By Ivana Gazibara
No one can deny the pace of change in Southeast Asia: it’s one of the fastest growing economic regions in the world. But rapid growth and the rising aspirations of a growing middle class are increasing pressure on natural resources. Southeast Asia has lost 13 percent of its forests since 1992 – an area equivalent to the size of Vietnam, the United Nations Environmental Programme reports. The impacts of global deforestation on the climate will be felt close to home: the region is one of the world’s most vulnerable to climate change impacts, such as droughts, floods, typhoons, sea level rise and heat waves, notes Dr Raman Letchumanan, Head of Environment at the Association of Southeast Asian Nations.
So what’s the likelihood of a sustainable future for the region, and what will drive it? This is one of the questions that a new Futures Centre in Singapore, run by Forum for the Future, seeks to answer. The global sustainability non-profit is working actively in the region with business, civil society and government. This is not left-field stuff you’ve never heard of. Rather, these are the big picture trends that are going to be influencing policy, business practice and societal developments over the coming years.
The trends below need to be understood and addressed – not just as separate issues, but in tandem – if Southeast Asia is to fulfill the promise of the ‘Asian Century’ of growth and prosperity, and prove resilient in the long term.
“The Singapore haze has highlighted to people that this is a really big issue, and not just something affecting orangutans in the bush,” says Scott Poynton, Executive Director of The Forest Trust. “In Sumatra and Kalimantan it’s affecting day-to-day health, catalyzing people to take a serious look at what’s happening out there with natural resources and say, ‘Hold on a minute, this is not sustainable’.”
This is certainly not the first time Singapore has experienced the dreaded haze. In fact, it is becoming a regular fixture above the city, which is exactly what is provoking the strong public response. The proliferation of digital air pollution monitoring platforms is another factor, allowing members of the public to identify correlations between a company’s operations and their own quality of life. As Anna Lyons, Programme Manager of Fauna & Flora International’s Business and Biodiversity team, says, “The use of real-time monitoring is a very powerful tool. The names of some of the companies that we work with came up during the haze, and three out of the four responded, because they could see the reputational risks.”
One sector bearing the brunt of criticism from consumers is ‘dirty’ palm oil. As Lim Biow Chan, President of the Consumers Association of Singapore puts it: “If we can signal strongly to the companies that buy palm oil [to manufacture their] products that we are extremely unhappy, and [that] they are risking the wrath of consumers, then they can signal [this] to the palm oil companies.”
In Singapore, much of the root cause of the haze can be traced right back ‘home’. Many plantations in Sumatra are actually owned by Singaporean companies – something which was pointed out by Indonesia, when Singapore sought to lay the blame at its door. The Minister for Environment and Water Resources, Vivian Balakrishnan, has called (via his Facebook page) for the companies responsible for the fires to be named and shamed, in the hope of provoking a consumer boycott. The haze could also begin to put off investors, which will no doubt ratchet up the pressure on business to act.
Elsewhere in the region, countries are competing to become automotive production hubs – but with a twist. Thailand manufactured more than 2 million vehicles in 2012, a record figure for its automotive industry. Part of this increase has been prompted by the adoption of the eco-car scheme in 2009, which promotes the manufacture of low-carbon vehicles through tax incentives and other measures. The scheme also sets production parameters aimed at reducing energy consumption, both to reduce emissions and to lessen the country’s dependence on imported oil. Phase II of the scheme started this year, with all new phase II eco-cars set to meet the Euro 5 environmental standard of releasing less than 100g of CO2 per 100km.
Indonesia is now following in Thailand’s footsteps by offering incentives for the production of small, fuel-efficient cars. According to IHS Automotive, these cars could account for 35 percent of the 1.8 million passenger vehicles expected to be sold in the country by 2020. And Laos has declared itself the ‘battery of Asia’ because of its high levels of clean electricity production from hydropower; it is now aiming to convert 40 percent of its local four-wheelers, tricycles and motorcycles to electric vehicles (EVs). Last but not least, Malaysia’s National Automotive Policy is promoting hybrids and EVs, and the development of related infrastructure. Could a combination of policy to reduce congestion and investment in low-emissions vehicles make Southeast Asia a global leader in the next generation of urban transport?
According to a recently published report by the Building Services Research and Information Association (BSRIA), the Asian smart building market alone will grow from the current size of U.S. $427 billion to U.S. $1,036 billion in 2020, creating vast opportunities for advanced building technologies and services.
Mark Wong, Head of Sustainability Reporting and Carbon, Sime Darby, says that the company has started to look into green buildings – “to see if this could be a big driver for consumer demand in future. We have developed a test bed: what does sustainable design look like given the tropical climate we live in? At what point will technologies become commercially feasible?”
In fact, Singapore is already billing itself as an "iconic smart city," despite some criticism about how much progress has really been made towards this goal. It has teamed up with energy company EDF on an urban modeling project that will allow it to develop, trial and commercialize innovative solutions in the city – particularly in terms of growing the clean technology and urban sustainability sectors. Its four year old University of Technology and Design aims to attract a new global elite to study architecture, sustainable design and systems engineering. Just across the border, Malaysia is engaging in a bit of friendly competition by developing Iskandar, a sort of "eco megacity."
Densely populated cities run particularly risks. In its Climate Change Vulnerability Index 2013, Maplecroft identified Manila, Bangkok, Yangon, Jakarta and Ho Chi Minh City at the top of its list. This takes into account concerns such as exposure to climate related natural hazards, resource constraints, agricultural dependency, government effectiveness and education levels.
Key industries are also under threat. Global warming is likely to cause the rice yield potential to decline by up to 50 percent on average by 2100 compared with 1990, and jeopardize critical export industries in the region. In Malaysia alone, for every one degree increase in temperature, palm oil revenue decreases by an average of 42.6 Malaysian ringgits [U.S. $13.2] per hectare in key producing regions. And in countries like Myanmar (Burma), which are economically underdeveloped, climate change could hinder government efforts to alleviate poverty.
A massive part of the challenge here is that most of the region is unprepared to cope with the impacts heading its way, which calls into question its optimistic projections for growth and development. Will it be able to both adapt and mitigate impacts effectively going forward?
There is some indication that consumers are beginning to look for more sustainable options, however. Some of this is a response to health and safety concerns. High consumer demand for natural cosmetics, for example, is leading many Asian companies to jump on the natural and organic bandwagon.
According to German cosmetics giant Beiersdorf, natural ingredients are very well perceived in countries like Vietnam. There has also been a developing trend for "authentic" products in places like Thailand, drawing on ancient Thai cosmetics that consisted mainly of extracts from various tropical flowers. In Thailand more broadly, the number of green consumers has been increasing over the past two decades, with a focus on things like energy saving, environmental goods purchasing, cycling, green labeling, and organic agriculture. And Filipinos report concerns about issues such as carbon emissions, environmentally friendly packaging, waste disposal and energy consumption.
Demand for organic rice is also on the rise, especially in the Philippines, Malaysia and Singapore. “People are aware of the environment,” says Yang Saing Koma, the President of the Cambodian Centre for Study and Development in Agriculture. And, at the end of 2011, the Hongkong and Shanghai Hotels Group announced a global ban across the company on serving shark fin – another sign of changing attitudes. “This was well received by guests. People wrote to say they are fully supportive of this act,” says Natalie Chan, Senior Manager of Corporate Responsibility & Sustainability for the Group.
Policy is helping shift behavior too. In Thailand, the Government has had a green procurement policy since 2008. More recently, the local government in a suburb of Manila banned plastic bags in shops, forcing people to switch to brown paper bags.
There is still some way to go in terms of the culture and behavior change around energy use as well. Commercial buildings are, on the whole, wasteful, and the practice of energy efficient design in the built environment is just beginning. A general lack of awareness about the potential and value of energy efficiency predominates. “People don’t like ceiling fans. They are associated with being poor whereas aircon is associated with being rich,” explains Hein Oomen, a futurist and clean energy professional based in the Philippines.
Water is also a significant concern. In order to reduce its dependence on Malaysia, Singapore has invested significantly in rainwater harvesting. Its recycled water tariff is also lower than its freshwater tariff in order to encourage water recycling, and recycled water now makes up some 15 percent of all water use in the city. Other countries are finding their core industries challenged by water constraints. Agriculture sucks up a grand total of 70 percent of Thailand’s total water supply (it is the world’s largest rice exporter), making for significant risk exposure in a country already grappling with drought issues. There is huge potential for improving the efficiency of resource use across the region. For example, the smart water meter market in Asia Pacific should grow substantially over the next five years, driven by the nexus between growing demand and dwindling supply.
Food security is also a growing problem. Southeast Asia is known for its food exports, with countries like Indonesia and Thailand regularly featuring among the world’s top food exporting nations. However, in 2008, the region experienced a sharp turnaround in rice production, with countries like Indonesia, Thailand and Vietnam calling a halt to their rice exports, and the Philippines frantically seeking to secure supply from those still selling.
As with many other resources, Singapore is almost entirely reliant on imports for its food supply. It is therefore no wonder that it’s been exploring opportunities like vertical farming and encouraging key players such as Syngenta and Bayer CropScience to develop ‘elite’ crop varieties for the region. As climate change hits harder and resources like water become scarcer, the region will have to think about the security of food supply much more actively.
The opportunities to correct the situation are tremendous. As Johannes Loh, Research Associate at the Asian Trends Monitoring Bulletin, points out, in Malaysia, 75 percent of the population is still unbanked and could benefit hugely from an expansion in financial service provision, particularly through microfinance and mobile finance. Low quality of schooling, as well as vocational training for young people in rapidly overpopulating urban centers, exacerbates the problem. And those who fall can fall pretty far, because many of the countries in the region lack comprehensive social protection nets. As The World Economic Forum on East Asia pointed out, issues such as inequality – unless addressed – will hold back the region’s potential in the future.
Ivana Gazibara is Head of Southeast Asia at Forum for the Future.
Photo credit: iStockphoto/Thinkstock, iStockphoto/Thinkstock, CEDAC