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The economics of waste

Waste can be valuable as recyclables (© Zsuzsanna Kilián /

WHAT is the difference between “waste” and “resource”? There is hardly any, except in socio-economic value. Both can be treated as commodities, though waste is usually priced less than resource.

Despite the price differential, waste is nevertheless sorted out into a number of streams of valuable materials. These are called “recyclables” and include paper, plastic, glass, metals such as aluminum cans, and toxic and hazardous substances such as expired pharmaceuticals.

In Malaysia, unlike in the US, recyclables have yet to be listed and traded in the Malaysia Commodity Exchange. The Chicago Board of Trade (CBOT), for instance, has been trading recyclables since the mid 1990s. On 17 Oct 1995, CBOT opened the first “Recyclables Exchange“, an electronic market in used plastic milk containers, old newspapers and glass bottles. But like in other commodities, the trading of recyclables has also been affected by past and current economic downturns. Nonetheless, the sustainability of the market for recyclables is crucial in the whole scheme of recycling and thus, in solid waste management.

Industrial or rather “industrial toxic and hazardous waste” is another barrel of swill. Imposing high fees for the final disposal of such waste has created a competitive economic environment for industries to minimise, reduce, re-use, or treat their own waste, should they find it more economical to do so. The fees can be as high as RM3.60/kg of pesticide waste and waste containing halogen, in solid form; or RM3.50/kg, if it is liquid. As expected, the highest fee of all is RM3.78kg for waste containing mercury which causes the neurological syndrome known as the Minamata Disease.

Handling waste

It is often said that one’s waste could be another person’s resource. But in Malaysia, this has yet to happen. Any waste is automatically regarded by the environmental authority as “scheduled waste”. Scheduled waste in Malaysia must be transported by licensed contractors, and delivered either to “prescribed material recovery facilities” or to the only final disposal site in Peninsular Malaysia in Bukit Nenas, Negeri Sembilan. This site is exclusively licensed to Kualiti Alam Sdn Bhd.

Computers ready for recycling (© Bluedisk / Wiki Commons)

Should waste materials be no longer useful to those who generate it but have some use to others, it would still require “special management” under the Environmental Quality (Scheduled Waste) Regulations 2005. However, the development of waste-to-material trade or waste-to-energy generation in Malaysia can only take off if it is free from the Regulation’s scope of application.

The question of whether or not one can simply claim that one’s “waste” is “resource” and thus not require regulation, is an interesting thought. No one can easily make such a claim unless one’s waste material is wanted by another who is willing to pay for it, hence making it a resource or recyclable. If it is not wanted and paid for, it constitutes waste.

woman wearing aluminium accessories
Publicity photo for US aluminium salvage campaign, 1942 (public domain / Wiki Commons)

However, please do not extend this line of thought to your spouse or friend. That would be disastrous!

Additionally, any proposed trading of “scheduled waste-to-raw-material” has to be currently confined within Malaysia, where it is licensed for export only to developed countries. Importation of such waste, either from developed or developing countries, is still prohibited under the 1989 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal.

In the past, there have been attempts by prospective independent power producers to import from Europe and other places such toxic and hazardous waste to fuel mega-watt power plants in Malaysia. Of course, such proposals would instantly be rejected by every citizen of Planet Earth, never mind the authority.

However, it is questionable whether or not such an unwritten policy can prevail in the importation of e-waste. These would include discarded computers and other electronic goods containing highly valuable and precious metals of significance to the country’s high-tech industries.

A matter of perspective: waste or potential value?
(© mckenna71 /

Adding value to waste

There has been a tendency for the authorities to continue labeling any waste as “waste”.  By right, it is not the question of classification or definition; it is the question of “use” and “value”.

The Klang Municipal Council has proven that point. By rewarding recyclers 10 sen/kg for waste that is sent to recycling centres or designated recycling places, the council has added value to waste, hence turning it into a resource. As a result, the rate of recycling has increased.

Unfortunately, this programme, by itself, could not be sustained. The challenge is how to sustain such a programme without having taxpayers pay, at the end of the day, for whatever waste is gathered.

Recharging recycling

Any recycling policy can only succeed if it is supported by comprehensive regulatory measures, and complemented by a range of enviro-economic policy instruments with some fiscal measures.

As much to re-energise recycling as to add “value” to “waste”, I propose an indifferent consumers pay principle instead of the polluters pay principle.

In Malaysia, as illustrated below, the poor generate as much as, if not less, waste than the rich. The middle-income group generates the least. Perhaps because they hardly cook at home. Should the polluters pay principle be imposed, as envisaged in the last two Five Year Malaysia Plans, it would be tantamount to making the poor subsidise the rich.


Among others, measures that can recharge recycling in Malaysia include the following:

    upgrading the existing waste recycling centres

    establishing a Malaysia Recyclable Exchange

    encouraging manufacturers to produce new products containing recyclables

    issuing attractive feed-in tariff for power that is generated and connected to the grid from waste-to-energy facilities, and

    promoting in-situ or ex-situ composting, especially in landed property households.

Cleanliness matters most to the public (pic courtesy of Liyana Y / Flickr)

November 11 is the designated National Recycling Day for Malaysia. But in the final analysis, what matters most to the public is that our localities are clean; to the national economy that our recycling rate is high and waste collection is not only cost-effective but dependable and reliable.

These should be the targets for the Key Performance Indicators, otherwise known by the buzzword KPIs, of all levels of government. As the saying goes, “What gets measured, gets done.”

Datuk Abu Bakar Jaafar is a mechanical engineer by profession, environmental scientist by specialisation, and maritime expert by current pre-occupation. He believes not many have spoken up enough for Mother Earth and for our common good and that it is high time to speak up again. He was director-general of the Department of Environment, Malaysia from 1990 to 1995.

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