Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Outlook REPORT Diagnostic Sustainability OVERVIEW Sustainability Pathway to Urban MELAKA © 2019 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Citation Please cite the report as follows: Global Platform for Sustainable Cities, World Bank. 2019. Melaka Sustainability Outlook Diagnostic: Overview Report: Pathway to Urban Sustainability. Washington, DC: World Bank. Cover photo: “Aerial view of Malacca city at sunrise.” Credit: asnidamarwani. Design: Ultra Designs, Inc. Sustainability Outlook Diagnostic OVERVIEW REPORT MELAKA Pathway to Urban Sustainability ii / Sustainability Outlook Diagnostic—Overview Report Table of Contents Abbreviations iii Benchmarking Melaka’s Urban Acknowledgments v Sustainability Background 21 Policy Briefing City Selection 22 GPSC Sustainability Outlook Diagnostic 1 Methodological Approach 22 Key Areas for Improvement 2 Scoring 23 Next Steps 3 Normalization and Weights 24 Maturity Assessment 24 Executive Summary Benchmarking Excel Model 26 Why Melaka 4 Assessment Results 26 Assessing Melaka 6 Overall Results 26 Synopsis of Dimensions Covered 6 Melaka’s Scoring 26 Supporting Report 1: Reinforcing Melaka’s Economic Success 6 References 28 Supporting Report 2: Integrating Annex A. Benchmarking Input Indicators 30 Environmental Plans 9 Annex B. Benchmarking Outcome Indicators 32 Supporting Report 3: Enhancing Services and Housing 10 Supporting Report 4: Shaping a Compact, Efficient, and Harmonious Urban Form 11 Supporting Report 5: Shifting Melaka’s Mobility Modal Split 12 Supporting Report 6: Demonstrating Fiscal Sustainability 14 Action Plan 16 Conclusion 19 MELAKA Pathway to Urban Sustainability / iii “Melacca City panorama.” Photo: JPLDesigns. FIGURES BOXES Figure 1. GPSC Benchmarking: Melaka’s Box 1. Melaka State’s Geographic and Political Pathway to Urban Sustainability 2 Structure 5 Figure 2. Melaka’s Strategic Location 4 Box 2. GPSC Urban Sustainability Benchmarking 7 Figure 3. Map of Melaka State’s Districts and Municipalities 5 TABLES Figure 4. Benchmarking Melaka’s Urban Sustainability Maturity 7 Table 1. Recommended Actions 15 Figure 5. Tourist Arrivals to Melaka State Table 2. Input Indicators (2000–2014) 8 (benchmark indicators) 30 Figure 6. Melaka State’s Manufacturing Sector Table 3. Output Indicators Contribution to GVA and Total Employment (background indicators) 32 (2010–2016) 8 Figure 7. Melaka State’s Developed Land: Actual in 2013 (left) and the State Structure Plan 2035’s Future Potential Extent (right) 11 Abbreviations ADB Asian Development Bank Figure 8. Melaka Heritage Area’s Pedestrian Volume 13 EIU Economist Intelligence Unit GEF Global Environment Facility Figure 9. Six Dimensions and Key Focus Areas 22 GHG greenhouse gases GPSC Global Platform for Sustainable Cities Figure 10. Izmir’s Score Card: Vision and GSURR Global Practice for Social, Urban, Rural, Long-term Strategic Planning 24 and Resilience Figure 11. Dimension Weightage as Part GVA gross value added of Overall Benchmarking Score 24 HSR high-speed rail Figure 12. Overall Benchmarking Score IMM Izmir Metropolitan Municipality Reflecting Maturity of Urban Sustainability 24 MIGHT Malaysian Industry-Government Group for Figure 13. Urban Maturity Steps 25 High Technology Figure 14. Traffic Light Representation UNIDO United Nations Industrial Development of Dimension Performance 26 Organization Figure 15. Continuum Representation USF Urban Sustainability Framework of Melaka’s Benchmarking Scoring (0–100) 27 WHS World Heritage Site iv / Sustainability Outlook Diagnostic—Overview Report “Picturesque Dutch Square, Malacca.” Photo: Wenbin. MELAKA Pathway to Urban Sustainability / v Acknowledgments The Melaka Sustainability Outlook in the Prime Minister’s Department was the executing agency for the GEF project. Datuk Diagnostic was created by the Mohd Yusoff Sulaiman, Raslan Ahmad, Datuk Nik Global Platform for Sustainable Ahmad Faizul Abd Malek, Zulkifflee Mohamad, Cities (GPSC), which is managed Anusha Magendram, Nik Sufini Nik Mohamed, by the World Bank and supported Fatin Asmida Asman, and Siti Nur Fatimah Noodin by the Global Environment Facility provided invaluable facilitation for the assessment. (GEF). The report was augmented by inputs from AJM- Planning and Urban Design Group Sdn Bhd This document and the six associated supporting (Noraida Saludin, Peter Ong, and Mohd Syafiq reports were prepared by a GPSC team led Subri) and RJ Planning (Rahani Binti Jusoh, Ainun by Lincoln Lewis. GPSC's program manager is Mahani, and Nabila Norsamsuddin). The team Xueman Wang. Lincoln Lewis was the author of thanks Melaka Green Technology Corporation the Policy Briefing and Executive Summary and of Melaka State (Datuk Haji Kamarudin bin Md Peter Griffiths was editor. The following task team Shah, Chandru Suparmaniam, Mohd Hafizam bin members contributed to the supporting reports Mustaffa, and staff) for representing Melaka State as lead authors: Dmitry Sivaev and Diana Tello during the assessment process and coordinating Medina, World Bank (Supporting Report 1); James the stakeholder engagement sessions. Patterson-Waterston and Naina Khandelwal, Vivid GPSC thanks the numerous participants in the Economics (Supporting Report 2); Jonathan stakeholder engagement meetings, held October Denis, Singapore-ETH Centre’s Future Cities and November 2017 and January 2018, and in Laboratory (Supporting Reports 3 and 4); Serge the subsequent conversations held to inform the Salat, Urban Morphology and Complex Systems development of the report. Presentations of the Institute (Supporting Reports 4 and 5); and Joshua results were made in October and November 2018. Gallo and David Painter, World Bank (Supporting Attendees of the working group meetings and Report 6). The section on benchmarking Melaka’s decision meetings came from the Government urban sustainability benefited from research by of Malaysia, Melaka State, municipalities and the Economist Intelligence Unit and was edited by districts, utility companies, and tertiary educational Lincoln Lewis. The team thanks Vivid Economics for institutions. its work on the supporting reports. The team also thanks Anne Himmelfarb for her thorough work as The federal government ministries, agencies, and the manuscript editor and Miki Fernandez for his departments were represented by the project’s attention to detail in the graphic design. National Steering Committee members; Ministry of Federal Territories; Ministry of Housing and GPSC’s diagnostic was performed with the GEF Local Government; Ministry of Economic Affairs; project Sustainable City Development in Malaysia, Ministry of International Trade and Industries; which was guided by the United Nations Industrial Ministry of Finance; Ministry of Energy, Science, Development Organization as the implementing Technology, Environment and Climate Change; agency. The team would like to thank Katarina Ministry of Water, Land and Natural Resources; Barunica for her facilitation throughout the project. Ministry of Transport; Federal Department of Town The assessment would not have been possible and Country Planning Malaysia (PLANMalaysia); without a strong connection to the Government Urbanice Malaysia; Kuala Lumpur City Council; of Malaysia and Melaka State. The Malaysian Malaysian Bumiputera Economic Empowerment Industry-Government Group for High Technology Unit; Malaysian Economic Planning Unit; vi / Sustainability Outlook Diagnostic—Overview Report Land Public Transport Commission; Malaysian Energy Commission; Malaysian Department of Environment; Malaysia Department of Lands and Mines; Malaysia Green Technology Corporation; and the Kuala Lumpur–Singapore High Speed Rail Corporation. The Melaka State government and corporations were represented by the Melaka Chief Minister’s Department; Melaka Ministry of Industry, Trade, and Investment; Melaka State Economic Planning Unit; Melaka Housing Board; Melaka State Department of Social Welfare; Melaka State Landscape Department; Melaka State Development Corporation; Malaysian Ministry of Rural Development, Melaka; Malaysian Department of Health, Melaka; Malaysian Department of Statistics, Melaka; Department of Town and Country Planning Peninsular Malaysia, Melaka; National Security Council, Melaka; and Panorama Melaka. Local stakeholder municipalities were represented by the Melaka Historic City Council; Alor Gajah Municipal Council; Hang Tuah Jaya Municipal Council; and Jasin Municipal Council. Utility companies were represented by SWM Environment Sdn Bhd and Indah Water Consortium Sdn Bhd. Tertiary education stakeholders were represented by the Technical University of Malaysia, Melaka, and Multimedia University, Melaka Campus. For support throughout the development of this document, the team would like to thank the World Bank’s Global Knowledge and Research Hub in Malaysia, led by Representative to Malaysia and Country Manager Firas Raad, and offer special thanks to Mei Ling Tan for her support. Feedback from peer reviewers Dao Harrison, Olivia D’aoust, Steven Rubinyi, and Aiga Stokenberga was greatly appreciated. Work on the Melaka Sustainability Outlook Diagnostic at the World Bank’s Global Practice for Social, Urban, Rural, and Resilience (GSURR) was carried out under the guidance of Abhas Jha and Francis Ghesquiere as the Urban and Disaster Risk Management Practice Managers for East Asia and Pacific, Maitreyi Das as the Practice Manager for the Global Programs Unit, Sameh Wahba as GSURR Director, and Ede Ijjasz-Vasquez as GSURR Senior Director. ● “Gates of Portuguese fort A Famosa.” Photo: Elena Odareeva. MELAKA Pathway to Urban Sustainability / 1 Policy Briefing Realizing Melaka’s sustainability aspirations requires bold steps to maintain the state’s economic success and prepare the necessary infrastructure for its expected population growth. This policy briefing is followed by an executive summary and benchmarking information, and accompanied by six supporting reports offering in-depth analyses. The Global Platform for Sustainable Cities (GPSC), led by the World Bank, is a network of 28 cities in 11 countries that supports adopting an integrated approach to urban planning and financing. An integrated approach requires wide input, and a full list of acknowledgments has been included in this report. GPSC Sustainability Outlook Diagnostic Melaka State, situated roughly halfway between Kuala Lumpur and Singapore, has unique importance in the global dialogue around the sustainability of our shared urban future. At Melaka’s heart is its historic urban center, a UNESCO World Heritage Site (WHS) strategically located along the Strait of Malacca, one of the world’s busiest shipping routes and a link between the two largest countries by population, China and India. Melaka has taken significant steps toward realizing a more sustainable urban growth trajectory, including becoming a member of GPSC when the platform was launched in 2016. In 2017, GPSC initiated the Sustainability Outlook Diagnostic with the United Nations Industrial 2 / Sustainability Outlook Diagnostic—Overview Report FIGURE 1 GPSC Benchmarking: Melaka’s Pathway to Urban Sustainability Lisbon Melaka Singapore Izmir Sustainable Recife Melaka’s Dimensions: • Inclusivity and Quality of Life Advanced Melaka’s Dimensions: • Governance and Integrated Urban Consolidating Planning Melaka’s Dimensions: y • Natural Environment i li t • Fiscal Sustainability and Resources in ab • Climate Action and u sta Emerging Resilience n s u rba • Urban Economies to hway t s pa Me laka’ An integrated approach—one that ties Melaka’s strong performance in Inclusivity and Quality of Life to the lower-scoring dimensions—will help the state more rapidly achieve its sustainability goals. Development Organization (UNIDO) and the provides a snapshot of where Melaka has achieved Malaysian Industry-Government Group for High sustainability alongside specific opportunities for Technology (MIGHT) to assist Melaka State in improvement (seen in figure 1). The expectation is achieving the level of urban sustainability to which that more cities in the GPSC network and beyond it aspires. will benefit from this benchmarking process. Importantly, the findings of the assessment and This detailed assessment covers six dimensions of benchmarking are analogous, confirming the sustainability, captured in supporting reports titled efficacy of this approach. Reinforcing Melaka’s Economic Success; Integrating Environmental Plans; Enhancing Services and Housing; Shaping a Compact, Efficient, and Key Areas for Improvement Harmonious Urban Form; Shifting Melaka’s Mobility Split; and Demonstrating Fiscal Sustainability. Each Managing urban change sustainably requires report provides significant insight into different recognizing the powerful links that exist between aspects of Melaka’s sustainability trajectory and economic growth, urban form, and municipal highlights key areas for improvement. financing, as well as the related infrastructure, environmental, and social impacts. Melaka State’s Melaka was also benchmarked against the cities of fragmented urban form illustrates these links: it Izmir (Turkey), Lisbon (Portugal), Recife (Brazil), undermines economic productivity and strains and Singapore. The policy-focused benchmarking budgets by making infrastructure, including basic analyzed 65 indicators to determine a holistic services and public transport, more expensive urban sustainability profile for each city that looked to provision. Car dependency, a by-product at several key areas (Governance and Integrated of poor urban connectivity, has environmental Urban Planning; Fiscal Sustainability; Urban consequences, while the relative unaffordability and Economies; Natural Environment and Resources; inaccessibility of low-density housing for certain Climate Action and Resilience; and Inclusivity and lower-income residents may potentially increase Quality of Life). This comprehensive approach inequality. An integrated approach, supported MELAKA Pathway to Urban Sustainability / 3 by data, is therefore critical to achieving Melaka’s sustainability goals, as captured in the three key ➌ Fiscal Sustainability areas for improvement which follow. Melaka State requires federal transfers to meet its capital expenditure and has limited capacity ➊ Economic Competitiveness for independent capital investment. Melaka State has opportunities to optimize its creditworthiness Melaka State has enjoyed remarkable economic profile, potentially giving access to private debt. As success with positive manufacturing and tourism the urban agglomeration spreads across various growth in recent years. However, productivity local authorities, Melaka State and its municipalities growth in these sectors is limited. Continued must work hand-in-hand to increase their fiscal economic growth for Melaka State requires sustainability so that they can implement leveraging its competitive advantages. Specifically, infrastructure to meet their anticipated future Melaka State should aim to growth needs. Specifically, Melaka State should ■■ Increase worker productivity aim to ■■ Diversify tourism offerings and increase the ■ Obtain a national scale shadow credit duration of tourists’ stays rating to demonstrate fiscal sustainability ■■ Pursue high-tech manufacturing investment in and creditworthiness, while also helping to specialty areas identity and implement financial management improvements ■ Increase the efficiency and scale of recurrent ➋ Integrated Urban Planning own-source revenue collection, achieve a reliable and sustainable operating margin, and improve Melaka State’s success has been associated with debt management capacity significant population growth and low-density ■ Work with municipalities, such as Melaka City, so expansion of urban areas. This fragmented that they can create a sound multiyear capital and disconnected urban form risks stalling and investment plan potentially undermining the city’s future economic growth. Shaping a compact and human-centric urban form is key to unlocking economic, social, and environmental gains. Specifically, Melaka State Next Steps should aim to Melaka State has already taken positive steps ■■ Reduce oversupply of developable land toward realizing its urban sustainability aspirations. and incentivize higher-density, mixed-use The GPSC Sustainability Outlook Diagnostic can development significantly support the state’s next steps in achieving its goals by providing evidence of the ■■ Coordinate land use and transport planning to links between economic productivity, integrated gradually shift the public transport modal share urban planning, and fiscal sustainability. Developing from 2 percent to 40 percent an integrated approach in the forthcoming update ■■ Enhance Melaka’s urban walkability to the State Structure Plan can be further guided ■■ Provide more low-cost, affordable, and well- by the targeted recommendations in each of the connected housing as part of infill development six detailed assessment reports. 4 / Sustainability Outlook Diagnostic—Overview Report Executive Summary Why Melaka developing a more integrated approach to urban challenges and thus achieve the level of urban Malaysia’s Melaka State, situated roughly halfway sustainability to which it aspires.1 between Kuala Lumpur and Singapore, has unique importance in the global dialogue around the Melaka State, one of Malaysia’s 13 states, occupies sustainability of our shared urban future. The state a historically strategic position in global trade has taken significant steps toward realizing a more routes, with the mouth of the Melaka River opening sustainable urban growth trajectory, including onto the Strait of Malacca’s busy shipping routes. becoming a member of GPSC when the platform The historic city center, which has expanded was launched in 2016. In 2017, GPSC initiated the significantly in recent decades, maintains a rich mix l Sustainability Outlook Diagnostic with UNIDO and of Arab, British, Chinese, Dutch, Indian, Malay, and Islamabad MIGHT; the goal has been to assist Melaka State in Portuguese cultural influences and has been named C H I N A This report uses Melaka, the traditional Malay spelling, rather than the alternative spelling of Malacca to reference Melaka State 1 and Melaka City. AN BHUTAN New Delhi NEPAL FIGURE 2 Kathmandu Thimphu Melaka’s Strategic Location C H I N A Dhaka N D II N A D II A MY ANMAR MYANMAR BANGLADESH LAO Nay P.D.R. Pyi Daw TH AILAND THAILAND VIETNAM Bangkok South China Sea Bay of Bengal CAMBODIA Phnom Penh SRI LANKA BRUNEI DARUSSALAM A Y S Strait of A L I Malacca M A Kuala Lumpur Melaka SINGAPORE I N D O N E S I A Melaka is strategically located on the Strait of Malacca, one of the world’s busiest shipping routes and a link among the major Asian economies, including the world’s two biggest countries by population, China and India. The strait provides the shortest maritime links from Asia to Africa and Europe. MELAKA Pathway to Urban Sustainability / 5 a UNESCO WHS. Further information regarding forestry, and cultural heritage and tourism (ADB Melaka’s geographic and political structure is 2014). Melaka’s State Structure Plan 2035 (State included in box 1. of Melaka 2018) further aims to promote economic growth, improve connectivity, reconstruct the The state has recently experienced strong physical living environment, manage traffic, economic growth, and it has high aspirations for improve socioeconomic well-being, and facilitate its urban sustainability. The state government overall sustainable development. has shown leadership in several recent initiatives guiding its development strategies. For instance, However, the city faces significant challenges, the Green City Action Plan was developed by including a car-dependent, inefficient spatial form the Asian Development Bank (ADB) in 2014 that undermines productivity, entails significant to focus specifically on water management, social and environmental costs, and exacerbates energy efficiency and renewable energy, green financial pressures in meeting infrastructure needs. transportation, zero waste, urban agriculture and The GPSC’s Sustainability Outlook Diagnostic BOX 1 Melaka State’s Geographic and Political Structure Melaka State has an area of 1,663 square kilometers global sea trade (Hans-Dieter and Solvay 2006). This (State of Melaka 2018) and a population of positioning has encouraged transshipment activities; approximately 910,000 people as of 2017 (DOSM while the consolidated Port of Singapore acts as the 2019). The state is governed by a parliament called world’s leading transshipment hub, Malaysia hosts the State Legislative Assembly, which is headed by several of the world’s busiest transshipment ports the chief minister. The party in power forms the State along the strait. Executive Council and is responsible for the state’s overall administration. FIGURE 3 Map of Melaka State’s Districts and The state is divided into three districts (Melaka Municipalities Tengah, Alor Gajah, and Jasin), and four municipalities (Alor Gajah Municipal Council, Hang Tuah Jaya Municipal Council, Jasin District Council, and Melaka ALOR GAJAH DISTRICT Historic City Council). The majority of urban residents JASIN Alor Gajah live in Melaka Tengah District, which is situated at Municipal DISTRICT Council Jasin the center of an urban agglomeration that extends District Council significantly beyond its administrative boundaries. MELAKA TENGAH Hang Tuah Jaya DISTRICT Municipal Melaka City has long been prized for its strategic Council Melaka Historic location along the Maritime Silk Road, and it was World Heritage Site City Council occupied by several empires until the Federation of Malaya gained independence in 1957 (National Strait of Malacca Archives of Malaysia 2018). The Strait of Malacca is North Kilometers 0 10 still one of the world’s most important shipping lanes, carrying between one-fifth and one-quarter of all Source: Adapted from State of Melaka 2018. Note: The map shows Melaka State, excluding Tanjung Tuan enclave along the coast of adjacent Negeri Sembilan State. Council and district jurisdictions are indicative. Melaka Historic City is referred to in this assessment as Melaka City. 6 / Sustainability Outlook Diagnostic—Overview Report for Melaka provides a holistic approach to key considerations emerging: 1) sustaining Melaka’s enable leaders to assess Melaka’s strengths and remarkable economic success requires focusing on weaknesses as they chart a path toward achieving its competitive advantages in the manufacturing their sustainability ambitions. The outcome and tourism sectors to boost productivity; 2) and speed of this type of assessment is heavily shaping a compact and human-centric urban form reliant on available data, particularly spatially is key to unlocking economic, environmental, and disaggregated data. As Melaka expands its data social gains; and 3) implementing infrastructure capabilities it will be able to make more informed to meet anticipated future growth needs requires policy decisions. increased fiscal sustainability. Each of the reports includes a set of key messages and recommended actions for improving sustainability. These are Assessing Melaka summarized as follows. GPSC’s Melaka Sustainability Outlook Diagnostic: Supporting Report 1: Reinforcing Pathway to Urban Sustainability and its associated Melaka’s Economic Success supporting reports were developed to inform the next update to the State Structure Plan, focusing Key message: on sectors that are integral to Melaka’s future ■■ Leverage competitive advantages and create urban sustainability. Guided by the GPSC’s Urban conditions for the key sectors of tourism and Sustainability Framework (GPSC, World Bank manufacturing to thrive. 2018), it lays out analyses supported with available data, key messages, and recommendations across Melaka State has seen remarkable economic six detailed assessment reports. These cover how growth in recent decades; however, much of this Melaka State can reinforce its economic success has been through the growth of the tourism sector (Supporting Report 1); integrate environmental and related increases in consumer services. The plans (Supporting Report 2); enhance services city’s manufacturing sector, while still responsible and housing (Supporting Report 3); shape a for 41 percent of economic output (DOSM 2017a), more efficient urban form (Supporting Report has registered modest growth in productivity and 4); shift mobility to walking and public transport output in recent years. A reliance on tourism and (Supporting Report 5); and demonstrate fiscal associated short-term low-quality jobs to drive sustainability (Supporting Report 6). They growth may be undermining productivity gains further highlight the degree to which Melaka’s in the wider economy; it may also be straining future sustainability is connected to urban form, infrastructure, services, and the heritage assets underscoring the need to develop an integrated of the city as well as undermining the region’s approach in responding to sustainability challenges. long-term economic sustainability. Melaka State’s unusually low unemployment rate of 0.9 percent, In addition, a further benchmarking exercise using possible labor shortages, and relatively lower 65 indicators has been conducted to more rapidly population growth further suggest the need to assess Melaka’s sustainability profile against its increase productivity to sustain growth. Given peers (box 2). Importantly, the findings of the the competition for talent from Kuala Lumpur assessment and benchmarking are analogous, and Singapore, Melaka needs to increase its confirming the efficacy of this approach. Full details competitiveness—both by building on its strengths are captured in the benchmarking section of this to attract talent to better job prospects in highly report. productive sectors and by improving the quality of life it offers. Having most investment flows for manufacturing in medium- and high-tech sectors Synopsis of Dimensions Covered is a positive sign that higher-quality jobs are being The in-depth analysis in the six supporting created. However, a relative lack of connective assessment reports consistently points to the need infrastructure, including limited links to the national for Melaka State to adopt an integrated approach rail network, limits labor mobility and Melaka’s to achieving its sustainability aspirations, with three access to local and international markets. MELAKA Pathway to Urban Sustainability / 7 BOX 2 GPSC Urban Sustainability Benchmarking Melaka was benchmarked against Izmir (Turkey), currently “Consolidating” (the second level). The Lisbon (Portugal), Recife (Brazil), and Singapore results of the benchmarking are included in a later using 65 indicators. The policy-focused benchmarking section of this Overview Report. analyzed six dimensions of urban sustainability and created a framework having four different steps of This benchmarking process will be expanded to more urban maturity. While Melaka’s overall development is urban areas, including much of the GPSC network. “Advanced” (the third level), its Inclusivity and Quality Importantly, it does not rank cities, but instead of Life dimension is ranked “Sustainable” (the highest highlights which cities are examples of best practices level). The Climate Action and Resilience, Fiscal in different areas and can be seen as achievable Sustainability, and Urban Economies dimensions are models for their peers. FIGURE 4 Benchmarking Melaka’s Urban Sustainability Maturity Lisbon Singapore Melaka Izmir Recife Sustainable • Long-term Vision • Integrated Strategy • Continuous Advanced Implementation • Clear Vision • Comprehensive Melaka Strategy • Inclusivity and Quality Consolidating of Life • Successful • Developing Vision Implementation • Strategic Priorities Melaka • Beginning Emerging • Governance and Implementation Integrated Urban • Finding a Vision Planning • Scattered Responses Melaka • Natural Environment • Fiscal Sustainability • Lacking and Resources Implementation • Climate Action and Resilience • Urban Economies Melaka has taken significant steps toward achieving its sustainability goals. An integrated approach that ties together Melaka’s strong performance in Inclusivity and Quality of Life with the lower-scoring dimensions will help the state more rapidly move from “Advanced” to “Sustainable.” 8 / Sustainability Outlook Diagnostic—Overview Report FIGURE 5 Tourist Arrivals to Melaka State (2000–2014) 16 25% 14 Number of tourist arrivals (millions) 20% Yearly growth of tourists (%) 12 10 15% 8 10% 6 4 5% 2 0 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Despite continuing growth in the absolute number of visitors, the rate of growth has declined in recent years. Diversifying tourism offerings to attract higher-value travelers and encouraging more productive labor will ensure the sector continues to drive economic growth. Sources: Tourism Malaysia 2015; Melaka Tourism Promotion Division 2015. FIGURE 6 Melaka State’s Manufacturing Sector Contribution to GVA and Total Employment (2010–2016) 43% 16,000 14,000 GVA in manufacturing (RM million) 42% 12,000 Share of total GVA 10,000 41% 8,000 40% 6,000 4,000 39% 2,000 38% – 2010 2011 2012 2013 2014 2015 2016 Sources: DOSM 2011–2017; 2017a. Note: GVA = gross value added. While manufacturing continues to grow, other sectors like consumer services are significantly outpacing the growth of the sector. Maintaining the manufacturing sector’s significant contribution requires further expanding opportunities to attract investment that creates higher-quality jobs. MELAKA Pathway to Urban Sustainability / 9 Recommended actions to improve sustainability: require wider adoption. However, the state’s limited influence over funding for projects limits 1-A Reassess large infrastructure projects opportunities for a long-term integrated approach. and create strategies to leverage their The state is still responding to a growing list of opportunities. Ensure that projects like environmental challenges in key areas. high-speed rail (HSR) and port investment— alongside local connectivity improvements Solid waste management: Investments have been and policy innovations—increase businesses’ made to improve future capacity for processing access to markets and labor. waste through recycling at source, material 1-B Rethink strategic priorities and link them with recovery facilities, incineration, and elimination opportunities for economic development. of landfill waste. However, there is concern that Understand what caused tourism and current waste exceeds landfill capacity, and that manufacturing to cluster in Melaka, and there isn’t a clear strategy to reduce consumer then prioritize opportunities for economic waste or compost organic waste. opportunity that build on and recognize local Water management: Melaka State has 100 percent strengths and capacities. access to piped water and has plans to reduce 1-C Build a more inclusive and collaborative consumption and distribution losses. Highly model of economic decision making. subsidized tariffs limit the incentive for behavior Leverage the power of business and change, and aging infrastructure and water community decision making by building robust pollution present significant risks. partnerships. Energy and greenhouse gases (GHG): Melaka has 1-D Support development of major sectors. ambitious targets for implementing renewable Tourism and manufacturing, as existing pillars energy and reducing GHG in the transport sector, of the economy, require unique support to responsible for 29.8 percent of total GHG emissions continue to thrive, e.g., diversification for (ICLEI 2016). However, cheap energy prices and a tourism offerings and productivity boosts for lack of a clear framework to assess integration limit manufacturing. the adoption of renewables. Climate change and resilience: Melaka is Malaysia’s Supporting Report 2: Integrating only representative in the 100 Resilient Cities Environmental Plans network.2 This membership increases local resilience capacity while providing access to a Key message: network of cities responding to related challenges. ■■ Synthesize existing initiatives by creating Coordinating local and state-level priorities with an integrated environmental approach and integrated administration and coordination could progressing toward recalibrated goals. further strengthen Melaka’s climate resilience. Melaka’s rapid urbanization has resulted in Recommended actions to improve significant infrastructure and environmental sustainability: pressures, despite ambitious attempts by the state to handle growth in a more coordinated 2-A Identify a clear champion of each priority manner. Melaka State has responded by seeking project and strategic objective. Identifying international funds and expertise to reposition its ownership of such targets will enable a trajectory toward smart, green, and sustainable greater focus on performance assessment growth. The state has also collaborated with and ultimately on budget allocations, in turn central and city governments and businesses to enabling more effective implementation. share best practice and drive further benefits 2-B Optimize existing knowledge sharing and through coordination. Innovative tools to assess technical leadership arrangements with green targets could potentially be used to track peer cities and partners. Through better performance and build targeted solutions but coordination—both internally and externally— 100 Resilient Cities will cease operations in July 2019 (Flavelle 2019), making Melaka’s participation in GPSC ever more 2 important for capacity development and knowledge sharing. 10 / Sustainability Outlook Diagnostic—Overview Report the state will be able to identify critical putting full coverage within reach, and 84 percent pathways to ensure outcomes in line with its of Melaka’s households are owner-occupied (DOSM sustainability objectives. 2017a). While housing is generally considered 2-C Develop clear performance guidelines for affordable, particularly for apartments and water management in buildings and urban terraced homes, the relative unaffordability of areas. Water management and efficiency certain housing types for low-income earners awareness programs should be launched, requires greater investigation to identify potential including water pricing mechanisms and future challenges. A long-term plan to improve comparative water usage information, to sustainability and efficiency through densification encourage water use reduction. and optimizing land-use and infrastructure planning will play a significant role in shaping the success of 2-D Harness environmental data and develop the built environment. evidence-based targets that inform policy and track performance. Citizens should be Recommended actions to improve included in policy making and implementation sustainability: through public campaigns, surveys, and awareness programs about environmental 3-A Increase accessibility of basic infrastructure protection, recycling, and sustainable water to 100 percent coverage throughout Melaka and energy consumption. State. This is achievable in the medium term by working with the community to identify 2-E Remove natural habitats prone to areas and households where gaps prevail flooding from areas designated for future and to allocate resources toward basic development. Policies could be enacted to infrastructure investment. strengthen the development controls of flood- prone areas. Improved maintenance regimes 3-B Improve Melaka State’s housing data will reduce instances of flash floods. framework. An integrated housing data framework administered by the Melaka 2-F Raise public awareness regarding recycling Housing Board in collaboration with other and reuse through environmental protection government departments and other relevant programs. Special attention should be paid stakeholders would better inform the current to organic waste, which in this case typically housing schemes and policies of Melaka State. makes up around 60–70 percent of the total waste generated, and compositing and sorting 3-C Integrate long-term housing considerations facilities should be developed. into planning processes. The housing strategy, which would complement the State 2-G Reduce GHG emissions by increasing use of Structure Plan 2035, should incorporate a renewable energy and encouraging energy comprehensive diagnostic of the current efficiency. Melaka State should develop a housing situation in Melaka State, a review of concrete and reliable energy profile, determine the policy framework, and an action plan to energy targets for sustainable and clean achieve long-term affordability. energy, and help mobilize financing for energy efficiency and renewable programs. 3-D Promote housing supply diversification. To ensure a variety of affordable housing options Supporting Report 3: Enhancing that cater to increasingly diverse households, Services and Housing this strategy should include considerations such as promoting the development of Key messages: smaller housing units and the densification and redevelopment of excess land on existing ■■ Achieve full coverage of basic services. family lots. ■■ Continue focus on improving the housing market. 3-E Deliver additional low-cost and affordable Widely sharing the benefits of Melaka’s stellar housing through private sector partnerships. economic gains is a key component of urban Melaka should implement a mandatory land sustainability. Melaka already has nearly a full value capture scheme dedicated to affordable provision of basic services throughout the state, housing for sites that achieve significant land MELAKA Pathway to Urban Sustainability / 11 FIGURE 7 Melaka State’s Developed Land: Actual in 2013 (left, in red) and the State Structure Plan 2035’s Future Potential Extent (right, in pink) NorthNorth NorthNorth Kilometers Kilometers Kilometers Kilometers 0 0 10 10 n developed land 0 0 10 10 n future potential built-up area Source: State of Melaka 2018. Melaka State’s developed land (excluding railways and roadways)3 in 2013 was 234 km2, representing 14 percent of the overall state’s area. The State Structure Plan anticipates that by 2035 the state will have 464 km2 of developed land (28 percent of the state) and indicates a potential built-up area for development of 848 km2 (51 percent of the state). The plan aims to guide and control the physical development at the subnational level to promote economic growth, improve connectivity and the physical living environment, manage traffic, improve socioeconomic well-being, and facilitate overall sustainable development. value lifts. It should also develop negotiated ■■ Encourage new data approaches and public-private partnerships with local strengthen data capacity for integrated developers and conduct independent analysis planning. to ensure that any levies and land value Melaka State, which has forecast population capture schemes are financially viable for the growth of 70.4 percent between 2015 and 2035 development industry. (State of Melaka 2018), has rapidly transitioned 3-F Improve affordability through enhanced from rural to urban, with most employment now locational accessibility. Melaka should supported by urban areas. The compact historic concentrate future housing as infill into mixed- core, a UNESCO WHS, has lost some of its unique use urban areas. The areas should be along key cultural vibrancy as the city has expanded, public transport corridors, improve walkability increasing the need for compact and dense urban conditions in residential neighborhoods, and development—not only to increase economic improve the provision of urban services and efficiency through agglomeration, but also to infrastructure in underserved areas. integrate the suburbs with the center’s unique urban fabric, while developing a polycentric urban Supporting Report 4: Shaping a form. This approach also provides opportunities Compact, Efficient, and Harmonious for using land value capture to finance transport, Urban Form public spaces, and affordable housing, while improving the area’s financial and environmental Key messages: sustainability. Retaining and developing Melaka’s ■■ Reduce the oversupply of developable land. unique identity is also key to enhancing the city’s appeal to tourists, businesses, and potential talent ■■ Leverage Melaka’s cultural, historical, and keen to enjoy a higher quality of life. Central natural heritage. to this effort is potentially leveraging centrally ■■ Harmonize Melaka’s urban fabric. managed socioeconomic and physical planning Definitions of developed land, built-up area, and urban extent can be found in Supporting Report 4: Shaping a Compact, 3 Efficient, and Harmonious Urban Form. 12 / Sustainability Outlook Diagnostic—Overview Report data to evaluate and monitor the performance of 4-F Address data gaps with alternative data strategic objectives. One concern is the current and sources and partnerships. Melaka should planned oversupply of land, which has led to low assess the feasibility of using private employment and residential densities, and which proprietary data, including big data and could be a major liability for economic efficiency, data analytics from private service providers, infrastructure costs, and climate resilience. to address key data gaps such as private transportation patterns, retail spending, Recommended actions to improve housing prices, air and water quality, and sustainability: public space use. 4-A Incentivize higher-density, mixed-use, green, 4-G Increase data integration through cross- and compact developments with flexible agency collaboration. Melaka should develop land use regulations. Recalibrate incentives state-level data management and innovation toward redevelopment and increasing density, capability for integrated planning, through the rather than sprawl. Spatial development should development of a specialized data expertise focus on having a mix of compatible uses by team and a roadmap, in consultation with integrating areas close to the city center with all government units involved. The roadmap high-density, high–plot ratio, and fine-grained should identify key data gaps and develop lot patterns. an action plan to achieve cross-agency data 4-B Shape a compact polycentric urban form integration. and develop well-connected nodes. Melaka 4-H Encourage open source. Developing an open should prioritize integrating land use and source policy roadmap will identify existing transportation infrastructure planning by open source solutions for Melaka’s immediate developing and connecting strong nodes and future data needs. Building in-house with concentrated economic activity; new capability, including hiring an open source functions such as logistics, business, finance, technical specialist and providing training and and knowledge industries should be gradually capacity to staff, will be needed. developed in accordance with the city’s 4-I Embrace open data. Melaka is advised to growth. identify which integrated planning data sets 4-C Adopt a sustainable approach to and information are suitable for public release, conservation. Melaka is advised to put in place as part of the roadmap for data integration sustainable tourism measures in the WHS. and the implementation of the open data Cultural sustainability principles should also be policy. It should ideally create one integrated, used to evaluate development interventions systematically updated, open data website within the site. containing structured and ready-to-use data 4-D Increase livability with a more vibrant public sets. realm. Melaka needs to develop animated streets beyond the restricted perimeter of the Supporting Report 5: Shifting Melaka’s heritage zone, based on the same principles of Mobility Modal Split the scaled down, traditional streets. Bringing residents closer to parks, water bodies, and Key messages: waterways will cater to a wide spectrum of ■■ Focus on public transport and green mobility social and recreational needs. strategies. 4-E Pursue a more harmonious urban fabric ■■ Enhance Melaka’s Walkability by applying sustainability and historical urban landscape principles to development. Melaka’s rising wealth and its low-density, Melaka’s harmonious urban fabric should fragmented urban form result in high car be compact, integrated, connected, and dependency, congestion, and pollution. Some diversified to promote diverse neighborhoods, 90 percent of Melaka’s trips are estimated to be optimize land use, and reduce car dependency. made using cars (ADB 2017). Ambitious targets for MELAKA Pathway to Urban Sustainability / 13 FIGURE 8 Melaka Heritage Area’s Pedestrian Volume Pedestrian volume/survey (People/hour) 1 – 250 250 – 500 500 – 1,000 1,000 – 1,500 1,500 – 2,000 2,000 – 2,500 2,500 – 3,000 Source: ADB 2017. Most pavements are only 1–2 meters wide, and 40 percent of the streets in the main heritage area have no walkways at all (ADB 2017). Given significant competition for space between motorists and pedestrians, there is great potential to increase this area’s walkability. reducing GHG emissions require a substantial mode 5-B Integrate public transport into a shift to public transport and land use planning that comprehensive strategy for a regional results in better integration between where people economic corridor. The HSR link between Kuala live, learn, and work. However, public transport’s Lumpur and Singapore, which is scheduled market share of around 1 percent necessitates to become operational in 2031, has a station substantial investment in quality, convenience, and planned 15 kilometers from Melaka City. Melaka availability of passenger information. A poor-quality needs to integrate its public transportation pedestrian realm further discourages walking, network with a high-quality public transport while higher transport costs negatively impact corridor between the new HSR station and accessibility in low-income groups. Melaka City. There is an urgent need to safeguard the corridor (ADB 2017). Recommended actions to improve 5-C Adopt transit-oriented development sustainability: strategies. Efficient land use through transit- 5-A Transform the public transportation industry. oriented development strategies and compact Melaka’s state-owned transport company, growth will encourage high-density, mixed- Panorama, has an estimated market share use, and balanced development, with walkable of around 1 percent. Panorama needs to be streets and jobs close to homes. This approach transformed into a modern and professional will be vital to reducing private car use and public transport company that is customer increasing the financial viability of public oriented, focused on growth, and efficiently transport. managed to attract investment and funding. 14 / Sustainability Outlook Diagnostic—Overview Report 5-D Move toward a public transport modal share Recommended actions to improve of 40 percent. Melaka should reduce growth sustainability: in private vehicle usage by introducing travel 6-A/E State and city: Obtain a shadow credit demand management measures, such as rating. Both Melaka State and Melaka City controlling parking areas, reducing off-street should obtain a shadow credit rating on the parking, and assessing transport-related Malaysian national scale to demonstrate development contributions. In addition, Melaka their degree of fiscal sustainability and needs to significantly improve passenger creditworthiness. This rating would be kept convenience on public buses. confidential within the government and could 5-E Enable walkability. Promoting walkability is help the state identity and implement financial a key element to making public space more management improvements. vibrant, reducing traffic congestion, and 6-B/F State and city: Improve debt management. stimulating the local commercial economy. Both Melaka State and Melaka City should establish written policies and procedures to Supporting Report 6: Demonstrating improve their debt management processes. Fiscal Sustainability 6-C State: Undertake a concerted effort to Key message: increase own-source revenue. Melaka State ■■ Demonstrate overall fiscal sustainability. should determine if its billing and collection efforts are performing efficiently and if existing Melaka requires federal transfers to meet its capital revenue streams can be revalued or potential expenditure. Diversifying to market-based financing new revenue sources should be introduced. may increase the capacity to shape and deliver on 6-D State: Achieve a reliable operating margin investment priorities; however, neither the state nor surplus. This requires a combination of the city has a credit rating, limiting this potential. increasing own-source recurrent revenues and A general reduction in federal transfers and tax slowing the growth in operating expenditures receipts at state level, with the state’s total revenue as much as possible. decreasing by 18 percent from 2012 to 2015 (State Government of Melaka 2014, 2015, 2016), along with 6-G City: Work closely with Melaka State to regular budget deficits, may indicate the state’s prepare the city’s own multiyear capital risk of being unable to fund urban infrastructure investment plan. This should include a in the future. The revenue decrease was notably financing plan that identifies market-based during a period of strong population growth. As and governmental sources of capital for the Melaka State shares infrastructure between several city’s projects. districts and municipalities, Melaka City was also 6-H City: Substantially increase recurrent own- assessed, given the impact it has on the state’s source revenues and reduce reliance on non- wider fiscal sustainability. The city has responded recurrent revenue. Negotiate with Melaka to its own fiscal challenges by selling assets, which State on ways to make the city property makes it harder for the city’s revenue structure to tax more responsive to changes in property gain from future urban growth and development. values and ways to reduce the city’s heavy Debt financing is seldom used at local or state dependence on the property tax. levels. If adequate sustainable infrastructure is to be 6-I City: Return to maintaining an operating developed at a pace that is consistent with Melaka margin surplus. Increase the growth in the State’s rapid growth, current legal and regulatory city’s operating revenue to a rate that exceeds restrictions on the use of long-term debt or PPPs the growth in operating expenditures. must be overcome, and participation of Malaysian sources of finance, including capital markets, should be catalyzed. “Melacca.” Photo: Oleh Slobodeniuk. 16 / Sustainability Outlook Diagnostic—Overview Report Action Plan aligning funding, and delegating the necessary tasks for implementation as they chart their own The action plan seen in table 1 provides a holistic path toward sustainability. Each recommendation’s overview of the key messages and recommended implementation action timeline has been estimated actions to improve sustainability that were to be a short-term “quick win” requiring less than 5 developed during the GPSC Sustainability Outlook years, a medium-term commitment of 5 to 10 years, Diagnostic. It will support policy makers and or a long-term horizon of 10 years or greater. leaders in determining strategic focus areas, TABLE 1 Recommended Actions 1 Reinforcing Melaka’s Economic Success Leverage competitive advantages and create conditions for the key sectors of tourism and manufacturing to thrive 1-A Reassess large infrastructure projects and create strategies to 1 year leverage their opportunities 1-B Rethink strategic priorities and link them with opportunities for 1 year economic development 1-C Build a more inclusive and collaborative model of economic 3 years decision making 1-D Support development of major sectors 5 years 2 Integrating Environmental Plans Synthesize existing initiatives by creating an integrated environmental approach and progressing toward recalibrated goals 2-A Identify a clear champion of each priority project and strategic 1 year objective 2-B Optimize existing knowledge sharing and technical leadership 2 years arrangements with peer cities and partners 2-C Develop clear performance guidelines for water management in 2 years buildings and urban areas 2-D Harness environmental data and develop evidence-based targets 3 years that inform policy and track performance 2-E Remove natural habitats prone to flooding from areas 3 years designated for future development 2-F Raise public awareness regarding recycling and reuse through 5 years environmental protection programs 2-G Reduce GHG emissions by increasing use of renewable energy 15 years and encouraging energy efficiency 3 Enhancing Services and Housing Achieve full coverage of basic services 3-A Increase accessibility of basic infrastructure to 100 percent coverage 5 years throughout Melaka State Continue focus on improving the housing market 3-B Improve Melaka State’s housing data framework 2 years 3-C Integrate long-term housing considerations into planning 5 years processes 3-D Promote housing supply diversification 10 years 3-E Deliver additional low-cost and affordable housing through 10 years private sector partnerships 3-F Improve affordability through enhanced locational accessibility > 15 years MELAKA Pathway to Urban Sustainability / 17 4 Shaping a Compact, Efficient, and Harmonious Urban Form Reduce the oversupply of developable land 4-A Incentivize higher-density, mixed-use, green, and compact 5 years developments with flexible land use regulations 4-B Shape a compact polycentric urban form and develop well- > 15 years connected nodes Leverage Melaka’s cultural, historical, and natural heritage 4-C Adopt a sustainable approach to conservation 3 years Harmonize Melaka’s urban fabric 4-D Increase livability with a more vibrant public realm 5 years 4-E Pursue a more harmonious urban fabric by applying sustainable 15 years and historical urban landscape principles to development Encourage new data approaches and strengthen data capacity for integrated planning 2 year 4-F Address data gaps with alternative data sources and 1 year partnerships 4-G Increase data integration through cross-agency collaboration 2 years 4-H Encourage open source 1 year 4-I Embrace open data 2 years 5 Shifting Melaka’s Mobility Modal Split Focus on public transport and green mobility strategies 5-A Transform the public transportation industry 2 years 5-B Integrate public transport into a comprehensive strategy for a regional 10 years economic corridor 5-C Adopt transit-oriented development strategies 10 years 5-D Move toward a public transport modal share of 40 percent > 15 years Enhance Melaka’s walkability 5-E Enable walkability 10 years 6 Demonstrating Fiscal Sustainability Demonstrate overall fiscal sustainability 6-A State: Obtain a shadow credit rating 1 year 6-B State: Improve debt management 1 year 6-C State: Undertake a concerted effort to increase own-source revenue 3 years 6-D State: Achieve a reliable operating margin surplus 3 years 6-E City: Obtain a shadow credit rating 1 year 6-F City: Improve debt management 1 year 6-G City: Work closely with Melaka State to prepare the city’s own 2 years multiyear capital investment plan 6-H City: Substantially increase recurrent own-source revenues and reduce 3 years reliance on non-recurrent revenue 6-I City: Return to maintaining an operating margin surplus 3 years “Replica of a 16th century Portuguese galleon in the Samudera Maritime Museum in Melacca.” Photo: CharlieTong. 18 / Sustainability Outlook Diagnostic—Overview Report MELAKA Pathway to Urban Sustainability / 19 Conclusion An integrated approach that coordinates growth at the state, municipality, and community levels, and Melaka State has taken significant steps toward that leverages centrally managed socioeconomic achieving urban sustainability, including partnering and physical planning data to evaluate and monitor with international organizations and becoming an the performance of strategic objectives, is key active member of GPSC when the platform was to achieving Melaka’s goals. As the assessment launched in 2016 to promote knowledge exchange. highlighted, an integrated approach is also by Fulfilling its aspirations, however, requires further nature iterative, requiring regular review and bold steps as the area rich in history grapples with updating as new information becomes available. contemporary urban challenges. These include This will enable Melaka State to reinforce its retaining key areas of economic competitiveness economic success, integrate environmental plans, to support continued growth, developing a more consolidate housing and services, shape a more efficient urban form to unlock economic, social, efficient urban form, shift mobility to walking and environmental gains, and increasing fiscal and public transport, and demonstrate fiscal sustainability to meet future growth needs. sustainability. Ultimately, the future sustainability of Melaka State is strongly connected with the The state government has shown leadership in sustainability of its urban form. Melaka’s challenges several recent initiatives guiding its development are not necessarily unique, which means it can strategies. GPSC's Sustainability Outlook benefit from the wider GPSC network of cities. But Diagnostic, developed in partnership with UNIDO thanks to its geographical advantages and vibrant and MIGHT, highlights the importance of leveraging historic center, it is uniquely positioned to provide the state’s opportunities and developing an leadership as it defines its sustainability credentials. integrated approach to its urban sustainability The future steps taken by Melaka will very likely challenges going forward. Using it to inform the confirm its singular importance in the global next update to the State Structure Plan will help dialogue around the sustainability of our shared the state chart a path toward sustainability. urban future. “Melaka city view from the Menara Taming Sari Tower.” Photo: jyapa. 20 / Sustainability Outlook Diagnostic—Overview Report MELAKA Pathway to Urban Sustainability / 21 Benchmarking Melaka’s Urban Sustainability Background The Urban Sustainability Framework (USF) (GPSC, World Bank 2018) was created by GPSC to build a common understanding of sustainability within an urban context and provide practical guidance to cities on how to pursue such sustainability through integrated approaches. To assist Melaka State in understanding its level of urban sustainability, the USF was operationalized by developing specific metrics to evaluate local policies on sustainable urban development. The objective of these metrics is to enable city governments around the world to learn more about the policy initiatives that peer cities are undertaking. They can also help cities track their own progress in creating policies to promote sustainable urban development. The benchmarking was researched by the Economist Intelligence Unit (EIU) from a set of key indicators found in the USF. The benchmarking focuses exclusively on policy inputs (rather than outputs), as these are areas where policy makers can implement changes in measurable and tangible ways. Policy inputs that are part of the benchmarking include an analysis of strategies, programs, regulations, and institutions that governments should consider to promote integrated urban development. As part of this pilot project, the benchmarking identified cities along a policy development continuum that serves as a roadmap for sustainable urban planning. 22 / Sustainability Outlook Diagnostic—Overview Report City Selection Methodological Approach Melaka was benchmarked against four The benchmarking framework has a total of 65 comparators: Lisbon, Izmir, Recife, and Singapore. indicators—34 qualitative (input) indicators and 31 These cities were selected taking into account quantitative (output/outcome indicators). These similar demographics, geography, economic indicators draw upon a range of different sources: activities, cultural affinity, and sustainability ■■ Qualitative indicators (input indicators) draw ambitions. Singapore, for instance, has close on documents describing strategies, programs, geographic proximity with Melaka; both have a regulations, and institutions that governments significant manufacturing industry, and they share should consider in order to promote integrated strong historical and cultural links. Melaka sees urban development. Singapore as an aspirational role model in many ways. Based upon the intention of comparing peer ■■ Quantitative indicators (output/outcome cities, the benchmarking had three objectives: indicators) draw on data collected by authorities or international organizations to assess key 1) Understand the readiness of Melaka’s urban characteristics and policy outcomes. planning and sustainable policy development The 34 qualitative indicators assess policy inputs 2) Measure Melaka’s current policy environment in across the six dimensions of the USF (Governance relation to comparator cities and the USF focus and Integrated Urban Planning; Fiscal Sustainability; areas Urban Economies; Natural Environment and 3) Assess the viability of scaling up the Resources; Climate Action and Resilience; and benchmarking to include more GPSC cities Inclusivity and Quality of Life). The dimensions and key focus areas are shown in figure 9. FIGURE 9 Six Dimensions and Key Focus Areas 1 1.1 1.2 1.3 1.4 1.5 Vision and Governance Stakeholder Data Trend Land Use Long-term Participation Management Analysis and Zoning and Integrated Planning Urban Planning 1.6 1.7 1.8 1.9 Urban Transport, Informal Cultural Growth Mobility, and Settlements Heritage Patterns Land Use 2 2.1 2.2 2.3 2.4 2.5 Accountability Revenue and Fiscal Sustainability Credit- Expenditure Management and Financial worthiness Management of Debt Transparency Autonomy 3 3.1 3.2 3.3 3.4 3.5 Urban Economies Economic Business Labor Livelihood Income Performance Climate Force Opportunities Equality 4 4.1 4.2 4.3 4.4 4.5 Natural Environment Ecosystems Water Solid Consumption and Air Quality Resources Waste and Production and Resources Biodiversity Management Management Patterns 5 5.1 5.2 5.3 5.4 5.5 Climate Action Greenhouse Energy Clean Climate Change Disaster Risk Gas and Resilience Inventory Efficiency Energy Adaptation Reduction 6 6.1 6.2 6.3 6.4 6.5 Drinking Water Inclusivity and Housing Food and Health and Safety Quality of Life Security Well-Being Sanitation MELAKA Pathway to Urban Sustainability / 23 “Shoppers in Jonker Street—the center of the Chinatown neighborhood in Malacca.” Photo: MosayMay. To score the qualitative indicators, policy questions Scoring were created based upon three guiding principles: The 34 qualitative (input) indicators across five cities were scored on a scale of zero to two. A 1) Objectivity. Qualitative research and score of zero was assigned to cities where no benchmarking must rely on tangible evidence. evidence or negative evidence was available. A This allows for consistency across large samples score of one was assigned to cities where there and minimizes the risk for interpretation biases. was some evidence of a policy, strategy, and/or 2) Precision. One question should measure one program, but this evidence was limited or outdated. concept. To achieve this, the streamlined A score of two was assigned to cities where framework adopts a binary (yes/no) scoring evidence was encompassing and had been updated system, including qualitative justifications and in the past five years. references to allow for traceability. Twenty in-depth interviews with local experts 3) Comprehensiveness. Questions selected are and authorities across five cities were conducted evenly spread across the dimensions and as part of this assessment. Interviews were the focus areas of the USF. This allows the complemented with secondary research and framework to retain the original structure analysis of laws, strategies and plans, EIU’s developed by the GPSC while allowing for a proprietary data, academic studies, websites focused and repeatable assessment. of government authorities and international Quantitative indicators were collected to inform organizations, websites of industry associations, an assessment of data availability (see annex B for and local and international news and media reports. a full list of the indicators). Where data was not To ensure that scores were properly justified and directly collected by the government, “n.a.” was consistent across all countries, each qualitative inputted into the benchmarking background data score was reviewed, scores were calibrated, and and supplemented by a note detailing the nature of cross-country comparisons were conducted. data limitations and alternative sources. Consequently, scores are best understood by reading both the scoring criteria and the written justifications provided for each indicator found in the accompanying Excel dashboard. An example score card is seen in figure 10. 24 / Sustainability Outlook Diagnostic—Overview Report FIGURE 10 Izmir’s Score Card: Vision and Long-term Strategic Planning Indicator Dimension and Focus Area: 1.1 Vision and Long-term Strategic Planning Question: Is there a city-level strategic plan that provides a clear long-term vision for the future? Score: 2/2 Justification: Izmir Metropolitan Municipality (IMM), the main local authority, has a city-level strategic plan to provide a long-term vision for the future. Three strategic plans have so far been developed, covering the periods 2006–2017, 2010–2017, and 2015–2019. The current strategic plan includes an evaluation of the 2010–2017 period and examines a wide range of issues, including geography, population, employment, health, education, economy, culture and art, and infrastructure. It identifies nine main strategic objectives with targets and performance benchmarks. These nine objectives are transparent governance; sustainable environmental management; urban conservation and planning; infrastructure improvement; safe and environmentally friendly transportation; social solidarity and health; 24/7 culture, art, and sport; the popularization of tourism; and disaster management and security.a IMM’s performance in fulfilling activities determined to achieve the plan objectives and targets is monitored and evaluated through performance programs and activity reports published annually.b a. Izmir Metropolitan Municipality, “Strategic Plan 2015–2019,” 2015, https://www.izmir.bel.tr/CKYuklenen/EskiSite/file/MALI_HIZMETLER/StrategicPlan2015-2019.pdf. b. Buğra Gökçe, General Secretary of Izmir Metropolitan Municipality, Izmir, November 14, 2018. Normalization and Weights FIGURE 11 Dimension Weightage as Part of Overall Each score has been normalized on a 0–100 Benchmarking Score range and then aggregated across indicators. 100% Governance Normalization rebases the raw indicator data to a common unit to allow for comparability. An equal and Integrated Urban Planning 16.6% ▲ weightage of 16.6 percent has been assigned to More each of the six dimensions of the framework. This sustainable method highlights the importance of integrated Fiscal Sustainability 16.6% policies planning but recognizes that the relative importance of each focus area—and the way each focus area can be addressed—may differ for each Urban Economies 16.6% city. A graphic representation of the weightage and overall scoring is seen in figure 11. 100% (total score) Natural Environment Maturity Assessment and Resources 16.6% The benchmarking model groups scores in four categories to reflect the level of each city’s Climate Action development along a policy continuum composed and Resilience 16.6% of four steps. Instead of presenting the overall scores, the benchmarking groups cities based on whether their policies are Emerging, Consolidating, Inclusivity and 16.6% Advanced, or Sustainable (figure 12). This is a Quality of Life benchmarking practice that focuses on fostering 0% policy dialogue. FIGURE 12 Overall Benchmarking Score Reflecting Maturity of Urban Sustainability Emerging Consolidating Advanced Sustainable Overall score 0–25 25–50 50–75 75–100 MELAKA Pathway to Urban Sustainability / 25 The scores translate into a qualitative maturity Each city is placed upon one of the four steps of assessment that reflects the key building blocks urban maturity based on an overall score and on of sustainable policy agendas. The highest- the score for each of the six dimensions. This allows scoring cities are those that have developed a cities to assess which key policy areas represent long-term vision, have integrated this vision into a strengths and weaknesses, and helps decision multidimensional and integrated strategy, and have makers identify priority areas for action. The been able to continuously implement and update placement of cities onto steps forms comparable policies and programs to achieve this vision. cohorts of cities that can learn from each other. This city-to-city learning is an important driver of GPSC. FIGURE 13 Urban Maturity Steps Sustainable Advanced Consolidating Emerging Key Policy FINDING A DEVELOPING CLEAR VISION LONG-TERM VISION Dimensions: VISION A VISION Cities that have Cities that have • Governance Cities that have Cities that are defined a clear been guided by a and Integrated yet to find a vision developing a long- vision clear, long-term, and term vision participatory vision Urban Planning SCATTERED STRATEGIC COMPREHENSIVE INTEGRATED • Fiscal RESPONSES PRIORITIES STRATEGY STRATEGY Sustainability Ad hoc policies Have identified Have developed Follow an with no strategic key goals and a comprehensive integrated, data- • Urban direction priority areas planning strategy driven planning Economies strategy • Natural LACKING BEGINNING SUCCESSFUL CONTINUOUS Environment IMPLEMENTATION IMPLEMENTATION IMPLEMENTATION IMPLEMENTATION and Resources Policies in few key Policies in some of Policies in most Comprehensive areas that lack the key areas that key policy areas policies in all of • Climate Action resources and/ are being financed that are usually the key policy Resilience or are not being and beginning to adequately financed, areas that are implemented be implemented implemented, adequately financed, • Inclusivity and monitored, and implemented, Quality of Life updated monitored, and frequently updated 0–25 25–50 50–75 75–100 Overall benchmarking score 26 / Sustainability Outlook Diagnostic—Overview Report Benchmarking Excel Model Assessment Results To help viewers analyze the benchmarking data and results themselves, an Excel model with an Overall Results interactive user-friendly interface was created. The benchmarking exercise places Melaka’s overall The model allows the data and results to be seen policy development in the Advanced category, using several representation methods, including with a strong performance in the Inclusivity and by individual scorecard, a stoplight assessment, Quality of Life focus area. Policies in the Fiscal horizontal scoring continuum, and scatter plot. Sustainability, Urban Economies, and Climate By utilizing the model, policy makers and urban Action and Resilience were Consolidating. In practitioners can better understand where their city comparison, policies in Singapore and Lisbon were stands in comparison with its peers. overall deemed Sustainable, and Recife and Izmir Excel model downloadable here: were placed in the Advanced category along with Melaka. A traffic light representation of the scoring from the Excel model is seen in figure 14. FIGURE 14 Traffic Light Representation of Dimension Performance Normalized scores 0–100, where 100 = most favorable conditions Emerging Consolidating Advanced Sustainable 1 2 3 4 5 6 Governance Natural Fiscal Urban Climate Action Inclusivity and OVERVIEW and Integrated Environment Sustainability Economies and Resilience Quality of Life Urban Planning and Resources Izmir Izmir Izmir Izmir Izmir Izmir Izmir Lisbon Lisbon Lisbon Lisbon Lisbon Lisbon Lisbon Melaka Melaka Melaka Melaka Melaka Melaka Melaka Recife Recife Recife Recife Recife Recife Recife Singapore Singapore Singapore Singapore Singapore Singapore Singapore Melaka’s Scoring score on Accountability and Transparency and the lack of third-party scrutiny over its finances. Melaka In the Governance and Integrated Urban Planning does not have a credit rating, and no independent category, Melaka has ambitious and forward- agency has made a pronouncement regarding the looking development plans. Its collaboration sustainability of its debt. Official documents and with various entities to develop the Melaka State budgets are not available online or easily available Structure Plan 2035 (State of Melaka 2018) and the to the public. Green City Action Plan (ABD 2014) have helped Melaka to move toward integrated policies. The In the Urban Economies area, Melaka scored on only indicator where Melaka scored below its the limit between Consolidating and Advanced, peers in this area was Transport and Mobility, as mostly due to a lack of focus in its economic vision. it lacks a comprehensive transport master plan. A The Melaka State Structure Plan 2035 aims to shift the structure of the economy to make the state representation from the Excel model of how Melaka more reliant on the services sector, but there is no scored in comparison to each of its peers is shown clear definition of the type of services industry it in figure 15. will be prioritizing. In contrast, cities like Lisbon In the Fiscal Sustainability area Melaka lagged and Recife have defined clear economic identities. significantly behind others, due mostly to a low Lisbon, for example, has reduced red tape, MELAKA Pathway to Urban Sustainability / 27 FIGURE 15 Continuum Representation of Melaka’s Benchmarking Scoring (0–100) Melaka 0 10 20 30 40 50 60 70 80 90 100 Melaka OVERVIEW Advanced Melaka 1 Governance and Integrated Urban Planning Advanced Melaka 2 Fiscal Sustainability Consolidating Melaka 3 Urban Economies Consolidating Melaka 4 Natural Environment and Resources Advanced Melaka 5 Climate Action and Resilience Consolidating Melaka 6 Inclusivity and Quality of Life Sustainable made information accessible to companies, and preliminary resilience assessment as part of the 100 promoted skilled labor to become Europe’s start- Resilient Cities program. Conversely, Izmir leads in up incubator. Recife’s economic plan emphasizes the disaster risk management policy development the development of high-tech companies with area. The city allocated almost 10 percent of its its initiative Porto Digital, which encourages tech budget to disaster management between 2010 incubators to settle in the city. and 2014 and has shifted its approach from crisis management to risk management over the past In the Climate Action and Resilience area, Melaka decade. scored on the limit between Consolidating and Advanced, as many of its policies are quite recent For a detailed breakdown of the scores and and some await implementation. A climate change justifications of Melaka and its peers, see the adaptation plan still needs to be developed, Indicator Explorer tab in the accompanying although Melaka has begun to develop a disaster benchmarking Excel model. risk management strategy by completing a 28 / Sustainability Outlook Diagnostic—Overview Report References ADB (Asian Development Bank). 2014. “Green City ICLEI. 2016. “Melaka State: Greenhouse Gas Action Plan: A Framework for GrEEEN Emission Inventory Report 2013.” November. Actions: Melaka, Malaysia.” https://www.adb. Melaka Tourism Promotion Division [Bahagian org/sites/default/files/related/41571/imt-gt- Promosi Pelancongan Negeri Melaka]. 2015. green-city-action-plan-melaka-april-2014.pdf. “Data Asas Negeri Melaka 2015 [Melaka ——. 2017. “Towards a Greener Transport System in Basic Data 2015].” https://www.melaka.gov. Melaka.” Draft Version Report, October. my/ms/kerajaan/jabatan-ketua-menteri- melaka/sektor-pembangunan/bahagian- Flavelle, Christopher. 2019. “Rockefeller to Wind promosi-pelancongan-bpp. Down Biggest Private Climate Resilience Push.” Bloomberg, April 1. https://www. National Archives of Malaysia. 2018. “Declaration bloomberg.com/news/articles/2019-04-01/ of Independence of Malaya.” http://www. rockefeller-announces-end-of-major-climate- arkib.gov.my/en/web/guest/pengisytiharan- resilience-initiative. kemerdekaan-tanah-melayu. DOSM (Department of Statistics Malaysia). Oxford Economics Database. 2017. 2011–2017. “Labour Force Survey Report 2011, State Government of Melaka. 2014. “Audited 2012, 2013, 2014, 2015, 2016, 2017.” Financial Statement 2013.” Melaka, Malaysia: ——. 2017a. “Report on GDP for Melaka by Kind of State Government of Melaka. Economic Activity, 2010–2016 at Constant ——. 2015. “Audited Financial Statement 2014.” 2010 Prices.” Melaka, Malaysia: State Government of ——. 2019. “Melaka @ a Glance.” https://www.dosm. Melaka. gov.my/v1/index.php?r=column/cone&menu_ ——. 2016. “Audited Financial Statement 2015.” id=TmlOYTJZTEJJZXg5QUZQMUxrRVF- Melaka, Malaysia: State Government of KUT09. Melaka. Evers, Hans-Dieter, and Solvay Gerke. 2006. State of Melaka. 2018. “Melaka State Structure Plan “The Strategic Importance of the Straits of 2035.” Malacca.” SSRN Electronic Journal. https:// dx.doi.org/10.2139/ssrn.1020877. Tourism Malaysia. 2015. Annual Report. https:// www.tourism.gov.my/activities/view/tourism- GPSC (Global Platform for Sustainable Cities), malaysia-2015-annual-report. World Bank. 2018. Urban Sustainability Framework. 1st ed. Washington, DC: World Bank. https://www.thegpsc.org/usf. “Menara Taming Sari Tower, Bandar Hilir, Melacca.” Photo: CharlieTong. 30 / Sustainability Outlook Diagnostic—Overview Report Annex A. Benchmarking Input Indicators TABLE 2 Input Indicators (benchmark indicators) Dimension Focus Area Benchmarking Question 1.1 Vision and Long-term Strategic Is there a city-level strategic plan that provides a Planning clear long-term vision for the future? Is there a structure that allows civil society to directly 1.2 Stakeholder Participation participate in urban planning and management? Is there a publicly accessible platform for 1.3 Data Management georeferenced data at the city level? Is there evidence of data sets and trend analyses 1.4 Trend Analyses being used to inform city-level planning activities? Governance Does the city have up-to-date land use plans and 1.5 Land Use and Zoning institutional capacity (an agency or committee) to and Integrated Urban Planning monitor their implementation? Does the city have plans in place to limit urban 1.6 Urban Growth Patterns sprawl and encourage increasing urban density? Does the city have policies in place to prevent and 1.7 Informal Settlements rehabilitate informal settlements? Is there an up-to-date transport master plan that 1.8 Transport and Mobility Integrated enables authorities to measure and monitor the with Land Use development of the transportation system? Are there policies and plans in place to protect and 1.9 Cultural Heritage conserve cultural and historical heritage? 2.1 Accountability and Transparency Is there an accountability framework in the city? 2.2 Creditworthiness Does the city have a credit rating? Is the city financially autonomous (as opposed to 2.3 Revenue and Financial Autonomy dependent on other levels of government) for its Fiscal overall financing? Sustainability Does the city have operating and capital investment 2.4 Expenditure Management plans that guide the preparation and execution of annual operating and capital budgets? Is the city’s debt level deemed sustainable by ratings 2.5 Management of Debt and Other agencies and/or independent watchdogs? Obligations Is there an economic plan or strategy to promote 3.1 Economic Performance economic growth in different sectors of the city’s economy? Is the regulatory environment of the city conducive 3.2 Business Climate, Innovation, and Entrepreneurship to starting and operating local firms relative to the rest of the country (i.e., ease of doing business)? Urban Are there city-led policy programs in place to match Economies 3.3 Labor Force the labor force level of skill to the current and emerging employment opportunities? Are there labor policies in place to deter 3.4 Livelihood Opportunities discrimination and promote fair employment conditions? Is there a government effort to ensure that the 3.5 Income Equality and Shared Prosperity provision of public services reaches all urban areas? MELAKA Pathway to Urban Sustainability / 31 Dimension Focus Area Benchmarking Question Natural Is there a policy or regulatory framework in place to 4.1 Ecosystems and Biodiversity protect ecosystems and biodiversity? Environment and Resources Is there a policy, program, or plan to reduce the 4.2 Air Quality source emissions and to reduce the risks they represent for public health? Is there a policy, program, or plan to improve water 4.3 Water Resources Management consumption patterns? Are there standardized and sustainable municipal 4.4 Solid Waste Management waste management practices? Are there city-led campaigns to raise awareness 4.5 Consumption and Production Patterns about sustainable consumption and lifestyles? Climate Action Does the city use a GHG inventory to identify 5.1 Greenhouse Gas Inventory sources of emissions and prioritize policies to reduce and Resilience emissions? Is the city implementing strategies to improve energy 5.2 Energy Efficiency efficiency? Has the city set targets, policies, incentives, and 5.3 Clean Energy milestones to increase the share of renewable energies? Has the city developed a climate change adaptation 5.4 Climate Change Adaptation plan or project? Has the city undertaken comprehensive disaster 5.5 Disaster Risk Reduction risk management strategies integrated with city planning? Inclusivity and Does the city have an affordable housing policy that 6.1 Housing is integrated with city planning and other national Quality of Life goals? Are there specific policies or programs to ensure 6.2 Poverty Reduction, Hunger Reduction, and Food Security urban food security? Is there sufficient and affordable potable water 6.3 Drinking Water and Sanitation supply and sanitation system provided to households across the city? 6.4 Health and Well-Being Are there city-level health promotion initiatives? Are there policies to prevent and decrease crime 6.5 Safety prevalence? 32 / Sustainability Outlook Diagnostic—Overview Report Annex B. Benchmarking Outcome Indicators TABLE 3 Output Indicators (background indicators) No. Performance Indicator 1 Population 2 Annual growth rate of the local population (%) 3 Age dependency ratio (% of working-age population) 4 Years since land use plan was reviewed and updated 5 Total city built-up area (km2) 6 Percentage of urban population living in slums (%) Percentage of households that declare they have access to public means of transport 7 within 0.5 km (%) 8 Number of World Heritage Sites within 100 km (UNESCO WHS) Credit rating or shadow credit rating on the national credit rating scale of the country 9 (rating agency) 10 Own-source revenue (US$) 11 Total capital expenditures (US$) 12 Debt service payments (US$) 13 City’s GDP per capita (US$/capita) 14 Average annual growth (GDP) rate in the past 10 years (%) 15 Number of days to obtain a business license (days) 16 Labor force by education level (%/level) 17 Unemployment rate as a share of the labor force (%) 18 Income Gini coefficient 19 Hectares of permanent green space per 100,000 city residents (ha) 20 Annual mean level of fine particulate matter in the city (annual mean, ug/m3 PM2.5 and PM10) 21 Annual household water consumption for all sectors (US$ million) 22 Total solid waste generation per capita (kg/capita) MELAKA Pathway to Urban Sustainability / 33 No. Performance Indicator 23 Material footprint per capita (metric tons) 24 Annual CO2 equivalent emissions per capita (tCO2/capita) 25 Total final energy consumption (GJ per capita) Percentage of total energy derived from renewable sources, as share of city’s total final energy 26 consumption (%) 27 10-year average of direct disaster economic loss (US$ thousand) 28 Housing shortage (number of housing units/number of households) 29 Percentage of malnourished children under five (% of children under five) 30 People using safely managed drinking water services (% of population) 31 Total public and primary private health insurance coverage (% of total population covered) “View of the famous colonial Dutch Square in Malacca.” Photo: CharlieTong Melaka State in Malaysia has strong sustainability aspirations and is an important member of the Global Platform for Sustainable Cities (GPSC). To inform the next update to Melaka’s State Structure Plan, GPSC performed a sustainability outlook diagnostic to holistically consider six dimensions of the state’s urban sustainability. The diagnostic consists of an overview report—containing a policy brief, executive summary, and benchmarking assessment—and six supporting reports that cover each of the diagnostic’s dimensions. Informed by a wide range of stakeholder consultations and by data, analyses, and the benchmarking assessment, the reports offer key messages and recommendations for action so that Melaka can chart its own pathway to urban sustainability.