Background
The Indonesian industry consumer goods manufacturing sector is growing rapidly. The fast-moving consumer goods market grew by 8.8% in 2020 and households spend 19% of their income of FMCG. Future developments revolve around rapid urbanization.1 This leads to new products, such as convenience foods, being demanded, Furthermore, urban consumers are becoming more health conscious, thereby demanding more products, such as vitamins, weight-loss foods or nutritional drinks. Additionally, this increased urbanization leads to higher demand of international products across the food and beverage, cosmetics, and consumer goods industry. The food and beverage industry especially benefits from the rise in wages, as the food industry it is forecasted to grow 9.1% from 2014 and the drinks industry by 13.9%2. According to statista, in 2021 the value growth of the Indonesian Fast-moving consumer goods (FMCGs) is 8.8% and the household expenditure share for FMGC is at 19%. This leads to the belief that the FMCGs are rapidly expanding3.
When looking at the composition of the market, the majority is made up of small or micro-sized enterprises, however financially the industry is dominated by a few large companies. The sector experienced very high levels of foreign investment. In 2014, the foreign investment into the food and beverage industry amounted to 50 trillion IDR, and it is growing in the following years. However, traditional trade still dominates industry after all.
Approach
With the passing of regulation 75/2019, many initiatives in the sector have been started to comply with the new requirements. As the regulation aims at larger companies in the implementation of the EPR standards, it comes as no surprise that the largest companies have started some initiatives.
After Unilever issued a public statement to their commitment in implementing new EPR standards, they created refill stations in Bintaro. There you can refill amongst others, different shampoos or laundry detergents. The company aims to halve their use of plastics, design all of their plastic products to be recyclable, reused or decomposable, additionally they want to help collect and process plastic packaging that is sold. Lastly Unilever wants to increase the use of recycled plastic content by a minimum of 25%. All these goals should be achieved by 2025. In order to achieve the goals, Unilever cooperates with PT Supra Boga Lestari, Tbk, and SMASH.id.
Another Indonesian based company that is implementing recycling in order to become more circular is Le Minerale. This company installed recycling points throughout many cities in Java, most notably in Jakarta. This company works closely together with the Indonesian Plastic Recycling Association, the Indonesian Scavenger Association and Waste4Change. In 2022, this initiative extended its activity to including education.
Additionally, Garnier made commitments to refrain from using virgin plastics in their packaging by 2025. Garnier also was able to reduce water consumption by 59% and CO2 emission by 84% in 2019 compared to 2005 values. In their roadmap, they worked together with eRecycle to launch an application that can weigh sorted plastic. In order to do so, they explored the option of using flute paper.
Danone also launched a pilot program of a plastic vending machine. Connected to an app, consumers can recycle their PET bottles and by recycling consumers can earn points to be converted into electronic money.
Coca-Cola also re-established its Plastic Reborn 3.0 initiative. With this project they aim at increasing the capacity of garbage workers, by increasing the usage of technology and educating the workforce about recycling activities. The projects put a special emphasis on the inclusion of the informal sector. The project uses the Alchemy app is used to measure the environmental, social, and economic impact of the project.
Nestlé became a partner of the STOP initiative. This initiative was started by Borealis and SYSTEMIQ and aims to provide waste management in East Java. The initiative is planning to expand to other cities. Within this program, a waste management facility was created. Currently, the project is present in four cities, namely Pasuran, Jembrana, Muncar, and Banyuwangi. In these cities they built recycling and waste sorting faculties, educating the public about recycling.
Lastly, there is great private sector support for the Global Plastic Action Partnership. The partnership is hosted by the World Economic Forum and is supported amongst others by Pepsico, Coca Cola, Nestle, and DOW, but also by the Canadian Government. In Indonesia the National Plastic Action Partnership (NPAP), the project has more than 150 partners. This initiative aims at connecting public and private sector stakeholders to create a common path in combating plastic pollution.
Members of the Packaging and Recycling Association for Indonesia Sustainable Environment (PRAISE) have committed already to increasing the local availability and use of recycled materials. To achieve their goals, they have decided to join hands in setting up collection systems. For this purpose, PRAISE has established the Indonesia Packaging Recovery Organization (IPRO). IPRO is to organize the improved collection of packaging and also develop new packaging concepts that can be recycled in a simple manner.
Source: IPRO http://indonesiapro.org/
Moreover, IPRO also periodically opens tenders for projects related to plastic collection and recycling.
As of June 2022, IPRO opened a tender for the collection of PP and MLP Packaging Materials for recycling with project details as follows:
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Used PP Packaging Collection and MLP Used Packaging Collection
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East Java and Bali collection locations
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The target volume is 250 tons/material/region for 6 months in the 2 regions
Here, 1 company can only choose 1 type of material to collect and choose 1 location. For collecting or recycling companies who are interested in becoming IPRO's partners in implementing in the field, can fill out the form at the link here: https://bit.ly/IPRO-Tender no later than 17 June 2022. Companies selected to follow the next process will receive an email from IPRO to attend the Project Briefing session.
Challenges & Results so far
When looking at the activity Coca Cola undertook within their project Plastic Reborn 3.0, there are some results that the initiative achieved. Firstly, the Coca Cola foundation Indonesia together with Dynapack Asia build a PET recycling facility in Bekasi West Java with an investment value of IDR 558 billion. Additionally, with the Plastic Reborn project 3.0, 436 scavengers were trained in using technology and in recycling. Additionally, within the program, the Ancora Foundation together with the Plastic Bank Indonesia and MallSampah collected more than 14 million PET plastic bottles in the regions of Lombok and Makassar.
Additionally, since November 2021, L’Oreal has implemented their flute liner packaging for products from the brands Garnier, L’Oreal Paris, and Maybelline. From then on products ordered from official stores will not be using bubble wrap or other plastic packaging.
The greatest challenge that the industry is facing revolves around the often untransparent waste collection services, as the waste collection is mostly done by the informal sector.
Outlook
So far, the manufacturing sector has taken significant initiative to help combatting the plastic pollution in Indonesia, by launching different projects on different aspects of EPR. As can be seen with the reinstalment of the Plastic Reborn 3.0 initiative, companies are reinstalling or founding their efforts in committing to improving waste management and plastic recycling. An important driver is the existence of IPRO. The success will depend on whether more companies will be joining and whether, ultimately, PROs will be supported legally by the Indonesian government.