Booming growth in Asia raises demand for environmental technologies - includes related articles - Focus on Environmental Technologies Exports: A Tribute to Secretary Brown's Vision - the late Commerce Secretary Ron Brown

Following explosive industrialization and urbanization, with all its related pollution, and flaunting growth rates ... more than double those of the rest of the world, Asia has emerged as a major environmental market. Home to more than half the global population, Asia represents about 20 percent of the global environmental market, or about $80 billion for 1994. The region's environmental market is projected to grow 17 percent per annum through the year 2000, creating many opportunities for U.S. companies willing to commit to the market. The Asian Development Bank (ADB) alone has emmitted around $4.4 billion in loans and technical assistance programs for the environment sector for 1995-1997.

Many Asian nations have introduced new environmental regulations and restrictions in recent years. This trend will continue with governments becoming increasingly earnest about protecting their natural resources. Rapid population growth, increasing environmental awareness, tighter environmental regulations, and burgeoning economic growth has created a significant market for U.S. exporters seeking great opportunities abroad. Chief among the opportunities are air pollution monitoring and control, solid waste and recycling technologies, and water and wastewater technologies. Other important areas are hazardous waste, hospital and medical waste, and clean technologies and/or waste minimization technologies.

Achieving success in Asia requires a commitment to establishing strong ties with partners and taking the time to visit those companies or individuals at least once or twice a year. Asia, in general, is considered a "relationship" market, where a handshake can be as important as a signed contract. Try to remember the five "Ps" for success: Patience, Partners, Presence, Persistence, and People!

Of all regions in the world, Asia is one of the most economically secure and aggressively growing areas of the world. Following are several abstracts of some of the key markets in the region.

China

The People's Republic of China (PRC or China) is one of the fastest growing economies in the world. Its gross national product grew by an estimated 11.5 percent in 1994 and is projected to grow between 8 end 9 percent annually for the remainder of the decade. This dynamic growth can be attributed largely to China's economic reform policies which have substantially opened the economy to the outside world.

China faces serious environmental problems stemming from a deteriorating natural resource base, a dense population, and a rapidly expanding industrial sector that lacks adequate pollution control systems. In the cities, the air is heavily polluted by particulates and sulfur dioxide due to the country's dependency on coal to generate energy. China TS among the world's largest sources of greenhouse gas emissions and industrial emissions of carbon dioxide. The persistent failure to dispose properly of solid waste has meant that toxins regularly leak into the ground water, and the water in many rivers is not fit for swimming. In rural areas, misuse of the water supply, fertilizers, and pesticides has multiplied the water pollution problem. Poor farming practices in irrigation and drainage have destroyed millions of hectares of land.

The Chinese market for environment technologies is widely considered to be one of the largest potential markets for environmental technologies; however, it has been slow to develop in China due largely to the lack of capital and foreign exchange. The market for environmental technologies in China is also affected by weak enforcement and regulatory incentives to achieve compliance. China's National Environmental Protection Agency (NEPA) lacks adequate financial resources for enforcement and has a limited ability to influence production ministries and state-owned enterprises. Consequently, NEPA often defers to provincial environmental protection bureaus to devise environmental standards, enforcement measures, and financing strategies.

Solid and hazardous waste pose an ongoing threat, one that may not be apparent for many years since improper handling of these materials only gradually lead to contaminated groundwater and aquifers. There are significant disparities in waste disposal practices between municipalities and industrial producers. Insufficient polluter fees and inadequate legislation have undercut the development of this market.

Significant air pollution is caused by China's extensive use of coal combustion for its energy requirements. The average ash content of Chinese coal is 27 percent, and sulfur varies up to 5 percent. These combustion sources range in size from small domestic stoves to large industrial plants, and there could be literally hundreds of thousands of units without any pollution control equipment. By the year 2000, China is projected to account for 75 percent of Asia's total sulfur dioxide (SO2) emissions. Presently, emission control technologies reportedly reduce SO2 emissions by less than 6 percent in the power sector. Also, as China increases the use and quantity of motor vehicles, nitrogen oxide emissions are likely to grow dramatically. Acid rain poses a particular threat to south China.

Despite already extensive environmental protection legislation, China is actively working to revise, update, and strengthen virtually all major laws covering key environmental sectors. The existing legislation is weak in areas; regulations and standards leave gaps and room for interpretation; and enforcement is inadequate. Many gaps exist because environmental laws are generally framed in terms of the state plan and cannot be applied as broadly as necessary.

China's principal environmental priorities and guidance on tire future direction of policy were previewed in an announcement following the 1992 environmental meeting in Brazil. Many of the export opportunities for U.S. industry are developing around efforts in China to implement these policies. China's ten policies n environment and development are: to implement a strategy of sustainable development; adopt effective measures to prevent and control industrial pollution; conduct a comprehensive strategy for improving urban environmental problems; increase energy consumption efficiency and improve the energy consumption structure; introduce ecofarming, preserve afforestation, and effectively strengthen biodiversity protection; promote scientific and technological progress; strengthen environmental research; provide economic means to protect the environment; strengthen environmental education and raise the environmental consciousness of the nation; improve the environmental legal system and intensify environmental management; and formulate China's action plans in the spirit of the United Nations Conference on Environment and Development (UNCED).

India

Since June 1991, when the Government of India embarked on an ambitious program to liberalize its economy, India has experienced increased foreign investment and significant growth in international trade. As a result, increased industrialization and urbanization has led to substantial environmental degradation. The environmental technologies market in India experienced an estimated investment of $1.3 billion in 1994, with projected growth of 20-25 percent annually through the year 2000. This growth potential is due to comprehensive environmental protection legislation and the desire of the Indian industrial sectors to adopt pollution prevention, waste minimization, and resource recovery principles to improve their bottom line. The major areas of opportunity for environmental technologies are in industrial wastewater treatment, hazardous and solid waste management, and energy production through clean technologies and renewable energies.

The wastewater sector experienced an estimated investment of $827 million in 1994, with approximately 83 percent of the total in the industrial wastewater treatment sector. Most of this investment was to meet regulatory requirements and increased enforcement of Indian water standards. Small-scale industries, such as tanneries, textile mills, distilleries, metal plating firms, foundries, and ether chemical manufacturers, are in desperate need of wastewater treatment facilities. While the ability of these firms to pay for treatment technologies independently is limited, increasing efforts are being made to implement the concept of Common Effluent Treatment Plants (CETPs). Under the CETPs plan, each of the small scale industries would release the industrial effluent into a collective pool, rather than independently treating the effluent. Once the effluent is treated the water can be recycled for reuse or discharged within the regulatory framework.

Increased enforcement of the Hazardous Waste (Management and Handling) Rules of 1989 has generated more growth for hazardous waste equipment. A conservative estimate of hazardous waste generated annually is 400,000 to 600,000 metric tons. A number of State Pollution Control Boards (SPCBs) are increasing the enforcement of laws, stipulating that industries must receive approval before they can handle, store, and treat hazardous wastes.

Solid waste management and disposal in urban areas is a major environmental problem as a result of increased urbanization. On average the four major metro cities--New Delhi, Bombay, Madras, and Calcutta--produce 4,000 tons of solid waste per day. Inadequate equipment has limited the collection and handling of the waste. Incineration technologies are not appropriate to deal with the municipal waste in India, due to the waste's exceptionally high moisture content. Composting, pelletization, and waste-to-energy technologies using anaerobic digestion are the most appropriate means of dealing with municipal waste in India.

Incineration technologies have vast market potential in the hospital and medical waste management marketing India. Presently, only 10 percent of the hospitals in India have medical waste treatment facilities, such as incinerators.

India's increasing energy demands have substantial environmental problems. The energy sector's coal driven power plants are the major source of suspended particulate matter (SEM); the use of low quality coal results in more than 45 millions metric tom of ash annually. The water supply is also polluted from the ash when dumped, as it leaches heavy metals into the nearby water supply, leading to a number of severe chronic illnesses. As the health dangers become more clear, there has been increased pleasure on the power sector to install pollution control equipment. The government has made a commitment to increase fly-ash utilization to 50 percent by the year 2001, and is encouraging fly-ash utilization through tax and duty incentives.

Indonesia

As the world's largest archipelago, Indonesia is also a big emerging market for U.S. environmental technology exporters. Comprised of 17,000 islands spread over three million square miles of ocean, Indonesia supports the fourth largest population in the world. Accelerating economic and industrial development have accompanied population growth. All three trends have damaged 35 percent of Indonesia's coral reefs, destroyed 900,000 hectares of its forests annually, and adversely affected air and water quality.

In 1994, the water pollution control equipment market in Indonesia was about $200 million. It is projected to reach $253.4 million this year. Moreover, Indonesia will require $25 billion in investments through 2004 to increase its production and distribution of clean water. The air quality in Indonesia is deteriorating rapidly. In Jakarta alone, 2.5 million vehicles coat the capital city in brownish-yellow clouds of lead-laden smog. The rapidly expanding industrial sector is expected to add to the problem. American alternative fuel powered vehicles and industrial air pollution control technologies are in demand. In 1994, the industrial air pollution control equipment market was approximately $190 million. Last year, Indonesia's overall environmental market was worth about $1.1 billion, and has a projected annual growth rate of 25 percent.

Much of the credit for rapid growth in the environmental sector belongs to the Government of Indonesia, which has begun to proactively address national environmental problems. Government programs have stimulated investments, creating small but growing markets for U.S. environmental technology and expertise. For example, the government is implementing the Clean Rivers Program to control water pollution. Under this program, 52.3 billion in investments will go into river clean-up over the next nine years. Two and a half billion dollars will also be invested in urban environmental infrastructure projects, particularly for water and wastewater treatment. Under the government's Blue Sky Program for air pollution control, monitoring equipment will go into at least 15 provinces. The government's Solid Waste Management Plan calls for 500 new landfills, and new industrial toxic and hazardous waste regulations will require waste treatment on-site at collection facilities. Finally, Multilateral Development Banks and other donor agencies are providing the government with funding to implement a new hazardous waste law, and municipal water supply and sewerage projects.

Despite its recent advances, Indonesia is not an easy market for doing business. The government has been slow to enforce its environmental regulations due to lack of funding. Moreover, European and Japanese companies are strong competitors. Moreover, for U.S. companies, there is no time like the present to begin "planting seeds" by forming business relationships and demonstrating technologies. The potential rewards are too large to be ignored.

Korea

Korea is a sophisticated, well developed industrial market. Environmental equipment and services represent a new and very rapidly growing market segment in Korea. According to business sources and the Ministry of Environment, the market for pollution control equipment and services grew from $3.8 billion in 1993, to $5 billion in 1995. Both the overall market size and the share held by imports are expected to grow sharply over the next few years as industrial emission standards are tightened and the government attempts to hasten clean-up and prevention projects by applying more efficient technologies and equipment.

During the last 40 years, Korea's industrial growth has resulted in substantial pollution. Moreover, rising living standards and expectations are fostering a new environmental awareness within Korea. Continued economic growth should create strong demand for pollution prevention and clean technologies that address waste minimization/process improvements technologies to supplement "end-of-pipe" con tools.

The Korean Government is significantly increasing its environment-related budget--from approximately $131 million in 1994 to $1.7 billion in 1996--and strengthening environmental laws and regulations.

The Korean market for air pollution control-equipment grew at an average annual rate of 25 percent for the past three years, reaching approximately $1.4 billion in 1995. The single most lucrative area will result from a regulatory clampdown on sulfur dioxide. Japan has jumped to an early lead in the air pollution control market. Japan accounts for about 45 percent of the import market while the U.S. share is about 20 percent, followed by Germany with 18 percent. U.S. products are generally regarded-by Korean end-users as equivalent or superior in quality to those of Japan. However, U.S. sales trail those of Japan due to the lack of prompt after sales service. Nevertheless, U.S. market share is expected to expand at an average annual rate of 18 percent because the Korean Government has a set policy aimed at reducing Japanese imports and diversifying its international trade.

The market for water pollution control equipment has also grown rapidly, reaching approximately $1 billion in 1995. Construction of additional sewage and waste treatment facilities, and facilities for the purification of water supply sources, is a response to public outrage following the discovery of major leaks and dumps of toxic substances into public drinking water sources.

Waste reduction though recycling and reuse has emerged recently as an environmental priority in Korea. The government's goal is to increase recycling of solid waste from the current 7.4 percent to 20 percent by 1997. The Korean market is still in the midst of developing its environmental policies and regulations. The laws and regulations that are presently being enforced will most likely be subject to change as Korean leaders search for a balance bet-weep policies that will promote further economic growth and those that will ensure effective environmental management. Marketing strategies must not limit their scope to existing environmental regulations, but also must consider Korea's long-term economic development plans and goals.

Taiwan

Taiwan's evolution into an urbanized, industrialized and economically prosperous economy has resulted in an increased amount of environmental degradation. This, along with the uneven distribution of precipitation, limitation on collection systems, and a sewer hook-up rate under 3 percent, has resulted in the deterioration of the quality of the island's drinking water. Taiwan is also running out of available land to bury the growing amount of waste generated by households and industrial/commercial activities. Continued pressure from public environmental activities has forced the authorities to strengthen the enforcement of pollution controls. Environmental legislation is focused on three main principles: "polluter pays," pollution prevention, and public participation. Taiwan is also moving toward privatization, but not via legislation.

In 1992, the Taiwan Environmental Protection Administration (EPA) launched a five-year (July 1992-December 1496) medium-range target plan (Green Plan) for a healthy environment. Under the plan, 19 implementing measures are being undertaken, including air quality improvement, water pollution control, municipal solid waste disposal, and industrial/commercial waste management. According to the EPA, about $2.9 billion will be allocated to the above four specific areas.

Taiwan is the third largest importer of U.S. pollution control equipment in Asia, after Japan and South Korea. Total imports of pollution control equipment, which in 1993 were valued at $750 million, are expected to reach approximately $1.3 billion by 1997. In the near future, municipal solid waste management, and water and air pollution control, are expected to shape the market, estimated to be between $2-3 billion. The growth range for Taiwan's total environmental market is conservatively estimated at 812 percent, with estimates as high as 20-25 percent for pollution control equipment. Foreign suppliers dominate the market with a share of 80 percent. The United States is the island's second largest foreign supplier, with an import share of 27 percent. American-made equipment is very competitive in the public sector.

Demand for foreign technology and advanced equipment is very strong. In addition to public environmental protection projects, stricter enforcement is also expected to create numerous sales opportunities in the private sector. Areas with the strongest growth potential in this sector include providing products to the basic metals, chemical materials manufacturing, petroleum refining/petrochemicals, food processing, textiles, computers, electronics, printed circuit boards, and plastic products manufacturing industries. There is a particular focus on cleaner, waste minimizing technologies for the above mentioned industries.

Though the market for pollution control in Taiwan is promising, U.S. suppliers need to improve their customer service relations and product designs in order to capture an even larger share of this lucrative market. Buyers in Taiwan prefer a "packaged approach" where technology, equipment, and services are sold together.

Asian Environmental Market Overview 1994

COPYRIGHT 1996 U.S. Government Printing Office
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