Indonesia is one of the countries moving forward to the circular economy platform. Plastic circularity, which involves both the formal and informal economies in its value chain, has been included as part of its agenda.
The informal sector, specifically, plays a significant role in running the collection and processing of the recycling supply chain today, thus acting as the fundamental livelihood for around 2 million people in Indonesia. It forms an ecosystem that, despite being called informal, actually performs a pattern to organize quantity and quality of plastic within its wide network.
Before the COVID-19 pandemic hit, practitioners and activists of the circular economy on plastics already faced challenges in mainstreaming this platform. The idea to reduce pollution while improving the economy and competitiveness of the industry still needs pre-conditions to accelerate its implementation.
The pre-conditions mainly include enabling national regulation that concretely incentivizes the use and production of products with recycled content, and the actualization of a business model that enables synergy between the formal waste management system and the informalities of the recycling ecosystem.
Our research has shown that Indonesia currently has a 7 percent recycling rate of plastic, although specific types such as PET bottles are recycled at a rate of nearly 70 percent. With this baseline in mind, we need to be cautious because the majority of plastic still needs to be contained and re-processed to avoid pollution and benefit the economy.
The challenges have become wider since COVID-19 began to spread around the world. The oil price decrease has resulted in a lower price of virgin plastics compare to recycled plastics, causing a domino effect for the recycling industry. The market demand became lower, the supply chain became slower, factories reduced (some even stopped) purchasing recycling materials, and the informal sector failed to sell its sorted plastics, resulting in unpaid waste pickers and a stock pile-up of post-consumer plastic materials.
In the formal and semi-formal sectors, waste facilities and waste banks in the communities are striving to maintain their operations, due to declining income from recyclable sales. This is worsened in cities where local government subsidies are shifted to COVID-19 relief mitigation actions. As a consequence, unsafe disposal and burning of waste have become inevitable in some waste facilities.
The uncertainty surrounding economic recovery after COVID-19 is undeniably shattering the recycling industry as one of the circular economy pillars. On the other side, unemployment, which will skyrocket due to economic depression, will likely increase the number of informal workers who turn to the easiest job to take: waste picking. If all of us realize this too late and fail to take immediate measures in handling these impacts to the recycling ecosystem, Indonesia could be moving further backward in meeting the target of reducing 70 percent of ocean plastic pollution by 2025.
The government, industry and society have to align together to mitigate and adapt during and after COVID-19 to enable the circular economy to stay on track, and even to hold more strategic positions. There are two sides of the coin for this: the recycling economy as the safety net for job employment and small/micro-entrepreneurs empowerment – the economy side; and recycling as a measure to divert the burden of waste at landfills, the conditions of which are at a critical stage in Indonesia – the environment side. Nationwide awareness about this urgency needs to be raised. The impacts would otherwise threaten our daily lives if we fail or are late to realize. Piles of trash in our neighborhoods would very much worsen the situation in this pandemic.
The questions of what should we do to revive the whole ecosystem remain challenging. Nevertheless, we try to point out what we consider doable programs to address this.
The first one is economic measures. Economic stimulus is needed for business actors, especially SMEs along the value chain, through financial support or guarantees, opening new markets, tax incentives or supporting infrastructure.
A regulatory framework that incentivizes products with recycle content needs to be prioritized, promoting recycling-based products that should be supported, e.g. through procurement of non-food contact related products in government institutions or state-owned enterprises.
It is also important that instruments of standards and verifications, especially for food-grade packaging that use recycled materials, are implemented soon. Incentives should be prioritized for post-consumer recycling – of which waste collecting and processing takes place in Indonesia – by Indonesian recyclers, rather than imported scrap or recyclate/resin produced by other countries. This is crucial to make sure that the circular economy is the solution that will give the most benefits to our nation.
The second one is collaborative measures. The development of a business model to synergize formal and informal systems in the collection and processing of plastic waste needs concrete realization. Perhaps on a pilot scale first, then scale up. Waste management investment via private engagement should also be explored more and implemented, both in a medium and large-scale capacity.
Director of Sustainable Waste Indonesia