Mr. Faiek Fazal, Senior Manager, Corporate and Md. Zahin Riaz, Intern, Corporate

In the midst of a growing world economy of highly integrated countries working together, achieving magic GDP growths, Greta Thunberg emerged and informed us of the darker side of this illusion of human advancement. With that in mind, pollution has been increasing dramatically and global warming is being pushed to brink of being irrecoverable. Every country has a part to play in this, Bangladesh included as they generate 821,250 tons of plastic per year as per an article done by The New Age in 2019. The pace at which the rate of production of plastic for the world is increasing is astounding, reaching 359 million metric tons in 2018 as per statista.com. Businessman and companies alike are putting together their resources to progress towards innovation that is compatible and beneficial for the environment. This progression has led to the introduction of the recycling plant in Bangladesh. Debonair Synthetic Fiber Limited is the one leading this innovation. The recycling plant will take PET plastic bottles and then convert them into pellets which can be further melted to be used as raw materials (PSF threads) for their garments industry. This provides the huge benefit of providing backward linkage as the country has an abundant amount of plastic bottles piling up at landfills, the idea seems all the more beneficially, entering a sort of circular economy if you will.

Damages dealt to the environment

Plastic waste build-up has been a problematic factor for the past few decades, however, the topic has only become a point of major concern in the past few years. Above data of an average amount of plastic production was given, the other horrifying statistic is the cumulative. About 7.8 billion metric tons of plastic has piled up, one ton for each person on the planet by 2015 (Hannah Ritchie and Max Roser (2018) - “Plastic Pollution”). Landfill sites are being over-filled and burning along with dumping is just another quick fix for the impending doom that will be faced by future generation. However, that’s not all there is to the problems surrounding plastic. As they are dumped in landfills, the pressure leads to toxic waste to be excreted which rainwater eventually takes into the rivers and sea. The Plastic waste can also be broken down into micro-plastics which can then come up the food chain through fish and other such animals that we eat. Animals cannot decipher plastic from food. Thus, they tend to take in polyethylene particles. This harms wildlife to the point of extinction. In light of this, Bangladesh has been a huge contributor to such a foreshadowing disaster. By 2018, Bangladesh has already reached capacity in a number of their landfill sites, including the ones in Dhaka. Those sites being in a disastrous state and with waste piling up at a fast pace, plans for expansion was called but no further step has been taken. Even though, policies and laws have been in place, the unabated use of plastic for packaging and handling by companies is still going on recklessly. A research done in collaboration with government’s Department of Environment found that 25% of the waste generated was leaked to the environment. This pollutes rivers and streams that lead up to the Bay of Bengal putting fishes and other marine life at risk. Policies need to be well-placed, so that, no sort of loopholes can follow through, along with the spread of general knowledge on the impact of these pollution. Formal mechanisms need to be in place for plastic pollution to have a safe outlet and the externalities can be internalized, which some companies are following for the better.

Everyone starts small

The recycling industry can be seen as similar to a small plant that is just starting to sprout and grow its roots. The industry has only started to take shape with only a few others competitors in the market. The huge amount of waste may seem overwhelming, but Debonair and the few others stand firm with the idea that greater risks lead to greater returns. As the eventual profits roll in, companies will start to flock and will enhance the size of this sector; as environmentally profitable ventures are low in numbers. This will allow for other complimentary industries to emerge.
Before such formal recycling centers of great importance were established, recycling was done informally by scavengers and citizens who were left out of the job markets. If we look back, even China, started recycling plastic and other such waste informally, a practice is still in place. These waste collectors take HDPE and PET bottles from dumps, houses and even streets. They are then sent to wholesalers or small recycling shop and eventually, sent to manufacturing firms for use. They run this in an unregulated environment and without incurring any cost to the government. This also doubles as a small scale waste management, poorly though, as the scavengers lack the knowledge of segregation. However, this informal sector cannot be the solution and formal recycling centers, that can manage huge quantities of waste is a demand of time. In 2017, the results of a research that was conducted by the government’s Department of Health showed that the informal sector was only capable of covering 36% of that year’s waste. This may seem as an achievement but this also means that 64% pile up in landfills and dumped to surrounding environment.

The recycling center in discussion, intends on converting the plastic bottles into reusable fibers that can be integrated into a garments factory. The process in details is a bit complicated with the breakdown of components, but the steps can be understood relatively easily.
The diagram shows how everything follows in the mechanical process of recycling. The process follows, firstly, the bottles have to be collected then categorized accordingly. After which, they are broken into small chunks then washed, again heated and compressed to form pellets. The pellets can then be heated to form fibers which can be utilized in the garment industry.
These recycling centers will mainly be working with Polyethylene Terephthalate (PET) bottles. However, there are a number of different classifications for plastic and can be seen to be as an outlet for future opportunities through which integration for higher value addition for the country can be done. The different types of plastic are:

Polyethylene Terephthalate (PET, PETE): Known for superior clarity, strength, toughness, and as an efficient barrier to gas and moisture. Commonly used in the bottling of soft drinks, water, and salad dressing, and for peanut butter jars.

High-Density Polyethylene (HDPE): Known for its stiffness, strength, toughness, resistance to moisture, and permeability to gas. HDPE is commonly used in the bottling of milk, juice, and water, as well as for trash and retail bags.

Polyvinyl Chloride (PVC): Known for its versatility, clarity, bendability, strength, and toughness. PVC is commonly used in juice bottles, cling films, and PVC piping.

Low-Density Polyethylene (LDPE): Known for its ease of processing, strength, toughness, flexibility, ease of sealing, and as an efficient moisture barrier. It’s commonly used for frozen food bags, freezable bottles, and flexible container lids.

The countries following the trend
Due to our slow pace of technological advancement in the past two decades, we only recently entered the recycling industry and building upon this innovation. Thus, to say the least, recycling has always been a part of the world economy both informally and formally and can also be said that Bangladesh is finally catching up. Thailand and China has entered the business years ago, with China being in the sector for almost three decades. China was the biggest importer of waste for several years and at their peak, imported 45% of the world’s waste from the Western countries. This was beneficial for them as the raw materials produced in their country was inferior to the plastic waste they accumulated from foreign sources. Thus, they recycled these products to form packaging and plastic sandals and other such conventional items. So, we can conclude that the recycling centers had a huge influence upon their Current Account Balance of Payments and the growth of their economy. However, the growth of such industries could not keep up with the pace of waste accumulation. The local residents did not segregate and local waste along with imported ones proved to be a huge burden for the Chinese government. Thus, they implemented the “National Sword” program in 2017, which reduces its foreign intake of waste. By late 2019, the enforcement of stringent laws under this program led to a 99% reduction in imported waste. This became a cause for concern for the Western countries that relied upon importing waste as their pipeline for the problem. Thailand, who was not as big of a player as China, also had built up their plastic recycling industry, started taking in a portion of the waste that China took in. Thailand also, benefitted greatly from this industry. The sector created greater employment opportunities through the recycling centers and waste collection management, which was required in bulk. The recycling centers also help in reducing the amount of Carbon dioxide emission, as the calculation goes, 100kg of recycled plastic helps to avoid 1.5kg of CO2. Thus, in accordance to a study done by UNESCAP in Thailand at the Sai Mai District “Closing the Loop”, 14454 tons of plastic recycling are reducing more than 21,681 tons of CO2 equivalent from avoided fossil fuels per year.

The ever-growing sector

Diving into another related industry, the garments industry has become a prominent segment of our small but great nation. It is an important part of the export sector taking up 84% of all exports and grew to become a $34.13 billion industry in 2018-19, employing about 45 lakh people. A mammoth of an industry that stands as the nation’s backbone. However, through the cracks of such greatness some lacking can be seen. The industry has weak backward linkages, thus, a lot of its raw materials have to be imported and harmful chemicals are used in washing and dyeing of the clothes. These in itself can be said to be a cause of concern for the industry. However, the support of the recycling industry could fix this. This different segment can help fill in the gap as the recycled plastic can transform into PSF fibers which can cost less than the average when companies import. An added benefit of recycling is that the costs tend to dip down as the economies of scale associated with the industry. Along with the provision of increased employment opportunities and lesser burden upon the environment, the preparation of a ‘substitute’ backward horizontal integration will be immense. This will prove to be an amazing base sturdy enough to face harsh international competition and pave a roadmap for the future. Also, to consider, is the factor of reduction in environmental harm that could have occurred. Based on the study “Closing the Loop”, that estimated one ton of plastic recycled will reduce the chance of carbon emission of 1.5kg, if virgin plastic was being made from scratch. Thus, if the industry were to grow large enough to capture the entire plastic waste deposits, then the harmful effects prevented would amount to 1,231,875kg of carbon emission. This process may not help in recovery but will be a massive aid from halting any further damage to the environment.

Introducing Debonair

Debonair Synthetic Fibers Ltd. (DSFL), a company born in Bangladesh is one of the companies jumping on the bandwagon travelling first into an environmental healthy, yet prospective future. The company intends on initiating a plan of developing a recycling center for the production of Polyester Staple Fiber (PSF) to reduce their amount of virgin plastic usage. They intend on taking advantage of the situation where China has developed some issues regarding their recycling plants. This will take some years for them to come back into operation, leading to a deficit of PET flakes required by manufacturers. Considering also that the Recycling Industry has only grown to about $35.4 billion in valuation as of 2018, the market can be deemed to be in a growing stage. Plastic production, as of figure 1, was 359 million metric tons, which is much higher than what the recycling is able to keep up speed with. Thus, with their predatory instinct, Debonair intends on taking a share of the demanding market. Also, the company ensuring quality as the finest, will provide the highest grade material and machinery into its production. The company also set the goal of achieving platinum level LEED (Leadership in Energy and Environmental Design) certification to better improve upon their goodwill and conviction that will sway the customers to have a better perception of the company.

Pros and Cons for the venture

In light of all the discussions, we now turn towards the effects caused by the recycling center on the economy and its surrounding. There is no doubt that the benefit of the environment will be immense with reduction in plastic dumping and inadvertently reducing the demand for crude oil, even if it is one center. Everything starts small and will have an effect that multiplies hugely into the long term. For example, the development of the recycling center will create opportunities for employment, both during the periods of execution and operation, numbering 106 people. This effect will eventually spread itself onto other related industries and create greater employment. This system will also help in reducing the cost in the long term through greater efficiency. In addition to this, the greatest benefit achieved by the company and also the economy: would be to provide with some backward linkage. However, like every new initiative, there are some challenges to this project as well. For instance, the project will require a substantial amount of funding and the set-up is expensive. The opportunity cost is substantial and implementation of the project may also cause slight disturbance in the ecosystem where it is being set up. Experience is needed for operation and maintenance of the center, which is scarce in Bangladesh for this sector. In conclusion, it can be stated that, the project’s feasibility is significantly dependent upon the resilience of the management and the entrepreneur on how to see through the challenges of this new initiative.

More on LEED

LEED certification is a form of rating system which evaluates the environmental performance of the company’s infrastructure building process and production process. This accreditation is very highly regarded and can be an indicator of how efficiently a building is performing. Bangladesh has a total 90 RMG sector companies that have been accredited by LEED certification, including 24 companies with platinum rating (the highest on the scale). Bangladesh has the highest number of green garment factories in the world: An unbelievable feat! This could be stated as baby steps taken by our RMG sector towards the protection and rehabilitation of the environment. The implementation of green factories also provide an increase in goodwill for the adopting entities, thus adding value in the decision making process of the foreign buyers when deciding whom to trade with. With the entire world stressed with uncertainty of our earth’s future, every step taken towards the preservation of the earth is of huge significance.

Role of FI

Coming to a related point, a project of this scale will always require a form of push to get off the right foot, as like any other business every firm requires capital and Financial Institutions can always help with that. As the company intends on following the LEED guidelines and also developing a recycling plant, they are required to install a number of equipments that promotes environmental & workplace safety measurements. All these require a good amount of investment, and banks and FIs are facilitating that through commercial loans at preferred rates. IDLC Finance Limited is a proud partner of this journey by Debonair Group.
Bangladesh Bank also supports entrepreneurs who are undertaking environmental friendly schemes in their business strategies. When guidelines that promote health and safety improvements are followed and the initiatives are certified by respective authorities, the central bank ensures that, the loans will have a lower interest rate. This scheme also has the benefit for the banks and financial institutions: if the loan sanctioned matches the criteria set by the regulators, then Bangladesh bank will reimburse the fund to the lenders at a preferred rate. In this way, the scheme helps to motivate both the lender and the borrower in participating to become more environmentally responsible.
Even though, strict measures and companies with burning passion to tread new plains have come up, we are still far away from the desired result of improving the environment. Plastic pollution is happening at extraordinary speeds and other such innovative ideas are needed to combat such world destroying problems. India used its garbage plastic bottles as bricks and China found that landfill sites that have been filled to the brim can be turned into amusement parks. Bangladesh had its own spark of ingenuity, as they used the plastic bottles to form natural air conditioners for communities in villages. Following such out of the box thinking will eventually lead us to an idea that may well alleviate us of this looming disaster. Recycling centers is our best bet as of now, and improving on this and not remaining only attached to this idea is the main job as we go forward.