From Saleng to factories: Vulnerabilities & limitations of the recycling business

A look at the recycling industry in Thailand from top to bottom. Despite its important role in recycling waste in the country, it still faces various limitations and vulnerabilities that are only understood by those on the inside.

The saleng or tricycles which buy old stuff are important to waste recycling in Thailand. The constant sight of saleng and the business of buying waste which can be seen all over the country is proof that garbage is valuable.

According to data from the Pollution Control Department, the national volume of waste in 2016 totalled 26.19 million tons, of which only 4.82 million tons, or 18%, could be recycled. 76% of what was recycled came from the saleng and recycling businesses. In 2019, Thai PBS reported that Thailand generated a total of 28.7 million tons of waste, of which 12.6 million tons was recycled and 9 million tons was plastic. These figures reflect an improvement in the country’s recycling efficiency.

Aluminium cans in storage, awaiting either crushing or sale.

Plastic Atlas, a 2019 publication by the Heinrich Böll Foundation, a foundation which has a close ties to the German Green Party, conducted a survey of 763 garbage collectors in Asia, Africa, and Latin America and showed that 65% of the respondents earned their main source of income from selling garbage. This shows the economic importance of garbage in several parts of the world, particularly in developing countries.

Even though waste has become valuable, insiders are aware of the vulnerabilities of this occupation, hemmed in by state policies, laws, as well as people in the business themselves.

Headaches at the bottom of junk supply chain

The bustle typically seen in a middle-class and student residential area like Soi Suea Yai Uthit (Ratchadaphisek 36) is merely a front for a large one-stop area at the back to sell, buy, and deliver garbage, which is connected to Soi Lat Phrao Wang Hin, home to more than 300 saleng drivers’ families and many junk shops. Along the roadside, one can see all sorts of waste displayed for sale, ranging from glass bottles to old car bodies.

Saleng and huge piles of junk are a common sight at Soi Suea Yai Uthit.

Ket Yoti, 58 years old, is one of those who have been affected by plastic and paper waste imports by the Thai government, just like other saleng drivers, with drastically lower prices for paper arising from a policy to import garbage from overseas which made the headlines in 2018 as China stopped waste imports from other countries. The reality of waste imports, put simply, was renting the country as a garbage dump, which affected the environment to the point where China stopped their imports.

Ket Yoti in her garbage-filled house.

The closing of one garbage can in China opened up others in Southeast Asia, including the Philippines, Indonesia, Malaysia, and Thailand. The influx of waste without investment in buying, storage and sales, was followed by auctions to take the waste to the factories. Imported waste consequently has a cheaper price than waste from recycling. When supply increases, it lowers the price of junk goods the market, according to market mechanisms.

Chaiyut Phonsen, President of the Saleng and Junk Shop Association, gave the example of the price of cardboard, one of the most commonly found household materials, which plunged between January and May 2019. The buying price for cardboard paper at furnaces dropped from 6 baht per kg to 5 baht per kg. in Mar–Apr and later to 2 baht per kg. in Sep–Oct. At such low prices, traders earned almost nothing after transportation and other costs.

Plastic has faced a similar fate. Chaiyut said that small factories from China had been opened to take imported waste for recycling, but not junk from saleng. When it was like this, large factories that used to be able to sell recyclable materials could no longer continue to do so, and had to ask for waste import quotas to reduce costs in order to compete with the small factories. As a result, domestic recyclable waste could not be sold, or was sold at a low prices.

Saleng drivers receiving bags of goods at a charity event held by the Re-users and Recyclers Trade Association in May 2020.

Ket told us in an interview in July that prices had fallen. Previously he earned 300-400 baht a day from selling junk he had collected. But now, he had to make 2 trips to get the same money. The policy to solve the paper price problem was yet to reached the saleng drivers at some shops, as the storefront buying prices varied. Some shops still offered 1.10 baht. Moreover, the debt from buying a saleng on instalments, which sometimes were bought on instalments from a junk shop, was another factor to consider, because many times, the instalment was deducted from the sale.

“[Prices] fall very easily. When we went to complain, they went up only slightly. But don’t think that the increase is the same everywhere. It is not. Some shops raise it by 10 or 20 satang. Others just reduce it.”

“Simply put, are you satisfied to sell to me? If you are not satisfied to sell to me, you cannot sell to any other shop because it is my saleng. You have no choice but to sell to me”.

Ket also said that saleng often had their weight of their goods cut by the junk shops claiming that the goods were contaminated with other material, for example, when selling lead or necklaces, the weight was cut on the pretext that they were mixed with iron. Or the paper price was cut again after the shops also had their prices cut by the factories because they had sprinkled water over the paper to add weight before it was sold.

Vulnerabilities of traders

Thawat Krairak, owner of Thawat Recycle, a junk shop which he claims as one of the largest on Soi Suea Yai, told us that business was booming in the past. The growth of Thawat Recycle, which came from seeing a business opportunity by his father who collected waste, was confirmation of his hypothesis.

Thawat Krairak

Thawat said that the junk shop business had been heavily hit in 2019, when iron prices in the recycling industry drastically declined because iron imports from China caused iron prices to drop extremely rapidly from 11-12 baht to just 2-3 baht in the course of 2-3 months, costing Thawat several hundred thousand baht.

Having learned the lesson from the import of paper and plastic and the resulting price mayhem, people in the junk industry consulted each other, which eventually led to a gathering of stakeholders at the Ministry of Commerce.

A crate of copper wire. Copper is one of the highest priced waste traded in junk shops.

Thawat said further that, after 11 meetings and a push by the Minister of Commerce, a policy to guarantee the price of paper was passed. The price of paper, though not no better than before, did not worsen. In the beginning, the factory-set price was 3.20-3.50 baht, which later slowly rose to the point where Thawat’s shop could buy cardboard at 4.60 baht and coloured paper at 2.50 baht (data as of September 2020).

Following those negotiations, a group of saleng drivers and recycling businessowners got together and founded the Saleng and Junk Shop Association in 2019 as a channel of news and information about the recycling business, and to register saleng to provide information, share news, and negotiate with the government. The Association has succeeded in giving the occupation of saleng drivers, who had not been able to register professionally, a certain status. Thawat himself was one of the founders.

The establishment of the Association was a noteworthy gathering as clearly serving as negotiators with the government in terms of waste management on the side of capital. Prior to this, Association members were also part of the push against foreign plastic waste import quotas until the government decided in September 2019 not to import plastic waste.

Tax: Burden of the recycling business

In order to open a junk shop legally, there are many processes to pass through. According to the Control of Sale by Auction and Trade of Antiques Act B.E. 2474 (1931), business owners must possess one license for the auction and trade of used goods per shop. They must be commercially registered under the Business Registration Act B.E.2499 (1956). In addition, recycling shops are regarded as used goods shops or sites conducting activities dangerous to health according to the Public Health Act B.E. 2535 (1992) and the Ministry of Public Health Announcement No. 5/2538, which requires payment of a commercial registration fee and annual fees according to the local rate set by each municipality or Subdistrict Administrative Organization, commonly known within the cycle as the “socially repulsive tax”. According to the Saleng Association, the tax rates range from 1,000-10,000 baht per year.

A worker at Thawat's shop unloading scrap from a pickup truck.

Thawat told us that tax was something business owners and saleng drivers were deficient in and did wrong. One of the reasons was that both business owners and saleng drivers lacked knowledge about the taxation system. At Thawat’s shop, an accounting firm was hired to do the job. Since that cost him tens of thousands of baht per month, it was difficult to imagine how small- and medium-sized businesses could shoulder such high costs. The Association planned to discuss this matter with the Revenue Department in order to create understanding on the junk business for the future.

Another point of concern among junk shop circles is value-added tax (VAT), which they have to pay upon buying and selling garbage. The intermediary companies linking junk shops and factories usually manage and pay VAT after receiving payment from the factories. However, some brokers sneak the tax money into their pockets and vanish. Not paying tax also means that they can set a higher price than those playing by the rules, skewing the junk market.

Chaiyut explained that these mechanisms emerged because factories were not the ones buying the junk themselves as their payment system was on a credit basis, which would only be settled every 7-15 days and junk shops could not afford to wait that long. And that was where the brokers came in. If the brokers’ failed to pay VAT, the Revenue Department found out when it was already time to close the books at the end of the year, when they knew there was something wrong because at that time, the factories submitted requests for tax refunds. Many times, the junk shops that sold stuff to the brokers also got prosecuted.

A void waiting to be filled in the recycling business

How serious are the organs of the Thai state regarding waste reduction and management policies? According to October 2020 data from the Customs Department, Thailand still imported 8,715 tons of plastic waste under HS Code 3915 (plastic waste, parings and scrap) from 22 countries, with imports from China being the largest, worth a total of 10,038,664 baht.

At the same time, even though saleng trading in junk plays a significant role in terms of waste management in the country, they still have questions about the limitations of price mechanisms. The Plastic Atlas report suggests that using market mechanisms to manage recycling waste is problematic in that when an item has no economic value or is worthless, it will be instantly ignored by garbage collectors. For example, some areas in Thailand do not accept coloured PET bottles (such as green soda bottles) or milk cartons due to storage costs and the long time required to collect before sale.

Tara Buakamsri, Country Director of Greenpeace Thailand, sees that recycling is only a fraction of the solution to the problem of waste management because the production process has by-products like toxic fumes and wastewater from industrial processes, and recycling still cannot completely convert all materials into their original substances. Thus, in recycling, there is something called “downcycling” – a process in which the recycled material becomes of lower and lower quality until it is eventually no longer usable.

“When we look at the impacts of recycling, if we weigh whether recycling has more benefits than not recycling, we have to look at the entire cycle, including the life cycle of each particular product, because recycling is only a small part. If we could design packaging that is more reusable and more durable and can be used more times, we would not need recycling in the first place because reuse does not involve an industrial process.

“Reuse may have a very low impact compared to recycling because the industrial process of recycling produces wastewater, waste, and residues as byproducts, requiring waste management in the process”.

A void waiting to be filled in policy

In 2016, the NCPO government drafted a policy-level plan on waste management as a national agenda item based on the 3R concept (Reduce/Reuse/Recycle). The goal is to promote a zero-waste society.

According to the National Waste Management Master Plan (2016-2021), a concrete, effective, and sustainable approach to waste and hazardous waste management involves building the capacity of saleng drivers to manage waste and hazardous waste by supporting a system of saleng and junk shops and of community recycling activity networks and recycling markets to increase alternatives and channels for waste sorting.

Chaiyut said that this initiative had not met with much success. He wants the state sector to be more serious  about the 3R policy. If possible, as the first step, he proposed the registration of saleng, like the government has done with farmers, to allow them to get assistance if they get into trouble, as saleng are crucial to bringing scattering waste into the recycling process.

The Country Director of Greenpeace Thailand proposed that the state’s perspective on waste reduction was still fixated on waste incineration for energy, which favoured capitalists under the Pracharat policy, who operated many waste-to-energy incinerators. The solution to this policy inadequacy could come from a law on environment-friendly waste management pushed by the people, which should be rolled out in parallel with the people’s draft constitution because they are related issues.

“The current Constitution may guarantee the peoples’ current rights to a certain extent. But if the mechanisms under it guarantee the peoples’ rights no better then this as regards environmental rights, because incinerators or waste management are not only about waste, but also about resource management, then plans for economic reform and environmental reform must go together. If we look at waste management in a fragmented way, it’s over,” said Thara.

Source: 
https://prachatai.com/journal/2020/12/90998

Advertisements

Since 2007, Prachatai English has been covering underreported issues in Thailand, especially about democratization and human rights, despite the risk and pressure from the law and the authorities. However, with only 2 full-time reporters and increasing annual operating costs, keeping our work going is a challenge. Your support will ensure we stay a professional media source and be able to expand our team to meet the challenges and deliver timely and in-depth reporting.

• Simple steps to support Prachatai English

1. Bank transfer to account “โครงการหนังสือพิมพ์อินเทอร์เน็ต ประชาไท” or “Prachatai Online Newspaper” 091-0-21689-4, Krungthai Bank

2. Or, Transfer money via Paypal, to e-mail address: service@prachatai.com, please leave a comment on the transaction as “For Prachatai English”