The Importance of Circular Economy for Indonesia from Business Perspective

Abstract

: A circular economy is an economic system where products and services are traded in closed loops or ‘cycles'. A circular economy is characterized as an economy which is regenerative by design, with the aim to retain as much value as possible of products, parts, and materials. This means that the aim should be to create a system that allows for the long life, optimal reuse, refurbishment, remanufacturing and recycling of products and materials (Kraaijenhagen, Van Oppen & Bocken. 2016, Ellen MacArthur Foundation, 2016). Indonesia's economic and population growth has been accompanied by the depletion of natural resources and major environmental pollution. This study is conducted to highlight the importance of circular economy in Indonesia due to the high number of waste produced annually without proper management. Indonesia is the second waste producer (TheJakartaPost, 2015) and four of Indonesia’s rivers are within the 20 most polluted rivers in the world (The Conversation, 2016). Projected by the Indonesian Misnistry of Environment and Forestry waste projection will increase by 5 million tons by 2025 and without action taken, global waste is projected to grow 70% by 2050 (World Bank, 2018). By implementing a circular economy, waste can be transformed into resources which, aside from reducing the human ecological footprint, it would be beneficial for business who knows how to utilize this concept.