PETALING JAYA: Federal funding for cities must be tied to clear outcomes and key performance indicators (KPIs) to ensure greater accountability among local authorities, says Housing and Local Government Minister Nga Kor Ming.
Nga said his ministry had moved away from generic municipal grants and introduced KPI-based allocations for all local authorities.
“Through the Traffic Light System, federal funding is now tied directly to performance and accountability.
“Local authorities that consistently underperform will be placed under the Red Light category and risk losing future allocations, while high-performing councils will be placed under the Green Light category and receive greater support and incentives,” he said.
He said this during the plenary session of the 10th World Cities Summit 2026 at the Suntec Singapore Convention and Exhibition Centre on Monday (June 15).
Nga, who is also UN-Habitat Assembly president, said the approach was part of efforts to strengthen governance and empower local authorities through performance-based funding mechanisms.
He said the same principle should also guide urban financing globally, especially in public procurement and public-private partnerships.
“Innovative fiscal engineering and greater accountability in federal funding across both the public and private sectors are needed to accelerate sustainable urbanisation and build more liveable and lovable cities,” he said.
Nga also proposed greater adoption of Outcome-Based Green Annuity Contracts, where payments are linked to measurable sustainability outcomes rather than contractual commitments alone.
“We do not want to privatise profits and socialise losses. Whatever the financing model or partnership, there must be measurable outcomes to benefit the people.
“Payments should only be made based on proven performance,” he said.
Nga said outcome-based financing would ensure greater accountability, transparency and value for public spending, while encouraging more responsible partnerships between governments and the private sector.
The biennial World Cities Summit is a global platform that brings together government leaders and industry experts to address challenges in building liveable and sustainable cities, share integrated urban solutions and forge new partnerships.
This year’s summit attracted more than 250 cities and over 2,000 delegates representing governments, businesses, international organisations and academia.
Also attending the plenary session were UN-Habitat executive director Anacláudia Rossbach, Jakarta governor Pramono Anung, Singapore Management University president Dr Lily Kong, Surbana Jurong Group chief executive officer Sean Chiao, and Google vice-president for Knowledge and Information Products, Government Affairs and Public Policy Cris Turner.
Nga also urged governments, businesses and urban leaders to embrace innovation and adaptability in responding to increasingly complex urban challenges, saying city development must remain humanity-centric.
“A city should not be measured by economic development alone, but also by how well it embraces humanity at its core.
“A successful city is one where people are happy, and this can be measured through indexes such as the Global Happiness Index.
“There is no point in having the most advanced technologies and skyscrapers if we also have high rates of depression or mental stress,” he said.
“We must learn faster, adapt faster, innovate faster and act faster. The choices we make today will determine the cities we leave behind for future generations,” he added.
Nga also emphasised the importance of urban renewal and preserving a city’s identity.
“The city is not only what we build today, but also what we choose to keep.
“Without the past, there is no future. A city must have a soul, and that means preserving its culture, heritage and history,” he said.
