CRPG has contributed to the policy discussion regarding the plastic shopping bag levy that was introduced in February 2016 in several cities in Indonesia.  The article, written by Dyah Paramita, was published in the Jakarta Post. The following is an excerpt:

Plastic waste is a problem. It is very difficult to decompose naturally and when it burns, it releases toxins such as dioxins and polycyclic aromatic hydrocarbons (PAHs) that are very harmful for human health and the environment and is linked to the development of cancer. Animals also suffer from the ingestion of plastic. According to the Ministry of Environment and Forestry, the use of plastic bags in Indonesia for the past 10 years is increasing. In the past decade, Indonesians used approximately 9.8 billion sheets of plastic bags per year and almost 95% of them ended up as waste.  Based on a recent study published in the Science Magazine written by Jenna R. Jambeck, the country ranks second (after China) that mismanaged plastic waste followed by the Philippines, Vietnam and Sri Lanka.

In order to handle the growing problem in Indonesia, a policy regarding the shopping plastic bag levy will be imposed on a trial basis.  The policy is geared specifically for consumers shopping in modern markets and retail outlets and will be imposed from February 21, on the National Waste Awareness Day, to June 5, 2016, the World Environment Day. At the completion of the trial phase, the regulatory framework is expected to be completed by June 2016.  The local governments of 23 cities have shown interest in participating in this movement (Jakarta Post  05/02/16). The Ministry of Environment and Forestry (KLHK) has proposed the charge of Rp. 500 per bag. Of this amount, Rp. 200 will be repaid to the consumers who return the plastic bags to the retailers and the rest (Rp. 300) will be used by the retailers and the local municipality to fund environmental activities. However, the price might vary and could range between Rp. 500-Rp. 5000, depending on the local policy (Kompas 26/01/16).

Will the plastic bag levy tackle the waste problem? A plastic bag levy is not a new concept in the environmental field.  Several countries have already introduced this policy, such as Taiwan, Ireland, Hong Kong, Botswana, China and Denmark.

There are different approaches regarding this matter. A levy on plastic shopping bags can be imposed to encourage the change of the consumers’ behavior. In this case, the main goal is to discourage consumers from using plastic bags, which will decrease the amount of litter and reduce the volume of waste going to the landfill. The amount of the levy is intended to deter consumers from using plastic shopping bags and to encourage them to bring their own bag.  Ireland applies this type of levy. The KLHK seems to be proposing similar type of levy combined with the deposit-refund system. The deposit-refund system means when a product, which potentially pollutes the environment, is sold, a deposit should be charged simultaneously. Thus, the deposit will be re-funded when the consumers return the empty containers to the collection points. It is similar to the policy known as the “bottle bill” in the United States. The consumers pay a deposit when they purchase beverage containers and they are refunded their money when they return the empty containers to the retailers or to the designated collections points. One of the objectives of the deposit-refund system is to prevent improper waste disposal.

Another approach is imposing a Pigouvian tax on the plastic bag. The name is taken from the British university professor, Arthur Cecil Pigou who coined the theory. This way, the tax is intended to internalize the external cost of using the plastic bags. The external cost in this sense is the environmental costs, which include pollution, waste problems, and damage to wildlife. To implement this type of tax, there are efforts to calculate the margin of the external costs and determine the optimum level of the tax accordingly. This is also a way to reduce pollution and protect the environment by discouraging excessive consumption of plastic bags. This policy reflects what is called the polluter-pay principle, meaning those who cause pollution should bear the cost of managing it.

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