Southeast Asia is at the center of a significant economic transformation. The region, which spans Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, is undergoing rapid growth and urbanization. By 2030, Southeast Asia’s urban population will swell by an estimated 100 million people, growing from 280 million people today to 373 million people.

This report examines the intersection of urbanization and the rise of the new creative or middle class in Southeast Asia. In particular, it assesses the connection between the rise of the creative class and urbanization in seven Southeast Asian countries and their major cities. These include Cambodia (Phnom Penh), Indonesia (Jakarta), Malaysia (Kuala Lumpur), the Philippines (Manila), Singapore, Thailand (Bangkok), and Vietnam (Ho Chi Minh City). We benchmark the development of these Southeast Asian nations and cities against others in Asia — including China (Beijing and Shanghai), Hong Kong, India (Delhi and Mumbai), Japan (Tokyo), and South Korea (Seoul), as well as other advanced nations like the Australia (Sydney), Canada (Toronto), and United States (New York).

Our research informs the following key findings:

Southeast Asian nations fall into four tiers of economic development.

• Singapore occupies the first tier, ranking third in terms of the share of its population who work in the creative class occupations and ninth on the Global Creativity Index, with levels of development and of the creative class similar to the most advanced nations of the world. Singapore generates $51,149 in economic output per person, making it one of the richest and most developed nations in the world — ahead of Canada and the United States. Singapore’s biggest constraint is its relatively low level of tolerance, especially of the gay and lesbian community, which may limit its ability to attract and retain talent from other nations, and compete with the largest and most open countries in the world.
• Malaysia and the Philippines occupy a second tier with economies that are developing rapidly and a substantial middle class. The creative class makes up a quarter of Malaysia’s workforce and a fifth of that of the Philippines, approaching the levels of advanced nations. They rank among the top 50 or so of the world’s nations both in terms of their share of creative class workers and their performance on the Global Creativity Index. Malaysia has a level of economic output per capita ($9,748) which places it among the world’s “upper-middle income” nations. Roughly three-quarters of its population is urbanized, not far off from that of the United States and other advanced nations.
• Thailand and Vietnam fall into a third tier. The creative class comprises roughly 10 percent of their workforces. They rank among the second half of nations globally both in terms of their share of creative class workers and the Global Creativity Index.
• Indonesia and Cambodia occupy a fourth tier of development. While Indonesia’s share of the creative class keeps up with that of Thailand and Vietnam, its performance on the Global Creativity Index falls back. Cambodia’s creative class share of four percent of its workforce is just half of Indonesia’s. While its creative economy development is still nascent, with per person economic output of $869, Cambodia ranks among the world’s “low-income” nations. Just a fifth of Cambodia’s population is urbanized, much lower than other Southeast Asian nations.

Urbanization will continue to increase substantially across the region. By 2030, urban areas in Southeast Asia are projected to grow by another 100 million, with a total urban population of 373 million, putting the region ahead of the United States. By 2030, Malaysia is projected to have an urban share of more than 80 percent, similar to the current level or urbanization in Canada and the United States. Indonesia and Thailand’s urbanization levels are projected to grow to more than 60 percent. Urbanization is projected to slightly grow in the Philippines to 46 percent, while Vietnam is projected to significantly urbanize and cross 40 percent. Cambodia is expected to grow to roughly a quarter of the population.

We also examined the size and status of the region’s largest cities and metro areas. The region has two mega-cities with populations bigger than 10 million: Manila and Jakarta. Four others have populations between five and 10 million: Bangkok, Ho Chi Minh City, Kuala Lumpur, and Singapore. By 2030, four cities in Southeast Asia are projected to have populations greater than 10 million with Bangkok and Ho Chi Minh City joining Manila and Jakarta. Kuala Lumpur will have a population close to 10 million while Singapore will be approaching seven million.

Southeast Asia’s cities and metros reflect the region’s tiered development pattern.

Singapore occupies the top tier. It ranks as the fourth most advanced global city in the world behind only New York, London and Tokyo and one of the most prosperous and advanced cities on the planet, ranking just below New York City with more than $66,000 in economic output per capita, greater than Tokyo, Toronto, Seoul and Hong Kong.

Kuala Lumpur occupies a second tier with economic output per capita of $28,000, considerably greater that either Shanghai or Beijing. With $172 million in total economic output, it generates more than half of Malaysia’s GDP and is a bigger economy than Stuttgart or Stockholm.

Bangkok and Manila fall into the third tier, with economic output per person of roughly $20,000 and $15,000 respectively. Bangkok’s economic output of more that $300 billion accounts for more than three quarters of Thailand’s total GDP, making it a bigger economy than Miami or Frankfurt. With nearly $200 billion in economic output, Manila accounts for nearly two-thirds of the Philippine’s GDP, and is a considerably bigger economy than Stockholm.

Jakarta and Ho Chi Minh City occupy the fourth tier with economic output per person of around $10,000 and $8,700 respectively. With total economic output of more than $300 billion, Jakarta’s economy is bigger than Toronto, while Ho Chi Minh City with $71 billion in output is just slightly smaller than Turin or Oslo.

Ultimately, our research suggests that urbanization is leading to economic development across the region and its nations and cities. That said, the level of economic development across the region and its cities is highly uneven, mirroring the broader pattern of uneven development between the advanced nations and cities of the Global North and the struggling nations and cities of the Global South. The region spans Singapore, one of the most affluent and urbanized places on the planet, and Cambodia one of the very poorest. While some areas of Southeast Asia are urbanized and developed, others have yet to make this transformation. The question is whether urbanization can continue to propel economic development in the region’s less developed cities and nations or whether some will fall victim to urbanization without growth.

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Exhibit 29: Global City Index in Southeast Asia