COVID-19: Plastic recycling industry laid off 63 thousand workers

COVID-19: Plastic recycling industry laid off 63 thousand workers

Workers arranged sacks of chopped plastic in a plastic recycling business in Cadek Village, Aceh Besar District, Aceh. ANTARA FOTO/Ampelsa/ama

As of April 2020, at least 63 thousand workers in the industry were laid off
Jakarta (ANTARA) - The plastic recycling industry has laid off at least 63 thousand workers as an impact of the COVID-19 pandemic, according to the Industry Ministry.

"As of April 2020, at least 63 thousand workers in the industry were laid off," the ministry's Director General of Chemical Pharmaceutical and Textile Industry, Muhammad Khayam, noted in a statement here on Tuesday.

The industry, absorbing 120 thousand workers and involving 3.3 million scavengers as informal workers, was among those bearing the maximum brunt of the pandemic, with production dropping to 30-40 percent.

The drop in production resulted from a declining demand in both the domestic and export market.

Khayam remarked that during the enactment of Large-Scale Social Restriction (PSBB) measures in some big cities, the demand for plastic products had dropped steeply.

Furthermore, with the price of virgin plastic raw material plunging as an impact of the lower crude oil price, reaching US$16 per barrel as of April 24, recycled plastic raw material was viewed as being uneconomical.

The ban on single-use plastic bags in some cities has also lowered the demand for recycling raw material for plastic bag.

"To survive in this scenario, the national plastic recycling industry will need the government's support," he noted.

Currently, there are some 600 large-scale companies and 700 small-scale businesses in Indonesia's plastic recycling industry, with total investment of Rp7.15 trillion and production capacity of 2.3 million tons per year.

The industry has generated Rp10 trillion in added value per year, with exports of recycled plastic derivative products recorded at US$141.9 million in 2019.

The plastic recycling industry has supplied 16 percent of the raw material for the upstream plastic industry, or some 1.2 million tons per year, of the total demand of 7.2 million tons annually.

Some developed countries have necessitated the industry to use recycled material in its packaging.

In Indonesia, plastic bottles, made of polyethylene terephthalate, have a relatively stable demand, as some beverage companies have used recycled material in their packaging.

Khayam stated that the ministry had formulated some policy concepts to minimize the impact of the COVID-19 pandemic on the industry and brought up some issues, including disbursement of the government's soft loan, postponement of bank loan payment, reduction of minimum and maximum electricity tariffs, and postponement of workers health insurance premium payment.

The ministry has also put forth a proposal to revise Financial Minister’s Regulation No. 23/PMK.03/2020 on tax incentive for taxpayers impacted by the pandemic to include the non-metal recycling industry on the list.
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