the environmental resources which act as inputs to economic activity and waste sinks for pollution. local taxation system using capital cost-based property values and incorporating a conversion or betterment charge for new land development. These three management issues overlap and interrelate but. or surtax. reducing financial and other costs and enforcing payment of remaining taxes and user charges. as discussed in Section 2. within the context of improved local collection systems.2. Combined with private sector funding.being excluded from the formal land market. The resulting scramble to negotiate in and around many existing management systems has resulted in the weakest . However.the poor . Chapter Six provides a discussion of best practices in projects which address these issues.land.

Second. and • encouraging city management to take the lead in developing land information systems which can benefit a wide range of government organisations and the public as a whole. To achieve these objectives. air and noise pollution. Such integrated planning can lay the groundwork for the creation or extension of rail and/or bus systems that can become the backbone of transportation in a city.this is vital to generate ownership of plans and programmes. and the needs of sustainable urban development. funding. (iii) high costs of acceptable solutions and (iv) weak intersectoral planning processes. minimising long journeys to work and reducing social.these could include streamlined land transaction procedures and provision of tenure to informal sector households. it can generate other major benefits such as guiding urban growth to preferred expansion areas. Ausaid . economic and environmental costs. it can reduce poverty by making jobs more accessible for those reliant on public transport. • developing innovative techniques to help the urban poor gain access to land.Urbanisation in Asia 35 Key land management tasks are thus: • ensuring that land development at the metropolitan level reflects national and regional economic objectives. • clearly evaluating urban expansion choices for the city . it can promote economic efficiency by creating accessibility and reducing the economic costs of congestion. environmental acceptability and land availability). This team needs strong political and community backing to be able to take an active stance in coordinating private sector interest groups and in seeking consensus on the ‘big questions’ (e. in order to enable the private sector to play a significant and efficient role in transport. tariffs. • enhancing public participation in strategic planning and implementation . Third. Further. financial. The development of an integrated transport/land use planning capacity is thus crucial for a city’s central urban management team. on-site solutions for squatting such as land sharing projects in Bangkok. • adopting enabling policies and techniques to help individual households and enterprises obtain land and shelter . improving the urban environment and reducing traffic accidents.in most cases it will be realistic to support market-driven ‘city-out’ expansion. there needs to be a coordinated strategy to address the core problem of traffic congestion. In parallel. new policies to support private rental housing and access to credit such as the Community Mortgage Programme (CMP) in the Philippines.g. the potential for deregulation and demand management. • defining clearly the roles and functions of organisations involved in land management . shelter services and employment including. economic and institutional strategies. focusing on the use of more effective plans. First. it can improve lifestyles by reducing commuting times. Transportation Management An effective transportation policy is central to the sustainability of quality of life in the cities. (i) lack of a consensus on what needs to be done.this is particularly important with the emergence of EMRs covering many local governments. • re-evaluating planning and regulatory systems. • merging spatial planning activities with the wider urban management process to allow effective integration of spatial. But there are major constraints including. • analysing land development policies in terms of their impact on income groups. particularly the urban poor. (ii) lack of institutional purpose to deal with highly political policies and projects.

Best practices in urban transportation management include Singapore’s central area traffic control scheme and Hong Kong’s toll and taxation measures. which have helped reduce congestion.road maintenance and rehabilitation. to ensure government transportation priorities and policies are determined first. wastewater.investment to create a hierarchy of roads.fuel and road pricing policies. solid waste and air pollution. many countries are rightly concerned with economic growth and have given low priority to environmental management in the past. the plan must be created and owned at the heart of government. Hong Kong’s MRT and Bangkok’s bus lanes. . its policies and priorities. through an integrated planning process. the growing environmental concerns of local community and other interest groups.36 Urbanisation in Asia government must determine. However. • • • Environmental Management Environmental conditions in the cities in the region. and then to give the private sector a major role . While many of the remedial actions needed are understood. . Institutional responsibilities for urban environmental management are often unclear. . and . and be flexible and innovative. have inputs from the private sector. industrialisation and increases in vehicle density.realism about what the private sector can deliver is essential. all of which have helped create viable alternatives to private car use. In the absence of such planning there is a danger of the private sector pre-empting the government and of economically and socially inefficient outcomes. interacting with the many parties involved and progressively developing consensus for courses of action. While most countries have established national level institutions to set standards and implement Ausaid . The discussions at the 1996 ADB seminar on magacity management revealed a need to promote ‘ownership’ of environmental issues and to develop more systematic approaches to environmental management. and then introduce car restraint measures.new roads at the city periphery to guide future growth.management of the available road space. the concerns of inward investors about worsening environmental conditions. and the emerging awareness of sustainability issues amongst policy-makers are all indicative of changing priorities. Key management objectives are: • to implement a ‘good housekeeping’ agenda comprising: . have deteriorated in parallel with rapid urban growth. to institute transport planning that is strongly implementation-oriented and outgoing. particularly those related to water. and to develop policies that support the development of an integrated public transport system to address the core imperative of controlling traffic congestion. . fuels and enforcement. and Singapore’s Mass Rapid Transit (MRT). • to develop a meaningful plan for a healthy sustainable city.efficient and responsive bus and tight/heavy rail services that meet the needs of most income groups. .a plan to reduce air pollution that focuses on vehicles.

the principle of a mix of traditional urban infrastructure components. • where the problem of wastewater exists. In order to progress this review of urbanisation further towards its goal of charting a course for more effective development assistance in the urban sector. by facilitating public participation and well-planned consultation between the responsible agencies and the affected population. • including. substitution and process changes. 2. most decisions affecting the environment are made by agencies with mandates unconnected to environmental concerns. • enhancing the effectiveness of services and efficient management by strictly implementing regulations and monitoring compliance. Key management tasks are therefore: • establishing clarity in institutional responsibilities for service delivery roles and relationships between the public and private sectors.3 Urbanisation Overview and Implications for Development Assistance in the Sector Chapters One and Two have set out the rapid pace and importance of urbanisation.Urbanisation in Asia 37 strategies. environmental components. • using demand management in environmental project development. and policy and institutional reforms. through the use of financial incentives. • directing education and training to change the behaviour and attitudes of people toward the environment. The institutional framework is further complicated where infrastructure and service needs extend across administrative boundaries. environmental components and institutional frameworks in the city management decision-making process. socially and culturally. responding to the specific sectoral problems of cities. and detailed important objectives and strategies for the management of cities. on the one hand. • ensuring harmony in the decision-making process. in fact. • adopting instruments to implement policy that are appropriate and feasible politically. recycling. sustainable development and human resource development. professionals and business groups on how investment decisions can improve environmental management. and focus on learning lessons from practice on the other hand. discussed the key issues of poverty alleviation. and the installation of sewage treatment facilities to help clean up the Han River in the Republic of Korea. Ausaid . and • developing and using information bases to inform the public. These sets of objectives and strategies define the task to be achieved in Asian cities. the use of clean burning fuels to help control air pollution in Bangkok. the study must take a step back to review the context of urbanisation. • including environmental considerations. they have been formulated in general terms. Best practices in urban environmental management include: the creation of pollution control zones in Thailand’s urban areas. authorities. encouraging conservation measures such as water quality control. described the institutions which are charged with addressing these issues. Of necessity. as part of a desirable environmental project.

Chapters Five and Six will analyse specific cases of project activity in the urban sector. Ausaid .38 Urbanisation in Asia The following two chapters will thus provide two key elements of context by reviewing the globalisation of the urban economy and by setting out the scale and scope of current development assistance activity in the urban sector.

Traditionally. Harvey (1989) writes of the degree to which finance has become an independent force in the modern world. 3.at least in broad terms. savers and investors. globalisation is changing our perception of competitive advantage. perhaps. Yeung (1995) and UNCHS (1996) and develops the themes expounded by the OECD/Australian Government conference. especially the relations between creditors and debtors. Ausaid . has significant spatial consequences. while Strange (1991) writes of the increased ‘structural’ power exercised by whoever or whatever determines the financial structure. influence and discipline the world’s national economies and businesses.capital. Knox and Taylor (1995). energy and raw materials (Porter and van der Linde.Urbanisation in Asia 39 3 THE URBAN SECTOR CONTEXT This chapter describes an important aspect of the global context of the urban sector . The following discussion of globalisation draws on research undertaken by Amin and Thrift (1995). as companies source low cost inputs anywhere in the world. Today. 1996).the globalisation of the international economy. also for the Australian organisations involved. 1996). initially for the recipient country organisations and later.that is. In recent times there has been a plethora of literature dealing with globalisation and the new global economy. The global reach of finance which is particularly striking. with major consequences for human settlements. allocated and put to use. and new rapidly emerging technologies offset many cost disadvantages of ‘high cost’ labour. labour. in turn. 3. the competitiveness of nations was measured by the ability of companies to access the lowest cost inputs . to be globally competitive is to be able to innovate rapidly and to provide the right conditions to attract or sustain individual business activities. The 1994 Joint OECD/Australian Government Conference Cities and the New Global Economy (1995) was instrumental in bringing attention to the linkage between rapid economic growth and urbanisation occurring in Asian-Pacific cities.2 Globalisation Forces There are a number of complex structural changes and forces in the world economy that have resulted in altering the importance of different economic sectors. Support should then be designed so as to a) facilitate measures which integrate economies into the global economy and alleviate poverty and b) link with the appropriate sectors of the Australian economy so that benefit may be gained within the globalisation process. In recent times. rather it is using resources productively that constitutes competitiveness. The economic boom in many South-East Asian countries is making it harder for them to compete on price alone. and the resulting increase in the power of finance over production. Thus. The changes in the global economy which occurred in the wake of the breakup of the Bretton Woods system (the system of regulation of the international economy that was established by Bretton Woods during World War II) in the early 1970s have resulted in a closer global web of economic linkages which. the ‘trajectory’ of urban economies within the global economy must be described . The global economy is a highly urbanised phenomenon. as it is increasingly necessary to compete on the basis of knowledge at relatively . it is not simply having resources that matters. The capacity of these cities to grow and change is critical to the ongoing expansion of the global economy. in a variety of forms. Consequently. The first is the increasing centrality of the financial structure through which money is created.low costs (Knowledge in Action.1 Globalisation Issues In order to assess what type of support should be provided to the urban sector in the future. as global financial institutions. relative to OECD countries .

later. sociology and management science.g. Paris and Tokyo) and newer metropolitan centres that developed as centres of high technology production (e. the acceptance of a scientific ethos and common cultural context provides a ‘common language’ among professionals. There is a sense in much recent writing that corporations have no choice but to ‘go global’ very early on in their development. quicker and cheaper. 1995) . In addition. for at least three reasons (Strange. Technopoles and Innovation The term ‘technopole’ is used to describe deliberate attempts to plan and promote within one location technically innovative. means that the ‘knowledge structure’ is becoming less and less tied to particular national or local business cultures.40 Urbanisation in Asia Second. resulting in corporations being open to competition at an early time. Whether it is the global economy seen in terms of a ‘space of flows’ (Castells.g.g. The result appears to be an increasing use of issue-based agreements between members of ‘plural authority’ structures (Gilpin. although government and universities had a significant role in their development (e. Technopoles include ‘science cities’ or scientific research complexes that are spatially separated from manufacturing (e. is the increasing importance of the ‘knowledge structure’ (Strange. the UN. 1991): • • • new methods of production with different patterns of returns to scale have resulted in a need to market globally to take advantage of these changes. It seems clear that the production and. Los Angeles and Munich). and major changes have occurred in the ease of transport and communication. as localised Ausaid . as almost without a border (Ohmae. The result is that national measures of concentration and market share have become less relevant as corporations manoeuvre in global markets. distribution and exchange of knowledge is a crucial element of the global and local economic system on a scale not previously known. The overwhelming dominance of technology-based solutions. This. 1991). industrial-related production.borderless geographies with quite different breaks and boundaries from the past. more attention is being paid to the importance of knowledge as a factor of production. 1989). combined with the ubiquity of enabling communications media and technologies. 1990). 1988) or ‘expert systems’ (Giddens. of specific relevance to urban areas. although some ‘technopoles’ (see box below) continue to thrive. In the disciplines of economics.g. transnational ‘plural authority’ structures like the World Trade Organisation (WTO). (Source: UNCHS. 1987). Technopoles include industrial complexes of high technology firms that eventuated in the absence of deliberate planning. Many attempts to generate technopoles have failed to achieve an ‘innovative milieu’ necessary to drive the innovation and synergy between different firms. greater transnational mobility of capital has made investing abroad easier. the result of the processes described above is the rise of ‘new global geographies’ (Amin and Thrift. G7 and the European Community (EC) have become increasingly powerful (Held. 1990). The growing power of global corporations has also resulted in the rise of transnational economic diplomacy. Finally. Governments and firms bargain with themselves and one another on the world stage. There are also old metropolises which retain their leading role as centres of high technology firms and research (e. Silicon Valley in California and Boston’s Route 128). 1996) These trends have resulted in a need to ‘go global’. with obvious consequences for the balance of economic power. that allows a technopole to achieve self-generating development. Tsukuba in Japan and Taedok in the Republic of Korea).

cultural attributes. but a new form or space of centrality.Urbanisation in Asia 41 production districts strung out round the world (Storper. more recently. While the information-based services will prefer a central location. In parallel. it is clear that the global economy is now an important factor in local geography. that such services could be located in more dispersed patterns but. The key elements of this impact on urban areas can be summarised as follows (ADB. Singapore. decisions on manufacturing location by multi-national firms are based on comparison of labour costs and other key factors of production across a range of potential host countries. Many cities are using professional marketing companies to promote their attractions. At another level. or as something in between these extremes. the massive commercial development of Pudong. producer services (accounting. which support the development of industrial companies with access to air transportation and business services. Such decisions are influenced increasingly by the qualitative attractions of alternative locations. research and development. in fact. advertising. as well as with financial costs. Sassen envisages ‘a new geography of the centre’. Increasingly. An OECD-based textile conglomerate may be comparing labour costs. taking new forms. Cities in the region and particularly megacities/EMRs. other more traditional service industries may prefer cheaper locations in the suburbs or outer metropolitan area. in terms of such attractions as lifestyles. the advantages of agglomeration economies and highly innovative environments are major forces in favour of a city location. given advances in communications. These are not suburbs in the way we conceived of them 20 years ago. good housing. Cities are the natural base for information-based industries and Sassen (1995) notes that the increasing interrelationship of services and the increased importance of time is leading to the formulation of a producer services complex in all major cities. in addition. 1996a:66): • The development of international markets for goods and services is encouraged by large free trade zones such as ASEAN and. Kuala Lumpur and Singapore for a new regional base for their operations. The agglomeration trends are. 1991). It might be expected. there is an emergence of information-based industries such as financial services. financial service conglomerates in Europe may be trying to choose between Bangkok. competes with the fast growing Eastern Seaboard development in the Bangkok Metropolitan Region. These pressures mean that there is an increasing need for cities to promote themselves in terms of their traditional comparative advantages of transport links. one that could involve a metropolitan grid of networks connected through advanced telematics. as the centralisation of economic power and control within a very small number of global cities (Sassen. Taiwan and China. It goes • • • • Ausaid . For example. as well as from Asian regional investors in such countries as Hong Kong. textile quotas and many other factors in a decision whether to locate in Dhaka or Calcutta. communications and infrastructure related to the production base but. cost of living and tourism opportunities. The Pacific Rim countries are now dominating the global economy in both labour-intensive and high technology manufacturing and these activities are overwhelmingly based in cities. media and the headquarters of large corporations. legal). long-term economic prospects for the country and sector-specific conditions concerning such items as investment incentives and regulations. Jakarta. at one level. 1991). particularly those with a strong international orientation. such as the People’s Republic of China Special Economic Zones (SEZs). however. the Asia-Pacific Economic Cooperation (APEC) and the establishment of new industrial core areas. are competing among each other for inward investment that may arise from OECD countries. This trend goes hand-in-hand with new techniques for the faster diffusion of data. Shanghai.

these reforms lie at the heart of developing countries’ improved economic prospects. The outward-oriented reforms being embraced by a growing number of developing countries are both contributing to globalisation and expanding opportunities for them to share in its benefits. globalisation has both positive and negative impacts on the environment. To an extent. globalisation is having the effect of encouraging the initiation of policy reform in developing Ausaid . multi-nationals are lobbied to apply the same standards abroad as at home. international trade in goods and non-factor services (exports plus imports) as a proportion of their GDP has risen from about 33 to 43 percent and FDI inflows have increased six-fold. As seen above. 3. In the seven years following the launch of the Uruguay Round in 1986. Increasingly. In efforts to hold down costs in order to compete in the global economy on product price. enterprise zones/export zones. globalisation spreads environmental awareness and forces for compliance to standards. as they do from specialisation trends in the domestic economy. The following section attempts to place these efforts in context and to identify macro-level strategies which foster successful integration into the global economy. the need to maintain the confidence of markets. countries are tempted to ‘go easy’ on enforcement of environmental standards. and technological change that is fast eroding barriers to the international tradability of goods and services and the mobility of capital. These changes have significant impacts. In this setting. more and more services are becoming tradeable. Alongside the new opportunities in trade and external finance offered by globalisation have come new challenges of economic management in an increasingly open. It is being driven by a near-universal push toward trade and capital market liberalisation. and include tax-free holidays for an initial period. international. Asian cities are likely to benefit from trends to specialisation among inward investments. 1996a). increasingly.42 Urbanisation in Asia without saying that government incentives for such footloose manufacturing or service employment are common. Since 1986.1 The Role of Developing Countries A prominent feature of the ongoing global economic change is that developing countries are active participants. On the other hand. both positive and negative. integrated and competitive global economy. both domestic and. The global economy thus has. and capital is flowing in increasingly diverse ways across countries and regions in search of profitable investments. subsidised housing and training facilities. The case studies of the Philippines and Vietnam summarised in Chapter Five have documented efforts to come to grips with the manifestations of the global economy. In addition. By promoting domestic efficiency and productivity and providing an environment that is friendlier to exports and foreign investment. increasing internationalisation of corporate production and distribution strategies. a major impact on urban management objectives and policies. developing countries were responsible for 58 of the 72 autonomous liberalisation actions reported to the General Agreement on Tariffs and Trade. sound economic policies command a rising premium. and will continue to have. on the poor in developing countries. this change is reflected in widening and intensifying international linkages in trade and finance. Markets for merchandise trade are expanding. international NGOs monitor activity throughout the world and the multilateral banks and Official Development Assistance (ODA) agencies such as Australian Agency for International Development (AusAID) enforce environmental screening in their projects. For example. Policy-makers are confronted more and more with a new discipline. 3.3 Globalisation and the Poor Globalisation is a fundamental process of change that is transforming the world economy. as both agents and beneficiaries of that change (World Bank.3.

Global integration is strongly associated with higher levels of economic growth. and the public sector played a complementary role in the provision of research and development and physical infrastructure. has been uneven. but also compounds the losses from a failure to act. 3. these developments raise the following questions. technology was upgraded by fostering market incentives in the private sector and by the removal of regulatory barriers. Conversely. developing countries with a more equal distribution of assets. the more efficient allocation of productive resources and the reduced cost of capital. Inequality and Poverty Contrary to much contemporary belief. however. Why does integration matter to developing countries? What factors determine its pace? What approach should policy-makers take towards it? Global integration permits a country to seize the opportunities presented by a favorable external environment. 1996b): • • • • macro-economic stability was important as was a climate that encouraged investment. 3. The strong integrators have shown how perceived obstacles (for instance. especially to foreign firms. including investment in commodity sectors. Over the last decade per capita growth in the quartile of fastest integrating developing countries was over three percentage points more than in the quartile with the lowest pace of integration. of which the most serious is macro-economic instability.3 Integration and Growth Lessons from country experience include the following (World Bank. Trade ratios fell in some 44 out of 93 developing countries.2 percent of GDP.3. Just ten countries contributed more than three quarters of the last decade’s rise in the overall developing country trade ratio. it is the more efficient policy regimes that will win out. increased integration has a substantial impact on domestic growth and general living standards (although adjustment creates groups . Greater integration into the world economy raises the payoffs to increased competitiveness.sometimes large groups . specifically land. grew more rapidly than countries with a less equal Ausaid .3.who are worse off). the level of inequality does affect growth. the abolition of public sector monopolies in production and marketing produced large efficiency gains. In general. Although growth does not consistently affect inequality one way or the other. Faster integration was associated also with more stable growth: the standard deviation of growth in fast integrators was about four percentage points less than in laggards. a slow rate of integration is usually a sign of underlying policy deficiencies. Thus. 1996c).3.4 Growth.2 Disparities in Integration The pace of integration into the global economy among developing countries. There are wide disparities among developing countries in the rate of integration. breaking commodity dependency and liberalising trade) can be overcome. The distribution of FDI was also skewed: eight countries comprising 30 percent of developing country GDP garnered two-thirds of FDI in 1990-93 and half of the countries received inflows of less than 0. For policy-makers in developing countries. Increasingly. economic growth almost always benefits the poor (World Bank. notably the importation of new technology.Urbanisation in Asia 43 countries in contrast to earlier processes in which reform was often initiated through ‘external’ pressure. 3.

where GDP grew at an average annual rate of 3.Among the 57 countries that grew at least 2 percent for a decade. growth almost always improved the incomes of the poor. .In US. the incomes of the poorest fifth of the population increased in 77 (88 percent).7 percent between 1985 and 1990. Between 1985 and 1990. • Inequality. the proportion of the population in poverty increased from 14 percent to 20 percent. Ausaid . In India. incomes of the poorest fifth of the population improved in all but three.In Cote d’Ivoire. This presents a serious problem for those countries (many in Latin America) where asset distribution is unequal. • Growth almost always benefits the poor .Among the 88 cases. .Latin America has an unequal distribution of assets. the more rapid the reduction in poverty .In the 88 cases studied by the World Bank where a country achieved per capita GDP growth for a decade. . the percentage of people living in poverty fell from 60 percent to 15 percent.500. the restructuring required to achieve global integration impacts on poverty groups and also creates some poverty. poverty has increased in six countries.In Indonesia. Over the same period.3 percent on average). Such impacts are important from both social and political viewpoints and must be addressed with development assistance support. Because the changes in inequality were quite small. poverty has fallen in all the countries for which data are available.East Asia has a relatively equal distribution of land and has achieved unusually high rates of growth (an average across countries of more than 4 percent per annum between 1960 and 1990). . the higher the rate of growth.3 percent per annum on average). since very few countries have achieved significant reductions in inequality.000. But even countries with relatively equal land distribution that pursued ineffective economic policies have had very low growth. poverty and growth . growth has been erratic (1.7 percent from 1970 to 1990. Available information suggests that poverty has increased. poverty declined in all 14 states that achieved growth in mean income. .Land distribution patterns vary widely in Sub-Saharan Africa.44 Urbanisation in Asia distribution of assets. • In general. the percentage of people living below the official poverty line fell from more than 18 percent to less than 12 percent. inequality improved slightly in about half the cases and worsened slightly in the other half.the Asian experience in context . except China.900 to US$17. Over the same period. real income increased from US$9. Between 1985 and 1990. where GDP declined by an average 2. fallen in four and remained unchanged in two. . The region has been characterised by poor policies and very low growth overall (0. Following are key facts emerging from the World Bank (1996c) research. real income increased three-fold from about US$700 to US$2. where the economy grew at an average annual rate of about 2 percent between 1959 and 1991. Nevertheless.

the higher risk-adjusted rates of return associated with portfolio and FDI flows to developing countries could translate into gains to the tune of 0. the process of increased integration with developing countries will not be without adjustment costs. Labour-intensive and low-skill industries and low-skill workers in industrial countries are likely to be disproportionately affected. medium to long-term gains through increased investment and innovation and higher productivity growth are likely to be substantial. Protectionist pressures to slow or reverse integration must be resisted. such dynamic gains are likely to be a multiple of the initial efficiency gains from trade integration. Such growth will also be beneficial to Australia Ausaid . In summary. mutually beneficial integration between developing and industrial countries. Insufficiently recognised in traditional analyses of trade. Increased FDI allows firms in industrial countries to reap the benefits of specialisation in production and distribution on a global scale.4 percent due to first-round static effects. these costs should be far outweighed by the gains from integration. the dynamic gains resulting from financial integration are likely to be higher by a few multiples.4 percent permanent increase in GDP. In portfolio investment. But. Indeed. 1996a). The gains to industrial countries from trade integration are estimated to be equivalent to a permanent increase in GDP of 0. Gains to industrial countries from increased trade integration with developing countries are potentially larger than those from additional integration among industrial countries. Industrial countries also stand to gain from increased financial integration with developing countries. Beyond a more efficient use of resources. since that would create losses for both industrial and developing countries. The scope for gains from trade integration will expand with the increasing tradeability of services. in promoting growth in developing countries. competition and technology ‘spillovers’. much will depend on industrial country policies for mitigating the social costs of adjustment and facilitating the reallocation of resources toward activities that will be spurred by integration. This is because the cost-price differences between developing and industrial countries can be more than twice as large overall as those between industrial countries. Trade with developing countries will spur other industries and services in which industrial countries will retain comparative advantage.2 percent (World Bank. Economy-wide and over time. These gains arise from increased market size. industrial countries (World Bank. Dynamic gains from trade are likely to be especially important in the case of integration with developing countries. the reallocation of resources that this structural change entails is not easily accomplished and will inevitably generate frictions and protectionist demands. However. which are forecast to grow about twice as fast as industrial countries. the possible intensification of protectionist pressures poses a major risk to the realisation of increased.8 and 3. Contrary to popular fears there is strong evidence that the growth of developing countries and their increasing integration into world trade and finance benefits. opportunity for raising the welfare of both developing and industrial countries over the long-term. For industrial country savers.Urbanisation in Asia 45 3. but both groups of countries have a large stake in ensuring that it continues to advance. rather than harms. 1996a). followed by dynamic gains of between 0. emerging markets provide an outlet offering higher returns and risk diversification for the savings of the aging populations of industrial countries. For a successful transition. Again.4 Industrial Countries’ Stake in Successful Integration of Developing Countries The increasing integration of developing countries into the global economy represents a major. the promotion of an efficient and effective macro-policy context is essential. perhaps the most important. The process of integration will not be without its problems. Increasing the flexibility of labour and product markets will be central to this effort.

called ‘growth triangles’. many countries in South-East Asia have created EPZs mostly near established urban areas and have. Other growth triangles exist or are at the planning stage in Pacific Asia. Other SEZs include Zhuhai and Shantou. and the Eastern Growth Triangle covering Mindanao (Philippines).1. A variant of the EPZ is China’s SEZs which were created for the first time in 1979 at Shenzhen. technology and entrepreneurship. The process has been documented by Ginsburg et al (1991) and was introduced in Section 1. there are cultural and linguistic affinities which further facilitate cooperative development. 1995). EPZs include those in Baguio and Bataan in the Philippines. came into being to maximise the efficiency of utilisation of the factors of production. Another innovative economic device to access the world market is the emergence of subregional economic cooperative zones. In terms of development assistance. Sabah and Sarawak (Malaysia) and Brunei (Yeung. Bayan Lepas in Penang and several others on the west coast of Peninsular Malaysia. even more complex issues of policy are raised for concerned countries and planning authorities in the areas of land use. has been the emergence of EMRs in Pacific Asia. Sulawesi (Indonesia). to date a uniquely Asian phenomenon. centred on Hong Kong. to a large extent. Laos. while the other parts of the neighbouring countries provide land and labour at cheaper costs.7 reviews the implications of globalisation for development assistance. FDI flow and pollution control to name just a few important areas. Such sub-regional economic entities. crossing national borders. southern Thailand and northern Sumatra (Indonesia). Growth triangles have also been proposed at the mouth of Tumen River in North Asia and several others in South-East Asia. is the acceleration of ribbon-type urban and industrial development in western Johore. firstly. For this reason. One impact. There is some potential benefit in this form of economic cooperation for countries in the Asia-Pacific region. Ausaid . as it provides impetus for its current emphasis on free trade and open regionalism. excellent economic complementarities exist where Singapore as a world city has been providing capital. in an area that has been called the SIJORI Growth Triangle. population migration. involves the participation of Hong Kong with Taiwan and China’s southern provinces of Guangdong and Fujian. primarily for the world market. the next two sections set out concrete manifestations of this globalisation impacting on developing countries. at a macro-level. and Lat Krebang outside Bangkok. The commonality of all these zones is that. Singapore. which were mostly formed in the late 1960s or early 1970s. In the context of globalisation. has been active in promoting FDI inflows and market-based economic development. from a spatial viewpoint. In addition to economic complementarities that exist in abundance. Related to the above processes of cooperative regional development focused on sub-regions and EPZs. but. which single country development would not permit (Thant et al. located in Guangdong because of their proximity to Hong Kong and Macau and Xiamen in Fujian with the geographical advantage of being close to Taiwan on the western side of the Taiwan Strait. Thailand and China’s Yunnan (called the Golden Quandrangle). with its recent re-entry into the world community.5 Globalisation Impact on Cities in South-East Asia As a response to the dynamics of the global economy.2. Malaysia (Johore) and Indonesia (Riau Islands) have been actively pursuing cooperative development in the State of Johore and Batam Island. The latest creation of EPZs is in Vietnam which. the Northern Growth Triangle involving northern Malaysia. Section 3. such as one linking Myanmar. 1995). linked nearby areas of complimentary economic structure (Yeung. Here. their establishment was predicated upon job creation through manufacturing production. 1994). The Southern China Growth Triangle. activities and programmes undertaken in an effort to support economic development must also be poverty alleviating. 3.46 Urbanisation in Asia provided exporters respond effectively to the markets generated by that growth.

6. The committee assesses possible new relationships and oversees existing ones. These groups. sometimes supporting or circumventing national efforts along the same lines. consisting of representatives from a variety of sectors.6. and by working with counterparts in other countries directly. and are the jurisdictional responsibility of higher levels of government. or from an influential citizen who had some reason for promoting the liaison. He also sees utility in ‘moral stances’. Such movements. In SCI. and facilitated by the same technology and transport links. Contact with twin cities was coordinated by an appointed Council member who reacted as needed to citizen requests (or to proposals made from various sources or foreign cities) without any long-term planning. Hamilton and Mangalore (India) and Regina and Pereira (Columbia). education and the cultural life of Victoria contribute to this group. mainly in developing countries. A strong line of academic research relevant to MFP has emerged relating to cities and global economic interactions. Council decided that the community should become more involved in the establishment of twin city partnerships. A committee. The institutional arrangements for twinning evolve as needed. Cities and Globalisation As an extension of economic globalisation. MFP activists have been involved with a wide range of issues. such as anti-apartheid resolutions when they are explicitly tied to economic sanctions. investment and tourism are some of the more active ways in which residents of cities (as well as states and some regions) have tried to increase their influence. 3. Earlier. have been instrumental in forcing special interest areas onto the international development agenda.275 cities in 90 countries and associations of local governments. a tentative globalisation of a political nature is underway. They provide a channel for funding of projects.2 Twinning City to city relationships are fostered by organisations such as Sister Cities International (SCI) in the United States of America and Australian Sister Cities in Australia. The Federation of Canadian Municipalities has assisted with exchanges between various Canadian cities and their partners . in 1989. Cities’ residents can participate in the political arenas that extend beyond their literal jurisdictions. urban-based American citizen groups (NGOs) have become increasingly active around issues of national foreign policy and international relations. have worked in two directions: by exhorting their political leaders and fellow citizens to address policy problems that often exist outside of the locality. Fry’s (1989) analysis of local-global interaction argues that economic competitiveness requires active global participation by actors at all geographic scales. It recommends all related policy Ausaid . In 1988. it has confined its energies to those four. The Council of the City of Victoria established a relationship with four cities and in order to ensure that a whole-hearted commitment is made and sustained.Urbanisation in Asia 47 3. 3. tourism. Promotions of trade.for example. embodied in Northern NGOs. there were 834 US cities having foreign partners with 1.6 Citizens. named the Sister City Advisory and Liaison Committee (renamed the Twinned Cities Advisory and Liaison Committee in 1993) was formed. acting on the belief that action at the local level can affect national and international issues. the various connections were made either as the result of the mayor or a councillor of the time visiting a city and responding to a request from that city. Vancouver and Guangzhou (China). A good example of twinning as a project delivery system is seen in the city of Victoria (assisted by the Federation) which is developing a water treatment project in Suzhou. Volunteers from business. China. from peace and security (local referenda on a Palestinian homeland or the establishment of nuclear free zones) to economic development and cooperation (creating local world trade centres or divesting from South Africa).1 Municipal Foreign Policy (MFP) In the last decade.

that more resources will be required from the aid programme to address urbanisation issues. In the context of assisting a developing country to take advantage of the growth of the international economy. 3. and lend support to network integration. the need to strengthen city’s bargaining and promotion skills in respect of FDI providers to attract appropriate higher value-added industry and to create employment . both in terms of technology (especially communications) and in terms of including representatives of cities in regional and global networks for sharing of information . Guangzhou (China) and Manila (Philippines). encouraging the community to take advantage of the benefits accruing to the city. it also acts as a promoter. • • • • • In terms of our engagement in Asia over the longer term. Citizens of Victoria who are interested in a specific twin city have developed local volunteer associations for three of the four city relationships. the need to strengthen the knowledge structure and technological development . several issues need to be addressed. the need to strengthen appropriate regional trans-border urban systems (growth triangles). thereby avoiding a dualism in the structure of human capital development. not just municipal politicians. They are involved in fund-raising. These groups are devoted to maintaining those relations abroad. and be part of. These are: • the need to strengthen financial systems in view of the primacy of finance . Ausaid . In Australia. are truly reaching out. and Melbourne with Boston. Such groups are powerful sources of energy in nurturing each liaison. the need to ensure competitive forces are at work to achieve efficient outcomes and regulatory processes are not coopted by vested interests .the challenge is to ensure the poor have access to appropriate services from the financial system in order to finance income generation/poverty alleviation activity. The State of New South Wales is twinned with Jakarta Province in Indonesia and Guangdong in China.7 Globalisation Implications The implications of the above review for the formulation of development assistance activity are important. St Petersburg and Tianjin (China)). However. these systems and networks. (for example Sydney with San Francisco. both on the basis of need and on the basis of Australian interest in effectively and usefully linking into Asian economies. Australian organisations need to understand.for the poor. South Australia with Penang in Malaysia. Their armslength connection with the city means that individual people. and thus the process is controversial even among the poor as it will usually involve the application of ‘user pays’ principles.48 Urbanisation in Asia to Council for action. and Victoria with Jingsu in China.this also means selective ‘pork barrelling’ of the poor will be more difficult. It is thus reasonable to assume. hosting and hospitality for visiting delegations. there are no examples of these relationships being used as delivery systems for aid although Brisbane City Council has recently established an agency which could operate in this role. Osaka. Nagoya. Portsmouth. it is important that a broad educational base be provided which links through to the ‘higher tech’ sectors of the economy. sister city relationships are established among numerous cities.such as the Pacific Rim Council for Urban Development (PRCUD) at one end of the spectrum and effective community-based twinning arrangements at the other. However.the challenge is to adequately protect workers whose low cost is the key motivation for their employment.

OECD savings are channelled to developing countries through: • financing the bulk of the UN system’s costs. multilateral agencies and International Financial Institutions (IFIs). almost all financial development assistance flows are channelled from OECD savings. • direct ODA handled by bilateral aid agencies or intergovernmental transfers. This broad statement should be balanced partly by pointing out that there are also flows from the developing countries to the OECD in the form of repatriation of dividends on OECD investments. The following account of aid delivery draws substantially from Serageldin (1995). This complex scene has also highlighted the need for improved aid coordination. and NGOs. Ausaid .the trends in development assistance support to the sector. have highlighted the need to strengthen administrative capacities and political clarity in the recipient countries.1 Actors in the Field Developing countries receive financial and technical inputs from many sources including aid inputs. Increasingly. All of these channels are important for the urban sector. 4. the multilateral agencies and IFIs. however. Ultimately. repayment of debts and some FDI from the developing countries in the OECD. and • direct investments by public or private bodies in the economies of the developing countries. their differing motivations and the differences in their operational styles and administrative requirements. substantial and increasing levels of funds are channelled to the urban sector through FDI (in particular) and South-South cooperation. and the bilateral donors. In addition. With this background in mind. it is pertinent to review in more detail the major actors in the field of development assistance to the sector . This overview groups the actors in the field of developmental assistance under the following broad headings: • • • • the UN system. • intermediation of IFIs.the UN system.Urbanisation in Asia 49 4 AID IN THE URBAN SECTOR This chapter describes an important aspect of the global context of the urban sector . • commercial banks. First. bilateral assistance. Significant South-South flows occur also. these were generated for the Habitat II Conference and have been used for consistency of presentation. While some of the data are a little dated (early 1990s). • NGOs. the variety of actors in the field. the scope and scale of developing countries’ needs in the sector will be reviewed.

8 100 Note: * Government spending only for Malaysia and Thailand ** Excludes Japan and includes Indian Ocean and Pacific states (Source: Asiaweek.3 trillion and US$1.2 1.5 0.from a low of 45 percent of urban population in Bangladesh.7 2. Table 4.509 6.7 0. power plants. UN figures indicate that access to health care is low .4 0.7 100 100 1. airports.1: Infrastructure Spending Forecast for East Asia.0 2. The mammoth amounts are needed to support a projected 6 percent growth in East Asia’s per capita GDP and an expected increase in city populations of one billion.4 0.and local level infrastructure required by rich and poor communities. In the case of poor communities. water mains.50 Urbanisation in Asia 4.8 7. While claimed official primary school enrolment rates are generally high in Asia (though ranging from 24 percent in Afghanistan to 100 percent in the Philippines).6 1.2 2.2 7.4 3.0 1.7 50 10 22 4 3 9 2 102 25 4 4 4 10 4 153 302 62 132 22 18 57 14 607 East Asia** 493 2.1 2. infrastructure spending will have to rise from about 5 percent of GDP currently to between 6.8 5. water treatment plants and power generation .1). Although national statistics are unreliable. actual enrolment rates for the poor are lower and the quality of education obtained by the poor is also lower.7 2.5 49 13 18 3 3 10 4 % of % of $B GDP Total 3. What they have in common is the enormous need for highways.6 4. provide the ‘systemic’ infrastructure to support economic development .8 6.1 2.5 percent to 7 percent in coming years (see Table 4.from a low of 40 percent of urban population in Vietnam.2 55 9 13 2 3 11 7 100 $B Transport Water & Sanitation % of % of GDP Total 1. with each country at a different point along the path towards sustainable development.5 0. Taken together. % of % of GDP Total 1.8 1.5 trillion is forecast to be spent in East Asia outside Japan between now until 2004 (World Bank.0 2.9 2.trunk infrastructure such as expressways. Also making up for low investments in the past. The issue of access is important. and access to sanitation . particular attention needs to be paid in the planning of investment to ensure that the poor obtain access to the facilities and services which result from these investments. Poor quality and crowded housing. on the one hand. railways and telephone systems.5 2. as is access to clean water .2 Need in the Urban Sector Asia’s economic growth is expected to continue.7 66 16 3 3 3 6 3 Total $B % of % of GDP Total 744 192 269 50 48 145 61 7. 1995-2004 Country Power $B % of % of $B GDP Total China Indonesia Korea Malaysia* Philippines Thailand* Others 200 82 101 17 19 49 25 2.1 1. ports. Half will likely be spent in China where nearly three dollars in four will go to power or transport facilities.4 0. 1995c) These investments will. lack of potable water and substandard sanitation are the rule in the areas where poverty groups live and this affects the poor disproportionately.7 2.4 2.0 0.4 6.2 41 17 20 3 4 10 5 100 141 23 32 6 7 29 18 256 Telecomm. Ausaid .1 0. their needs run into the trillions of dollars which cannot be completely sourced from their domestic capital markets. although perhaps not at the remarkable rates achieved in the 1990s.from a low of 35 percent of urban population in Vietnam.8 0. 1994a). Between US$1.9 0. waste disposal facilities.

Now direct investment is the largest source. Asian governments used ODA to build such projects or borrowed from exportimport banks. It has also provided nearly US$250 million for targetted urban projects . clinics. Habitat is a specialised agency of the UN based in Nairobi. only then. followed by private loans and. telecommunications and transport and regional planning. Such schemes allow ODA (and counterpart government) funds to be focused more on poverty alleviation (see below). or occasionally. and the latter rely on budgets that are approved by their own independent bodies. Foreign investment.3 The UN System The UN’s role in international development is large. housing. 1991). official government aid accounted for two-thirds of the capital inflow to the AsiaPacific developing countries in the mid-1980s. and ODA will continue to be needed. and those that fall under the responsibility of the Economic and Social Council (ECOSOC). new options have appeared for financing infrastructure projects. the UNDP has invested more than US$3 billion to support broad urban projects . with formerly insular countries like India inviting investment from abroad. Economic and social policies are the responsibilities of several UN agencies. The primary task of the UNCHS Technical Cooperation Division has been to make technical cooperation in human settlements available to developing countries in support of local. power. Australia has a strong reform agenda in respect of the UN which concurs with this approach. While the capital needs are huge. Since 1971. either directly or through stock exchanges. The most important distinction between the two groups is that the former rely almost totally on the UN budget approved by the General Assembly. partly from project funds and partly from project management fees. commercial institutions. this investment is beginning to flow to a number of countries in the region. Kenya. official assistance. national. The UN agency with prime responsibility for the urban sector is the UNCHS Habitat which falls under the responsibility of the Secretary-General and its activities are funded partly from the UN budget. Schemes are being tried in which roads. which can be divided into those that fall directly under the responsibility of the UN General Assembly and the UN Secretary-General. power plants and other infrastructure projects are built by private investors. 4. Many of these projects are executed by the UN Centre for Human Settlements (Habitat or UNCHS). there is widespread recognition that the UN system is an important contributor to the development process (but that its assets must be used more effectively). on the whole. is clearly needed to overcome substantial financing gaps. Public perceptions of the UN system have been negative but.for example. such as the ending of the telecommunications monopoly in the Philippines.Urbanisation in Asia 51 In the past. planning. regional. According to the World Bank (1995). The UNCHS technical cooperation programme helps translate global and inter-regional action strategies into concrete action at the country and regional levels. Asian companies are becoming aware of domestic and international bond financing and are raising billions of dollars each year. both direct and through other channels such as mutual funds. Activities have been focused on capacity building in human settlements management and on enhancing the sustainability of human settlement development efforts. Some foreign investment is already finding its way to infrastructure projects through stock markets and the privatisation of monopolies and utilities. The UNDP (1991) maintains Ausaid . the World Bank. infrastructure and services and activities to generate income. New mechanisms of finance are being facilitated by a more liberal investment climate. interregional and global action (UNDP.for schools. The use of some ODA funds to facilitate private funds is a cost effective way of supporting the required investment in many Asian countries. the ADB. As discussed in Chapter Three.

52 Urbanisation in Asia “By promoting long-term programme approaches to national capacity building, the UNCHS technical cooperation programme has been a vehicle for disseminating policy options, analytical tools and strategies, and for consolidating technical capacities at national and local levels for the more effective mobilisation of domestic and external resources”. In practice, UNCHS focuses on Technical Assistance (TA) projects which, in turn, focus on building urban management and urban environmental management capacity. It has effectively no funds for investment projects. Some other projects, such as the UMP (jointly funded by UNDP and the World Bank), concentrate on dissemination of the considerable body of expertise available through individual consultants associated with Habitat and on catalysing TA projects. The Research and Development Division of UNCHS has been responsible for keeping human settlement conditions and trends under constant review and for identifying global policy options. The new urban agenda of UNCHS focuses increasingly on promoting the role of cities in sustainable development and implementing the Global Strategy for Shelter to the Year 2000 and the Habitat II Global Plan of Action. UNCHS is currently faced with severe budgetary problems and lacks a clear strategy to guide its future activity. United Nations International Children’s Fund (UNICEF) disbursements to shelter-related infrastructure and services totalled over US$4.5 billion during the period 1980 to 1993, with three-fifths of the support going to primary/basic health care services (including support for child health and nutrition and for community or family basic health services). This makes it the second largest multilateral aid programme to projects in the urban sector health, despite the fact the UNICEF’s total annual funding commitments appear small relative to most multilateral and bilateral agencies.

4.4

Multilateral Agencies and IFIs
With a central role in the present international system, the IFIs are the main providers of development finance, primarily on a loan basis. These institutions include the IMF and the World Bank Group and four major Regional Banks: ADB, the African Development Bank (AFDB), the Inter-American Development Bank (IADB) and the European Bank for Reconstruction and Development (EBRD). The regional banks are multilateral in structure, but regional in their geographic areas of concern. The World Bank is by far the world’s largest financier of development projects (UNCHS, 1996). The International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) have disbursed about US$16.5 billion for Fiscal 1992 and are expected to increase disbursements to about US$20.4 billion in Fiscal 1993. They have a portfolio of US$140 billion in lending commitments, supporting projects and programmes totalling US$360 billion. Programmes in the urban sector comprise a significant proportion of World Bank activity (see below). Current policy in the sector focuses on four areas - urban poverty, urban finance, urban environment and urban productivity (World Bank, 1991).

4.4.1 Basic Services
The infrastructure and services associated with housing and residential areas receive a higher priority from both multilateral and bilateral agencies than housing itself, or housing finance. Table 4.2 shows disbursement in the areas of infrastructure and services associated with shelter. This table also shows the noticeable increase in the priority given to such infrastructure and services in the early 1990s. The World Bank (IBRD and IDA funding) is by far the largest donor for this group of projects both in terms of aid (through its concessional loans) and in terms of non-concessional loans. Around US$22 billion was committed to the infrastructure and services associated with shelter

Ausaid

Urbanisation in Asia 53

between 1980 and 1993, with most of it allocated to urban areas. Close to half went to water supply, sanitation and drainage, with around a quarter to primary health care, and just over a fifth to basic education and literacy. Virtually all the rest went to social services or social employment schemes. For the non-concessional loans, three-fifths of commitments during these 14 years were for water and sanitation, with close to a fifth for primary health care and for primary or basic education. Thus, while the scale of the World Bank’s commitments specifically to shelter has declined, the scale of the commitments to interventions, central to improving housing and living conditions and providing services that every village or urban settlement needs (e.g. primary health care and schools), has increased considerably. Asia dominates the World Bank’s spending, receiving 50 percent of its total funding in the period of which basic services and infrastructure (see below) received approximately one third.

Table 4.2: The Proportion of Aid and Non-Concessional Loan Commitments to ShelterRelated Infrastructure and Basic Services, 1980-93
Total Proportion of total project commitments funding Water & Primary Basic Poverty (US$B) Sanitation Health Education Reduction Care & Jobs Percent of total commitments 1980– 1990– 1992– 93 91 93

Agency

Aid (concess. loans/grants) World Bank IDA Africa Asia Latin Amer. & Caribbean AFDB Asian Development Fund (ADF) IADB Caribbean Development Bank (CDB) UNICEF 27.9 38.6 1.9 10.2 14.3 6.5 0.7 6.6 3.6 5.5 3.8 7.3 4.4 18.0 4.1 13.7 2.7 5.3 3.5 2.7 1.6 1.4 33.5 4.3 2.7 1.8 4.3 1.7 3.1 7.9 1.9 1.4 7.6 1.3 0.3 1.3 0.5 12.7 15.0 16.8 15.7 7.9 29.6 4.9 55.1 20.0 22.1 41.1 15.8 7.7 28.0 3.1 57.4 15.3 36.2 11.8 15.3 22.6 37.8 2.2 47.9

Overseas Economic Cooperation Fund (OECF), Japan (1987-91) 36.5 Non-concessional loans IBRD Africa Asia Latin Amer. & Caribbean AFDB ADB IADB CDB (Source: UNCHS, 1996) 29.6 90.6 68.7 17.6 30.9 41.7 0.5

3.8

-

0.4

-

4.5

3.7

-

8.0 3.3 5.1 9.0 4.5 6.3 6.7

1.2 0.9 1.6 0.4 1.0 0.3 0.0

0.9 0.9 2.1 1.6 0.3 0.0

0.1 0.04 0.0 0.4 0.6 0.0

10.4 5.1 8.9 11.5 5.6 7.5 6.7

12.3 7.9 12.2 13.5 1.3 13.0 8.5

12.9 6.6 11.1 14.5 0.7 17.3 0.0

Ausaid

54 Urbanisation in Asia Among the other multilateral agencies, the IADB with loan commitments of US$4.4 billion in these 14 years is the largest donor. Table 4.2 shows the high priority this Bank gave to shelterrelated infrastructure and services in recent years. The ADB generally gives a low priority to these kinds of projects although, as Table 4.2 shows, these received an unusually high proportion of total commitments for soft loans (through ADF) for 1992 and 1993. Just over half were for water supply and sanitation. However, in recent years, primary health care, primary or basic education and social funds have received more support, while the proportion allotted to water and sanitation has declined. The priority given to basic education has also increased in recent years.

4.4.2 Infrastructure
Among the multilateral agencies listed, the World Bank remains the largest source of development assistance to urban infrastructure and services (the larger-scale ‘network’ projects as distinguished from the generally local ‘basic’ services discussed above), with commitments totalling close to US$27 billion between 1980 and 1993 (see Table 4.3). Urban services such as secondary and higher education and hospitals received around 40 percent of the funding, with around 33 percent to urban infrastructure, 18 percent to integrated urban development and 7.5 percent to improving urban management. The trend over these 14 years has been a shift away from large infrastructure projects to support for secondary and higher education, strengthening the capacity and competence of city or municipal authorities in urban management and integrated urban development. In recent years the World Bank has given a greater priority to pollution control in urban areas. Although loan commitments were made before 1990 (indeed, a loan commitment to Sao Paulo to help control river pollution is recorded in the Bank’s 1971 Annual Report), it is only since 1990 that one or two projects have received funding each year. In 1993, three urban pollution control projects received support with commitments totalling more than US$700 million. The ADB made commitments totalling US$6.4 billion between 1980 and 1993. Just over twofifths went to urban infrastructure (mainly ports and urban electrification), with just under twofifths to urban services (mainly secondary and higher education) and one-fifth to integrated urban development. The ADB also made its first loan for a comprehensive urban environmental improvement project in 1992 - to Qingdao in China. The AFDB group committed about US$2.9 billion during these 14 years with most going to secondary and higher education, hospitals and city electrification.

4.5

Bilateral Assistance
The bulk of international financial assistance, in terms of net transfers to the developing countries, comes from the bilateral assistance provided by the members of the OECD’s Development Assistance Committee (DAC). The most recent DAC report shows that its members contributed US$54 billion in ODA flows to developing countries and multilateral institutions. This amount has shown a small, but consistent, decline in terms of the percentage of member GDP devoted to aid (Randel and German, 1996). It is much more difficult to provide a comprehensive overview of the commitment of bilateral agencies to human settlements projects. Unlike the multilateral agencies, few publish details of all the projects they fund in enough detail to allow an analysis comparable to that provided above for the agencies listed in Table 4.2. The most up-to-date figures available for the bilateral agencies’ priorities in this area are shown in Table 4.4. They are reported under a category termed ‘social and administrative infrastructure’, which incorporates health and population, education, planning and public administration and water supply and ‘other’. This is the category used by the DAC to report on funding flows from the bilateral aid programmes of OECD countries. No more detailed statistics are available that allow comparisons between these bilateral agencies.

Ausaid

5 4.6 3.8 10.7 2.4 4.9 2.9 10.7 7.7 1.2 20.5 0.4 0.9 4.0 0.4 3.2 14.3 14.0 0.0 2. Hospitals Transport Dev.3 3.4 3.5 2.0 16.0 2.3 10.9 38.0 0.3 6.1 6.8 8.9 16.1 11. & Caribbean AFDB ADF IADB CDB Arab Fund for Economic & Social Development OECF.7 17.7 36.1 0.4 6.3: The Proportion of Aid and Non-Concessional Loan Commitments to Urban Infrastructure.7 12.3 10.1 0.4 0.4 15.5 9.3 0.0 4.6 30.9 4.2 0.8 n.6 33. Total Urban Colleges & Public & Integrated.1 3.8 6.0 0. 1980-93 Proportion of total project commitments Urban Mngt. Percent of total commitments 1980– 93 1990– 1992– 91 93 Agency Aid (concess.6 15.5 13.4 0.3 0.Urbanisation in Asia 55 Table 4.2 11.6 90.0 3.0 0.4 5.8 9.1 16. 1996) 29.0 0.7 1.6 5.0 6.0 3.a.6 0.1 3.9 14.0 11.8 1.8 3.7 17.5 2.5 0.0 3.0 1.4 4.5 - 0.9 41.2 11.1 15. Japan (1987-91) Non-concessional loans IBRD Africa Asia Latin America & Caribbean AFDB ADF IADB CDB (Source: UNCHS.0 14.0 3. (US$B) Infrastruct.6 68.3 8.6 20.9 1.3 6.6 1.4 16.9 0.4 18.3 10.5 2.0 14.8 16.2 1.8 7.4 4.0 0. Urban Services and Urban Management.1 0.5 2.5 13.1 4.3 3.2 14.4 18. 7.0 0.6 2.1 - Ausaid .6 1.9 8.7 0. loan/ grants) World Bank IDA Africa Asia Latin Amer.3 12.4 1.3 8.1 5.8 27.7 0.

1 2.2 25.6 6.8 5. even if this is not yet apparent in the latest statistics showing their sectoral priorities.9 11.7 36.1 1.4 5.4 1.8 7.3 41.6 2.1 9.3 12. In recent years. this does not reflect a priority to basic education.4 4.2 4.3 39.4 1.2 3.9 22.56 Urbanisation in Asia Table 4. over US$400 million was authorised for various initiatives to support USAID private sector or municipal investments in Ausaid .4 2. with 10 of the 19 bilateral programmes giving less than 5 percent. The United States Agency for International Development’s (USAID) Office of Housing and Urban Programmes made large commitments to urban infrastructure.6 12.1 14.2 19.4 7.4 2.4 12.2 4. especially water and sanitation between 1990 and 1993.9 8.6 1.5 12.7 0.7 1. several bilateral and multilateral agencies have shown a greater interest in urban poverty.8 3.8 0. the Dutch Government’s bilateral aid programme incorporates a new programme on urban poverty.3 5.2 1.2 Australia Austria Belgium Canada Denmark Finland France Germany Ireland Italy Japan Netherlands New Zealand Norway Spain Sweden Switzerland United Kingdom USA Total DAC (Source: OECD.6 2.1 3. Education receives a higher priority but.6 6.4: The Priority Given by Bilateral Aid Programmes to Different Project Categories within 'Social and Administrative Infrastructure'.3 20. The average of total spending for water supply and ‘other’ was 4.5 5.1 0.3 2.9 28.9 5.8 0.8 8.8 0.9 17. in most bilateral programmes. For instance.3 6.4 3.3 4.6 4.4 3.9 14. 1994) 30.1 6.8 11.4 2.4 2. 1991 The Percent of ODA to: Countries Education Health & Population Planning/ Public Admin.4 3.3 3.5 0. Water Supply & Others Total social & administrative infrastructure 43.0 9.6 4.0 15. during 1992-93.9 1. in the context of the total aid effort.7 24.4 11.9 21.4 51.9 24.1 0.6 2.0 5. For instance.2 3.0 26.9 These statistics indicate a low priority to urban water and sanitation and to health and population.6 19. Most bilateral assistance to education goes to support scholarships for students from the South to study in the higher education institutions in the donor country.9 percent.7 2.3 4.4 5.0 2.4 4.9 31.5 32.6 12.8 3.9 7.7 4.2 1.5 8.1 12.2 3.5 2.3 1.1 22.3 14.7 8.

5: Bilateral Agencies’ Official Development Finance Commitments for UrbanDevelopment by Purpose.5 430.6 1990 26. Although upgrading projects did improve conditions for several million urban households at a relatively low cost.9 175.0 716.5 984.8 0.469.4 68.8 3. most funds went to projects that differed considerably from conventional public housing.329.4 120. on average.0 1.6 998.6 73.9 52. sanitation and other forms of urban environmental infrastructure.7 3.Urbanisation in Asia 57 water.1 38.7 108.417.403.0 2.1 2.0 Total 1986-90 251.0 5. three to four times total bilateral spending in the sector each year.0 35. Table 4.7 4. 1986-1990 (US$ Million Constant–1990 Value) 1986 Urban development Housing Water and waste mngt. Ausaid .4 165.195.648.3 74.0 652. These programmes made up for the lack of past investment by local authorities and by the private sector.0 570.6 95.4 741.1 1987 33.0 100.3 13.0 629. The data available on most bilateral agencies is insufficient to permit a detailed analysis of funding to urban infrastructure and services.0 0.0 397.7 168.5 1.7 617. there were often problems with maintaining the upgraded infrastructure and services.5 1989 31.5 138.545.9 5.1 660.0 540.1 1988 66. 1992) 93.413. this Office became a unit within a new Environment Centre USAID. The Office of Housing and Urban Programmes has been renamed the Office of Environment and Urban Programmes.5 457. Transport Gas distribution Electricity distribution Pollution control Harbour/docks/airports Health Cultural activities Total (Source: OECD. rarely did they also increase the capacity of local authorities and citizen groups to maintain them.0 2.1 35.5 1.0 62.3 254.2 2. In 1994. However.2 72.3 Between 1980 and 1993.659.2 0.9 68. the DAC documents the scale of support from bilateral agencies to urban development as presented in Table 4. While such projects improved conditions considerably.0 685.811.0 21.0 478.7 522.5. These figures suggest that multilateral donors are far more significant sources of funding for urban infrastructure and services than bilateral donors. drainage and some community facilities.3 576.5 0. a few donor agencies provided significant support to low-income housing projects in urban areas.4 191. which was established to provide technical and program leadership and lend support to USAID personnel (including its field missions) and its domestic and international development partners on global and sustainable development/environmental problems.0 1. More importantly.0 334.652. For instance. support was provided for ‘slum’ and ‘squatter’ upgrading schemes that sought to improve conditions within existing low-income settlements by providing or improving water supply and for supplying sanitation. the World Bank alone disbursing. most of them in large cities.2 0.0 917. Many such projects also provided secure tenure to inhabitants whose house or occupation of the land (or both) had previously been considered ‘illegal’.8 93.

and are independent of government politics. This kind of aid still constitutes about 80 percent of the annual commitments of the World Bank. they have also demonstrated that low-income households are willing and able to repay. and the Bank has emphasised the appropriate participation of NGOs in the design and supervision of Bank-funded projects. sanitation and income generation needs. On the one hand on the part of NGOs in both developed and developing countries.58 Urbanisation in Asia Despite being dwarfed by multilateral programmes.1 Project Aid Much international agency support has come in the form of project aid. One of the Ausaid . on the part of these agencies. Linked with shelter needs. and increasingly. The fund has a capital base of US$150. 4. As well as demonstrating the need for appropriate housing finance. repayment rates achieved are much higher than those of wealthier groups repaying to many commercial banks or housing finance institutions. the Wapenhans Report (citied in World Bank. it supported 830 households with about one-third of the loans being outstanding at the end of this period. much bilateral assistance is grant-funded and much of these funds are for TA. The revolving loan fund of Catholic Social Services in Karachi. bilateral or multilateral) funds.6 Non-Governmental Organisations NGOs have played an increasingly important role in development assistance. A recent review of the World Bank’s overall project portfolio.7 The Types and Experience of Aid in the Urban Sector 4. The NGO experience over the last 20 years has provided a basis for the design of many of the innovative povertyfocused government/multilateral/bilateral programmes (see Chapters Three and Six for examples). In 1989. The household’s involvement in loan repayments achieves important development objectives at both a micro and macro-level.000. 1995).7. that is. They usually have highly motivated staff and low operating costs. Such projects are now incorporated into multilateral and bilateral programmes which often. The advantage of this kind of aid is that it enables the concerned agency to appraise the merits of the proposed project. NGOs have distinct advantages as agents of development. Such experiences have demonstrated that a lack of loan finance for housing is an important factor in increasing household consumption expenditures and delaying house consolidation. NGO projects routinely ‘crosscut’ health. Indeed. On the other hand. they do not wish to be ‘captured’ by official ODA agencies. The World Bank and many aid agencies remain primarily project financiers. Institutions such as the World Bank have recognised the importance of NGOs in the process of fostering development. 4. bilateral assistance plays an important role in the sector. which is important in augmenting the capacity of local institutions to manage the investments undertaken with other (government. NGO projects in the sector use small independent revolving loan funds in which households repay funds to a capital fund which then makes the funds available to another household. With increasing resource flows has come dual concerns. is typical of such programmes. water. 1994b). financing and TA tied to a specific investment or programme. are close to the grass-roots.3 billion). The weight of experience has been in shelter rather than infrastructure provision. and it is this aspect that many government programmes have sought to replicate (UNCHS. In many cases. total grants from private voluntary agencies (US$4 billion) represented 5 percent of total recorded DAC resource flows (US$85. 1996:386). are utilising NGOs in implementation. Between 1981-92. documented an increasing number of poorly performing infrastructure projects. NGOs need to be accountable for the efficient implementation of projects and programmes funded with public money (Edwards and Hulme. In particular. Pakistan. maintaining a strong orientation towards the people they serve.

1994b:86). significant structural deficiencies in the focusing of delivery systems and. which can lead to an upward bias in estimating rates of return. when countries are reeling under external shocks and severe liquidity crises and their economies are starved for imports. be linked to improvements in the country’s macro-economic management. Nevertheless. in cases of insupportable repayment levels. The current focus on urban poverty is welcome.7. or compensatory finance (nonproject finance) is needed. Ausaid . In addition.7. Before undertaking this analysis. Education has a high priority. Australian experience in urban sector development assistance will be reviewed briefly. 1996). This assistance should. indeed. the report argued that greater attention to uncertainty and risk was warranted in project preparation (World Bank. 4. NGOs are of increasing importance in the delivery of assistance. as seen above. of development assistance in the urban sector points to the lack of focus in projects and programmes of the institutions involved in the sector. however. projects were often too complex. do not have high priority in most aid programmes.3 Other Forms of Aid Although the two forms of aid discussed above constitute the ‘mainstream’ channels of aid delivery. however. ‘twinning’. projects with a wider scope. prepared for the Habitat II Conference (UNCHS. The subsequent chapter examines best practices in development assistance delivery by sector. Environmental projects are of increasing importance. In 1987. Finally. The record is far from perfect in respect of the effectiveness of TA projects judged against their stated goals. However. Mostly.2 Technical Assistance TA aid is where OECD country programmes or less common multilateral agencies pay for (the transfer of) technical skills to the recipient country. ‘environmental’ projects have usually addressed the mechanics of pollution control and monitoring. have also addressed issues related to differing income groups within the context of a cross-sectoral approach to environmental problems. in the performance of those systems generally. has been recently used. 4. balance of payments support. In the urban sector.water enterprises are one example. but have encountered difficulties in ‘scaling-up’ activities. relative to implementation capacities. This form of assistance enables individuals from like organisations in donor countries to undertake TA assignments in developing countries. TA to Sub-Saharan Africa totalled US$4 billion. either individual or. working with consultancy companies. is needed in exceptional circumstances. This skill transfer is usually provided by consultants. The arrangement is more common in the utility areas . In addition. The next chapter will undertake a more detailed analysis of delivery practice in such provision in the case study cities. Buyck (1991) and Paul et al (1989) have reviewed the TA programmes of the World Bank and provide a good analysis of such projects initiated by the various international agencies.7. but the majority of funds tends to be for higher level assistance. such as the Metropolitan Environmental Improvement Programme (MEIP) and the Sustainable Cities Programme (SCD).Urbanisation in Asia 59 causes of this increase citied by the report was a tendency to concentrate in the appraisal process on loan approval. 4.4 Focus The overview. this aid is used in support of the implementation of project aid which represents an important element of foreign assistance. the report showed that. disaster and humanitarian relief is required and debt relief. although a newer form of technical assistance. but basic services at the community-level which are most important to poverty groups. There are therefore. there are examples of effective action to alleviate poverty and promote sustainable development.

as in respect of the water supply sector in 1990 . In some of the larger country programmes. although the concentration of aid will not change substantially . these figures will change significantly. This being said. reflecting development priorities of the country concerned and Australia’s role in relation to other donors. have significant urban components but are not included in the estimate. the case study cities contained no ongoing AusAID urban projects. the lack of geographical focus is seen as a potential problem from the viewpoint of achieving rural-urban links within the programme and synergies among sector areas and between the bilateral and NGO programmes.the results of the evaluations were not specific for urban projects (which are dominated numerically by rural water supply projects). in the Philippines for example. although the project mix varies extensively among countries. has not yet been implemented in Cebu. Water supply and sanitation are extremely important from the viewpoint of support to sustainable development. A$160 million (of which A$90 million was through the former Development Import Finance Facility . give no clear picture of performance. On the one hand it overstates urban spending because such items as the A$65 million Mekong Bridge are included.8 Australian Aid in the Urban Sector AusAID’s urban programme is significant.DIFF) for Indonesia. Although the criteria may be questioned. The figure is indicative. Project approvals current (1996) in the urban sector total . A$115 million for Vietnam. A$60 million for China (almost all DIFF) and A$50 million to the Philippines (A$35 million DIFF). are not included in the A$900 million. is striking. The Philippines Regional Municipal Development Project. Ausaid . India in particular. Such reviews as have been attempted. One project which has significant potential to act as an example of best practice. The spread of spending is relatively concentrated with one third (A$300 million) destined for Papua New Guniea. The sectoral focus of project aid is towards water supply and sanitation. However. Where sector-wide evaluations were carried out . the small scale of other programmes supporting poverty alleviation and response to globalisation forces. for example in health and community development. the results of these evaluations cannot provide examples of best practice. such as support to the telecommunications sector and to economic development activity/private sector development (to micro-enterprises in particular).according to one set of categorisation . numerous urban sector projects have been evaluated in terms of their performance against nominated outputs. such results give credence to the proposition that the inherent complexity of urban projects requires upgrading of existing project delivery systems to ensure the adoption of best practice in the sector concerned.60 Urbanisation in Asia 4. In terms of the preceding discussion of urbanisation trends.with the exception of the reduction in prominence of China. Over the last two decades. Unfortunately. the underrepresentation of countries with significant concentrations of urban poor. as it should. it understates AusAID presence in the sector because many sectoral projects. is clear. AusAID has carried out successful urban sector projects which respond to the issues raised above. However. particularly in view of the health/environmental nexus that is particularly important for the poor. and this ‘hit rate’ appeared to be much lower than for agricultural projects.over A$900 million. Other than those undertaken by NGOs in Cambodia and the Philippines (see below) and the Hanoi Masterplan Project. With the curtailment of the DIFF scheme. no comprehensive analysis of urban project performance has been attempted. as the projects were not evaluated in respect of wider urban sector/institutional development goals (such as those set out in Chapter Two). NGO projects in urban areas. the 1991 Australian International Development Assistance Bureau (AIDAB) Effectiveness Review of Australian Development Cooperation with China did find that only one out of three urban sector projects were ‘effective’. In addition. In respect of the actual performance of projects. On the other hand.

the same lesson has been learned and. Bilateral and UN agencies have similar priorities. again. Ausaid . Both bilateral and multilateral agencies are increasingly utilising NGOs in implementation of projects especially in those aspects of projects which focus on grass-roots. No ‘magic formula’ for success in projects has been found.Urbanisation in Asia 61 4. especially grant TA funds. and efficiency improvements must focus on better implementation and sustainable management/maintenance of investments catalysed by ODA. the following observations on the major trends in development assistance in the urban sector may be made. but their spending (declining as a proportion of OECD GDP) is more oriented towards technical assistance focused on capacity building particularly in formal education but increasingly in terms of improved human resources and systems within urban management organisations. The next two chapters will detail lessons relating to efficient implementation and maintenance by drawing on the analysis of the case study cities and on examples of best practice in the sector. experience with both government and NGO implementation mechanisms has been mixed. poverty-focused community development. • • Multilateral development banks focus on loan funding infrastructure. both at the city-wide level and at the local level in support of shelter projects. In grass-roots projects. Large-scale projects have been effective in both supporting economic development and poverty alleviation if they have been effectively implemented and managed by recipient institutions. In many projects this has not been the case. • • The implications for the design of future development assistance are: • • more efficient use needs to be made of scarce ODA funds (in the context of demonstrably greater investment and capacity building needs).9 Conclusion Generalising from the above analysis.

even in Australia (AIDAB. CEBU. Elsewhere. HANOI. 1993). social and environmental dimensions . Ausaid . Thus. This context determines: • the impact of such actions (e.g. The difficulty with strict definitions is that such concepts as pricing to ‘recover the full social and environmental costs of their use and extraction’ are operationally difficult. and the replicability of the actions (e. 1992) and Towards a Sustainable Future (AIDAB.1. Urban poverty alleviation has been analysed under four major issue categories: • • • • Micro-Enterprise Development and the Informal Sector Human Resource Development Health and the Environment Rural-Urban Linkages The four issue categories encompass the spectrum of activity in the area of poverty alleviation and correspond broadly to categories utilised by multilateral agencies in structuring their activity. social and environmental sustainability as defined in Agenda 21 (United Nations Conference on Environment and Development (UNCED). the ability for a micro-credit scheme to go beyond the first tranche of aid-donated funding to a few ‘pilot’ households or enterprises in a given area). Cambodia and India. the more general definition adopted in Agenda 21.1 Methodology and Concepts: Poverty Alleviation Through Sustainable Development Poverty alleviation has been central to the analysis of the case studies. 1994a). as indicated in Figure 5. the ability to replicate such a micro-credit scheme in other areas and cities). is better suited to the current study. • If sustainable development encompasses the concepts of economic. social and environmental context within which these actions are undertaken. PHNOM PENH This chapter presents the findings of a study on urbanisation in the four case study cities conducted by the Australian Housing and Urban Research Institute (AHURI) in conjunction with its partner institutions in the Philippines. The discussion of the four issue categories will illustrate their dimensional interrelationships. As shown in the diagram. 5.62 Urbanisation in Asia 5 CASE STUDIES – CALCUTTA. the central concept of the Agenda 21 definition of ‘sustainability’ was the need for sustainability to be achieved in economic.and that these dimensions were interrelated. The definition of sustainable development offered in Agenda 21 has been criticised as being insufficiently defined and insufficiently ‘strict’. The case studies have shown the critical interdependence between effective micro-level actions designed to alleviate poverty and the economic. Vietnam. given the variety of circumstances and context in which it will be used in respect of urban development. 1994a). then it is possible to construct a conceptual framework for placing the four broad categories in context. Australian environment groups have defined a strict definition of sustainable development which places more emphasis on biodiversity and limits on natural resource use (Beder.g.

1 Micro-Enterprise Development and the Informal Sector The key to poverty alleviation is the generation of income for poor households. food and cigarette vending. outside mainstream economic activity in small micro-enterprise activities such as small shops and service establishments. Ausaid .Urbanisation in Asia 63 Figure 5. 5.1: Conceptual Framework for Understanding Sustainable Development in the Context of the Four Issue Categories SUSTAINABLE DEVELOPMENT Urban Proverty Economy Society Enterprise Development Rural-Urban Links Human Resource Development Health & Environment Environment In addition to the major issue categories identified above. bicycle and car repairs. These crosscutting issues interrelate and within this overview document they will be addressed in each of the major issue categories.that is. several crosscutting issues were utilised in the analysis of the case studies. These were: • • • • institutional capacity private sector participation finance gender.1. In many cities. collecting and reprocessing rubbish and scavenging in garbage dumps. the majority of people are employed in the informal economy . transportation of passengers.

The study has highlighted there is considerable scope to extend micro-enterprise development and the informal sector. The majority of the poor own or work in small enterprises which are generally perceived as informal. with about 80 percent of the unemployed and 60 percent of the casually employed estimated to be working in microenterprises in 1989.000 in an environment where the private sector can only absorb around 15. inter alia. In Vietnam. provide an opportunity to compare approaches. The four case studies indicate the significant contribution that micro-enterprise development and the informal sector can make to their national economies. This perception is fallacious. the informal sector or ‘pavement economy’ is significant.000 persons in Vietnam earned their living from microenterprise activities including mobile food catering. An important finding of the study is the contribution females make to micro-enterprise development and the informal sector. among the case studies. 25 percent had no access to sanitary services.2 Urban Poverty and Sustainable Development A summary of the case study findings is set out in the following sections. Using data from Lea and Courtney (1986) and ESCAP (1992). 20 percent were urban squatters.2.an economy which is stagnant cannot support more enterprises and employment. it faces institutional and financial constraints which hamper efficient investment. the ADB report that between 1980 and 1982 the percentage of the labour force in the informal sector in many Asian metropolises was high. there exist considerable differences in levels of government involvement. housekeepers. Such positive gains must be considered in respect of significant numbers of informal sector workers suffering from poor health. by local government. and in capacity of NGOs and CBOs involved. they are outside mainstream economic activity. Micro-economic reform influences their relationship to the formal sector. Females play an important role in Cambodia’s informal sector employment performing activities such as maids. In total some 125. However.000 self employed and 22.000 new entrants at present. Due to its ‘informality’. 5. In many cities the majority of people are employed in the informal economy. development and expansion.000 unpaid family workers operated in the informal economy. 1994:20). estimated to number 135. that is. Calcutta with 54 percent and Manila with 50 percent. Without macroeconomic success. transport services and craft industries (National Institute of Urban and Rural Planning. 30 percent had no water or electricity.1 Micro-Enterprise Development and the Informal Sector The key to poverty alleviation is the generation of income for poor households. Of these. low education attainment and low skill’s levels. In Cambodia the informal sector absorbs many of the new entrants to the labour force. bar hostesses and sex work. the ADB (1995) estimate that between 1980 and 1982 in Jakarta 65 percent of the total labour force was engaged in the informal sector. 5. however. around 50 percent had completed primary education. Disparities in financial incentives for the poor to improve their conditions through small local initiatives and differences in levels and type of ODA support to programmes which target micro-enterprise development and informal sector activities. Informal sector workers suffer from poor health and low skill levels.64 Urbanisation in Asia Although data on the number of persons employed in the informal sector are scant. followed by Madras with 60 percent. Ausaid . Cebu • In 1992 it was estimated that almost all of the 67. 66 percent did not have skills necessary to perform in the industrial and formal service sectors and 34 percent had a daily income of less than P50 (A$1). it is difficult to alleviate poverty . Micro-enterprises and the informal sector operate within a framework of physical and social infrastructure support provided. especially the financial sector.

90.16.000 in 1994) is a consequence of poor social and economic conditions. housekeepers. was established to provide financial help (subsidies and loans) to those unemployed and under-employed living beneath poverty levels. with workers at the mercy of brothel owners and the police. • • • Ausaid . chemicals.000 (A$800) of which 25 percent is subsidised. Women with access to permanent market stalls have access to Tin Tong (savings group system). lack of credit lines and lack of creativity. Around 70 percent of the slum population are employed in the informal sector and small scale entrepreneur programmes operate to improve slum dweller’s conditions (financed by Federal and State Governments. • • Phnom Penh • Micro-enterprises are an essential survival mechanism for Phnom Penh’s urban poor. Experience thus far with this programme has been positive. with a sustainable financial base being established.Urbanisation in Asia 65 • The importance of contribution to the economy and in the area of family support (many are the primary money earners and are widows) is highlighted in that informal sector comprises 78 percent females (compared to 53 percent nationally). increased competition. The maximum assistance is Rs. producing a number of consumer goods. • Calcutta • Micro-enterprises and the informal sector are strong. bar hostesses.500 in 1990 to some 17. including lack of access to information and education programmes. In 1990 a new NGO-financed programme. Schemes for Urban Micro-Enterprises (SUME). The outlawing of prostitution in Phnom Penh has forced females into discreet business activities.000 Cambodians are currently HIV positive). and the United Kingdom Overseas Development Administration) through loans made available via national banks. In Phnom Penh. The incidence of poverty is highest in the country-side where 40 percent of all households (comprising 32 percent of the rural population) were below the poverty line. These figures present opportunities for rural based micro-enterprise initiatives to lessen poverty alleviation. 24 percent of households live below the poverty line.5. Numerous NGO programmes and programmes utilising NGOs provide support to the sector. sex workers). Constraints to their success are poor location. Numbers of persons having sexually transmitted diseases are increasing (for example. with the most effective appearing to be such programmes as ‘TST-SECA’ where a NGO utilises its ‘own money’ rather than acts as a conduit for external funds. The urban informal sector comprises mainly females working in excess of five hours per day and young people (mostly young females as maids. A lack of capital is perceived as the major impediment to profitable economic activities in the informal sector with interests charged on loans varying between 0 and 45 percent per month. with lower caste persons being eligible for an extra Rs. light manufacturing and so on. Two state government programmes are lending support to improve poverty alleviation Schemes for Urban Wage Employment (SUWE) which aims to provide employment to the urban unskilled workforce and the Community Environmental Management Strategy (CEMS) which gives disadvantaged and vulnerable communities more control over their lives and the environment.000. The growth of the commercial sex industry in the informal sector (for example. in Phnom Penh the number of sex workers has increased from an estimated 1.

luggage handling. Many females specialise in junk buying and run pavement recycling deposits. 8.for example. Hanoi • The inability to gain employment has seen the proliferation of micro-enterprises clustered in the inner city and along transport routes through the city . with the remainder being city residents. It is estimated that 6 out of 10 urban poor women are subjected to domestic violence. The case studies have also shown that human resource development for poverty groups must be undertaken in the context of broader education and productivity/labour market policies. well managed and provide linkages to formal sector finance and markets. Ausaid . Estimates of persons employed in micro-enterprises vary. • 5. but little systematic analysis of outcomes is evident .000.000 were either under-employed or in casual employment. Micro-enterprise activities are clustered around mobile catering. Social education programmes are also lacking . In 1989.000 scavengers work in Hanoi. there are significant questions as to the relevance of the material taught in many of the educational institutions. withdrawing to a funding role as local NGOs’ capacity increases. • • Lessons learned: • • support to the informal sector is a high development priority and demand for such support activities is high even if they are given on a cost-recovery basis. International NGOs.the ‘pavement economy’. while males from rural areas travel to work as truck loaders. slow. by the end of 1996). however. In addition. 52. however.600 were from the ranks of the unemployed. support to the sector can effectively alleviate poverty.000 persons were estimated to be unemployed and 14. Keeping pace with increasing urbanisation and additional consumption will exert pressure on the limited existing government collection infrastructure. in some cases.000 persons employed in micro-enterprises. 41. Of the estimated 125. transport services and handicrafts. and best practice in the sector consists of ensuring the support programmes are financially sustainable (they recover costs). addressing the issue of domestic violence in the Philippines and Cambodia.2. A number of scavengers and junk buyers work the city dumps and collect materials thrown along city streets for recycling.2 Human Resource Development The case studies have demonstrated the importance of vocational and other types of education as essential for poverty alleviation.66 Urbanisation in Asia • Programmes focused on poverty groups mostly catalysed by international NGOs and. Generally the poor lack educational opportunities.4 billion increasing to VND 2 billion. and in overcoming the institutional and financial difficulties associated with enrolment and attendance. The fund provides small loans to poor women. are still maintained by them. around 6. food market vendors. A Savings Day for Poor Women Fund has been established by the Hanoi Woman’s Association (estimated at VND 1. providing an avenue for waste specialisation in the informal sector through improved capacity and capability. are. In peak times.disbursements and repayments being taken as a proxy for effectiveness in this area. Support for micro-enterprise is. or US$190.400 were under-employed or casual employees. bottle buyers and scrap metal dealers. both in terms of the quality and number of facilities.

2 percent of females. and is an effective community-level education initiative. primary education attainment for total labour force in Vietnam is 44 percent. only 3 percent are qualified to continue beyond postsecondary (only 15 percent of students in the University of Phnom Penh are females). Women also comprise significant numbers of street persons and 75 percent of these were accompanied by children. While 7. Ausaid . • Hanoi • There are disparities in education levels attained between Vietnam as a whole and Hanoi and between Hanoi city and the suburban municipalities. numbering between 60-70 pupils.Urbanisation in Asia 67 Cebu • The World Bank (1995) has highlighted the under-financing of primary education in the Philippines as a critical development issue (1 in 3 Filipino children entering first grade fail to complete the elementary cycle. While high literacy exists (77 percent of the Calcutta population). Public school class sizes are high. The UNICEF United Kingdom Overseas Development Administration funded UBSP provides basic literacy education and some skills programmes. class exploitation and caste inferiority.43 percent of the total dump labour force were children aged 5-18 years. • • • Calcutta • The government is committed to improving literacy with primary education in the metro area which is provided at no cost in 500 schools. The plight of children is demonstrated by the high numbers working at the city’s main dump . Education levels in Hanoi city are relatively high compared to suburban areas of the municipality and Vietnam (for example. condemning them to a continuous cycle of poverty). compared to 19 percent in the suburban districts.000-10. • • Phnom Penh • There exists a disparity in educational attainment between males and females . 21 percent have completed tertiary education compared to 4 percent in the suburban districts. and the education curriculum is not commensurate with skills required in the market place. Around 34 percent of the labour force have completed secondary education. There is a high incidence of street children (estimated at between 5. Street children have limited access to services including education and are not protected by child labour policies or safety standards. reportedly worse than the national average of approximately 70 percent. less than 50 percent have the required qualifications to teach mathematics and science).5 percent of females complete upper secondary. Cebu Province has a low level of primary school completion. Urban Basic Services Programmes (UBSP) projects contain community education programmes (often focused on women) as part of integrated poverty alleviation activity and have been successful in catalysing community support.000) with 75 percent coming to the streets in search of employment.11 percent of males have no education compared to around 22. unemployment is increasing as job creation does not keep pace with population growth. Women are disadvantaged in gaining access to education opportunities and income generating opportunities due to male dominance. Physical infrastructure in schools is lacking with around 50 percent having no water facilities and around 66 percent having no electricity in the 1980s. in Hanoi it is 79 percent). The education qualifications of teachers are poor (for example.

and the capacity of environmental authorities to set and enforce appropriate standards. the programmes are delivered more effectively by CBOs which can mobilise community support to lobby for. • the lack of a coordinated. In turn. success in the formulation and implementation of such policies is determined by the capacity of local government. fisheries. and Ausaid . Despite several generations of ‘urban development’ projects. this situation persists in many areas and can be attributed to a number of factors including: • changing government policy. better teachers and facilities and to ensure good teachers are kept and facilities maintained. these programmes coexist with a situation in the formal education sector where. lack of potable water.2. the collection of household wastes and health care service. sustainable in social and economic terms) were community-based and run and. focus on supporting CBOs in the activities. primary education. • the role and level of participation of NGOs in aid programmes. and substandard sanitation are the rule in the areas where poverty groups live. mangroves. had no ongoing involvement of international NGOs but did have some ODA input. forests. • • • 5. disparities persist in access to these services especially between lower and higher income groups.g. inadequate facilities and unsuitable curricula. The study has indicated that poor quality and crowded housing.68 Urbanisation in Asia Lessons learned: • the more successful programmes (that is.g. coastal habitats) leading to serious environmental degradation and public health problems. the ability of the financial sector to fund both poverty groups and local government. successful community-based education programmes are relevant to the life experience of the poor and allow them to determine the allocation of resources. Success in improving conditions in both areas is determined by shelter policies and policies determining access to basic infrastructure at the local level. and these programmes targeted both adults (especially women) and children. Health and the environment are intimately linked for poverty groups. reduced labour demand. • the lack of clear property rights and ineffective management of ‘common’ resources (e. as many of their children drop out and those that continue suffer poor quality education due to unqualified teachers. mainstream educational systems should. However. given that these attributes require a relatively labour-intensive approach. does not greatly benefit the poor. water. with the exception of Cambodia. • resource constraints. and thus. in respect of the poor. in theory universally available. • the lack of macro-policies focusing on protecting and enhancing natural resource assets rather than on financing consumption and the acquisition of capital: on the growth of energy and capital intensive polluting industries with little consideration of impacts (e. The case study cities are subject to an array of urban management initiatives which have provided improved water supply. pollution).3 Health and the Environment People must be healthy in order to work and study effectively. or pay for. collaborative urban development and management strategies. sanitation provision. drainage.

Total Suspended Particulates (TSP) in Metro Manila exceeds US annual average TSP by over 200 percent (transport contributes 60 percent. services and occupational health services. Land prices are high and land suitable for housing is minimal due to mountainous terrain and limited amenable locations. Air quality in urban centres is poor as a consequence of urbanisation and the use of private and commercial vehicles. Land ownership presents an important problem in Cebu where only 1 percent of the urban poor own the land on which their house is built.6 percent of GNP spent on public health (a low level when compared to other ASEAN countries). The incidence of homelessness is high with some 0.g.05 g/ml) and chemicals used in metal and pottery manufacture.Urbanisation in Asia 69 • low community-based involvement in deciding solutions to social. economic and environmental problems. not supplied to 26 percent of the Philippine population (28 percent in Cebu). Colony Improvement Programme and the Health Programme.9 percent of the urban poor. while 28 percent do not have access to sanitary toilets. United Kingdom Overseas Development Administration in respect of the UNICEF UBS programme). Cebu • In 1990. although 60 percent own the house they occupy. chromium compounds are greater than 1. air pollution. inadequate access to shelter. with open drains serving as sewers. • • • • Calcutta • A number of environmental health problems exist as a consequence of urbanisation and industrialisation including. A state government programme which is lending support to improving health is the CEMS. This gives disadvantaged and vulnerable communities more control over their lives and the environment. Slum dwellers have little access to potable water.resulting in wastes being dumped in bins. These are supported by Federal and State Governments with some foreign aid assistance (e.000 times permissible level of 0. on average.g. water pollution from tannery effluent on the Calcutta eastern outskirts (e.6 million people sleeping on the footpath each night. • • • Ausaid . The Philippine urban squatter population comprises 36. in the Philippines. Government spending on health totalled 2. Health and employment programmes form a significant component of physical and socioeconomic improvement of city slums (including infrastructure and housing improvement and preventative health programmes). Waste management lags significantly behind developed countries with 40 percent of urban households not receiving municipal garbage services .4 percent of Gross National Product (GNP) between 1985-1987 with only 0. or being burnt (35 percent of households) and deposited in open pits (12 percent). Multiple programmes are undertaken: the Bustee Improvement Programme. The World Bank (1995) estimate that clean water is. water-borne diseases comprised the three leading causes of morbidity and second leading cause of infant mortality. 58 percent of Cebu’s population were squatters or renters. In 1990 only 25 percent of barangays (local districts) had easy access to a health station. industry 40 percent). In 1992. For example. garbage clearance and sanitary toilets. streets and waterways. Employment Generation Programme.

The average living space is small at around 5. However. In 1989. overcrowding may not be an important issue as concepts of personal space may be deemed less important to notions of kinship. Hanoi’s environmental problems have impacted directly on public health with an increased morbidity from. offsets gains made through clean production. headaches. skin and eye diseases. The private housing sector is experiencing a boom with middle and upper income housing being constructed. and occupation-related diseases (dust. Health and environmental conditions in these areas are poor. However. have lived previously in insecure rural areas (landmines and low level insurgency) and often have physical impediments.8m2. Water purchased for cooking and drinking provides 40 percent of water supplied to the city. with rain water being an important source. Over 60 percent of households live in one room structures often with more than one family in occupancy.000m3 total volume was generated in 1987. noise. walkways. lung inflammation). Water pollution of lakes and rivers as a consequence of industrial activity is a major concern. Thus. This situation.70 Urbanisation in Asia Phnom Penh • High numbers of families are urban squatters including the disabled. • • • • Ausaid . Squatter settlements appear to be increasing. water and sanitation. for example. Increased levels of foreign investment and the closure of old State firms using out-dated technology will result in many factories using more environmentally-friendly technology in industry processes. if the disposal of these substances is not undertaken effectively. 60 percent have water sealed toilets and 15 percent rely on open pits or underneath houses. Around 25 percent of households have no toilet facilities. with occupants being either illegal migrants without residential permits or squatters.600 illegal dwellings. this must be tempered with the knowledge that the introduction of more sophisticated processes to generate new and improved products is often accompanied by the use of dangerous chemicals and substances. Sharing household facilities is common practice due to kinship ties. development will exert pressure on the natural environment. upper and lower respiratory tract related diseases (nasal and sinus conditions. The Hanoi Police have identified 15 areas containing 1. exposure to toxic substances). the Hanoi environment will likely be improved through the Vietnam Law on Environmental Protection promulgated in December 1993. TB. Around 50 percent of household wastes are organic and are buried to be later used as manure in agriculture. of which around 45 percent was collected with the remainder dissipated along roadways and in waterways (an opportunity for micro-enterprise activities in recycling). only 48 percent of housing was government-owned (a low figure for a socialist system) and 47 percent was in private ownership. given that waterways are a noticeable feature of Hanoi City. Piped water comprises less than 30 percent of water and water from well is less than 12 percent. although the high rate of construction is not matched by the rate of infrastructure provision of roads. In respect of solid waste disposal. Government responsibility for housing is diminishing. 238. internally displaced. with air and noise pollution from industry and motor vehicles exceeding international standards. refugees and female-headed households. These persons lack capital. spurring on the housing and land market. To this end. • • • Hanoi • The environment and infrastructure are in need of urgent attention with only 3 percent of Vietnam’s construction funding allocated to Hanoi. Also of significance is the need to enforce existing regulations and procedures and to devise innovative responses to environmental problems. with stocks being sold off.

virtually no capital and no access to urban land.Urbanisation in Asia 71 Lessons learned from the case studies in the health/environment sector are similar to those learned for education. As well. that community-based delivery systems. Migrants originate from the immediate hinterland of Cebu. providing relevant health and educational support. many of the urban poor originate from rural areas and that continued inflow puts pressure on already overburdened infrastructure. Out-migration of affluent urban households occurs as these households relocate to the urban fringe due to increasing congestion. Urban poor women are more likely to find work in the formal sector than are their rural counterparts. however. For equity reasons and in order to stem migration. • • Calcutta • The population growth has slowed due to the better performance of the agricultural sector particularly around the Calcutta metropolitan area. poor housing and lack of hygiene in densely settled areas.2. as they usually lack the support mechanisms often available in rural areas. Cebu • 58 percent of migrants to Cebu are females. only 37 percent of (already low) male wages for similar work. While many may have a cash income above that of rural poor. it is necessary to spread the benefits of the urban economy to rural areas at the same time as rural development proceeds. government investment in physical and social infrastructure. Villages benefit from such cash income. adding additional stress to transport systems and inner city infrastructure. further reducing their disposable income and placing them in a precarious financial position. • • Ausaid . and broader land market reform. with the majority entering the ranks of the urban poor as squatters. Female workers receive. on average. mostly seeking employment. for the case study cities. enabling purchase of agricultural inputs and education. 5. in Hanoi). Villages surrounding the wealthy commuter enclaves have benefited from service employment opportunities in these areas. are the most effective form of delivery to the poor.5 million persons daily). Many women are sending substantial sums to their villages. In-migration to urban areas of poverty stricken persons from rural areas occurs during the lean agricultural months. The Cebu City Hillyland Resource Management and Development Commission is a community-based initiative to develop the villages in the hinterland of Cebu. Improved transportation permits those outside Calcutta to commute to work (an estimated 1. backed by formal agencies to the extent that their resources allow. The shape and size of rural-urban linkages are determined in particular by transport systems. the urban poor are in many respects worse off than the rural poor. enabling people to overcome household crises.4 Rural-Urban Linkages The study has confirmed that. migrants are often characterised by low skills and education levels (except relatively. Growth in productivity and better economic performance in rural areas is attributed to the West Bengal government land tenancy and local government reforms. That is.

many with shop fronts) along transport routes some distance from the original commune. • Hanoi • Generally. The focus of poverty alleviation programmes is on rural areas where 85 percent of Cambodia’s population is found. which can exist between a city and its hinterland. all of them with a positive impact on the rural economy. particularly in Phnom Penh. displaced persons. Promoting rural development is perceived as essential to stem expected flows of migrants to urban centres. with women. Unlike the other case study cities. The push from the rural areas is expected to produce faster urban growth rates than the current 4 percent per annum. the unemployed and the unemployable being most vulnerable to poverty. around 26 percent of households have female heads (Cambodia. programmes in the surrounding ‘hillyland’ represent the only example found. children. around 66 percent of the population were rural dwellers. resulting in higher numbers of migrants with diminished overall education levels and skills. However. 21 percent). well-qualified persons entering the city to gain employment. Specifically: • • • • remittances from urban workers. badly managed urban development can have negative consequences including: • • pollution. the rural economy is buoyant with Vietnam being an important rice exporter. the economic reforms of the 1980s have seen the numbers of rural-urban migrants swell putting pressure on the existing urban infrastructure (e. a community-based approach facilitated through local NGOs provides the most effective delivery mechanism. • • However. In Cebu.72 Urbanisation in Asia Phnom Penh • Rural-urban migrants form a growing number of the urban poor. employment for those within daily or short-term ‘commute’ distance. electricity. the old and infirmed. and social costs of badly managed/inequitable land development.g. transport. In Hanoi. at the 1989 Census. Ausaid . returnees. especially if rural areas remain unstable politically. Rural residents living in proximity to cities are taking advantage of increased consumption by providing goods for sale in city markets. housing). amputees. Again. controls on in-migration have contributed to more highly skilled. The transition from communes to villages is resulting in a shifting settlement pattern with new houses (often substantial structures. employment in satellites. and markets for rural produce. Accumulated savings and agricultural reforms have made building activity possible. Lessons learned from the case studies show the diversity of links. In Phnom Penh. Effective programmes to facilitate positive spillover to rural areas surrounding cities are few. Greater market economic activity will put pressure on such controls. water.

Although relatively bureaucratic. the ability for a micro-credit scheme extending beyond the first tranche of aid-donated funding to a few ‘pilot’ households or enterprises in a given area). enabled by lax regulatory systems.1 The Linkages of Poverty Alleviation and Sustainable Development The central lesson learned from the case studies is that even good initiatives in respect of poverty alleviation will fail to achieve their potential impact and will not be replicable unless they are undertaken in the context of sustainable systemic reforms. Projects which do not squarely address these issues will not provide sustainable shelter for such groups. The public system of provision has all but ceased to function and poverty groups are facing increasing problems. This context determines: • the impact of such actions (e. it has succeeded in providing security of tenure in many communities and has led to upgrading of community infrastructure on a sustainable (cost recovery) basis. It must be efficiently managed and provide opportunity for appropriate levels of service provision to low-income groups.3 Further Lessons Learned from the Case Studies 5. In India there is diverse and long experience with shelter upgrading. the ability to replicate micro-credit schemes in other areas and cities). This infrastructure is provided in the context of city-wide infrastructure.g. and • the replicability of actions (e. The case studies have shown the critical interdependence between effective micro-level actions designed to alleviate poverty and the economic.shelter. usually limited in its replicability due to the high levels of subsidy involved. The analysis of the case studies indicates the need for more effective government facilitation of shelter provision for poverty groups. there is scope for the use of transparent community service obligations. The private sector in Vietnam. even in the context of a privatised Ausaid . water supply and sanitation. 5.g. To address equity issues. The Philippines provides an example of best practice in the sector with the CMP. health. providing cross-subsidy to certain groups. In Cambodia. and income generation.2 Sector-Specific Issues A number of sector-specific issues were identified in the case studies . finance and land management systems constitute the major impediments to the production of affordable housing for low-income groups. Often this is not the case.3. transportation and other infrastructure. housing and land management systems are so degraded that they constitute a significant impediment to the provision of new development. both local and network infrastructure should be provided on a cost recovery basis. In order for it to be sustainable.3. education. is active in supplying housing for middle and higher income groups. social and environmental context within which these actions are undertaken.Urbanisation in Asia 73 5. Shelter Tenure. Water Supply and Sanitation Local infrastructure is essential to the maintenance of the health of poverty groups and for support to enterprises in the informal sector. energy.

However poorer neighbourhoods remain badly serviced. access to educational opportunities is constrained by lack of appropriate vocational training. NGOs such as Sulabah and Excellent Novel Radical provide effective mechanisms for the supply of sanitation to poverty groups. This has serious consequences for the development of poverty-alleviating micro-enterprise development and for gender equality. with other jurisdictions lagging considerably. The provision of cost-effective health care has not. and that this support must be highly flexible. fully been integrated into the structure of the public health system of the case study cities. Cambodia is re-establishing its health system by encouraging private investment in the sector. as access is often even more restricted for females. physical lack of provision in low-income areas and lack of opportunities for financing education. Questions remain about systemic-level priorities. Health UNICEF has been instrumental in bringing international attention to the needs of the world’s poor in respect of health care and providing a model for effective action through the UBSP. India has a long tradition of supplying. Vietnam has a good education system which is in danger of becoming less accessible to the poor as the differential between private and public sector incomes widens. such measures do not assist the poor. recognising the time constraints under which the urban poor operate. Major infrastructure upgrading is planned however. Water and sanitation systems in areas other than higher-income neighbourhoods are generally poor.74 Urbanisation in Asia service. But. UNICEF programme initiatives have indicated that cost-effective basic health care can be provided to poverty groups generally. Philippines and Calcutta have UBS-type projects which are effective at delivering basic health care. Such projects are socially sustainable in terms of their organisational structure being based in the communities served. constitutes best practice for the Philippines. however. Ausaid . Rapid growth is stretching water and sanitation infrastructure in Vietnam and poverty groups living in illegal settlements are particularly disadvantaged. But such measures do not assist the poor. effectively free. Comments for the health sector are generally applicable for education. Vietnam has a good health system which is in danger of becoming less accessible to the poor as the differential between private and public sector incomes widens. Issues of water resource depletion and the waste sink capacity of receiving water bodies are central issues of environmental sustainability. While primary education is adequate in the Philippines. Private sector participation has been sought in Cambodia and significant upgrading has taken place. Cambodia is reestablishing its education system by encouraging private investment in the sector. Education Even more than for health. as the education component of UBS-type projects is usually less than the health component. but currently depend on external resources to subsidise provision. water to slum communities using public taps. there are echoes of India’s systems bias towards tertiary education. The analysis of the case studies supports training of those involved in micro-enterprises. The situation in the Philippines and India may be even more skewed than for health. although Calcutta is considered to be better-than-average practice. Basic water supply and sanitation is approached on a systemic basis in Cebu. This. and for women and children in particular. however.

Urbanisation in Asia 75

Energy, Transportation and Other Infrastructure
While levels of provision are far short of needs and the capacity of organisations to operate such services often falls short of what is required, it is at the policy level where much of the difficulty can be found. Non-competitive tendering for capital items, inefficient labour practices, ineffective revenue collection, lack lustre maintenance and a lack of funding for capital programmes can all be traced to policies which maintain services in government hands without appropriate incentives for efficiency. At base, then, the efficient operation of urban services is a governance issue requiring the strict application of competition policy, although the transition will need to be managed sensitively. Again, there is scope for the use of community service obligations in order to address equity issues even in a privatised regime. Extensive private sector financing is available if policy context and financial mechanisms are appropriate. Infrastructure projects have high profile impacts on social and ecological systems. Thus, planning for infrastructure provision must ensure these impacts are within sustainable limits. The Philippines leads the region in respect of privatisation of its power and transport systems. In general the level of provision of its infrastructure is adequate. In India, despite some isolated instances of success, investment in infrastructure lags demand by a considerable margin. Calcutta is no exception. Rapid growth is stretching water and sanitation infrastructure in Vietnam and poverty groups living in illegal settlements are particularly disadvantaged. Major infrastructure upgrading is planned however. Cambodia is seeking private participation in power sector projects.

Income Generation
Skill development, local infrastructure, finance and regulatory reform are essential to foster entrepreneurs who employ poverty groups. The first two issues have been addressed above. Small scale finance has an established body of practice and usually suffers only from lack of promotion of such practices through the wider financial system and from lack of integration of institutions in the field within the wider financial system. Regulatory reform, especially at the local government level, will facilitate the operation of small scale enterprises by reducing the uncertainty and arbitrary costs currently hampering such businesses. It is apparent that gender issues need to be addressed in some countries, especially those where women either comprise a disproportionate number of the poor or head poor households. Programmes need to be designed so that women can have equitable access. Specific projects aimed at support of the private sector, except in respect of the level of informal enterprises, were not encountered in the case studies. In Vietnam and Cambodia, bilaterals (including AusAID) support NGOs undertaking small enterprise development. In India, while numerous programmes have been launched, all encountered in the case study are subsidised and difficult to replicate on a large scale. In the Philippines, more effective and sustainable programmes in support of the formal private sector operate at a variety of levels.

5.4

Crosscutting Issues
A number of crosscutting issues have been identified through analysis of the case studies. They are institutional capacity, private sector and community participation, finance and aid delivery. Improvement in these areas should be the focus of activity in the sectors above, as it is these areas which constitute the major constraints to efficient and equitable management of urban service delivery.

Ausaid

76 Urbanisation in Asia

Institutional Capacity
Institutional development programmes within urban projects are very common in all countries, although in Vietnam and Cambodia they are in their first generation. The results in the Philippines and India are mixed. These countries both have excellent educational institutions producing international standard professionals. Below this level, however, there has been a dearth of training. This lack of support, combined with the structures of the institutions in which they operate, has often prevented high quality professional/senior staff from working effectively. Such effects are nascent in Vietnam and Cambodia. In order to change this situation, training and skill development opportunities must be provided to support staff and institutional structures must be challenged. This must be expected to be a long-term, incremental process. The Philippines has the highest capacity institutions and the most resources to utilise in solving problems. However, even though Cebu is considered to be an example of best practice in poverty programmes, the case study has shown that institutional performance remains highly variable. A primary cause for this appears to be a lack of programme focus. A multitude of uncoordinated, under-resourced and constantly changing programmes are administered by numerous agencies (government and NGO). Despite recent constitutional amendments which are designed to foster more efficient service delivery, most urban areas in India suffer also from overlapping and under-resourced institutions. These operate within a legalistic and hierarchical bureaucracy and are subject to considerable political interference at the State level. In addition, there remains considerable emphasis on government provision of services and infrastructure. Social justice arguments justifying special treatment of particular interest groups - in particular the poor - result in well intentioned, but bureaucratic programmes which have little impact on the conditions of the target groups. Over-staffing and poor management combined with generalised, poorly structured and unfunded community service obligations, ‘hamstring’ investment by service providers. This situation is especially serious because of the strong regulatory control of urban development. Government agencies are usually the only organisations capable of undertaking large scale development. While professional staff are often of high quality, they are unable to utilise their skills effectively because of the institutional structure in which they operate. Vietnam has evolving institutional structures in the larger cities and formally well-qualified groups of planners and urban managers. However, skills are often out-of-date or inappropriate, having been acquired in the Soviet Union or Eastern Europe. Upgrading of planning and management skills will therefore be required for some time to come. Cambodia has generally weak institutions and will require sustained long-term strengthening, probably funded by support from international agencies. NGO coordination is good, with apex NGOs in place and effective.

Private Sector and Community Participation
All countries involved in the case studies have lively private sectors. In all but the Philippines, however, the private sector is viewed with some suspicion (for various reasons). International links to the local private sector are, therefore, difficult in all countries but the Philippines (again, for a variety of reasons). In all countries, the formal private sector has, in aggregate, the major role in urban development but caters almost exclusively to the upper income market. The informal private sector caters to the majority of the poor. While the private sector has had a minor role, isolated major projects notwithstanding, in the provision of infrastructure, all countries involved in the case studies have a policy that this situation should change. NGOs are highly variable in their capacity and scope but, especially in respect of local social and physical infrastructure, have undertaken or catalysed important investments.

Ausaid

Urbanisation in Asia 77

The Philippines has an extensive programme of private sector participation in the energy sector, with smaller programmes dealing with the shelter and transport sectors - for example, the Manila Rapid Transit. However, the country is slow in implementing private sector participation in other areas, despite guidelines being in place which relate to most urban sectors. NGO participation is encouraged and is fruitful. CBOs are also encouraged and are the core of such programmes as UNICEF UBSP. NGOs are also widely variable in their effectiveness, although their staff are often of high quality and dedicated. India welcomes private sector participation in principle, but in practice few projects have proceeded. Flagship projects such as the infamous Enron power station near Bombay have been stalled. Even the Infrastructure Leasing and Financing Services (ILFS), established with International Finance Corporation (IFC) equity and loan participation and powerfully connected through the Housing Finance Company in Bombay, are finding it hard to actually implement public-private partnership projects. In the urban sector the HUDCO is a central institution, but is currently unsure of its future role in working with the private sector. State development corporations and authorities remain tentative in their activity in all but a few States. NGOs vary widely in their capacity. Some are small and basically act as consultants, while others have India-wide reach and are highly professional. NGOs are successful in respect of provision of specific infrastructure services to the poor. Vietnam is open to greater private sector participation in urban development, but actual progress has been limited. Joint venture undertakings in the cities have been mainly in hotels and tourist services, office block development and infrastructure for industry (e.g. industrial estates). Lack of clear guidelines and administrative structures has proved a dis-incentive to investment. There is virtually no NGO participation in projects in the cities, though NGOs have had a small role in some rural development efforts. Cambodia is moving towards extensive involvement of the private sector in the provision of urban services. Initial activity has occurred in the energy sector (e.g. Build-Operate-Transfer (BOT) projects). Private health and educational institutions have been established. Perhaps the greatest contribution to infrastructure for the poor has come through foreign NGOs under the umbrella of the Cooperation Committee for Cambodia.

Finance
Financial constraints are similar across the case study cities, although the detailed context is of course quite different. Similarities occur in the following areas: • • • local government finance remains weak although many initiatives are underway to strengthen capacity in this area; small scale finance for micro-enterprises and upgrading is limited and needs to be integrated into the wider finance system; and large scale finance for infrastructure development needs to be augmented by expanding the range of institutions and instruments available, and by channelling external funds where local capital markets cannot provide the funding levels required.

Pricing policies (user pays), cost recovery and transparent subsidies linked to community service obligations (where a service is provided by the private sector) are central to the sustainability of the financing of service provision. The Philippines has a robust financial sector which has the potential to be highly effective in supplying the required finance for urban development. Led by the Development Bank of the Philippines (partly funded by the World Bank and KfW Germany and with links to ING Barings) which has been active in Cebu, the sector has considerable expertise in infrastructure

Ausaid

Lessons may also be drawn from the case studies on the use of local and foreign NGOs for delivery of aid in the sector. their limited focus does not usually enable them to be the vehicle for the strategic planning of the aid programme. although West Bengal appears to be an exception. can have an important input into the design of the aid delivery process. Independent urban sector NGOs. In India there are several agencies lending to State Development Corporations and Development Authorities which have. until the present. Further.78 Urbanisation in Asia finance. While local NGOs can be more focused and responsive than government agencies. been the mainstay of urban development (especially in regards to the lower middle class and the poor). where they exist. The two largest are the HUDCO and the National Housing Bank. the case studies pointed to many key issues in respect of effective service delivery in the urban sector and effective support to strengthening the equity and efficiency of that process.5 Conclusions in Respect of the Case Studies Although limited by the amount of data that could be procured. although this is rapidly changing as the central government loses the financial flexibility to determine interest rates and direct credit. as would be expected in view of the complex institutional issues involved. with the Housing Development Finance Corporation (HDFC) and the ILFS being the most prominent. They are not sustainable in their current form. Private sector institutions are beginning to enter the sector. financial systems and skills in the central and city agencies are limited and generalising specific examples of best practice is the main challenge for the sector. Nevertheless. The State agencies they lend to are typically insolvent. especially where the focus of delivery is narrow and within the experience and remit of the NGO concerned. project-based external assistance. The utilisation of Australian-based NGOs to channel aid to the urban sector is also viable. Aid Delivery A further lesson of the case studies is that such reforms are. The following chapter reviews a wider geographical spread of best practice in the field in order to draw additional lessons from broader experience. Philippine local governments have the ability to issue bonds and have access to (limited) loan funds from central agencies. difficult to achieve and sustain through the medium of short-term. They have traditionally lent money at subsidised interest rates. Both agencies have been the recipients of substantial multilateral and bilateral assistance. there are concerns about the capacity of some NGOs. Ausaid . 5.

self-reliant development that have been implemented by UNICEF and the World Bank. 6. Turkey. initiatives dealing with public health go hand-in-hand with improvements in housing. The analysis of best practice therefore described the roles of these actors and how the practice contributes to sustainable development and poverty alleviation. water supply and waste disposal. The Ausaid .1. at often minimal costs.1. Therefore. as described in the review of best practice. to the community being directly responsible for their continued well-being. government. education. Programmes for urban service development that reflect the needs of the local community are better maintained due. and to government/donor agency procedures which are unable to make allowance both for lower management capacity and for different management orientation than found in consultant-implemented projects. in other local communities experiencing similar problems. Some are successful at the community-level. and/or the private sector. The analysis of best practice indicates the importance of CBOs and NGOs in the delivery of community-level programmes and NGOs and CBOs can mobilise that involvement. However. acting as representatives of poverty groups.1 The Importance of NGOs and CBOs at the Community-Level Poverty groups are also politically marginalised. In order to maximise their choices for determining their own future. particularly at the community-level. There are a number of internationally recognised examples of aid delivery systems which support sustainable. a joint project of the UNCHS (Habitat) and the Together Foundation (Together Foundation and UNCHS.Urbanisation in Asia 79 6 6. NGOs.1 BEST PRACTICE Overview In addition to the insights gained reviewing the four case studies. Many of the best practice examples were taken from the Best Practices Database. In such circumstances access of the poor needs to be ‘built in’ through the use of community service obligations and other techniques. Community involvement is generally a cost-effective means to achieve poverty alleviation. prepared in conjunction with the Habitat II conference in Istanbul. while others impact at a wider systemic-level. education. Many of the examples cited are significant for the contribution they make to increasing community awareness of existing and potential problems. it is evident that best practice constitutes effective action by the community. largely. For example. Their role is particularly important (see Section 6. From the review of the case studies. 1996). It is evident from the examples cited that best practice often crosscuts sectors. for expanding local community skills bases and for their ability to be replicated. management problems have been encountered in respect of NGO/CBO projects. combine these political and economic dimensions in their advocacy of such groups in their efforts to improve access to land and land tenure. both economic and political constraints need to be addressed. not only is their choice set constrained by income but also by social status. with these solutions able to be mastered by local communities.2 below) when markets are made more efficient and the role of the private sector increases. The most successful programmes are those using low-tech solutions to problems. Such examples can be enhanced by collaborative partnerships between NGOs and CBOs. 1996. as has been demonstrated throughout the review of best practice. health care etc. These problems are due mainly to limited experience in project management by NGO managers especially in circumstances requiring rapid ‘scale up’ of activity. it is necessary to undertake a wider review by sector of programmes and project initiatives which represent ‘best practice’.

For those ‘against’. Private sector provision may be more efficient in terms of reducing operating costs. The successful expansion of such programmes is found in communities participating in development planning and action (UNICEF. for example.1. Local NGOs provide the same to CBOs. a market is involved. These projects are ‘incremental’ in that they feature stepby-step implementation in which problems are progressively identified through project experience and corrected over time.80 Urbanisation in Asia difficulties of monitoring NGO programmes are also well established in the literature (see. However. international NGOs provide a broader view and additional resources and new techniques/technology not available to local NGOs. Edwards and Hulme. In terms of the debate over public or private provision. regardless of whether an urban service is provided by a public or private organisation. the public sector may be more equitable in its orientation (experience of actual delivery is not encouraging on this point) but is often inefficient. Wider systemic changes must facilitate and support community development. Practical programme design in the context of the circumstances of a particular country takes into account these realities. If the relationship is to be mutually reinforcing. local NGOs and CBOs must be handled sensitively. 1995).2 The Importance of Efficient and Equitable Markets at the City-wide/ Regional Level Considerable confusion. bordering on hysteria. In expanding the scope of programmes and their geographical range. second. It connotes. Thus. Thus.a hugely inefficient complex of economically and environmentally perverse institutional incentives. is adopting a systematic process of facilitating community-to-community extension. is the identification of a local project for social development. they have been relatively intensive of supervisory resources on the part of the donor (the PACAP has 10 locally engaged staff monitoring a A$4 million programme. European farmers are ‘efficient’ in the context of the EC Common Agricultural Policy . 1990) and the organisations operating within those markets are efficient only in terms of the incentives set by those institutions. Markets are structured by institutions (North. surrounds the use of the word ‘market’. and third. Thus. is transforming the project into a community-based Action Learning Centre. To this end. community-based projects are not a sufficient mechanism to ensure poverty alleviation. Where NGO programmes have worked well (the AusAID Philippine Australia Community Assistance Programme (PACAP) in the Philippines is an example). 1995). Ausaid . UNICEF have identified a three phase approach to guide future efforts which emphasises equity and capacity building: first. Development best practice thus consists of supporting government in implementing the above measures and. 6. paternalism needs to be avoided at each level. the word market means an obsession with profits to the exclusion of human values. community-level aid delivery programmes focus support for practical learning projects (often targetted primarily at women). effectively constituting an apex NGO). a number of impediments are routinely encountered. in the context of the examples found. The review of best practice also shows that the relationships among international NGOs. The word is used here in a technical sense meaning ‘system for purchase of a good or service’. for those in favour of ‘the market’. longer-term support utilising such mechanisms as twinning was most effective in this regard. Development assistance should thus focus on supporting NGO and CBO capacity building and facilitating the ‘scaling up’ of local NGO activity (see Chapter 8 for recommendations as to practical formulations for projects which respond to such objectives). an almost mystical ability to allocate resources efficiently. The difficulty of these relationships is the timing and organisation of ‘withdrawal’ from activities which more ‘grass-roots’ organisations progressively acquire the capacity to undertake. but is indifferent to equity issues which do not impact on profits.

getting the macro-economic context right. invest in and manage infrastructure and service provision. Ausaid . and . where appropriate. or to oversee other bodies (private enterprises.1. There is often a poor match between the ‘project orientation’ of most development assistance agencies and the capacity building and funding needs of local institutions. • • 6. In particular. private enterprise and the community have to interact effectively.regulation for efficient provision on the part of supply organisations (public or private) and of financial institutions funding these organisations.strategic planning to provide a comprehensive investment context as in the cases of environmental planning in Madras. Urban authorities need a continuous capacity to invest in and maintain infrastructure and services. efficiencies in service delivery are possible if organisations involved adopt practices of transparent accounting for use of assets and staff and through the introduction of competition in service provision where possible (not always possible as some components of urban services are natural monopolies).facilitating community-level provision which provide targeted support to the poor through NGOs and CBOs. Government best practice consists of: . Desirable equity outcomes can be promoted by explicit community service obligations and by using ‘pro-poor’ (NGO/CBO based) delivery systems and targeted subsidies. government.1.3 Urban Investment and the Community. The maintenance of political commitment is usually necessary throughout this period. as in the cases of Sulaban in India and mobile clinics in Venezuela. financing arrangements are central as shown in Figure 6. Funds available on an irregular basis for specific projects are not an effective substitute. the financial interaction will determine the structure of investment in the sector concerned and viability of those investments. the private sector has. Public and Private Sectors As we have seen from the case studies and best practice examples. Such pressures will mean that agencies tend to favour large. community organisations. etc) which provide some services. in general. • In particular.not a ‘top down’ or ‘bottom up’ approach but a partnership. The review of best practice has shown that this interaction is most effective when it is two way .to establish. NGOs and community organisations) (Smith et al. cooperatives. In order to implement new investment. as in the cases of the energy sector in the Philippines and the water sector in Swaziland and the housing finance sector in India. easily supervised projects. This suggests that development assistance should be provided within a long-term strategy to develop the capacity of national and local governments to plan. and to involve other key local actors in this process (including private sector institutions. This is difficult as there are great pressures on virtually all development assistance agencies to minimise the amount of staff time per unit of expenditure. . to provide any urban investments.Urbanisation in Asia 81 The lessons of best practice identified at the ‘systemic’ level can be generalised in this realistic context. government and. transport planning in Tanzania and health planning in Ghana . 1991). taken a prolonged period of sustained activity typically several years . The case studies and best practice examples have demonstrated also that effective financing of projects with sustainable institutional structures relating community.

the characteristic strengths and weaknesses of each of the three partners need to be taken into account in the context of the country concerned. 6.82 Urbanisation in Asia Figure 6. 1996:396) as: • • • small-scale and multi-sectoral addressing multiple needs of poorer groups. on the community. experience of best practice within each group needs to be outlined in more detail than is possible through a review of best practice projects.this necessitates long-term involvement as building the institutions for community cooperation in what is often a fragmented. living conditions and income.2 Design of Delivery Systems In designing delivery systems. community takes time. Although there are many issues which are relevant across partner groups. respectively. 6. Ausaid . even mis-trustful. government and private sector.1 Community-Focused Assistance Certain characteristics of effective assistance at the community-level have been identified over the years and may be summarised (UNCHS. substantial involvement of local people (and usually their own community organisations) in project design and implementations . implementation over many years .less of a project and more of a longer-term continuous process to improve housing.2.1: Partnerships in the Urban Economy URBAN ECONOMY Enterprise* NGOs financial flows Government National State Local rural Firms rural/urban balance in investment support inputs Financial Institutions NGOs/CBOs Households Community rural remittances The sections below set out the major issues to be addressed in the design of delivery systems which focus.

high ratio of staff costs to total project cost. especially its complementarity in the government’s project.2 Government-Focused Assistance Other characteristics of effective practice in respect of strengthening government capacity to efficiently and equitably manage the provision of needed shelter and infrastructure have been identified (ADB.Urbanisation in Asia 83 • • • • project implemented collaboratively with beneficiaries. and make sure that the procurement and disbursement procedures work smoothly even where government officials are hostile to NGOs. Ensure that the adequate administrative capacity exists in the relevant government agencies to efficiently and effectively deal with NGOs/CBOs. their local government and certain national agencies. Single sector ‘plans’ are inadequate in a city situation where sectoral interrelationships are complex and important. difficult to appraise and evaluate using conventional cost-benefit analysis. as clearly as possible. has generally not provided a satisfactory level of service. and use of locally available and appropriate inputs of goods or services. the following seven points should be given special attention: • • • • Ensure that NGOs fully understand the practical implications of working with the government and the donor. 1996a). • • Centralisation does not work and the public sector provision of urban services. 6. ideally. Ensure consistency of supervision through the succession of task managers and. as well as for them to better understand what governments are trying to do. The ‘project by project’ approach to infrastructure and services investment has not worked. Encourage NGOs to promote the participation of the target population by providing flexible and responsible mechanisms during the supervision. • • • The value of the catalytic role donor agencies can play between the government and NGOs is emphasised by the World Bank. While it is true than many problems arose from bureaucratic delays and formalities. Define the purpose of NGO involvement. many NGOs also reported that these projects offered them a chance to show governments what NGOs can do. when working with NGOs in projects. Working with governments had both pros and cons for NGOs involved in the case study projects. The World Bank (1996d) has undertaken a review of their (mixed) experience with NGO involvement and recommended that. In working with NGOs and CBOs at the community-level additional lessons have been learned. Design the procurement plan to meet the specific needs of the NGOs. continuity.2. financed out of taxation. Evaluate the capacity of the NGOs early in the design stage before the selection of suitable collaborative mechanisms. Ausaid .

Conversely. • 6. training of staff in business relevant skills (e. if any. Thailand). providing basic infrastructure. The characteristics of successful projects in this area are (United Nations Industrial Development Organisation (UNIDO). especially accounting support.g. public health in Calcutta and environmental protection in Manila. Indonesia. The second is activity undertaken with the aim of increasing the efficiency of urban service provision by involving the private sector. giving support for ongoing enterprises. providing access to marketing.g. either in an operating or operating/finance role. From this level capacity building activity should be undertaken designed to facilitate efficient and equitable operation and to ease ‘bottlenecks’.2. as in water supply (e. NGOs and CBOs can be effective in the delivery of some services. provision of business advisory services. private sector delivery of services may not always be efficient. Decentralisation of responsibilities from central to local levels without decentralisation of resources does not work. training of purchasing agents. within the ‘enabling’ paradigm. setting up of entrepreneurs’ club to facilitate deals between enterprises.84 Urbanisation in Asia • Technocratic solutions to urban management problems often fail because there are few. design and packaging expertise. especially in sustaining sales and general selling techniques and for the control of finance and cash flows. employment. providing low cost market research and market planning advisory services. book keeping). government should focus on a facilitating/regulatory role and avoid an operational role where possible. The first type of activity is usually focused on the informal sector. Ausaid . hence. Market-oriented public agencies can deliver services effectively. providing access to credit lines. for example sanitation in Karachi. • • • Two important principles stand out: • The first principle is to focus assistance activity at the lowest government level capable of implementing and operating the project on a sustainable basis. The first is activity undertaken with the aim of increasing formal or informal private sector business and. 1991): • • • • • • • • • • ensuring competitive supply of inputs. for example where user charges can be introduced. lines of communication through the electoral system. particularly where formal distribution mechanisms do not work. or other participatory approaches by which beneficiaries can express their views and choices.3 Private-Sector Focused Assistance Two types of activity are important in respect of private sector involvement in urban sector programmes. The second principle is that.

new technologies and methods of operation in providing a service and better human resource management procedures. adopting a legal framework conducive to the creation and implementation of contracts. establishing simple. Good management of private sector involvement requires: • • • • • creating strong and clear political support for private sector involvement. • • • • • • Ausaid . establishing trading agencies.this will help to promote and establish such partnerships in the cities and in the provision of services in the most appropriate manner. or BOT) or full ownership (ADB. leasing. The former is usually more appropriate for most services having a monopoly or quasi-monopoly nature. increasing the public perception of the benefits that derive from good services provided on an economic basis. establishing and defending economic pricing regimes conducive to attracting the private sector. training and capacity building is needed in public/private partnerships for public administrators. In some cases. partly arising from the public sector’s unfamiliarity with the subject. regulatory bodies to oversee the creation and operation of partnership arrangements. especially on-site. concessions. and providing technology advice and telecommunication services. providing institutional training and capacity building in the setting up and regulating of public/private partnerships for public administrators. The main choices of private sector involvement are contractual (e. is forcing governments to search for alternative financing mechanisms and more efficient management of services from the private sector. in each country. The preoccupation with funding tends to obscure other benefits involving the private sector that flow from operating in a market environment. giving high visibility to success stories. avoiding using companies that have no proven expertise in the particular service under consideration. requiring unprecedented mobilisation of capital to meet the demand for infrastructure and services and coinciding with an overall scarcity of public funds. but effective. the private sector will start its involvement through ‘bulk supply’ contracts. The rapid growth of cities in the region. for example. To generate trust and confidence between the two sectors. while in others it will offer a total service with direct customer contact. establishing. encouraging established international specialist companies to be prepared to transfer technology and expertise to local or regional-based companies.g. 1996a). establishing trust and confidence between the public and private sectors. specialist cells with expertise in aspects of public/private partnerships . However. The characteristics of the second type of activities have also been distilled from practice.Urbanisation in Asia 85 • • • providing appropriate repair and maintenance services. concerns have been expressed about private sector involvement.

Building on this base. being time bound and with specific objectives.which must be the focus of efforts in the urban sector. institutions changed to increase the efficiency and equity of service delivery . Projects are important tools used within this process. Chapter Eight will recommend new systems of development assistance delivery which have. are important in the efficiency of an aid delivery system. There is legitimate concern that the introduction of a central regulatory framework may create too many restrictions and ‘red tape’. Chapter Seven will review the current expertise before recommending areas of concentration in the light of the needs established in Chapters One to Six. but should not be its focus.86 Urbanisation in Asia • • strengthening and formalising the processes of planning and coordination to ensure clear and well conceived strategies. These characteristics point to ways of assessing projects and programmes as to their sustainability and to ways of measuring performance of delivery. share. effective institutional and community change in support of poverty alleviation and sustainable development. Projects. The above sections described characteristics of best practice involving the community. and in order to place these recommendations in the context of Australian expertise in the sector. But it is the effectiveness of the process of aid delivery . government and the private sector. 6. and underwrite risks.3 Delivery Systems Versus Projects It may be seen that characteristics of a successful ‘project’ discussed above usually describe processes of development or selection of actors. as their organising principle. some central supervision is needed to protect both contracting parties from abuses.poverty alleviation. and encouraging both the public and private sectors to identify. However. Ausaid .

1 AUSTRALIAN EXPERIENCE AND EXPERTISE IN THE URBAN SECTOR The Needs of the Asian Urban Sector 7.1. the McKinsey and Company (1994) study of service sector export potential for AusTrade categorised market opportunities for goods and services under four main headings.1. whether in poverty alleviation activities or in support of ‘systemic’ improvements. the primary objective of the analysis will be to identify how these skills and products can best be integrated into urban sector aid programmes in support of poverty alleviation and sustainable development.1 Introduction This chapter commences with a categorisation of the needs of the urban sector in Asia. Given that development assistance should offer the best possible products and services. The second part of the chapter assesses the skills the Australian urban sector has to offer.1).2. such ‘market testing’ is reasonable. 7.1: Framework for Expertise in the Urban Sector Australia Country income level: Low Income Middle Income High Income Infrastructure 'Adaptive' 'Advanced' Tourism Income group share of world GDP: 4% 17% 79% (Source: McKinsey and Company.Urbanisation in Asia 87 7 7. As a framework for discussing the multiple and varied needs of the urban sector identified in the preceding chapters in relation to established Australian expertise. Figure 7.2 The Needs of the Urban Sector in Asia and Australian Expertise The scope and scale of the need for investment in the urban sector was set out in Section 4. These categories serve to summarise the areas of focus for utilising Australian expertise in the urban sector for countries of differing levels of economic development (see Figure 7. The discussion below is based on analysis done in terms of export assessment. 1994) Ausaid . But.

Elaborately Transformed Manufactures (ETMs) products also have potential to increase efficiency in this sector.1. there is a particular premium for excellence and innovation and there is usually considerable competition. they are not usually specifically ‘urban’. The challenge is to ensure Australian ‘products’ in these markets move ‘up market’ in line with the needs and capacities of local organisations. 1996a). The extensive needs for capacity building in urban service delivery require such services. sewerage and power. of course. as with traffic management technology for example. entertainment. At least partly as a result of the existing aid programme. Australian domestic services and institutions with capacity in providing these services can readily be adapted to meet such needs. basic telecommunications. While such services cater to urban-based demands. may be urban. Ausaid . These partnerships directly address issues of sustainable development. especially in such areas as software and in the sale of ETMs. there is. however. and Australian educational institutions have been successful in exporting educational services in the urban sector. Australia has had considerable success in providing services in this area in which construction companies such as Leighton Construction and Lend Lease have been active. Although specific pockets of poverty may persist.3 Partnerships and Investment Needs According to the ADB president.1. Sato observed that governments in Asia have almost universally recognised the need to make their cities more productive. opportunities for cooperating with a higher-income Asian country to assist other countries (so-called ‘third party engagement’). the Australian tourism industry is not relevant to our discussion of development assistance focused on sustainable development and poverty alleviation. Among these measures. efficient and sustainable.88 Urbanisation in Asia In relation to Figure 7. the expertise categories relevant to support for sustainable development are defined as follows: Infrastructure includes roads. especially in the context of globalisation pressures and/or processes. The following section explores the scope for such activity. the most significant to private businesses are the development of public-private partnerships and access to the resources of private investors. Their application. Mitsuo Sato. 7. Advanced Services include advanced technology. the growth of Asia’s cities is associated with “enormous infrastructure investment needs which must be met through a combination of cost recovery from consumers and tax-payers as well as funds mobilised in capital markets and the private sector”. water supply. There may be. Involvement in these large projects often requires considerable investment in plant and equipment to deliver the service. Although included as a part of Figure 7. and are doing this through various measures. Australian consultants have a good reputation in Asia. in his opening address at the Megacities Management Seminar held in Manila (ADB. financial institutions and capital markets. As one moves along the spectrum of income.1. in such situations.g. In this market. Adaptive Services include services to manufacturing and education. The preceding review of urbanisation needs has shown that demand for infrastructure is high in low and middle income nations. through improving safety nets and community service obligations of infrastructure providers. Nations with a large and expanding middle class (e. less justification for a poverty alleviation-focused development assistance programme. any assistance offered to upper-middle-income countries should focus on leveraging community and private sector resources as poverty alleviation activity can only be progressed. Indonesia and India) are developing needs for services which are readily available in more developed countries. The above review has identified the centrality of financial services for efficient and equitable development of Asian urban areas. information-based finance and recreation-associated activities.

many Asian countries are adopting ‘enabling’ policies to support individual households in providing for their own shelter. a burgeoning manufacturing area further inland. 80 percent of housing in Asia’s cities is provided by the private sector. the country’s business capital.2). known as Lippo Cikarang. More offices are also opening up in New Bombay. Water Supply Development For Asia’s cities. In the Philippines. housing for its executives and employees. communitylevel partnerships are the ‘other side of the coin’ in terms of being essential to ensure the poor have access to improved infrastructure and shelter. Such developments require infrastructure. an entire new town is being developed by the Lippo Group in Bekasi. changes in credit mechanisms and lowering of housing and sub-division standards to make them more affordable. Land Development. Chapter Eight will discuss models of delivery using such partnerships. While Chapter Six reviewed best practice in the area of catalysing community-level partnerships. These projects take place in the context of wider sectoral systems which must be efficient and equitable in their operation. for example. However. Implicit in these ‘enabling’ policies is the encouragement being given by governments to private companies in opening new lands for urban uses. In Indonesia. Australian organisations have considerable expertise in this area. some examples of urban investment facilitated by public-private partnerships are set out below. Although it is not yet fully developed. both in the fringes of cities as well as idle or under-utilised sections of downtown areas. 1995a). was recently tendered for development by private investors. a military camp next to Manila’s Makati financial district. and a huge shopping centre. will usually not directly address the provision of housing to the lowest income groups. such development is essential to take pressure off general housing costs and limit middle-income groups from coopting lower income accommodation. property values have reached Tokyo levels (Asiaweek. To be finished by the year 2000. adaptive and advanced services in which Australia has significant expertise (see Section 7. and the majority of this is by individuals rather than corporations. and they lose Ausaid . In Bombay. except in the higher-income countries such as Malaysia. This new town. While public-private partnerships in this sector. 117 hectares of Fort Bonifacio. In many cities public utilities cannot treat enough drinking water for residents. In India. boasts a thriving industrial complex of mostly Japanese and Korean manufacturing companies. the town already has a hotel. Realising the urgent need to re-focus their housing policies. people by the tens of millions are moving to the cities to find work and a share in the country’s new-found economic dynamism. Of particular interest to private housing developers are measures such as deregulation. the focus of community-level partnerships must be activity by national CBOs and NGOs in projects which cut across several sectors. resulting in a shortage of nearly 31 million homes in urban areas. it will be a commercial office centre. Housing and Urban Renewal Typically. one of the most important infrastructure requirements is water supply. The government is trying to relieve the pressure on the commercial property market by developing the International and Business Financial Centre (also called the Bandra-Kurla Complex) on about 200 hectares near the airport. Thus it is important to review current issues in respect of sectoral investment in order to provide a context for the use of Australian expertise at this level. Based largely on the analysis of von Einsiedel (1996). a formerly agricultural town that is now part of the Jakarta EMR or JABOTABEK. Rapid population growth and industrialisation are both exhausting and spoiling Asia’s water resources.Urbanisation in Asia 89 While the following discussion focuses on private partnerships at a systemic-level.

and then efficiently augment these supplies. pricing and revised tariffs. For example. Within the city of Jakarta itself only 35 percent of total households are served by piped water. where the population of 16 million is projected to grow to 30 million by the year 2015. Salinisation has now penetrated as far as central Jakarta’s National Monument. China is taking steps to bring in foreign water companies to invest in its urban waterworks. Von Einsiedel (1996) estimates that it will cost at least US$128 billion over the next decade to meet the drinking water and sanitation needs of East Asia. but Indonesia’s cabinet still has to approve a proper framework for their participation. canals and reservoirs. an emerging opportunity for private business is in demand-side solutions which aim to conserve existing water supplies through efficiency. Expanding the network of water pipes to cover Jakarta’s municipal area alone would cost US$2 billion at a conservative estimate. An estimated 700. Bangkok and Manila. Particularly for poor city residents.000 pumps are depleting the city’s aquifers and causing saltwater contamination of the aquifers. 1988) Price ratio of water from private vendors: public utility 5:1 12:1 to 25:1 10:1 4:1 to 9:1 28:1 to 83:1 4:1 to 10:1 17:1 7:1 to 10:1 7:1 to 11:1 17:1 to 100:1 20:1 to 60:1 16:1 to 34:1 Ausaid . The lack of water in several Asian countries. While there are attractive opportunities in the construction of dams. Municipalities around the country are discussing ventures with private companies for 20 to 30 year BOT concessions. Differentials in the Cost of Water ( Ratio of Price Charged by Water Vendors to Prices Charged by the Public Utility) City Abidjan Dhaka Istanbul Kampala Karachi Lagos Lima Lomé Nairobi Port-au-Prince Surabaya Tegucigalpa (Source: World Bank. about 3 kilometres inland. With rapidly growing populations. these cities must first improve the treatment and distribution of existing supplies. private sector knowhow from countries such as Australia is often required and sought. a safe water supply is more critical than electricity. including Indonesia and the Philippines. Cash-poor government agencies are keen to involve the private sector in new water schemes.90 Urbanisation in Asia more than a third of output to inefficiency or theft. In Tianjin. China. is restricting options for economic growth. authorities devised a new tariff scale for industrial water in which the price escalates with consumption. With renewed emphasis on managing demand. rendering wells unusable in the northern suburbs of the city. the Macao Water Supply Company has been operated by a French-led private sector consortium since 1985 (Far Eastern Economic Review. 1995b). Wells and water vendors account for the rest of the supply in the Jakarta EMR or JABOTABEK. Similar initiatives are underway in Ho Chi Minh City. roads or telephones.

Urbanisation in Asia 91

The danger in such policies is that inequitable outcomes of poorly managed processes will block private investment. The urban poor also need efficient water supplies. The box above indicates the premium they currently pay for water, but defined community service obligations and effective regulation are necessary to ensure they are not disadvantaged under private sector provision.

Transport Systems
Asian cities are creating or extending their mass transit systems as the ‘backbone’ of transportation through the city. These are being undertaken largely through new forms of public-private partnerships such as BOT schemes mentioned earlier. In Bangkok, for example, three mass transit lines are currently under construction: 1) the 21 kilometre underground system of the Metropolitan Rapid Transit Authority; 2) the 23.7 kilometre elevated train of the Bangkok Metropolitan Administration; and 3) the 60 kilometre elevated road and rail system of the State Railways of Thailand. Foreign investors involved in these projects include those from Hong Kong, Germany and Italy. In Manila, the Light Rail Transit line 3 (LRT 3) has been approved after several years delay. The elevated system is being built by a consortium of Filipino and European companies within the framework of the Philippines’ BOT law. It will augment the existing 15 kilometre LRT 1 and the still-pending LRT 2. In Manila’s Makati financial district, and also in Quezon City, (Metro Manila’s largest city in terms of land area), the municipal governments are planning their own mass transit systems which will connect to the LRT 3. In 1995, Jakarta administrators signed a memorandum of understanding with a consortium of European, Japanese and Indonesian companies for a US$1.3 billion subway system. The contract covers the first 14.5 kilometre stage of what Jakarta planners say will eventually be an enormous network spanning 250 kilometres (Asiaweek, 1995b). Expected to be finished in 2001, the subway is one of several massive transport projects destined to change forever the face of Jakarta. Among them is a two-tier overhead railway and toll road, running north-south through the city, with the toll road on top and the light rail system suspended on tracks below. In Hanoi, the Transportation Ministry plans to start building a US$839 million network of elevated trains to help ease the capital’s chronic traffic problems. The first section of tracks in a planned 35 kilometre system will cost US$464 million, with much of the money expected to come from the German Government. The elevated train system, to be completed by the end of the decade, will transport as many as 60,000 passengers an hour (New Straits Times, 1995). At the same time, Vietnam is slowly modernising its colonial era railroads, replacing steam locomotives with diesel engines and adding new rolling stock and tracks. Again, the issue of access to public transport is an important one for the poor. Involving the private sector requires effective institutional arrangements for regulation and particularly monitoring of community service obligations. In addition, large scale compulsory purchase for Rights of Way (RoW) and subsequent relocations must be managed sensitively and equitably.

Environmental Management
Large cities concentrate air, water and ground pollution resulting from high densities of people, vehicles and businesses. This pollution constitutes serious threats to health. Risks of epidemics originating from slums may spread throughout the city, affecting all income groups. Urban expansion across administrative areas makes effective regulation difficult. The characteristics of large cities, however, also present environmental management opportunities. High residential densities allow the cost-effective installation of environmental infrastructure. The relatively higher levels of income among residents mean that some pollution control measures and environmental services can be afforded. Environmental education and public awareness campaigns are more effective because of higher levels of literacy and easier communications.

Ausaid

92 Urbanisation in Asia In Asia’s cities the most significant environmental concerns are urban waste pollution, water pollution, and urban and household air pollution - collectively referred to as the ‘brown agenda’. The need for major investments to address this agenda is taking place against a backdrop of policy trends towards local capacity building and privatisation. With widespread public concern over the environment manifest in many Asian countries, governments are being pressured to enforce existing laws, as well as allowing local communities to manage their own environmental problems. In Indonesia new regulations that set standards for storage, collection and transport of hazardous waste coincided with the May 1994 opening of the country’s first hazardous and toxic waste disposal facility in West Java (Far Eastern Economic Review, 1994). The plant is owned by US-based Waste Management Inc. and an Indonesian company. At least three more toxic waste facilities are slated for construction elsewhere in the archipelago. Indonesia has been pressing ahead for the past four years with the cleansing of 24 of the country’s most polluted rivers. The government is making funds available for small to medium-sized industries to purchase pollution-abatement equipment. To help administer the fund, the government has enlisted the help of the American consulting firm Labat-Anderson Inc. In the case of Malaysia, privatisation of environmental services is also occurring. Early in 1994, a US$245 billion project was awarded to a consortium of companies to build, operate and maintain a national sewerage system. A private company will also be operating the nation’s first toxic waste treatment plant in central Negeri Sembilan state, just outside Kuala Lumpur. The company, Kualiti Alam, is using Danish technology and includes among its shareholders United Engineers Malaysia with a 50 percent stake, the Arab-Malaysian Development Bank with 20 percent and three Danish firms, Kruger Engineering, Chemcontrol and Enviroplan, which collectively hold 30 percent (Far Eastern Economic Review, 1995a). In the field of solid waste management, many Asian city governments have been contracting out collection services to private companies. Disposal facilities, which are often open dumps, are still largely government managed. There is, however, increasing interest in privatising these, as many Asian cities are becoming aware of successful privately operated disposal facilities in other cities. A popular example being visited by government waste managers is Hong Kong’s network of sanitary landfills. In February this year, the South East New Territories landfill was opened, at a cost of US$453 million. The project was designed, built and operated by Green Valley Landfill, a joint venture of London-based Waste Management International (50 percent share), Citic Pacific (30 percent) and Sun Hung Kai Properties (20 percent). Asian city managers are beginning to learn more about proper solid waste disposal, both in terms of technology and of the mechanics of private sector financing and operations. Given that the poor are the most vulnerable to health and safety risks resulting from poor environmental management, such initiatives are welcome. This is especially the case as costs are usually recovered from formal sector organisations. However, careful management of such programmes is required. Large scale private investment can displace informal employment (albeit dangerous and low status employment such as waste pickers). It is the role of government to alleviate the impact of such transitions.

The Service Sector
Increasingly, Asians are realising that manufacturing strength alone will not be sufficient to sustain their next generation of economic growth. In Asia’s urban centres, low-paying low-skill jobs are usually found in manufacturing. Over the past decade, as Asian countries became richer, the proportion of their economies devoted to services has risen. The richest Asian countries are now those with the biggest service sectors as indicated in Figure 7.2.

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Urbanisation in Asia 93

Figure 7.2: Service Sector Output as a Percentage of GDP
Hong Kong Singapore Thailand Taiwan. South Korea Malaysia Philippines Indonesia India China 0 10 20 30 40 50 60 70 80

percentage of GDP 1992 (1991 for Taiwan & Malaysia) (Source: Lynch, 1995) 1980

Many manufacturing jobs have moved from the richer Asian countries to their poorer neighbours. For example, in 1980 there were 1.5 million manufacturing workers in the Kowloon area of Hong Kong. Today there are only 615,000 in the whole colony, although Hong Kong firms employ 6 million people in China. Hong Kong is now a city devoted to service industries such as finance, marketing and design. The lesson for development assistance is that poverty alleviation activity need not focus exclusively on manufacturing skills. Services to service industries - witness the photocopy shops serving Yogyakarta students - can be viable enterprises. In this process, the formal foreign and local private sector, open to ‘out sourcing’, may be an effective partner of community-based informal enterprises.

7.1.4 The Major Risks Involved
The opportunities for public-private partnerships in Asia are obviously not without risks. There are existing constraints to pursuing these partnerships across all the areas of opportunities mentioned earlier. There are also constraints that are sector-specific. Among the constraints that impact across all sectors, the two major ones are: • • changes in government policy; and weak public administration and management capacities (including ‘red tape’).

Government policies on private sector involvement are evolving in many Asian countries. Hong Kong investors in China, for example, caution against China’s unsophisticated and frequently

Ausaid

design. Australia has some of the world’s best housing. especially in administering private sector and community involvement. Ausaid . The Philippines has established the Local Government Academy to train local government officials in modern public administration and management. as are our skills in training tradespeople and in information technology. The existing weaknesses are not limited to just individual competencies and skills in management.2. design. The sections of the reports relevant to support to sustainable development and poverty alleviation are discussed. environmental planning and management. Often. The nation’s research. A World Bank (1995) report presented at the APEC meeting in Osaka cites several instances when project costs trebled because authorities changed their minds about what they wanted. The recent experience of Enron in India is a cautionary example of what may happen when government changes. with a view to identifying these Australian skills and products which could be integrated into the aid programme. they also include organisational effectiveness and inter-agency relationships. finance and technology. often with the assistance of external organisations such as the UNDP/UNCHS/World Bank UMP. consultancy and planning skills are world class. including how to deal with private sector involvement in municipal development. is currently developing guidelines for private sector involvement in financing urban infrastructure. Indonesia recently launched an Urban Management Training Programme (UMTP) designed to modernise management practices in its cities. institutions and codes of practice. India is about to embark on a Decentralised Training Programme (DTP) for urban local authorities. in order to encourage such private sector participation. government ‘enabling’ and regulatory institutions need to be strengthened. Public support for new private sector involvement is still fragile. The discussion below sets out the areas of expertise relevant to the opportunities identified above. these changes are triggered by serious political issues. inputs required from Australia will be predominantly services or ETMs. The above discussion also argues that. such as loss of jobs and higher utility charges under privatisation. be required in the pursuit of sustainable development in Asian cities. The urban development sector brings together enterprises that provide: • urban development services such as planning. Addressing these challenges requires policy change and upgrading of capacity and practices.94 Urbanisation in Asia changing rules. Given the high quality and competitive pricing of manufactured goods from other Asian countries and the fact that ‘urban sector’ investment is mostly private sector.2 Australian Strengths and Opportunities in the Urban Sector 7. Its National Institute of Urban Affairs. Housing. All of the services and products associated with the urban sector will. one of the world’s more efficient urban development sectors. in the context of the above discussion. building codes. the pursuit of sustainable development by Asian governments (differing though the interpretation of this concept will be) will require private sector expertise and finance. Local Government and Community Services (DHARD) completed in 1993 focusing on the potential for export in the urban sector. Most of Asian developing countries’ capacity to deal with urban issues is being outstripped by the rate and complexity of their urban growth. 7.1 Sector and Product Thus. with the support of USAID. Many Asian countries have started to recognise these deficiencies and some have recently launched capacity building programmes. real estate and related legal services. as well as some of the best developed housing policies. The following analysis was compiled substantially from three reports by Commonwealth Department of Health.

for example. Together.2 Competitive Goods and Services in the Urban Sector A National Institute of Economic and Industry Research (NIEIR. particularly public-private partnerships.000 special trade firms undertaking contractor/subcontract work. although the private sector needs to be able to work together with Commonwealth and State Government agencies to provide a variety of linked products and services. architectural services. climatic range and diversity. this can add A$1. supported by about 70. are rarely exported as such. The residential building industry alone consists of about 15. the building materials and products industry. there are many small enterprises providing a variety of products with export potential. structures and skills.Urbanisation in Asia 95 • integrated housing and urban development and infrastructure provision and management. regulation and infrastructure provision. • building materials and pre-fabricated components. There are some 15. spread of population. but brick-making technology and skills can be). In contrast. These range from land titling and building code expertise. selected 10 products and services for detailed examination.400 proprietors and partners and about 90. residential building contractors. 7. solar systems. The products selected were plaster board.700 house-building firms. is dominated by six companies which account for 80 percent of the Australian market and have extensive export experience. Given that this assessment was based on commercial potential. This sector has an annual turnover of around A$45 billion. for example. Product and Service Potential: Australian Urban Exports. The potential net export gain is in the order of more than A$1 billion a year.4 percent of GDP at factor cost. integrated and flexible solutions have been devised to address Australian urban development problems. and • financing and management of housing and infrastructure.2.000 jobs each year. • education and training. By the turn of the century. The organisations in the Australian urban development sector are diverse in their size. land title systems. however. In addition. through to sector-specific training and real estate marketing. sawn timber. modular systems. Ausaid . a number of innovative. a figure larger than the mining and agricultural industries combined. it may be assumed that use of such skills and products in the aid programme will provide effective assistance to recipient countries if such inputs are well managed. The products and skills of these organisations can provide essential support to developing countries in pursuit of sustainable development. A further element of the sector is the range of government and semi-government bodies involved in urban development across the fields of planning. the residential and non-residential sectors account for 8. Some of these solutions are readily adaptable to overseas conditions and the following section describes some such goods and services.000 subcontractors.7 billion to GDP and create an additional 22. 1994) study. clay bricks. Due to Australia’s relative isolation. The NIEIR report concluded that each product category has some potential to contribute to Australia’s export performance. although markets varied greatly between countries and the ‘method’ of market penetration varied greatly among products (bricks. rental management systems and building trade training. Both the capacity and the ability of these industries to expand was examined.

non-uniformity of building standards and poorly developed codes in Asia requiring modification of products and methods. • However several challenges for the sector were identified: • • • a lack of ‘international’ expertise on the part of managers and a low level of appreciation of international opportunities. Ausaid . and linkages important in Australia can be difficult to maintain overseas. Another study by Maxwell and Druce International (DHARD. Key opportunities in developing countries were found in the following areas. The report takes a variety of urban development products and services and makes an assessment of the relative attractiveness of various markets for the product. regulatory. as discussed above. assessed the relative attractiveness of different markets for various Australian products and services. technology and management packages supported by governments. Hong Kong and Japan. 1994) The Current Situation: Australian Urban Exports assesses the situation with regard to exports of products and services. and between urban planners and designers. Low profit margins mean there are few resources available for developing and refining products tailored to relevant markets. Korea. The Commonwealth Scientific and Industrial Research Organisation report (CSIRO. Taiwan. China. linkages between architects and construction firms. the characteristics which make the sector so efficient within Australia (e. It documents the main companies involved in exporting. facade engineering. could result in the more effective use of Australian technology and innovation. engineering and construction. Markets assessed included Vietnam. Singapore. 1993). the large number of small firms competing against one another. and provides a valuable source of information on the export of urban development products from Australia. and the relatively low level of capital required to enter the industry) can. financial and social service systems could be applied. Detailed market profiles for each country are provided. with a focus on likely market opportunities for exports from the Australian urban development sector. CSIRO compared Australia’s export performance with that of other countries and examined government assistance to exporters in the sector. high skills in design and consulting. planning. their characteristics and the main export markets. with under-utilised and technologically advanced plants. however.96 Urbanisation in Asia However. and a world-leading record of public-private cooperation in innovative housing and infrastructure programmes backed by quality social. impede the sector in participating in such programmes.g. The report assesses products and services in which Australia has a competitive advantage and identifies where Australian legal. Indonesia. For example. and lack of cooperation among Australian firms leading to limited integrated materials. between construction firms and other service and product supplies. Thailand. and the implications of this for export from the urban development sector. financial and technical capacity. The report focuses on the physical/building product and consultancy areas and outlines the competitive advantages for these areas as: • • the leading building products manufacturing industry in design and quality in the AsiaPacific region. including fire research. building codes and information systems. and in some building technology areas. Malaysia. Any aid programme utilising quality expertise or technology also needs to be designed to allow for such organisational limitations.

Australian expertise can deliver the NGO expertise at the community-level. for example. Strategies for the most effective use of Australian expertise in the urban sector need to be formulated for specific countries in consultation with such coordinating groups and with companies in the sector. 1992). joint venturing or in a strategic alliance) and in Australia. as well as government involvement. Of interest in this document are arguments concerning DIFF. as this programme was a specific component of the aid programme and thus justified.Urbanisation in Asia 97 • • • • • • • Regulatory and finance: Project management: Environment management: Maintenance: Design. in the first instance. However. This study reached similar conclusions as the CSIRO (1994) research about the strengths and weaknesses of Australian companies. research and development: Ownership and land title: Policy and institutional: Indonesia Thailand and Indonesia Malaysia and Korea Malaysia Indonesia Vietnam Vietnam A particular opportunity identified throughout the Asia-Pacific region. arrangements which help promote the supply of capital goods to developing countries are potentially a useful form of development assistance. effectively increased in volume) in several ways. These companies. in terms of the developmental impact. 1997) does not accept either of these justifications however. In 1993. together with consultants. the two largest users of these facilities were construction companies (AIDAB. 7. Ausaid . operating and financing the range of urban sector services. is the requirement for training. because such goods are used for investment rather than for consumption purposes. there needs to be strong private sector participation for such groups to succeed. There is a good deal to be said for supporting forms of assistance which are likely to be self-targeting on investment activities. Experience indicates that. the Construction Export Group. NGOs and government agencies are practiced at involving communities while delivering quality technical input. the Accountancy Market Access Committee and the Airport Services Group. ‘budget stretching’ may take place because the credits are tied to procurement in Australia which may. First. The following is taken from a discussion on the benefits and drawbacks of the DIFF scheme reviewed (AIDAB. especially in the less developed and emerging economies. ‘financial stretching’ takes place when aid funds are combined with loan funds to provide a loan substantially larger (typically around three times larger) than the development assistance grant alone. The recent report of the Committee to Review the Australian Overseas Program (Simons et al. some generalisations can be made in the context of the discussions on best practice in Chapter Six. both overseas (standing alone. are also large users of Export Market Development Grants. 1994b) administered by Austrade.2. From AusAID’s point of view. Australian consultants.3 Experience in Support to Private Sector Participation in Development Assistance The urban sector has been a large user of DIFF facilities. in turn. The same range of institutions are practiced in public-private partnership projects. The Australian private sector developers and service companies are capable of advising on. Australia has 18 known groups which coordinate export activity in particular industries including. Another advantage of the system from AusAID’s point of view is that development assistance funds are ‘stretched’ (that is. bolster public support for the development assistance budget. Second.

NGOs are in favour of smaller scale. it is apparent that both camps are misguided. especially in the urban sector. a coalition of people who may be loosely termed ‘export interests’ in Australia argue in favour of such schemes. DIFF-financed exports often have certain characteristics which make them of particular interest to officials in both industrialised countries (in export finance and aid agencies) and developing countries (in many operational government departments). Poverty-focused projects must go hand-in-hand with systemic-level projects which provide efficient and accessible social and physical infrastructure to support economic development generally. the requirement for a substantial degree of subcontracting. The capital goods purchased using DIFF are frequently characterised by large and intermittent orders. Economic advisers in such bodies as the Treasury and the Industry Commission. Ausaid . but this does not mean that government policy may not choose to foster ‘success’ in industries which are seen to be strategically important. grass-roots forms of development assistance. academics). Government-sponsored subsidised credits reduce the cost of project identification and bidding. Such projects. as well as other economic commentators (e. significant bidding costs and the importance of reputation and goodwill in winning orders. in respect of poverty alleviation. the stance of some NGOs has softened given AusAID’s more targeted use of such credits. In respect of the criticism regarding ‘commercialisation’ of aid leading to poor ‘quality’ aid. would have been unlikely to have incorporated the environmental components if mixed credit was not used. NGOs incline towards the view that a greater reliance on such channels as mixed credits will be at the cost of aid quality . Examples of such mechanisms will be discussed in the following chapter. However. and indeed do not accept that policy shifts towards pro-market policies in developing countries are necessarily a good thing at all. Many members of NGOs are also extremely wary of the consequences of a ‘commercialisation’ of development assistance programmes.projects which. Large scale infrastructure provision is being privatised and to address such markets new institutional mechanisms both for management of this activity and for aid delivery are needed. Traditionally. if implemented by the governments concerned with their own resources. the above analysis shows this to be incorrect providing such aid is focused on leveraging efficient investment or inputs to productive activity from the local or international private sector. enhance the reputation of the seller and increase the goodwill of buyers.98 Urbanisation in Asia Export interests in both the public and private sectors see a promising market for Australian exports in developing countries.g. provided mixed credits are available to support the purchase. are increasingly rare.in particular. are inclined to take the view that mixed credits (e. In this they are correct. particularly in Asia. they can usually point to senior government officials in recipient countries who are eager to purchase Australian capital goods. DIFFs) are an inequitable form of industry subsidy which favours the capital goods sector. Their representatives have frequently criticised large scale projects. For these reasons. particularly in environmental infrastructure projects . Furthermore. In short. NGOs have been negative about the use of mixed credits by Australia. DIFF was an appropriate instrument to procure large scale capital projects awarded by governments. In terms of the above review of the situation in Asia.g. Furthermore.

The key characteristic of such services and products is that they are developed within a framework of public-private relationships (typically government regulatory agencies. These are precisely the types of services and products needed in the new partnerships discussed in Section 7. which may be appropriate for use in one country. The difficulty for the development assistance programme is to evolve delivery systems which recognise and facilitate such relationships in order to maximise the efficiency of delivery.Urbanisation in Asia 99 7.1. will not necessarily be appropriate for use in another. has not enabled such frameworks to be established or to be built on existing frameworks by Australian companies. have been identified as having great potential. finance and management of housing and infrastructure provision. regulatory and monitoring systems for sustainable development. specially facilitating knowledge about.that the skills and products. such as DIFF. education and training. in particular: • • • • planning. and certain products. Australian urban sector institutions. This limits the effectiveness of utilisation of Australian skills and expertise both at the community-level and in the larger investments required to deliver city-wide/regional (systemic) services. Flexibility is therefore required in the design of delivery systems for Australian aid.3.2. and access to. Such systems must recognise one of the key lessons of the above analysis . products and systems to be developed. taking into account the strengths and limitations of Australian organisations where they are involved in the delivery system. government or private operating company and consultants) which enable complementary services. participation in the aid programme and resulting commercial opportunities. The following chapter proposes new models for delivery systems which will increase that effectiveness. The above discussion has highlighted the increasing importance of public-private partnerships on both sides of the relationship. Traditional support to the commercially-oriented private sector in development assistance. especially ETMs and specialist information technology products. have a range of world class services and products which can be utilised in poverty alleviation activity and in support of sustainable development.4 Lessons Learned in Applying Australian Skills The relationship among Australian public and private agencies (including NGOs) and their Asian counterparts varies along a spectrum between direct fully aid-funded project (public to public) and fully commercial activity (private to private). both public and private. Ausaid .

neither ‘top-down’ nor ‘bottom up’ approaches are appropriate for planning and implementation of service delivery. capacity must be built in government. Australian organisations were experienced in. the central question for the analysis is: “How to foster best practice in service delivery?” It is proposed that three major types of support are appropriate given the variety of circumstances met in Asian urban areas. poverty alleviation activity is focused at the community-level with NGOs and CBOs being effective agents for community capacity building if projects and programmes are designed to maximise this effectiveness. and able to facilitate such partnerships. requiring building of both government capacity for coordination and market regulation (in such areas as community service obligations) and private sector capacity for management and finance. • • In the rapidly evolving economic and social context of Asian urban areas. community and the private sectors. local and higher levels of government. but one key element. efficient and equitable investments at city-wide/regional (systemic) level. long-term programmes focused on assisting governments to manage the urban system and to link more effectively with NGOs/CBOs on the one hand and to structure markets for efficient and equitable public and/or private sector investment in service delivery on the other. which recurs in many instances of best practice at both community and systemic levels. there are three central themes which have emerged through the analysis of the city case studies and best practice. is the need for a longterm orientation in the design of project delivery mechanisms. Many detailed lessons of best practice have been discussed. and short or long-term programmes focused on service delivery at the city-wide/regional level in circumstances where the private-public partnerships are the most appropriate method of delivery. focusing on the need for urban poverty alleviation and sustainable development. So in this context. These are: • • long-term programmes focused on building the capacity of local NGOs/CBOs at community-level and assisting local NGOs in the ‘scaling up’ process.1 MAJOR OUTCOMES OF THE RESEARCH Central Issues of the Analysis In the pursuit of lessons to guide the design of more effective delivery systems for development assistance. Partnerships among NGOs/CBOs. It has been demonstrated that. These are: • the complexity of urban issues in the context of global economic changes requires that. and poverty alleviation activity at community-level must be supported by sustainable. for effective and sustainable service delivery. • The mix of these programmes utilised in a particular country should be determined by an explicit review of country circumstances in the urban sector. Ausaid .100 Urbanisation in Asia 8 8. given the difficulty in changing institutional and community behaviour. given a base of world-class expertise. and the formal and informal private sector need to be constituted as appropriate to meet community or city-wide/regional needs.

The following sections describe the three streams of support in more detail and give examples where such programmes have been utilised. 8. the explicit expectation would be that the first project(s) would constitute the first phase of a longer relationship which would continue if agreed project performance criteria were met. Management capacity of NGOs is also a concern. The current delivery mechanism involving NGOs is diverse in design.Focused Delivery System Multilateral or bilateral agency Technical assistance and capital funding Northern NGO Local Apex NGO Community-based NGO(s) or CBO(s) Recipients The length of the reporting chain and the complexity of the interactions involved indicates the major difficulties encountered in respect of administration of aid channelled through this mechanism in the urban sector . Figure 8. in the delivery of aid. This approach will have the flexibility to respond to changing circumstances and to unforeseen institutional constraints encountered. both Australian and local. Resources also need to be available to the relevant NGO to hire expertise (consultants) in areas where it is not strong.1: Current Community . There is a growing awareness of both the advantages and constraints in utilising NGOs. this NGO will be able to assist local NGOs in ‘scale up’ if appropriate. the programmes will look like normal tender for one or more specific projects which can be monitored as normal. Administratively. funding either Northern NGOs.1. In this regard the role of an international (Australian) NGO which understands and overviews core community interests is central.3 below). Flexibility could be achieved by increasing the ‘contingency’ amount and allowing more explicit flexibility in moving project funds among budget items. local apex NGOs or CBOs directly with a variety of funding paths from these organisations to the recipients as shown in Figure 8. Their activity must complement appropriate activity by government (see Section 8. in fact) between an Australian partner and an appropriate organisation or organisations in the developing country. An environmental Ausaid .2 Community Partnerships Best practice in community-focused aid delivery depends on NGOs and CBOs. In addition. The objective and structure of a proposed long-term programme of community-focused development would be to provide local NGOs and CBOs with the capacity to be self-sustaining without external assistance.Urbanisation in Asia 101 In order to foster a long-term orientation and an orientation towards achieving real institutional change it is proposed that the central element in all these programmes be a long-term relationship (a partnership. However.especially difficulties of unclear (even conflicting) objectives and inadequate supervision.

the objectives of such partnerships programmes will be to: • • impart best practice in sustainable development of the investments for which the partner institution has responsibility. in order to ensure that such relationships are sustainable and not paternalistic.2. but financing new avenues of income generation may be crucial to achieve environmental improvement. and of linking to formal sector organisations. for example. The performance of the NGO managing the project will be assessed on the successful completion to budget and time of the project. In general. Figure 8.1 above. Given that the central strength of NGO involvement is its close relationship to the community.2: Proposed Community Partnership Delivery System Multilateral or bilateral agency Technical assistance and capital funding Consultants Aust NGO Local Apex Partner organisations Community-based NGO(s) or CBO(s) Recipients The delivery mechanism incorporates several principles (in addition to the AusAID code of practice and such detailed operational guidelines as those for micro-credit programmes). Plan International constitutes Australian best practice in this area with their policy of ‘withdrawal’ after viable CBOs are established. Ausaid . programmes should be designed so that Australian NGOs are associated with and work through apex southern NGOs where possible. These are: • • NGO-based community partnership projects should be formulated as part of an overall urban sector strategy. construction and initial period of operation of a major project. As discussed in Section 8. funding. of working through the highest appropriate level of NGOs. and facilitate the NGO/CBO linkages to the private sector and to government. but also on other performance indicators in respect of the organisational performance of the local associated NGO/CBOs. The proposed delivery mechanism is shown in Figure 8.102 Urbanisation in Asia NGO may not be strong in micro-credit. the contract with the Australian NGO should continue over the duration of the design.

effective NGO activity has been undertaken in: • • • development of local water and sanitation projects. IIED-America Latina launched a new programme for the institutional strengthening and training of NGOs such as FICONG based in Buenos Aires. Training courses. The FICONG programme is implemented through a large network of NGOs and other settlement institutions. In support of local apex NGOs. In Latin America there is a long tradition of specialist NGOs working with the inhabitants of low-income settlements (often illegal or informal settlements) in programmes to improve housing conditions or provide basic services. the Netherlands and Japan. development of community health and education projects. In particular. and micro-credit and enterprise development in the informal sector. Among the main supporters of the FICONG Programme are the Economic Development Institute of the World Bank and the bilateral aid programmes of Sweden. It aims to enhance the capacity of NGOs and public agencies in responding to the needs of poorer groups and to increase their effectiveness and the scale of activities. With these goals in mind. as economic reform during the 1980s has often been accompanied by a withdrawal of the State from direct provision of services.Urbanisation in Asia 103 This report has identified the need for community-based activity in poverty alleviation that crosscut the investment sectors identified above. and local NGOs of demonstrated capacity. 1996) • strengthening links between the formal and informal sectors . seminars and workshops are undertaken throughout Latin America in conjunction with a large network of affiliated institutions and organisations. FICONG also encourages NGOs and State organisations to develop more effective partnerships with residents’ associations in low-income communities. The partnership programme should be used by: • • Australian NGOs in partnership with local apex NGOs.for such purposes as expanding the scale and profitability of micro-enterprises Ausaid . (Source: UNCHS. The resulting greater participation for NGOs in projects has to be matched by a greater effectiveness among NGOs and a growth in the scale of their programmes. in September 1991. It has supported IIED-America Latina in Buenos Aires over many years as a counterpart apex organisation in South America. the programme should undertake: • strengthening of management practice of both apex NGOs and community-based NGOs/CBOs Twinning in the Philippines Training NGOs: the FICONG Programme International Institute for the Environment and Development (IIED) is a northern NGO based in London. The role of NGOs has also been much increased in many countries.

8. which initiated programmes of micro-credit for micro-enterprises based largely upon the TSPI model.3 Government Partnerships This report has identified four broad areas of activity necessary to promote sustainable development and poverty alleviation. community and church-based organisations to increase incomes for the poor. Calming earlier fears about the problems to be overcome among the urban poor. In the past three years. TSPI soon became one of the leading micro-credit NGOs in the Philippines. and as far as possible using NGOs.2.3) is less-than-optimal if the focus is to shift to longAusaid . which combine into 35 person centres. but the advantages of longer-term financing. Following the 1986 ‘people’s power’ revolution.2. KMBI. to make small loans and training available to micro-entrepreneurs. and are now receiving bank lines of credit channelled through the NGO. In the context of the desirable characteristics of delivery systems set out in Section 6. education and health facilities. US and Europe. The government sector plays an important role in each of these focus areas. TSPI responded to this challenge by creating six new provincial partner organisations (among them ASKI and Kabalikat Para sa Maunlad Na Buhay Inc KMBI). Philippines Tulay sa Pag-Unlad Inc (TSPI) was established in 1982 by a group of business and professional leaders based in Manila. more flexibility in resource sourcing and more clarity of expectations on the part of all organisations involved should make for more efficient project implementation. has started an ambitious programme to build Self-Help Groups (SHGs) for banking with the poor living in squalid squatter areas on the northern fringe of Metro Manila. the current delivery mechanism (see Figure 8. jobs and micro-enterprises for the poor. capacity building for local formal and informal private sectors in the above areas. (Source: The Foundation for Development Cooperation. and subsequently with official aid support from Australia. President Aquino called upon the Philippine NGO community and overseas aid donors to develop an effective programme to alleviate poverty. KMBI estimates the average cost of establishing a SHG centre. With growing support from international NGOs from Australia and US. it has already built 245 small groups of five members each. these groups are now working well. with a good track record in creating incomes. to be about US$1. over one year. 1994) Issues for Community Partnership Programmes The proposed delivery mechanism may be seen as adding a more restrictive structure and even additional levels if the Australian NGO links directly with a CBO to current flexible arrangements. with loan repayment rates of over 95 percent. especially in the poorer provinces. and the strengthening of financial institutions servicing both the formal and informal sectors in the above areas. development of social infrastructure such as housing.031 (similar to the annual cost in India). These are: • • • • development of physical infrastructure. These manage and operate the credit and savings programmes of the combined groups.104 Urbanisation in Asia Micro-Credit Programme.

Figure 8.project implementation organisation The proposed delivery mechanism (see Figure 8. This picture is further complicated if co-financing arrangements are involved.4: Proposed Government Partnership Delivery System Multilateral or bilateral agency Technical assistance and capital funding Consultants Partner organisations The delivery mechanism will involve the long-term association of an organisation. combined with necessarily narrow terms of reference. Australian local governments (fields as above).3: Current Project Government Delivery System Multilateral or bilateral agency Technical assistance funding Capital funding Consultants Advice Government agency/parastatal . State and Territory government sectoral agencies (especially in the fields of implementation of regulatory reform and good practice in management and operations and maintenance). and Australian commercialised or privatised service providers (fields as above). Australian. can lead to a project being ineffective in catalysing required institutional change. Figure 8. either: • • Australian.4) is designed to answer the issues raised by the ADB and addresses the organisational constraints of the current delivery mechanism. increasing the scope for dissipating energies in the pursuit of multiple objectives.Urbanisation in Asia 105 term engagement of project implementation organisations. The fragmented nature of the inputs and their short duration. • • Ausaid . State and Territory government central agencies (especially in the field of regulatory reform).

the objectives of such projects will be to: • • impart best practice in sustainable development of the investments for which the partner institution has responsibility. supported by the World Bank. consumers. The performance of the organisation managing the project will be assessed on the successful completion to budget and time of the project. (Source: World Bank. or to perform specific tasks just as they do in their Australian operations. facilitate the role of the private sector in providing services and/or investment by. including issues important to poverty groups such as community service obligations of service providers. but also on other performance indicators in respect of the organisational performance of the implementing agency in the recipient country. construction. 1996b) Ausaid . the programme should undertake: • strengthening of governance/regulatory practice Twinning in the Philippines Structured by the World Bank At a macro-scale. whilst at the same time protecting the environment. The strengths of twinning are found in the development of partnerships. skills transfer and entrepreneurial development.g. • In support of social and physical infrastructure investment and of Small and Medium Scale Enterprises (SMEs). energy producers) cooperating in the formulation of ground rules for the design of DSM programmes. The organisation will be resourced in two streams . The twinning programme is a cost-effective means of Technical Assistance with all vested interests (e. and support the relationship between the government organisation(s) and NGOs/CBOs representing community groups. In particular. training programmes. DSM can potentially reduce yearly power generation needs between 10-30 percent. CBOs. funding. for example. As power demand is estimated to grow around 10 percent per annum over the next decade. These managing organisations would engage consultants either to serve in their establishment. defining the regulatory framework. a twinning programme. In addition to these energy savings and realisation of environmental goals. the Philippine’s Energy Regulatory Board (ERB) is developing a regulatory framework for the provision of energy efficient and environmentally sound energy policies with a focus on Demand-Side Management (DSM). NGOs. With help from the Oregon’s Public Utility Commission. another stream to be used on approval of AusAID to address project ‘bottlenecks’ as they arise (in practice this will be constituted by a larger contingency sum). as well as an enhanced quality of life for residents through improved energy services and environmental improvement. The introduction of DSM practices will likely realise a 1 to 3 percent saving in annual power demand. and initial period of operation of a major project. staff competence is increased as is long-term institutional efficiency and capacity. The programme should encourage best practice in governance and urban management techniques. The contract should continue over the duration of the design.one stream for its management and specific tasks identified by the project. between energy regulators in the Philippines and US is assisting the Philippines in improving energy efficiency.106 Urbanisation in Asia There will also be an organisation undertaking similar activities in the recipient country.

Inter-American Development Bank and IFC private sector loans funded 40 percent of the capital costs. Despite its name.Urbanisation in Asia 107 • strengthening of government capacity for project formulation and structuring to facilitate Private Sector Investment (PSI) Buenos Aires Water and Sewerage Joint Venture Structured by the World Bank The urgent necessity for extensive rehabilitation works and new investment amounting to some US$3. this ‘seed’ activity was successful. 1996) • support to agencies in their links to community organisations The Local Government Engineering Department (LGED).95 billion to provide adequate water and sewerage coverage for Argentina’s capital. Local capital markets were not adequate to cope with the funding. Obras Sanitarias de la Nacion. The World Bank. This is in addition to the direct implementation of a large rural roads programme and food aid programmes. (Source: Idelovitch and Ringskog. (Source: Lindfield and Teerlink. the Department undertakes a wide variety of slum upgrading. suggested the need for external assistance. It coordinates and funds the activities of NGOs in providing services to slum dwellers. possessed the organisational capacity to implement the required works and to achieve the levels of cost recovery required to make the project feasible. the ADB. community development and micro-credit schemes. Bangladesh The LGED of the Ministry of Local Government. coupled with the absolute lack of government funds. the World Bank and UNICEF. 1995) • support to agencies in the implementation of sustainable development practice Ausaid . Rivera. The Bank therefore promoted a process of competitive bidding for a concession agreement which would involve implementation of the required investment programme. It provides TA in the implementation of infrastructure and slum improvement projects. The organisation supplies a broad range of support to local governments and communities. USAID. The consortium implementing the project formed a company which tapped the international capital markets. 1995. engineers in each of the 460 thana and seconds officers to municipalities where their capacity is limited in respect of project implementation. was not convinced the existing operator. The organisation has successfully implemented a range of large internationally-financed projects including projects sponsored by Germany. intended as the primary funding agency. In terms of catalysing substantial private sector financing (equity and commercial loans amounting to 25 percent of the capital costs). It monitors the financial performance of local governments. The use of a reputable foreign merchant bank to set up the tender for the franchise ensured that state-of-the-art financial ‘technology’ was available to the tenderers and that approval costs would be minimised. of whom 540 are professionals (mainly engineers). Rural Development and Cooperatives has an establishment of 9.859 staff. The organisation has offices in each Zila capital. The presence of the World Bank/IFC in the financing structure of the project reduced the perceived country/political risk and the information costs of potential financiers. It undertakes training of municipal officers and community organisers.

Dares Salaam. it is a replicable model at the area or town level. Prior to the project. hazardous sites. however.000 persons.115 metres of stormwater drains and 690 metres of murram have been constructed in an unplanned neighbourhood benefiting 5. Such a long-term relationship will take the pressure off recipient agencies to create special ‘units’ to ‘process’ aid projects. Collection has increased from 30 to 300 tons/day. There was no city dump site. (Source: Together Foundation and UNCHS. Included in the scope of the SDP are improvements to solid waste management. open space management (e. air quality management. upgrading under-serviced settlement. and managing the economy. in fact. including an improved living environment for residents. Ausaid . These deal with each of the environment issues indicated in the SDP. Such units are often not sustainable and. benefiting directly 170. benefiting 40. provided that it carries with it grant contributions to capital and TA programmes comparable with the existing aid effort.108 Urbanisation in Asia Sustainable Cities Programme . it encourages capacity building. Tanzania In Tanzania. and it promotes institutional collaboration. managing coastal resources. The coordination and reorganisation of bus routes and city centre bus terminals has improved greatly the public transport system. their isolation within the bureaucracy is one of the reasons institutional change does not occur. coordinate and manage environment/development interactions. green belts). will be welcome. investment is attracted to the area. Partnerships have been made possible between the private sector. They are: • • Do the recipient agencies want it? Will the arrangement meet the quality and quantum needs of efficient aid delivery? In respect of the first question. servicing city expansion.g. CBOs and the public sector via the establishment of cross-sectoral and multi-agency working groups. From the governance viewpoint. Less welcome in some instances will be more stringent tests of real institutional change and fewer opportunities to exploit fragmented implementation processes for personal gain. the Dar es Salaam Sustainable Development Project (SDP) was launched in 1992.000 persons and resulted in around 80 percent of roads drying out (previously sewage flowed onto access lanes contributing to high rates of water-borne diseases). coordinating city-centre sprawl. Some 1. the prospect of long-term support. NGOs. less than 3 percent of the city’s wastes were collected to be disposed of in an hygienic environmentally friendly manner.000 passengers. surface water management and quality control. There are a number of project achievements thus far. The SDP seeks to manage the sustainable growth and development of Dar es Salaam through strengthening local capacity to plan. More regular and faster emptying of pit latrines has benefited 24. improved delivery.000 persons. such reactions should be seen as positive and a test of institutional willingness to change. The prospect of building long-term relationships with agencies will be seen as valuable. 1996) Issues in Partnerships Two questions are central to the practical application of such programmes. The strengths of the SDP are in increased services and with. and preparing a long-term dynamic integrated development plan and investment strategy. recreation zones.

However. While the scale of output would not change. In respect of private provision of infrastructure. The agencies selected ‘partners’ would have to submit partnership project to their government coordinating agencies in conformity with existing procedures. but the managing partner would have an incentive to minimise their use (in order to simplify administration. These are: Ausaid . Integrating the ‘ownership’ of local agencies and established development assistance practice would be the task of consultants and/or AusAID personnel carrying out an urban poverty/sustainable development review (termed an Urban Sector Initiatives Review . the management of such outputs would change over the life of the partnership project. there are two key streams of potential activities in support of the private sector : • • support to micro-enterprise development.4 Public-Private Partnerships These investment needs of Asian countries. significant benefits will result from ensuring that private sector investment is poverty alleviating and environmentally sensitive. the World Bank does not distinguish the two approaches in its operational guidelines). Aid assistance in building capacity to manage such projects in the public sector would be provided under the government partnerships outlined above. Intermediate outputs (projects) would be monitored in the same way as projects are currently monitored. The mechanisms for support to micro-enterprise development are relatively well understood and such projects can be adapted to modified conventional delivery mechanisms as proposed in this study.USIR in this study). this situation does not apply. in respect of guaranteeing access to poverty groups. the task of supporting a particular project or programme in order to promote such activity is radically different from what might be called the ‘traditional model’ of aid delivery. However. provided that the objectives of the partnership are set out explicitly in terms of needs for defined outputs of significant size. It is envisaged that similar control procedures can be used as with consultants (indeed. 8. given the limitation of ODA resources.g. consultants would have a bigger role. The objective of private sector partnership-based delivery systems is to provide the required finance for the least cost while fulfilling the social/allocative functions ascribed to the project (e. From analysis of the lessons learnt. Initially. protection of the environment). This is the case in Australia. budgetary pressures and globalisation forces will result in increased involvement of the local and international private sector. which has world-class expertise in the field. even in the absence of incentives to do so) by replacing them with local agency staff or local consultants managed by local agency staff. The key constraint to efficient and equitable involvement of the private sector in urban infrastructure service delivery is the capacity of the public sector to manage such projects. the issues of quality and throughput should be addressed. Such a review would identify projects in the normal way. two additional areas of potential aid involvement in this field can be justified. The structuring of these projects therefore requires clear definition of community service and other obligations. and support to the sustainable private provision of urban infrastructure (to which the poor have access). In view of the increasing involvement of the private sector in urban service delivery and the potential impact of this involvement on poverty groups and on the environment.Urbanisation in Asia 109 In respect of the second question. but would formulate partnership-based approaches to delivery.

In the ‘traditional model’. the task of structuring a particular project or programme in order to promote such activity is radically different from what might be called the ‘traditional model’ of aid delivery. such as extension of networks to low income areas. In order to gain the most ‘leverage’ from aid funds and minimising the funds used in these area. This loan predominantly funded redundancy packages for surplus staff. the Australian private sector. or is the lead manager (in the case of loans or portfolio investment from funds). • These interventions should be scoped in the USIR as they require coordination across partnership groups (see Section 8. Ausaid . provided the Australian partner contributes over 50 percent of project funds and has over 50 percent of foreign equity. strengthening of government and/or community capacity to fund said CSOs on a sustainable basis should be undertaken. Direct equity input on the part of AusAID is inappropriate and administratively difficult. An example of such credit enhancement by the ADB in Pakistan is described below. resources additional to any raised internally by the service organisation were mobilised almost exclusively from government taxation revenue and from ODA. Other indirect supports to private sector projects are possible. In a case where a government cannot provide for needed/required community service obligations (CSOs). However. and the Australian private sector in joint venture with an entity from another country.5 below). The principal financing channels can be described diagramatically as in Figure 8. but will constitute a contingent liability which (as in the case of World Bank guarantees) constitute “disbursement” of aid and for which provision should be made in the aid budget. Such support will often not require cash input. With public-private partnerships the picture is substantially more complicated. This enhancement normally involves hedging (covering) an area (areas) of risk which cannot be hedged with commercially available financing instruments and insurance. In parallel. the programme should encourage investment in these priority areas by: • • • the local private sector. The support must be limited in terms of duration and amount. Such support would normally not take the form of revenue payments to a private company. Mechanisms of Public Private Partnerships In the current economic and political context. such as the provision of equity through a local intermediary. limited support should be provided to government in this area. private sector involvement in promoting sustainable development catalysed through the aid programme invariably involves ‘partnerships’ with government. although this complication reflects a multitude of opportunities.5. Government must be involved if only to structure institutions. some form of credit enhancement may be necessary. so that the private sector can become involved. Such activity can even be undertaken on a loan basis. but would be in the form of capital subsidies for infrastructure utilised by poverty groups or for environmental protection.110 Urbanisation in Asia • In order that such projects as the Buenos Aires water and sewerage concession go ahead and achieve potential efficiency and equity gains. as was the case in respect of an IFC loan to the concessionaire in Buenos Aires.

on a recourse basis (meaning that the principals are liable for debt service).Urbanisation in Asia 111 Figure 8. financing can be: . contribution of lower-cost funds. local/foreign NGOs and local/foreign private sector companies or individuals .that is. • • Ausaid .recourse & non-recourse* Partner organisations equity (& loan) Project implementation organisation* Finance of SPV3 In this formulation: • • the financial institutions involved may be local or foreign institutions or both.direct to a specific project managed by the partners.loans . an organisation established specifically to implement one project. • governments. • financing can utilise several modes: . Build-Operate-Own (BOO) and the like.direct to a Special Purpose Vehicle (SPV) .5: Project Funding Opportunities Multilateral and/or bilateral agency* Credit enhancement Finance of principals Banks Funds etc Financial institutions Project finance: . or on a limited recourse basis (meaning that the principals are liable in certain circumstances) .equity (issue of shares) .direct to the partners (principals). Build-OperateLease.bonds. bilaterals. the partners can be multilaterals. the joint venture becomes a recipient of FDI.franchise.where one of the principals is a foreign entity or person which/who contributes capital. . the project organisation may take many contractual forms . contribution of TA and the like. government agencies or parastatals. but predicated on the reputation of one or more of the partners either on a non-recourse basis (meaning that if the project fails the financing institution has no right to ask the principals to service the debt). bilateral agencies and/or multilateral agencies may ‘enhance’ any of these modes by issue of guarantees. BOT.

and for efficient implementation through competitive bidding processes. and strengthening of financial institutions and the capital markets in which they operate so as to provide the quantity of long-term finance required . Successful structuring for these obligations. Such structuring requires proactive institutions in several areas of project-related activity.g. especially in terms of building the capacity of the recipient government’s ability to tender and manage such projects.112 Urbanisation in Asia The objective of these partnership-based delivery systems is to provide the required finance for the least cost while fulfilling the social/allocative (Vickers and Yarrow. In support of social and physical infrastructure investment and of SMEs.5: • the assembly of partnership groups competent to undertake the investment required and utilisation of the most appropriate contractual forms among the participants. education and health facilities. The key areas of activity may be deduced from the structure of Figure 8. The structuring of these projects therefore requires clear definition of community service and other obligations.in particular to promote the use of a range of financial channels and instruments to enable the choice of the most appropriate (that is the cheapest) combination for particular project circumstances. in respect of guaranteeing access for poverty groups or protection of the environment). 1989) functions ascribed to the project (e. the programme should undertake: • support to local private sector to respond to the needs of partnership-based programmes Ausaid . capacity building for local formal and informal private sectors in the above areas. • This report identifies four broad areas of activity necessary to promote sustainable development and poverty alleviation. and strengthening of financial institutions servicing both the formal and informal sectors in the above areas. These are: • • • • development of physical infrastructure. will maximise the economic benefits for a country from the supply of the necessary urban services and infrastructure. development of social infrastructure such as housing.

1996). 1996) • support to local financial institutions to respond to the needs of partnership-based programmes The Rau-Pithampur Tollroad and the ILFS The Infrastructure Leasing and Financing Services is a joint venture between the IFC (the private sector arm of the World Bank Group) and the well respected Housing Development Finance Corporation of Bombay. Again the ILFS was instrumental in re-negotiating the concession. The foundation covers the costs of its micro-finance and TA services entirely through the revenue generated from loan recovery. the Madhya Pradesh Toll Ltd and is promoted jointly by ILFS and the Madhya Pradesh State Industrial Development Corporation. volunteered to act as the institution anchor for the programme. the share of the available market that it serves is less than 2 percent. (Source: v. USAID sought to launch a Small and Medium Scale Enterprises (SME) project that would provide credit and business management assistance to SMEs.70 million. the ASBA is an excellent model of a practice that can be effectively sustained. Such efforts are required to establish the mechanisms for private sector investment in many countries. although the foundation has reached a significant number of clients. In response to this situation. In the three year period of project development the cost increased from Rs.5 km two-lane road project connecting an industrial estate with Indore city) is run by an SPV. Consequently the three year concession period given to the company to recover its investment has been extended to 15 years. a 11. as an organisation that began as a committee to promote business interests and then expanded to take on community service projects. a private non-profit NGO run by a Board of Directors from the local business community. the ASBA programme has served over 20. It has extended over 47. As a completely self-reliant project. The bonds have been collaterised by cash flows generated by the toll collection (Economic Times. Dijk and Lindfield. It has floated a Toll Revenue Bond issue of Rs. Since ASBA first began its SME programme.20 to 70 million. the paucity of credit available to micro-entrepreneurs has significantly constricted their potential for growth. The Alexandria Small Business Association (ASBA).Urbanisation in Asia 113 USAID Support to SMEs in Alexandria While micro-enterprises constitute a substantial sector of the Egyptian economy representing at least 40 percent of total industrial employment.000 clients. However. it has achieved a range of outreach activities comparable to those of the most successful micro-finance ventures in the world. 1997) Ausaid . Toll collection is only one third of what had been expected. India’s first private sector road project (Rau-Pithampur. ILFS was involved in the project to completion. it combined business know-how with institutional commitment to community development. and significant room for expansion remains. In the last five years. The ASBA was an ideal vehicle to initiate the SME programme because.000 loans amounting to almost Egyptian LE 122.750. (Source: Together Foundation and UNCHS.024. Nevertheless.

such returns mean that finance is expensive (given current low inflation). They will not be easily accessible to middle and low-income earners. Corp. Macquarie has had to project returns of up to 30 percent per annum and restrict the term of the fund to three years. In particular. there are several enhancements to the financing package which could be made. In order to attract funds to such a fund. as Macquarie is also lending to finance the construction of the housing to be purchased with Housing Investment Fund money. Pakistan: Fauji Kabirwala Power .ADB Credit Enhancement Role The ADB has undertaken significant credit enhancement activity for this project.00 Recent Australian Initiatives and Potential Leveraging Measures While not intended as models for direct application. rediscount facilities. The A$20 million China Housing Investment Fund launched by Macquarie Bank will finance mortgages in Tianjin. Cost Estimates: (US$ million) Foreign currency Local currency Total Tentative Sources of Funds: (US$ million) Equity: ADB 5.50 35. 1996c) 146. its equity and debt contribution reduced the perceived project risk. some recent initiatives on the part of the Australian private sector provide a basis for a more efficient method of leveraging the necessary investment finance in the urban sector.00 42. discount windows. Such enhancements are: Ausaid . on a 30-year BOO basis.00 24.00 37. given the ‘unhedged’ foreign exchange and country risks. In order to decrease the required returns and increase the term offered so as to make such mechanisms more widely accessible (and increase the marketability of such a fund). While Chinese capital markets are not unique in requiring funds in excess of what can be provided by the national capital markets for urban development. and will be built on a site near Kabirwala.20 32. of Canada Total (Source: ADB. they are outstanding in that they can generate such returns. While international funds will be combined with lower cost local funds. co-financing with multilaterals and the like.50 60.114 Urbanisation in Asia • enhancement of financing channels for partnerships through the provision of limited guarantees.00 170.30 Sponsors ADB Loan Co-financing: Complementary Financing Scheme Loan (Parallel Loan) Export Dev. It has been well subscribed and disbursement is assured.00 170. The project is a 151 MW gas-fired power plant project developed by Fauji Foundation and US based Sceptre Power Company.

and full or limited country risk guarantee/insurance (perhaps utilising the World Bank’s Multilateral Investment Guarantee Agency (MIGA) facility). among others. Disbursal of funds is restricted by the need to ‘hedge’ political risk. country environment reports provide a context for environmental programmes. there are no current examples of Agenda 21 (economic/social) issues being translated into a TA/investment programme at a country level. The traditional method of achieving this is to obtain a letter of support from the central government which does not amount to an explicit government guarantee (but amounts to an implicit guarantee). A full or limited country risk guarantee/insurance. project investment needs against implementation capacity and design a TA and/or loan programme to provide for capacity building and investment funding. small teams on short missions. The international fund is based in Singapore (but run by the Lend Lease Capital Services and Project Finance Group based in Sydney) and focused on water supply and sewerage infrastructure. 8. While the Export Finance and Insurance Corporation (EFIC) has the capacity to manage risk management instruments once in place. Swiss and Dutch governments. The issue of how to quantify and manage risk for ‘leveraged’ projects is an important one. The Netherlands also carries out urban poverty reviews. Again a programme of TA and investment is identified. country risk through association with multilaterals). In respect of sustainable development. especially in the absence of DIFF funding. and do not require large expenditures. the identification and design of such instruments would be a specialist task.Urbanisation in Asia 115 • strengthening the capacity and systems of the Tianjin Housing Management Centre perhaps in association with World Bank/IFC or ADB so as to lower counterpart risk (and. The urban review process can also be an instrument for focusing support activity in the urban sector. would be welcome support to such projects. but the most effective are implementationfocused. • • Lend Lease has established two funds (one Australia/New Zealand and one international) focusing on infrastructure investment. In order to design programmes addressing investment sector needs. it is necessary to undertake a review of urban poverty/alleviation needs and of required initiatives to foster sustainable development. These reviews specifically address the needs of poverty groups and undertake an institutional analysis to determine better systems for service delivery to these groups. indirectly. They vary in the resources required. carried out by experienced. Ausaid . full or limited foreign exchange ‘hedging’. The fund is a joint venture between Lend lease and Lyonnaise des Eaux of France. At the city level MEIP and SCD provide models which could be scaled up.the German. The practice of producing an urban sector review is followed by both the multilateral agencies and key donors . Usually these reviews assess demographic trends.5 Urban Sector Initiative Reviews Since each of the three modes of programme partnerships are interrelated. However. perhaps utilising the World Bank’s MIGA facility. Some AusAID country programmes have identified a lack of focus as an issue and have taken steps to consolidate programmes. the design of the development assistance programme in the urban sector for a particular country is a matter of balancing available AusAID resources with sector needs and other ODA activities.

6 Recommendations The analysis and outcomes of the research set out above enable four main recommendations to be made in the context of the current urban sector programme of AusAID. Regular review of this best practice should result in a review of AusAID guidelines. this system should document best practice (including best practice in avoiding common problems). government or private sector) organisation. government and public-private partnership projects identified by the review should be detailed in terms of their performance measures. Consultation with NGOs and the private sector will be required in regard to the performance measures. Based on the “Lessons Learnt” Database. Ausaid . social and environmental development preparing a programme of development assistance in support of investments which meet both the approval of the recipient country and AusAID policy and administrative requirements. Such networks could be designed along the lines of the Consultative Group to Assist the Poorest. monitoring systems and contract forms documented. Recommendation Two: Prototype community. Structured by sector. with a focus on project (community. networks for dissemination of best practice among actors could be fostered in these areas. The system should not require more administrative documentation for project officers. These are: Recommendation One: A prototype urban sector initiatives review should be trialed in order to judge its efficiency in: • • • identifying focus areas of poverty alleviation support designing interventions for sustainable economic.116 Urbanisation in Asia 8. a ‘learning system’ for best practice in the urban sector in AusAID should be established. and the provision of support to the public sector in the management of private sector initiatives. Recommendation Three: Recommendation Four: Additional research should be conducted in each of the case study countries in order to more fully scope issues and problems in these areas and identify specific assistance measures needed in the light of the ‘partnership paradigm’ recommended in this report. In addition. The study has highlighted two areas in which more information is needed and for which better dissemination of best practice is required. These are: • • the provision of support to NGOs/CBOs in community-based projects. The review methodology should then be documented. but should comprise regular debriefing on project progress and analysis of project outcomes based on evaluation reports and debriefings. monitoring systems and contract forms in order to ensure efficient and transparent procedures are used in implementation. Such a review should be drafted by a small team headed by AusAID staff and include members with experience in community partnerships and in private sector participation in order to ensure all target partnership groups are adequately addressed.

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