Asian Business Issues - Rants & Raves, Illusions & Collusions etc.
Saturday, November 24, 2012
Singapore Water Industry, Thanks To You Know Who
Saturday, 10 November 2012 06:34
S'pore - thanks to Malaysia's Dr M, our water industry is now worth $ 9 BILLION!
Written by mevotex
Fresh water has always been a precious resource to Singapore. Being a tiny island with high urban population constrained by its land size, modern Singapore never have enough water of its own to support its population, but this is about to change....
In 1927, Singapore signed a water agreement with Johor to construct a pipeline transporting raw water from Johor to Singapore. During the Battle of Singapore in 1942, the pipeline was destroyed, which left Singapore with water reserves that could last at most two weeks. According to Lee Kuan Yew, this was one of his motives to envision water self-sufficiency for Singapore later when he became the city-state's Prime Minister.
Immediately after the British awarded self-governance in 1959, the Singaporean government under Lee signed 2 water agreements with Malaya in 1961 and 1962. Under these agreements, Singapore will build two water treatment plants in Singapore and a new, expanded pipeline from Johor at its expenses. Singapore will also supply treated water to Johor at far below the cost of treating the water, and in return, Malaya would also supply raw water to Singapore below market prices. The agreements would last till 2011 and 2061 respectively.
In 1965, when Singapore was expelled from the Malaysian Federation, it received the first water threat from then Malaysian Prime Minister Tunku Abdul Rahman, who said that "if Singapore’s foreign policy is prejudicial to Malaysia’s interests, we could always bring pressure to bear on them by threatening to turn off the water in Johor".
Mahathir tried to take advantage
In response, Singapore began to construct more water schemes on the island throughout the 1970s. This include the damming of river estuaries to allow for greater storage volumes, which resulted in larger artificial reservoirs that collect water from carefully managed catchment areas. These reservoirs would later be responsible for 20% of Singapore's water needs in 2012.
But as Singapore began to rapidly industrialize, the amount became insufficient. Thus in 1982 the city-state was interested to build a dam on the Johor River in Malaysia and an associated new water treatment plant there, with the construction costs all paid by Singapore, in exchange, Malaysia was to allow Singapore to purchase more than the 250 million gallons of water per day as negotiated in the 1962 agreement.
Malaysia's Prime Minister Mahathir Mohammad however, decided to make it difficult for Singapore. After six years of difficult negotiations, the 2 countries finally signed the agreement that allowed the construction of the dam. It was a heavy price for Singapore, who agreed to pay RM320 million as compensation for the permanent loss of use of the land and its associated revenue, a premium of RM18,000 per hectare of land, and an annual rent of RM30 for every 1,000 square foot of the land. The cost of building and maintaining the dam would be borne by Singapore, and upon the expiration of water deals, both the dam and the treatment plant are to be returned to Malaysia.
Mahathir believed that Singapore couldn't survive without Malaysia's water
Emboldened by this victory, Mahathir mistakenly believed that he had caught Singapore's main weakness. In 2000, attempts to re-negotiate with Malaysia to secure water supply beyond 2061 failed, and in 2003, Malaysia again warned Singapore that once the first treaty expired in 2011, the water prices would be raised by 200 times from 3 sen per 1,000 gallons to RM6.25. The government of Singapore decided that, instead of paying a higher price and continue its water dependence on Johor, it will go all-out to achieve water-sufficiency.
But Kuan Yew said NO!
The first thing Singapore did was to invest heavily in water technologies and gathered the world's most renowned water management scientists into the island. Academics, researchers, scientists and experts from across the globe were invited to Singapore to help it devise a water solution. Desalination and recycled water were identified. Utilizing advanced technologies, Singapore proceed to construct one of the world's largest desalination plant in 2005, now accounted for 10% of the country's water needs. Singapore's second plant, even bigger, is scheduled to complete in 2013, providing another 10%.
Desalination removes salt and other minerals from sea, turning sea water into fresh water. There is almost no controversy on this. The issues come when dealing with recycled water. By that it means waste water, including those from toilets and drains, is to be purified back for use. The concerns lay on whether all harmful materials, pathogens or micro-organisms could be effectively removed.
Lee Kuan Yew Water Prize was established to award $300,000 for scientists of any nationalities who made breakthrough in water treatment technologies and brought them to Singapore. In 2003, Singapore started its first wastewater recycling plant. Under constant advices and supervision from scientists and researchers, by 2012, the country's 5 wastewater plants successfully marketed themselves and provide enough clean water to meet 30% of the island's needs.
‘Public acceptance is not guaranteed at the start. Recycled water has been rejected in Australia, where people term it ‘yuck’ water,’ said Dr Eduardo Araral, assistant dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore. ‘Singaporeans accepted it both because they are pragmatic and because they trust the Government’s promise that it is safe to drink,’ he added.
In 2006, Singapore identified the commercial value of water and environmental technologies, especially to water-scarce Middle East, North Africa and various First World nations, and also countries who currently lack proper and effective water treatment system. The government invested an initial $330 million to promote the new industry and to make Singapore a potential global hub for water research and development. Since 2008, the city-state hosts the Singapore International Water Week, a key event for the global water industry, every year.
Water sufficiency to exceed 70%
Over the years, Singapore has turned what used to be a scarcity into its strength and now the water industry is seen as a new growth sector for the country. The government's commitment to industrial promotion, easy access to research funds, and readily available talents, help built up a new robust water industries in Singapore amid the European financial crisis.
Kow Juan Tiang, group director for Environment & Infrastructure Solutions at IE Singapore, said: “If you look at the water industries in Singapore, it encompasses companies from many countries. Our financial sector worked closely with those companies venturing overseas here for projects to secure technology, solution, and most importantly, money financing, at a competitive advantage compared to otherwise in (crisis-laden) Europe.”
Goh Chee Kiong, director of Cleantech Building & Infrastructure Solutions at Economic Development Board, said: “What is helping this sector is the fact that Singapore has a vibrant manufacturing industry comprising chemicals, pharmaceuticals, semiconductor, oil and gas, and they are becoming prove points and demonstration sites for water companies to utilize their technology in Singapore before scaling up to the rest of the world.”
The push to develop the industry has drawn attention from some of the world's largest companies like General Electric and Siemens, who invested and created local water companies such as Hyflux that have expanded overseas. "What they are looking to do is create a virtual market for the water business which is much larger than Singapore," said Mr Glen Daigger, chief technology officer of CH2M Hill, an US-based industry consulting firm. "Singapore's ambition to become a water technologies hub in Asia is now a step closer."
With technology as the key driver, the water industries in Singapore experienced strong growth. In just five years, Singapore was propelled from a water-challenged nation to an internationally-recognised name in the global water community - with its water industry blossomed to over 100 companies. The city-state successfully built up a vibrant water industry cluster, with operations which span the value chain, including R&D centres, equipment suppliers, system integrators and EPC firms, project developers and financing organizations.
In 2011, Singapore's water sufficiency rose to 60%. At the same time the 1961 water agreement with Malaysia expired. Singapore informed Johor it would not be renewing the agreement. The next focus would be on total self-sufficiency before 2061, the date when the second agreement lapsed.
Singapore's water sufficiency to top 70% next year, on track for self-sufficient in 2061