The Plastic Recycling Industry (IDUP) plays an important role and has become one of the spearheads in implementing Reuse, Reduce, and Recycle (3R). Unfortunately, in executing its functions, IDUP is still limited in its production capacity due to various factors. One is due to the increasing volume of plastic waste and its low quality or not even feasible for recycling.
“At this moment, the plastic recycling capacity of IDUP in Indonesia is still around 7% or 810,000 tons, and must be increased to reach the Intended Nationally Determined Contribution (INDC) and Sustainable Development Goals (SDGs) targets through providing fiscal incentives,” said Dr. Andang Wirawan Setiabudi, a Doctor from the Faculty of Administrative Science (FIA) of Universitas Indonesia (UI).
Because of that, Dr. Andang carried out research to analyze how fiscal policy is used by the government to increase the capacity of IDUP. This research also found designs of fiscal incentive policies and comparative studies of fiscal policies in various countries in dealing with plastic waste.
“The results show that fiscal incentives in the form of direct subsidies for plastic waste sorting costs, supertax deductions, tax holidays, special regulations for IDUP, imposition of relevant plastic excise, and Government Borne Value Added Tax (VAT) facilities on recycled plastic pellets are designs that can boost the growth of this industry significantly,” said Dr. Andang.
Meanwhile, comparative studies with similar policies in other countries, such as Thailand, Germany, South Korea, and Malaysia also illustrate that a combination of incentives and taxing (disincentives) was proven to improve plastic recycling capacity at the national level. Dr. Andang stated, “Appropriate fiscal policies can become a strong driving factor for increasing IDUP capacity and moving society towards a more sustainable consumption and production pattern.”
From the research, Dr. Andang suggested increasing the collaboration of fiscal policies with various other public policies. An example of this is the ease of providing capital for IDUP from banks to accelerate increasing IDUP’s capacity to control the volume of plastic waste in society.
Other than that, there is the need to prepare concept revisions to the rules for implementing fiscal incentive design for IDUP, such as the regulation put up by the Minister of Finance in 2020 regarding pioneer industries that are entitled to a tax holiday. Other concepts include designing regulations for granting subsidies and imposing government-borne VAT for recycled plastic pellet products.
Next, Dr. Andang suggested speeding up the imposition of taxation and incentives adopted from the best international practices, such as ones already implemented in other countries, namely in Thailand, Germany, South Korea, and Malaysia. This has been proven to increase plastic recyclability capacity. The taxing policy in question is to immediately issue a Government Regulation (PP) regarding the imposition of plastic excise which has been delayed from 2019.
“This recommendation was designed to be a cornerstone for the government and other stakeholders in formulating and implementing fiscal policies effective in supporting the plastic recycling industry in Indonesia. In this way, it is hoped that it can reduce the environmental impact of plastic waste and encourage more sustainable consumption and production patterns,” said Dr. Andang.
Owing to his research, titled, “Desain Kebijakan Fiskal Industri Daur Ulang Sampah Plastik untuk Mendorong Tercapainya Produksi dan Konsumsi Plastik yang Berkelanjutan,” Dr. Andang managed to earn a doctoral degree in the Administrative Science field of the FIA UI Postgraduate Program at the EDISI 2020 Auditorium, Building M FIA UI, on Monday, June 25. He became the 43rd doctor from FIA UI and the 231st in Administrative Science with a satisfactory judiciary.
