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Market News

 August 16, 2006
The Philippines Environmental Market

 The estimated market size of the Philippine market for environmental equipment is US $500-550 million yearly. This is expected to grow 5-10% in the next three years due in large part to government and private sector programs and projects to address pressing environmental problems: worsening air quality in the urban centers, very limited access to potable water through water supply and distribution operations, lack of sanitation and sewerage systems, solid waste disposal problems, and increasing amounts of industrial and hazardous wastes.

The Philippines' major challenges include: insufficient funding from both the public and private sectors and weak institutional capacity.

Best prospects include:
  • Products/equipment/accessories for development/rehabilitation/ treatment of water resources and water supply system;
  • Packaged/modular wastewater treatment systems that can be expanded when needed; equipment for wastewater recycling
  • Equipment for sewerage, septage and combined sewerage-septage projects
  • Equipment for solid waste management
There is demand for low-cost technologies -- low cost in terms of initial cost, operation and maintenance.

The Philippines is dependent on imported environmental equipment since it has limited technological capability and resources. It can fabricate low-cost equipment or parts of equipment. There are companies that can fabricate mechanical and bar screens, clarifiers, filter presses, decanters, sludge collectors for wastewater treatment facilities; scrubbers, blowers and dust control systems for air pollution control systems; and composting drums, bodies of garbage compactors and collection vehicles for solid waste management systems. These are fabricated using imported parts.

Japan is the Philippines' major source of environmental equipment because of the technical and funding assistance provided by the Japanese government to the Philippines.

Major competitors in the Philippine market are Australia, the United States, China, Korea, Singapore, Taiwan and European countries such as France, Germany, Italy and United Kingdom.

The major players in the environment sector are the Philippines' national and local governments with funding assistance from bilateral and multilateral funding agencies, water companies and water districts, and the industrial and commercial sectors, especially multinational companies and large Philippine firms.

Prospective Buyers

Following are the major prospective buyers of environmental equipment:
  • Water and Wastewater Treatment Equipment -- Concessionaires of the Manila Waterworks and Sewerage System (MWSS), namely: MWCI and Maynilad Water Services Inc. for the Metro Manila area; water districts for areas outside the jurisdiction of MWSS, manufacturing/industrial plants, e.g., semiconductor, food and chemical plants; shopping malls; residential condominium/ subdivisions and commercial buildings; resorts; restaurants and fast food chains are prospective buyers of water and wastewater equipment.

  • Air Pollution Control Equipment - Thermal power stations; cement manufacturing plants; oil refineries; and food, textile, and iron and steel industries are the major types of industries that contribute to air pollution. Since air pollution control equipment is a big-ticket item, the demand for this equipment will come mainly from multinational firms and large Philippine manufacturing firms. Small and medium-sized firms would most likely purchase higher quality fuel with lower sulfur and ash contents. They may also undertake process adjustments to improve fuel efficiency instead of purchasing air pollution control equipment.

  • Solid Waste Management -- Prospective buyers are local government units and private contractors, e.g., companies that construct disposal facilities under joint venture arrangements or Build-Operate-Transfer schemes, companies involved in waste collection and disposal or recycling, and contractors of local government units The major barriers in implementing environmental projects are lack of funds and absence of skilled personnel to operate and maintain equipment.

  • Price is the major consideration in purchasing environmental equipment. Other considerations are operating and maintenance costs, technical expertise or track record of supplier, consultant's recommendations, simplicity of operation, terms of payments and after-sales service. Generally, end-users choose the most cost-effective equipment that will enable them to comply with government's standards. They also prefer low-cost equipment, not only in terms of initial cost but also in terms of operating and maintenance costs.

Suppliers interested in the Philippine market should appoint a Philippine agent/distributor.

Depending on the company's requirements, the Philippine representative may only sell equipment or provide other services such as consulting, engineering, design and build, or offer turnkey services -- from design to equipment supply, installation and maintenance. It is important to have a Philippine representative to monitor projects since both government and private sector projects take time before they come to fruition. To lower equipment and freight costs, there are Philippine agents/distributors who are allowed by their principals to fabricate portions of the equipment, e.g. housing/framing.

The usual promotion techniques are sales call to end-users and consultants; advertisements in the yellow pages; and participation in trade shows, conventions and seminars.

Private entities purchase environmental equipment using internally generated funds or bank loans. Government agencies use their budget and proceeds of foreign loans and grants.

Philippine government projects financed partly or wholly by international institutions are open to international competitive bidding. Suppliers or contractors can bid either directly or through their Philippine representatives. Government entities that use their budget allocations likewise conduct competitive bidding following the procedures specified in the Implementing Rules and Regulations (IRR) of Republic Act 9184, otherwise known as the Government Procurement Reform Act.

Letters of credit and telegraphic transfers are the most common method of payment for imported environmental equipment.

There are no restrictions on the importation of environmental equipment. Tariff rates imposed on equipment range from 1-10 percent.

Excerpts from 'Philippines: The Philippine Environmental Market', US Commercial Service, July 2006