Original by Dr. Steve Wong
August 12, 2024
The cost of importing plastic scraps to Vietnam and Thailand has been higher than Malaysia’s. Shipping a 40-foot container to Malaysia costs around US $500 to US $550 while shipping to Vietnam and Thailand costs over US $2000 per container. In the past, recyclers decided to establish businesses in these countries because of cheap labor, other cost advantages, and the local market’s potential. However, despite significant investments of money and resources, since 2018, only about 20-30% of the recycling businesses established in these countries have survived. This may be attributed to choosing the wrong location or making bad decisions. Those who have survived are considered “masters.” They endure by making intelligent choices in selecting suitable materials, focusing on less competitive areas with room for price adjustments—such as engineering plastics—leveraging their expertise and having advantages in trading and craftsmanship.
Others in the same industry, operating in areas with low profits and intense competition—such as PP big bags and PE films—have mostly closed down and returned to China or moved to other countries. They are described as coming in suits but leaving in shorts when they return to China.
Unlike the Malaysian government, which views waste plastics as a resource, Thailand and Vietnam have different attitudes. In communication with Malaysian officials, they calculated plastics recycling as a US$9 billion circular economy, indicating they would not give up this valuable resource. Their import procedures and processes are very clear. Recyclers can import non-contaminated, re-processed plastic from recycling factories as neutral cargo, which is not considered waste. Additionally, items with a recycling rate of over 95% and not categorized as hazardous waste can also be imported. Factories with recycling permits can import waste plastics from developed countries.
Conversely, the Thai government has a different approach, especially towards EU countries, and does not allow the import of all waste plastics. Recently, Thailand has stopped the import of licensed factories, leading to many containers already shipped needing to be re-routed at sea to other locations. Some say this restriction is temporary, while others claim it’s permanent. Regardless, many recyclers are sure to close down in this wave. Although the Thai government aims to force the recycling industry to focus on processing domestic waste, imported waste plastics are different from local waste plastics. Banning imports does not necessarily increase the amount of local recycling. When China used to import waste plastics, at its peak, it reached up to 9 million tons per year; after the ban, there was no significant increase in the recycling of domestic waste plastics.
Recently, Vietnam has intensified its crackdown on trading import permits, posing a significant challenge to those in the trades and recycling businesses that relied on third-party permits. This has forced some to consider cooperation with permit-holding businesses, leading to increased costs or profit sharing. Despite these challenges, Vietnam still allows the import of waste plastics without restrictions or bans, as long as the regulations for importation and national environmental laws are adhered to. However, the pressure is evident, with some recycling factories in Vietnam being put up for sale, signaling a new round of challenges in the sector.