Plastics have transformed our modern world, providing a flexible, durable, lightweight material with a remarkable range of applications. Along with these benefits, however, come undeniable challenges, as our reliance on these materials generates a growing pollution burden.

Global plastic consumption doubled in the two decades from 2000–2020, reaching 460 million tonnes (MT). Demand is expected to triple further by 2060, emphasizing a growing need for both private and public stakeholders to develop and deploy effective solutions to enhance plastic circularity.

According to research by the Organisation for Economic Co-operation and Development (OECD), just 9 percent of plastics were recycled as of 2019, and 22 percent were mismanaged, with an estimated 11 metric tons of plastic flowing into our global oceans annually.

Plastic pollution, like demand, is expected to triple by 2060, framing a serious sustainability challenge for our planet. This is a global problem, and yet one that Indonesia – as Southeast Asia’s largest economy – should put itself at the forefront of addressing.

Boston Consulting Group (BCG) has developed an adaptive Circular Framework to help inform this journey for stakeholders in Indonesia and beyond, looking at ways to maintain the benefits of these versatile materials while mitigating the impacts on our nation and our planet.

Improving Indonesia’s plastics landscape

Not all plastics are made equal, and understanding the landscape of global plastic is critical to identifying appropriate solutions. 60 percent of plastics consumption is utilized for just three sectors—packaging (consumer and industrial), building and construction, and automotive industries.

Packaging accounts for the greatest demand, responsible for 154 million metric tonnes per annum (MMtpa) of annual demand—more than building and construction (63MMtpa) and automotive (60MMtpa) combined. Digging deeper into the sub-applications of various plastic materials further illuminates a lopsided landscape.

Analysis of the top 20 sub-applications reveals that the five largest sub-applications—food packaging flexibles, PET beverage bottles, PVC piping for water/utilities, stretch and shrink wrap LDPE, and PP for automotive interior and exterior—consume ~94 MMtpa or about 20 percent of total global plastics.

Indonesia is estimated to generate a staggering 7.8 million tons of plastic waste annually, with over 4.9 million tons mismanaged due to poor collection or improper disposal. More than half (58 percent) of plastic waste never gets collected at all, and 9 percent of uncollected waste is directly deposited into the ocean.

This creates a huge problem for both land and sea ecosystems, threatening both environments and livelihoods. Indonesia’s plastics burden means the country releases up to half a million tons of plastic pollution into the oceans each year, threatening the hugely valuable tourism and fisheries industries.

World Bank analysis estimates that the cost of plastic pollution to Indonesia’s ocean economy stands at over $450 million per year, with an estimated $147 million in revenue lost annually due to plastics.

Indonesia has introduced important legislation to address this issue. The Marine Plastics Debris 2018-2025 and a 2018 Presidential Decree about Handling of Marine Waste aim to reduce marine debris by 70 percent by 2025, as leaders look to tackle the rising tide of plastic pollution.

A 2017 Presidential Decree about National Policy and Strategy for the Management of Household Waste and Garbage Similar to Household Waste commits to 30 percent waste reduction at source and 30 percent community-based recycling by 2025, backed by the wider National Medium Term Development Plan (RPJMN) which aims to deliver 80 percent management and 20 percent reduction of solid waste generated in urban areas by 2024.

BCG’s adaptive Circular Framework offers an informed strategy designed to help stakeholders identify and deliver measurable change in the areas that matter most. 

An Adaptive Circular Framework

There are four key dimensions to address in an effective circular framework. The first is existing and developing business models, exploring existing solutions and available best practices.

Policy and regulation are needed for financial de-risking or incentivizing investments to increase adoption. The available technology is another essential component, looking at technologies that complement and support business models.

Finally, societal engagement is important to involve broader groups of stakeholders to spread adoption and enable the business model.

In order to deliver a truly effective solution, our Circular Framework is designed to address the four core dimensions of business models, policy and regulation, technology, and societal engagement which are critical to designing a fit-for-purpose model to improve plastics circularity.

This should be undertaken as part of a five-stage solution:

1. Pick a framework component to start
2. Evaluate how each dimension supports the value chain
3. Highlight all possible options and identify the optimum choice for each archetype
4. Select examples of chosen options
5. Inform recommendations for industry

If we look at the top five most-consumed plastic types today—PET, PP, LDPE, HDPE, and PVC—it’s clear they have a wide range of applications throughout industry and society, in areas as diverse as packaging to building and architecture.

PET, or polyethylene terephthalate, is the most prolific of these materials, and responsible for almost one-fifth (19.4 percent) of total global demand. You can see that demand in the water bottles bubbling away in every office cooler or bottles of fizzy drinks crowding shop fridges.

The use of the most-consumed plastic types is dominated by consumer and industrial packaging, as well as the automotive segments. In total, 14 sub-applications represent one-quarter of total global plastics consumption, with the highest shares belonging to PET beverage bottles, PVC pipes, and/or LDPE food packaging.

This data-driven foundation offers a platform for industries and governments to assess where their most valuable intervention lies to deliver a circular plastics solution.

Understanding the potential societal impact of any intervention, as well as the maturity of existing solutions, offers the final lens with which an effective plastics circularity strategy can be deployed.

Indonesia has some valuable foundations to help move forward with this transition. The nation’s significant palm oil industry, for example, offers an innovation pathway towards sustainable, circular bioplastics which could have significant implications for the journey of global plastic.

There has been a seismic shift in attitudes to plastic pollution over the last decade, culminating in a landmark agreement in March 2022 setting out a mandate by UN member states to negotiate a legally binding treaty on plastic.

With negotiations now underway to establish a treaty targeted attending plastic pollution by 2040, this issue has never been more prominent. Indonesia is a nation at the beating heart of global growth, and it has the potential to become a major gateway in this essential transition to more circular plastic economies.

Committing to this journey can not only help tackle the nation’s own plastic pollution challenges but put the world on track to a more sustainable global environment backed by value-adding and inspiring innovative plastic products.

Arun Rajamani is a managing director and partner at the Boston Consulting Group. Marc Schmidt is also a managing director and partner at the multinational consulting firm.