Dec 17, 2009

Analysis: ‘Gush of Opportunities’ in Thai Water, Wastewater Markets Attracts Foreign Investments

Frost & Sullivan research shows growing population and increasing concerns about water scarcity drive government to encourage water and wastewater treatment

The water and wastewater treatment market in Thailand is emerging as a favored destination for engineering consultant services and is expected to grow substantially on the back of rising demand from municipal and industrial sectors, according to consulting and research firm Frost & Sullivan. The growing population and increasing concerns about water scarcity are driving the government to encourage water and wastewater treatment (WWWT).

The analysis, “Market Growth Opportunities of Water & Wastewater Markets in Thailand,” found that the market is likely to earn revenues of $177.3 million by 2015.

"The Thailand government has established comprehensive measures for WWWT development and management," said Frost & Sullivan Consultant Melvin Leong. "It has invested massive and continuous budget outlays for irrigation projects to ensure adequate water supply for the country."

While government backing and stringent implementation of regulations are expected to buoy the supplier market, the limited local capability to produce high technology has opened the market to foreign imports of products and services. Approximately 80% of the WWWT equipment in Thailand is from foreign participants Japan, the United States and Europe.

The upturn in the industrial sector has driven up the demand for WWWT facilities. Advanced WWWT technology will find considerable business opportunities in high-growth industries such as automotive, electronic and electrical, paper and pulp, as well as steel, Frost & Sullivan said. Further, heightened environment consciousness and the need to develop a global standard for environment protection are making a solid case for the WWWT market.

Despite these considerable prospects, participants may experience shrinking profits because maintaining attractive pricing without compromising on product quality and offering after-sales support in this intensely competitive market may not be feasible.

In addition, the occasional turbulence in the political situation may slow down the overall economic growth in Thailand. In such a scenario, suppliers tend to rely heavily on government subsidies for the constructions or refurbishments of treatment plants.

Another solution to the price problem is cost cutting by both local and foreign suppliers, the firm said. This option is unpopular among participants and can be avoided through foreign-local business partnerships and joint ventures, as they can reduce financial risks and losses.

"At present, there are limited partnerships between companies in Thailand's water and wastewater projects and most participants bid independently for public and private projects," Leong said. "Strategic partnerships among these companies are expected to create better business models in the supply of services, products and maintenance or after-sales activities."