Ranked one of the fastest growing regions in the world, Southeast Asia is home to an unprecedented amount of new, large installations, holding great potential for many security players.
Ranked one of the fastest growing regions in the world, Southeast Asia is home to an unprecedented amount of new, large installations, holding great potential for many security players. A&S had the pleasure to meet and speak to a number of major players in the region in the past few months to find out what has been moving the electronic security industry in Southeast Asia. This report is a summary of our latest findings.
Market Overview
Southeast Asia (SEA) refers to the 11 countries situated south of China, east of India and north of Australia, including Brunei,Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, East Timor and Vietnam. When combined with other countries in the Asia-Pacific region, they generated a sales record- - for sur vei l lance products aloneof US$1.6 billion in 2006, based on the estimate by Steven Tan, General Manager of Security Electronics Division at Chemcoa fairly active regional distributor of high-end elec t ronic secur i ty products.
All of these SEA nat ions have been growing quite rapidly in recent years, with the exception of East Timorgiven its socio-political unrest. And this market expansion phenomenon was confirmed by Bosch: ¨Aside from China and India, ASEAN (the Association of Southeast Asian Nations) as a cluster is one of the most promising areaswith the highest growth rate for us worldwide,〃 said Doris Grammer, Vice President of Asia Pacific for Bosch Security Systems.
Take Vietnam for example. The country, according to the U.S. Commercial Service, had an estimated market sizefor safety and security equipmentof $90 million in 2006, with its annual GDP growth surpassing 8 percent for the past couple of years. ¨With many Taiwanese and Korean companies setting up their factories in Vietnam, the countryˇs security market has experienced 7x growth over the last two years,〃 said Daniel Lim, Senior Manager of Product Marketing, CCTV & Access Control, Bosch Security Systems Asia Pacific. Primary sales of safety and security equipment have occurred in the Vietnamese construction market, where development of transportation (roads, bridges and airports), power (thermal and hydro), oil and gas (plants and pipelines), environment (water drainage) and bui ldings (hotels and commercial sites) has outpaced other types of development projects.
Competition is intense, though, as major suppliers include those from Japan, England, Korea, Malaysia, S ingapore, China and Ta iwan. Panasonic just entered into Vietnam this year, and its estimate for the surveillance market is $15 million. ¨Thriving vertical markets include town centers, factories, airports, banks, casinos and transportation,〃 shared Koji Yamada, General Manager, Professional Systems Division, Panasonic Systems Asia Pacific. ¨Although red tape is not as challenging as in China, logistics is still somewhat problematic as major infrastructure is not fully in place.〃
For Axis, business in Vietnam is based on a large number of smaller orders. ¨IP-based surveillance in Vietnam is growing at 40 to 60 percent per year,〃 said Oh Tee Lee, Regional Director, South Asia Pacific, Axis Communications, ¨and government is the largest user and is quite strict when checking for each productˇs country of origin.〃 In bidding, users can stipulate that suppliers must have been involved in certain types of projects or projects of certain sizes. American IT channel players, such as Ingram Micro, FTP and CMP, are quite active in the countryˇs security business.
Other countries like Indonesia and the Philippinesaccording to another U.S. Commercial Service reportthat were in a more or less financially lackadaisical state have also bounced back, growing at triple digits every two years with respect to use of security paraphernalia. Although the Philippine market has become more price-conscious in recent years, demand for safety and secur ity products is expected to surge due to the growing need to protect commercial and industrial establishments, residential communities, sensitive infrastructure (such as airports and seaports) and personal properties, said Tan.
New secur ity-related technologies and solutions continue to be introduced to the local market as there is growing interest in their var ied and special ized appl ications. Meanwhile, the Philippine government ˇs current campaign against terrorism and criminality has s t res sed the impor tance of such security provisions. Industry estimates peg the safety and security market to be between $35 to $50 million, and industry players project a 10- to 15-percent annual increase in sales of safety and security products over the next few years.
Zoom in on Singapore
With merely a population of 4.55 million and a land mass of 682.7 square kilometers, Singapore had experienced, in 2006, an astonishing GDP growth rate of 7.4 percent unproportionate to its rather limited natural resources. With respect to security electronics, most studies and interviewees pointed out that Singapore has reached a cer tain point of maturity and saturation, so it was difficult to pinpoint an exact market size figure. Recent security projec ts have all been upgrade and refurbishment ones, with an estimated annual value of $80 to $100 million. There are, however, a few new construction projects on the way, with a total infrastructure cost in billions.
Market Drivers and New Projects
The most exciting security projects are, of course, the two integrated resorts where there will bewhen completed in 2009 and 2010, respectively purpose-built casinos, theme parks, apartment complexes and commercial establishments to boost tourism. The first was awarded in May 2006 to Las Vegasˇ Sands Corporation; the $3.6-billion casino resort is expected to be operating by July 2009. Analysts said the Marina Bay project would be the worldˇs most expensive casino resort, situated on 51 acres of waterfront property oppos i te downtown Singapore that city planners are turning into a new central business district. Sands will receive a 30-year concession to operate the casino (Sands Marinas), which translates to approximately $3.4 billion a year in revenue.
Bidding system integrators on Sands Marina include Tyco, Bosch (acquired local system integrator ADC Technologies in 2005), Certis CISCO, Singapore Technologies and National Computer Singapore, said David Lung, Sales and Marketing Manager at AVT. The final winner will be announced some time in the first half of next year.
¨Education is our most important vertical in Singapore,〃 said Graham Wheeler, Regional Manager of Mobotix APAC. For example, Republic Polytechnic of Singapore has incorporated more than 800 Mobotix network cameras into its surveillance system, and it is expected that more than 1,300 cameras will be in place by the time the project is fully completed. According to Lim of Bosch, banking, petrochemical, pharmaceutical, high-tech semiconductor foundries and high-profile military sites are other booming market segments.
The expansion plans of ExxonMobil, Shell and other chemical and energy plants on Jurong Island are also vied over by many international system integrators. When asked about Singaporeˇs role as a ¨Biopolis〃 in Asia, Co-Chairman of the Economic Development Board Philip Yeo commented: ¨ The breadth and depth of the biomedical sciences manufacturing activities is testimony of Singaporeˇstrack record in high value-added manufacturing, technology leader ship and intellectual property protection. It also under scores our ability to effectively support the supply of pharmaceutical products to global markets through good infrastructure, excellent manpower capabilities and efficient logistics.〃 With a number of world-class research institutes busy setting up divisions and labs on this island nation, it is anyoneˇ s guess as to how much security, especially access control, is worth in this rapidly growing vertical.
Major Players
Local manufacturers seem to focus only on access control products, and the notable ones are ADC Technologies, ASIS Technologies and Elid. Video surveillance products are imported from Taiwan, China, Korea, the U.S. and a few European states. Despite its size, Singapore has well over 1,000 active security distributors and system integrators. International big names, such as Bosch, Tyco, Chubb (UTC Fire & Security), Stanley Works, Securitas, Johnson Controls, Siemens Building Technologies and so on, are no exception. Not limited by the relatively small domestic market, local system integrators Singapore Technologies, Cer tis CISCO and Ademco (a Rentokil Initial company) are actively reaching out to other countries in the region and in the Middle East, added Charles Loh, Managing Director of Security Consulting for Certis CISCO.
Malaysia, Truly Asia
Though Malaysia has not experi-enced the terrorist attacks that have plagued neighboring Indonesia, nor the ethnic unrest that is occurring across their border in southern Thailand, the country ˇs location along the Malacca Strait and in the South China Sea exposes it to several potential threats, as evidenced by pirate activity and the 2000 kidnappings off of Eastern Malaysiaˇs coast by Philippine terrorists. Combined with Malaysiansˇ increasing desire to install security systems in their homes and offices, the outlook of the safety and security industry in Malaysia remains resilient.
Recuperating from its political disquiet almost two years ago, the Badawi administration is finally injecting funds back into infrastructural projects, of which security is a vital elementconsidering Malaysiaˇ s sensitive religious makeup and geographical stronghold. It was estimated, by Chemcoˇs Tan and Prisma Bytesˇ CEO Shaji N.M., that the 2007 security market for Malaysia is approximately $250 million.
Market Drivers and New Projects
The Malaysian government has also been promoting tourism (hence the section title), and part of this initiative involves city surveillance. ¨The nationwide project was supposed to be done two years ago, but the money wasnˇt there,〃 explained Tan. ¨When all 13 states are fit for city surveillance in the next few years, there will be more than 2,600 Vicon network cameras that link directly to Kuala Lumpurˇs new police headquarters.〃 In the capital city alone, more than 1,300 street junctions will be watched by Bosch IP cameras in three yearsˇ time.
¨Transportation (including airports and seaports ) , oil and gas, and Islamic banking are also growing very fast,〃 commented Alex Ng, Executive Director of Viewtech & Communication, a prominent local distributor. The market size for airport and seaport security equipment in Malaysia in 2006 was about $25 million. According to other industry sources, the demand for airport and seaport security equipment between 2005 and 2009 is estimated at $120 million.
Malaysiaˇs two largest ports, Port Klang and Port Tanjung Pelapas, began participating in the U.S. Container Security Initiative (CSI) in 2004. Under the program, the U.S. government has made some direct donations of equipment, training, and infrastructure needs to the Malaysian government under the CSI Megaports project. Other areas of airport/seaport security equipment include computerized access control systems, high-tech perimeter control systems (including those employing infrared technologies), smart cards, surveillance systems, multi-zone door frame metal detectors, baggage reconciliation systems, advanced explosive and radiation detection scanners, and biometrics-based integrated passenger profiling systems.
The $515-million, dual-use storm water management and road tunnel, or¨SMART Tunnel,〃is a storm drainage and road structure in Kuala Lumpur; the main objective of this tunnel is to solve the problem of flash floods in Kuala Lumpur and also to reduce traffic jams along Jalan Sungai Besi and Lok Yew flyover at Pudu during rush hours. ¨Videotec casings were specified for this project because cameras need to be completely waterproof, for a prolonged period of time,〃 explained Ng. Other large-scale transportation projects, said Paul Mun, Sales Director of Viewtech & Communication, are taking place on Penang I s land where a new, 13.5-kilometer bridge and a mass rapid transit system with 52 stations are being constructed.
Malaysia is also the head of the Organization of the Islamic Conference, which is an inter-governmental body with 5 7 member states and a permanent delegation to the United Nations. Given this unique status, a lot of Malaysian system integrators were specified in the infrastructural and security projects for the Doha Asian Games last year, said Shaji of Prisma Bytes. Investment influx in the form of ¨Islamic Banking〃a term coined by the Wall Street Journalis now easily palpable in this Islamic nation and is, in turn, triggering growth in the security business. Combined with upgrade projects for commercial and office buildings (including the Patronas Towers where more than 600 cameras were renewed), the demand for burglar and fire alarm systems, electronic lock systems, card access systems, surveillance systems and intercoms will continue to expand for sure.
The residential sector, suggested Mun, is on the rise as well, especially for the south of Malaysia where it borders with Singapore. The outlook of this sector is very promising, with more people beginning to understand and appreciate the need to install home security systems. Burglar and fire alarms, lock systems, s a fes and electronic gates a re common features in high-end homes. In middle-income households, the demand for burglar alarms and electronic gates is increasing. There have been a number of incidents of mugging and rape in parking lots of large building complexes recently. The Housing and Local Government Minister recently gave a directive that requires commercial buildings and public places with parking lots to install surveillance systems. This directive will lead to fruitful opportunities as many building owners still have not installed security cameras at their premises.
Major Players
There is no local CCTV production, and active access control players are Elid and Castle. ¨Video surveillance products in Malaysia rely heavily on quality imports from China, Taiwan and Korea,〃 said one representative at FTEC Networks. Both Ng and Lim think Taiwanese products still have the upper hand in terms of price and performance. Major security distributors and system integrators named by industry sources are Sapura, ADT (Tyco), GeeLong, SensorLink, Johnson Controls and Prisma Bytes; strong, pure system integrators include Pernec Group, Honeywell and Armour Built.