Indonesia embarks on smart manufacturing for sustainable plastics production
Southeast Asia’s largest economy, Indonesia, has a fast-growing plastics industry owing to robust demand from its food & beverage (F&B) packaging sector that accounts for around 60% of the plastics industry’s output. But Indonesia also generates about 6.8 million tons of plastic waste every year, according to the Indonesia National Plastic Action Partnership (NPAP), a collaboration between the Ministry of Maritime Affairs and Investment and the Global Plastic Action Partnership. Roughly 80% of the plastic waste comes from land while the remaining 20% comes from coasts and oceans. The country announced a new plan during the World Economic Forum’s Annual Meeting in Davos in 2021, where it pledged to reduce marine plastic waste by 70% within five years and to become totally pollution-free by 2040. The plan also calls for redesigning of plastic products for recycling and eventual reuse, with the objective to double the recycling capacity in order to be able to process an additional of 975,000 tons of waste annually. Indonesia is also building and expanding its waste disposal facilities to manage an additional of 3.3 million tons of plastic waste yearly.
Navigating towards intelligent packaging solutions
Indonesia is a major potential market for technologies that will enable smart manufacturing where digitalisation can play a significant role. The country’s technological transformation could add US$$2.8 trillion to the national economy by 2040, according to an estimate by its Department of Finance. The application of digital technology and the growing awareness of Indonesia’s industrial sector on the benefits of adopting Industry 4.0, along with digitalisation and utilisation of intelligent manufacturing processes, have started to gain ground among those in the plastics industry, and projected to push requirements for technologies to build digital factories.
The packaging industry is witnessing the fastest growth among the various plastics-dependent industries in Indonesia in terms of adherence to the smart manufacturing concept. This sector is projected to grow from 141. 3 billion units in 2019 to 159. 2 million units in 2024, registering a CAGR of 2. 4%, according to a study by Reportlinker, which also states that flexible packaging is expected to witness the fastest CAGR during 2019-2024 among other packaging types.
Aside from ensuring flexibility and improving profitability, smart packaging is now being embraced in many products to provide crucial information on product quality, extend shelf life, trace movement of the product in the supply chain, and for safety and protection. Indonesian plastics packaging manufacturers are becoming more aware that the only way to go is by implementing smart manufacturing through digitalisation, not only to increase their profitability but also to meet the global trend towards sustainability.
Waste management and recycling
As some leading F&B companies in Indonesia have been following the Industry 4.0 trends, they also see the importance of digitalisation to meet their sustainability goals as they intensify their recycling to alleviate plastic packaging waste, especially single-use plastics. Members of the Packaging and Recycling Association for Indonesia’s Sustainable Environment (Praise) which established the Packaging Recovery Organisation (Pro) have identified methods from waste collection to recycling. Praise members include PT Coca-Cola Indonesia, Danone-Aqua, PT Indofood Sukses Makmur, PT Nestle Indonesia, Tetra Pak Indonesia and Unilever Indonesia. Aside from upgrading their productivity through smart manufacturing process, these companies are supporting recycling by adopting smart packaging and labels for traceability.
Coca-Cola, in partnership with Dynapack Asia, is also constructing Indonesia’s biggest bottle-to-bottle (rPET) recycling plant scheduled to become operational in 2022. Another major packaging company, Unilever, is working with partners in Indonesia to help collect and process plastic packaging. This covers investments and partnerships in waste collection and processing, building capacity by buying recycled plastics, and supporting extended producer-responsibility schemes in which Unilever pays for the collection of its packaging. Unilever’s technology-led solution in Indonesia involves supporting urban communities to develop systems to collect and sell waste. A digital platform called ‘Google My Business’ enables consumers to find their nearest waste banks via Google Maps.
Nestlé and Project Stop have partnered for a material recovery facility in East Java, Indonesia. The facility is expected to reduce ocean plastic waste in the coastal areas of Indonesia. The project, which aims to alleviate marine plastic pollution in Southeast Asia, is an initiative by Borealis and Systemiq, and designed to implement circular economy solutions in the region through effective waste management system.
In the area of smart packaging, even foreign companies are setting their sights into Indonesia’s vast market due to its large population. Baoshen Science & Applied Technologies Co., Ltd (BSN), a leading Chinese company that produces packaging materials for garment products (shoes, clothes and bags), furniture products, cosmetics, etc., has set up an operation at Indonesia’s Kendal Industrial Park. The construction of the factory started in August 2021 and is expected to be operational in June 2022. Since its founding in 1988, BSN has succeeded in becoming a “smart packaging” industry by establishing a Technology Center for RFID-based label design and production.
Digitalisation and smart manufacturing solutions for the packaging sector are also a focus on this year’s Chinaplas.
