Rapid development and urbanisation in Southeast Asia has led to considerable investor interest in the infrastructure sector of the region. One such important area is the water sector. Many developing countries in the region are now working towards ensuring efficient utilisation of water resources and building a sustainable future for the sector.
The private sector is expected to play a vital role in Southeast Asia’s water sector development as they possess the financial and technological strength that can assist governments to successfully implement various projects.
Emerging trends in water sector
There have been remarkable improvements in the water sector in the Southeast Asian region, with many countries such as Brunei, Singapore, Malaysia and Thailand close to achieving almost universal coverage in access to clean drinking water and other services. However, certain countries like Cambodia, Lao PDR, Myanmar and Timor Leste lag behind in terms of providing access to clean drinking water.
Historically, the water sector has been highly subsidised, which has led to inefficiencies in the sector and the quality of services has not been up to the mark. However, many countries are now introducing reforms in the tariff structure to strengthen the water sector and ensure high quality services. Countries like Singapore, Malaysia, the Philippines and Myanmar have already substantially hiked their tariffs to make the water sector more efficient.
Another challenge being faced by the water sector in the ASEAN region is the high percentage of non-revenue water (NRW), a result of the lack of stringent rules and regulations in the region. Myanmar has average NRW levels of 50 per cent followed by Malaysia, Indonesia and Vietnam with average NRW levels of 35 per cent, 33 per cent and 30 per cent respectively. Singapore, on the other hand, has the lowest NRW rate in the region with 5 per cent. Several steps are being taken to reduce the loss of water including installation of automatic meters, fixing district metering areas and adopting IT solutions to track usage through the distribution network. The state of Johor in Malaysia aims to reduce its NRW levels to 5 per cent by 2025 through the extensive use of smart district metered areas. Indonesia is also taking various steps such as replacing old meters and fixing leaking pipes to tackle this issue.
The participation of private entities in the water sector has also been of vital importance in the Southeast Asian region. Although the role of public-private partnerships (PPPs) in Southeast Asia is limited and the majority of projects continue to be financed by public funds, the role of the private sector is slowly increasing. PPPs provide the financial and technological muscle to the water sector and that increases its efficiency and ensures financial sustainability. Governments in the region are increasingly using PPPs to finance and operate bulk water supply and wastewater treatment facilities. Expertise from the private sector is also being sought to tackle issues such as NRW and pressure management.
Upcoming projects in the region
The water sector in Southeast Asia has attracted considerable investment as many water supply networks and water treatment facilities are coming up in the region. The developing countries in the region are investing heavily in the water sector to increase its efficiency and make it more sustainable.
The Philippines has been at the forefront of attracting investments in the water sector and is working extensively to boost the water supply network. West zone concessionaire Maynilad Water Services, Inc. will be investing PhP 10 billion to develop its third water treatment plant (WTP) in Poblacion, Muntinlupa. The WTP will source water from the Laguna Lake and aims to produce 150 million litres per day (mld) of potable water. The plant is expected to start operations in 2022 and will help fulfil the water requirements of around 150,000 households. Once the facility is completed, Maynilad will have a total of five WTPs with a combined production capacity of 2,850 mld for over 9.7 million customers.
In another vital investment in the Philippines, the Asian Development Bank (ADB) approved a $126 million loan to state-owned Metropolitan Waterworks and Sewerage System (MWSS) on June 19, 2020, to improve the water supply network in Manila. The loan will be used to support the construction of the Angat Water Transmission Improvement Project, which aims to provide secure water supply to nearly 13 million residents in Metro Manila. It involves the development of a 15 km water transmission pipeline to strengthen the water system’s downstream transmission capacity. The project will feature advanced technology to help withstand earthquakes of magnitude up to 7.2 and reduce the risk of a system breakdown.
In Malaysia’s Labuan territory, the upgradation of the raw water reservoir system at the Mukasauk Kinabenua WTP is expected to be completed by the end of 2020. As per the Labuan Water Department, the RM 8 million project involves the expansion and deepening of existing water reservoirs to increase the capacity of water resources in Labuan. The project to upgrade the WTP reservoir in Kinabenua started in October 2019 under the 11th Malaysia Plan. The upgraded water reservoir will supply 3 mld of water to consumers, with a holding capacity of water for up to two weeks. Labuan currently relies on water supply through seawater pipes from Beaufort for 90 per cent of its requirements.
A WTP is also coming up in Myanmar’s largest city of Yangon. The $180 million budget will be borrowed from ADB, according to the Ministry of Planning, Finance, and Industry. Yangon supplies water to residents from reservoirs including Hlawgar, Phuugyi, Ngamore Yeik, and Gyo Phyu. Aiming to increase water supply to 90 per cent of city residents by 2025, the Yangon City Development Committee is implementing a number of projects besides Lagonpyin.
Future outlook
There has been massive urbanisation in the Southeast Asian region in the past few decades due to which the economies of countries such as Cambodia, Lao PDR and Myanmar were upgraded to a lower-middle-income designation from low income. The rapid urbanisation and population growth in the region took a toll on the water sector and it has now become necessary to make major improvements in existing facilities.
In order to make the water sector sustainable in the long run, there is a dire need for technological advancements that ensure the highest degree of efficiency in the utilisation of water resources. Digital solutions such as SCADA and smart metering have helped the region reduce wastage of scarce water resources and provide good quality services.
The utilisation of treated wastewater is also becoming an important aspect in the long-term sustainability of the water sector. The recycled water can be used for various purposes such as agriculture, landscaping, power plants, etc. Singapore has emerged as a global leader in wastewater utilisation and is making substantial advancements in establishing it as a viable source to meet future demand.
These initiatives require financial muscle and technological expertise, making the involvement of the private sector imperative. Hence, it becomes necessary for countries to capitalise on the benefits of PPPs by developing long-term strategies, providing the necessary incentives, ensuring flexibility and having the political will to bear costs and guarantee risks.
