`Asian tigers are on the prowl for new environmental technologies By BILL BREWER Pentec Environmental "There is simply no way to really prepare oneself for your first business trip to any one or more of the Asian Tigers," says Mike McDowell, president of Pentec Environmental Inc. "It simply has to be experienced." Pentec, a 25-person, Edmonds-based environmental consulting firm, entered the international environmental marketplace about two years ago. It has completed five international projects to date: one in the Republic of Kiribati, one in the Republic of Palau and three in Canada. Indiscriminate logging and mining in Southest Asia have damaged fisheries, aquaculture and coastal tourism areas. The "Asian Tigers" McDowell refers to are the countries of Indonesia, Philippines, Singapore, Thailand, Malaysia and Brunei, so named because their economies are among the fastest growing in the world, averaging greater than 8 percent annually (though Thailand's economy is going through a monetary crisis of late that is likely to reduce the country's annual growth in 1997). "The pace of development is unprecedented, and the scope and magnitude of projects planned or presently underway is often at a scale unlike anything we have ever seen in the United States, let alone the Pacific Northwest," McDowell said, suggesting that the majority of these projects are not just fanciful dreaming, but carefully planned projects being implemented by many of the world's largest and most successful corporations. But with the fast pace of economic development and diversification have come major environmental and pollution problems -- which has created an opportunity for U.S. environmental firms. Numerous examples exist throughout the region where economic development and the revenues derived from development have superseded sound environmental management of the natural resource base. For example, indiscriminate logging and mining in upland areas throughout much of Southeast Asia and the Philippines have brought significant economic benefits to some, but have often proven detrimental to lowland activities such as fisheries, aquaculture and coastal-dependent tourism. Similarly, unregulated fishing efforts and the use of destructive fishing methods have caused serious destruction of fish habitats, coral reefs and fish stocks. Indiscriminate cutting of mangrove forests for aquaculture, fuel wood and timber, and conversion of land for industrial purposes has brought temporary gains in some sectors of the economy, but has also resulted in losses in nursery areas of commercially important fish, and shrimp stocks, coastal erosion and land accretion. Although environmental laws and regulations are in place in most Southeast Asian nations and the Philippines, regulatory staff often lack proper training and the enforcement ethic is often weak. While we expect Pacific island nations, such as the Federated States of Micronesia (FSM) and the Republic of Palau, to yield a number of challenging but generally small marine and coastal environmental projects each year, dollar-wise they pale in comparison to the environmental opportunities presented just in Indonesia. The Natuna Natural Gas Project, a joint-venture between Esso Corporation (Esso Exploration and Production Natuna Inc.) and Pertamina, Indonesia's national oil and gas company, is a good example. Located in the North and South Natuna Island archipelagoes of the South China Sea, the Natuna gas field is believed to have 222 trillion cubic feet of natural gas in reserve, 46 trillion cubic feet of which is expected to be commercially recoverable. The project will cost some $40 billion to develop and has been described as the world's largest project. Esso's Jakarta office is presently in the process of recruiting international engineering and environmental consultants to assist in the surveys, studies, environmental documentation and permitting that will be required for the project to proceed. Atlantic Richfield Berau Inc., based in Jakarta, is in the early stages of developing the rich natural gas deposits of Berau Bay, in Irian Jaya (Indonesia's easternmost province located on the western side of Papua New Guinea). The gas field encompasses an area of roughly 300 square miles of shallow reef flats and mangrove swamps. Like the Natuna project, the Berau Bay project will also be needing various types of environmental studies, impact assessments and permits. What's hot for U.S. companies? There are many specific overseas business opportunities within the environmental industry for U.S.-based companies, including: industrial process controls; waste-stream minimization; solid-waste management; waste-to-energy facilities; industrial air pollution control; industrial and domestic wastewater treatment systems; environmental monitoring, water quality equipment and instrumentation; coastal resource management; watershed and ecosystem management; environmental impact assessment. Both projects are expected to come on-line early in the next decade and will eventually provide gas or liquefied natural gas (LNG) to satisfy the energy demands of countries throughout the region and around the world. Thailand has already opted to delay plans to buy LNG from Oman over the next 25 years because of the size and development potential of the natural gas resource in its own backyard. Indonesia may also be the scene of one of the largest marine habitat restoration and management projects ever attempted. Some $40 million of funding from The World Bank and the Asian Development Bank (ADB) is anticipated to implement the Indonesia Coral Reef Rehabilitation and Management project (COREMAP). On the basis of a recent meeting we attended in Manila with the ADB project manager, the scope of work for COREMAP will entail mapping and rehabilitating degraded coral reefs, protecting intact reefs in 10 provinces throughout the nation, raising awareness of stakeholders on the importance of coral reef ecosystems, managing priority pristine reefs, establishing coral reef information systems and developing research, monitoring and regulatory enforcement capabilities nationwide. Pentec hopes to be able to use its proprietary Sea-All underwater video technology to map and document the health and viability of coral reefs on this project. During McDowell's visit to Manila and Jakarta, Pentec representatives met with several Indonesia and Philippine-based environmental consulting companies as well as officials at the Indonesian Institute of Sciences, COREMAP's executing agency, to introduce their experience, qualifications and technologies. Although the larger projects appear to garner most of the headlines, there are seemingly nearly limitless opportunities for U.S. environmental firms and technology in the region. Opportunities for U.S. environmental firms range from small marine projects in the Pacific Island nations to an estimated $40 billion plan to develop a natural gas field in Indonesia. According to a July 24, 1997, trade lead from the United States-Asia Environmental Partnership office in Jakarta, the market for environmental services and technologies is estimated at $8 billion in Indonesia alone. (The US-AEP is a five-year-old interagency project designed and led by the United States Agency for International Development). Only 20 percent of the Indonesian population is estimated to be currently served by direct water connections and about 60 percent of the country's urban population does not have access to sanitary wastewater treatment systems. About 11,000 industrial plants have recently been put on notice by the government to upgrade their solid waste and industrial effluent management practices. Jakarta's US-AEP office estimates that over 50 percent of the environmental services and technologies needed will have to be supplied from international environmental consulting companies and vendors. Seattle maintains a Sister City relationship with Surabaya, Indonesia's second largest city and a growing industrial center. That relationship can help Seattle-based companies in marketing their services and products. We found the US-AEP offices in Manila, Jakarta and Surabaya, as well as the respective commercial attaches at our U.S. embassies or consulates, offered tremendous help in both government agency and private sector appointments and local logistical coordination during our trip. The only disappointment or frustration we feel about the Southeast Asia marketplace is that there is so much going on in the region. It's hard to pass up an opportunity to submit a proposal for a project that sounds interesting, especially one that you are qualified to do. On the other hand, if you respond to every tender that looks interesting, you would never get anything done and wouldn't have time to establish the necessary business networks and personal relationships that are critical to sustain your business activity over the long term. Although it has been hard for Pentec to pass on certain projects, our first year international goals were to build relationships and corporate name recognition, mainly in the Philippines, Indonesia and a few Pacific island nations where McDowell had earlier established a successful project track record. Many companies bite off more than they can chew in marketing internationally. "We have the staff and resources to monitor, track and follow-up business leads and opportunities in just two or three targeted countries," McDowell said. "For most small companies, anything more than this and you are just fooling yourself." Accurate identification and assessment of a company's business niche is critical. Firms should concentrate their efforts on marketing their best service or best product. To assist in its recent international marketing efforts, Pentec submitted a grant application in 1996, in conjunction with the Washington District Export Council, to the National Association of State Development Agencies (NASDA), in Washington, D.C., proposing to market environmental services and technologies in the Philippines and Indonesia. In April 1997, Pentec was notified it will receive a $20,000 grant award. The NASDA program is designed to assist companies in international environmental technology transfer as well as in promoting the export of U.S. environmental services and technologies. This grant program is typically matched on a 1:1 basis with in-house funds and in-kind contributions. Pentec also targeted the ADB, a multilateral regional development bank based in Manila, for pro-active marketing because it offered a relatively low-risk entry into the Asian marketplace, a diversity of geographic settings, well conceived projects and had experience with Pentec staff on ADB-funded projects in the environmental and natural resource sectors. Funded by 20 of the world's developed nations, the ADB annually funds and co-funds approximately $5 billion of technical assistance and loan projects within about 36 developing and less-developed member nations in the Pacific and Asia. U.S. environmental expertise, technology, regulatory acumen and experience in the management of large and complex projects are strong calling cards internationally for U.S.-based environmental companies in Asia. Bill Brewer, Pentec's managing director for Asia and Pacific operations, is a 24-year veteran of the Asia-Pacific Basin. He spent most of June on a business development trip to Pohnpei (Federated States of Micronesia), Manila, Jakarta and Surabaya (Indonesia).