Singapore Leverages Its Liquid Smarts

"Our know-how in water is from our drive to be self-sufficient"

Singaporeans splash their way through average annual rainfall of 93 inches, three times as much as Londoners. Yet even all that rain doesn't meet the water needs of the tropical city-state, which has virtually no lakes, rivers, or other sources of fresh water and relies on its neighbor (and occasional adversary) Malaysia for supplies. When Singapore split from the Malay Federation in 1965, founding father Lee Kuan Yew set self-sufficiency in water as a national goal. The country has since cut water imports to 50% (from 80%) of its total needs by recycling waste and building desalination plants.

Now, the local companies that have led that effort are winning billions of dollars' worth of contracts to build water treatment facilities worldwide—and mounting a vigorous challenge to global giants such as General Electric (GE), France's Veolia and Suez, and Thames Water from Britain. "A lot of our know-how in water technology is from our drive to be self-sufficient," says Beh Swan Gin, chief of the Singapore Economic Development Board, a government agency.

The global market for water treatment technology could more than triple, to $1.4 trillion, in the next decade, researchers Frost & Sullivan predict. Already more than 800 million people worldwide lack clean water. As China, India, and other developing countries grow wealthier, they'll need ever more water to keep factories humming and consumers from going thirsty. Selling water treatment technology for warmer climes, where much of the world's economic growth is likely to take place in coming decades, "is an area where [the Singaporeans] can have a major impact," says David Garman, president of the London-based International Water Assn., an industry group.

The government is investing $240 million in water research over the five years ending in 2012, helping to woo global water companies. Tokyo-based Toray Industries, a specialist in filtration, last year set up a facility with a local university. Siemens (SI) has received some $15 million in grants for a Singapore lab that will be the company's biggest water research facility within two years. GE last year opened a water lab in the city, and by 2011 it expects to double the number of scientists there, to 70.

The growing expertise has helped local companies win more than 100 water-related contracts abroad, valued at some $5.6 billion, since 2007. Government-controlled Sembcorp is building a $1.7 billion desalination facility in the United Arab Emirates, a $1 billion desalination plant in Oman, and several projects in China. Keppel, also partly state-owned, will finish a $1.1 billion water treatment plant in Qatar next year. And privately held Hyflux outbid GE and others on a $468 million contract to build the world's biggest filtration-based desalination plant, in Algeria. "Singapore companies are relative newcomers," says Frost & Sullivan analyst Melvin Leong. But they're giving bigger rivals "a run for their money."

The bottom line: Singapore's expertise in treating water has wooed researchers and is helping build an important new export industry.

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