Policy support is essential for compliant plastic recycling in Bangladesh

Bangladesh is the second largest cotton-based RMG exporter in the world, and knitwear is the largest contributor to national export earnings. Exports to the EU increased to $21.64 billion in 2023–24. Demand for synthetic fibre-based clothing has been increasing, but Bangladesh is lagging behind global partners. 

Global fashion trends are moving towards circularity and using recycled materials. Demand for MMF (synthetic and cellulosic fibres) is increasing due to its benefits of wrinkle resistance, durability, lower environmental impact, and low land requirement. Cotton apparel exports grew by approximately 72.4% from 2005 to 2021. By 2021,  cotton apparel exports increased to $219 billion, while MMF-based apparel exports more than doubled to $271 billion. 

With global apparel buyers increasingly adopting sustainable practices in raw material sourcing and waste management, Bangladesh must align its industry practices to meet these evolving demands.  About 45%–50% of our RMG and textile exports are destined for the EU. To sustain the market, Bangladesh needs a transition in the textile sector for resource efficiency through compliant recycling. 

Presently, MMF accounts for over 70% of the global apparel market. Bangladesh's exports of cotton apparel are 70.8%, while 21.8% are non-cotton and the remaining are silk, wool, and blended apparel.  Raw materials are mostly imported, of which 25% are man-made fibre, mainly from China, Indonesia, and India.

Bangladesh has a large presence of plastic factories; the number is about 5030, mostly SMEs. The sector employs around 15 lakh people with a 20% growth rate. The market size of this sector is $4 billion; only deemed exports are $900 million (2022–23); with actual exports, the export amount is more than $1 billion. 

The plastics sector roughly generates a staggering 821,250 metric tonnes of waste annually, of which only 293,825 metric tonnes, or 36%, are recycled, while leakage is about 25% and the remaining are landfilled. According to stakeholders of the sector, 100% of the plastic waste is now recycled except single-use plastics. Recycling is mostly accomplished informally. 

Waste pickers, commonly known as tokai, play the main role in that respect. The waste pickers dump the waste to the small aggregators; large aggregators collect waste from small aggregators, and those who have establishments with shredder machines shred these plastic bottles and, as pet flakes, export them to different destinations. These pet flakes are in demand in India, China, South Korea, and some other countries. 

From the statistics from the Export Promotion Bureau, it is seen that in 2022–23, exports of pet flakes are about $30.22 million. The sector enjoys cash incentives at 6%. However, they have a problem of having certification from the Department of Environment and thus cannot qualify for institutional financing from banks and financial institutions. The number of small pet flake exporters is increasing, but they are facing an acute shortage of raw materials. 

Presently, some 7-8 industries have established their units to produce polyester staple fibre (PSF) industry. Raw materials for them are plastic waste; however, they are running out of quality feedstock and fear increasing production to meet growing needs. 

Some large industries are waiting for production to start and are in the pipeline (Debnoir, Mumanu, etc.).  Import of plastic waste is not allowed in the country considering the environmental hazard. Similar is the case for textile waste imports; it is also not allowed to import. 

Entrepreneurs are of different opinions in regard to allowing the import of waste, some in favour of allowing the import of plastic waste provided there must be a specific zone to recycle the waste; on the other hand, some believe it will be shocking for a country like Bangladesh; alternatively, pet flakes can be imported for use as a raw material for large synthetic fibre manufacturers. 

However, local pet flake exporters who are small but contributing to export and creating employment will be in uneven competition then. Only proper policy support can resolve these issues; the required standards and guidelines need to be framed so that small entrepreneurs can cope with the new situation gradually, which will ultimately help to avoid livelihood and employment risks in the country.

In order to sustain quality in the EU market, ensuring compliance and traceability is an important issue so that it can adhere to the needs of the recent textile policy, which has given more emphasis on recyclability and resource efficiencies. 

The EU Eco Design for Sustainable Products Regulations (ESPR) Delegated Act will be enforceable. BUILD made a presentation recently on plastic to textile recycling. It is seen that the EU ESPR  can impose a 30% eco-design tariff on recycled content, which will require a Recycled Content Declaration (RCD) and adherence to ISO 14021. 

Sustainable strategies such as ethical PET bottle sourcing and post-consumer waste management have to be ensured.  Presently,  tax-related issues are cumbersome; PSF is VAT exempt; however, AIT at 1% and source tax at 4% are in place. Processing jhut needs 7.5% VAT, while preparing PSF and delivery to spinning mills again requires 15% VAT. In view of that, the presence of informality increases. 

The dynamics of textile to textile and plastic to textile are different.  In the case of textiles,  the wastage cannot be sold formally because of the high tax burden; on the other hand, it cannot be burnt even because of its environmental impact and huge quantity of wastage. 

The only alternative is to depend on the local power person at a negotiable cost; rejected clothing also has a similar fate and has to remain totally informal. 

In the case of plastic,  waste management is accomplished by municipalities throughout the world. Separate bins are used in each household to segregate the waste at the source. The recyclers buy the waste from the municipalities, and they are given special incentives, tax holidays, and other policy support to encourage recycling. 

Bangladesh's situation is different. There is no clear jhut management policy in the case of textile waste management; on the other hand, plastic waste management is mostly in the hands of the sector, depending on the waste pickers. 

It came out from the discussion in the recent dialogue that more than 3000 small plants are recycling around 99% of plastic waste and producing a large number of products such as jackets, blankets, mattresses, babywear, pillows, and many other products,   however informally.  Plastic waste has a huge demand in the country.  Compliance and standards must be ensured. A waste management policy has to be enacted and enforced.

Bangladesh Pet Flakes Manufacturer and Exporters  Association (BPFMEA) revealed that the scrap industry in Bangladesh is one of the largest,  employing over one lakh people. The industry is grappling with several problems, like a lack of raw materials and no support from the government and NGOs, and emphasised the need for subsidising this sector, citing the examples of India, Pakistan, and Vietnam. 

There are several facilities that are extended, ensuring funding. Commercial banks always favour large industries, ignoring the SMEs. SMEs do not have a guarantor and are incapable of providing collateral. 

The Global Plastic Treaty is being negotiated by around 175 countries to end plastic pollution at every stage of its lifecycle, from manufacturing to disposal. The treaty is to help interested countries find a way to reduce and then stop the harm from plastic pollution. Each country can use the Global Plastics Treaty to support plastics reduction efforts best suited to their needs. 

The treaty will create a standard global framework that every country can work through, so efforts are coordinated and effective. Toxic plastic chemicals are leaching out of everyday products. Children, through the food they eat, the water they drink, and the toys they play with, can inhale these hazardous chemicals. There are financing mechanisms; Bangladesh needs to rise to the occasion to be a part of the treaty and prepare a national action plan that will have a financial management plan to address this huge issue. 

Bangladesh needs an effective circularity policy that will give proper directives to align Bangladesh recycling standards to adhere to the needs of the EU Green Deal and Circular Economy Action Plan,  which promote sustainable textile production.   

From the statistics from the Export Promotion Bureau, it is seen that in 2022–23, exports of pet flakes are about $30.22 million. The sector enjoys cash incentives at 6%. However, they have a problem of having certification from the Department of Environment and thus cannot qualify for institutional financing from banks and financial institutions.

With the presence of a large plastic sector, Bangladesh has the potential to capture more market share of global high-value-added garment items and high-value-added products such as synthetic staple fibre (SSF) which can be used in the local spinning mills for manufacturing fibre.  

The production cost of plastic products from recycled resin is significantly lower than from virgin resins, so energetic entrepreneurs can extend investment in these sectors if proper policy support is there.  By promoting recycling industries, we will be able to take care of the environment on the one hand and, on the other, address pollution eventually to achieve the SDGs.

Lack of established supply chain and infrastructure, inconsistent feedstock quality due to informality, and affordability of small pet flakes manufacturers are some of the challenges. High costs of recycling machinery, limited access to circular financing, and over and above-limited R&D have been identified as the main challenges. 

Two fronts' policies we will have to initiate, while we need to update and enact some new policies, such as Extended Producers Responsibilities, which have been discussed several times but not yet finalised, tax policies, tax holidays, and utility and infrastructural support for the businesses. 

On the other hand, Bangladesh needs to improve the assessment of EU policies, which is our main market, and improve our consultation process to increase awareness among businesses. 

To build capacity for digital product passports for textiles upstream and downstream, there is an extensive need for improving the data management of the total value chain process. Bangladesh has been branded as one of the main textile powerhouses; we will need to work together and engage our collective efforts to sustain this branding.

Ferdaus Ara Begum, CEO of BUILD—a public-private dialogue platform—works for the private sector.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.