Abundant Infrastructure Opportunities in Asia
Another day, another business trip. You finally land after the long flight, pick up your bags from the airport, get a taxi to the hotel, and then do your best to relax and get over the jet lag before tomorrow’s meeting. But how relaxed you feel is probably dependent on the experience you have just had. And your trip is likely to be colored by a first few impressions.
Was the airport a welcome sight or somewhere you could not wait to get out of? Quick luggage pick-up or a frustrating wait by the carousel?
In most of the so-called developed world, or the West, there are certain things taken for granted and which make daily life bearable: being able to move around efficiently and safely; access to clean, fresh water; a safe food supply; a reliable source of electric power; quick and easy communications.
But unfortunately, that’s not the case everywhere, and Asia is one such place. Increasing urbanization, economic growth, and many years of public sector neglect mean that countries in the region need to spend US$700 billion per year to develop and expand their infrastructure, according to Michael Carapiet, executive director and of Macquarie Capital Advisers, speaking at the December 2007 Asian Infrastructure Conference held in Singapore.
This call is echoed by august bodies such as the UN, which goes as far as to say that the long term development of the Asia Pacific region is being threatened by a lack of investment in infrastructure. And a study co-authored by the Asian Development Bank (ADB) cautions that for countries in Asia to maintain their growth trend requires keeping up with the demands of companies that need energy, reliable transportation links, and other services.
Indeed, in this globalizing world, there is a strong link between the strength of a country’s infrastructure and its economic growth potential. As companies mull over foreign direct investment (FDI) options, infrastructure elements come into play.
So while a country may look attractive on paper in terms of workers’ wages, these advantages can be quickly negated by other factors such as high landed logistics costs, an unreliable power supply (that can disrupt sensitive manufacturing processes), and even the difficulty of attracting staff to live and work in a less than comfortable environment.
The good news for automation suppliers is that the glaring infrastructure gap in Asia represents a ready source of business opportunities, as countries in the region invest in new facilities to support their manufacturing sectors and to provide a better quality of life to more affluent citizenry.
“Citect in Asia sees a high demand from customers involved in infrastructure projects such as power distribution, water treatment, airport and facilities Management, and pipeline distribution systems for oil & gas,” says Scott Druery, Southeast Asia head for the Australian automation software supplier, now part of Schneider Electric.
“Apart from the large quantity and necessity for high speed sampling of data points monitored and controlled in these SCADA applications, we are seeing the increased importance of reporting, data accuracy and timeliness to present this information to key users and management.
“Business managers now require access to accurate information in real-time, to speed up decision making, and to act in the best interest of their customers and businesses. If automation can help in that regard, it makes sound business sense to invest in technology,” affirms Druery.
With surging passenger traffic and cargo levels over the last four years highlighting the inadequacies of its airport sector, an aggressive modernization and expansion program is underway in India. The airports of the key cities of Delhi, Mumbai, Kolkata and Chennai are all targeted, and in addition, some 35 new non-metro airports are being built.
In fact, according to Iata, the air transport association, airports in Asia need to continue planning and investing in additional capacity to keep pace with expected traffic growth (300 million passengers over the next five years) and ensure that the capacity is efficiently utilized. China is one country taking heed, recently revealing plans to build an eye-popping 97 new airports by 2020.
For Citect, the airport building and modernization boom spells clear opportunities. “The high speed, high volume of real-time data demanded in airports lends requires automation systems such as distributed PLCs and SCADA. As the volume of travelers increase and the region continues to prosper, these types of projects will continue to expand to meet demand.
“Cities with older airports with dated systems may miss out on the volume of travelers as people prefer modern, updated facilities with efficient handling systems,” Scott Druery tells CE Asia.
As Asian countries move far beyond exporting basic agriculture and commodities and become linked into inter-dependent and global supply chains, there is a consequent raising of the bar on the necessary quality of logistics infrastructure.
“Manufacturing firms, especially those integrated into global production chains, seek not only low transport costs but also a host of sophisticated logistical needs: short transit times, reliable delivery schedules, careful handling of goods in cold storage chains, certification of product quality, and security from theft,” said the World Bank in a study highlighting the shortfalls in Asia’s logistics progress, which it notes has “failed to keep pace with the growth in trade”.
Singapore is one country in the region that has made strident efforts to achieve a top-notch logistics infrastructure, and touts this as part of its efforts to induce more foreign players to come and invest. Significant automation investments have been made boost the efficiency of its air cargo complex and its shipping port and ensure attractively low turnaround times. Or to put it more simply, to make it easy and quick to get in and out.
“We use Singapore as our shipping hub. The airport, customs, and logistics aspect is very important to us because the material we manufacture throughout Asia comes through Singapore. Broadcom needs a very good logistics base and Singapore has the best of any countries in Asia,” said Rick Hodgman, Broadcom’s managing director for Asian Operations, when speaking about the decision to base the semiconductor manufacturer’s Asia HQ in the country.
And in addition to ongoing investments in a comprehensive subway system– now including driverless trains – Singapore was the first country in the world to introduce electronic road pricing (ERP) as a means of managing road traffic levels, which are little short of chaotic in many Asian capitals. Every licensed car is equipped with an RFID-based cash card system, which is “read” each time the vehicle passes under an overhead gantry and a value deducted based on the time of day.
Having, in effect, an RFID sensor in each car, has allowed other automation applications to spring up. Most major car parks now cleverly leverage the ERP system, with RFID readers at entrance and exits calculating to-the-minute duration for consequent payment deduction and barrier control.
For many other countries in the region, it’s a question of ensuring that manufacturing investment potential is not derailed by inadequate logistics. For example, often touted as the “China of Southeast Asia”, Vietnam is ramping up infrastructure to ensure its nascent growth is sustained.
“Vietnam needs modern highways to help remove the country’s transportation bottlenecks, accelerate economic growth and ultimately expand economic opportunities for Vietnamese families,” said John Cooney, ADB infrastructure director, during a December 2007 announcement of US$1.1 billion four-lane highway that will link Hanoi and Kunming in southern China and is the bank’s single largest ever loan project.
“We are pleased to have been selected for so many projects that are important to meeting the infrastructure needs of this region,” Andy Wang, vice president, Asia Pacific, for Emerson Process Management’s Power & Water Solutions division told CE Asia.
Examples of power system projects the company has been involved in around the region include: Pagbilao Power Plant, Quezon, the Philippines; Amarkantak Power Plant, Chhattisgarh, India; Ratchaburi Power Plant, Thailand; and Haiphong Power Plant, Haiphong Province, Vietnam.
“In Asia and around the world, Emerson has experienced first hand how power generators are increasingly adopting a digital bus-based approach for new construction,” said Wang. “It is rewarding to see this new generation of power plants deploying technologies that will have a positive impact on their operations not just initially, but over their entire service life.
“At these smart, highly automated digital plants our PlantWeb architecture with the Ovation control system creates a network of predictive intelligence that detects problems even before they occur, enabling power generators to avoid unplanned outages and optimize daily operations.”
With the capability to deliver both power systems and automation technology, ABB is another company seeing healthy returns from Asian infrastructure projects.
“Going forward, the key drivers of market growth will include the strong investments in the power sector to cope with growing demand, and higher penetration of automation in utilities to address cost pressures and improve quality of output,” says James Foo, president and country manager, ABB Singapore.
India, often tagged with the “poor infrastructure” label, is touting12” may be more preferred goals.
For its activities in the power sector, Citect provides the example of a just completed project for PT Indonesia Power in which CitectSCADA centralizes control for nine hydro-power plants scattered across central Java to one location.
“Through its 130 power plants, with a total capacity of 8,872 MW, PT Indonesia Power has contributed significantly to the Java Bali interconnection system electricity supply,” says Southeast Asia chief Scott Druery.
He also notes, “Anywhere we live in Southeast Asia, where it’s hot and humid, we require power for lighting and air-conditioning, good clean drinking water, and fuels for energy. We need to invest in infrastructure to sustain life as we know it.”