While trade can play a role in addressing environmental challenges, it must be paired with policies that strengthen domestic recycling industries, enforce responsible waste management, and promote sustainable economic growth.
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Indonesia is one of the world's largest plastic consumers, with an estimated annual plastic consumption of over 6.2 million tons, a significant portion of which comes from food and beverage packaging. Unfortunately, only about 10% of this waste is recycled, while 61% leaks into the environment, and the rest ends up in landfills. The lack of proper waste collection and recycling infrastructure exacerbates the crisis, leading to severe environmental and economic consequences.
Indonesia’s plastic waste problem is worsened by inadequate waste separation practices, inefficient collection systems, and a lack of incentives for recycling. The majority of waste generated in the country is either burned in open spaces, discarded into rivers, or dumped in overflowing landfills, contributing to land and marine pollution. Studies estimate that Indonesia is the second-largest contributor to ocean plastic pollution globally, with millions of tons of plastic waste entering the sea each year, harming marine biodiversity and coastal communities. Research has shown that mismanaged plastic waste harms both terrestrial and aquatic ecosystems. In marine environments, plastics pose a threat to biodiversity, affecting fish populations and endangering livelihoods that depend on fishing. On land, plastic waste disrupts nutrient cycles and pollutes soil, affecting agricultural productivity. The economic cost of plastic pollution is also substantial—studies suggest that marine plastic pollution alone could cost the Asia-Pacific region over $1.2 billion annually.
International trade is often seen as a driver of economic growth, but what happens when trade policies lead to unintended environmental consequences? This study explores Indonesia’s plastic waste imports, examining whether they contribute to industrial growth or simply exacerbate pollution.
Our research is part of a broader initiative supported by the Templeton World Charity Foundation (TWCF) to investigate the intersection of trade, industrial development, and environmental sustainability. We analyzed the policy shifts that led to surges in plastic waste imports, their impact on Indonesia’s recycling industry, and the broader economic and environmental consequences.
Indonesia experienced two significant increases in plastic waste imports: in 2010, when the government relaxed restrictions, and in 2018, when China banned plastic waste imports, diverting global exports to Southeast Asia. The key question remains—did these imports boost Indonesia’s recycling capacity, or did they simply overwhelm an already fragile waste management system?
Indonesia’s recycling industry comprises 600 large and 700 small firms, with a combined annual capacity of 2.3 million tons. However, the country generates more than 6.2 million tons of plastic waste annually. The gap between plastic consumption and recycling capacity means that the majority of plastic waste still ends up in landfills or remains uncollected.
The expectation behind importing plastic waste was that it would fuel industrial growth and create employment opportunities. However, our study finds little evidence supporting this. Despite an influx of plastic waste, investments in recycling facilities remained stagnant, and the value added to industries that switched to imported plastic waste increased by a mere 0.3%.
Instead of creating a thriving recycling ecosystem, the policy has primarily resulted in an accumulation of waste that is not effectively processed.
The global plastic waste trade has undergone dramatic shifts in recent years. Developed
nations, particularly in the EU and the US, have long exported their plastic waste to developing
countries under the assumption that it would be recycled. However, when China banned plastic
waste imports in 2018, these exports were redirected to Southeast Asia, particularly Indonesia,
Malaysia, and Thailand.
Indonesia saw a 149% surge in plastic waste imports in 2018 alone, largely from the EU, the US, and Australia. However, the country’s limited recycling capacity meant that much of this waste was not properly processed, leading to environmental pollution. By 2022, plastic waste imports had declined, yet Indonesia still imported around 200,000 tons, highlighting its continued role in the global waste trade.
Despite the challenges, there has been some progress. Investment in recycling improved slightly in 2022 and 2023, and multinational companies like Indorama Ventures and Danone have made commitments to increase recycled PET production. However, these efforts are still insufficient to address the country’s growing plastic waste problem.
While proponents argued that importing plastic waste could create economic opportunities, the lack of infrastructure and investment meant that much of this waste was either dumped or inadequately processed. Indonesia’s trade policies on plastic waste imports have fluctuated over the years, reflecting an ongoing struggle to balance economic interests with environmental sustainability. Initially, import regulations were relaxed in 2010, allowing an influx of plastic waste under the premise that it would bolster the recycling industry. However, the anticipated growth in recycling infrastructure never materialized, and much of the waste ended up in landfills or the ocean.
The situation worsened in 2018 when China, previously the largest importer of plastic waste, enacted a strict ban, causing developed nations to divert their waste exports to Indonesia and other Southeast Asian countries. This led to an overwhelming surge in imports that Indonesia was ill-equipped to handle. In response, the government imposed stricter regulations in 2021 and 2022, requiring importers to process waste domestically and meet higher environmental standards.
Despite these measures, illegal waste imports and regulatory loopholes remain persistent problems. Reports indicate that some waste shipments are mislabeled to bypass restrictions, and enforcement mechanisms are often weak. Additionally, Indonesia's domestic waste management infrastructure still lacks the capacity to process the volume of plastic waste it generates, let alone additional imports.
The environmental consequences of weak trade policies are significant. Large amounts of imported plastic waste are often burned, releasing toxic pollutants into the air and harming public health. Others are dumped into waterways, contributing to Indonesia’s already critical ocean plastic pollution problem. Addressing these issues requires stronger regulatory enforcement, improved waste processing capabilities, and international cooperation to ensure that plastic waste trade does not shift environmental burdens onto developing nations.
Indonesia’s experience with plastic waste imports highlights a critical issue in global waste management. Wealthy nations often justify exporting plastic waste under the assumption that developing countries will recycle it efficiently. However, when the receiving country lacks adequate processing capacity, these imports become an environmental burden rather than an economic opportunity. Our findings contribute to the global discourse on trade and sustainability by emphasizing the need for responsible waste export policies. Developed countries should ensure that exported plastic waste is pre-sorted and directed to legitimate recycling facilities. Meanwhile, recipient nations must build the necessary infrastructure before allowing large-scale imports of plastic waste. Indonesia’s case demonstrates that without proper regulation and investment, plastic waste imports do more harm than good. While trade can play a role in addressing environmental challenges, it must be paired with policies that strengthen domestic recycling industries, enforce responsible waste management, and promote sustainable economic growth.
Moving forward, Indonesia must focus on three key areas:
● Strengthening Domestic Recycling Capacity – Investments in waste collection, sorting, and processing infrastructure are crucial to managing both imported and locally generated plastic waste effectively.
● Tightening Import Regulations – The government should continue enforcing stricter policies on plastic waste imports to prevent the country from becoming a dumping ground for foreign waste.
● Promoting a Circular Economy – Encouraging the use of recycled plastics in manufacturing and creating incentives for businesses to adopt sustainable practices will be vital in reducing reliance on virgin plastics.
This study underscores the importance of aligning trade policies with environmental sustainability. While trade can drive industrial growth, it should not come at the expense of environmental and public health. Indonesia’s experience serves as a cautionary tale for other developing nations facing similar challenges in managing plastic waste imports. The world must work together to ensure that plastic waste is managed responsibly—before it’s too late.
