Digital transformation and inclusivity: Reshaping Asia and the Pacific’s urban future

Sanjeevani D. Singh
Economic Affairs Officer, ESCAP
Julia Ferraz
Communications Manager, Asia-Pacific, Habitat for Humanity International

Digital innovation and technology have become an integral part of the way governments, businesses and individuals function, transforming the speed and efficiency of communication, service delivery and governmental operations, with significant potential to boost economic growth, sustainable development and climate resilience. The COVID-19 pandemic has accelerated mass digital adoption and expedited the adoption of technology across industries, advancing digital transformation at an unprecedented speed and scale. 5G connectivity has also enabled faster and more reliable communications for several applications, including smart city applications and the adoption of digital technology solutions by governments and cities.

The Asia-Paciifc region is experiencing massive growth and investments in the digital sector. Revenue in the internet market is estimated to reach $436 billion by 2026, with smart cities accounting for one third of the market and digital finance at the forefront leading the transformation. Increasing smartphone adoption, online business penetration and rising government initiatives to digitize economies are key factors driving this growth. Additionally, the significant economic growth in the region has led to the expansion of the middle class, creating a growing consumer base with increased purchasing power.

The region houses the world’s largest urban population and has the most populous and diverse countries, with cities generating a vast market for digital products and services. ESCAP’s Future of Cities Report 2023 projects that the urban population will increase from 2.53 billion in 2023 to 3.5 billion in 2050. Cities across the region are adopting technologies and adding digital intelligence to urban systems to improve the delivery of services, streamline administration and decision-making, and improve safety and citizen engagement through e-platforms. There are also growing opportunities for smart solutions to be leveraged to address challenges cities are facing around congestion, affordable housing, air pollution, waste management and environmental degradation. However, there is also a growing digital divide across the region and governments need to invest in digital infrastructure, especially in expanding connectivity access and by reducing the cost of connectivity to less connected parts of cities and countries. For this digital shift to have a profound and positive impact on society and contribute towards the achievement of the 2030 Agenda for Sustainable Development, it must be rooted in safety, trust, and inclusivity.

Using digital platforms to improve access to housing and increase inclusivity in cities

According to ESCAP, 650 million people live in informal settlements across the region. Demonstrating that access to affordable housing remains a significant challenge, especially in developing countries across the region. This is primarily due to the growing urban population, increasing house prices, limited access to credit especially for those working in the informal sector, and a substantial housing backlog. Urban dwellers, particularly the emerging middle class, often face barriers to accessing formal financial services for mortgages, housing loans, and funds for rent and renovation. This challenge is further exacerbated by the 65 per cent of the population employed in the informal sector in the region, who face constraints in accessing finance due to the lack of formal documentation, inconsistent income and absence of credit history. Moreover, the prevalent practice of paying rental upfront annually further misaligns with the financial capacity of many households.

With the Asia-Pacific region undergoing rapid urbanization and digital transformation, technology-driven solutions are crucial to address the challenges faced by urban residents. Gradana is an example of a specialized peer-to-peer lending platform focusing on property financing in Indonesia, which is part of Habitat for Humanity’s ShelterTech accelerator program for Southeast Asia. Granda helps connect banks, borrowers, agents, and developers, by getting borrowers the right rentals and mortgage financing while reducing stakeholder risk. There are many emerging innovative technological solutions across the region that demonstrate how digital innovation can support urban planning, delivery of urban services and disaster forecasting and climate action and contribute toward the creation of cities that are not only smart but also equitable, resilient, and supportive of the well-being of all residents.

At the same time there is a growing digital divide, not just within cities but also at a regional and subregional level. Advanced economies in the Asia-Pacific region like Singapore, Japan, and Republic of Korea have more resources to invest in digital infrastructure than developing economies. This leads to disparities in digital readiness and implementation capabilities, making cooperation across countries essential. Regional cooperation and platforms for technology sharing, knowledge exchange, and collaborative governance can help bridge this gap and ensure that even smaller cities and those in developing nations can leverage digital innovation for sustainability and resilience.

With digital transformation at the forefront of innovation for cities and governments alike, platforms for the sharing of experiences and knowledge – such as the Asia-Pacific Urban Forum and Asia-Pacific Housing Forum – are fundamental for the achievement of sustainable solutions.

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