Waste is an unavoidable by-product of human activities. However, the generation of waste as a result of consumption behaviour, particularly solid waste, is accelerating at an alarming rate, outpacing our ability to manage and process the waste sustainably.
Kenanga Research Thematic ESGrelease today (Dec 6) looked into the current state of waste management in Malaysia, the potential in recycling and using waste as fuel. In our recent panel session on ‘Sustainable Waste Management in the Consumer Sector’, the Waste Management Association of Malaysia (WMAM), AEON and Kloth Cares showed what can be done, emphasising on the need for greater resolve and firmer actions to ensure the separation of waste at source.
What a waste – It is estimated that Malaysia is generating over 40,000 tonnes of waste per day, which is equivalent to about 1.2kg per person. The amount of waste generated has been growing steadily over the years in tandem with economic and population growth, and the country is expected to throw away 19m tonnes of waste by 2050 from 14m tonnes as at 2021.
Highlighting the magnitude of the problem, Alam Flora said it takes just one week for waste collected in Kuala Lumpur alone to pile up to the height of the Petronas Twin Towers − about 2,500 tonnes of solid waste daily produced by households, commercial, industrial and construction sectors (excluding scheduled waste i.e. hazardous/toxic and clinical waste).
Data from the Solid Waste Management and Public Cleansing Corporation (SWCorp), an agency under the Local Government Development Ministry, revealed that the biggest shares of waste are food waste (36%) and plastics (23.9%).
High cost of waste disposal – The Waste Management Association of Malaysia (WMAM) warned that at the current rate, Malaysia risks running out of space for landfills by 2050 as some 82% of our waste is sent to landfills nationwide based on 2021 data. The latest figures from SWCorp showed that there are 137 operating landfills currently, of which only 21 are sanitary landfills i.e. with controlled tipping and/or have a bund, good soil lining and a leachate control system that ensure minimal seepage or damage to the environment.
Meanwhile, 174 landfills have been closed and are undergoing long-term maintenance that involves treatment to prevent contamination to the environment, costing the government RM1.9b annually since 2015. Each landfill can only be used up to a maximum of 20 years before the soil becomes unstable and toxic due to chemical substances and leachate that could pollute the environment, posing particular danger to water sources.
After it is closed, a landfill needs another 20 years in the recovery process before it can be repurposed.
The methane factor – Waste and the oil & gas sector are the two largest sources of methane (CH4) emissions in Malaysia. Based on the International Energy Agency (IEA) data in 2022, methane from waste is the biggest chunk, emitting 56% (894 kilotonnes or kt) of Malaysia’s total 1,585 kt while 30% of CH4 is attributed to the energy sector.
Globally, landfills are among the top 3 biggest methane emitters. Methane is the second most abundant greenhouse gas (GHG) and although it makes up only 17% of the GHGs (vs. 75% of carbon dioxide), it is a potent one – its global warming potential is 80 times more than that of CO2 over a 20-year period. Methane is also high flammable and burning it produces CO2.
Malaysia is committed to cut methane emissions, being one of the 111 countries that have signed the Global Methane Pledge (GMP), committed to cut global methane emissions by at least 30% by 2030 (from 2020 levels). Although there is no firm plan or policy in place at the national level, the government recognises the urgency to reduce CH4 emissions in line with the 2050 net zero target.
Desperate need to separate – The first step in reducing waste is to separate waste into recyclable and non-recyclable material thus reducing the amount that will be sent to landfills, and recycling is key in achieving that goal. According to the Federal Territories SWCorp, of the 820,217 tonnes of waste produced in Kuala Lumpur and Putrajaya in 2022, only 0.2% of the waste was separated at source.
On a brighter note, the recycling rate in Malaysia has been steadily improving over the years (from 21% in 2017 to 33.2% in 2022) with many programmes and activities initiated by corporates in collaboration with various non-governmental organisations. KPKT Deputy Minister Akmal Nasrullah Mohd Nasir recently announced that the national recycling rate (NRR) for 2023 rose to 35.38%, surpassing this year’s target of 35% with the amount of recycled goods touching 4.933m tonnes.
If the momentum can be maintained, Malaysia is on track to reach the goal of 40% NRR by 2025 as stated in the 12th Malaysia Plan. Based on available data, Indonesia recycled 15% of its waste in 2019, Japan 20% in 2021, China 30% in 2021, Thailand 34% in 2018, Singapore 57% in 2022, South Korea 57% in 2021 and Germany 68% in 2021.
Adding more bite to Act 672 – Under the Solid Waste and Public Cleansing Management Act 2007, also known as Act 672, households in Kuala Lumpur, Putrajaya, Pahang, Johor, Melaka, Negeri Sembilan, Perlis and Kedah are required to separate their waste into recyclables and non-recyclables. Those who fail to do so face being fined i.e. RM50 on landed property owners for the first offence, RM100 for the second and RM500 for subsequent offences while high-rise dwellers will be fined RM100 for the first offence, RM200 and RM500 for the second and third offences, respectively.
Although separation of waste at source (SAS) has been made compulsory since September 2015, there is no urgency with a lack of enforcement while many local councils have yet to implement a proper waste separation at source (SAS) programme that includes awareness on SAS and recycling, provision of separate bins for recycled waste as well as setting up of collection or buyback centres to encourage the recycling habit. However, this is about to change as starting from 1 Jan 2024.
Federal Territories SWCorp will issue show-cause letters to joint management bodies (JMBs) and management committees (MCs) in Kuala Lumpur and Putrajaya that fail to comply with Act 672. There are over 2,000 JMBs and MCs in the two federal territories and they will be given one month to comply, failing which fines of between RM100 and RM500 (for non- landed properties) will be imposed. If prosecuted and found guilty, offenders may be fined up to RM1,000.
Circular Economy – Waste management has been identified as one of four areas for opportunities in the circular economy. The other 3 are manufacturing, packaging materials and biomass. In line with the national ambition of achieving net zero by 2050, Malaysia aims to accelerate the transition from solid waste management in a linear economy to a circular economy model and this requires a zero waste-to-landfill strategy using the latest technology and the development of downstream industries to process solid waste.
A circular economy entails markets that give incentives to repairing, recycling and reusing products, rather than scrapping them and then extracting new resources. The goal is to minimise the use of virgin resources to produce new products ensuring products continue to circulate in the economy as long as possible.
In such an economy, all forms of waste, such as clothes, scrap metal and obsolete electronics, are returned to the economy or used more efficiently. As the UN Conference of Trade and Development sums it: “The goods of today are the resources of tomorrow at yesterday’s resource prices.”
In a bid to accelerate the transition of solid waste management to a holistic cyclical economy, the government launched the National Circular Economy Council (NCEC) in September 2023. Driven by the Local Government Development Ministry (KPKT), the NCEC focuses on six elements that support the circular economy ecosystem i.e. developing markets and demand for recycled materials; designing products that can optimise their life cycle through reuse, recycling and environmental friendliness; promote the segregation of waste at source and improve the collection system of solid waste.
Along with the six elements, priority will also be given to providing infrastructure facilities and appropriate incentives, developing an integrated data system and creating a public, private and community collaboration platform. A comprehensive data collection mechanism is critical for a successful outcome in managing waste sustainably.
According to the WMAM, there is no data on the informal sector as there is a lack of recognition on the role of these individuals or small enterprises that are involved in unregistered and unregulated waste collection and processing, when they make up a substantial part of waste management.
Hence, policymakers face a huge challenge in getting an accurate picture of what, how much and where waste ends up in the chain of processes.
Not wearable but still usable – Setting a leading example of circularity is Kloth Cares, a pioneer in Malaysia’s fabric recycling movement, promoting circularity in the textiles, clothing and plastics industries since its inception in December 2013. Fabric waste made up 3.1% or 432,901 tonnes out of the 13.9m tonnes of total waste generated in Malaysia in 2021, releasing methane to the atmosphere as these decompose over a period of 20−200 years in landfills while the dyes and chemicals used on the fabrics cause water pollution.
A Malaysian government accredited social enterprise, Kloth Cares has collected and recycled over 6m kg of fabric waste thus preventing these from reaching landfills since 2018 from a network of 500 fabric bins spread across Kuala Lumpur, Putrajaya, Selangor, Negeri Sembilan, Melaka, Johor and Singapore. This has resulted in millions of pieces being diverted from landfills, avoiding GHG emissions as well as saving almost USD$200k in landfill cost.
It has also collected and recycled more than 15k plastic bottles since 2015. Discarded fabric and clothes are sorted and repacked to be distributed to vulnerable communities, and repurposed into industrial wiping cloths. Materials also undergo further processes such as fibre reclamation and mechanical separation (to make rugs and carpets). Kloth Cares is also exploring options on using the fabric in running tracks and tiles. Collected fabrics and apparel that are degraded and unwearable are sent to a facility where these will be shredded to be used as processed engineered fuel (PEF) in the cement industry. Kloth estimated that 5−10% of the collected materials are used as PEF.
Making headway with throwaway – Seeing opportunities to create an ecosystem for recyclables, Kloth Cares ventured beyond collecting and recycling activities, establishing Kloth Textile (collects discarded textiles), Kloth Wear (design, sew and market wearable items made from recycled and sustainable fabrics sources by Kloth Textile) and Kloth Woman Up.
Kloth Wear has generated almost RM2m in revenue since 2015, mostly through collaboration with corporates. The initial years were dedicated to promotional efforts which resulted in heightened interest among corporate clients. To date, it has used over 205,000 loose plastic bottles to make textiles and clothing sold to corporate customers. One recent collaboration was with Alliance Bank for the bank’s inaugural Alliance Bank Heritage Run 2023 in October where more than 3,000 t-shirts were produced using recycled plastic bottles (rPET) at about 14 plastic bottles per t-shirt. Meanwhile, Kloth Woman Up engages 20 women from marginalised communities to produce premium and customised upcycled merchandise from donated or unwanted fabrics and to date, over 24,000 upcycled products have been made.
The women are paid based on the number of items produced at a rate of 60%−70% of the selling prices, thus improving the livelihood of their families. Apart from corporates, Kloth Cares also partners with other organisations such as KDEWB Waste Management on the collection of discarded garments and fabric, and Life Line Clothing Malaysia and Selangor Youth Community to repurpose discarded garments.
Kloth Cares is the recipient of the APAC Insider South East Asia Business Awards 2022 for the best fabric circular economy category. It is also the only socially responsible company in Malaysia to be awarded the MyHijau Mark certification under the textiles and waste sector category.
In view of the increasing emphasis in recycling and rising interest on repurposing garments fabric and circularity, Kloth Cares has expanded its initiatives to Singapore and Australia.
A retailer’s experience in managing waste sustainably – AEON’s waste management policy is drawn up in line with its sustainability charter that was launched in 2022, forming the blueprint for a sustainable business economically and environmentally as well as ensuring responsible employment, efficiency and integrity, and dynamic customer experience.
Managing waste efficiently is an integral part of the group’s sustainability journey as this will impact customers’ perception on the AEON brand. It is prioritising on reducing waste by implementing a waste management plan, intensifying recycling activities and collaborating with recycling organisations.
Food waste and plastic waste are key areas of concern in AEON’s management policy where the company is committed to reducing food waste and repurposing unconsumed or unsold food where possible while implementing zero plastic bag practice for shoppers and using sustainable packaging as much as possible. Since January 2023, AEON has stopped selling single use plastic bags to shoppers, offering paper bags that are FSC certified (paper from responsibly sourced wood fibre) instead while encouraging shoppers to bring their own bags. AEON’s waste management policy covers cooking oil, plastics
(PET bottles and soft plastics), metal, cardboard, domestic and wet waste. AEON echoed the call for proper segregation at source (SAS). The group’s current recycling rate is 10% (cardboards, food waste, plastics, apparels and fabric).
Minimising food waste – Food waste is a serious global problem – with 931m tonnes going to waste each year, generating 8%–10% of global carbon emissions, according to a UN report. Malaysia is among the biggest producer of food waste, throwing away a staggering 8.3m tonnes of food every year, said a UN Environment Programme (UNEP) report released in April. Exacerbating the problem is the amount of food that ends up in landfills.
In a study by UPM and UMS researchers published last year, over a third of Malaysians (37.13%) discard their food waste to the normal dustbin. Realising the important role that retailers play in minimising food waste and hence reducing the impact of excess resource use, AEON began implementing action plans in earnest to address the food waste generated by its business operations covering over 170 outlets.
Currently, food and non-food surplus make up over 70% of AEON’s waste, consisting of perishable items, processed food and bakery products, amongst others. The company’s goal is to reduce and reuse food surplus, leftover food waste, waste from its packaging and food supply chain.
Towards this end, AEON is collaborating with suppliers such as Nestle, non-government bodies such as Kechara Soup Kitchen and Kloth Cares as well as heightening shoppers’ awareness. In FY22, together with Kechara Soup Kitchen, AEON distributed 37,131kg of unsold bakery items, fresh produce and fruits to the homeless and vulnerable communities.
Going forward, AEON plans to engage more organisations to reduce the amount of food waste being sent to landfills. Its partnership with Kloth Cares since June 2022 has yielded over 200,000kg of textiles through 48 Kloth bins that are located in 26 AEON malls.
In December 2022, AEON collaborated with Coca Cola and a PET bottle recycler Hiroyuki Industries, and managed to gather about 175kg of bottles in three months from just six malls in Johor. Another bin was put at AEON Nilai in September 2023 with plans to include other stores soon.
AEON’s integrated waste management centre in Alpha Angle is a pilot project that it co-runs with Alam Flora housing a 2-tonne capacity composting machine and a buy back centre. Since it began operations in June 2022, AEON has collected over 5,000kg of food waste (up till Dec 2022) and learnt valuable lessons on having the right prerequisites to maximise the utilisation of the composting machine, chief among them: (1) SAS especially organic waste from plastics), (2) manpower to sort and )separate the waste accordingly, (3) placement of bins at locations that are most convenient to shoppers and tenants, and (4) a seamless process flow.
AEON is looking at having offsite composting machines to process its own organic waste and produce high quality organic fertiliser for its home-grown organic vegetables that are being sold in AEON stores, forming a real circular economy for the retailer.
Another initiative is refilling stations for its home brand Top Value where the retailer is piloting in the AEON Maluri mall. AEON is targeting to have five refilling machines by 2023 in selected stores to further encourage reusing of containers when restocking cleaning supplies.
AEON sees sustainable waste management’s potential to: (1) optimise cost savings as less waste translates to fewer trips to landfills; (2) optimise income generation from recycling activities, (3) reduce carbon footprint; (4) foster communities’ involvement for a healthier environment.
Kenanga Research increased the rating for AEON’s effluent/waste management to 3.5 stars, resulting in an unchanged overall 3-star ESG score. Kenanga’s TP remains at RM0.92 with an UNDERPERFORM call.
Recycling trash for cash. For consumers, selling recyclable materials may not generate a significant amount. The amount of work and time involved in cleaning and sorting the waste is not always worth it. The lack of information and resources to facilitate recycling adds to the inconvenience and further dampens interest among the general public.
However, with increasing emphasis on environmental protection and stricter regulations on the use of natural resources, in particular virgin raw materials, recycling is regaining importance, presenting opportunities in the circular economy. To encourage the habit among consumers, Alam Flora set up seven buyback centres and started publishing reference prices for recyclables.
While there is no detailed information on how much the recycling industry is worth in Malaysia, there are clear indications on its potential. As of March 2022, data from the National Solid Waste Management Department revealed that Malaysia stands to gain an estimated RM476m in recyclable materials with better recycling practices. The bulk of these recyclables is paper (17%, valued at RM205m in the recycling industry) and plastic materials (9%, equivalent to RM163m), which are sent to landfills.
In a report by WWF-Malaysia in June 2022, a World Bank study estimated that Malaysia’s economy could potentially gain USD1.1b in material value if plastic materials were to be reused and recycled into other products. This is based on a projected post-consumer plastic waste generation of 1.07m tonnes, of which 81% of the material value is lost due to non-recovery.
In 2022, Malaysia imported 351,284 tonnes of plastic waste − the 4th largest importer after the Netherlands, Türkiye and Germany (Our World in Data) – from countries that include the US, Japan and some in the EU countries. Companies need to obtain approved permits from the National Solid Waste Management Department to import clean and homogenous plastic waste generated from industrial facilities and post-consumer wastes.
Meanwhile, the country imports about RM3b worth of pulp and paper products annually. Hence there are economic opportunities in the recovery and recycling of such materials. Malaysia is no newcomer in the recycling business. There are currently eight metal recycling plants (ingots, alloy ingots, billets), seven paper recycling plants (recycled paper), 40 for plastics recycling (granules, pellets, flakes) and six for organic waste (compost, bio-fertilisers), Investment in waste management.
Integrated waste management has been identified as one area of green technology investments by the Malaysian Investment Development Authority (MIDA). In 2022, Borneo Waste Industries was granted an investment of RM101m for the building and operations of an integrated waste management facility at the Kayu Madang sanitary landfill, Kota Kinabalu. It was awarded a 30-year concession for waste collection, storage, recycling, recovery, and waste treatment, producing alternative raw material pellets and refuse-derived fuel pellets. The facility can process 800 tonnes of waste a day, diverting up to 90% of the waste from landfilling.
From waste to energy – Converting waste to energy is one way to reduce the dependency on landfills, cut the volume of waste while conserving valuable land for other development. Waste-to-energy (WtE) plants are gaining attention as renewable energy sources; especially since the official opening of Malaysia’s largest landfill gas-powered plant in Bukit Tagar Enviro Park (BTEP), Hulu Selangor, Selangor. Local Housing and Development Minister Nga Kor Ming said that the government plans to have a WtE plant in every state by 2035, in line with the energy transition roadmap.
Estimated to cost about RM180m, the 12MW power plant converts methane from solid waste at the landfill into energy, supplying 339m kWh of electricity to the grid, which is enough to power 4,000 domestic homes, and generating up to RM25m in annual revenue.
An initiative by the Ministry of Local Government Development through the JPSPN and Berjaya EnviroParks Sdn Bhd. Operational since 2005, it can process 2,500 tonnes of solid waste a day and to date, it has disposed of 17m tonnes of solid waste from Kuala Lumpur and its surrounding areas.
BTEP has generated some 2.7m tonnes of verified carbon credits under the Clean Development Mechanism (CDM) under the UN Framework Convention on Climate Change, proving the potential of WTE plants in generating carbon credits.
Meanwhile, Cypark Resources Bhd’s solid waste modular advanced recovery and treatment waste-to-energy (smart WtE) plant at Ladang Tanah Merah, Port Dickson, with a 20MW capacity, began operations in December 2022. The RM300m plant has been awarded a 25-year concession, is able to dispose of 600 tonnes of solid waste a day and projected to generate an annual revenue of RM80m.
It was reported that relevant state governments had principally agreed on the construction of waste-to-energy plants in Rawang, Selangor, Batu Pahat in Johor and Sungai Udang in Melaka.
Handling scheduled waste – According to the Department of Statistics Malaysia’s Compendium of Environment Statistics 2022, Malaysia generated 7.5m tonnes of scheduled waste in 2021, 4.5% more than the 7.2m tonnes in 2020.
Meanwhile, clinical waste recorded a huge 44% jump to 57.4k tonnes in 2021 from nearly 40k in 2021 due to the Covid-19 pandemic. Scheduled waste is extremely difficult to manage due to the heavy metals, dioxin and gases produced during the treatment of toxic and hazardous materials. Cenviro Sdn Bhd (70% owned by Khazanah Nasional and 30% by South Korea’s SK ecoplant Co. Ltd) is Malaysia’s most prominent scheduled waste management services provider.
It collects about 230k tonnes of scheduled waste annually and has been operating the country’s sole integrated hazardous waste management centre in Bukit Nanas near Port Dickson, Negeri Sembilan.
The centre houses an incineration plant, solidification plant, physical & chemical treatment plant, clinical waste treatment centre, secured landfill and a scheduled waste-to-energy (SWtE) plant (operating since 2018) that can process 100 tonnes of scheduled waste per day, channelling 3.4MW of electricity to the national grid.
Cenviro’s second SWtE plant is scheduled to begin operations in Johor (14km from Pengerang) in January 2024. The company is also involved in recycling and recovery via its associate company Shan Poornam Sdn Bhd, the largest e-waste and metal recycling and recovery service provider in Malaysia.
Challenges. Separation at source (SAS) is critical for sustainable waste management. The low rate of waste separation at source means recyclable resources worth millions go to waste every day.
“Wet” solid waste is also not suitable for a WtE plant’s incineration process and this increases the capex as WTE plants need to invest in recycling or recovery facilities before solid waste can be used as feedstock.
The processing, recovery and incineration of waste is costly and capital intensive; a WtE plant costs hundreds of millions. Hence, it is impossible to implement without government-backed or regional agencies. Although WtE plants are considered an effective and quick way of solving the mounting waste problem, opponents point to health concerns and environmental safety due to pollution, dioxin and other heavy metals from incinerators.
Paramount to waste management is to prevent waste from arising. In the waste hierarchy, this is the most preferred way of managing waste and by far, the best for the environment. By producing less waste, we save on resources for disposal, recovery and recycling, and most importantly, less landfilling.
