Smart city initiatives have helped Bandung, Indonesia's third-largest city, become a role model for government performance as its architect-turned-mayor focuses on slashing red tape.

"We have the best performance in bureaucracy in Indonesia today," Ridwan Kamil, mayor of Bandung, told CNBC on Thursday.

Investing in technology to transform how citizens are served has quashed corruption and improved the overall efficiency of state programs, he said on the sidelines of the Milken Institute's annual Asia Summit.

Since being elected in 2013, Kamil has built 400 software applications aimed at speeding up public service. One of those is called GAMPIL, which allows small and medium enterprises under $5,000 to register their businesses online instead of applying for permits at government offices.

"We are the only Indonesian city where SMEs don't require a permit, which helps demolish corruption," Kamil said, adding that 60,000 new SMEs were born within three months of enforcing the policy.

The use of e-budgeting has also ended ineffective and costly programs, saving the city almost $200 million last year, he continued.

Southeast Asia's largest economy is home to a youthful population and booming internet penetration rates, so the digitization of public services should come as no surprise. Millennials' usage of technology will transform Indonesia over the next five years, according to Kamil.