Frost: Government Aids Growth of Hong Kong, Singapore Municipal Water, Wastewater Treatment Equipment Markets

April 23, 2007 // Published as a news service by IHS

According to Frost & Sullivan, despite market maturity, significant growth is expected as a result of new projects and refurbishment opportunities.

Recent analysis from Frost & Sullivan of the municipal water and wastewater treatment equipment markets in Hong Kong and Singapore found earned revenues of $344.3M in 2006, with estimates to reach $600.0M in 2013.

"The corporate-friendly tax structure in Hong Kong and Singapore offers pioneer incentive, by which market participants are offered tax exemptions on large turnkey projects, development and expansion incentives, investment allowance, tax deduction for patenting costs and enhanced tax deduction for R&D expenses," said Frost & Sullivan research analyst Sundhar Parthasarathy.

"Moreover, the 100% write-offs on capital expenditure and low trade tariff on water and waste treatment equipment import is bound to attract foreign investments."

With the governments' current drive to develop centralized water and water treatment plants, analysts said the focus is slowly shifting from new urban projects in the water treatment sector.

Singapore is developing a deep tunnel sewerage system (DTSS) that will link sewers, collect wastewater and channel it by gravity to the two state-of-the-art treatment plants positioned at either end of the island.

Similarly, analysts said the harbor area treatment scheme (HATS) project in Hong Kong consists of a 23-kilometer (km)-deep tunnel conveyance system, a centralized primary treatment plant at Stonecutters Island and a 1.7-km submarine discharge oceanic outfall.

The Singapore government's aim to attain self-sufficiency in its water needs and efforts to avoid renewing its water treaty with Malaysia are aiding steady market growth. Consequently, analysts said investments are pouring into membrane and filtering technologies for water processing; this development is reflected in the all-round market growth.

Meanwhile, analysts said the Hong Kong market is expected to grow due to the installation of disinfectors, trickling filters and micro filters as part of the second stage of the HATS project.

Analysts said the lack of new small-scale projects caused a market slowdown in 2006, during which refurbishments and installation of expensive disinfection techniques buoyed market revenues. Constant upgrades, maintenance, treatments and expansion continue to drive the market, especially its municipal sector.

This, however, intensifies competition for the few new and refurbishment opportunities. Analysts said this challenge can be overcome once the environmental administrations of both countries allot an increased budget and manpower for smaller projects and regular upgrades of defective equipment.

"Newer, innovative systems are also attracting consumers, and despite financial constraints, municipalities are willing to use advanced treatment systems capable of tackling complex contaminants," said Parthasarathy. "This is expected to drive the growth of membrane systems, including membrane bioreactors, UV (ultra-violet) disinfection systems, ozone equipment and high efficiency clarifiers."

Source: Frost & Sullivan.