Environmental Technologies Industries

Environmental Technologies Industries

Market Plans

Malaysia Environmental Export Market Plan

Chapter 7 - Air Pollution Control

Overview

The haze that afflicts Southeast Asia's air was worsened by huge fires in the fall of 1997, forcing Malaysia's deteriorating air quality into the public consciousness. Indonesia's recurring, man-made forest fires in Sumatra and Kalimantan were the primary cause of the haze, although peninsular Malaysia's pollution from vehicles, industry, and open burning share the blame. The haze consisted of thick, heavy pollution that reduced visibility and caused respiratory illnesses throughout the region.

With monsoon rains that helped control the fires, the haze problem abated by the end of 1997. However, pressure on the Malaysian Government has been mounting to take drastic steps to curb air pollution, specifically to establish tougher air emissions regulations and standards. The Clean Air Act is being reviewed, but no timetable has been set for its implementation. Industry analysts expect that, at first, the law may be partially implemented. A review began in 1995 to improve air quality measures and to develop new ways to deal with Malaysia's air pollution.

Malaysian authorities maintain that the haze is a seasonal phenomenon that is at its worst during the southwest monsoon, when warm air blows from the south (May through September) and at its most benign during the northeast monsoon (October through April). DOE reported that air quality nationwide, based on the Air Pollutant Index (API), was generally good in 1996 and that no case of “serious haze” was registered.

In 1997, however, forest fires brought the worst haze ever. In Malaysia, the places hardest hit by the heavy smoke were Sarawak, north of Kalimantan (Borneo), and the Klang Valley, which includes Kuala Lumpur and most of Selangor State. The daily API in September 1997 showed readings of over 300 in Kuala Lumpur and 371 in Penang, while Kuching in Sarawak readings were as high as 839. Kuala
Lumpur's API saw swings between moderate and unhealthful readings.

As the haze reached critical levels in the region, particularly with the delay of the northeast monsoon, there were mounting calls for tougher environmental enforcement actions. Some of the concern came because the daily API is averaged over a 24-hour period and does not reflect conditions at a given hour. This contributed to public perceptions, particularly in the capital, Kuala Lumpur, that the index is an unreliable tool for measuring the heavy plume of smoky pollution over the city.

The Malaysian air pollution control (APC) market is not very strong. Air pollution enforcement has historically been lax, although recent technological advances in monitoring and surveillance have dramatically improved DOE’s ability to enforce its regulations. Given constraints in manpower and budgets, DOE has increasingly relied on industry self-regulation spurred by the department's online monitoring system.

Resistance from the industrial lobby, particularly the motorcycle manufacturing industry, forestalled implementation in 1994 of the comprehensive Clean Air Plan, and industry continues to oppose the plan. There are indications, however, of a surge in industrial demand for stopgap measures to reduce air pollution.

Overall, the government reported that in 1995 pollution from domestic sources continued to grow. Other than forest fires, the three main sources of air pollution in the country are mobile sources (vehicles), stationary sources (power stations, industrial fuel-burning processes, and domestic fuel burning) and the burning of municipal and industrial wastes. In 1995, these contributed 75.1 percent, 20.3 percent, and 4.6 percent, respectively, of Malaysia's air pollution (table 13).

Annual and daily particulate matter averages regularly exceeded guidelines, as did carbon monoxide and ozone. Particulates routinely exceeded limits and generally worsened with the haze. Nitrogen oxides and particulate matter are the most pervasive air pollutants.

Table 13: Emission of Pollutants to the Atmosphere by Source, 1987-1995

	1987	1988	1989	1990	1991	1992	1993	1994	1995
Mobile Services	571.1	542.1	572.7	630.8	681.0	1,283.1	1,283.1	1,388.9	1,426.7
Stationary Sources	364.4	368.2	184.9	197.4	204.4	296.9	293.0	376.2	464.7
Burning of Wastes	30.7	23.2	16.5	24.0	25.9	27.7	41.8	83.8	106.7

Source: Seventh Malaysia Plan (1996–2000), Government of Malaysia.

The number of motor vehicles grew from 6.8 million in 1995 to 7.7 million in 1996, a 3 percent increase. Kuala Lumpur had the most vehicles, followed by the states of Johor, Selangor, and Perak. Motor vehicles emitted 2.4 million tons of carbon monoxide, 457,900 tons of hydrocarbons, 146,300 tons of nitrogen oxides, and 19,000 tons of particulate matter into the atmosphere in 1996. Catalytic converters are mandatory on new cars and nationwide retail sales of unleaded gasoline increased from 68 percent to 76 percent in 1996. However, use of unleaded gas is expected to remain voluntary in the near future.

Regulations for Vehicles - Effective in 1996

Environmental Quality (Control of Emissions from Diesel Engines) Regulations 1996
Environmental Quality (Control of Emission from Petrol Engines) Regulations 1996

Motorcycles, particularly those using two-stroke engines, are significant air polluters. While the more than 1 million motorcycles have not yet been entirely banned, they are supposedly being phased out gradually. The motorcycle industry continues to resist DOE’s proposal to adopt more stringent standards, similar to those in Taiwanese Stage Two, rather than the lax European Union standards. The proposed DOE standards include the installation of catalytic converters on two-stroke engines. Despite DOE initiatives, however, the standards have languished because of government indecision.

Industry and power generation account for a relatively small portion of total air pollutants. Sulfur dioxide pollution in Malaysia is not very high compared with other countries in the region (Malaysia's petroleum is fairly “sweet”). A 1993 DOE report on air quality management in the Klang Valley indicates dramatically worsening conditions by 2005 if adequate measures are not taken. Some improvements have been reported. In the Klang Valley, the air quality index has generally been between the good and moderate range while the pollutants’ levels have been below the Recommended Malaysian Guidelines.

DOE has termed overall industrial compliance with the Environmental Quality (Clean Air) Regulations of 1978 “satisfactory,” although it reports that odor and fugitive emissions remain a problem. This is based on 1996 DOE inspections of 3,887 sources. The leather industry achieved 100 percent compliance, while wood industry compliance was only 73 percent (table 8). Generally, dust was the main air pollutant from the wood industry, caused by poor operation and maintenance of pollution control equipment such as dust collectors, bag filters, water sprinklers, and cyclones.

Legislation and Enforcement

The EQA amendments were what the authorities called a significant first step toward implementation of the Clean Air Plan.

These regulations mandate direct DOE control of emissions from diesel and gas engines. They underscore DOE’s preventive approach in that they control vehicular emissions at manufacture or assembly. Beginning January 1, 1997, new vehicle models were required to meet certain emission standards before being licensed. The emission standards incorporated in the regulations were based on the European Economic Commission on Standards (text box below).

Air pollution control regulations, however, are essentially unchanged. Stack gas emission standards for dark smoke, dust, metal, and metallic compounds and gases apply nationwide. DOE issues contravention licenses to some industries when they have difficulty meeting emission standards. About 93 percent of the contravention licenses issued in 1996 were for open burning of wastes.

Control of Industrial Emissions Legislation

Environmental Quality (Clean Air) Regulations 1978
Environmental Quality (Compounding of Offenses) Rules 1978

Control of Motor Vehicle Emissions

Motor Vehicles (Control of Smoke and Gas Emission) rules 1977 (made under the Road Traffic Ordinance of 1958)
Environmental Quality (Control of Lead Concentration in Motor Gasoline) Regulations 1985
Environmental Quality (Motor Vehicle Noise) Regulations 1987

Control of Substances that Deplete the Ozone Layer

Customs Duties (Amendment) (No. 35) Order 1989 (made under the Customs Act 1967)
Environmental Quality (Prohibition on the Use of CFC and Other Gases as Propellants and Blowing Agents) Order 1993

Ozone-depleting substances (ODS) are not manufactured locally, but are imported from developed countries for local industries’ consumption. The use and production of these chemicals are being phased out. As a signatory to the Montreal Protocol, Malaysia is committed to phase out ODSs by 2010. However, the government decided to phase them out ODS by the year 2000. To achieve this goal, it is monitoring the importation and consumption of controlled substances, and encouraging industries to use alternative chemicals.

As part of its review of the Environmental Quality (Clean Air) Regulations (1978), DOE proposed amendments to the existing standards. Under these amendments, new limits for eight existing parameters and additional sources of pollutants were suggested. To control sulfur dioxide emissions, the review promoted the use of low-sulfur fuel. The review also suggested other methods of reducing stationary emissions.

DOE relies on the nationwide air quality monitoring system project under way as part of the privatization agreement with Alam Sekitar Malaysia Sdn. Bhd. (ASTHMA). Nearly 30 new automated air quality monitoring stations with telemetry systems had been established by the end of 1997. In addition, ASTHMA manages the existing seven semi-automated, high-volume samplers for total suspended particulates (TSPs) and respirable particulates. In the future, DOE plans to establish a similar system to monitor marine water and groundwater quality, but implementation has been delayed because of tight budgetary conditions.

The government instituted curbside inspections and surprise checks against excessive black smoke emission in 1996. Vehicular inspection (including emissions monitoring for commercial units) was privatized in 1996, the concession going to a Malaysian company, Pusat Pemeriksaan Kenderaan Berkomputer Sdn. Bhd. (Puspakom). A subsidiary of Diversified Resources Bhd., Puspakom is expected to invest $60-$70 million to build a nationwide network of computerized vehicle inspection centers.

Also in 1996, authorities launched AWASI (Area Watch and Sanction Inspection), a program to reduce motor vehicle emissions in Kuala Lumpur and other cities. Under AWASI, visual inspections of a total of 20,137 “smoky” vehicles in the capital yielded 982 summons and 531 prohibition orders. These vehicles were permitted to operate only after being repaired and retested by DOE.

DOE, with the cooperation of the Royal Malaysian Police Traffic Division, conducted 409 emissions enforcement campaigns nationwide. A total of 43,900 vehicles were tested, and 7,154 summonses (16 percent of all vehicles) were issued for noncompliance. Other emissions initiatives, such as the Joint Airborne Surveillance Program between DOE and the Police Air Wing, provided speedy surveillance on pollution in the states of Selangor, Negri Sembilan, Melaka, Johor, Pahang, and the Federal Territory of Kuala Lumpur. Investigations were focused on excessive smoke emission from industries, open burning at dumping grounds, and forest fires.

Competitive Situation and Market Opportunities

Malaysia's severe air quality problems have caused a public outcry for stricter regulation and enforcement and for better technological solutions, although the estimated $25-million APC equipment market has been growing more slowly than other environmental sectors. Water and wastewater treatment and solid waste programs are better funded.

According to Alam Sekitar, the concession holder for air quality monitoring, APC monitoring equipment is in high demand as a direct result of the haze. There are no domestic manufacturers of continuous emissions monitoring (CEM) equipment. Companies generally view the cost of APC equipment, especially in the wake of the late 1997 currency devaluation and high import tariffs, as too high. They consider such costs to be expenditures rather than long-term investments. Previously, the APC market appeared to have been influenced mostly by community pressures and inter-national factors, such as ISO 14000. Increasingly, industrial polluters, particularly power plants and boiler plants, will be required to install stack monitoring equipment. Some industries also want to improve plant performance, and commercial establishments and other institutions seek ways to improve indoor air quality that suffers from the perennial haze.

Domestic APC Suppliers and Manufacturers

Suppliers
Air Pollution Engineering Sdn. Bhd. is one of the few APC specialists in Malaysia. The $3-million company provides turnkey installations and maintenance services, using outsourced equipment. Its focus has been mainly on dust control for cement plants and boiler flue gas projects for palm oil mills and rice husking facilities.

Hexagon Tower Sdn. Bhd. started in 1984 as an exhaust ducting fabricator firm. The company has since shifted to turnkey services and operations and maintenance, recording about $5 million in 1996 sales. Its APC business is about 20 percent of sales. Services to the electronics and chemical industries, as well as retrofits, are Hexagon's major growth areas.

Master Jaya Environmental Sdn. Bhd. is part of the Master Jaya consulting, manufacturing, and trading group. Set up in 1983, the firm has more than 50 employees and over $2 million in APC sales. It provides turnkey services related to APC, noise, ventilation, and other areas for the rubber, cement, palm oil, and wood-based industries. Because of the high import duties, only about 5 percent of the equipment is imported, according to company executives.

Manufacturers

Air Pollution Engineering Sdn. Bhd.
Enviroserve (M) Sdn. Bhd.
Juru Rubcoil Sdn. Bhd.
Kemac Holdings Sdn. Bhd.
Lindeteves-Jacoberg (M) Sdn. Bhd.
Mks Sdn. Bhd.
Care Industrial Products Sdn. Bhd.
Jebsen & Jessen Engineering (M) Sdn. Bhd.
Melcomb Malaysia
Pollutech Engineering Sdn. Bhd.

Most air pollution control equipment in Malaysia is imported, which creates opportunities for U. S. businesses. Continuous emissions monitoring (CEM) equipment, industrial air scrubbers, stack emission analyzers and control equipment, dust collectors, indoor APC equipment, and other systems for vehicle emission monitoring stations will be needed. Another potential demand is for clean incineration systems to alleviate pollution from open burning. However, much depends on the level of government enforcement during the current economic crisis.

Opportunities also exist in providing alternatives to chlorofluorocarbons and ozone-depleting substances. Malaysia restricts the use of ODSs to a few areas. They are used in foams, air-conditioning, firefighting chemicals, and aerosols. While many large enterprises have begun phasing out the use of ODSs, many small to medium-sized industries have not, for both financial and technical reasons. The government has also begun promoting the use of natural gas vehicles in conjunction with Thailand and Indonesia, which also suffer from serious exhaust pollution.

Air Quality Monitoring Holds Promise for Private Firm

In April 1995, the Malaysian Government signed a privatization agreement for air quality monitoring with Alam Sekitar Malaysia Sdn. Bhd. (ASTHMA), a joint venture owned by the Malaysian company Progressive Impact Corp. Sdn. Bhd. (75 percent) and the Canadian firm Bovar Inc. (25 percent). ASMA was awarded a 20-year concession to install and operate a nationwide air quality and water quality monitoring system estimated at a value of $10 million. CEO Dato D. Abu Bakar Jaafar believes the company is the only one of its kind worldwide. ASMA will sell the data it collects to DOE. The information will be used to assist development and enforcement of environmental policies and programs.

Bovar, which specializes in gas analyzers for continuous emissions monitoring applications and process stream equipment, will provide a minimum of 50 ambient air quality monitoring stations with automatic data transmission to DOE. As 1997 ended, 29 air monitoring stations were functioning. Sixteen additional stations were expected to be installed in 1998. In response to the haze problem, four stations were established in Sarawak as part of the nationwide system. Six continuous monitoring stations have been installed to monitor freshwater quality, and there are 1,000 sites for manual testing. In the next phases, the government plans to take up seawater and groundwater quality.

For fiscal year 1998, ASMA was expected to generate revenues of RM26 million ($7.9 million at RM3.3 to $1) compared with about RM16 million ($4.8 million at RM3.3 to $1) in 1997. Capital equipment costs have risen by nearly 40 percent since July 1997 in the wake of the currency devaluation. Sales are projected to reach RM60 million in the year 2000.

Eventually, the group hopes that private industry will be the real customer. To be profitable however, it will need full enforcement of pollution regulations. Enforcement now consists of persuasion rather than closing down the operations of violators. The “intensity of enforcement has always been there,” said Dr. Jaafar “The question is whether industry will make the right decisions.”

ASMA also aims to act as consultants for clients, thus adding value to the database it provides. Demand for air quality monitoring systems is high from institutions, commercial establishments, and industrial sites. ASMA typically provides raw or processed data using equipment it leases to clients. “Our first option is to provide the data, but we would own and run everything,” said Dr. Jaafar. Clients would have full rights to data that are not released to the government.

Malaysian executives think foreign manufacturers should develop technology transfer agreements with Malaysian partners to serve both the domestic market and regional Asian markets. In 1994, for example, Johnson Matthey plc, one of the world's largest suppliers of catalytic converters, entered into a joint venture with the Hicom Group to build the first catalytic converter plant for Southeast Asia in Malaysia. The plan is to have manufacturing capacity of 1.5 million ar to supply both domestic and regional markets. The group has an effective monopoly on catalytic converters. However, having a technology venture is no guarantee for success. One U.S. firm is planning to close down its emission control manufacturing operations because of inadequate regulations in its area.

Lack of enforcement has inhibited development of the market for industrial air pollution equipment. This market is expected to improve with new monitoring and surveillance technology. U.S. firms are the leading foreign suppliers of APC equipment, followed by Japanese, British, German, and Australian companies. Specialized APC players in Malaysia are few, and they must compete with the country's “backyard fabrication” industry, which offers cheaper alternatives for most industrial end-users. Malaysia's main APC products are conventional dust collectors (mainly in wood and furniture industries), fume scrubbers, advanced bag and gravel bed filters, advanced dust abatement systems, and electrostatic precipitators for particulates from process industries.

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