Construction of Environmental Infrastructures Least Likely to be Affected

SINGAPORE, Jan. 8 /PRNewswire/ — The environment market globally has done
business worth 650 million USD in 2008 and is growing by double digits.
Expectation is that it will reach a 45% growth by 2015 from 2002. While there
are niches where the growth is higher than the rest, this sector has
demonstrated overall resilience to the global economic slowdown so far.


According to Frost & Sullivan Asia Pacific Consulting Head of
Environmental & Building Technologies Practice Sapan Agarwal, the first half
of 2009 may be slightly grimmer than average given that companies are cautious
in spending. Nonetheless, this phenomenon is likely to fade away beyond the
first half of the year.

He added that business in Asia has been on the growth trend mainly because
of rising consumer awareness and an ever increasing population. Urbanization
has also been a key contributor to the industry growth. While the timing and
speed of urbanization has varied and is varying between countries in Asia, on
average, an additional 48 million people will have migrated to Asian cities in
2008. This directly translates into intense pressure on urban infrastructure
and also rising demands for equipment and services such as water and waste
management. The global environment market comprises water 47%, waste 39%, air
9% and others 5%.

“Greening of technologies and processes is a strong trend in most of the
industries today and with a shift in confidence later in 2009, businesses in
the environment sector may see steeper growth rates that may have dipped
slightly during the first 6 months of the year,” Agarwal said.

He continues to say that businesses within the Environment sector that are
mass consumer centric such as residential water filters, air filters etc have
been buoyed by the growing health and wellness sentiments among Asians
although the average spending power of the consumer has stayed with caution.

According to Agarwal, “Exchange rate fluctuations in some countries in
Asia have lately been quite rough and this may hurt companies especially
multinationals who tend to lose anywhere from 5% up to as high as 20% owing to
dipping exchange rates.”

Businesses that are related to infrastructure projects have been more or
less insulated from the state of economy in the US with the on going projects.
However, the planned projects may see some delays, albeit nothing alarming,
mainly owing to factors such as uncertain oil and commodity prices.

“There have been no cuts in budgets related to environments and we do not
foresee that happening either,” he says, “Contractors and service providers
may see some shrinking margins, though, given the volatile costs of logistics
and materials. Environment businesses related to manufacturing and industries
have been the ones that have started to witness dipping business as a result
of industries conserving cash and suspending expenditures & investments.”

Overall, Asia’s economy will continue to be driven by the growth engines
of China, India, and Southeast Asia, where environmental market opportunities
are vast, in tandem with its socioeconomic growth. However, with Japan
currently declaring an economic recession, Japan’s environmental revenues are
expected to further decline in the already saturated marketplace.

In terms of industry specifics, Agarwal says that the volatile economic
times may spur mergers and acquisitions in the region. “Opportunistic
technology providers/manufacturers from Europe, USA, and even Japan may invest
with Asian companies that suffer from lack of funds,” he adds.

He continues to say that construction of environmental infrastructure is
least likely to be affected though cost-cutting measures are being considered
at many sites in the form of compact construction schedule, locking prices of
materials and equipment to cushion the rising energy costs.

“Overall growth is likely to be between 7 to 10 percent. Middle East is
expected to witness better growth due to its ever high demand of water and
waste management. Desalination technology and its projects are one of more
potent markets and will hold its ground for stable growth,” Agarwal said.

He continues to say that the environmental outlook in 2009 will most
likely be focused on retrofits, service contracts, and implementation of
approved new infrastructure projects prior to 2008-2009.

“Contractors and suppliers involved with approved projects in 2009 are
expected to witness tighter margins as a result of volatile energy cost,” he

Factors that may impede growth and profitability, as identified by
Agarwal, include increasing electricity tariffs, uncertain oil prices and
subsidies, finance interest rates; all of which have a domino effect on
support services such as cost of materials, logistics, and labour.

“The municipal sector will stand a better chance over the industrial
sector; reduction of plant production capacity due to the slow economy may
reduce dependency on new installations and upgrades of process treatments with
regards to the environment,” he says “as less water usage means less waste
generation and less air pollution.”

“This will be more apparent in Southeast Asia,” he adds. “Continuous
industrialization and urbanization in India and China will boost demand for
environmental services and products.”

Agarwal sees that the demand of water will continue to increase with or
without the negative impact of the US economy as it is this time that
environment companies should focus on the development of products with energy
saving features and high efficiency.

Continuous pressures from developed nations on the environment protection
in Asia will also serve as one of the drivers to the industry.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, partners with clients to
accelerate their growth. The company’s TEAM Research, Growth Consulting and
Growth Team Membership(TM) empower clients to create a growth-focused culture
that generates, evaluates and implements effective growth strategies. Frost &
Sullivan employs over 45 years of experience in partnering with Global 1000
companies, emerging businesses and the investment community from more than 30
offices on six continents. For more information about Frost & Sullivan’s
Growth Partnership Services, visit


    Donna Jeremiah
    Corporate Communications - Asia Pacific
    P: +603 6204 5832
    F: +603 6201 7402

    Carrie Low
    Corporate Communications - Asia Pacific
    P: +603 6204 5910


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