Thye Kim Meng, CEO
TAIWAN’S S$181 billion-plan (NT$3.99 trillion) for 12 large-scale infrastructure projects is auguring a strong deal flow for Darco Water, its CEO, Mr Thye Kim Meng, told NextInsight last week.
Taiwan is a strong market for Darco Water, which reaped half of its S$88-million FY07 revenues from that country. The other half comes from Singapore, Malaysia, China, Indonesia and the Philippines.
The company, which was Singapore’s first water treatment company to make a foray into Taiwan, generated revenues of S$51 million for 1H08 and expects to post its FY08 results on 27 Feb.
Numerous nations have announced economic stimulus packages so what is so special about Taiwan?
2008 saw the dawn of a new political era for Taiwan with the inauguration in May of a new President who is supportive of strong Taiwanese relations with China.
Darco Water's waste recycling faciltiy in Taiwan. Photo by Rachel Ho
He is different from former President Chen Shui-bian, who was indicted in December 2008 for forgery, money laundering and misuse of public funds, and was widely touted by Taiwanese media to have obstructed Taiwan’s economic progress by his pro-independent policies.
Postal, transportation (direct flights and shipping routes for passenger and cargo) and trade (interbank transactions) links between mainland China and Taiwan were officially implemented on 15 Dec 2008.
Robust cross strait relations is widely expected to be a lifeline to Taiwan economically, especially now that its ruling political party controls majority vote.
Pent-up infrastructure demand
Waste recycling bins are a common sight at the foot of condominum blocks in large Taiwanese cities.
Mr Thye is very excited that Darco is now in a sweet spot to meet infrastructure demand that has been pent-up during Chen Shui-bian’s Presidential terms from 2000 to 2008.
Neglect of public infrastructure development has taken its toll. Taiwan’s non-hazardous industrial waste amounts to 12 million tons a year and over 40% of its rivers are polluted by industrial and municipal wastewater.
To address Taiwan’s under-developed sewer connection system, now averaging only at 25%-30% of households, the government is budgeting S$5 billion for 28 wastewater treatment plants to be built over 8 years.
Other than municipal governments, Darco also engineers and maintains water and waste treatment systems for clients from diverse industries ranging from semi-conductor, electronics, PCB, to F&B, textiles and pharmaceuticals.
Darco's projects in Taiwan currently revolve largely around municipal projects, but the strong infrastructural focus of Taiwan’s NT$3.99 trillion stimulus package opens up many opportunities for Darco to secure a wider industrial client base.
Some government initiatives that will begin this year include improvements to the transport network, building an International Aviation City in Taoyuan and developing a Free Trade Zone and Eco-port in Kaoshiung.
Last year, Darco invested S$3.6 million in a BOO (build-own-operate) waste treatment facility to recycle Taoyuan County’s industrial and domestic waste and garbage.
Recycling is a big thing in Taiwan, where segregation of waste into recycling bins is a way of life with householders. That’s how the Taoyuan County government is able to guarantee delivery of at least 50,000 kg of waste to the Darco waste recycling facility every day.
Actual capacity is at 100,000 kg of solid waste, recyclable into 13 systematic categories: paper; ferrous iron; aluminum; glass; plastics; dry cell batteries; lead acid batteries; tyres & rubber; electrical appliances; computer parts & mobile phones; lamps and bulbs; media discs; fabrics & garments.
Commencing on 1 June 2008 with the contract renewable after 6 years, Darco expects to accrue revenues of S$6 million a year for this.
Even more exciting is the fact that Taoyuan is the first Taiwanese county to collaborate with private waste recycling companies, implying opportunities to replicate the BOO project on the island's 22 other counties.
Healing soil on redevelopment sites
Even at Taiwanese streets famed for their mouth watering eats, visitors will be hard pressed when in need of a public rubbish bin for disposing of their snack carriers. Photo by Sim Kih
Yet another piece of evidence that points to Darco’s Taiwanese success is the sharp increase in demand for soil remediation solutions.
Soil contamination on industrial sites directly pollutes natural water sources in underground rock strata, and Darco’s environmental remediation solutions removes contaminants from brownfield sites intended for redevelopment.
Darco secured a S$8.4-million soil remediation project to be delivered over FY08-09 to Taiwan-listed civil engineering contractor, BES Engineering.
Winning the contract was no easy feat in the face of international competition, but Darco showed its ability to simultaneously manage health, legal and financial risks.
The company will treat a BES Engineering site that has been contaminated with mercury in the Miaoli County.
Taiwan’s Environmental Protection Agency now requires companies to eliminate waste materials before vacating a site and Darco has already identified over 1,000 sites that will require its soil remediation solutions.
The company can also treat contaminants such as petroleum, heavy metal and pesticide.
Also in the pipeline is Darco’s plan to invest S$4.7 million to acquire an existing toxic waste recycling business. The investment sum includes upgrade of facilities to eventually process 3,600 tons annually plus the purchase of 8 trucks specially constructed to collect and dispose of toxic waste at a third-party treatment facility.
"Our soil remediation or retrofitting and upgrade services are required when factories close down or when 4 to 5 facilities are streamlined into 2 to 3”, concludes Mr Thye, somewhat morbidly in the light of the global economic crisis.
