Governments in Asean should embrace second-life plastic

If governments have been slow to roll out waste management systems, they should be looking at ways to support the dynamic commercial sector now doing it for them.

Eric Stryson

Eric Stryson

The Jakarta Post

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Doing the work: Several women sort plastic waste, which is a part of the waste bank program in Medan. (Courtesy of Armawati Chaniago) (Courtesy of Armawati Chaniago/Courtesy of Armawati Chaniago)

November 9, 2022

JAKARTA – Plastic waste is a global scourge. Yet it represents an enormous economic opportunity if it can be transformed into high-quality recycled feedstock. Nowhere is this more apparent than in ASEAN where because per capita consumption is growing, plastic waste is now a significant challenge, and municipal waste management remains unable to cope.

In Thailand, up to US$4.3 billion per year or 87 percent of the potential value of plastic resins is lost, because the material is not reprocessed and put back to use. In Vietnam the figure is $2.9 billion per year, where some 2.6 million tons of plastic are thrown away with all the unsorted trash. What these figures don’t show is the growing volume of plastic, particularly single use bottles, being recovered by informal collectors.

By some estimates there are up to 5 million collectors in Indonesia hand-picking increasingly valuable plastic items from the 4.8 million tons of mismanaged waste each year. Their entrepreneurial effort represents the vanguard of a nascent recycling revolution, from which they deserve to benefit.

If governments have been slow to roll out waste management systems, they should be looking at ways to support the dynamic commercial sector now doing it for them. Communities recycling waste need investment in logistics infrastructure, upgraded collection facilities and training in process management. Land could be made available for warehousing.

Subsidies could be offered for electricity for environmentally responsible processors. Policies to support access to finance for upgrading machinery and transport could be a game changer. Recycling processing and manufacturing creates on average of 10-25 times more jobs than landfilling of waste, so it can help meet multiple objectives for municipalities.

Individual collectors and upstream processors deserve a bigger economic stake in the industry. Currently only the thinnest slice of the value chain goes to those who work the hardest to collect, sort, compact and bale the recycled plastic. Profit margins are healthy for producers of flakes or pellets. As capturing quality supply becomes more competitive it makes sense to reward collectors with inclusive business models or even offering them equity stakes.

Governments could offer tax benefits for companies that organize collectors cooperatively or offer profit-sharing strategies which will increase collection rates, improve quality, and keep plastic waste out of the environment.

Diligent collectors meanwhile create a level of purity of baled plastic difficult to replicate by municipal or household sorting systems, which are often highly contaminated by organic and other waste streams. Ironically, the largely informal system of collectors in Indonesia produces better quality bales than Singapore’s well managed, centralized trash collection, which anyway only recycles 4 percent of its plastics according to the National Environment Agency, the majority incinerated.

Meanwhile the industry is transforming rapidly. Surging demand for second-life plastic is being driven by multinational companies seeking to integrate more recycled material in products and packaging. It means that villages, towns, and peri-urban settlements who have for years been dumped upon – by both local and foreign waste – can now benefit from a veritable plastic goldmine.

According to original analysis from the Rebound Plastic Exchange (RPX) based in Abu Dhabi, UAE, there is an annual gap of at least 6.3 million metric tons of recycled plastic material, approximately the size of 19 Empire State buildings. At spot prices for recycled PET bales (polyethylene terephthalate) upwards of $300 per ton, and processed flakes and pellets far higher, the conditions are ripe for a transformation of supply.

Other plastic types like high density polyethylene (HDPE) and polypropylene (PP) are in growing demand and collectors will soon shift their focus beyond PET. Modern society is unlikely to give up plastic anytime soon – it has become too essential and convenient. Recycled plastic is thus bound to become further integrated into all areas of the economy.

Scores of young entrepreneurs across ASEAN are responding to the opportunity, especially as the global marketplace reorients toward trust, transparency and streamlined payment systems. In Indonesia, companies like Kibumi, Octopus, Bantubumi, and many others are mobilizing collectors in innovative ways. In the Philippines, the Plastic Flamingo, Green Ant and Envirotech are just a few companies who upcycle waste plastic into building materials and are well positioned to serve international manufactures. There is room for many more.

As Extended Producer Responsibility (EPR) mandates are rolled out across the region – Singapore (2023), Philippines (2024), Malaysia (2026), regulators should consider related factors. Difficult to recycle plastics should be banned – HDPE shampoo bottles with marketing stickers impossible to remove or multi-material multi-layered plastic sachets impossible to recycle except through expensive, carbon-intensive pyrolysis or depolymerisation.

Local recycling entrepreneurs should be protected as international financial capital gets involved. Before governments themselves invest in commercial scale incineration or waste to energy, they should enable local communities to transform existing material and capture the value.

Growing demand for second-life plastic is an economic opportunity that ASEAN governments should not miss.

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The writer is managing director at The Global Institute For Tomorrow (GIFT).

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