Developing the Circular Economy in Asia

Leading Vietnamese car manufacturer THACO has recently proposed a circular economy complex in Vietnam’s south central region and focused on mining and processing bauxite worth around USD 4.1 million. Moving well past the normal boundaries, the process encompasses aluminium processing then restoration of the impacted environment into agriculture and ecotourism. This type of project is an indicator of a positive trend for the circular economy in Asia. Jari Hietala, Managing Partner for Asian Insiders digs a little deeper.

By definition, the circular economy is a model where both production and consumption allows for and maximises sharing, leasing, reusing, repairing, refurbishing and recycling materials and products as long as possible to allow maximum use and minimal waste. The three core principles are the elimination of waste and pollution, the circulation of products and materials and the following regeneration of nature – reduce, reuse and recycle.

While the circular economy remains for many, a theory, and for some, a utopian ideal… for others, the concept is an inspiration for a better, more sustainable world. In Asia, already burdened with 60% of the world’s population, rapidly expanding cities, stretched resources and an increasingly strained environment, there is real and substantial interest in the long-term benefits.

Economies in Asia can reasonably be characterised by the word ‘transformational’. Differing from the western model of developing industrial might, almost every economy in Asia has transformed themselves from war-ravaged, rural economies into powerful modern and in some cases, high tech industrial powerhouses. To the three current ‘superpowers’, India is emerging as a fourth and perhaps a fifth is looming in Indonesia. Within the recent two generations, hundreds of millions of have been lifted from poverty, while Asia as a region has forged ahead, transforming itself.

But new-found prosperity and consumerism carries its own dangers and Asian countries are often now amongst the more significant contributors to global trash and pollution. The transformational effort to reduce this trend, perhaps even reverse it requires major governmental buy-in. The good news is that there are signs that this is broadly taking place at national and provincial levels.

Thailand, for example is taking a lead in fostering the circular economy and in enacting various policies and incentives towards a circular economy in three strategic sectors – food and agriculture, electrical and electronics manufacturing and construction. One good example of this is Thailand’s Siam Cement Group, (SCG) a building materials conglomerate and one of the largest companies in the country. SCG has held the world’s number one ranking for a straight decade in the Dow Jones Sustainability Indices in construction materials and has deployed a wide range of innovations and processes within its workflow, including taking an active role in advocating for sustainable development.

In China, the concept of a circular economy was introduced into policies from 2002 and has since evolved into a national strategy, reflected best in the inclusion within the 14th Five Year Plan (covering 2021 -2025). This involved several initiatives, specifically “motivating green product design, recycling, remanufacturing and renewable resources”. Strongly mentioned also is a push to eliminate unnecessary or problematic packaging, including ensuring that all packaging is recyclable in practice. This state-led emphasis is significant in China and leads to a raft of initiatives at all levels of governance to mandate or encourage recycling, waste-to-energy treatment technologies and facilities, recycling initiatives as well as reforestation and land refurbishment.

Likewise the government in India is actively formulating policies and encouraging projects that drive the nation towards a circular economic system. Two such critical areas are electricity from recyclable resources and waste management. India accounts for 18% of the worlds population on only 2.4% of the world’s surface and faces constraints in sustainably supplying its population and its industry. The government therefore is implementing a policy framework that include management requirements in plastic waste, e-waste, construction and demolition waste, metals recycling and waste management. Eleven national committees have been formed across eleven sectors to accelerate transformation from a linear towards a circular economy.

Indonesia’s new capital (see here) is an example of government leadership in that a complete new city is being constructed based on the principles of the circular economy. Nusantara, built in the jungle of Borneo is the country’s emerging centre of government with the eventual goal of being a futuristic city producing zero waste. Nusantara will include a water recovery system fully in place by 2035 and a complete waste recycling system operating by 2045. Meanwhile, as Indonesia struggles with several issues around easing regulation, stimulating growth and encouraging foreign investment, policy initiatives affecting the whole country include building towards greener food production, less carbon emission and improving its electrification of national transport systems.

Both Korea and Japan have made significant progress towards the circular economy in areas such as construction – for example where Japan is exploring designing buildings with prefabricated and reusable components, minimising waste. South Korea has only recently unveiled their strategy to promote circular economy across nine major industries intended at reducing carbon and stabilising domestic supply chain with the comprehensive reuse of by-products and waste materials.

While Asia is a wide region with competing interests and non-unified political structures, there are increasing initiatives across the region that considers sharing resources, particularly water. The transnational Mekong Institute, for example, allows the nations along this major river and its tributaries to coordinate natural river resources and human impact accordingly. However, there is a long way to go and the circular economy in Asia has a long path ahead. While most governments have now identified suitable policies and commenced building an effective framework, there remains considerable work to be done on public education and bringing corporate practices in line.

Most Asian governments now are building policy at local levels while developing funding models to incentivise aligned behaviour with landholders and industries. Officials are active now in building supporting infrastructure in waste collection and processing as well as further research and innovation. There are plenty of challenges ahead, but the public dialogue is happening with the benefits of a successful transformation visible to all. Developing the circular economy in Asia is underway and governments are seeking expertise and capital accordingly.

Asian Insiders partners offer local knowledge and experience in developing the circular economy in Asia. We’ve worked on several projects in related industries seeking partners in Asia. We’re pleased to be supporting innovation in sustainability here in Asia and look forward to assisting our clients with enquiries, research and connections. For a no-obligation call, please contact Jari Hietala, Managing Partner: jari.hietala(at)asianinsiders.com

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