Evolving Business Models for Water Utilities in Southeast Asia

Four Essential Steps at the Backbone of Decentralization and Privatization will Enable Water Business Sustainability

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In Southeast Asia (SEA), 5 major challenges are identified in water utility sectors, comprising environmental and social challenges, high percentage of non-revenue water (NRW), underdeveloped water utility infrastructure, growing expenditure on water utility, and lack of investments. The new forecast for water utilities’ capital expenditure (CAPEX) in 2016 touches nearly $6.50 billion. The construction of new water facilities and the rehabilitation of existing water infrastructure remain steadfast in this region.

Water utilities operation expenditure (OPEX) is re-forecast to slightly above $4.50 billion in 2016. As the general economic sentiments remain volatile, expenditure is more likely to be lean as water utilities undertake cost cutting measures on non-critical treatment overheads (energy and labor).

This study discusses the 5 main challenges as mentioned above. One of the major issues affecting water utilities in the SEA developing countries is the high percentage of non-revenue water (NRW). Old business models in water utilities are largely based on revenue collection from customers, stormwater management, and management of water facilities, including capacity expansion.

With all these impactful challenges, water utilities need to change their operations and business approach by creating value-add initiatives that promote customer satisfaction, management efficiency, resource sustainability, and betterment of the environment. The following enablers support changing business models:
•     Entrance of foreign experts
•     Privatization of the water market
•     Leveraging new technologies
•     Cost efficiency measures
•     Decentralizing water utility management

This study also discusses 4 key areas that are essential for the transition to new business models in the near future. Firstly, future reform through partnerships will focus on the reconstitution of water utilities and some level of divestiture of water utilities by governing authorities. Next, water utilities need to view leakage control as a major element for corporate strategy that involves human resources development and management procedure improvement. Thirdly, smart water grids need to be implemented to improve distribution services, customer service and management, revenue management, and overall treatment efficiency. Last, but not least, water utilities need to reduce operations cost in electricity consumption through energy recovery and water reuse, and generate additional revenue through solids recovery.

This study focuses on key SEA water industry in Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Two case studies involving PBA Holdings Berhad (Malaysia) and Manila Water Company (The Philippines) are also presented.


Water utilities operation expenditure (OPEX) in SEA is reforecast to account slightly above $4.50 billion in 2016. As the general economic sentiments remain volatile, expenditure is more likely to be lean as water utilities undertake cost cutting measures on non-critical treatment overheads (energy and labor).

This study discusses five main challenges as mentioned above. One of the major issues affecting water utilities in the Southeast Asian developing countries is the high percentage of non-revenue water (NRW). Old business models in water utilities are largely based on revenue collection from customers, stormwater management, and management of water facilities, including capacity expansion. 

With all these impactful challenges, water utilities need to change the operations and business approaches by creating value-add initiatives that promote customer satisfaction, management efficiency, resource sustainability, and environmental betterment. Enablers that support changing business models:

  • Entrance of foreign experts
  • Privatization of water market
  • Leveraging new technologies
  • Cost efficiency measures
  • Decentralizing water utility management

This study also discusses four key areas that are essential for the transition to new business models in the near future. Firstly, future reform through partnerships will focus on reconstitution of water utilities and some level of divestiture of water utilities by governing authorities. Next, water utilities need to view leakage control as a major element for corporate strategy that involves human resources development and management procedure improvement. Thirdly, smart water grid needs to be implemented to improve distribution services, customer service and management, revenue management, and overall treatment efficiency. Last but not least, water utilities need to reduce operations cost in electricity consumption via energy recovery and water reuse, and generate additional revenue via solids recovery.

This study largely focuses on key SEA water industry in Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Two case studies involving PBA Holdings Berhad (Malaysia) and Manila Water Company (The Philippines) are also presented.

Table of Contents

Evolving Business Models for Water Utilities in Southeast AsiaExecutive SummaryKey FindingsFour Essential Steps that Drive Business Model ChangeOverview of the SEA Water Utility MarketKey FindingsOverview of the SEA Water Utility MarketOverview of the SEA Water Utility Market (continued) Overview of the SEA Water Utility Market (continued) Possible Upcoming Business OpportunitiesMajor Challenges in the SEA Water Utility MarketKey FindingsVisualization of Challenges Faced by SEA Water UtilitiesEnvironmental and Social ChallengesHigh Percentage of Non-Revenue WaterUnderdeveloped InfrastructureGrowing Expenditure by Water UtilitiesInsufficient National InvestmentsChange of Implementation of Business Model in Water Utility MarketKey FindingsReasons for Change of Business ModelEntrance of Foreign ExpertsPrivatization of Water MarketLeveraging New TechnologiesCost Efficiency MeasuresDecentralizing ManagementGrowth Opportunities and Companies to ActionKey FindingsTransformation in Water Utility Ecosystem—2017Framework for Evolving Business ModelsGrowth Opportunity 1—PPPs of the FutureGrowth Opportunity 1—PPPs of the Future (continued)Growth Opportunity 2—NRW and Leakage Control Growth Opportunity 2—NRW and Leakage Control (continued)Growth Opportunity 3—Smart Water Solutions Growth Opportunity 3—Smart Water Solutions (continued)Growth Opportunity 4—Waste to Value Growth Opportunity 4—Waste to Value (continued)Case StudiesCase Study—PBA Holdings BerhadCase Study—PBA Holdings Berhad (continued)Case Study—PBA Holdings Berhad (continued)Case Study—Manila Water CompanyCase Study—Manila Water Company (continued)Case Study—Manila Water Company (continued)The Last WordStrategic Imperatives for Success and Growth Legal DisclaimerAppendixDefinitionsThe Frost & Sullivan StoryThe Frost & Sullivan StoryValue Proposition: Future of Your Company & CareerGlobal PerspectiveIndustry Convergence360º Research PerspectiveImplementation ExcellenceOur Blue Ocean Strategy




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