Running header: E-WASTE IN INDONESIA

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E-Waste in Indonesia: Implementing Clear Standards and Integrating the
Informal Sector
Donald P. Santoso
ERM 428 Spring 2015
Arizona State University

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E-WASTE IN INDONESIA
Abstract
While economic development gives rise to markets of emerging technologies, it also creates an emerging global issue in the management of the electronic waste (e-waste) it generates.
Unfortunately Moore’s Law, which articulates that technological advancements follow an exponential upward growth every year, does not apply to the innovation in recycling that technology. E-waste is a term for waste electrical and electronic equipment (WEEE). These products and components can range from home appliances to consumer electronics; they are

defined as e-waste once they reach the end of life, and no longer retain value through its intended function. The European Union (EU) estimates that the amount of global WEE increases 3-5% annually, equivalent to three times the growth of other categories of solid waste (Schwarzer,
2005). Electronic products have become extremely affordable in today’s economy, making it increasingly cheaper to replace these goods rather than fix them. Interval updates in the electronic sector also encourages pre-mature obsolescence of many products (Agamuthu et al.,
2012). These factors contribute to a high turnover rate of electronics in the market. As a consequence, there is little incentive for both the industry and consumers to recycle or refurbish electronics. Instead, used electronics and e-waste are commonly exported to developing Asian countries with non-existent or uncontrolled e-waste regulations. One of these countries,
Indonesia, has remained a prime hotspot for both the illegal importation and poor environmentally sound management (ESM) of e-waste (Agamuthu & Heart, 2012). Indonesia currently lacks the physical, social, and political infrastructure to create and enforce the legal mechanisms necessary to deal with the exponentially growing problem of e-waste. This paper addresses the issues with the prevalent informal e-waste sector in Indonesia through a look at waste management research in both Indonesia and other Asian countries. Through comparison and suggestions by other research, this paper discusses methods in implementing e-waste management through both a policy and market approach. Indonesia can improve its ESM of ewaste by establishing clear standards on the definition of e-waste and developing the informal ewaste sector.

E-Waste in Indonesia: Implementing Clear Standards and Integrating the Informal Sector

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Transboundary Regulations of E-waste as Hazardous Waste
Unlike the EU’s Waste Electrical and Electronic Equipment (WEEE) Directive, Indonesia’s government does not have a specific law in place for regulating e-waste. In fact, Indonesia has not yet established a legal criteria on what constitutes as e-waste. Currently, Indonesia’s regulation on e-waste management falls under existing regulations on hazardous waste management (Ministry on Environment, Republic of Indonesia et al., 2013). E-waste often consists of toxic substances such as arsenic, lead, cadmium, mercury, chromium, copper, and mercury. These chemicals are commonly found in components such as printed circuit boards
(PCBs), central processing units (CPUs), fluorescent tubes, cables, and cathode ray tubes (CRTs) in monitors. Direct exposure with these substances is harmful to both human health and the environment (Breiter et al., 2013). Indonesia’s first step in confronting the issue of imported hazardous waste was in 1993, when the government ratified the Basel Convention by
Presidential Decree No.61 (Ministry on Environment, Republic of Indonesia et al., 2013). The
Basel Convention is an international treaty that creates stringent conditions on the transboundary movement of hazardous waste. Under the treaty, Annex VIII section A1180 states that e-waste is considered hazardous when containing certain components such as “mercury switches, glass from CRTs and other activated glass and PCB-capacitors”, as well as equipment contaminated with certain constituents such as Cd, Hg, Pb, or PCB, that adhere to any of the characteristics that define hazardous material in Annex III. Indonesia’s national definition of hazardous waste can be found in two Governmental Regulations, Article 1 paragraph 16 of Act No. 23/1997
(Environmental Management), and Article 1 paragraph 2 of Act No. 18/1999 (Hazardous and
Toxic Waste Management). These regulations similarly define hazardous waste as residue from an activity that contains hazardous material harmful to the environment and/or the health of humans and/or living species. Act No. 85/1999 was created as an amendment to Act No.18/1999, providing the waste code D219 to the classification of hazardous waste derived from electronic components/equipment, including sources from CRTs, plastic casings, and solder residues from
PCBs, and integrated circuits (ICs).
Currently, the illegal importation of hazardous waste in Indonesia grounded on two key
Government Regulations. Article 29 of Act No.18/2008 is concerned with domestic waste

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management and states the illegality of importing domestic waste containing hazardous substances. Detailed language regarding Environmental Management and Protection is found in
Article 59 of Act No.32/2009, which states that producers retain responsibility to treat the hazardous waste they produce. Article 69 prohibits the importation of hazardous waste into
Indonesian territory.

E-waste Regulations
Within Indonesia’s Government Regulations, there is no clear policy on transboundary movements specific to e-waste. Internationally, there is also a lack of a harmonized legislation to e-waste classification and management, further hindering enforceability in Indonesia (Wendell et al., 2011). However, there are initiatives tackling this issue. One organization called StEP
(Solving the E-Waste Problem), created from private-public partnerships, intends to standardize the universal e-waste recycling and material harvesting process and create a global policy for ewaste management (United Nations University, 2007). In addition to this, the Basel Convention has drafted guidelines on distinguishing EEE as waste and non-waste. The Basel Convention has also adopted initiatives such as the Mobile Phone Partnership Initiative (MPPI) in 2002, and the
Partnership for Action on Computing Equipment (PACE) in 2008, both aimed at finding innovative solutions for increasing business and consumer knowledge and capacity in recycling, refurbishment, and material recovery of the consumer electronic at topic. Unlike Indonesia,
Vietnam controls international trade based on the Basel procedures, with the addition of a complete ban on importing most used EEE regardless of intention for direct reuse (Wendell,
2011). This type of policy may not work in Indonesia due to Indonesia’s reliance on secondhand EEE in the informal markets, as this paper will soon discuss.
Importing E-waste as Second-Hand Products
There are two main ways e-waste settles in Indonesia. Either it is imported as used electronics, or created domestically through the end of life cycle from industrial and municipal users. In
Indonesia, over 50% of electronic devices sold in domestic markets were illegally imported into the country (Breiter and Panambunan-Ferse, 2013). Due to Indonesia’s geographical layout, it is not difficult for illegal imports of EEE to enter the country. Once the shipments clear through

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international ports of Singapore and Malaysia, the interisland monitoring of imported products within Indonesia is extremely limited (Ministry on Environment, Republic of Indonesia et al.,
2013). Developed Asian countries export many of these used electronics. Korea was estimated to have shipped 1.56 million units of second-hand mobile phones in 2005, and Japan was estimated to have exported 30% of its used home appliances to developing countries in 2006
(Akenj et al., 2011). Often times, second-hand EEE is shipped to developing countries such as
Indonesia in the form as material aid, yet serving the ulterior purpose of transferring the recycling cost to the developing countries (Breiter and Panambunan-Ferse, 2013).
E-waste poses challenging situations when the laws governing its management pertain to solely to the mentioned Government Regulations on hazardous waste. While hazardous waste may not be imported into Indonesian territory, thirteen categories of used electric equipment may legally be imported according to the Ministerial of Trade Decree No. 39/2005, including items such as refrigerators, dish washers, mobile phones, routers, television cameras. In the Ministerial of
Trade Decree No.48/2011, second-hand computers and monitors were also deemed legal for importation as long as it met certain conditions: did not contain CRTs, would still function for not more than 5 years, and packaged properly in a complete set. These EEE could only be imported by licensed end-users for direct production or refurbishment (Ministry on Environment,
Republic of Indonesia et al., 2013).
Due to these provisions allowing the importation of used electronics, Indonesia’s Ministry of the
Environment states that illegal e-waste generally enters the country as intended initially for reconditioning and the extraction of raw materials (Ministry on Environment, Republic of
Indonesia et al., 2013). However, it becomes clear that the absence of a concise definition of ewaste makes it difficult to evaluate whether the imported equipment is classified as e-waste or second-hand electronics. Unclear e-waste standards give inspection authorities significant discretion on the approval of EEE imports entering the country (Wendell, 2011). This is concerning when their evaluation of imported second-hand EEE does not account for the product not functioning properly or even being sold. In developing countries, it is estimated that 25-75% of imported second-hand EEE is unusable (Agamuthu & Heart, 2012). Out of Indonesia’s numerous small informal ports, most illegal EEE enters Indonesia through the south in Batam

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Island, and through the east in the Wakatobi Islands (Breiter et al., 2013). These ports have been identified as locations importing large shipments of “scrap metal”, which according to Annex IX of the Basel Convention, is allowed to be imported/exported on the condition that the electrical and electronic assemblies only consist of metal or alloys. In reality, these “scrap metals” still contain hazardous substances, but documents are easily falsified to claim otherwise. The geographic characteristics of Indonesia’s archipelago of 170,000 islands create a strain in enforcing illegal importation on a local level (Rochman, 2010). On top of Indonesia’s lack of physical capacity in implementing the laws, e-waste is a dynamic category of waste that changes constantly with advancements in technology. Materials used in new technology are always being refined and updated, and categories of EEE continuously converge into multi-functional products.
This attribute of e-waste creates complexities in drafting an explicit legal framework for its management. Indonesia’s Informal Sector
Indonesia’s thriving demand for electronic products parallel its growth as an emerging economy.
Unlike industrialized economies, emerging economies like Indonesia regard post-consumer electronics to still have value through its recoverable resources (Streicher-Porte & Yang, 2007).
It has become the norm for middle and lower income citizens in Indonesia to own personal electronic devices, as continuous technological updates force outdated products into the secondhand market before they are actually obsolete. These second-hand markets, particularly for mobile devices, flourish in Indonesia. In an assessment by Breiter and Panambunan-Ferse
(2013), Indonesia has the highest percentage of citizens accessing the Internet on their mobile phones in Southeast Asia. In Manado, a major city of Indonesia, the average cell phones was discovered to have an individual user life span of 19 months. It is exactly these second-hand informal markets that create difficulty for the government in implementing ESM policies for ewaste.
Informal markets for second-hand goods inherently create an informal sector for e-waste collection and refurbishment. It is difficult for private companies to compete with the informal sector because of higher operating costs in a formal business (Rochman et al., 2010).

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Furthermore, certified formal collectors and recyclers of e-waste often don’t have the capacity to enter regions controlled by the informal markets. Informal e-waste recyclers in Indonesia use crude methods to extract materials, such as open burning of plastic and unsafe de-soldering of circuit boards. Typically, these techniques are inefficient, as only a portion of valuable materials are extracted, while the rest are dumped in backyard landfills or bodies of water (Akenj et al.,
2011). Informal recyclers have low recovery rates when extracting raw materials from metalbearing components because they aren’t equipped with the right tools. They are also unequipped with the right safety equipment, exposing themselves to health hazards as well as harming the environment. In a field study conducted by Rochman (2010) on the e-waste management in
Yogyakarta, Java’s second largest city, it was found that there was an intricate hierarchy of informal scavengers, aggregators, classifiers, processors, and recyclers doing business with each other and were well established in the community. These interconnected pathways formed its own social economy within the community, and provided a significant source of employment for low-income citizens. Evidently, there is no lack of understanding in the market value of materials in e-waste, especially the rare earth materials. If managed correctly, 3,500kg of gold could be collected annually from mobile phone waste in Indonesia (Breiter and PanambunanFerse, 2013). Rather, the informal sector has an insufficient awareness in the harmful affects of improper e-waste management.

Extended Producer Responsibility
It is commonplace for governments to use Extended Producer Responsibility (EPR) schemes to deal with the negative environmental and health externalities created by the EEE market (Akenj et al., 2011). Essentially, EPR programs shift the responsibility of e-waste management to producers. Indonesia adopted EPR in the aforementioned Government Regulation on Waste
Management Act No. 18/2008, and implemented it in the Government Relations Act No.
81/2012 on Household and Household-type waste (Ardana, 2014). Though not specific to ewaste, Indonesia’s EPR policies instruct producers to retain the responsibility for proper treatment of its product in its post-consumer stage. This includes integrating reduce, recycle, and reuse programs into business operations, producing goods with more sustainable materials, and taking back their products at the end of life from consumers. The problem with Indonesia’s

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implementation of EPR is that it does not follow a “phase-in” approach, which is a method advocated for the Waste Management & Research journal (Akenj et al., 2011). Proponents of the method argue that is necessary to take into account the developing countries’ deeply rooted informal sector when implementing EPR. Developing countries like Indonesia need to develop an EPR from the ground up, as opposed to adopting policies already drafted through bodies such as the OECD.

Identifying Producers in EPR
In the literature by Akenj et al., (2011), e-waste management is segregated into several steps from multiple actors. Firstly, there are the collectors who gather the e-waste. The following stage in the informal sector involves sorting/dismantling. The final stage of e-waste management of pre/end-processing involves material extraction and refurbishment of e-waste that creates the harmful environmental influences. It’s important to recognize that the first two stages of informal collecting and sorting in Indonesia do not actually contribute to significant harmful environmental impacts. In fact, it would be detrimental to remove or replace these actors, as the jobs are an important source of income for many communities. It is the final stage of e-waste management with the salient negative environmental consequences.
Therefore, if Indonesia implemented an EPR framework that placed fines on the informal recyclers, only the low-income community would be undermined. On the other hand it is also not realistic to fine the disposers because they are generally producers in developed countries.
The alternative would be to issue fines to non-compliant importers. But the fact that there are non-compliant importers implies that these are underground operations that emerged from the government’s inability to monitor them in the first place. Similarly, China and Thailand have encountered issues in handing out fees to importers (Chung, Murakami-Suzuki, Kojima, 2009).
Identifying the producer is one of the most challenging issues in implementing Indonesia’s EPR due to the informal markets (Osibanjo et al., 2007). Again, it is instrumental for Indonesia to not only adopt an EPR policy, but to work with internationally to develop a universally accepted policies on international trade of EEE.

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Utilizing the Informal Sector
Illegal imports of EEE are usually non-branded products and re-assembled, repaired, or modified using a variety of replacement parts. These informal repair businesses are well integrated into the Indonesian market, and it would be remiss for the government to simply burden them.
Unlike Japan, China, and India’s policies, it would be detrimental for the Indonesian government to place the recycling cost of e-waste to consumers, since it is the lower-income consumers who are the last users of most products’ end of life. Yet, Indonesian households have been estimated to generate 285,000 tons of e-waste in 2015, and 622,000 tons in 2025 (Andarani & Goto, 2013).
So a solution in assuring that these informal repair businesses follow ESM is to utilize them and license them. Associations can be formed to standardize methods and products, and even allow for short-term warranties for second-hand/modified EEE (Akenj et al., 2011). Informal recyclers can be licensed to aid the e-waste disposers in choosing the right recyclers. Because informal recyclers who are not government monitored can generally offer better prices to disposers, the
Indonesian government may need to create a voucher system where monetary incentives are provided to disposers who send their e-waste to certified recyclers. The government can also provide benefits to certified recyclers through education programs and subsidies. In Indonesia, the majority of e-waste collection does not come from take-back systems. Referring back to
Breiter and Panambunan-Ferse’s (2013) study in the city of Manado, manufacturers with voluntary collection of e-waste for mobile phones from consumers are less was revealed to be less than 1%. However, a public survey revealed that consumers were very willing to return their phones if there was a program that either benefited themselves through monetary incentives or society with humanitarian benefit. The Indonesian government needs to focus on the community awareness of its e-waste programs in conjunction with utilizing the informal sector that are already integrated in the communities since manufacturers and producers do not have the capacity to interact directly in the community.
Linking the Informal to the Formal Sector
Indonesia’s current informal e-waste recycling is labor intensive, and new policies must take that into account. Integrating the first two stages of the informal sector into the implementation of policies is crucial preserving the economic benefit and social structure. For Indonesia, it may

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simply be the end-processing stage that requires updated technology to reduce environment and health impacts. The government can capitalize on this by linking the informal and formal sector through a middleman organization that promotes the transfer of e-waste between the two sectors
(Akenj et al., 2011). This organization can buy e-waste the collected and dismantled from the informal businesses and sell it to high-end recycling firms.

Challenges with Formal Recycling Facilities
Indonesia currently has under a dozen formal and certified recycling facilities across the country
(Ministry of Environment, Republic of Indonesia, 2011). However the facilities’ certifications are based from hazardous waste regulations, non-specific to e-waste. It is crucial to identify exact management procedures and protocols for e-waste recycling facilities, as environmental and health hazards can also arise from poorly managed certified recycling sites. In a study a
China (Guo et al., 2010) discovered that areas proximal to recycling sites are highly hazardous and have high levels of lead and polybrominated diphenyl in the air. Furthermore, people living nearby were tested to have high concentrations of lead, cadmium nickel, and PCBs. Recycling sites can also fail due to underestimation of e-waste it can procure. While e-waste estimates are essential in providing operating costs for these facilities, e-waste estimates are difficult to produce due to different methods using various definitions of e-waste (Chung, 2012). There is also a tendency for consumers to leave their e-waste unattended to at home due to limited of program awareness (Breiter and Panambunan-Ferse, 2013). Creating a clear framework and understanding of what is and is not e-waste for legislative purposes in Indonesia will aid in ensuring that an accurate national inventory of e-waste can be estimated for collection by formal recycling facilities.

Product Design Focus
Once Indonesia has implemented its management and resource recovery framework for e-waste collection, and followed through with market incentives/disincentives, the next step is improving the e-product design for the environment (DfE) (Akenj et al., 2011). Despite the upstream reduction in waste through manufacturing efficiencies and sustainable business practices, if the

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E-WASTE IN INDONESIA end of life for the e-product pressures the e-waste management of Indonesia, then efforts in sustainable manufacturing methods are negated.

Conclusion
The most fundamental step in preventing the illegal importation of EEE as a generator of domestic e-waste is to establish definite guidelines on the distinction of e-waste and second-hand goods in regards to what can be imported with a permit. Once the framework is grounded, the guideline can be used to aid the development of informal recyclers of e-waste. Informal sectors materialize from “economic incentives, regulation gaps, industrial interdependence and social reality” (Agamuthu & Heart, 2012). While it is difficult to identify and burden the e-producers in Indonesia due to the prescreens of illegal imports and second-hand selling, Indonesia must acknowledge its regional market structures and stakeholders in order to implement ESM in ewaste to improve infrastructure, public awareness of both programs and health and environmental affects, and policies regarding EEE imports. By doing so, Indonesia can tap into the material resources in e-waste and the employment of the informal e-waste recyclers to improve the economy while protecting human health and the environment.

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