KL one of 27 cities at the center of world economy

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Yes, you read the headline correct. While we city slickers like nothing better than to complain about the state of our capital city, others have somehow seen fit to place KL as among the top 27 most significant cities in the world.

For the first time in the five years of the Cities of Opportunity report,Malaysia’s capital, Kuala Lumpur has emerged as among the top 27 cities in the world.

The report is produced by PwC and the Partnership for New York City and examines the current social and economic performance of the world’s leading cities.

Looking at 2012 results and ahead toward the possibilities in 2025, the report seeks to provide a realistic framework for thought and action beginning with 27 of the world’s most significant cities—on one hand, the engine of the modern global economy and on the other, the heart of much of its shared culture.

The focus on these cities is obvious. They account for nearly 8% of world gross domestic product (GDP) but only 2.5% of the population. By the quarter century, they will house 19 million more residents, produce 13.7 million additional jobs, and generate US$3.3 trillion more in GDP if the population follows UN projections and economic progress remains modest.

According to the report, as growth occurs, the symbiotic relationship between East and West is likely to continue: Emerging cities will skyrocket in jobs and population, but developed cities will retain the spending power, as well as the consumer and corporate demand, to drive growth. One side will still need the other to move ahead.

Kuala Lumpur comes into the ranking at 18th spot, securing a spot in the middle third of the rankings between Beijing and Shanghai. The study also forecasts Kuala Lumpur will continue its growth to 2025.

While there are 10 key indicators measured, it comes as no surprise that KL ranks third in the world in low costs and 10th in ease of doing business. In terms of being low cost, Kuala Lumpur only ranks behind Seoul and Berlin, but ahead of Istanbul and Mexico City. The cost indicator measures costs for a businessperson living in our cities— which is to say, the middle-class way of life. The variables that score well for Kuala Lumpur are cost of business occupancy, cost of rent, consumer price index and low tax rate.

Among the other indicators and Intellectual capital and innovation where Stockholm, Toronto, Paris are the top three and Technology Readiness where Seoul, San Francisco and New York are the global leaders. These are two key indicators to watch as KL is making converted efforts to sharpen its innovation edge and technology readiness.

In terms of ease of doing business, Kuala Lumpur ties with San Francisco at an impressive 10th place in this indicator, rounding out the top 10 behind Tokyo and ahead of such famously business-friendly cities like Sydney and Seoul. KL’s strong ranking in this area stemmed fundamentally from shareholder protection, employee regulations, and a fairly flexible visa policy.

KL also ranks sixth in rate of real GDP growth and fifth in major construction activity, showing its potential as an emerging economy.

More promising for KL-ites is that the forecasts are that KL will continue its growth toward 2025 and joins the world’s emerging cities in terms of productivity per worker, or wealth, falling between Buenos Aires and Johannesburg in that projection. In terms of jobs today, wholesale and retail employs one in four workers in KL or 22.9%. The financial and business services sector comes a close second with 20.8% of jobs while manufacturing supplies 8.1% of the jobs KL-ites have today.

However, by 2025, more jobs will be created by business services, where it will account for one in five workers.

“Kuala Lumpur’s low costs and ease of doing business represent the starting point for the city’s transformation into a world hub for talent and competitiveness. With the various initiatives our government is putting in place to transform our economy, we are on a good track,” says Andrew Chan Yik Hong, PwC Advisory Services Malaysia Executive Director, who leads Capital Projects and Infrastructure.

The views expressed here are the personal opinion of the columnist.

Photo credit: Flickr user UweBKK (α 550 on )

 

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