Environmental Technologies Industries

Environmental Technologies Industries

Market Plans

Malaysia Environmental Export Market Plan

Chapter 5 - Solid Waste Management

Overview

Solid waste management is the last sector that the Malaysian Government will privatize. The process was set in motion in 1993, but it has been deferred pending the passage of legislation outlining standardized fees, collection charges, cross-border disposal, and baseline information. Much of the delay is related to public resistance to sewerage fees.

Historically, waste management has consisted of little more than hauling away domestic and industrial waste in collection trucks, dumping it into open pits or rudimentary landfills, and then burning it, either in the open or in open furnaces. Open burning is routinely done at more than 100 disposal sites nationwide, adding to the perennial haze that plagues the country. A few incinerators are in use in Pulau Tioman and Genting Highlands, and in Kuala Lumpur, Ipoh, and Penang.

Overall, lack of effective equipment for solid waste management systems and the absence of government environmental controls are evident. Investment in solid waste management has been very low, mostly limited to procurement of collection trucks and landfill developments. Based on earlier studies, Environmental Business International estimates the value of solid waste collection and disposal in urban areas at around $50 million, excluding capital investments.

In 1995, Malaysia's urban population produced 5.5 million tons of municipal solid waste, including nonhazardous industrial waste. According to the latest estimates, the total waste volume expected by the year 2000 will be around 9 million tons annually. Table 11 gives solid waste generated by selected local areas for 1990–2010. Yearly per capita waste generation is between 0.5 and 1.5 kilograms. Solid waste volume continues to rise while unsafe landfills and illegal dumping of waste remain a problem. Currently, 45 landfill sites have been or are being upgraded as part of various programs.

Table 11: Solid Waste Generated by Selected Local Authority Areas, 1990-2010

Tons x 1,000	1990	1992	2000	2005	2010
Kangar	43	57	68	82	139
K. Bharu	66	85	132	146	175
K. Terengganu	58	85	119	172	211
Kuantan	36	44	67	85	107
Seremban	65	95	120	160	224
Melaka	94	115	168	215	236
Kota Setar	98	128	142	182	229
J. Bahru	107	140	180	236	304
Ipoh	105	121	164	218	324
P. Pinang	155	192	273	355	386
K. Lumpur	766	913	1,022	1,058	1,095

The Ministry of Local Government and Housing (MLGH) is the primary overseer of the semiprivatized municipal solid waste management. Under the proposed national privatization, responsibility for solid waste management will be transferred from state and local governments to the federal government and will be governed under new legislation. Industrial solid waste will not be covered under the privatization initiative. However, industries will continue to use private contractors to collect and dispose of solid waste at municipal landfills.

Despite education and marketing efforts by MLGH, recycling is not common in Malaysian households. Recycling has been practiced informally for many years by scavengers who collect mostly paper and glass at landfills. In a few urban areas, very limited recycling programs are being carried out by MLGH. Waste is separated at the source and collected from households. The ministry is considering various recycling technologies.

Technology for waste separation, sorting, processing, and recycling are limited or are not available domestically. About 90 percent of recycled paper is imported. Many plants can process used aluminum and old glass, although the supply of glass is limited.

Legislation and Enforcement

Solid waste management is governed under the Local Government Act (1976). State governments and local or municipal governments are responsible for enforcement, but their legal powers, capabilities, and resources are severely limited. A new Solid Waste Management Bill is being considered by Parliament. The new act is expected to cover all facets of solid waste management and possibly mandate a new nationwide regulatory body.

Privatization

In 1994, the government announced plans for the National Solid Waste Management Program, estimated to cost RM10 billion ($3 billion at RM3.3 to $1). Thirty companies were invited to bid on the project and more than 50 submitted formal bids. Under the privatization plan, the country is divided into four zones to be managed by four consortia with 20-year concessions. The contractors and shareholders chosen were mainly Malaysian (table 12). Unlike Hong Kong, Malaysia promotes domestic control over the businesses that operate such concessions.

Table 12: Regional Solid Waste Contractors

Central and Eastern Regions

Consortium Alma Flora Sdn. Bhd.
HICOM Holdings Bhd.
Pembinaan Jayabumi Sarawak Sdn. Bhd.
Kumpulan Jetson Sdn. Bhd.
State governments of Selangor, Pahang, Terengganu, and Kelantan
Projected investments: RM4.7 billion over 20 years

East Malaysia (including Labuan)

MMC Environmental Sdn. Bhd.
Sinoh Environmental Sdn. Bhd.
State governments of Sarawak and Sabah
Projected investments: RM1.8-RM2 billion over 20 years

Northern Region

Rumpun Hijau Corp. Sdn. Bhd.
Wagon Engineering Sdn. Bhd.
MHES Sdn. Bhd.
Zamrud Maju Sdn. Bhd.
Maju Egatt (M) Sdn. Bhd.
State governments of Perak, Penang, Kedah, and Perlis
Technical consultant: Malaysian Management Consultants
Projected investments: RM500 million - RM1 billion over 20 years

Southern Region

Consortium Conseec Gali:
Group Asas Montery
Kenbang Restu
TNB Engineering Consultants
AWS Jaya
Engineering and Environmental Consultants Sdn. Bhd.
State governments of Negeri Sembilan, Melaka, and Johor
Technical consultant: Black & Veatch International
Projected investments: RM2 billion over 20 years

Source: Solid Waste Contractors Association

The four consortia are Eastern Waste Management, Southern Waste Management, Alam Flora Sdn. Bhd., and Northern Waste Industries (NWI). Eastern Waste Management will handle Sabah, Sarawak, and Labuan States. Southern Waste Management will cover the states of Johor, Malacca, and Negeri Sembilan. Alam Flora is responsible for the central region: Kuala Lumpur, Selangor, Pahang, Terengganu, and Kelantan. NWI will handle Kedah, Perlis, Penang, and Perak states. These consortia will collect, store, transport, treat, and recycle all of the country's nonhazardous waste.

As anticipated, however, the Solid Waste Contractors Association has complained that the planned new fee structure on residents, business, and industry could have an adverse economic impact. To appease consumers and private waste collectors, the government delayed the nationwide program until this year. In the interim, a pilot area consisting of Kuala Lumpur, Johor Baru, and Johor Baru Tengah localities was designated in 1997. (See “Concessions Plan Investments in Solid Waste Management” text box). Authorities said the government aims to study the viability and economic impact of the fees. The consortia are expected to continue using the sanitary landfills to keep fees from becoming prohibitive. However, use of incinerators is also being studied.

The government has failed thus far to use economic instruments to reduce waste generation and create incentives for recycling. Fees imposed for the collection and disposal of solid waste fall far short of actual costs. Privatization should allow the private sector to recoup the true costs of solid waste management. Industry experts are hoping that the proposed bill will help address this issue. The bill is expected to focus on five core areas: waste minimization, reuse, recycling practices, waste recovery, and residue management. Initial reports indicate that tariffs will probably vary locally.

Best Opportunities

According to government surveys, almost none of Malaysia's dumps are safe. The privatization program offers investment opportunities in technology transfer, particularly for advanced landfill, waste processing, and disposal technologies. Privatization is expected to generate a number of capital projects, such as upgrading of vehicle fleets, purchase of landfill equipment, and construction of incinerators.

Other areas of opportunity include industrial reuse of biomass from land clearing, palm oil trunks, and the food industries (e.g., rice, sugarcane, pineapple, cocoa). Residues from the wood industries are traditionally burned in the open. There is potential for using byproduct gas and landfill gas.

Expanding waste management programs and economic factors are expected to increase demand for better pollution prevention technologies and waste minimization. Several large corporations have begun to adopt pollution prevention techniques. All types of waste treatment and recovery technologies will see rising demand, especially metal recovery systems. Industry analysts cite an immediate need for oil reclamation technology to recover used oils from industries and from ship-based oil sludges.

The potential need for incinerators is unclear. However, there are indications that one or two large-scale incinerators (1,000–2,000 tons per day capacity) may be built. Concession holders have indicated that large-scale incineration will be part of integrated waste management.

Domestic contractors have been aggressively marketing incinerators, despite the high moisture content of the waste, high capital costs, and the absence of skilled technicians. Smaller, cheaper, in-house incinerators appear to be favored by some industrial plants due to lack of landfill capacity.

Concessions Plan Investments in Solid Waste Management

Central and Eastern Regions
In Kuala Lumpur (population: 1.3 million), the concession holder, Alam Flora Sdn. Bhd., has begun a pilot privatization program to phase in the National Solid Waste Management Plan. HICOM Holdings Bhd., one of the country's largest diversified groups, holds a 40 percent interest in the consortium; Kumpulan Jetson, 20 percent; Pembinaan Jayabumi, 20 percent; while four state governments (Selangor, Pahang, Terengganu, and Kelantan) have taken 5 percent shares.

To lay the groundwork, HICOM conducted a full audit of municipal solid waste (MSW) management systems in 42 municipalities with a team of Canadian and Malaysian experts. Since January 1, 1997, the consortium has taken over eight service areas in the Federal Territory of Kuala Lumpur that were the responsibility of local utility Dewan Bandaraya Kuala Lumpur (DBKL). DBKL directly serviced 40 percent of the area, including the city center, Ampang, Damansara, Bangsar, and Sungei Besi. (The remaining 60 percent was serviced by 23 private collectors.)

The consortium is consolidating DBKL’s waste management activities and then plans to reorganize them into eight zones with decentralized authority. Under its draft concession agreement, Alam Flora will spend RM.7 billion ($1.4 billion) over the next 20 years. A primary goal of the concession holder's plan is the siting and integration of large-scale regional sanitary landfills that will be serviced by strategically located transfer stations, road transport, and rail haul. These sites will replace many unsafe dumps. Alam Flora plans to shut down 80 of the 83 central region landfills and build 13 new ones that will meet international standards. In addition, HICOM, as part of the Alam Flora consortium, plans to build 27 transfer stations.

It also aims to build two incinerators for about RM1.5 billion ($440 million) to be located in the Klang Valley and Cameron Highlands. The company is conducting a four-month feasibility study that includes site selection and an environmental impact assessment. Landfills to be built in the Klang Valley and Selangor will occupy from 25 to 100 hectares. Smaller landfills will be constructed in the east coast states. Transfer stations, to be built around Kuala Lumpur, Klang, and Sepang, will have 500–1,000 tons per day (t/d) capacity.
Another focus of Alam Flora's strategy will be a program for progressive waste reduction. The program will enlist cooperation with waste generators, national and local government agencies, recyclers, and the general public.

Northern Region
Northern Waste Industries (NWI), the concession holder for Kedah, Perlis, Penang, and Perak, is a consortium comprising Rumpun Hijau Corp. Sdn. Bhd. (40 percent), Wagon Engineering (10 percent), MHES (10 percent), Zamrud Maju (10 percent), and Maju Egatt Sdn. Bhd. (10 percent). The four state governments each hold 5 percent. The group plans a spending program of RM500 million to RM1 billion ($147 million to 290 million) over a 20-year period. Responsibility will cover 29 local authorities, including Ipoh, Penang, Alor Start, and Kangar.

The overall strategy is to have an integrated system of waste management, with recycling and waste reuse programs that will help reduce the amount of waste going into landfills. NWI is examining various methods. Collection will probably use standardized storage systems at the source and collection vehicles that are fitted with mechanized lifters. Waste will be treated at materials recovery facilities.
Eastern Malaysia
Eastern Waste Management is led by MMC Engineering Services Sdn. Bhd, which owns 70 percent. Sabah-based Sinoh Environmental Sdn. Bhd. has taken a 10 percent share, and the Sabah and Sarawak state governments have each been allocated 5 percent equity. It is unclear who owns the remaining 10 percent.
According to initial reports, the group employ a flexible disposal technology that includes possibly two central sanitary landfills capable of handling 300–400 t/d in major cities such as Kota Kinabalu (Sabah) and Kuching (Sarawak). The company, which hired an Australian consultant, plans to set up transfer stations for processing and treatment patterned after the Australian system. Recycling will be introduced later.