The environmental consulting services market is not entirely open to U.S. companies according to the Foreign Investments Act, which restricts engineering, chemistry, geological, and other professional services to 100 percent Filipino-owned companies. Nonethe-less, several U.S. companies have penetrated the market by establishing local subsidiaries. Another option for U.S. firms is to provide services to multi-national corporations operating in the Philippines.
The U.S. Department of Commerce estimates that the 1997 market for environmental consulting services will reach $36 million. Although the market subsegments analyzed to produce this aggregate estimate are not specified, it is safe to say that the following types of services are currently in demand:
* Environmental impact assessments (EIAs) and environmental baseline studies. These currently represent the largest share of the market, potentially around 80-90 percent of the total. The Environmental Compliance Certificate required prior to the construction of new industrial, commercial, and large-scale residential projects, and expansions of existing projects, is the most actively enforced of all the regulatory programs, and most firms comply, albeit not necessarily in a timely manner.
Although EIAs rarely reach the depth and technical sophistication of EIAs conducted in the United States and elsewhere, some clients demand more rigorous analysis such as air and water quality modeling studies. Generally, Western multinationals with large projects at stake prefer to hire foreign consulting firms (U.S. and Australian, primarily). Asian multinationals (Korean, Taiwanese, and Singaporean) are more apt to hire local firms with good connections inside the Department of Environment and Natural Resources (DENR).
Fees paid for EIAs range from 10,000 pesos (P) for small-scale projects up to P1 million for large industrial complexes. Rarely do they exceed this ceiling, as the DENR EIA review committees generally do not demand highly sophisticated modeling or analysis.
* Pollution management appraisals (PMAs). PMAs, or waste minimization assessments, were introduced in 1992 by the Industrial Environmental Management Project, funded by the U.S. Agency for International Development. It aimed to demonstrate the economic benefits of pollution prevention to the Philippine industry. In order to increase demand for the free PMA services offered by the project, DENR passed DAO 17 Series of 1992 offering a one-year moratorium on enforcement action to firms that agreed to conduct a PMA. Although the International Environmental Management Project has recently concluded, the provisions of DAO 17 are still in force. Thus, although PMAs are no longer a free service, there is still a demand for them from firms facing closure orders from the Pollution Adjudication Board. The PMA price tag generally ranges from P4,000 to P75,000, depending on the size and complexity of the facility to be audited. These low contract values are generally not attractive to U.S. firms without local subsidiaries, and potential follow-on contracts for engineering/design services are restricted to Filipino-owned companies.
* ISO 14001 and Environmental Management System program design. Although the Bureau of Product Standards is still in the process of drafting the Philippine national standards for third-party certification under the ISO 14000 series, some companies have proceeded with self-certification, or have been certified by European certification bodies, for the ISO 14001 Environmental Management Systems certification. These firms tend to be the local subsidiaries of major multinationals that are pursuing certification for all their overseas operations. Furthermore, most firms to be certified under ISO 14001 to date are located in the Metro Manila area.
Firms pursuing ISO 14001 Environmental Management System (EMS) certification seek assistance from consulting firms in several areas: making the decision on whether or not certification is desirable, audit of the existing EMS, design of an EMS that will pass the certification requirements, and training for executive and operations management on the EMS purpose and implementation. Prices paid for these services are known to range from P4,000 for a basic consultation and orientation training, to over P100,000 to help bring a firm to certfication.
Certification under the ISO 14000 series standard on ecolabeling is currently not a high priority for Filipino companies. A primary reason for this is that the United States accounts for 40 percent of all Philippine merchandise exports, and ecolabeling is not generally recognized in the United States yet. Firms exporting to the European market, on the other hand, might be more active in pursuing certification.
