Kuala Lumpur is business friendly and affordable in Cities of Opportunity Study of Global Economic Leaders

KUALA LUMPUR, 22 October 2012 – Kuala Lumpur finishes in the Top 5 in two important categories of economic progress in the fifth edition of Cities of Opportunity, released today by PwC and the Partnership for New York City. A newcomer to the study this year, Kuala Lumpur ranks 18th overall, securing a spot in the middle third of the rankings between Beijing and Shanghai. The study of 27 centres of finance, commerce and culture also forecasts Kuala Lumpur will continue its growth to 2025.

In the 2012 rankings, Cities of Opportunity (http://www.pwc.com/cities) reports Kuala Lumpur ranks third in the world in low costs and 10th in ease of doing business. In terms of being low cost, Kuala Lumpur only ranks behind Seoul and Berlin, but ahead of Istanbul and Mexico City. Our cost indicator measures costs for a businessperson living in our cities— which is to say, the cost of a transnational, middle-class way of life. The variables that score well for Kuala Lumpur are cost of business occupancy, cost of rent, consumer price index and low tax rate.

In terms of ease of doing business, Kuala Lumpur ties with San Francisco at a very impressive #10 in this indicator, rounding out the top 10 behind Tokyo and ahead of such famously business-friendly cities like Sydney and Seoul. Kuala Lumpur’s strong ranking in this area stemmed fundamentally from shareholder protection, employee regulations, and a fairly flexible visa policy.

Kuala Lumpur also ranks sixth in rate of real GDP growth and fifth in major construction activity, showing its potential as an emerging economy.

Cities of Opportunity forecasts Kuala Lumpur will continue its growth toward 2025 and joins the world’s emerging cities in terms of productivity per worker, or wealth, falling between Buenos Aires and Johannesburg in that projection. In terms of jobs today, the study shows wholesale and retail employs one in four workers. By 2025, more jobs will be created by business services, where it will account for one in five workers.

“Kuala Lumpur’s low costs and ease of doing business represent the starting point for the city’s transformation into a world hub for talent and competitiveness. With the various initiatives our government is putting in place to transform our economy, we are on a good track,” says Andrew Chan Yik Hong, PwC Advisory Services Malaysia Executive Director, who leads Capital Projects and Infrastructure.

“As with many emerging cities, Kuala Lumpur needs to invest considerably more in human development and technology if it is going to break into the front ranks of global cities,” he adds. “For Kuala Lumpur to be a more “liveable” city – on the basis that a strong quality of life forms a virtuous circle with a strong economy - Kuala Lumpur needs to continue investing in sustainability, transportation, health, safety and security.”

“Kuala Lumpur was chosen for this year’s Cities of Opportunity report because it is one of Asia’s most dynamic capitals and increasingly a major global city. The Cities of Opportunity report is a detailed and insightful analysis of how leading global cities stack up against one another. The true value of this report is not just the rankings, it is that every city can learn from one another about what works when building a 21st century city,” says Andrew.

Meanwhile, New York and London finish in a virtual tie to lead overall scoring. However, emerging cities are narrowing the gap within key economic indicators. Both Shanghai and Beijing finish in the Top 5 in City Gateway and Economic Clout, with Beijing leading the latter category.

While New York officially edges out London by one point across 10 economic indicators, the city wins in no individual category. Toronto, which finishes third, also shows great balance yet wins no category. London, however, takes the lead in city gateway, an indicator introduced this year that measures global interconnectedness and international attraction. Rounding out the leaders are Paris, which advances four spots from 2011 to number four, and Stockholm at number five.

In addition to looking at the current performance of 27 cities at the centre of finance, commerce and culture, the study for the first time analyses city employment in the most significant and telling job sectors and projects the trajectory of the cities in jobs, productivity, and population  to 2025.


Notes to editors

1. The Cities of Opportunity key indicators and top three cities in each are:

  • Intellectual capital and innovation: Stockholm, Toronto, Paris
  • Technology readiness: Seoul, San Francisco, New York
  • Transportation and Infrastructure: Singapore, Seoul/Toronto (tied for second), Tokyo
  • Health, safety and security: Stockholm, Toronto, Sydney
  • Sustainability and the natural environment: Sydney, San Francisco/Toronto (tied for second), Berlin
  • Economic clout: Beijing, Paris, London/New York (tied for third)
  • Ease of doing business: Singapore, Hong Kong, New York
  • Cost: Berlin, Seoul, Kuala Lumpur
  • Demographics and liveability: Paris, Hong Kong/Sydney (tied for second), San Francisco
  • City gateway: London, Paris, Beijing

2. Emerging Cities Advance 

Beijing advanced to the top spot in "economic clout" while Shanghai placed fifth behind Paris, London, and New York. This is the first time two emerging cities appeared in the top five of this indicator category. Beijing and Shanghai are also in the top five for “city gateway,” along with London, Paris, and New York. Balanced progress across a range of social and economic indicators represents the next step for these cities in transforming exceptional growth into sustainable performance for these emerging cities.

3. Where the Jobs Are 

For the first time, the 2012 report provides an in-depth look at some of the most significant and telling job sectors, now and looking ahead to 2025. The financial and business services, manufacturing, and wholesale and retail sectors anchor many city economies in 2012.  Financial and business services when grouped together account for more than a third of the jobs in Milan, Paris, London, Beijing, San Francisco and Stockholm. One in three Shanghai jobs today is in manufacturing, although the study projects the city shifting to a more diversified economy by 2025. Wholesale and retail make up more than 20 percent of the workforce in Hong Kong, Kuala Lumpur, Moscow, Mumbai, Mexico City and Istanbul.  New York leads the world in healthcare employment with nearly 16 percent of its workforce in the field. Hospitality and tourism accounts for over a quarter of the jobs in Abu Dhabi.

4. Our Cities Tomorrow 

Future employment and economic risks for the 27 cities are pinpointed in a new section that projects a 2025 baseline scenario and several “what if” models, including: 

  • If knowledge, technology and travel connections determine future success—placing London, Tokyo, New York, Seoul and Paris among the leaders;
  • If protectionism spreads as a way to counter lingering slow growth, where all cities suffer; and
  • If quality of life drives city economies, a world in which the beauties of Stockholm, Sydney, Paris and San Francisco fuel strong growth in the percent of annual GDP

The study's baseline scenario projects that by 2025 an additional 19 million individuals will live and 13.7 million will work in the cities. They will generate an additional US$ 3.3 trillion in gross domestic product—all predicated on a world of modest growth.  At the same time, the wealth divide will remain much the same in 2025 as it does today. Population and employment will surge in cities like Beijing, Mumbai, Istanbul and São Paulo. Mature cities will maintain greater spending power, and the consumer and corporate demand, that drives emerging economies. Mutual self-interest would logically unite emerging and mature cities as one side continues to need the other.

Despite the rise of emerging cities in key indicators, Cities of Opportunity details some of the long-term challenges facing developing cities due to rapid population and employment growth. For example, both Beijing and Shanghai will need to devote roughly 42 percent of GDP to infrastructure between now and 2025 to accommodate growth while cities like London and New York only need to invest 17 percent and 20 percent, respectively.

5. The full report, along with in-depth interviews with E.O. Wilson, emeritus professor of entomology at Harvard, Bill Bratton, former New York and Los Angeles head of police, and other leaders are available at http://www.pwc.com/cities.

6. Methodology 

Cities of Opportunity is a continually evolving project created for cities, their leaders, businesses, and citizens seeking to improve their economies and quality of life. The report is based on publicly available information supported by extensive research. Three main sources are used: Global multilateral development organisations such as the World Bank and International Monetary Fund, national statistics organisations, such as UK National Statistics and the US Census Bureau, and commercial data providers. The data were collected during the latter half of 2011 and first quarter of 2012. In the majority of cases, the figures used in the study refer to 2010 and 2011 data. In some cases, national data are used as a proxy for city data. Care has been taken to ensure that, where used, national data closely reflects city data. The scoring methodology was developed to ensure transparency and simplicity, as well as comparability across cities.

Taking the data for each individual variable, the 27 cities are sorted from the best performing to the lowest performing. The cities are then assigned a score from 27 (best performing) to 1 (lowest performing). Once all 60 variables are ranked and scored, they are placed into their 10 indicators. Within each group, the variable scores are then summed to produce an overall indicator score for that topic. This produces 10 indicator league tables that display the relative performance of our 27 cities.

Methodology presented for The City Tomorrow section can be found on page 20 of the report.

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