Recycling value chains in South-east Asia shut down by Covid-19 risk closures

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AUGUST 31, 2020 - 6:24 PM

PLASTIC recycling stakeholders in South-east Asia face the danger of bankruptcy or permanent closure if immediate action is not taken to mitigate the impact of the Covid-19 pandemic and oil prices on the recyling value chain, a study has suggested.

A white paper released on Monday by GA Circular and Circulate Capital said the plastics recycling industry was already facing significant challenges before the pandemic, which has exacerbated the situation. The study was based on more than

More than 80 per cent of the recycling value chain was not operating during the height of the pandemic in Vietnam, India and The Philippines, resulting in an increase of plastic entering landfills and likely, the environment, the paper said.

There has also been a 50 per cent drop in demand for recycled plastics and a 21 per cent drop in sales prices experienced by recyclers, it said. Meanwhile, more than 40 per cent of actors in the recycling value chain are at risk of permanent closure or bankruptcy.

With a 65 per cent reduction in plastic volumes collected and sorted by the informal sector, the most vulnerable workers in the value chain are affected, the paper said.

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The paper called for a three-phased approach for interventions to prevent lasting damage to the recycling value chain.

In the immediate term, short-term loans and financial support can be provided to operators while recognising the recycling value chain as an essential service. In the next year, financing to the sector should be accelerated, while capacity building and vocational skills training programmes is extended to workers. Beyond that, recycled content usage in food grade applications should be recycled in Asian markets, while household source segregation should be mandated to improve feedstock quality, the paper suggested.

The paper said while some bankruptcies or closurese are inevitable as the industry shrinks, just like many other industries challenged by Covid-19, it is critical to ensure that the industry does not suffer from "permanent and long-lasting damage".

"There is an ‘opportunity window’ of the next 6 months for interventions to be made to ensure that the vast majority of the 40 to 60 per cent of businesses that are at risk of permanent closure or bankruptcy, are kept in business," it said.