Is Circular Economy Good For Indonesia?

Is Circular Economy Good For Indonesia?

Is Circular Economy Good For Indonesia? To answer this question, we must first know how the circular economy works. Circular economy is an economic concept that emphasizes the efficient management of natural resources, making long-lasting products, and managing waste into new resources. Then, the questions above will be answered by examining what problems Indonesia can solve with this circular economy concept.

Circular Economy is Good for Minimizing the use of Natural Resources of Indonesia

One of Indonesia’s problems is natural resources which continue to be exploited without stopping. The process of extracting resources is often still very extractive. Where entrepreneurs in Indonesia take resources as raw materials, then sell them to other countries. This causes Indonesia to lose a lot of resources but gain relatively little. Potential benefits from extracting natural resources in Indonesia should be increased through a circular economy.

Circular economy is a principled concept to create a circular value chain. So, there are 3 principles that are emphasized. The principles of circular economy are using resources as long as possible, maximizing product value, and restoring natural resources. With these three things, Indonesia should be able to do more downstream and recycling in industrial sectors that require a lot of natural resources. As President Jokowi has done regarding the nickel ore downstream policy in Indonesia, other sectors also need the same thing. In addition, the recycling process is also important for us to do in order to replace virgin material from available natural resources. As Great Giant Pineapples (GGP) has done to manage pineapple waste in its industry. Thus, we can maximize product value, recycle waste into alternative resources, and minimize excessive exploitation of natural resources.

Circular Economy is Good for Reducing Waste from Indonesia

Indonesia is one of the countries with the largest waste production in Southeast Asia. In fact, waste production in Indonesia is increasing from year to year. In 2021, total waste production in Indonesia will reach 68.5 tons. By 2022, the waste will increase to 70 tons. The government also said, of this amount, 24% or 16 million tons were not managed. Unfortunately, 69% of waste is transferred to landfills and only 7% is recycled.

With the circular economy principle that encourages zero waste or zero waste, Indonesia should be able to increase the percentage of waste recycling. The use of waste banks in Indonesia is indeed very good. However, access to technology for recycling waste in large quantities is still very limited. Therefore, efforts to implement this circular economy must be given more attention because it can have an impact on reducing waste significantly. For example, the company Chandra Asri and Ecolab are able to work together to manage plastic waste, thereby saving 6 million kilowatts of electricity and 2,100 tons of carbon emissions.

Circular Economy is Good for Increase GDP of Indonesia

Indonesia is a developing country which has a GDP (Gross Domestic Product) of 5.72%. This percentage increased from some time before. This was due to an improvement in domestic demand and also an increase in exports. Even so, Indonesia’s economic growth was hampered due to the pandemic. Starting in 2021 until this year, the government and society will continue to make efforts so that the economy can recover.

Circular economy is the concept that emphasizes the efficient management of natural resources, making long-lasting products, and managing waste into new resources. So, it is predicted that implementing a circular economy can increase GDP by around 2.3 to 2.5% by 2030. At the G20 it was conveyed that the circular economy transition could provide an increase in GPD by Rp 593-638 trillion. Apart from that, implementing a circular economy can also save 126 million tons of CO2e which can also have a good impact on the environment. With an increase in GDP, this shows that the Indonesian economy is increasing and the people are more prosperous.

Circular Economy is Good for Increase Efficiency of Supply Chain Activity in Indonesia

Indonesia is an archipelago that stretches from Sabang to Merauke. There are thousands of islands in Indonesia which are separated by vast oceans. Usually the distribution is done by ship or plane. There are not many areas between islands that use bridges. For example, in Indonesia there is the Suramadu Bridge which connects Surabaya and Madura. On the other hand, Indonesia is also building fast trains on the island of Java that connect many cities so that access in each region becomes much easier.

Even so, Indonesia’s distribution problems are not over. Product distribution costs often increase the selling price so it is very inefficient. First, distribution channels that are too long require a lot of time and energy. Second, bad access roads make products more easily damaged. Third, vehicles that still use gasoline make distribution trips produce carbon emissions. Another reason is that each region has dependencies with other regions so that there are differences in the location of supply and demand points. These are some of the reasons for Indonesia’s inefficient supply chain.

Therefore, with a circular economy, we can continuously improve supply chain efficiency. First, the circular economy emphasizes an efficient supply chain distribution process by implementing lean management. Second, the circular economy emphasizes managing waste to become a new resource to replace the main resource so that the needs of an area can be met. Third, the circular economy emphasizes the use of renewable energy, so that the vehicles used to distribute it can be much more environmentally friendly and efficient.

Circular Economy is Good for Create More Job In Indonesia

Indonesia is a country with a high unemployment rate. In 2022, according to BPS, the number of unemployed people in Indonesia was 8.4 million people. This figure decreased from the previous year which amounted to 8.75 million people. Even so, the government is still trying to continue to reduce the unemployment rate. This is because the unemployment rate has various major impacts such as the level of poverty and public health. The higher the unemployment rate, the greater the poverty rate in Indonesia.

Therefore, utilizing the idea of a circular economy can provide a solution to this unemployment problem. Innovation from the circular economy can open new jobs that are more promising and more sustainable. For example, labor for the electric motor industry and renewable energy, labor for sustainable agriculture, labor for the plastic recycling industry. Thus, the government and entrepreneurs must work together to build a healthy ecosystem for the circular economy transition in Indonesia.


Thus, the question “is circular economy good for Indonesia?” already answered clearly. Indonesia has many unresolved problems and challenges. Then, the concept of circular economy emerged and offered solutions for Indonesia. Circular economy can minimize the use of natural resources, reduce waste, increase GDP, increase supply chain efficiency, and create new jobs. Several government and business policies have become examples of how the circular economy has a good impact on Indonesia. Therefore, let’s realize a wider Circular Economy transition in Indonesia!

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