Urban: City's Existence

 

Discuss the factors that led to your city’s existence – relate with today’s chapters.

 

Kuala Terengganu is one of the cities located in Eastern Peninsular Malaysia.  It is the only City Council (Majlis Bandaraya) in Terengganu and governs by local authorities known as City Hall (Dewan Bandaraya).  On 1 January 2008, Majlis Bandaraya Kuala Terengganu, translated as Kuala Terengganu City Council, successfully obtained the city status.  Hence, that is one of the reasons I choose Kuala Terengganu as my main topic.

First and foremost, we should know why Kuala Terengganu has been declared a city and not a municipality or a normal district.  If Municipal Council meets the criteria set by the Ministry of Housing and Local Government (KPKT), it will be upgraded to the City Council.  The standards mentioned are that the region’s total population is more than 500,000 residents, as well as the income of the Local Authority (PBT) surpasses RM100 million per year.  In 2008, Kuala Terengganu met all these criteria.  Besides, as a factory town, it emphasizes economies of scale in the production of the goods rather than comparative advantages in production, which are always linked to trading cities.  Next, a factory city like Kuala Terengganu also considers the time and transportation cost of the hired employees to the factory town.  The cost should not be too costly or insufficient with their current cost of living.  This situation means the economies of scale are sufficient to reimburse for the higher cost of living faced by the labour.  Hence, most of the workers in Kuala Terengganu live near the firm to reduce the amount of time and money spent on commuting.  Then, the land value in Kuala Terengganu also rises over time.  The closer the land to the factory area, the higher the price of the land since more labours are concentrated in the factory area.  In other words, land prices rose due to competition and increased the population density of Kuala Terengganu, resulting in the formation of Kuala Terengganu as a factory town.  Hence, these characteristics would make Kuala Terengganu a factory town instead of a trading city.

Besides, the development of Kuala Terengganu matched with the fifth axiom; competition generates zero economic profit.  The textile industry developed in Kuala Terengganu many years ago, and it never failed to gain customers, especially when Terengganu is popularly known for its batik textile.  Textile firms keep entering the market in the tourism destination, namely Pasar Payang (The Central Market), and the cycle goes on until there is no more profit to gain.   Now, the textile industry in Kuala Terengganu keeps blooming, although there is little incentive for the new firm to enter the textile market.

To conclude, Kuala Terengganu develops as a factory city because it focuses on producing goods and services rather than trade services.

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