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Market Opportunities for IFM in
Vietnam, Indonesia & Philippines
Chukiat Wongtaveerat
Environment & Building Technologies
Frost & Sullivan Asia-Pacific
5 March 2012
2
3
V.I.P Market
Future Direction of IFM in V.I.P
1 APAC Perspective of Facility Management
APAC Perspective - Facilities Management Market
Evolution and Roadmap
20001990
Evolution
of Facility
Managem
ent
Markets
2010 2020
PPP
Offerings
Soft FM
Outsourcing
Sustainability
Management
Service
Integration
Energy
Contracting
2012
Total Facility
Management
FM Automation
(e.g. CAFM)
Hard FM
Outsourcing
Contract
Management
Value Driven
DesignIT Services
Waste
Management
Property
Management
Complete Workplace
Management
Service
Bundling
Workplace Change
Management
Regional/ Global
Contracts
Service
Externalisation
BPO
PFI
Vietnam
• The Asia-Pacific market is a good mix of developed, developing
and under developed market. Hence a huge disparity exists in
terms of the overall status of each countries
• Singapore, Australia, Japan and South Korea markets are
relatively more developed as compared to other countries.
• The South east Asian markets barring Thailand and Malaysia are
relatively less developed and are fast catching up with their
APAC counter parts like Singapore or Japan
• Most of the Asian countries have the presence of the
international FM players
• The Singapore market is one of the most developed and the
largest markets in Asia. Most of the international players have a
foot print in the country. Singapore is fast reaching a market
saturation level
• The Indonesian markets are driven by the energy and resources
sector which includes renewable and non conventional sources
of energy as well
• Philippines FM market is driven by the Retail industry, BPO
industry in the country and the influx of multinational players in
the country. However this is a recent phenomenon and the
market is still in nascent stage and small in market size as well
• Vietnam is an under developed economy and so is the FM
market in the country. The growth is mainly driven by the
manufacturing and office space sector
APAC Perspective - Facilities Management Market
MaturityDevelopment Growth Decline
Source: Frost & Sullivan.
Indonesia
Japan
Time
Singapore
Philippines
Malaysia
Thailand
South Korea
Australia
APAC Perspective - Single, Bundled or IFM?
Note: All figures are rounded Source: Frost & Sullivan analysis.
• The market for integrated solutions in Asia-Pacific will continue to grow at a faster rate than the market for
single and bundled services. Growth in integrated services invariably reduces growth in single services
(through the inclusion of single services into integrated service packages).
• Short/ medium term: Many FM providers have been reporting double digit growth over the last 3
years, plenty of untapped growth potential within many verticals and geographies.
• Long term: Integrated services will not grow without limit as the advantages are less evident for small
and medium businesses. Besides, some large end-users will continue to appreciate the flexibility that
comes from short contracts with multiple suppliers.
APAC Perspective - Single VS Integrated Services
Before 2005 2005 – 2020 2020
Onwards
Key
Market
Trends
Lack of
Professional
Conduct.
Low
Technology
absorptionCost pressures
from local players
Price Sensitivity
& Value
Consciousness
in the end
consumer
Cost
Effectiveness
for Large
Players
Relationship
based
Tendering.
1
2
34
5
6
• The overriding factor in pricing for the Asian market is
the low level of per capita income. While consumers
want quality and understand that quality comes at a
premium, most buying decisions are highly price-
sensitive.
• Large and established FM players have the cost
advantage and manage to offer their services in a more
cost effective manner than the smaller players
• However, international IFM players are under the
pressure to match the price of their local counterparts.
• Profitability ranges from 5% to 10% for regular FM
service provider (cleaning, security, and others). IFM
players experience 10% to 15% profit margin due to their
value-added services
• Small local companies are often at a disadvantage
compared to large established FM players that maintain
good relationship and support from the government
clients
• Lack of professionalism is prevalent in the non-
government sector too where contracts are awarded
based on relationships rather than the merit of the
company
• With the increased participation of international IFM
companies, use of IT and Web-enabled tools to measure,
track, and report is expected to be more common and improve
the quality of FM services
• With cleaning and security being the most outsourced
services, the use of technology has been limited
• Local FM companies, both small and large, do invest in
technologies and chemicals pertaining to cleaning
APAC Perspective: Facilities Management Market
2
3
V.I.P Market
Future Direction of IFM in V.I.P
1 APAC Perspective of Facility Management
Indonesia is likely to maintain its market share among 3
countries
Source: Frost & Sullivan analysis.
• The country has rapidly created private sector job
opportunities and is well positioned to achieve all the
Millennium Development Goals by 2015.
• Vietnam is an emerging market, offering ground
floor and growing opportunities for exporters and
investors.
• Vietnam’s economic growth rate has been among
the highest in the world in recent years, expanding
annually at 7-8.5 percent, while industrial production
has been growing at around 14-15 percent per year.
• Telecommunications, information technology, oil and
gas exploration, power generation, environmental
technology, aviation and education are some of the
key industries in the country
• These sectors continue to offer the most promising
opportunities as infrastructure needs continue to
expand with Vietnam’s pursuit of rapid economic
development Like in other Asian countries, the trend to outsource
FM in Vietnam is expected to increase, especially in
sectors such as
banking, telecommunications, energy and power
sectors
Vietnam – Emerging Economy of APAC
Vietnam – Market Features and Characteristics
Number of
Companies
in the
Market
Less than 10 companies in
Tier 1 with hundreds of
small and medium players
in Tier 2 and 3
Types of
Competitors
International well-
established service
providers
Local service providers
that are well-known in the
industry with significant
market share
Smaller or individual
service providers, usually
catering, cleaning or
security companies
Tiers of
Competition
Tier 1 (2-3%)
Tier 2 ( 25%)
Tier 3 ( 70-75%)
Characteristics Details
Pricing Large, established FM participants have a cost
advantage and manage to offer their services in a more
cost-effective manner than smaller participants.
However, international IFM participants are under
pressure to match the prices of their local counterparts.
Tendering Small local companies are often at a disadvantage
compared to large, established FM participants that
maintain a good relationship with and get support from
government clients.
Technology As cleaning and security are the most outsourced
services, the use of technology has been limited.
With the increased participation of international IFM
companies, the use of IT and Web-enabled tools to
measure, track, and report is expected to become more
common.
Vietnam – FM Key Market Trends
Key Trends in VietnamPrice sensitivity and value consciousness
among end users
Cost effectiveness in large participants
• The trend to outsource the entire
bundle of FM services to a third party
is weak, although IFM participants
have recently started bidding for
projects outsourced by multinational
companies.
• Vietnam provides great potential for
FM service providers, as major socio-
economic development is underway.
This includes construction in real
estate, rising concern about
pollution, and increasing focus on
energy conservation.
Cost pressure from local participants
Low technology absorption
Relationship-based tendering
Lack of professional conduct
Source: Frost & Sullivan analysis.
Cleaning
SecurityCatering
M&E
IFM
Pest Control
Property Services
Office Services
Vietnam – Market Opportunity Analysis by Service
Type
Relative Market Share
Re
lati
ve
Gro
wth
Ra
te
Opportunity by Service Type (Vietnam)
Source: Frost & Sullivan analysis.
Traditionally,
most common
single services
in Vietnam
M&E service is one of
the longest FM
services, with the
highest growth rate;
most sought service
across Vietnam
Catering is an
important service
to multinational
manufacturing
companies in
Vietnam.
Relatively new
service propositions;
future potential is high
• FDI in Indonesia has increased significantly by
20% in 2011, especially in the
telecommunications, energy, and infrastructure
sectors. There are around 1,700 MNCs across 37
industrial sectors
• Indonesia is one of the most resource-rich and
populous emerging-market countries in the world
• Indonesia has long been considered a essential
economic power, both in the region and globally
• Government plays a significant role in Indonesian
economy since it owns more than 164 state-
owned enterprises and administers prices on
several basic goods, including energy, food and
basic infrastructure
Similarly to other Asian countries, the trend to outsource FM services is expected to increase in Indonesia,
especially in the banking, telecommunications, energy, and power sectors.
An increasing trend to reduce energy cost as well as waste generation is expected to favor the rise in
demand for FM services focusing on energy and waste management.
Indonesia – Rapid growth on FDI drives FM market
Indonesia – Market Features and Characteristics
Number of
Companies in
the Market
More than 30 companies in
Tier 1 and Tier 2, with
thousands of small local
players in Tier 3
Types of
Competitors
International well-established
service providers
Local service providers that
are well-known in the industry
with significant market share
Smaller or individual service
providers, usually catering,
cleaning or security
companies
Tiers of
Competition
Tier 1 (3-5%)
Tier 2 ( 40%)
Tier 3 ( 50-55%)
Characteristics Details
Pricing Indonesia is a highly price-sensitive
market and FM participants are under
constant pressure to lower prices.
International FM service providers offer
consultative value-added services and
tend to be more expensive.
Tendering Goverment and local tendering for IFM
projects in Indonesia are mainly based
on the relationship between the service
providers and clients.
Technology Technology usage in FM services is at
an early stage in Indonesia, though
some IFM participants offer Web-
enabled tools to track and manage
facilities.
Indonesia - FM Key Market Trends
Key Trends in Indonesia
Level of price sensitivity in local clients is high
More focus on customized services
• The trend to outsource FM services is
increasing in several
sectors, especially in offshore mining
and retail. Commercial buildings are
also projected to contribute
significantly to the overall development
of the FM market in Indonesia.
• Excluding the mining and retail
sectors, the adoption of IFM in
Indonesia is low and limited to sectors
such as healthcare, business, and IT.
Integration of green technologies and IFM
Web-based technology to communicate with clients
Price competition is high
New buildings might list technology advancement
as a key requirement
Source: Frost & Sullivan analysis.
Office Services
Security
Relative Market Share
Re
lati
ve
Gro
wth
Ra
te
Cleaning
M&E
IFM
Catering
Property Services
Pest Control
Opportunity by Service Type (Indonesia)
Source: Frost & Sullivan analysis.
Continuous
demand on
security services in
government and
commercial
buildings
IFM focus is high
in major cities.
Demand from
new buildings is
significant due to
intense building
construction in
these cities
Focus is mainly
in major cities in
Indonesia
An important
single service for
all types of end-
user sectors
Indonesia – Market Opportunity Analysis by Service
Type
• Philippines has a dynamic private sector with a
strong positioning in several sectors such as
electronics, offshore IT and tourism
• The country has 8 to 10 million OFW (Overseas
Filipino Workers) working primarily as the
contract workers across various countries
• Moreover, lower dependence on exports,
resilient domestic consumption, large
remittances from over millions overseas Filipino
workers and a growing business process
outsourcing industry helped the economy
sustain during turbulent times
Philippines is emerging as the one of the most lucrative ITO and BPO destinations of the world, Metro Manila
is the biggest outsourcing hub for players such as IBM and Accenture
With a sprawling BPO industry there has been an influx of multinational companies in the country
World leading IT companies, banks and various other enterprises are increasing their footprint in the country
Philippines – The Top Outsourcing Destination in
Asia
Philippines – Market Features and Characteristics
Number of
Companies
in the Market
Less than 10 companies in
Tier 1 with hundreds of small
and medium players in Tier 2
and 3
Types of
Competitors
International well-established
service providers
Local service providers that
are well-known in the
industry with significant
market share
Smaller or individual service
providers, usually catering,
cleaning or security
companies
Tiers of
Competition
Tier 1 (1-2%)
Tier 2 ( 25%)
Tier 3 ( 70-75%)
Characteristics Details
Pricing The Philippines market is highly price
sensitive and insists on value for money.
Therefore, services must stay price
competitive to gain a foothold in the market.
Tendering Tendering is relationship-based rather than
operating on the basis of cost and service
efficiency.
Procurement methods and procedures are
well in place but slowed by red tape and
corruption, which often disrupt the
tendering process in the business
environment.
Technology Information and communication
technologies are two of the key industries in
the Philippines but the uptake of technology
in FM is still in the nascent stage.
Philippines - FM Key Market Trends
Key Trends in Indonesia
Relationship-based business
Non-uniform pricing
• The growth is expected to be fueled
by the commercial and retail sectors.
There has been a severe influx of IT
services companies in the
country, due to the growing business
process outsourcing market in the
country.
• The manufacturing sector in
Philippines is predicted to contribute
significantly to the overall FM market
in the country in future.
• Most IFM service providers have set
up offices in the country, as they
anticipate a huge FM demand.
Low awareness of benefits
Red-tapism
Price sensitivity is high
Source: Frost & Sullivan analysis.
Office Services
Security
Relative Market Share
Re
lati
ve
Gro
wth
Ra
te Cleaning
M&EIFM
Catering
Property ServicesPest Control
Opportunity by Service Type (Philippines)
Source: Frost & Sullivan analysis.
Security
services are
prominent in
most public
areas such as
shopping
malls, commer
cial
buildings, and
train stations.
Energy savings
are the main
proposition in
new or bigger
buildings in Metro
Manila
Niche services in
major cities only
Philippines – Market Opportunity Analysis by
Service Type
2
3
V.I.P Market
Future Direction of IFM in V.I.P
1 APAC Perspective of Facility Management
Future Direction: Customer Characteristics
CountriesCompetitive
Intensity
Customer Characteristics
Level of Price
Sensitivity
Level of Brand
Awareness
Preference for
Local
Participants
Malaysia
Singapore
Indonesia
Philippines
Japan
South Korea
Thailand
Vietnam
Australia
New Zealand
Impact:
High
Medium
Low
Source: Frost & Sullivan analysis.
Parameter Vietnam Indonesia Philippines
Market Size
Market Growth
Competitiveness
Rate of
outsourcing
Development of
IFM
Source: Frost & Sullivan analysis.
Future Direction: Market Attractiveness
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
High
1 52 3 4
Low
Vietnam
Business & IT
Services
Retail & Wholesale
Transportation &
Infrastructure
Healthcare
Govt. Offices
Indonesia
Energy & Resources
Business & IT
Services
Manufacturing,
Retail & Wholesale
Education,
Transportation &
Infrastructure
Philippines
Business & IT
Services
Manufacturing
Retail & WholesaleEducation
Govt. Offices
Potent Level by End-User
Most Likely Least Likely
Future Direction: Market Opportunity by End-User
Country High Market Share Moderate Market Share Low Market Share
Vietnam Indonesia Philippines
Targeted End-User
Sectors
Business & IT
Services
Retail &
Wholesale
Energy &
Resources
Business & IT
Services
Brand Value
Price
State-of-the-art
Technology
Past References
One Stop Services
Source: Frost & Sullivan analysis.
Future Direction: Key Success Factors
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For Additional Information
Donna Jeremiah
Corporate Communications
Asia Pacific
+61 (0) 8247 8927 [email protected]
Carrie Low
Corporate Communications
Asia Pacific
+603 6204 5910
Chukiat Wongtaveerat
Consultant
Environment & Building Technologies
Jessie Loh
Corporate Communications
Asia Pacific
+65 6890 0942
