High costs limit plastic recycling in South-east Asia: Bain

[SINGAPORE] Plastic recycling in South-east Asia is limited by high collection and sorting costs, which can be 1.5 to two times the raw waste price, said global consultancy Bain & Company.

“Major markets like Indonesia, Thailand and Vietnam capture just 8 to 25 per cent of plastic waste for recycling in major urban areas, indicating significant headroom to boost recycling rates,” it said in a Mar 18 report.

With high collection and sorting costs, brand owners are unwilling to pay premium prices despite “ambitious” targets, said Bain, noting that there are three key challenges.

Firstly, the value chain for plastics recycling is fragmented, with a heavy reliance on informal players, such as individual collectors who sell plastic waste to support their families.

While such work can be a lifeline, “the lack of formalisation and coordination leads to inefficiencies and missed opportunities”, said the consultancy.

Secondly, different types of plastics face “varying fortunes” in their recycling journeys, with the recycling of flexible materials – such as plastic bags and films – lagging significantly.

“These materials pose unique challenges; they are lighter and voluminous, prone to contamination, and more costly to process, making their recycling less economically attractive without significant technological and process innovations,” said Bain.

And finally, South-east Asia is facing tighter international regulation on the import of plastic waste.

Many countries in the region have long depended on imported waste to supplement their local recycling feedstock. However, the European Union plans to ban plastic waste exports to countries that are not members of the Organisation for Economic Cooperation and Development by 2026.

This could impact about 140 million kg of annual waste import into Malaysia and Vietnam, said Bain, adding that this “makes bolstering domestic capabilities more urgent, so the region can establish a reliable supply of recyclable materials”.

Growing demand

Despite the challenges, Bain expects demand for recycled plastics in the region to see double-digit growth through 2030.

It noted that many South-east Asian countries are starting to promote less plastic usage, such as by banning single-use plastics. They are also encouraging higher recycling rates and use of recycled plastic content.

In addition, Vietnam, Malaysia, Indonesia and the Philippines have introduced “extended producer responsibility”, a policy approach where producers have to take charge of treating or disposing of post-consumer products.

To improve plastic recycling, Bain called for more education on plastic circularity and consumers’ role in the process. There needs to be more awareness on flexible materials, which are less likely to be recycled due to contamination and economic factors, as well as the steps required to make their collection effective.

Incentives for recycling are another possible solution. Bain noted that several countries have introduced “reverse” recycling machines, where consumers can earn rewards by returning containers. Other incentives could include subsidies for businesses that invest in recycling technologies.

“By making the economics of recycling more attractive, stakeholders can encourage greater participation from both businesses and individuals,” said the consultancy.

It added that as technology improves, recyclers can process plastic waste of different qualities “more efficiently and at lower costs, making recycled plastics more competitive with virgin materials and, thus, more attractive for broader use”.

On the part of brands, centrally managed coordination of plastic waste disposal from operation sites could improve efficiency and reduce waste.

Bain noted that there is room for more innovation. It cited projects where smartphone apps allow households and businesses to connect with plastic waste collectors, with doorstep pickup services or designated drop-offs.

“Projects like these can increase collectors’ reach, reduce barriers in collection, and refine logistical operations with advanced technologies to process recyclables more efficiently,” it said.

The consultancy further called on governments to acknowledge the crucial role of informal workers, and to “consider the safety and economic viability of these informal workers and uplift them”.

Such a multifaceted strategy “is crucial for addressing the immediate challenges in plastic circularity and setting a sustainable path forward”, said Bain.