Development Priority Sectors for Circular Economy in Indonesia

Development Priority Sectors for Circular Economy in Indonesia

There are priority sectors for circular economy in Indonesia including food and beverages, textiles, construction, retail trade, and electronics as stated by Bappenas. These five sectors are the most influential sectors because they have a large percentage of GDP contribution to Indonesia. In addition, the problems of waste and pollution in this sector are also a big opportunity in the future.

Circular Economy Impacts

The application of the circular economy in these five sectors has significant positive impacts from an economic, environmental and social perspective. From an economic standpoint, Indonesia can increase its GDP by around 593 to 638 trillion in 2030. Meanwhile, from an environmental perspective, the idea of ​​a circular economy can reduce waste in each sector by 18-52% in 2030. In addition, it can also reduce CO2 emissions by 126 tons and water use of 6.3 billion cubic meters in 2030. Meanwhile, from a social perspective, this idea could have an impact on the creation of 4.4 million net cumulative jobs in 2030. In fact, its implementation can increase annual household savings by 9% in 2030.

Implementation of 5Rs in 5 Priority Sectors

The idea of ​​a circular economy is manifested in the use of the 5Rs principle. These principles include reduce, reuse, recycle, refurbish, and renew. Reduce means reducing the resources used and using them as efficiently as possible. Meanwhile, reuse means reusing resources that have been used so as to maximize the value of the available resources. Then, recycle means recycling the product into a resource for different products. Furthermore, refurbish means repairing a damaged product so that its value is recovered like a new product. Finally, renew means involving various activities that can utilize renewable energy and materials.

Priority Sectors: Food and Beverage

The Food and Beverage (F&B) sector is a sector that has a major impact on Indonesia. Besides having a large percentage of GDP, this sector also has major problems related to food loss and waste (FLW). According to The Economist Intelligent Unit, Indonesia is included in the category of countries with poor FLW handling among other G20 countries. FLW in Indonesia originates from the production, distribution, and retail and consumption phases. The 5Rs opportunities in this sector are reducing post-harvest food loss, reducing supply chain food loss and waste, reducing consumer food waste, and process food loss and waste.

Priority Sectors: Textiles

The textile sector is a sector that has a big influence, especially on export and import activities. Considering that Indonesia is the top 10 textile producing nations in the world. Unfortunately, this textile manufacturing activity produces a lot of textile waste. Then, the 5Rs opportunities in this sector are reduce waste in production, reuse products, recycle and use more sustainable materials.

Priority Sectors: Construction

Construction is a large sector and requires a lot of resources and energy. The problem with this sector is the production of construction and demolition waste (C&D waste), which is not small. Then, the 5Rs opportunity in this sector is to generate less C&D waste through existing processes, generate less C&D waste through new processes, optimizing building usage, reuse and recycle materials. Apart from that, you can also use more sustainable materials and design and build more resource-efficient buildings.

Priority Sectors: Retail Trade

The retail and whole sale sectors are sectors that have direct contact with consumers. The various products they sell require a lot of plastic packaging. Data shows that every year Indonesia produces 6.8 million tons of plastic waste and will continue to increase to 13.6 million tons in 2040. Then, The 5Rs opportunities in this sector are reduce and reuse plastic packaging, redesign plastic packaging for improved recyclability, increase recycling rate of recyclable packaging, and replace more sustainable packaging.

Priority Sectors: Electronics

The electronics sector is the most influential sector in this era. The encouragement of the use of technology makes almost everyone need an electronic device. Though electronics require scarce resources. In addition, electronics also require the use of a lot of energy, both during the production process and when we use it. Then, the 5Rs opportunities in this sector are Virtualise and dematerialize physical goods, reuse products, recycle materials, increase product lifespan and reduce obsolescence, and refurbish products.

Top 10 Circular Economy Barriers in Indonesia

Even though the circular economy promises many advantages and benefits that we can experience, this is not easy to achieve. In Indonesia, there are 10 barriers that can be a challenge for practitioners to implement a circular economy.

  1. Difficulty in changing customs and habits
  2. Lack of infrastructures
  3. Implementation and enforcement failures
  4. Unintended consequences of existing regulations
  5. Insufficient end markets
  6. Poorly defined targets and objectives
  7. Inadequately defined legal frameworks
  8. Not profitable
  9. Imperfect information
  10. Lack of capital

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