Six Tiger s and a Huge Wakening Dr agon;

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Six Tiger s and a Huge Wakening Dr agon;

Oppor t u n it i es f or Bol l egr aaf Recycl i n g Mach i n er y i n East Asi a

Bedum, June 2004 K.J.T. Salomons

PART II

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Six Tiger s and a Huge Wakening Dr agon;

Oppor t u n it ies f or Bol l egr aaf Recycl in g Mach i n er y in East Asi a

Rijksuniversiteit Groningen

Faculty of Management and Organisation Assessors: Drs. R. Julien

Dr. J.A. Neuijen

Bollegraaf Recycling Machinery Assessor: Mw. M. Meijering

K.J.T. Salomons Bedum, June 2004

PART II

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Table of Contents

LIST OF TABLES, FIGURES AND BOXES... 6

T^ABLES... 6

FIGURES... 6

BOXES... 7

INTRODUCTION... 8

CHAPTER 1: RECYCLING BUSINESS OPPORTUNITIES IN TAIWAN... 9

1.1 INTRODUCTION... 9

1.2 GENERATION OF MUNICIPAL SOLID WASTE... 10

1.3 COMPOSITION OF MUNICIPAL SOLID WASTE AND RECYCLING... 10

1.4 PRE-SORTING AND COLLECTION OF MUNICIPAL SOLID WASTE AND RECYCLABLES... 11

1.5 DISPOSAL OF MÛNICIPALSÔLIDWÂSTE... 12

1.6 CONSUMPTION, PRODUCTION AND TRADE IN PAPER AND WASTE PAPER... 12

1.7 THE TAIWAN GOVERNMENT... 13

1.7.1 Government Structure... 13

1.7.2 Government Policies on Municipal Solid Waste and Recycling... 13

1.7.3 Central Government Projects... 15

1.7.4 Government Legislation and Regulations... 16

1.8 RECYCLING MACHINERY... 17

1.8.1 Market Demand... 17

1.8.2 Competition... 17

1.9 MARKET ACCESS... 18

1.9.1 Marketing Recycling Machinery in Taiwan... 18

1.9.2 Preferred Entry Mode(s)... 18

1.9.3 Tariffs/ Duty’s... 18

1.9.4 Methods of Payment/ Financing... 19

CHAPTER 2: RECYCLING BUSINESS OPPORTUNITIES IN HONG KONG (SAR)... 20

2.5 DISPOSAL OF MUNICIPAL SOLID WASTE... 25

2.6 THE HONG KONG GOVERNMENT... 27

2.7.2 End Users... 31

2.8.1 Marketing Recycling Machinery in Hong Kong... 32

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CHAPTER 3: RECYCLING BUSINESS OPPORTUNITIES IN CHINA... 33

3.4 P^RE-SORTING AND COLLECTION OF MÛNICIPALSÔLIDW^{ASTE AND}RÊCYCLABLES... 37

3.4.1 History... 37

3.4.2 The Informal Sector... 38

3.4.3 The Formal Sector... 38

3.7 CONSUMPTION, PRODUCTION AND TRADE IN PLASTICS AND WASTE PLASTICS... 41

3.8 THE CHINESE GOVERNMENT... 41

3.8.3 Central Government Projects... 43

3.9 R^ECYCLINGM^ACHINERY... 46

3.9.2 End Users... 47

3.10.1 Marketing Recycling Machinery in China... 47

CHAPTER 4: RECYCLING BUSINESS OPPORTUNITIES IN SOUTH KOREA... 50

4.7 THE SOUTH KOREAN GOVERNMENT... 57

4.8.2 End Users... 62

4.9.1 Marketing Recycling Machinery in South Korea... 62

CHAPTER 5: RECYCLING BUSINESS OPPORTUNITIES IN SINGAPORE... 64

5.2 GENERATION OF MÛNICIPALSÔLIDWÂSTE... 65

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5.6 T^HES^INGAPOREG^OVERNMENT... 68

CHAPTER 6: RECYCLING BUSINESS OPPORTUNITIES IN MALAYSIA... 72

6.7 THE MALAYSIAN GOVERNMENT... 80

6.8 R^ECYCLINGM^ACHINERY... 82

6.8.2 End Users... 82

6.9.1 Marketing Recycling Machinery in Malaysia... 83

CHAPTER 7: RECYCLING BUSINESS OPPORTUNITIES IN INDONESIA... 84

7.4 COLLECTION OF MUNICIPAL SOLID WASTE... 87

7.5 PRE-SORTING AND COLLECTION OF RECYCLABLES... 88

7.8 C^ONSUMPTION, PRODUCTION AND T^{RADE IN}PLASTICS AND W^ASTEP^LASTICS... 92

7.9 THE INDONESIAN GOVERNMENT... 92

7.9.2 Government Policies on Municipal Solid Waste... 92

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List of Tables, Figures and Boxes

Tables

Table 1: Recycling Rates Taiwan, 2001... 11

Table 2: Number of Solid Waste Disposal Sites in Taiwan, 2001... 12

Table 3: Taipei City’s EPB’s Planned Recycling Facilities ... 16

Table 4: Market Size for Recycling Machinery in Taiwan (in million US$) ... 17

Table 5: Source of disposed MSW, Hong Kong 2002... 21

Table 6: Recovered recyclables in Hong Kong 2002*... 23

Table 7: Solid Waste Delivered to Transfer Stations and Landfills, Hong Kong 2002... 26

Table 8: Market Size for Waste Reduction and Recycling Equipment in Hong Kong (in 000 US$) ... 31

Table 9: Relation between increasing wealth, urbanisation and MSW generation in China ... 34

Table 10: MSW Generation China: different sources compared ... 35

Table 11: Specification of types of plastics in solid waste in China in 1994... 37

Table 12: Paper and board production in Asia, 2001... 39

Table 13: Paper and board consumption and Recovery and Utilization Rate, 2001 ... 40

Table 14: Changes in the supply of main inputs to the plastic cycle in China in percentages ... 41

Table 15: Some government projects under the 10^th Five-year Plan, regarding solid waste treatment and disposal... 43

Table 16: Proposed Shanghai solid waste disposal facilities ... 44

Table 17: Recycling goals for Packing Waste South Korea, 1000 tonnes/year ... 54

Table 18: Budgets for Waste Reduction and Recycling, South Korea in 1000 US$... 60

Table 19: Recycling Rates Singapore, 2002 ... 65

Table 20: GDP by industry Malaysia, in million US$ ... 72

Table 21: Solid Waste Generation in Local Authorities in Malaysia, 1999... 73

Table 22: Composition of the Malaysian MSW stream (%) ... 74

Table 23: Price, Alam Flora pays for recyclables, August 2003 ... 77

Table 24: Residential waste in Petaling Jaya Municipal Council, 1994 ... 78

Table 25: GDP by industry Indonesia, in current million US$... 85

Table 26: MSW generation in major Indonesian cities... 85

Table 27: MSW composition in major Indonesian cities... 86

Table 28: Paper & Paperboard in Indonesia ... 91

Table 29: Market shares in the Indonesian Paper & Board Industry in 2000 ... 91

Table 30: Plastics in Indonesia in 2001, (1000 tonnes/year)... 92

Figures Figure 1: Map of Taiwan... 9

Figure 2: Generation of Municipal Solid Waste Taiwan, 2001... 10

Figure 3: Composition of Municipal Solid Waste Taiwan, 2001 ... 10

Figure 4: Disposal of Municipal Solid Waste Taiwan ... 11

Figure 5: The Mucha incinerator in southern Taipei City is one of the many incinerators that have been constructed to deal with the shortage of landfill sites... 13

Figure 6: Map of Hong Kong... 20

Figure 7: Waste Generation Hong Kong, 2002... 21

Figure 8: MSW Generation Hong Kong... 21

Figure 9: Composition of MSW, Hong Kong 2002 ... 22

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Figure 10: Collection of MSW in Hong Kong, 2002 ... 24

Figure 11: Public Recycling and Collection Point in Hong Kong ... 25

Figure 12: Composition of disposed MSW in Hong Kong, 2002 ... 26

Figure 13: The three landfill sites currently in use in Hong Kong ... 27

Figure 14: Waste Reduction Framework Plan, 1998-2007 ... 28

Figure 15: Waste Recycling in Housing Estate... 29

Figure 16: Map of China ... 33

Figure 17: Comparison best case versus worst case scenario on MSW generation China... 35

Figure 18: Composition of Municipal Solid Waste China. ... 36

Figure 19: Consumption of paper and paperboard products in China, 1979-2000 ... 36

Figure 20: Map of South Korea... 50

Figure 21: Waste Generation South Korea, 2000... 51

Figure 22: Generation of Municipal Solid Waste South Korea, historic and goals ... 51

Figure 23: Composition of Municipal Solid Waste South Korea 2001, with percentage based Seoul.. 52

Figure 24: Disposal and treatment of Municipal Solid Waste South Korea... 55

Figure 25: "Separate Disposal" Sign... 59

Figure 26: ‘Environmental Friendly Mark’ ... 60

Figure 27: Map of Singapore ... 64

Figure 28: GNI per capita Singapore ... 64

Figure 29: Composition of Municipal Solid Waste Singapore, 2002 ... 65

Figure 30: Public Recycling and Collection Point in Singapore ... 67

Figure 31: Disposal of Municipal Solid Waste Singapore... 67

Figure 32: Promotion material for recycling in Singapore ... 68

Figure 33: Map of Malaysia ... 72

Figure 34: Solid waste collection in Malaysia’s 13 states... 75

Figure 35: Total recyclables collected by type by Alam Flora, June 2003 ... 77

Figure 36: Total recyclables collected by Alam Flora (Jan-Jun 2003) ... 77

Figure 37: Map of Indonesia ... 84

Figure 38: The “Yellow Brigade” moving MSW to a transfer station in Surabaya, Indonesia ... 87

Figure 39: Recycling system in major Indonesian cities ... 88

Boxes Box 1: Taiwan Declares War on Plastic ... 14

Box 2: Part of a speech by the Minister of the Environment at the official opening ceremony of the Water and Wastetech and Cleantech Asia 2001 ... 69

Box 3: Alam Flora Sdn Bhd ... 76

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Introduction

This part is the empirical part of the research containing the market data. It consists of seven chapters in which each of the seven countries researched, are described. These countries are respectively Taiwan, Hong Kong, China (PRC), South Korea, Singapore, Malaysia and Indonesia. This description comprises all aspects of municipal solid waste (MSW) and MSW management, such as generation rates, composition, means of disposal, recycling rates, government policies and legislation with relation to MSW and recycling, etc. It further contains a description of the market for recycling machinery in terms of market size, market demand, entry issues, competition, tariffs and duty’s and other related issues. The conclusions of the analyses of the seven countries as described in this part, as well as the answers to the question whether these countries are potential markets for Bollegraaf Recycling Machinery, can be found in chapter 5 in Part I.

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Chapter 1: Recycling Business Opportunities in Taiwan

1.1 Introduction

Taiwan is an island on the east coast of mainland China.

It inhabits 22.5 million people and is, with its 36,188 square kilometres only a bit smaller than The Netherlands. But approximately 60% of the land is high mountain and therefore unsuitable for human habitation.

The official name of Taiwan is ‘Republic of China’ (ROC).

Based on historic grounds, Taiwan claimed domination over both the island and mainland China. However, mainland China (PRC) disagrees, and sees Taiwan as its rebel 23^rd province. China seems to win this fight since many countries do not recognize Taiwan as an independent sovereign country. The country is the fifth largest economy of the South East Asian region, after Japan, China, India and South Korea with a GDP of US$ 337.54 billion and a GDP growth of 3.5% in 2002.

Gross National Income per capita was almost 14,000 US$ in that year (National Statistics of Taiwan, 2003).

The official language is Mandarin Chinese, although many leading business people speak English.

Taiwan maintains one of the highest densities of factories in the world. Industrial authorities estimate that there are 90,000 legal factories and some 30,000 illegal factories on the island. The greatest concentration of these factories are in Taipei County, Taoyuan County in the North, Taichung and Chanhwa Counties in the central part of the country, and Tainan County and Kaoshiung County in the south. These factories, particularly small and medium-sized companies have been the engines of the growth of the Taiwan economy in the past 40 years (Strategis, 1997). The country has four main industries contributing to almost 80% of the country’s GDP. These industries are: Manufacturing (25.7%), Finance, Insurance & Business Services (23.6%), Commerce (19.4%) and Government Services (10.5%). Main sectors in the Manufacturing industry are electronics and computer products, chemicals and petrochemicals, basic metals, machinery, plastics machinery and transport equipment.

Major trading partners are the US, Japan and Hong Kong (mainly exports). Exports to Hong Kong also include exports to China¹ (National Statistics of Taiwan, 2003).

The process of rapid urbanisation, industrialisation, economic growth and population growth has had its impact on the environment. The country main environmental problems are air pollution, water pollution (illegal waste water dumping), and noise pollution in urban areas. The country also lacks sufficient technology for removal and treatment of hazardous wastes. Recent legislation, has given the environmental industry a major impulse (see paragraph 1.7.4 Government Legislation and Regulations). Market researchers expect a significant growth in the demand for equipment for treatment of solid waste and recycling, among others, see paragraph 1.8.1 Market Demand (EVD, 2003b).

1 More general and international trade related information for Taiwan can be found on the EVD website (http://www.evd.nl/Landen/Land.asp?land=tai).

Figure 1: Map of Taiwan

Source: CIA, World Factbook, 2002

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10 1.2 Generation of Municipal Solid Waste

In 2001, the population of Taiwan generated 7.25 million tonnes of MSW. This was a decrease of 7.6% on the previous year and a decrease of 18.3% on 1997, the year the MSW generation peaked 8.88 million tonnes.

In that year, the Taiwanese government introduced the Recycling Four-in-one Program.

This program combines the efforts of four parties (community residents, local Environment Protection Bureaus (EPB’s, recycling companies and EPA’s Recycling Fund Committee) in the promotion of waste recycling (see paragraph 1.7.2 Government Policies on Municipal Solid Waste and Recycling). The average MSW generation rate per capita was 0.89 kilograms per day.

1.3 Composition of Municipal Solid Waste and Recycling The Taiwanese MSW stream comprises the following main categories.

Compostables

The 31.4% compostables in the MSW stream consist of 27.3% food wastes and 4.1% garden trimmings.

Paper

The MSW stream contains 26.6%

paper. This total paper waste disposal comprises 1.93 million tonnes in 2001 of which 310,154 tonnes were recycled comprising the recycling rate of 16.1% in Table 1: Recycling Rates Taiwan, 2001 (EPA/ROC, 2003).

Plastics

Generally, middle and high income countries have a plastics percentage

in their MSW streams of approximately 10%, and low income countries have an even lower percentage. This makes the plastics percentage of 21.1% in the Taiwanese MSW stream remarkable.

In 2001, 10.4% of the 1.53 million tonnes of waste plastics were collected from the MSW stream, comprising a total of 158,588 tonnes. Almost 50% of the collected plastic recyclables were PET bottles and about 20% were PP/PE bottles. The remaining 30% ‘other waste plastics’, including PVC, expansible and unexpansible PS. The high collection rate for PET bottles was caused by the EPA’s

Figure 2: Generation of Municipal Solid Waste Taiwan, 2001

0 1.000 2.000 3.000 4.000 5.000 6.000 7.000 8.000 9.000 10.000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Year

(1000 tonnes/year)

Source: Environmental Protection Agency / ROC, 2003

Figure 3: Composition of Municipal Solid Waste Taiwan, 2001

Paper 26,6%

Metals 3,5%

Others 7,6%

Textiles 4,8%

Composta bles 31,4%

Plastics 21,1%

Glass 5,0%

Source: Environmental Protection Agency / ROC, 2003

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11 policy of refunding NT$ 0.5 per PET bottle. This program was terminated in 2002 due to illegal practices, see paragraph 1.7.2 Government Policies on Municipal Solid Waste and Recycling. In 2002 a total of 111,285 tonnes of plastic bottles (PET, PS, PVC, PP/PE) were collected from the MSW stream.

Glass

From the almost 365 thousand tonnes of glass waste disposed, 109,724 tonnes were collected comprising a recycling rate of 30.1%, see Table 1: Recycling Rates Taiwan, 2001.

Metals

As usual, metals have the highest recycling rate. In 2001, 68% of the 3.5% waste metals in the MSW stream were recycled. The recycled metals are divided in ‘iron cans’, ‘aluminium cans’ and ‘other waste metals’ comprising respectively 75%, 10% and 14%.

Others

The others category contains a wide range of recyclables including, electrical appliances, computers, tires, batteries, lead-acid accumulators and others. Approximately 53% of these types of waste are recycled. About 48% of the recycled ‘others’ are waste tires and about 13% are lead-acid batteries (EPA/ROC, 2003).

In total, 1.055,000 tonnes of recyclables were collected from the MSW stream in 2001 comprising an overall recycling rate of 14.5%. However, this rate is to be interpreted with some caution, because the same source (EPA/ROC, 2003) also gives a history of recycling rates ranging increasing from 7.0% (1999) to 9.8% (2000) to 12.7% (2001) to 14.5%

(January-June 2002).

1.4 Pre-sorting and Collection of Municipal Solid Waste and Recyclables Under the Four-in-One Recycling

Program (see paragraph 1.7.2 Government Policies on Municipal Solid Waste and Recycling) residents are responsible for pre-sorting their recyclables and bringing their trash to fixed or removable collection points. Waste and recyclables are then collected by the local EPB's or waste traders and sent to sorting and recycling plants for further processing. The collection rate for MSW has improved steadily from 95% in

Table 1: Recycling Rates Taiwan, 2001

Waste type Recycling Rate (%) Compostables N/a

Paper 16.1

Plastics 10.4

Glass 30.1

Metals 68.0

Others 52.9

Total 14.5

Total (target 2006) 18 Source: EPA/ ROC, 2003

Figure 4: Disposal of Municipal Solid Waste Taiwan

0 2.000 4.000 6.000 8.000 10.000

1992 1993

1994 1995

1996 1997

1998 1999

2000

2001 Year Total disposed (1000 tonnes)

General Landfill Sanitary Landfill Incineration Recycling Others Source: Environmental Protection Agency / ROC, 2003

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12 1988 to 99.5% in 2001. The costs of collection and disposal were US$ 649 million² in 2001. More than one third (US$ 232 million) was contributed by the citizens and the industry as a fee, levied for collection and disposal of their waste (EPA/ROC, 2003). The city of Taipei spends approximately NT$ 6 billion (US$ 173 million) per year on solid waste removal and disposal, which is about 55% of its total environmental budget (IBS, 2003).

1.5 Disposal of Municipal Solid Waste

According to the EPA/ROC (2003), the generation of MSW has doubled over the past 15 years. In 1985, an average Taiwan citizen generated 0.65 kg of waste per day, whereas this rate was 1.14 kg in 1997. This rate has dropped to 0.89 kg in 2001. Figure 4, shows the disposal of MSW generated over the past decade. From 1995, there is a decrease of general landfill and sanitary landfill, and an increase in incineration. The year 2000 and 2001 also showed a trend towards increased recycling. In 2001, the 7.25 million tonnes of MSW generated were disposed in the following way: general landfill (5.53%), sanitary landfill (38.23%), incineration (47.67%), recycling (7.45%), composting (0%) and others (1.12%). This means that 93.35% of the MSW was disposed according to EPA standards.

Although the MSW generation in per capita and in total is decreasing since 1998, the disposal of this waste is becoming a growing problem. Many landfills are either full or near their capacity.

In 1998, 66 of the country’s 316 garbage treatment sites had reached full capacity, leaving more than half of the Taiwan’s rural and urban townships with no place to dispose their garbage. But the construction of additional sites is very difficult because the extreme land scarcity on the island. Therefore the EPA has set the goal of incinerating 90% of all Taiwan’s MSW by 2003. Therefore it is drastically increasing its incineration capacity with the construction of 36 incineration plants which are to be completed in 2003. By then, the island will have a waste burning capacity of 30,400 tonnes a day.

However, there is a strong opposition of the public towards the

construction of incineration plants, fearing the toxic emissions of waste burning and arguing that recycling rates, under the recycling promotion programs, can and will increase much more (Taipei Times, 2001). Table 2 shows the operational solid waste disposal sites/plants in Taiwan at the end of 2001.

1.6 Consumption, Production and Trade in Paper and Waste Paper

Taiwan is the 5th largest paper producer of Asia, after China (34.2%), Japan (31.5%), South Korea (10% ) and Indonesia (7.1) with a production of 4.21 million tonnes comprising 4.3% of Asia’s total.

Exports (1.08 million. tonnes) approximately equal imports so that production almost equals consumption (4.45 million. tonnes). There are 116 paper mills and 2 pulp mills active in the country employing 20,500 people. In 2001, the Taiwan citizen consumed an average of 201 kg of paper and board, which is more than the average for France (183 kg/cap/year) and less than the average for the Netherlands (227 kg/cap/year).

2 Taiwan New Dollars were converted into US dollars using the following exchange rate: 1.00 TWD = 0.0288659 USD. Source:

www.xe.com

Table 2: Number of Solid Waste Disposal Sites in Taiwan, 2001

Plants/ sites for solid waste disposal in Taiwan, 2001

Total number Incineration

< 100 tonnes/day 13

>100 < 300 tonnes/day 1

>300 tonnes/day 18 Sanitary landfill 161 General landfill 47

Composting 2

Dumping 11

Total 253

Source: EPA/ ROC, 2003

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13 In 2001, the country (including the paper industry, pre-consumer paper waste and paper waste from all other industries) recovered 2.72 million tonnes of paper waste. This number includes the official amount 0.31 million. tonnes (11.4%) collected from the MSW stream as registered by the EPA/ ROC, mentioned in paragraph 1.3 Composition of Municipal Solid Waste (PPI, 2002). The country imported an additional million tonnes of waste paper and exports were nil, comprising a total of 3.72 million tonnes to be consumed by the paper industry. The island has a recovery rate of 61% in 2001, which is very high. For comparison, see Table 13 in chapter three (PPI, 2002).

1.7 The Taiwan Government

1.7.1 Government Structure

As a response on the environmental problems the country was facing, the government created the Environment Protection Agency (EPA/ROC) in 1988. This agency falls under the direct responsibility of the Executive Yuan of the Republic of China. Since then, the EPA has designed and enforced environmental legislation and imposed fines and shut-down orders on manufacturers who improperly disposed their wastes. It also provided financial incentives for industries to purchase and install environmental friendly equipment and it actively encourages communities to recycle their wastes.

Some relevant Bureaus under the responsibility of the EPA are:

Bureau of Environmental Sanitation and Toxic Chemicals Control;

Bureau of Environmental Monitoring and Data processing;

Statistics Office;

Bureau of Environmental Inspection.

The EPA is represented in the counties by the local Environmental Protection Bureaus (EPB's) and in the cities of Taipei and Kaohsiung by the municipal Environmental Protection Bureaus. Enforcement by local EPB's is essential for environmental policies and regulations formulated by the EPA to have any effect. By 2001, the EPA had helped 14 local EPB’s by drawing up their own regulations for the implementation of waste recycling, and other EPB’s are following.

1.7.2 Government Policies on Municipal Solid Waste and Recycling In the 1980s the Taiwan government had the

policy of incinerating all combustible waste and disposing of non-combustible waste in landfills. However, MSW generation grew with an average of 3% per year and there was growing opposition towards the construction of new landfill sites and incineration plants and appropriate locations were difficult to find, since land is extremely scarce in Taiwan. Therefore, the EPA changed its policy from 100% disposal to waste minimization and increased recycling and from (sanitary) landfill to increased incineration. In the past few years, the EPA has promoted and developed its waste minimization and recycling policy through

Figure 5: The Mucha incinerator in southern Taipei City is one of the many incinerators that have been constructed to deal with the shortage of landfill sites

Source: Taipei Times, 2003

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14 various strategies, including:

Holding the producer/importer/seller of polluting goods/packaging responsible, for example:

Producers/importers must report the amount of items sold/imported to the EPA.

Producers/importers must pay recycling fees for such items.

Producers/importers of specified items must produce specified recycling labels on their products.

Specified retailers are required to display collection points and accept recyclables returned by their customers.

Sellers must take back used appliances (i.e. washing machines, refrigerators, televisions etc.)

Pay-As-You-Throw policy, for example:

Taipei City promulgated the “Municipal Waste Cleaning Fee Collection Ordinance” in 2000, which requires citizens to pay a fee (US$ 0.013 per litre) for trash collected by the city’s collection service. Pre-separated recyclables are free of charge.

A policy of mandatory sorting, for example:

Taichung City promulgated the “Municipal Waste Recycling and Cleaning Ordinance”

in 2000, which requires citizens to sort their trash into four categories (recyclables, large-volume wastes, hazardous wastes, general wastes) before pick-up.

The development of appropriate environmental legislation, see paragraph 1.7.4 Government Legislation and Regulations.

The development of resource reuse technologies in various projects, see paragraph 1.7.3 Central Government Projects;

Some of the above waste minimization and recycling policies can be found in the Four-in-One Resource Recycling Program which has been in operation since January 1997. The program combines the efforts of four parties in the promotion of waste recycling: community residents, recycling companies, Environment Protection Bureaus (EPB’s) and the EPA’s Recycling Fund Committee. The Recycling Fund Committee is responsible for distribution of the funds in the Recycling Fund and for monitoring the Four-in-One program. The Committee

collects funds from manufacturers, importers and retailers of materials that are declared as recyclables and sets prices for each kind of recyclable material. These funds are then distributed to the recycling companies. A portion of the fund is also paid back to communities and local EPB’s (IBS, 2003/

EPA/ROC, 2003).

Taiwan faces heavy environmental pollution due to it’s large use of plastics. In 2001, the MSW stream consisted of 21% of plastics which is extremely high. It was estimated that in 1997, the Taiwan citizens used 3 billion plastic bags for their convenience! To reduce the immense plastic waste, the EPA introduced the Plastic Shopping Bag and Plastic Disposable Eating Utensils (Styrofoam) Restriction

Box 1: Taiwan Declares War on Plastic

Disposable plastic bags, bowls and other utensils are to be banned in Taiwan. The ban will apply to supermarkets, department stores, fast food chains, restaurants and convenience stores. Thousands of volunteers are promoting the government campaign which aims to reduce landfill waste and street litter. Hau Lung-bin, head of the Environmental Protection Administration, said: "We must dump the habit of disposing of utensils after use. "This may bring a little inconvenience to your life, but it will help clean up our environment." Disposable bowls and other plastic ware have long been popular in Taiwan because they are cheap and sanitary. Many customers don't trust restaurants to properly clean dishes and utensils. Authorities encouraged the use of disposable dishes 10 years ago to halt the spread of hepatitis. While the liver disease has been in check in recent years, the island has become swamped with cheap plastic ware. Government officials estimate that plastic utensils and bags account for 54,545 tons of waste annually.

Authorities are allowing a grace period of 45 days for the plastic ban.

After that, businesses ignoring the policy will be fined up to £2,682.

Stores have been reminding customers they should bring their own shopping bags or pay extra for paper bags.

Source: Ananova, 31 Dec. 2002

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15 Policy, see Box 1. To increase the recycling rate of plastic bottles, the government introduced a refund program for PET bottles in 1992, refunding NT$ 0.5 for every PET bottle. This program was terminated in 2002, due to illegal practices including serious over reporting of PET bottles by recycling firms.

1.7.3 Central Government Projects

Environmental Technology Park Development Plan

In September 2002, the Council of Economic Planning and Development under the Executive Yuan, and in coordination with the Resource and Recycling and Reuse Act approved TEPA’s plan to establish three environmental technology parks across Taiwan. Under this plan, NT$ 15 billion (US$ 433 million) will be invested over the next ten years to set up three zones, to:

introduce new clean-production technologies;

develop new recycling technologies and;

promote the use of recycled products.

The plan will provide economic incentives including land lease, tax deductions, capital subsidies, production subsidies and special financing to encourage local and foreign enterprises to set up operations in the parks. The EPA hopes to bring together a total of 150 R&D companies and 60 environmental companies. The locations of these parks is still to be decided (IBS, 2003).

Demand for Incinerator Ash Reuse and Final Disposal Technologies

The major incinerators currently operating in Taiwan produce over 774,000 tonnes of ash per year.

This incinerator ash is sent to landfill sites for final disposal. However, the diminishing landfill space causes the EPA to seek other ways to dispose this ash. The EPA is now encouraging local public environmental authorities and private companies to set up incinerator ash reuse and disposal sites.

The EPA will provide subsidies up to NT$ 3.58 billion (US$ 105 million) over three years and a guarantee of sufficient ash volume for processing. The EPA encourages companies providing incinerator ash reuse technologies to take advantage of this opportunity.

Green Procurement Policy for Government Agencies

The Green Mark System is an environmental labelling program that was implemented by the EPA in 1993 in an effort to promote green consumerism and to encourage companies to produce environmental friendly products. This policy was strengthened by the 2001 approval of the Program for Promotion of Green Procurement by Government Agencies calling for all levels of the government to raise their green procurement rate of office equipment and supplies to 50%. The Green Procurement Policy can be seen as an important step the EPA is taking to create a market and marketing channels for recycled products (IBS, 2003). For more info, visit the website: http://www.greenmark.org.tw.

Local Environmental Protection Bureaus’ Projects

The EPA has helped many local EPB’s by formulating their own regulations on waste recycling.

Currently, policies regarding kitchen recycling are being implemented in many cities and counties, so their will be an increasing demand for organic waste treatment technologies.

Taipei City EPB to Build a Number of Recycling Facilities

Taipei City’s EPB plans to build a number of recycling facilities via a Build-Operate-Transfer (BOT) approach in the future. These include:

An organic waste disposal facility at he Peitou incinerator;

A comprehensive sorting facility at the Neihou incinerator (NT$ 200 million/ US$ 5.77 million);

A crushing, sorting and recycling facility for oversized and building waste at Shanchuku Sanitary Landfill;

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16 Organic waste disposal and comprehensive sorting facilities will be built at all three Taipei

incinerators by 2015;

A crushing, sorting and recycling facility for oversized and construction waste will be built at the planned new landfill.

Kaohsiung City EPB to Build Organic Waste Facilities in 2003

Kaohsiung City has introduced its ‘Compulsory Garbage Separation Program’ in January 2001, requiring residents to separate their garbage into four categories: general waste, hazardous waste, bulk waste and recyclables. Offenders will be fined, with a maximum of NT$ 4,500. The city is planning to privatise a number of its services. It is also planning a kitchen waste organic compost facility at the Southern District Recycling Plant.

1.7.4 Government Legislation and Regulations

The following regulations and codes of practice, have been developed for waste management by the EPA.

Waste Recycle and Reuse Act. Promulgated on July 2002, and has become effective in July 2003. The act was designed for the purpose of conserving natural resources, reducing waste generation, promoting material recycling and reuse, lessening environmental burden and building a society of sustainable resource utilization.

Taiwan’s Waste Disposal Act (WDA). Promulgated in 1974 and last revised in Oct. 2001. The WDA stipulates rights and duties of relevant agencies involved in the prevention, recycling and storage of waste. In Oct. 2002, new regulations were added which specify methods and standards for recycling, storage, clearance and disposal of various waste items that are required by law to be recycled. In coordination with the WDA, the Solid Waste Management Bureau of the EPA has introduced the following measures:

Measures for Management of Waste Recycling Proprietors Measures for Management of Waste Recycling Businesses Measures for Recognition and Inspection of Recycled Waste

Measures for Application and Auditing on the Subsidy of Waste Recycling

Air Pollution Control Act. Originally Promulgated and Effective in 1975. Latest Revision 1992 Environmental Impact Assessment Act. Promulgated and Effective in 1994

Soil and Groundwater Pollution Remediation Act. Promulgated in 2000

Table 3: Taipei City’s EPB’s Planned Recycling Facilities

Time frame 2001-2005 2006-2010 2011-2015 2016-2020

1. Crushing/ sorting and recycling facility for oversize waste (100 tonnes/day)

1. Full sorting and disposal facility (300 tonnes/day)

1. Full sorting and disposal facility (1,600 tonnes/day)

1. Waste decomposition ash vitrification and solidification facilities Task to be completed 2 Trail compost plant (30

tonnes/day)

2. Organic waste compost plant (900 tonnes/day)

2. Organic waste compost plant (500 tonnes/day) 3. Use of restaurant

kitchen waste as swine feed (150 tonnes/day)

Source: IBS, 2003

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17 Organic Act Establishing the Environmental Protection Administration of the Executive Yuan.

Promulgated and Effective in 1987. Latest Revision Effective in 1997

Toxic Chemical Substances Control Act. Promulgated and Effective in 1986. Latest Revision in 1999

Water Pollution Control Act. Promulgated and Effective in 1974. Latest Revision Effective in 1991

Environmental Agents Control Act. Promulgated and Effective in 1997.

More acts and regulations can be found on the EPA website: http://www.epa.gov.tw/english/LAWS.

1.8 Recycling Machinery

1.8.1 Market Demand

The policies of the Taiwan government and the EPA regarding the environment and recycling, supported by necessary acts have given and continue to give the environmental and recycling industry a major impulse. The EVD (2003) estimated the size

of the environmental market in 2001 on US$ 970 million.

The total market for recycling machinery in 2003 was estimated to be US$ 258 million. Local production is estimated to be US$ 199 million and exports US$ 149 million. This makes the import market worth US$ 208 million in 2003, see Table 4.

According to contacts in the recycling industry, the following equipment can be identified as high in demand in Taiwan for treatment of general waste:

Recovery equipment and technology Screening and separating equipment Filtration equipment and technology Shredders

Crushers Garbage trucks

1.8.2 Competition

Three major exporting countries were responsible for almost 63% of Taiwan’s recycling machinery imports in 2002. These countries are the U.S. (17.5%), Japan (32%) and Germany (13%). If the import shares of 2001 are compared, one can conclude that Japan (44%) and Germany (17%) are losing market share on the U.S. (10%). The U.S. suppliers of recycling equipment still hold an advantage over local, Japanese and German firms, due to their leading technology. Historically, U.S. firms have done well in the market for crushing/grinding equipment, paper shredding/sorting equipment and garbage trucks. Both the public and the private sector recognize the U.S. as a leader in environmental technologies. Many business leaders got their degrees from U.S. universities and are therefore

Table 4: Market Size for Recycling Machinery in Taiwan (in million US$) 2001 2002

(estimated) 2003 (estimated)

Projected average growth rate for following 2 years

Import Market 228 190 208 10%

Local Production 169 189 199

Exports 127 142 149 10%

Total Market 270 237 258 10%

Source: IBS, 2003

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18 familiar with U.S. technology and business practice. However, U.S. products are also seen as having higher prices and less complete after-sales service than competitors. In contrast, after-sales service is something Japanese firms do have a strong reputation in. This is the main reason that they have done well in Taiwan’s environmental equipment market. Another important factor is that quite a few Taiwanese business people speak Japanese, making business transactions much more easier.

Germany is another strong competitor in the market. In recent years, it has become very aggressive in increasing their sales in the Taiwanese environmental technologies market, especially in the recycling industry. In general: reputation, quality, price and service are very important whereas quality and reputation often comes for price (Strategis, 1997). Other competitors in the market include the U.K., Italy, Canada, France, Korea, Singapore and Thailand products (IBS, 2003).

Taiwan itself is only capable of producing recycling equipment that is not technologically intensive such as waste loaders, paper shredders, crushers and vibrating screens for which the technology or concept is often imported/copied from foreign countries. In March 2002, the country totalled 108 environmental equipment suppliers and manufacturers, 482 environmental service companies and 43 environmental testing and monitoring companies. Most of these companies are small to medium sized (under 20 employees). There are another 100 firms, not classified in the above categories which totals the environmental industry on 730 firms.

1.9 Market Access

1.9.1 Marketing Recycling Machinery in Taiwan

Imported equipment is marketed through sales agents/importers, direct foreign purchases and consulting engineers. All public agencies purchase equipment through open tender bidding. The Central Trust of China (CTC), a quasi-governmental organization, usually procures for state-run enterprises if the purchase exceeds NT$ 50 million (US$ 1.5 million). State-owned enterprises and government agencies notify the CTC of equipment to purchase, after which the CTC announces and administers tender procedures. The evaluation of technical requirements is left to the agencies themselves or parties acting on their behalf. CTC tenders may be local or international.

Public pollution control or environmental projects are generally contracted through the Taiwan EPA, local EPB’s and the Industrial Development Bureau (IDB). The IDB’s Sustainable Development Division is responsible for pollution control and prevention projects in Taiwan's private industries (IBS, 2003).

1.9.2 Preferred Entry Mode(s)

It is highly recommended that companies enter the Taiwan market through the establishment of a technical cooperation relationship with a domestic agent/ distributor, a local engineering company or a local manufacturer. This enables foreign firms like Bollegraaf Recycling Machinery to develop market contacts and early awareness and preparation on government bids and specifications. Most local firms prefer the an agent relationship over a distributorship relationship (IBS, 2003; Rondinelli, 1996).

1.9.3 Tariffs/ Duty’s

The entry of Taiwan into the World Trade Organization (WTO) in early 2002 has resulted in the removal of non-tariff trade barriers imposed on foreign environmental technologies, making foreign products more affordable to Taiwanese buyers. There is also no import tariff on pollution control/prevention equipment in Taiwan. In all cases, a Free Tax Certificate must be obtained from the

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19 Industrial Development Bureau (IDB) of the Ministry of Economic Affairs. According to Strategis (1999), companies importing pollution control equipment can be offered a 10% credit for imported equipment.

In addition, between 5% and 10% of expenditures for recycling technology or equipment used for industry may be credited against corporate income tax (IBS, 2003).

1.9.4 Methods of Payment/ Financing

Importers are usually responsible for arranging their own financing, however official assistance by the Export/Import Bank of the Republic of China (EXIMBANK/T) is available in certain cases. Letters of credit are usually accepted payment terms. Banks require a 10% deposit when opening a letter of credit with the balance paid upon the arrival of goods. After developing a satisfactory working relationship with local firms, foreign suppliers also may consider the following methods of payment:

Documents Against Payment or Documents Against Acceptance. Settlement will be made in foreign currency by the importer at maturity or at the time of receipt of goods or relevant shipping documents.

(IBS, 2003).

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20

Chapter 2: Recycling Business Opportunities in Hong Kong (SAR)

2.1 Introduction

Hong Kong was occupied by the United Kingdom in 1842 as a result of the first Opium War (1840-1842). From 1898 on, the area was leased by the UK from mainland China for a period of 99 years.

Because the Peoples Republic of China did not want to extend this leasing contract, another solution had to be found.

The result of the negotiations between the parties was the establishment of Hong Kong as a Special Administrative Region (SAR) on the 1^st of July, 1997 for a period of at least 50 years. This construction was based on the ‘one country, two systems’ approach, in which the PRC promises not to impose the socialist economic system on Hong Kong and also that Hong Kong will enjoy a high degree of autonomy in all matters (executive, legislative and juridical) except foreign and defence affairs.

Macau is the other of the two SAR's of the PRC.

Hong Kong is very hilly and has numerous small islands. With a population of 6.82 million people in 2003 and a total land area of 1,100 square kilometers, the area has one of the highest population densities of the world. This is especially true for some urban areas in Kowloon peninsula, which inhabits 30.7% of the population. Some urban areas in Kowloon are said to have a population density of 44,210 people per square kilometre! The other two main areas are Hong Kong Island; the economic centre of the SAR inhabiting 20.4% of the population and the New Territories inhabiting 47.7% of the population. About 98% of the Hong Kong citizens are of Chinese origin, and most of them are originally from the province of Guangdong. The official languages are Chinese (Cantonese) and English. Hong Kong is one of the most important trade links with mainland China, due to it’s geographic position and its natural harbour³ (EVD, 2003; CIA, World Factbook, 2003).

In 2002, the SAR had a GDP of US$ 161,532 million comprising a US$ 23,800 per capita GDP⁴. There are three industries accountable for this GDP, which are: Industry (13,8%), Services (86.1%) and Agriculture and Fisheries (0.1%). The 2002 GNI per capita was US$ 24,318 (Census & Statistics Dep.

Hong Kong, 2003).

3 More general and international trade related information for Indonesia can be found on the EVD website (http://www.evd.nl/Landen/Land.asp?land=hok).

4 Hong Kong Dollars were converted into US dollars using the following exchange rate: 1 HKD = 0.128223 USD. Source:

http://www.xe.com

Figure 6: Map of Hong Kong

Source: CIA, World Factbook, 2002