Creating a sustainable plastics ecosystem in Malaysia
20 Apr 2023
Plastics have transformed our modern world, providing a flexible, durable and lightweight material with a remarkable range of applications. Along with these benefits, however, come undeniable challenges, as our reliance on these materials generates a growing pollution burden.
Global plastic consumption doubled in the two decades from 2000 to 2020, reaching 460 million tonnes. Demand is expected to triple further by 2060, emphasising a growing need for both private and public stakeholders to develop and deploy effective solutions to enhance plastics circularity.
According to research by the Organisation for Economic Co-operation and Development (OECD), as of 2019, just 9% of plastics were recycled and 22% were mismanaged, with an estimated 11 metric tonnes of plastic flowing into our global oceans annually. Plastic pollution, like demand, is expected to triple by 2060, posing a serious sustainability challenge for our planet. This is a global challenge, and yet one that Malaysia must be at the forefront of tackling, with a hugely successful plastics industry at the heart of regional opportunities.
Boston Consulting Group (BCG) has developed an adaptive circular framework to help inform this journey for stakeholders in Malaysia and beyond, looking at ways to maintain the benefits of these versatile materials while mitigating their impact on our nation and our planet.
Improving an evolving plastics landscape
Not all plastics are made equal, and understanding the global plastics landscape is critical to identifying appropriate solutions. Some 60% of plastics consumption is utilised in just three sectors: packaging (consumer and industrial); building and construction; and automotive industries. Packaging accounts for the greatest demand, responsible for 154 million metric tonnes per annum (MMtpa) of annual demand — more than building and construction (63MMtpa) and automotive (60MMtpa) combined.
Digging deeper into the sub-applications of various plastic materials further illuminates a lopsided landscape. Analysis of the top 20 sub-applications reveals that the five largest sub-applications — food packaging flexibles; PET beverage bottles; PVC piping for water and utilities; stretch and shrink wrap LDPE; and PP for automotive interior and exterior — consume ~94MMtpa, or about 20% of total global plastics.
Malaysia is estimated to waste more than one million metric tonnes of plastic per year due to post-consumer waste, resulting in almost RM5 billion in lost value to the economy. A circular approach to plastics integrates design and production for circularity; improves waste collection and recycling and treatment facilities; and could have wide-reaching impact for both the environment and the economy.
The national recycling rate for all materials stood at just 25% in 2019, with a target to achieve 40% recycling by 2025. Important steps towards this goal include the launch of Malaysia’s Plastics Sustainability Roadmap 2021-2030, with the aim of ensuring 100% recyclability of plastic packaging containing 15% minimum recycled content by 2025. This road map also targets more than three-quarters (76%) of plastics to be collected for recycling by 2030. Single-use plastics are also set to be phased out, with the Ministry of Environment and Water’s (now known as the Ministry of Natural Resources, Environment and Climate Change) National Roadmap Towards Zero Single-Use Plastic 2018-2030 aiming to eliminate it altogether by 2030.
BCG’s adaptive circular framework offers an informed strategy designed to help stakeholders identify and deliver measurable change in the areas that matter most.
An adaptive circular framework
There are four key dimensions to address in an effective circular framework. The first is existing and developing business models, exploring existing solutions and available best practices. Policy and regulation are needed for financial de-risking or incentivising investments to increase adoption. Available technology is another essential component; look for technologies that complement and support business models. Finally, societal engagement is important to involve broader groups of stakeholders to spread adoption and enable the business model.
In order to deliver a truly effective solution, our circular framework is designed to address the four core dimensions of business models, policy and regulation, technology and societal engagement that are critical to designing a fit-for-purpose model to improve plastics circularity. This should be undertaken as part of a five-stage solution:
1. Pick a framework component to start;
2. Evaluate how each dimension supports the value chain;
3. Highlight all possible options and identify the optimum choice for each archetype;
4. Select examples of chosen options; and
5. Inform recommendations for industry.
If we look at the top five most-consumed plastic types today — PET, PP, LDPE, HDPE and PVC — it’s clear they have a wide range of applications throughout industry and society, in areas as diverse as packaging to building and architecture.
PET, or polyethylene terephthalate, is the most prolific of these materials and responsible for almost one-fifth (19.4%) of total global demand. You can see that demand in the water bottles bubbling away in every office cooler or the bottles of fizzy drinks crowding shop fridges.
The use of the most commonly consumed plastic types is dominated by consumer and industrial packaging, as well as the automotive segments — all areas of considerable importance to Malaysia. In total, 14 sub-applications represent one-quarter of total global plastics consumption, with the highest shares belonging to PET beverage bottles, PVC pipes, and LL/LDPE food packaging. This data-driven foundation offers a platform for industries and governments to assess where their most valuable intervention lies to deliver a circular plastics solution.
Understanding the potential societal impact of any intervention, as well as the maturity of existing solutions, offers the final lens with which an effective plastics circularity strategy can be deployed.
Malaysia already has some encouraging signs of the industry transitioning beyond the top-level road maps that will define the future plastics landscape. The nation’s leading palm oil industry offers a world-leading opportunity for bioplastics development, while government-owned research enterprise SIRIM recently signed memoranda of understanding with national energy company Petroliam Nasional Bhd to explore certification technology and standards to develop a more robust biodegradable plastics ecosystem. This integrated industry approach will be key to addressing Malaysia’s end-to-end plastics value chain.
There has been a seismic shift in attitudes to plastic pollution over the last decade, culminating in a landmark agreement in March 2022 setting out a mandate by UN member states to negotiate a legally binding treaty on plastic. With negotiations now under way to establish a treaty targeted at ending plastic pollution by 2040, this issue has never been more prominent. Malaysia is at the forefront of this global challenge, with a mature plastics ecosystem and a huge opportunity to improve plastics circularity. Moving early could not only mean staying ahead of the global curve but also ensuring a sustainable opportunity to unlock value across the economy.
Arun Rajamani is managing director and partner, and Priyanshu Kumbhare a partner, at Boston Consulting Group
Source: The Edge Markets