MUCH have been said about the circular economy. Felda has just announced it as one of their growth pillars.
But the much-needed regulatory instruments are still missing. There is undoubtedly a growing world interest as we battle the climate crisis.
It is a logical move. A circular economy decouples growth with resource use and carbon emissions, the two major spoilers of sustainability.
It has advantages over the linear model. A PWC presentation at our recent sustainable Malaysia group conversation spoke about the challenges the world faces embracing the circular economy.
A presentation from the Malaysian Palm Oil Board, MPOB, articulated the huge potential of the circular economy for the palm oil business.
No wonder, the circular economy is the fastest growing sustainability policy area in the world. It has attracted diverse pools of capital. Many countries have put the necessary policies in place.
We still struggle to prepare an overarching circular economy framework.
Experts agree many factors must be considered. These include data availability, infrastructure readiness, regulation and policy support, market demand, business capability, transition cost, and value hierarchy.
Looking at the implementation of circularity with the existing infrastructure in Malaysia's business environment, the waste to energy sector seems to be getting the most traction.
This may be because it is easier to implement within the existing infrastructure. The oil palm biomass is one potential circular economy candidate that has generated interest.
But there is still much work to do to make it really happen. Top of the list is the necessary regulatory intervention to remove the uncertainty of the raw material supply.
Some private sector associations including the Federation of Malaysian Manufacturers annually publish their reports and updates on circular economy initiatives of their members.
However, due to the relatively limited existing waste management infrastructure in combination with the lack of enforcement and awareness, the companies struggle to translate into actions.
Most wastes such as plastics, especially packaging, food discards, and agricultural wastes including the EFBs end up in nature, in landfills or get burned. Their potential value is lost that way.
According to the Malaysian Investment Development Authority (MIDA), consumers are blaming companies for being unable to supply environmental-friendly products, while the producers are putting back the responsibility on consumers for failing to recycle due to a lack of awareness.
The Malaysian government has established roadmaps and national policies to cut their carbon emission and reduce waste. They are however predominantly active in the field of waste management which is the last step in a circular strategy.
We still lack in the earlier steps of designing for circularity. Hopefully the recently launched biomass action plan will address this.
The Extended Producer Responsibility, (EPR) has yet to be put in place. The EPR for Plastics is planned for 2026.
Now, the circular economy initiatives are driven by private companies especially FMCG (fast moving consumer goods) companies through Malaysian Recycling Alliance. There is still limited awareness of the general local industries in Malaysia.
This is where practical education and knowledge sharing will be essential
The National Solid Management Policy in Malaysia is the right step to regulate waste collection and treatment. However, it has not been fully implemented and informal dumping continues.
Scaling waste collection and processing can bring down costs and provide new revenue opportunities for businesses through the various activities in the circular hierarchy.
The Biomass Action Plan has proposed collection centres to enable effective scaling up. Logistics remain a major challenge. Malaysia Productivity Corporation has urged industries to embark on circular economy practices for long-term sustainable growth.
The EU has introduced policies on eco-design principles and digital product passport, greenwashing law, and packaging rules. Since the EU is a major market we need to be wary of their rulings.
The EU Carbon Border Adjustment Mechanism, CBAM, is one.
There is an upcoming blueprint on circular cities in Malaysia to enable circular solutions using digital technology. This includes maintaining and extending lifetime using smart maintenance.
Such blueprints including the National Biomass Action Plan would mean nothing if the right regulatory measures are not put into place.
In the end, the circular economy will be another of our pipe dreams.
* The writer is a professor at Tan Sri Omar Centre for STI Policy, UCSI University