The global returnable packaging market is projected to grow from $37 billion USD in 2018 to $59 billion USD by 2026. This is another huge opportunity for businesses to invest. It also creates more jobs and has many other secondary benefits, such as the tourism industry. Thailand has huge potential for young startups. It is a very highly digitalized country with great opportunities for reverse logistics and value retention processes. Kai Hofmann, Project Director, GIZ
Huge Opportunities for Investment in Thailand’s Circular Economy With Thai policymakers having recognized that introducing circular economy principles in production and trade within the waste hierarchy (i.e. reduce, reuse, recycle) can provide solutions to current unsustainable production and consumption patterns, Thailand has introduced its Roadmap on Plastic Waste Management. Effective from 2018 to 2030, the plan is aimed at reducing or banning single-use plastic (SUP) products and replacing them with more environmentally-friendly alternatives.
Taking this commitment even further, the Thai government has partnered with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH1, a development agency which supports the German government in its mission to promote international cooperation for sustainable development. One area under the sustainable development framework that GIZ Thailand has been implementing is Sustainable Consumption and Production (SCP).
The projects related to SCP aim at reducing waste from single-use plastic products with a focus on upstream strategies of prevention and preparation for re-use. They combine policy advice on the circular economy, capacity development for key stakeholders, local government pilot activities and support for innovative business models tackling SUP prevention.
Project Director, Mr. Kai Hofmann, talks about the benefits of the project in terms of environmental impacts and investment opportunities.
Could you please explain the SCP project you are working on with the Thai government? We are working on Sustainable Development Goals (SDGs) 12, ensuring sustainable consumption and production patterns, which covers eco-labeling, green public procurement (GPP), and the circular economy. SDG target 12.7 specifically deals with promoting public procurement practices that are sustainable, in accordance with national policies and priorities.
Thailand has started its BCG (Bio – Circular – Green economy) strategy, and one of our focuses is to support Thailand in the C pillar of the BCG strategy, the circular economy. We can share experiences of how Germany has implemented measures. For example, in the EU, we have developed the Circular Economy Action Plan. Thailand has now done something similar and they are requesting our support specifically on the plastic aspects.
One of the requests from the government is to support the action plan on packaging prevention and to develop a circular packaging legal framework under the act. Also, we are conducting market analysis to assist with the implementation of support measures, in terms of regulatory, fiscal and economic incentives.
We are also supporting the second pillar: standard making. This is called Design for Recycling and includes minimum standards of, for example, beverage containers so that they can be recycled more easily. We are also helping with the development of guidelines for mainstreaming the standards in the FMCG (fast moving consumer goods) industry. We are also supporting the concept of sourcing and labeling bio-based and biodegradable plastics.
As a specific action, we are supporting a pilot project called Single Use Plastic Prevention in Phuket. On this, we are working together with the municipality and business community, including the Hotel Association of Phuket, two malls and some Thai startups which are producing alternatives to SUP. We’re hoping that the TAT (Tourism Authority of Thailand) will take this up to promote Phuket as a green tourism destination.
What strategy should Thailand take to reduce SUP?
It is important to understand that our current economy is linear. It takes virgin plastic, makes SUP products out of it, sells them and then they become waste. This is unsustainable and the costs for this unsustainability are passed on to future generations and the community as the oceans and beaches are damaged which obviously affects tourism.
A circular economy is fundamentally different. In simple terms, in a linear economy, we mine raw materials and process them into products that are thrown away. In a circular economy, we close the cycle of these raw materials. This requires much more than just recycling. It changes the way the value is created and preserved. Production processes are changed from unsustainable to sustainable and new business models are applied.
This can be achieved by using the same goods for more people. You can take the examples of shared cars or multi-use packaging. In the EU, and now similarly in Thailand, we banned the use of SUP drinks containers and replaced them with reusable containers that you either bring yourself or return to the store.
We are introducing this kind of multi-use packaging system in pilot projects in Indonesia and Malaysia, and later in Thailand, for sectors such as food delivery. The COVID-19 pandemic has caused a 15% increase in SUP, mostly because of food deliveries. This can be replaced with multi-use packaging. We have to introduce a reverse logistics system — to return those containers, clean them, make sure they are hygienic, and then re-use them.
What kind of business activities or investment do you recommend to promote the use of multi-use plastic, reduce SUP or change consumer behaviors?
Figures from the Ellen MacArthur Foundation2 show that by replacing just 20% of the SUP that is avoidable, we could reduce 6 million tons of plastic so there are huge opportunities for businesses to invest there.
The global returnable packaging market is projected to grow from $37 billion USD in 2018 to $59 billion USD by 2026. This is another huge opportunity for businesses to invest. It also creates more jobs and has many other secondary benefits, such as tourism.
Thailand has huge potential for young startups. It is a very highly digitalized country with great opportunities for reverse logistics and value retention processes.
For instance, one of the opportunities where we can produce economy is in the elimination of packaging from the first part, so new packaging design or other systems of delivery present opportunities, such as in reverse logistics machines and the collection of plastics.
Thailand’s Pollution Control Department is currently preparing an extended producer responsibility law, which will transfer the cost responsibility for collecting and sorting plastics from the community, from the public sector, to the private sector. The polluter who brings the plastic into the system has to pay. For example, in Germany, companies have to prove that they have collected and recycled at least 80% of the plastics they introduced into the market. From this, a collection, sorting and recycling infrastructure has huge investment possibilities.
Alternative material is another possibility. Thailand already has great startups turning agricultural waste into compostable containers. Although they are single use, they are definitely helping. It’s a double win because the agricultural waste that is normally burned causing pollution is turned into a valuable and compostable product that can replace plastic. This is a great strategy and an excellent investment opportunity.
What does the circular economy offer in terms of job creation or other economic factors? The circular economy has enormous opportunities, but fundamentally, it is an innovation agenda and innovation triggers investment into new business models and creates economic opportunity. However, it also creates resilience. For example, during the pandemic, some resources have become increasingly less available on the global market. Developing a strong circular economy means we keep the resources in the economic system as long as possible and that makes us more resilient.
The great opportunity for Thailand here is that you have great designers, great innovation potential, and a young digital population that is eager to develop new business models in the circular economy. I see great potential for Thailand to jump ahead of other countries in this regard.
Global powers, such as the EU, US and now even China, are focusing more on climate change, increasing their efforts at reducing greenhouse gas emissions. How can Thailand accelerate its green business model? We have to understand that we are all in the same boat. We have only one planet and if we don’t make a collective effort to reduce greenhouse gas emissions, all of us will suffer.
Thailand is among the frontrunners in Southeast Asia to embrace this agenda. Together with the German government over recent years, Thailand has made drastic strides in getting its nationally determined contributions up to speed. And we hope to see further improvement in the areas of promoting renewable energy and energy efficiency, addressing food loss and industrial-based pollutions such as in construction, manufacturing and mining industries.
This interview is published in Thailand Investment Review (TIR) magazine.
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