The closure of Chinese recycling facilities presents a big opportunity for the Philippines; by Matt Barrie 03.05.18.
For years China was the world’s premier destination for recyclable materials, but a ban on certain imports has left nations scrambling to find new destinations for disposed resources. The decision was announced to the World Trade Organisation in July 2017 and came into force on January 1 of this year, giving companies from Europe to the United States barely six months to look for other options.
It’s had a huge impact in China with recycling companies having to lay off staff or shut down due to the lost business. The so-called ‘National Sword’ ban bars imports of 24 categories of solid waste, including certain types of plastics, paper and textiles.
Chinese recycling companies are now looking at establishing operations in emerging markets elsewhere and this provides a huge social and economic opportunity for the Philippines. Aside from the economic uptick that the Philippines would benefit from, the establishment of state-of-the-art treatment facilities would provide an expedient solution for the growing domestic waste issue that we see so prevalently infecting all aspects of Filipino society.
For decades, China was the world’s largest importer of waste — a status that many countries took for granted, going by the reaction to Xi Jinping’s surprise decision to limit future imports. The country started importing waste in the 1980s to fuel a growing manufacturing sector and at its peak, imported almost 9 million metric tons of plastic materials a year, according to Greenpeace. It grew a whole waste processing and recycling industry, but with domestic handling of waste becoming an increasing issue in recent years (as demonstrated by the award-winning documentary, Plastic China), Beijing has decided to focus on its own backyard and has pledged $35bn to this end over the next 3 years.
The ban has created challenges for Chinese companies dependent on foreign waste. “It will be very hard to do business,” said Huizhou Qinchun, a plastic recycling company in Guangdong province who’ve already let go a dozen employees. Others, such as Nantong Heju Plastic Recycling in the coastal Jiangsu province, will “no longer do business” at all, a representative said.
Chinese recycling companies are looking to move their operations into emerging markets in Southeast Asia.
There are fears that this could be more expensive for the west than shipping waste to China. Sending recyclables to China is extremely cheap because they are transported on ships that would otherwise be empty when they return to the Asian behemoth after delivering consumer goods to the west.
However, the Philippines could follow a similar track. An approximate $800 million in exports are sent every month to the US with only $560m in imports received (PSA, 2017). There’s clearly space on inbound ships that could be utilised to import valuable waste materials.
The size of the opportunity is huge. In 2015 alone, the China bought 49.6 million tonnes of materials, 2.5 times the total annual waste generated here in the Philippines, according to official customs figures. The European Union exported half of its collected and sorted plastics and the Republic of Ireland alone exported 95 per cent of its plastic waste to China in 2016.
That same year, the US shipped more than 16 million tonnes of used commodities to China, worth more than $5.6 billion.
Yet the Filipino government doesn’t seem to be doing anything about this.
A potential shortfall of some 7 million tonnes annually of recycled plastic materials in China is leading plastic re-processors to install capacity in nearby Vietnam and Thailand and Malaysia and Indonesia have followed in attracting Chinese investors in the recycling sector over the past year. Most of these countries have yet to develop their own domestic recycling collection and public awareness about the issue, but their access to cheap labour and locations of ports close to major shipping lines work in their favour.
Preliminary data from the Bureau of International Recycling (BIR), showed imports of plastic waste into Southeast Asia are already rising fast. Due partly to a ramp-up in shipments in the final quarter of 2017, the BIR estimates that annual imports of plastic scrap into Malaysia jumped to 450,000–500,000 tonnes in 2017 from 288,000 tonnes in 2016. Vietnam’s imports rose by 62 percent to 500,000–550,000 tonnes for 2017, while Thailand and Indonesia showed increases of up to 117 percent and 65 percent respectively.
There’s a growing social and environmental consciousness in the Philippines, with public examples like Boracay serving us all a lesson as to the consequences of inadequate waste management, and there’s a network of exciting, new start-up businesses like Solu and Trash2Coin coming to market in the coming months that use technology to optimise waste management processes.
Our country is fertile for this potential Chinese investment but once more, the lackadaisical Philippines has sat idly by.
The story of Seah Kian Hoe should serve as inspiration for the Philippines.
When Seah Kian Hoe was 10 years old, he would jump on the back of his parent’s small truck during school holidays and help them collect scrap, going door-to-door around neighbourhoods in Malaysia’s southern state of Johor. Taking their haul back to the family yard, they would spend hours separating the glass bottles, aluminium cans and discarded newspapers.
Seah now employs 350 people at Heng Hiap Industries, one of Malaysia’s top plastic recycling businesses which processes 40,000 tonnes of waste per year from both domestic and overseas suppliers. Heng Hiap Industries is just one of the Southeast Asian plastics recycling companies gearing up to benefit from China’s decision to ban imports of plastic waste from the start of 2018.
In Malaysia, Seah remembers how his parents were once ashamed that they made a living from collecting and reusing scrap, believing it to be a profession that was not respected. But when his recycling company began to make serious money and received an international award for environmental leadership in 2013, it helped to change minds. Southeast Asian nations face a similar battle to shift perceptions of the recycling industry. “I don’t believe there is a global plastics pollution problem — there is a global plastics ignorance problem,” said Seah. “It shouldn’t be seen as trash but as a resource with a lot of intrinsic value.”
The China import ban has already seen some wide-ranging consequences just five months in. Australian councils are reported to be considering charging a $90AUD (~P3500) monthly levy to their residents as budgets need to be dramatically raised to continue to afford to recycle. In the UK, hoards of low-grade plastic have been moved from storage to incineration sites for energy capture and in the US, collectors of recyclables are already reporting “significant stockpiles” of materials, according to the Institute of Scrap Recycling Industries (ISRI).
“There may be alternative markets [to China] but they’re not ready today,” recently stated Emmanuel Katrakis, the Secretary General of the European Recycling Industries’ Confederation in Brussels.
Our Southeast Asian counterparts seem to be aggressively readying themselves — but why isn’t the Philippines?
President Duterte, Senator Lagarda and Senator Gatchalion take note.
There’s a real opportunity here for foreign investment to not only provide material economic benefits to the Philippines, but to solve the burgeoning domestic waste problem that our local governments simply can’t keep up with.
You can reach the author at firstname.lastname@example.org. His thanks go to Anya Khalamayzer, Jen Skerritt, Kristine Owram and Jason Margolis.