APAC's water industry to experience moderate growth in 2015 amidst challenges, says Frost & Sullivan
SINGAPORE, Feb. 6, 2015 /PRNewswire/ -- The water industry landscape in the region is expected to face challenges in 2015 stemming from varied factors such as intense competition from new start-ups and non-conventional water companies, socio-political uncertainties, and new government regulations pertaining to public-private partnerships.
2015: Asia Pacific water industry to witness greater activity in M&A space
Despite the rough economic conditions, the development of the water industry remains an important part of the green economy plans of most countries. Water industry has the potential to act as an economic stimulant in countries such as Singapore, Japan and Korea. Key activities to observe in 2015 include M & As (notably by Japanese and Korean conglomerates), business realignment and R&D in advanced technologies such as membranes and energy harvesting from wastewater sludge.
"A sustainable water supply system in a country will also attract foreign investments and eventually be a catalyst for the advancement of green economy in those countries," explains Melvin Leong, Research Manager, Energy & Environment Practice, Frost & Sullivan Asia Pacific.
2015: Water Utilities CAPEX is expected to increase across developing Asia
The capital expenditure for both the utility and industrial segments for water & wastewater treatment are expected to increase to about US$80 billion for utilities (2.0% growth) and US$6.7 billion for industries (13.4% growth). Countries with high CAPEX plans are Indonesia, Thailand, China and India.
"Drainage solutions and stormwater management issues remain pertinent in Malaysia and Thailand. Indonesia and India will continue to emphasize on non-revenue water reduction and improve water supply coverage," added Leong.
2015: Energy efficiency initiatives will result in lower OPEX in Singapore and Japan
Although utilities are struggling to keep OPEX stable and low, there is a likelihood that OPEX will increase in all developing countries. In 2015, the OPEX in APAC for both the water and wastewater utilities will likely reach US$96 billion for utilities (2.8% growth).
"However, we can expect OPEX reduction in Singapore's and Japan's water utilities in 2015, due to efficiency improvement initiatives taken in the recent years. The focus of public expenditure on water and wastewater supply will be retrofit of old plants and improvements in piping systems," Leong added.
2015: Despite untapped potential, Myanmar will be a challenge
While the untapped potential in Myanmar is significant, industry players believe that business conditions will remain challenging. Areas of possible growth include Non-Revenue Water (NRW) reduction, urban storm water management and weather-related disaster resilience.
The unorganised nature of water industry, with multiple government stakeholders makes it more challenging to do business.
2015: Non-Revenue Water (NRW) continues to impact emerging economies in APAC
Developing countries will continue to be trapped in the vicious cycle of NRW unless governments take active measures to address the issues. These include active leakage control, water pressure management and pipeline and asset management.
Although it is expected to sustain strong growth at 21.7% in 2015, the smart water metering market in APAC is expected to remain underdeveloped and with low market penetration rate.
2015: Singapore's Continued Progress into Regional Water Hub
Singapore will maintain its leadership position in APAC for water sustainability and security efforts, and will continue to secure investments. In 2015, the water sector is expected to contribute US$1.7 billion to Singapore's GDP.
Singapore's competitive landscape in the water industry is also changing with public participation from emerging regional water companies. At present, Singapore has about 150 water companies and 26 R&D centres contributing up to US$120 million value add to the economy with the creation of 500 new jobs.
"Singapore's position as a water hub in Southeast Asia and to the larger extent, APAC, is going to be strengthened with best practices by the government agencies as well as leading private market participants operating in the country," commented Leong.
The industrial sector will remain as the most dynamic end-user in Singapore's water industry with the best prospects for membrane replacements and Zero Liquid Discharges (ZLD) technologies.
Singapore's focus also includes improving water security and sustainability. An example would be rainwater harvesting (RWH) to improve potential in residential / commercial sector as RWH still accounts for the lowest in percentage for water supply in Singapore's 4 National Taps.
Highlights of this press release are from the report 'Asia Pacific Water Industry in 2015'.
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SOURCE Frost & Sullivan
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