|June 13, 2007|
Singapore: Water Treatment & Wastewater Recycling
|The Singapore market is ripe for new water treatment and wastewater recycling systems equipment in its effort to become an independent nation on water. |
Singapore is a small country of only 4.5 million people with limited water resources. The country imports approximately 52% of its water from Malaysia, however two water agreements with its neighbor are due to expire in 2011 and 2061.
There is concern about Singapore's future water security, and to meet its water challenges, the island city-state has invested in research and technology for the last four decades and developed capabilities in total water management.
With the development of major national water projects such as NEWater (recycled water), the Deep Tunnel Sewerage System (DTSS), desalination and rainfall storage like the Marina Barrage, Singapore is becoming increasingly independent on water. The result is a thriving water industry eco-system with more than 50 international and local companies present in the Singapore market. Singapore's strategic location in Asia has also attracted major global players to use the country as a launching pad to expand into the region as well as a test-bed and pilot base for new water technologies.
Since 2001, the Public Utilities Board (PUB), Singapore's national water authority, has outsourced some US$3.0 billion worth of water infrastructure projects, such as the Deep Tunnel Sewerage System, Marina Barrage, NEWater facilities and desalination plant, to the private sector. In addition, the Government of Singapore (GOS) is encouraging industrial users to conserve and recycle water through a media campaign, legislation and economic incentives.
The water conservation and recycling equipment market is growing in tandem with the flourishing water sector. The current size of the market for water conservation and recycling systems is estimated at US$950 million. The recent economic upturn significantly increased water demand. In the past year, some trade sources reported that their sales of water conservation and recycling systems improved by as much as 50%. There has been a much greater impact on sales to the GOS than the industrial sector.
The size of the market for water conservation and recycling systems is projected to expand by 10%-15% annually in the next three years. This growth will emanate from a strong demand for government projects including the construction of new desalination plants and NEWater facilities. Market prospects for industrial users are also good and future demand could be greater as the economic situation improves further in the next few years.
Singapore's water supply is currently derived from four main sources, namely, water from local catchments, imported water from Malaysia, NEWater and desalination water.
To supplement the Republic's water supply, Singapore is importing water under two bilateral agreements with neighboring Malaysia. The first agreement, which will expire in 2011, provides Singapore with 100 million gallons per day (mgd) of raw water that Singapore treats at its own facilities. The second deal, which expires in 2061, gives the city-state a further 250mgd of untreated water. Singapore is striving to be self- sufficient in its water needs by 2061 when the second supply contract with Malaysia expires.
The local water catchments comprise 14 reservoirs and a network of stormwater collection ponds that help prevent flooding during heavy rains. By 2009, the local catchments will increase from half to two-thirds of Singapore's land surface when the reservoir program, including the Marina Reservoir project, is completed. A series of pipelines are being built so that excess water can be pumped from one reservoir to another for storage. With these Reservoir Integration Programs, the yield from existing reservoirs will be increased. At the same time, advanced membrane technology will enable the PUB to undertake a wider range of activities in catchment areas without compromising the quality of reservoir water.
As Singapore's population and economy grow, demand for water will rise. PUB is responding by looking for more sustainable ways to augment the country's water supply. As an island nation, the surrounding sea holds obvious potential. Hence, Singapore's first large-scale seawater desalination plant was built and commissioned in late 2005 by Hyflux. Under a 20-year build-own-operate arrangement with the PUB, the US$167 million desalination facility produces 30 million gallons of potable water a day and it is pumped into PUB's potable water distribution main. With the successful implementation of the first desalination facility, it is expected that more desalination plants will be built in the future years ahead.
There are no published statistics to accurately depict the actual size of the Singapore market for water treatment and recycling equipment. Trade sources estimate that sales totalled about US$950 million in 2006. Of this amount, approximately US$700 million is for government projects and US$250 million for sales to private or industrial users. The Singapore market grew at a rate of about 15%- 20% per year in the early 2000s. The price of water is high in Singapore, which makes conservation and recycling viable. In addition, the GOS has the money and intention to invest in water treatment and conservation facilities. Furthermore, it encourages industrial users to conserve and recycle water through legislation, the media and incentive programs.
Over the longer term, future growth is estimated at 20%-25% annually. Part of this expansion is likely to be the result of new investments in the GOS' desalination plants. More industrial users will purchase systems as the technology proves itself and people gain awareness and knowledge of various systems. Water conservation will become increasingly important in Singapore as water prices for household and industrial use continue to rise due to the use of costlier water from desalination plants. Therefore, there is room for significant growth in the water conservation and recycling equipment market in Singapore.
Best Sales Prospects
Sales prospects are better for water recycling systems and technology than for conservation systems. Feedback from the industry indicated that their water conservation efforts are relatively insignificant and do not involve special equipment or systems. One supplier of water conservation systems reported that Singapore buyers are unwilling to allow suppliers to examine their manufacturing processes and make suggestions.
In the area of water recycling system, the previous trend was "end-of-pipe" treatment of wastewater. Suppliers are now working with industrial users to segregate and treat their wastewater at the point of production.
Water recycling systems with the best sales prospects include advanced membrane technologies like microfiltration, reverse osmosis, and water disinfection with ultraviolet light. There are also good opportunities for the sales of entire systems as well as pumps, valves, sterilizers, crystallizers and other related components.
Major GOS projects are likely to include desalination plants, NEWater infrastructure and enhancement of water catchment areas.
Many North American exporters use agents or distributors to serve the Singapore and other markets in Southeast Asia. Finding prospective partners presents no problem. Singapore firms are aggressive when it comes to representing new products and usually respond enthusiastically to new opportunities. In addition, most Singaporean companies are open to joint venture proposals and many are interested in manufacturing under license.
Technology, price and after-sales service are the main selling factors in Singapore. Prospective exporters to Singapore should be aware that competition is strong and that buyers expect good after-sales service. Selling techniques vary according to industry or the product involved, but they are comparable to the techniques used in any other sophisticated market. It is also important for firms to visit their representatives and maintain a good relationship with them.
There are no duties, taxes or tariffs on imports to Singapore of all types of water related equipment. The challenge is in competing with all the other suppliers from the world since it is such an open economy.
All imported goods meant for local consumption are taxable under the Goods and Services Tax (GST), which is levied at 5%. With effect from July 2007, GST will be levied at 7%. Goods kept in the Free Trade Zone are not subject to GST, however GST will be charged if they are later released for local consumption
Excerpts from "Singapore: Water Treatment & Wastewater Recycling Systems", U.S. Commercial Service, May 2007.