The world's largest continent is increasingly facing problems with regard to its water supply. Overuse, mismanagement, pollution, droughts: all are contributing to water shortages in this huge and massively diverse continent. From unparalleled droughts in Northern China to Arsenic pollution in Bangladesh, the need for potable water is becoming ever more apparent. Water pollution is pervasive, contaminating surface water and groundwater in urban and industrial areas.
As the urban population in Asia grows, urban degradation is increasing. Industrial pollution is growing even more rapidly than economic growth.
Desalination is one potential solution to the dilemma of how to avert escalation of these problems and provide a reliable source of water. Although currently the majority of projects across Asia are being constructed to provide mainly industrial end users with a reliable, clean water supply, the potential for the municipal market looks promising, largely thanks to:
Falling prices, both in terms of plant cost and cost per cubic metre of water Improving technology - simpler and more reliable Growing confidence and understanding of desalination Improving relationships between equipment and plant manufacturers and local partners
Growth of the Asian desalination plant market is governed by a series of key drivers and restraints each of which exert a positive or negative push on the growth of the market. The main drivers include water shortages, tourist development and population growth. Restraining factors on the market include political instability, volatility of economies, lack of national awareness of economic viability of desalination schemes, and frequent lack of funds.
However, the force exerted by the drivers is expected to outweigh that of the restraints and the Asian desalination plant market is certainly expected to grow over the forecast period. Looking at how the market has performed historically over the last decade the growth trend can plainly be seen. From an average value of $162.1 million over the period 1990-1994, the market grew to an average value of $392.6 million over the period 1995 to 1999.
The market for desalination plants in Asia is expected to continue growing over the forecast period from an estimated value of $452.6 million in 2001. Indeed, the compound annual growth rate (CAGR) over the period 2001 to 2005 is estimated at around 11.0 percent, showing promising growth over this period. Towards 2010 however, increasing demand on freshwater resources for both industrial and municipal use will have pushed the Asian desalination market value through the $1 billion barrier, expecting to have a value of $1.029 billion.
This indicates that the desalination plant market offers significant opportunities to companies participating in the market or those that can position themselves to enter or penetrate it in the near future. The yearly fluctuations highlight the effects that individual large projects can have on the market as a whole. Chart 1 shows Frost & Sullivan's view of the potential growth opportunities in the 5 key regions of the Asian desalination plant market for the period 1990 to 2020.
In terms of competitive environment, the market currently contains around 90 to 100 companies, ranging from huge multinational turnkey plant suppliers to specialist small scale equipment manufacturers. The shares of top companies vary considerably from year to year depending on the winning of large scale plant orders.
There are a vast number of factors and trends that have influenced the Frost & Sullivan forecasts for the Asian desalination plant market, although these vary geographically, by technology type and by end-user type, to name but three. However, in summary it can be said that Japan is probably the most influential regional market, simply because it is the largest and most developed.
Market activity in the future forecast years are again expected to be fairly dynamic, although varying greatly from region to region, and indeed, nation to nation for that matter. This is because each region occupies a slightly different stage of the market life cycle, and the picture is further complicated because each is developing in slightly different ways and at differing rates.
In summary, the opportunities that exist for generating desalination plant revenues in Asia are massive, but it is still critical that companies address contemporary issues in a dynamic and innovative fashion if they are to position themselves to exploit future growth potential. With the total desalination plant market currently in the growth stage of its life cycle, it offers potentially great opportunities to companies that are active in, or entering this market. There are a number of key factors specific to this market that are characteristics identified within this analysis:
Dominance of RO as the desalination process for both seawater and brackish water applications Industrial customers are currently the principal end users of this equipment, although municipal plants are likely to become increasingly widespread in future years. Plants such as the PUB plant in Singapore are leading the way in this respect. Increasing competition will undoubtedly result in restricted opportunities for price increases. Private finance initiatives look to be increasingly common to fund plant construction
Those that fail to meet these challenges could find themselves being squeezed out of what is becoming an increasingly complicated and competitive marketplace. (Source: Frost & Sullivan, 18 April, 2002. The report Asian Desalination Plant Markets will be available in May 2002)
