Since May 2018, major ports in Vietnam such as Cat Lai Port and Hai Phong Port have faced severe congestions due to high volume imports of containers filled with paper, plastic and metal scrap materials. The congestion in Vietnamese ports may partially be the result of China’s ban on scrap imports since early 2018, prior to which, it used to allow half of the world’s plastic waste into the country. Due to the new environment policies adopted by China, many waste export businesses were left to find new emerging markets such as Southeast Asia to import their scrap materials. One country in particular is Vietnam, where waste import had increased since China’s ban. Sources indicate that the United States is the largest importer of scrap into Vietnam with around 147 million pounds of plastics imported between January and May 2018. This reflects an increase of about 85 million pounds from 2017 and 56 million pounds from 2016 respectively.
In May, port operating companies and customs offices experienced capacity constraints with containers being left at ports for more than 30 to 90 days. In Cat Lai Port alone, there were about 8,050 TEUs of long-day stored goods, 5,234 TEUs of plastic and waste-paper materials and a remaining 2,816 TEUs of goods that were being stored for 90 days or longer. As a result, many imported goods were left in queue at Cai Mep and Tan Cang– Hiep Phuoc Ports before they were moved to Cat Lai Port, thus creating a ripple congestion effect at other ports.
This led the authorities to impose a ban on waste imports on June 15. The ports also stopped accepting plastic scrap shipments effective at all ports from June 25 to October 15. The temporary ban not only buys time for the ports to clean up the abandoned containers but also provides an opportunity for the authorities to formulate short and long-term strategies to assess the ports’ storage capacity constraints and its plastic recycling industry. It is evident that for its short-term plan, legislative actions against unlawful imports of scrap would be taken as the port authorities reportedly started cracking down on illegal shipments of paper, plastic and metal scrap by investigating the owners of the containers and those responsible for the illegal imports.
Furthermore, the port authorities will take the ownership of inspecting permits of imported scrap containers before allowing vessels to unload. Sources indicate that authorities also found companies that were deliberately importing illegal waste under a false name with fake licenses and incorrect addresses to earn quick profits while they leave their trash at the terminals. Hence, ports are now only allowing vessels to unload scrap containers if they have valid import permits and written date commitments to pick up the cargo.
Moreover, legal documents on the management of waste imports will be revised, taking into account environmental protections, and mechanisms to prevent, control & manage the trade and imports of scraps from other countries will be established. Despite these efforts, as of early October 2018, there were still reportedly 4,000 containers of scrap at Cat Lai Port which includes 3,000 containers that had been left for more than three months.
Although the scrap import ban is temporary and is expected to last only for a few months, it is likely that Vietnam will gradually reduce the import of overseas scraps and simultaneously increase the reuse of recycled materials in its long-term strategic approach. Solid waste ban had impacted local recycling industries, as sources suggested that waste processing is an additional source of raw materials for the country’s paper, plastic and steel industries.
Despite the environmental and port congestion concerns, there is still a demand for overseas paper and plastic scraps for some domestic productions, due to the inadequate plastic recycling system in the country. Sourcing of scrap locally is reportedly difficult as most plastic wastes are normally mixed with regular trash and are not separated properly. Ho Chi Minh City alone produces about 900 tons of plastic waste daily, of which only 90 tons are recycled. While there are pros and cons in the scrap policy, efforts for local recyclers to switch to domestic waste will progress gradually in years to come as the industry needs time to adjust from handling import waste to domestic waste.
It is not only Vietnam that needs to find a win-win solution for both ports and the domestic recycling industry; Thailand and Malaysia have also followed Vietnam’s footsteps in banning plastic waste due to an increase in such imports. On July 2, Thailand was the second country after Vietnam to ban the import of certain waste goods, including plastic scrap, electronic waste and hazardous waste at Ports of Laemchabang and Songkhla. However, unlike Vietnam, the duration of the ban remains unclear for Thailand. In the same vein, Malaysia has cancelled the import licenses for 114 of the country’s plastic scrap processors and implemented new operating procedures and regulations for recyclable material import licenses. Sources indicated that authorities will conduct inspections to ensure that only processors with valid permits are allow to continue operations. It is also important to note that Indonesia had begun inspecting 100 percent of scrap imports since early April following an increase in imports of scrap polystyrene from the United Kingdom in the first three months of this year.
As most Southeast Asian nations take a tougher stance on waste import while they struggle with their own domestic waste problems, waste shippers are left with fewer options to find alternative markets to substitute China. It is no doubt that China’s ban has disrupted the global supply chain which had about 7 million tons of scrap plastic imported annually from the United States and Europe. Although India is likely to be the next location where waste exporters were reportedly shipping to, with volume up 164.4 percent to 70,550 TEU, there is no guarantee that this can remain a viable option in the long run. Perhaps, China’s import ban on scrap is a wake-up call not only for Southeast Asian nations but also for countries with large volumes of scrap to find solutions in its domestic market, particularly in the recycling sector.