Almost a year ago the first throws of the recession were in place and a recovery or upturn was merely a dream.

Now however, that dream appears to be edging closer to reality, especially for those countries that comprise the Southeast Asia region.

In the orbit of an ever-growing and increasingly forceful China, Southeast Asian economies could perhaps have more reason for optimism than some other countries entrenched in recession.

This translates into good news for the gases business in the region too – relatively stable economies tend to go hand-in-hand with gas demand, while companies are also more likely to consider investment, especially given the close proximity to the emerging economies of both China and India.

Comprised of the Philippines, Singapore, Malaysia, Thailand, Indonesia, Vietnam, Cambodia and others, Southeast Asia possesses a relatively minor gases market valued at around $2.2bn in 2008, though if the budding electronics hub of Taiwan were also factored in this would actually be nearer $3.4bn.

For the purposes of this analysis however, we consider Taiwan as part of the North Pacific region and not as part of Southeast Asia.

Intrinsically linked
There’s no doubt that Asia on the whole has been heavily affected by the global economic crisis, thought to be blamed on the region’s high dependence on the US economy and the US Dollar’s role as an international currency.

While the whole region has suffered the effects then, China is resurgent and expected to maintain a relatively high GDP growth, becoming ever more influential on the overall global economic stage.

The Chinese dragon continues to roar as an economy, while its gases business also bounds forward with each passing year.

In its orbit are the neighbouring Southeast Asian countries, set to benefit from the close proximity to both China and India, even with the former thought to be keen to assert its supremacy and influence over the Southeast Asia countries.

Closer cooperation is believed to be underway between these intrinsically linked countries,
with this spirit of togetherness emphasised at
the recent Boao forum, held in Boao at the southern Chinese island of Hainan from
17th – 19th April 2009.

Modelled after the World Economic Forum in Davos, Switzerland, the Boao forum is regarded as a platform for leaders in government, business and academia in Asia to gather and share visions for the region, as well as the rest of the world.

Emphasising the belief in cooperation and his country’s active role in pursuing closer economic ties, Chinese Premier Wen Jiabao is quoted as telling the forum, “The fate of all nations is tied together. No one is immune from the global financial crisis and is able to conquer it alone.”

Closer trade ties are also thought to be in the pipeline for Southeast Asian countries, with China keen to invest in infrastructure and increase the Guangxi province’s access to the Mekong region (Burma, Cambodia, Laos, Thailand and Vietnam) and additionally the market’s of Indonesia, Malaysia and the Philippines.

Central and local government appear set to finance infrastructure development in the city of Nanning and along the coast, creating a new channel for goods to flow between Southwest China and the accompanying Southeast Asian collective of countries.

With such a promising economic future ahead, coupled with close proximity to China, the Southeast Asia region clearly has a sound climate for possible investment by the gas & equipment companies. But what’s already going on with gases in the region?

Perhaps the best word to describe the effects of the industrial gas companies in Southeast Asia is ‘nurturing’.

Equipment companies are nurturing their provisions in the region, major players such as Air Liquide and Messer continue to consolidate their interests there, while the countries themselves continue to develop or nurture their LNG operations respectively.

US company DataOnline (see gasworld’s August company profile) revealed in February this year that it had signed an agreement with L+H Automation Inc. to represent the former’s array of products in the Philippines.

As part of the agreement, L+H Automation will support DataOnline’s industrial gas business and its range of solutions for the water, waste water and chemical industries.

That followed the August 2008 announcement that Bangkok company Blue Stacks had signed an agreement to become DataOnline’s representative for all products and services provision in Thailand.

Meanwhile, Messer continued its healthy investment in the Vietnamese market this year, with the February inauguration of a new filling plant in Vung Tau, on Vietnam’s oil coast.

Up to 300 gas cylinders are filled with oxygen, argon, carbon dioxide and other gas mixtures at this location on a daily basis, while through its companies located in four regions of Vietnam, Messer operates a nationwide network for distributing gases required in almost all industrial sectors.

Messer notes that its next move will be an investment of around €15m in an industrial-gas production site in Hải Dương, to be put into operation later this year.

Also in Vietnam, we’ve seen the recent revelation that the first factory to produce solar panels in Vietnam has now started-up in the Duc Hoa Industrial Park in southern Long An province – intended to lay the foundations of Vietnam’s solar cell industry.

Nurturing its blossoming relationship both with the photovoltaics (PV) industry and business in Southeast Asia, Air Liquide is now contracted to provide key gas supply to PV manufacturers in China, Japan and the Philippines.

The French gases major has concluded multiple
major turnkey gas supply contracts with some of the largest solar cell manufacturers in the world, confirming its well established position in this fast-growing industry.

In the Philippines in particular, the company has extended its relationship with Sunpower by signing a contract for expanded total gas supply and services for its recent crystalline-Silicon Photovoltaic 300MW peak Fab2 investment.

These services include carrier gases, specialty gases, on-site gas management, and turnkey gas equipment.

Francisco Martins, Air Liquide’s Vice-President of Electronics, declared in an October 2008 press release, “We are very proud to continue our successful partnership with the PV industry manufacturers as they expand in China, India, Japan, South-East Asia, Europe and North America, setting-up new long-term agreements with these key customers.”

Market value & end-users
In terms of actual figures for the Southeast Asia gases business, the projected revenues reinforce the idea that economic green shoots are beginning to emerge.

Industrial gas revenues in 2007 totalled $1.9bn, rose to just under $2.2bn in 2008, and are estimated to reach around $2.34bn by the close of 2009.

A compounded annual growth rate (CAGR) of more than 12% was witnessed in the region from 2002 to 2007 and this double digit rate of growth is expected to prevail for the period 2007-2013, as a CAGR of 10% is projected by Spiritus Consulting.

This would see industrial gas revenues amount to just over $2.5bn next year (2010) and a market valued at approx. $3.4bn by 2013.

Comprising the bulk of these revenues in Southeast Asia are the manufacturing and chemicals industries – both representing key end-use segments in terms of revenues.

Manufacturing dominates the market, making up a 30% share and $669m in 2008, while the chemicals industry accounts for 29% and $640m in end-use revenues in the same year.

By the close of 2009, manufacturing is expected to account for $701m, while chemical end-users will comprise $693m of the anticipated $2.34bn market value.

Both the metallurgy and electronics industries represent considerable revenues in Southeast Asia, at $239m and $191m respectively, with non-cyclical end-use sectors such as healthcare and food & beverages also weighing in strongly.

When looking at the actual geographical dynamics of the market too, Singapore is clearly the largest country by industrial gas revenues and closely followed by Thailand.

Singapore comprises a huge 31% of the market and revenues of around $670m, while Thailand possesses a 20% market share and $442m in revenues.

Other notable markets within the Southeast Asia region are Malaysia with 15% share ($338m), Indonesia with almost 10% ($216m), and the Philippines at 7% or $157m revenues.

Vietnam accounts for just 4% of the Southeast Asia market and $79m of revenues – though as this market continues to develop and attract interest from companies such as Messer, surely this will grow.

Potentially healthy growth from the country’s new-born electronics PV sector would also support such an ascent in future.