Singapore

• Country Overview
• Market Estimates and Analysis
• Foreign Competition
• Regulatory Impact

COUNTRY OVERVIEW

Government Action

Singapore has one of the most stringent environmental management regimes in the region. Decades of a centralized, authoritarian-style, single-party government that has historically placed a high premium on environmental quality have helped ensure uninterrupted anti-pollution policies that are implemented effectively. With no distinction between national and local levels of government, the central national government is responsible for all pollution control.When Singapore�s environmental institutions were first established in the early 1970s, they were given considerable authority and support, unlike other neighboring Southeast Asian countries. 

Regionally, Singapore has taken the lead in some important environmental initiatives:

• banning the import and manufacture of nonpharmaceutical aerosols and polystyrene sheets and products that produce chlorofluorocarbons (CFCs)
• introducing unleaded gas (1992)
• phasing out CFCs.

Singapore�s environment has also benefited from the country's relatively small size and population and an absence of rural hinterland.  Unlike many other Asian countries, Singapore does not have large rainforests or extensive agricultural systems. Thus, urban infrastructure has not experienced strains from migrating rural populations.

As in all countries, however, numerous environmental problems still persist, many regarding waste.  Transboundary pollution from Malaysia and Indonesia has spurred concern due to increased levels of industrial waste in Johor.  This waste has created water pollution in the straits between Singapore and Malaysia. Issues such as remediation of new and complex hazardous waste also must be addressed.

Environmental Awareness

As a result of Singapore�s environmental achievements, there are no environmental movements or coalitions protesting pollution. Public interest in the environment is low because citizens have felt little need for change.

Environmental Equipment and Services Market

Singapore has provided a small but reliable market for environmental equipment and services. However, it is limited by the small population and the fact that pollution control has been underway for two decades. According to estimates reported in the 1999 Country Commercial Guide by the U.S. Department of Commerce Foreign Commercial Service and U.S. Department of State officials, the Pollution Control Equipment sector ranks eleventh among leading industry sectors for U.S. exports and investment for nonagricultural goods and services in Singapore. Overall, government expenditures for environmental goods and services are projected to be about $3-4 billion over the next five years.

MARKET ESTIMATES AND ANALYSIS

Industry Priority Ranking

A general rule that we apply to the distressed economies of Asia is that environmental demand is likely to be strongest in those sectors of the economy with the strongest economic performance. Only those industries with sufficient revenues can afford to purchase environmental products or make production process modifications.

To the extent that economic performance data is available, we can identify the most robust sectors of the economy where we expect to see environmental demand. To further inform our efforts to discover high-growth/high-demand sectors, we also look at export performance. Economic recovery in Asia will continue to be led by those industries with the greatest export success. Those exporting industries will most likely have sufficient capital to purchase environmental products and services.

An analysis of production indices, profitability, export orientations, and associated trends clearly revealed that various industry sectors have had very different experiences since the onset of the financial and currency crisis. Summaries of manufacturing performance and industrial production are presented below.

Economic Performance:  Manufacturing Output for Selected Industries (millions of dollars)

Industrial Production:  Selected Industries
(Percent Change from 1997; 1992=100)

Pharmaceuticals and petroleum products show the greatest ability to buy, followed by fabricated metal products and nonmetallic mineral products.These results are highlighted in the following figure.

With no values for the X axis (due to the lack of enforcement data), all industries included in the figure are shown to have an equal motivation to buy. The upper right quadrant normally represents potential buyers who have the greatest combination of both motivation and ability to purchase environmental goods and services. The size of the circles indicates the approximate relative size of each industry.

Environmental Sales Opportunity Ranking

Industrial Equipment

Various organizations and agencies have provided the following environmental market size estimates and forecasts:

Source: (c) Environmental Business International, Inc. (San Diego, California)

Pollution Control Equipment (in millions of U.S. dollars)

Industrial Water & Wastewater Equipment & Services
(in millions of U.S. dollars)

Note:  Future Inflation Rate Assumed: 2%
Due to the classification of trade statistics and the broad range of environmental equipment, the above figures are estimates derived from our assessment of the market. They are not precise but are indicative of the order of magnitude of the market.
Source: U.S. & Foreign Commercial Service and U.S. Department Of State, 1997

Market Size for Air Pollution Control Equipment
(in millions of U.S. dollars)

Estimated Future Inflation Rate: 1.8%
Last Year�s Import Market Share (Percent for U.S. and major competitors): US: 28%; Germany: 20%; Japan: 32%
Notes to table:

1. Import estimates are from RIET�s The Asian Environmental Market�An Overview of Business Opportunities. Local Production is measured as total market size (reported in same publication) less imports.
2. Total Market: The US-AEP estimate for the total environmental market in Singapore in 1996 is US$1 billion. RIET notes that 17% of the environmental market in the last year was for air pollution control equipment. Thus, for 1996: 1,000 x 0.17.
3. Export estimates: This is the balancing figure after total market, local production, and imports have been estimated, as explained above.
4. Imports for the U.S.: estimates based on qualitative assessment. U.S. market share was estimated to be 28% last year and is expected to increase to 30% and 35% in the next two years.

Sources: US-AEP and RIET estimates; industry analysts; ENV publications; Financial press projections

Singapore Customs tracks imported equipment through both Customs and the Singapore Trade Development Board. These shipments are summarized in various categories according to function and type. Unfortunately, there are no specific categories related particularly to environmental equipment. Export-Link held discussions with Korean Statistics and Customs staff to determine how environmental equipment was categorized. Singaporean Customs responded with the following list:

• Domestic type machinery & apparati for filtering
• Intake air filters for internal combustion engines
• Other air/gas pumps & compressors, nes
• Other fans
• Other filtering & purifying machinery & apparati, and filters
• Energy equipment (turbines)
• Parts of filtering/purifying machinery & apparati
• Parts of pumps & compressors w/in 7431

The Customs data collected contains only those transactions that are equipment-related and not those sales related to infrastructure. Infrastructure projects are the largest commercial component of environmental activity; the equipment segment is only a small but very concrete share of the entire environmental market. Furthermore, imports included in this analysis are not strictly environmental equipment but include industrial process control as well. For example, equipment such as blowers and air compressors controlling air and gas pressures within a production process is grouped with air filtration equipment. This more general definition of environmental equipment helps us track opportunities for U.S. technology to modify "up-stream" production processes and not just "end-of-pipe" solutions.

Imported environmental equipment for 1996, 1997, and 1998 varied by year and equipment type. All the figures have been converted into U.S. dollars so the imported changes are net of changes in currency fluctuations between the won and dollar.

• The total imported environmental equipment market in 1997 was just over $534.6 million.
• The total market declined 25% in 1997.
• The total market dropped another 12% to $352.6 million in 1998.

Total Imported Equipment Growth and Market Share by Equipment Type (1996�1998)

Source: Singapore Trade Development Board, February 1999

• Blowers and compressors comprise 48% (not shown) of all market imports. However, sales in this sector have dropped steeply by over 30% in the last year. Some air filtration equipment (mostly removable filters and converters) is included in the blower segment because it is often a component of an entire air stream system.
• When possible, specific electrostatic filters and large filtration units are separated into the electric air filter category.
• Gas filters include gas recovery systems, which are crucial to pollution prevention. This segment has dropped by 22% in the last year.
• The smallest category is water filtration equipment with about $31 million in imported sales. However, unlike other US-AEP countries, the Singaporean water filtration market expanded in 1998 by 17%.
• The energy category is mostly turbine sales for large and small power generation systems. This category grew significantly (39%) in 1998.

Infrastructure Projects

The imported environmental equipment market may be much smaller than the infrastructure projects market in total dollar amounts. However, for many small and medium-sized companies, small equipment sales opportunities may be a much more realistic goal than multibillion dollar infrastructure projects.

ENV has fostered the construction of Singapore�s basic environmental infrastructure, in which Singapore has invested $3 billion in the last decade. In November 1995, ENV announced that it would spend more than $4 billion on infrastructure projects over the next five years. Acting Environmental Minister Tep Chee Hean announced Singapore�s need for sewage plants, incinerators, and dumping grounds. But he also addressed the fundamental problems that Singapore must reconcile in these developments, namely land shortages and lack of manpower. To manage these, Singapore is tapping foreign expertise for value-added technology in areas like hazardous wastes.

Projects underway in 1999 included upgrading sewage treatment works, a landfill, and an incineration plant. Projects being studied include the deep tunnel sewerage system and a fifth incineration plant. In addition, development of a group of offshore islands into an integrated chemical island will see strong demand for environmental control technology in the next five years. However, due to the economic crisis, all new environmental projects have been delayed and were scheduled to be reviewed at the beginning of 1999.

FOREIGN COMPETITION

Only a few companies have manufacturing capabilities in environmental equipment. Singapore�s local presence is mainly in design and engineering. With limited domestic production, Singapore�s imported environmental equipment market is dominated by foreign companies working through joint ventures or local distributors. Countries with the strongest presence include the United States, Japan, Germany, France, and Australia. According to ASEAN data, local distributors are very knowledgeable and provide valuable after-sales assistance. Singapore also serves as a gateway to opportunities in the region.

• U.S. manufacturers have a 28% share of the total imported environmental/process control equipment market.  (U.S. manufacturers slightly gained market share from Japanese manufacturers after the Asian currency crisis.)
• Japanese manufacturers hold the second place in terms of market share.
• Malaysian imports came on strong in 1998, displacing Germany for the third position.

Remarkably, even with a 12% drop in the entire import market in 1998, U.S. market share only shifted 3%. Singaporean customers reduced demand instead of shifting to cheaper domestic substitutes. This implies that, at least in the short run, there is a core of U.S. customers in Singapore with significant brand loyalty.

In the medium- and long-term, when Singaporean production processes are given time to modify and adapt to external economic conditions, there will be more substitution to domestic equipment if prices for U.S. equipment stay relatively high. U.S. firms are doubtless squeezing margins in Singapore to keep market share for as long as possible. It is a waiting game for U.S. firms pitting the potential long-term benefit of market position against the short-term cost of reduced or even negative margins. Japanese manufacturers are under the same pressure.

The imported water filtration market grew 17% in Singapore in 1998, which is more growth for water filtration sales than in Taiwan, the Philippines, Hong Kong, Malaysia, or Korea. As in other US-AEP countries, the U.S. dominates the imported water filtration equipment. However, while the imported water filtration market expanded 17%, the U.S. market share dropped 6% points. Meanwhile, Japan and Canada both increased their market shares by 6% and 11% respectively. U.S. firms cannot afford to rest on their laurels�their competitive position is being eroded in a growing market. New customers must be found and strategies for competing with the Japanese and Canadians should be developed.

The U.S. became the largest importer of gas filtration equipment over Japan in 1998. Japanese sales in this segment have fallen off considerably, while German and British sales are on the rise.

The imported energy equipment segment is mainly comprised of turbine sales for small-scale and large-scale power systems. Market share percentages in this sector swing considerably as the sale of one system can be one-tenth or more of the entire import market.

• U.S. energy equipment sales and market share dropped consistently in 1997 (-17%) and 1998 (-50%), despite the robust 15% growth in the segment over the same two years. The U.S. does not appear to be able to compete effectively post-currency crisis in this segment.
• Germany dropped from large sales in 1997 to almost no sales in 1998.
• Japan and Malaysia each have 34% of the market.
• It is unclear from Customs data if Malaysia is the original manufacturer or an intermediate warehousing or shipping point.

REGULATORY IMPACT

Singapore's major environmental regulations are listed below.

• Industrial Wastewater Treatment
• Hazardous/Toxic Waste Treatment, Storage & Disposal
• Air Pollution
• Environmental Impact Assessments
• Enforcement

Singapore's Environmental Initiatives

ENV

ENV is the authority on environmental matters and the prime mover of environmental projects. Established in 1972, ENV has succeeded in implementing effective pollution controls and a complementary legal framework. ENV�s annual expenditures on environmental protection averages about 1% of GDP.  Expenditures have been rising since 1992, reaching nearly $500 million in 1995.

ENV is at the heart of Singapore�s environmental market. ENV is the principal buyer of environmental equipment and also directly involved in various industries, including the environmental industry. Although limited, the government has provided strong political support for building Singapore�s basic environmental capabilities.

ENV is known for forming quasi-government establishments. In 1990, the ministry established the ENV Corporation, which formed a joint venture with Singapore Technologies Industrial Corporation, an international conglomerate, to create Singapore Environmental Management and Engineering Services Pte Ltd. (SEMES). SEMES offers consulting services, project management, and training in environmental management and environmental engineering. Areas of expertise include solid waste management, sewage treatment and disposal, management of land drainage, flood control, and pollution control. SEMES aims to work with foreign companies and government agencies to tap into the regional environmental market.

ENV also established SEMAC, a private company that provides refuse collection and treatment of solid waste. SEMAC began to face competition in April 1999 when other companies could bid for refuse collection contracts.

Regional Institute of Environmental Technology (REIT)

Another quasi-government organization is the Regional Institute of Environmental Technology (RIET). Established in 1993, RIET is a joint venture between the European Union and the Singapore Institute of Standards and Industrial Research. RIET aims at establishing links between Asian markets and European technologies by providing consulting services, training, and database information of European suppliers and their environmental products and services.

Enforcement

There is virtually no available data describing detailed enforcement activity directed at Singaporean industry. For the purpose of this report, we rely primarily on economic performance data to predict the most likely industrial buyers of environmental technologies. A better picture of likely near-term buying patterns among Singaporean industries will require the collection and analysis of environmental enforcement information at the industry and firm levels.

Even with an environmental track record that is the envy of many Asian governments, the government does not appear to show signs of complacency. In July 1993, ENV announced the Green Plan, an environmental blueprint to turn the country into a "model city" by 2000. Under the plan, ENV envisioned a $1.9 billion investment to upgrade sewage treatment facilities and solid waste management systems and create recreational waterways. The plan includes:

• reduction of waste volumes through waste minimization and recycling
• reduction of the amount of land required for sewage treatment
• stricter emission standards on sulfur dioxide (SO₂), nitrogen oxide (NO), and particulates
• tougher vehicular emission controls to conform to European, U.S., and Japanese standards.

The plan has three main objectives:

• Improve environmental cleanliness
• Encourage private sector participation
• Make Singapore a regional center for environmental technology.

Green Plan Objectives

The introduction of the Green Plan shows that there are no quick fixes when it comes to environmental cleanup. Creating a model city by 2000 requires more modern infrastructure and new waste disposal facilities to accommodate its growing population. This poses tremendous difficulties in a region with limited land space. Concerns about a water shortage due to increased manufacturing water usage have also been raised.

Click here to open the Environmental Market Analysis Addendum for Singapore.

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