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Indonesia Needs 18 Billion Dollars of Investment to Achieve Zero Marine Plastic Waste by 2040

This article was previously published in Maritim.

Plastic waste is one of the environmental problems threatening our earth. According to a World Economic Forum (WEF) report, around 4,8 million tons are not managed properly every year. Out of that number, more than 620 thousand tons end up in the sea and threaten the health of the ecosystems within. Meanwhile, in an archipelago like Indonesia, marine health is vital for the economy and welfare of the people.

The COVID-19 pandemic has made the situation worse. Waste production has soared during the pandemic, which means that more plastic waste may end up in the sea. This could threaten the government's efforts to reduce plastic waste in the ocean by 70 percent by 2025 while working toward zero marine plastic waste by 2040 through a circular economy.

In November 2020, the National Plastic Action Partnership (NPAP) with the support of the WEF launched a report outlining recommendations for actions to achieve the national target for the reduction of plastic waste flowing into the ocean. NPAP is a platform that brings together the government, the private sector, civil society organizations, and research institutions to jointly address the problem of marine plastic waste in Indonesia.

According to the NPAP report, a total capital investment of US$18 billion is required between 2017 and 2040 to address the challenges in shifting from business-as-usual to a System Change Scenario for effective waste management and recycling. The number is based on the capital investment need of $5.1 billion from 2017 to 2025 for waste management, including for non-plastics, and an additional $13.3 billion from 2025 to 2040.

In addition, around $1 billion of additional operational financing is needed per year for a solid waste management system by 2040. This investment has the potential to generate revenues of up to $10 billion per year by 2040 from increased sales of recycled plastics, material substitution, and new business models toward a circular economy in the plastics value chain.

Such financing and investment estimations as contained in the NPAP Financing Roadmap and NPAP Action Plan are needed to provide the government and other stakeholders with recommendations in formulating policies toward waste management that is conducive to society and the environment as well as in effectively mobilizing investment and resources to address pollution on a large scale. Good and systematic coordination between the government, the private sector, and non-government actors can support this.

Domestic and international financing sources are needed to accelerate waste management improvement, especially waste collection and recycling infrastructure. Various investments from international organizations have been focused here, such as the Cleans Ocean Initiative that targets $2 billion in financing for waste management and has focused their activities on Indonesia, among others. Over $3 billion of domestic green investment commitments, such as from PT SMI, have been directed toward waste management infrastructure.

Furthermore, waste retribution is the main source of financing for waste management at the local level. However, the levy for household waste remains small and varies for each region. Furthermore, the retribution collected is often not actually used for waste management. According to the NPAP report, household waste retribution rates range between Rp800-1,300 per capita or less than 1 percent of local government revenues. The central government has issued a waste retribution regulation that can increase revenues from waste retribution. The actual collection at the local level needs to be supervised, as does the allocation of funds to ensure that they are actually used for waste management.

Indonesia also needs to quadruple its recycling capacity to achieve its national plastic waste reduction target. The Sea The Future initiative has committed $300 million and targeted to increase recycling capacity by facilitating recycling infrastructure development. The initiative is estimated to generate $20 trillion per year for global waste collection and recycling.

In addition to improving large-scale recycling infrastructure, local-level initiatives can also double down on recycling. The STOP project, which focuses on increasing collection and recycling capacity at waste processing sites – reuse, reduce, recycle (TPS3R) and private recycling centers, is an important step to increase recycling. For example, since the commencement of its operation in 2018 until the end of April 2021, STOP has collected 11,000 tons of waste and prevented nearly 10,000 tons of waste from flowing into the sea.

However, investing into the country remains challenging. Knowing who is doing what and where as well as finding domestic partners have been difficult. Platforms such as the National Plastic Action Partnership (NPAP), which brings together the government, the private sector and innovators, can help catalyze collaboration between the private and public sectors to tackle the plastic waste challenge.

Communication Bureau of the Coordinating Ministry for Maritime Affairs and Investment of the Republic of Indonesia

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