The objective of this report is to summarize the ongoing activities of the retail sector to fulfill its responsibility towards the adoption of an EPR system, whether based on government regulations or its own commitments. Similar to the other business sector reports, the intention is to highlight approaches and experiences to enable private sector stakeholders to build on it and to utilize the evolving opportunities. The report will be updated regularly to include new developments.
In Indonesia, the retail sector is characterized by a high degree of economic development. In the third quarter of 2021 the GDP grew by 3.51% (yoy) while turnover in the retail sector increased by 4.4%. The mobility of people in retail and recreational trade places was recorded to be 4.4% higher than the period before the pandemic. The increase of activity in this industry indicates an economic development for Indonesia in the midst of the pandemic. Moreover, economic growth in the retail sector has also occurred. According to data from Bank Indonesia, the retail sector experienced an increase in sales performance on a monthly and annual basis. As of December 2021, there was growth of up to 7.6% (mtm) from 2.8% (mtm) in the previous month and indicated an annual growth of 13.8% (yoy) from 10.8% (yoy) in the previous year.
Source: Bank Indonesia (2022)
During the last five years, the number of retail outlets has increased by 10,044 new outlets and reached a total of 36,146 outlets in 2020. This has drastic consequences for waste generation. In Jakarta alone, plastic bags coming from the retail sector contributed 5.2 tons out of a total of 978 tons of total plastic waste in circulation.
Source: BBC Indonesia (2019)
According to the regulation of the Minister of Environment and Forestry of the Republic of Indonesia No. 75 of 2019 regarding the reduction and recycling of packaging waste, the retail sector is one of the three targeted sectors. The regulation categorizes modern shops, shopping centers, and traditional markets as types of retail outlets. The required contribution from the retail sector is the reduction of single-use plastic bags with the objective of fading out the use of such bags completely by 2029. Some municipal and provincial governments have banned the use of such bags already. Though, in traditional public markets such single-use bags are still widely used.
Besides the mandatory measures based on the regulations, some retail outlets go further. The cooperation between industry and the retail sector has become closer in regards to dealing with packaging waste. The retail sector supports the collection of recyclable items increasingly.
On January 24, 2022, Alfamart together with Danone and PlasticPay launched a Reverse Vending Machine (RVM) program to improve the collection of recycable plastic residues. With these machines consumers can exchange their empty plastic bottles into electronic money (OVO, LinkAja, Dana, etc.). With a total of more than 16,000 outlets throughout Indonesia, Alfamart believes that the placement of these machines in Alfamart outlets can be a strength in the plastic waste management process in Indonesia. As for the first stage of this collaboration, the machines will be placed in five Alfamart stores located in Jakarta and Tangerang. PlasticPay alone previously provided trash dropboxes at 224 points spread across the Greater Jakarta area (Jabodetabek) area, including residential areas, offices, and places of worship.
A similar plastic exchange program was launched also by Farmers Market in collaboration with PT Unilever Indonesia and PT Supra Boga Lestari. The Smart Drop Box facility allows consumers to earn shopping points in the MyTrust Farmers Market app after depositing trash into the Smart Drop Box. In the future, the Smart Drop Box will be distributed to 10 Farmers Market outlets in the Greater Jakarta area.
In addition, PT Unilever Indonesia has also launched a refill station program at the Saruga Package-Free Shopping Store, Bintaro, South Jakarta. With this refill station, people can bring their own packaging and then refill various Unilever brand products, such as Rinso, Molto, Sunlight, Superpell, Lifebuoy, Clear, Dove, Sunsilk, TRESemmé, Love Beauty and Planet, and Bango. The cost of refilling all these products is very affordable, starting from Rp. 13 to Rp. 36 per gram or milliliter. And as per March 2022, it is also available at Kalibata City Apartments, Jakarta, and BSD Modern Market, Tangerang. The idea of providing refilling stations for liquid consumer goods is at the core of the business plan of the startup Siklus. The company buys the products in larger containers and distributes the goods via mobile stores to the houses of their customers.
Examples of plastic recycling can be found as well. Also in January 2022, clothing retail chain H&M Indonesia, in collaboration with Danone-AQUA, launched a new collection of children's clothing as part of their Bottle2Fashion program. The clothes are produced with plastic bottles as the base material. The Bottle2Fashion is an initiative from the two companies to contribute to the reduction of plastic pollution in Indonesia. For the latest edition, Bottle2Fashion has collected and recycled more than 7.5 million PET bottles, and has produced several modern forms of hoodies, trousers, t-shirts, and long-sleeved tops, also socks for 9 to 14-year kids. The recycled plastic bottle material has gone through 5 long stages, starting from cutting, heating, converting to recycle polyester fiber, to merging and pasting other materials so that clothes are ensured to be safe for children's skin.
In line with this, there is also Super Indo, which in 2021 has launched the product "Kantong Segar 365" as an alternative for plastic rolls when consumers shop for fresh products such as vegetables, fruit, and eggs at Super Indo outlets. As an alternative to plastic, Kantong Segar 365 itself is made of cloth and is more environmentally friendly. In addition, Super Indo collaborates with Tetra Pax and Green Movement Indonesia to provide Packaged Waste Drop Boxes services at its 6 outlets in the Solo area. The collected waste will be distributed to the waste bank and then recycled. Moreover, the retail also collaborates with P&G Indonesia in the Conscious City Bandung program where they open services for people to sort their waste at home, deposit them to the conservationists/scavengers using digital applications, and so that waste can be recycled and create a circular economy.
Challenges & Results so far
Apart from various innovations and company projects on waste management circulating in the environment, there are also challenges that could hinder the achievement of these goals. Refilling stations and reverse vending machines are very new solutions. To make full use of this consumer behaviour would have to change significantly. For instance, plastic bottles would have to be collected at home and then taken to the next retail store with an RVM. At present, recyclable items are mostly thrown into the garbage bin.
The plastic bag excise tax is a good example of consumer behaviour needing time to adjust. If available, consumers still prefer to use plastic bags. In July 2020 the Indonesian parliament approved a plastic excise of Rp. 30,000 per Kg of plastic, which corresponds to Rp. 200 that consumers would have to pay for each plastic bag. This small amount does not distract consumers. Being lightweight, durable and water-resistant, consumers are in a “love and hate relationship” with their plastic bags. Perseverance and consumer education are important. A stronger enforcement of already existing regulations banning the use of plastic bags is essential. Otherwise, the plastic bag ban program becomes ineffective. On the other hand, with 107 million Kg of plastic bags being produced in Indonesia per year, the Indonesian Ministry of Finance could record an additional income of IDR 1.6 trillion (approximately 62 million EUR).
In supporting the implementation of EPR in Indonesia, retail agencies should maintain the sustainability of various programs that have been initiated. As for achieving the intended goal, cooperation between the retail sector and the government is important. The Indonesian Retail Entrepreneurs Association (Asosiasi Pengusaha Ritel Indonesia / APRINDO) can follow up on retail waste management programs and encourage more companies to connect with producers and through this go beyond what the current legal framework expects the sector to take care of.
The number of such RVM machines is expected to further increase. Electronic payment providers will benefit from integration with such machine providers. Important will be campaigns to convince the public to make use of such machines. Volumes of collected items have to increase to prove the validity of this approach. Startups will continue to shake up the sector.