Environment and water to Hong Kong

(Last updated: 6 Jan 2012)

Trends and opportunities

The market

The environmental sector has not been a high priority industry in the Hong Kong economy in the past. However, people’s behaviour are changing with more pressure on the government to implement stringent pollution controls. Environmental protection has now become a major policy area for the the third term of the HKSAR government.

All major policy programs, initiatives and measures are now assessed for social and environmental sustainability. Environmental objectives need to be integrated with economic and social objectives under the sustainable development concept.

Air pollution is a serious problem in Hong Kong. The two major issues are: (i) the 'local street-level pollution' coming from diesel vehicles and (ii) the 'regional smog' problem caused by industry and power plants in the Pearl River Delta region. A number of measures have been introduced that have reduced vehicle emissions by almost 80 per cent..

Major progress:

• To incentivise early replacement of old diesel commercial vehicles with vehicles that comply with the prevailing statutory emission standard for newly registered vehicles, which is now Euro IV standard
• To encourage the use of environment-friendly petrol private cars through tax concession
• To introduce a concessionary duty of $0.56 for Euro V diesel. Since then, all petrol filling stations in Hong Kong are exclusively offering this fuel. Starting from 14 July 2008, the duty rate for Euro V diesel has been waived to further encourage drivers to use this more environment-friendly fuel
• To complete a public consultation on whether to introduce legislation to ban idling vehicles from running their engines
• To encourage the use of environment-friendly commercial vehicles through tax concession

The HKSAR Government has also been working with Guangdong Provincial Authorities to implement a joint plan to tackle the regional smog problem.

Road traffic noise is one of the most pervasive forms of pollution in Hong Kong.

Close to a million people live in homes which suffer road traffic noise higher than the minimum acceptable standard (70dB) in the Hong Kong Planning Standards and Guidelines. The following measures have been introduced to tackle road traffic noise problems:

• Pre-emptive planning based on environmental impact assessments
• Introduction of building insulation to redress the impact on the affected premises
• Installation of roadside barriers and enclosures on existing roads
• Imposition of legislative regulation to control noise from vehicles
• Resurfacing noisy roads with a special porous, low-noise road surface

Water pollution has increased with urban development. Hong Kong produces more than two million tonnes of sewage every day. The lack of proper treatment for most sewage from the urban area around Victoria Harbour has resulted in poor water quality. The government has launched the ‘Harbour Area Treatment Scheme’ to tackle the sewage and wastewater pollution. Around 70 per cent of the sewage that flows into Victoria Harbour will pass through chemically enhanced treatment. An international panel completed a review on the sewage system in Hong Kong and made suggestions on the future treatment of sewage.

The total recycling recovery rate in Hong Kong is about 35 per cent of the total municipal solid waste. In the industrial and commercial sectors Hong Kong has a good recovery rate with over 50 per cent of materials being recycled. Local industry reprocesses over 50 per cent of recyclable materials such as waste paper, metals, plastic and glass.

Chemical wastes are treated at the Chemical Waste Treatment Centre by incineration. The government also plans to develop incineration facilities for the disposal of municipal waste, clinical waste, sewage sludge from the sewage treatment plants, and animal carcasses.

A major government initiative is to implement the concept of ‘green buildings’. The aim is to improve the quality of living for residents by adopting the use of environmentally-friendly products in building and construction. A cross-departmental team has been set up to identify new green products and processes including planning, design, construction and maintenance. The scope of environmental technologies includes:

• Reduction in construction waste
• Recycling materials
• Recycling processes
• Low fume and emission coatings
• Energy saving systems
• Reduction of wet trade on site

To address the environmental infrastructure requirements, the Hong Kong Government plans to commission over US$900 million of projects including:

• Municipal sewage treatment systems and related equipment for US$500 million
• Two refuse transfer stations for US$65 million
• Two landfill restoration sites for US$80 million
• Two one-million tonne per year waste-to-energy incinerator for US$300 million
• A low-level radioactive waste storage facility for US$20 million

Opportunities

There are multiple business opportunities in pollution prevention and control technologies for Australian companies. The key areas of opportunity are:

• Municipal sewage
• Air pollution control
• Solid waste minimisation processes and equipment
• Green building products and environmentally-friendly building technologies and processes
• Recycling technologies
• Site remediation

Exports to Hong Kong have mainly penetrated the following four segments:

• Compressors, including equipment for the pumping and regulation of in-plant gases and Exhaust air
• Small air filters and blowers
• Water filtration equipment
• Gas filtration

Government tenders issued by the Environment Protection Department can be found at www.epd.gov.hk/epd/english/business_job/business_opp/tender.html

Competitive environment

Major suppliers of environmental equipment are from the USA, Japan, mainland China and the UK.

Tariffs, regulations and customs

Hong Kong is a free port, with no tariffs on general imports. Import duties are imposed on spirits, hydrocarbon oil, tobacco products, and methyl alcohol. There are no sales taxes or import quotas.

In July 2007, the Environment Bureau was formed with responsibility for environmental protection, energy and sustainable development in Hong Kong. The former Environment, Transport and Works Bureau (ETWB) was restructured where the responsibility for transport was transferred to the new Transport and Housing Bureau, and the Works branch was transferred to the new Development Bureau.

The Environment Bureau oversees the work of the Environmental Protection Department (EPD), the main role of which is to maintain a high standard of environmental quality and to increase community awareness of environmental issues.

The Sustainable Development Division (SDD) was also formed to facilitate the integration of sustainable development into new government initiatives and programs and in the community generally, and to provide support to the Council for Sustainable Development.
The SDD is headed by the Deputy Secretary for the Environment underpinned by the Principal Assistant Secretary (Sustainable Development) whose areas of responsibility are as follows:

• Policy matters on government sustainability assessment system
• Consultancy or research studies in the field of sustainable development
• Council for Sustainable Development
• Policy regarding the Sustainable Development Fund
• Publicity and education programs relating to sustainable development

Following the re-organisation on 1 July 2007, the EPD has adopted a new structure based on three operational divisions, four policy divisions, a cross-boundary division, and a corporate affairs division. These divisions are:

• Environmental Infrastructure Division
• Environmental Assessment Division
• Environmental Compliance Division
• Air Policy Division
• Water Policy Division
• Waste Management Policy Division
• Nature Conservation and Infrastructure Planning Division
• Cross-Boundary & International Division
• Corporate Affairs Division

Other related departments:

• Drainage Services Department
• Electrical and Mechanical Services Department
• Transport Department

Industry standards

Hong Kong has its own standards in building materials, building code systems and other related products. If companies want to export their products into Hong Kong, they should contact the relevant government departments for guidance on standards compliance:

• Architectural Services Department
• Buildings Department
• Electrical and Mechanical Services Department

Marketing your products and services

Market entry

It is vital for Australian companies to set up an office, or to have local partners. Local customers have a strong demand for on-the-ground support and long-term relationships especially when dealing with government projects. Foreign companies that do not have local support significantly reduce their chance of winning projects. Competition in the environmental consultancy and product market is very keen.

Australian suppliers should also consider:

• Approaching potential customers directly with your local partners
• Visiting the market frequently
• Identifying target sectors
• Organising one-to-one meetings or seminars to build up your presence
• Maintaining on-going contact and communication with customers is important in order to sustain and grow your business

Australian companies have not been active in Hong Kong’s environmental industry compared with USA, Japan and European suppliers. There are few local companies providing solutions and services in this industry. Many of the local firms are small and focus on designing equipment and providing services targeting specific industries such as:

• Food and beverage manufacturing
• Textiles and clothing
• Printing and publishing
• Fabricated metal products
• Electronics
• Plastics
• Electrical products
• Restaurants

The Hong Kong Government consistently uses the services of the consulting firms to determine pre-qualifications and tenders. British consulting engineers and large construction groups have been the dominant service providers to the government in these areas. Major US, German, French and Dutch consulting firms are keen competitors.

Distribution channels

Local partnering is very important in Hong Kong. Customers have a strong demand for on-the-ground support and long-term relationship building with their suppliers and business partners.

If you are a manufacturer of equipment, the major distribution channel is by appointing agents or distributors. The agents can provide the pre- and post- sales support to the local customers with speed.

If you are providing consultancy service, you have to either set up a local office or identify a strategic partner to remain a close contact with the potential customers to keep track of the progress of projects.

Links and industry contacts

Environment and water–related resources

Agriculture, Fisheries and Conservation Department – www.afcd.gov.hk
Drainage Services Department – www.dsd.gov.hk/index.htm
Environment Bureau – www.enb.hk
Environmental Protection Department – www.epd.gov.hk
Food and Environmental Hygiene Department – www.fehd.gov.hk
Hong Kong Waste Management Association – www.hongkongwma.org.hk
Hong Kong Business Environment Council – www.bec.org.hk
Hong Kong Productivity Council – www.hkpc.org

Government, business and trade resources for Hong Kong

Electrical and Mechanical Services Department – www.emsd.gov.hk
Marine Department – www.mardep.gov.hk
Transport Department – www.td.gov.hk

Media

South China Morning Post – www.scmp.com
Hong Kong SAR Government – www.gov.hk/en/residents
Hong Kong Tourist Board – www.discoverhongkong.com