Water Tech in Southeast Asia offers Strong Opportunities for Investors

Low water quality in Southeast puts people and businesses at high risk. Governments are addressing the problem with regulatory and other requirements, creating a need for large-scale rollouts and new solutions to solve the issues. While existing companies have some products, startups are going beyond simply cleaning water by offering advantages such as lower costs, ecofriendly options or higher crop yields. There are potential opportunities for early-stage investors.

Water in Southeast Asia is Dirty

Water is essential for life and jobs all across Southeast Asia, as is true everywhere. Large rivers in the region such as the Mekong as well as myriad smaller ones provide water for people and companies alike. Coastal communities rely on clean water for fishing or aquaculture, and goods move along rivers or through seas to their destinations.

However, water resources are under growing threat from industrial effluents, agricultural runoff and untreated sewage or sediments, ADB’s SEADS observed. Weak environmental governance and inadequate treatment capacity cause pollutants in rivers and groundwater, undermining natural ecosystems. And even though rivers support fisherfolk, processors, traders, transport workers, market vendors, restaurants, and households, researchers at SEARCA found that pollution is reaching habitats and food chains.

Indeed, more than 30 percent of domestic wastewater is directly discharged into rivers and lakes or canals in Vietnam, about a third of Thailand’s surface water is of poor quality, and only 7 percent of municipal wastewater in Indonesia undergoes treatment, according to Hitachi Global.

Cleaning Water is a Big Business

What’s needed to solve the problem, SEADS explained, is a combination of advanced treatment technologies, digital intelligence and sustainable collaboration. This technology can optimise results when it is targeted at specific needs, such as municipal, industrial, aquaculture or drinking water treatment. These have quite different customers, regulations, sales cycles, and economics. Moreover, natural ecosystems such as wetlands, rivers, and forests will continue deteriorating quickly without these solutions.

Fortunately, change is underway. The Southeast Asia water treatment chemicals market is seeing a structural transformation, USD Analytics said, fuelled by accelerating industrial growth and tightening environmental standards. More governments are enforcing strict water reuse and pollution control regulations, leading to bio-based and non-toxic chemical solutions in sectors such as textiles, municipal water and manufacturing. Multinational corporations such as BASF and Ecolab as well as regional leaders, and many local firms provide products to address the issues.

Given the size of the problem, though, there is room for more players in what USD Analytics calls a multi-billion-dollar market.

Startups have Solutions

While large companies such as BASF have indeed developed solutions ranging from filtration to chemicals, it is not enough. Fortunately, innovative startups and small businesses in Southeast Asia have developed solutions to address the problems.

The innovations revolve around several types of solutions.

One is new variations on using membranes to filter and cleanse the water. New technology and the usage of AI continue to make these newer solutions more effective than traditional ones.

NTI Technology in Singapore, for instance, produces advanced PVDF membranes directly for sectors ranging from water treatment and wastewater reuse to biotechnology and industrial processes. Atera Water, also in Singapore, produces two types of sustainable nanocomposite ultrafiltration membranes. One is for high-turbidity surface water applications and another works as a pressurised membrane system, delivering operational cost savings it estimates at up to 40 percent. And Venambak produces a filtration system to lower a pond’s waste load and speed up decomposition before the effluent is discharged into the environment, especially with ammonia reduction in aquaculture ponds.

Other players have chosen different types of solutions, each cleansing water in its own way.

E-Primate, for instance, uses a recirculating aquaculture system with symbiotic plants and aquatic life that it says filters water, boosts productivity and improves fish health. The flora includes cultured algae which absorbs excess chemicals and nutrients, and in other places a live macroscopic sponge colony collects microscopic sediments that improve water quality. Other locally available natural materials like lava rock and oyster shells further improve biological filtration, keeping water and fish clean without the use of chemicals.

NileBioFish in Thailand has developed a microbial inoculant that it says supports sustainable biofloc aquaculture systems and uses microorganisms to turn fishpond waste into natural protein. By reducing ammonia and nitrite levels as well as improving water quality within ponds, it helps farmers reduce feed costs, water usage and chemical inputs.

Prima Agro Tech in Indonesia said its microbials can maintain water quality by controlling pathogens, breaking down organic waste and supporting healthy aquatic animals. Its microbial blends feature 16 strains, each with a specific function that can range from nitrogen cycling to pathogen suppression, specifically selected to perform under the unique environmental conditions of Southeast Asian aquaculture.

Some of these startups are raising money from investors interested in early-stage companies. And there are others that are still so early that they are in stealth mode, offering a target for investors who can find them.

While the scale of the problem of dirty water is huge and the impact on people as well as companies is high, actions by governments and corporates in many markets across Southeast Asia are still nascent. Investors with a risk appetite for promising startups that can improve water quality and who have capabilities for due diligence that can evaluate whether the startup has a viable business model may have credible investment opportunities amidst rapidly changing markets that need to solve a severe predicament.