Extract from View From Asia, fDi magazine, Financial Times, London, May 2018

There are various city classifications. World Bank defines city tiers in terms of population size. Tier 1 Metropolitan city has more than 1 million people. Tier 2 Large City has between 500,000 to 1 million people. Tier 3 Medium City has between 100,000 to 500,000 people. Tier 4 Small City has less than 100,000 people.

UNESCAP describes the rise of secondary emerging ASEAN cities and that urban growth in Asia Pacific will be this century’s most important demographic trend. Half of Asia Pacific’s urban population lives in cities with less than 1 million.

Tier 2, intermediate or midsized cities (less than 5 million) will account for the largest share of urban growth in the region’s developing countries. They include: China (1-10 million) having 135 tier 2 cities. e.g. coastal cities such as Hangzhou, Shantou, Xiamen, and Zhuhai, and inland cities such as Chengdu, Chongqing, Nanjing, Xian; India (1-5 million) with 40 tier 2 cities. e.g. Nagpur, Pimpri Pune and Visakhapatnam; Thailand tier 2 cities being Chiang Mai, Pattaya-Bangkok, and Chiang Rai GMR; Malaysia’s tier 2 regional cities and urban corridors including Klang Valley, Penang-Georgetown, Johor Bahru, and Kuantan, and Indonesia’s tier 2 emerging cities being Bandung, Surabaya, Semarang, and Solo.

UNESCAP maintains that the development of these secondary cities will shape Asia’s urban future, their development is mostly untapped. Many have succeeded by providing effective branding, availability of land and lower land costs, leveraging on proximity to consumer and low cost labour markets, developing high value added and fast growing industries, developing infrastructure projects which connect to larger cities, developing networks and partnerships with other cities and private sector and developing diversified and integrated growth strategies. For example, strategic investment plans to attract business, industries & high skilled workforce.

Asia’s tier 2 cities are facing challenges like increasing competition for investment and placemaking. Other challenges include economic (weak linkages to new markets, providing bankable projects attractive to investors), social (rapid social change and conflict), infrastructural/environmental (deficits) and governance (weak fiscal base, dependence on allocations, information deficits).

World Bank reports that competitive cities foster their rapid economic growth through four categories of interventions: Institutions and regulations; Infrastructure & land; Skills & innovation; and Enterprise support & finance. How these Asian tier 2 cities compete in future will depend largely on their management of these interventions and whether tier 3 cities catch up in their development also.