Global Captial and the Cities of the South

With investments in the picture, money will shape the souls of cities

Arif Hasan

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The Layari corridor after demolitions

The reality
International capital is desperately looking for a home. Cities of South and South-East Asia are attractive destinations since they have a weak regulatory framework and have undergone structural adjustment. Here, this form of investment is increasingly determining not only the shape of the city but also social and economic relations[1].

New terms, such as “world class cities”, “investment friendly infrastructure”, “foreign direct investment” (FDI), have entered the development vocabulary. Local governments are obsessed by making cities “beautiful” to visitors and investors. This means building flyovers and elevated expressways as opposed to traffic management and planning; high-rise apartments as opposed to upgraded settlements; malls as opposed to traditional markets; removing poverty from the centre of the city to the periphery to improve the image of the city; catering to tourism rather than supporting local commerce and seeking the support of all kinds of international corporate sector.

New terms, such as ‘world class cities’, ‘investment friendly infrastructure’, ‘foreign direct investment’ have entered the development vocabulary. Local governments are obessed by making cities ‘beautiful’ to visitors and investors

The above agenda is an expensive one. For this, sizeable loans have been negotiated on a scale unthinkable before[2]. Projects have replaced planning and this is especially true of transport related projects[3]. In addition, there has never been more liquidity in banks and leasing companies. However, due to the freedom that these loan-giving institutions have today, this liquidity is used to provide short-term high interest loans which do not bring any benefit to the city or to the majority of its residents[4].

The nature of investments being made in many of the Asian cities are increasing land hoarding, evictions[5] of settlements and gentrification. The current strategic plans are not giving priority to the socio-economic issues arising out of these trends.

The rich-poor divide has increased as a result of these policies[6]. However, the most serious repercussion is that the overwhelming power of international capital/consultants has weakened institutions and the democratic political process. Governments have become deaf to the concerns of the environmental and dissenting academic lobbies. And all this in an age where the media is freer than ever before and “consultations” are the order of the day[7]. Meanwhile, the once-successful NGO projects have now in many cases become “respectable” and in partnership with governments and no longer populist altruists.

If this trend continues
If the present trend continues governance issues will increasingly become law and order related and not justice and equity related. In addition, development will take place where the investor is happy and so the other regions will become the backwaters[8]: a recipe for conflict.

How can this be changed?
Foreign capital has its benefits but it has to fit into a larger plan based on development principles as so to create an inclusive and environmentally-friendly urban environment. These principles could be: planning should respect the ecology of the areas in which the urban centres are located; landuse should be determined on the basis of social and environmental considerations (not only on potential value of land); planning should give priority to the needs of the majority population; and planning must respect and promote the tangible and intangible cultural heritage of the communities. Zoning bylaws should be developed on the basis of these principles so that they are pedestrian and street friendly, pro-dissolved space and pro-mixed landuse.

What is required is: a heavy non-utilisation fee on land so as to bring hoarded land into the market; a cut-off date for the regularisation of informal settlements and an end to evictions; planned squatting; initiation of programmes for built units and plots which solve the issues related to targeting and speculation[9]; development of rules and procedures to guarantee that the natural, entertainment and recreational assets of the city will not only be for the elite or the middle classes; a regime for privatisation backed by institutional arrangements that guarantees provision of sustainable employment and development; and an understanding that all programmes and projects will be advertised at their conceptual stage, subject to public hearings before finalisation, supervised by a steering committee of interest groups, have their accounts published regularly, and be overseen by one government official from the beginning to the end.

The overwhelming power of international capital/consultants has weakened institutions and the democratic political process. Governments have become deaf to the concerns of the enviromental and dissenting academic lobbies

The major question is how can the above agenda be achieved in an age where social and political evolution is in flux and the economy is controlled globally by undemocratic international organisations? Can local “civil society” organisations (funded by bilateral agencies and international NGOs) do this by coming together as a large network? Or can this be achieved more successfully through the national political process or by an international movement seeking to modify the current paradigm in the interests of the poorer sections of the population?

Protest against the demolitions


1. David Satterthwaite; Understanding Asian Cities, ACHR, October 2005.
2. Between 1976 and 1993, the Sindh province in which Karachi is located borrowed US$ 799.64 million for urban development. Almost all of this was for Karachi. Recently, the government has arranged to borrow US$ 800 million for the Karachi Mega City Project. Of this, US$ 5.33 million is being spent on technical assistance being provided by foreign consultants.
3. Cities such as Bangkok, Manila, Calcutta have made major investments in light rail and metro systems. Other Asian cities are following their example. However, these systems are far too expensive to be developed on a large enough scale to make a difference. Manila’s light rail caters to only 8 percent of trips and Bangkok’s sky train and metro to only 3 percent of trips and Calcutta’s metro to even less. The light rail and metro fares are 3 to 4 times more expensive than bus fares. As a result, the vast majority of commuters travel by run down bus system (for details, see Geetam Tiwari; Urban Transport for Growing Cities; Macmillan India Ltd., 2002 and Arif Hasan; Understanding Karachi’s Traffic Problems; Daily Dawn, January 29, 2004).
4. For example, 502 vehicles have been added to Karachi per day during the last financial year. It is estimated that about 50 percent of these have been financed through loans from banks and leasing companies. This means that loans worth US$ 1.8 billion were issued for this investment which could easily has been utilised for improving public transport systems or for social housing.
5. ACHR Monitoring of Evictions in seven Asian countries (Bangladesh, China, India, Indonesia, Japan, Malaysia, Philippines) shows that evictions are increasing dramatically. Between January to June 2004, 334,593 people were evicted in the urban areas of these countries. In January to June 2005, 2,084,388 people were evicted. The major reason for these evictions was the beautification of the city. In the majority of cases, people did not receive any compensation for the losses they incurred and where resettlement did take place it was 25 to 60 kilometres from the city centre. (Ken Fernandes; Some Trends in Evictions in Asia; ACHR, March 2006).
6. David Satterthwaite; Understanding Asian Cities, ACHR, October 2005. Also, the economic survey of Pakistan 2006-07 concedes that the gap between the rich and poor is widening and quoting gini coefficient and consumption share of quintile the survey states that the share of consumption of the richest 20 percent stands at 39.4 while it is 9.5 for the bottom 20 percent population. It further states that the gap is growing in spite of a 7 percent GDP growth.
7. NGOs and community activists and academics in Delhi, Karachi, Phnom Pehn, Calcutta, Lahore all have the same complaint. They claim that consultations are an eye wash and environmental assessments are rubber stamps.
8. Urban settlements that have been bypassed by the communications revolution are dieing economically while small towns are loosing their elite and skilled persons to large towns and becoming politically irrelevant. For details see Arif Hasan; The Scale and Causes of Urban Change in Pakistan; Ushba Publishing International, Karachi 2007.
9. There are various ways of doing this that have been successful as pilot projects, but the land hunger of a powerful nexus of developers, bureaucrats and politicians is the biggest hurdle in implementation.