A circular economy is a new, environmentally friendly approach to the supply chain that aims to make the chain more circular instead of linear by reducing the use of raw materials in the manufacturing process and replacing them with used or recycled processed goods.

The deputy head of Kadin’s permanent committee on Europe, Yono Reksoprodjo, said that even though the approach had not specifically been mentioned within the I-EU CEPA talks, the concept was inherent to many environment-related issues that have been a challenge to resolve.

“In trade talks, there are always a few technical barriers to trade; [...] the environment is one of them,” Yono told reporters following a press briefing on Monday. “The purpose of the standards they create is to design a more livable environment, so we are helping the government by providing input [on environmental aspects of the I-EU CEPA].”

Aside from speeding up the talks, he added, the adoption of a circular economy could also help enhance Indonesia’s competitiveness and investment inflows.

For instance, fulfilling environmental standards would gain Indonesian-made products wider acceptance in the international market, including in Europe.

And as many Indonesian companies are reluctant to spend money for research and development programs, European companies could bring in their technology as a form of investment, then make joint investments with local firms, said Yono.

“[European countries] buy our goods without imposing too many standards because they need our raw materials, but there is a wide deficit [from the value of their purchase] compared to the high-tech products we buy from Europe. Therefore, we have to look at strategic means to push our products into the [European] market,” he said.

In July, the government reiterated its commitment to implementing a circular economy as it sought to utilize industrial waste as an alternative to raw materials or as a source of fuel.

The Environment and Forestry Ministry’s deputy director for recycling and specific waste, Haruki Agustina, had said that the government directed a number of companies to implement the concept of a circular economy.

The European Commission (EC) policy officer for bilateral and regional environmental cooperation, Katarina Grgas Brus, said that while the EU had looked into partnering with Indonesia in developing the latter’s circular economy, no calculations have been made on how much investment would be needed.

However, she said the implementation would lead to many positive economic and environmental improvements, pointing to a 2015 study conducted by the EC on the EU’s adoption of a circular economy.

The study claims that full implementation would save businesses some 600 billion euro (US$688.9 billion), equivalent to 8 percent of their annual turnover, as well as create 580,000 jobs and reduce carbon emissions by 450 million tons by 2030.

“In 2015, we adopted the circular economy action plan. [Since then], we have achieved over 80 percent of the planned actions, [...] including a ban of single-use plastics that came out this year in May,” Grgas Brus said.

Plastics, she said, would likely be at the center of a circular policy in Indonesia, as they made up a majority of the country’s unprocessed waste.

Popular

RI, Australia strengthen partnership on taxing crypto assets

Analysis: Indonesia denies normalization with Israel to enter OECD

Citroen to produce electric cars in Indonesia