CHAPTER 2

LITERATURE REVIEW

Most of the studies have focused on some aspects of plastic industry like
environmental impact of plastic shopping bags, risk faced by plastic industry,
adopting new technology in plastic industry, traditional performance index of plastic
industry, plastic debris and steps to support and to enable policy makers to develop
plastic industry. Very few research work has been done on the financial performance
analysis of plastic industry.

Yuan-Tien Su (2003) investigated whether Economic Value Added (EVA), could be

applied for the traditional plastic industry in Taiwan stock market and had better
Adjusted R2 with Market Value Added (MVA) than the traditional performance index,
and was a better tool in the decision- making of investment by the management and in
evaluating the value of an enterprise by the investor.

The following results in this study were obtained:

1. EVA was proved to be highly related and explainable with MVA for the traditional
plastic industry in Taiwan
2. EVA could reflect the operational performance better than RI for the traditional
plastic industry in Taiwan.
3. EVA applied for the traditional plastic industry was more appropriate than the
traditional performance index in Taiwan.

Dr. Tuong Thi Hoi (2002) analyzed four plastic manufacturing companies, impact on
environment, their policies and target, standards of emission, waste water, etc in his
study. Plastic Industry Environmental Review: An assessment of the significant
environmental aspects and impacts associated with plastic manufacturing in Ho Chi
Min city Vietnam, June 2002. Vietnam cleaner production centre. Dr. Tuong Thi Hoi
concluded the following:
All four plastic companies have not adopted any of the EMS nor environmental
policies, environmental purposes and targets. Companies’ managers and staffs are not
aware of significant environmental aspects related to their company operation and
they do not know which environmental standards on emission, wastewater, noise etc.
need compliance. DOSTE had carried out several environmental measurements on air,

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water and labor environments at Dat Hoa and Duy Tan. However, the managers of
these two companies do not want to show measurement results to the workers or
public. Truong Thinh and Tu Hai have never had any environmental monitoring
program carried out by DOSTE.

Rhian Tough (2007) used a mixed comparative approach to investigate the

environmental impacts of plastic shopping bags and consumption patterns, in relation
to international practice, alternatives to plastic shopping bag, and policy options. The
mixed comparative approach used in this research was a combination of the
philosophies underlying cost benefit analysis, sustainable development, and triple
bottom line reporting, case studies and policy analysis. Economic instruments while
achieving modest to high reductions in plastic shopping bag use, were moderately
costly, and also face acceptance and implementation constraints. However, due to
strong public pressure for government intervention, and potential implications for
future climate change and sustainability initiatives, it was suggested that economic
instruments and regulatory options were the most likely choices for government
policies to address plastic shopping bags.

Meng-yi Wang (2007) analyzed the issues concerning risk-bearing issue faced by the
public listing companies in Taiwan's traditional industries, including the food and
plastic industries. The study covered the period from 2001 to 2006, and its results
were as follows:

In both the food and plastics industries, if a company had greater operating leverage,
it faces greater total risk and specific risk. If the company had greater shareholding
ratio of board directors and greater amount of assets, it faces less total risk and
specific risk.

Regarding debt ratio of the food industry, if the debt ratio is higher, the total risk and
specific risk were higher. The debt ratio had no effect on risk-bearing of the plastics
industry. With regards to the shareholding ratio of board directors and quick ratio, the
total risk and specific risk were lower in the plastics industry. The shareholding ratio
and quick ratio had no effects on the risk-bearing of the food industry.
As for the establishment years of a company, due to the stability and cycle of the
products, a food company with longer establishment faces great risks and risk-

15
bearing. On the contrary, for a plastics company, the longer it has been established,
the lower the risk and risk-bearing it was subjected to.

Povl A Hansen, Goran Serin (1993) showed that development of new materials and
material shifts play an increasing role in the development of industrial production.
The main issue of this paper was the ability of the industry to adapt to new materials.
This study showed that it has been difficult for established firms in Denmark, both
within the plastics industry and outside, to undertake shifts in technology. The study
also showed that firms most open to material adaptation have been firms based on
product ideas not on materials. Another finding was that the Danish plastics industry
had been characterized by high growth rates despite low R&D figures. The reasons
for these were on the one hand the ability of Danish plastics firms to exploit existing
know-how and on the other hand the increased specialization of the firms.
Furthermore the study shows that neither institutional R&D nor institutional education
had played any noticable role in the adaptation process of the Danish plastics industry.

Steven Landau, Steven Ellis, William Ennen (2000) suggested different components
of plastic manufacturing firms to manage them. One component of the research was to
interview plastics company executives in North Central Massachusetts. A second
component of the research was an investigation of technology and training assistance
centers across the United States. The goal was to learn how successful centers—
especially centers that worked with plastics firms similar to the ones in this region—
structured themselves, what their sources of funding were, and the extent to which
companies were involved in their operations.

C. J. Moore, G.L. Lattin, A.F. Zellers (2005) focused area of this study was the Los
Angeles River Watershed and the San Gabriel River Watershed in Southern
California. The areas of interest for this study were evaluation of BMPs at plastic
industry sites, sampling mass emission sites on each river, sampling the beaches
adjacent to each river, and trawl sampling in the forebay at the mouth of each river.
The mass emission site for each river was selected because it was the convergent area,
at which all materials coming down the river from the watershed would have to pass
before reaching the ocean, and it was also upstream enough not to be influenced by
ocean tides. The mass emission samples and the forebay samples focused on the
plastic particles in the rivers that were less then 5 millimeters. Many of these plastic

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particles were pre-production pellets, shavings from cuttings, regrinds, and sprues
from drilling during the manufacturing process.

Girum Bahri (2005) discussed the adverse environmental impacts of plastic bag waste
in Nairobi, Kenya, their root causes and remedial policy and technical packages for
the short and long term. The need for such a study was justified as it was desirable to
change the unsustainable pattern of consumption and production associated with these
materials. Plastic bag waste appears in very high proportion in the municipal sold
waste stream in Nairobi and was causing environmental problems such as choking of
animals and soils; blockage of waterways and rivers; blight of landscapes and trees;
and resource depletion. The research questions addressed were: (1) what was the
current status of plastic bag waste pollution in Nairobi? (2) What were the associated
undesirable environmental impacts? (3) What were the underlying causes? And (4)
what were the applicable solutions for short-to-medium and long term. To answer
these questions, different approaches were utilised. The theoretical background of the
problem and that of possible remedies were investigated from literature sources.
Experiences of other countries on the issue were studied. A detailed contextual
assessment was conducted in Nairobi to determine the status of the problem, its root
causes, major stakeholders and what has already been done in response to the issue.
The results indicated that the problem was a consequence of externalities in
production and consumption; ineffective by-laws on littering and illegal dumping;
failure of garbage collection and disposal systems; and low public awareness and poor
life-cycle considerations. The compiled information and suggestions was useful to
deal with the menace of plastic bag waste and related challenges due to unsustainable
patterns of consumption and production.

Michael McDonald Crowley (2003) demonstrated that guaifenesin and ketoprofen

were stable during the extrusion process. XRD suggested that guaifenesin crystallized
following the extrusion process, but ketoprofen formed a solid solution with PEO.
Melting points corresponding to the crystalline drugs were not observed in the films
by DSC analysis, suggesting that guaifenesin and ketoprofen dissolved in PEO while
in the molten state. Crystallization of guaifenesin on the surface of the film could be
observed using SEM at all concentrations studies, but did not reveal ketoprofen
crystallization until reaching the 15% level. Guaifenesin and ketoprofen were found to

17
decrease the drive load, increase the stability of PEO and plasticize the polymer
during extrusion. The modified Hansen solubility parameter correctly predicted
miscibility of PEO with ketoprofen and immiscibility between PEO and guifenesin.
The percent elongation decreased with increasing guaifenesin concentrations, but
significantly increased with increasing ketoprofen concentrations. Guaifenesin
reduced the film elongation by disrupting the polymeric network. The elongation of
films containing ketoprofen increased due to plasticizing effects. Both guaifenesin
and ketoprofen decreased the tensile strength of the film.

Santanu Mandal (2011) in his study “Porter’s Five Forces of Analysis of the Indian
Plastic Industry” he has analyzed the plastic industry of India in terms of Michael E.
Porter of Harvard Business School in 1979. Porter’s five forces are
1. Bargaining power of suppliers
2. Bargaining power of buyers
3. Internal Rivalry
4. Entry
5. Threat of substitutes.
So far as the porter’s five forces analysis of this industry is concerned, bargaining
powers of suppliers is low while that of buyers is high. Entry is difficult and it entails
the incumbent to have significant capital to invest if it wants to enter this industry. On
the substitute front, there are lot of researches going on and recent anti plastic
campaigns have already given way to many new replacements for plastic as seen
above, thereby indicating high threat from substitutes. On the internal rivalry context,
the rivalry is high and firms often engage in price wars. It is easy for small firms to
change prices and increase market share but the large ones finds difficult to switch
quickly. On the whole plastics are essential for today’s standard of living and they
help in improving the quality of life. It is expected that plastics will continue to grow
dynamically.

Legesse Adane and Diriba Muleta (2011) recommended in his study to educate the
public (1) not to use plastic bags, (2) to use eco-friendly alternative materials and (3)
city level legislation as a solution of serious environmental pollution and health
problems due to plastic products. Plastic bag wastes pose serious environmental
pollutions and health problems in humans and animals. The situation was worsened in

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economically disadvantaged countries like Ethiopia. The objective of this survey was
to assess usage of plastic bags and their environmental impacts in Jimma City of
Ethiopia. A semi-structured questionnaire was used to collect data from 230 randomly
selected respondents. The results indicated that the larger proportion (176, 76.52%) of
the respondents used plastic bags more frequently than any other plastic products
regardless of their age, occupation, and economic and educational status. Low price
(159, 69.13%) and easy availability (152, 66.08%) were the main reasons for the
widespread utilization of these products. Among the practices used for disposal of
plastic bag wastes, open dumping to surrounding areas (137, 59.56%) was a practice
widely used by almost all the residents of the city. Some of the major problems were
animal death (167, 72.60%), blockage of sewage lines (162, 70.43%), deterioration of
natural beauty of an environment (144, 62.60%) and human health problems (119,
51.73%). The findings of the present study also indicated that the trend of utilization
of plastic bags was increasing from time to time in spite of a good deal of awareness
of the residents about the adverse effects of these products. In order to reduce the
problems associated with plastic bag wastes, it was recommended to educate the
public (1) not to use plastic bags, and (2) to use eco-friendly alternative materials
(bags) made from clothes, natural fibers and paper. City level legislation was also
highly recommended against indiscriminate use and disposal of plastic bag wastes as
well as to end free distribution of plastic bags by retailers.

Hamid Minhas (2006) has drawn overall picture of the growth of Pakistan's economy
due to the growth in plastic industry in his study. Pakistan`s economy achieved an
impressive GDP growth rate of 8.4% in 2004-05, the highest in two decades and the
third fastest growing economy in Asia. Powering the economy with its superb
performance, the manufacturing sector accounted for 18.3% of GDP while registering
a growth of 12.5%. The co-related industries of Plastic, Printing & Packaging have
registered a phenomenal growth during the past few years where printing and graphic
arts industries were the second largest industries in terms of work force in Pakistan.
Pakistan's plastic industry was thriving at an average annual growth rate of 15% with
a total estimated production capacity of 624,200 M/T per annum. The industry
attracted investment amounting to more than US$ 260 billion, almost half of which
was foreign direct investment (FDI), all contributing to an exceptional export growth
by 35%. Particular growth was seen in exports of plastic components for the

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automobile industry. This growth happened, besides entrepreneurial efforts, due to
simplified tax policy on local production and reduction in import tariff on plastic raw
materials. The industry was contributing more than Rs7.5 billion annually to the
national exchequer in shape of custom duty, sales tax and income tax.

Dr. Zareena Begum I (2007) in her study ‘The Plastics and Environment’ she studied
the economic aspects of plastics and its impact on ecology. She has suggested some
solutions of plastics waste management and alternatives of plastic carry bags and
insisted for the improvement in the system of waste disposal management.

Aline Marques Rolim, Luis Felip Nascimento (2010) the goals of this paper were to
analyze post-consumer plastic recycling technological and market aspects and to
identify difficulties and benefits involved with this activity. These goals were being
reached trough case studies in Rio Grande do Sul, Brazil. The cases being studied
were post-consumer plastic recycling companies and companies that manufacture
end-use products from recycled plastics. This article describes their recycling
technology and some market aspects.

They have suggested on their study that post- consumer plastic recycling can be
sustainable development tool which help to solve the problems of solid waste. “Post-
consumer recycling was a technological trend that recovers the economic value from
objects discarded by consumers (e.g. bottles and packaging). It is a trend due to the
current solid waste problems. Traditional landfills were becoming saturated, scarce
and environmentally undesirable. Post-consumer plastic recycling can be a sustainable
development tool which helps to solve these problems since plastic consumption and
waste generation are increasing.

Piyush Kunnapallil & Sruthijith K K (2002) the paper examines the viability of the
command-and-control approach and that of the market-based alternatives in
addressing the environmental problems caused by plastics.

The methodology adopted in this paper was the following. First, the composition and
the life cycle of plastics were briefly discussed. Second, the benefits from plastics
were elucidated and their inevitability in India established. Third, the ecological
harms and health hazards caused by plastics were elaborated. Fourth, the viability of
command-and-control measures for addressing these harms and hazards was

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investigated. Finally, the competence of market-based solutions in this regard was
suggested.

J N Fobil and J N Hogarh (2009) in their study they have suggested the ppp levy
system to make the responsible three key stakeholders: the producer of the plastic, the
consumer of the plastic and appropriate authorities responsible for plastic waste
management. In principle, the proposed PPP levy system spreads the responsibility of
management of plastic waste among three key stakeholders: the producers of the
plastics (those with high propensity of ending up as litters), the consumers of the
plastics and the appropriate authorities responsible for plastic waste management. The
concept was to be able to create direct value in plastic wastes such that people will be
willing to collect them from the ground. Most waste scavengers in Accra (Ghana), for
instance, would quickly pick up metallic waste because locally it has ready market
value; they were locally recycled into coal-pots, metallic cooking pots and many other
useful metallic equipment or utensils. Bottles were also limited in the waste stream
because they were picked up and resold mostly for reuse. It was, therefore, envisaged
that if market value could be created in plastic waste, scavengers would start picking
them as well. It was concluded that itinerant waste buyers would start moving from
house to house to buy plastic waste.

Narayan, Priya (2001) analyzed Plastic waste management in India, its recycling
process and technology used in it and reported that the kind of recycling practiced in
India is quite different from what is practiced in the rest of the world, in that state-of-
the-art technologies are not employed here. The entire process of recycling is done on
the basis of experience. The starting point is the sorting of plastic waste. This is done
on the basis of colour, transparency, hardness, density and opacity of the scrap. The
sorted waste is then sent to the granulators. The technology employed is mechanical
with the traditional grinding and extrusion to obtain granules. The final stage is
reprocessing. The reprocessing sector can be divided into the granulators and the
converters. The granulators make granules from the plastic scrap and sell these
granules to the converters. The converters use these to make plastic products. A
majority of the units in the informal sector are the granulators that utilize their storage
shed in the houses to carry out the grinding. Such units are often located in slums, and
function with stolen power and single machine extruding units. Scrap storage is done

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in the backyards, and washing is done in open drums. Their activities are often termed
as backyard recycling. Conversion units are small industrial units that process the
granules into finished products. The technologies used in these industries are also old
and local.

Shah, Priya (2001) stated in their study “The Plastic Devil: Ecological Menace” that,
the rate of recycling in India is extremely high. About 40 percent of the total plastics
manufactured are sorted, collected and recycled as opposed to only 10-15 percent in
developed countries. Of the types of plastics recycled in India, PVC (polyvinyl
chloride) accounts for 45 percent, LDPE (low density polyethylene) for 25 percent,
HDPE (high density polyethylene) for 20 percent, PP (polypropylene) for 7.6 percent
and other polymers such as PS (polystyrene) for 2.4 percent. According to
manufacturers, almost all these types of waste can be recycled up to four or five
times. However, the quality of the recyclate deteriorates as additives and virgin
material are added to give it strength.

Tammemagi Hans (1999) “The Waste Crisis: Landfills, Incinerators and the Search
for a Sustainable Future” stated that incineration of plastic wastes also significantly
reduces the volume of waste requiring disposal. It is said that the volume reduction
brought about by incineration ranges from 80 to 95%. It is also a suitable option for
disposing waste that cannot be recycled further or is non-recyclable.

D`Mello, Pamela (1998) in their study alerts that faulty and inefficient way of waste
management causes severe health problem. It has been observed that due to an
inefficient and faulty waste collection and transit system, a large amount of plastic
waste fails to reach landfills or incinerators. Instead they are left behind to find their
way into the soil, the sewage system and the water bodies. They choke the gutters and
drains and during the monsoons flood streets causing severe health problems.

Amaral, Kimberly (1984) stated in their research “Plastics in Our Oceans” reported
that when plastics reach the rivers, seas and oceans, they pose a serious threat to
marine animals like sea turtles, seabirds and fish. The marine animals mistaking them
to be authentic food consume plastic objects and pellets, they can clog their intestines
leading to death out of starvation or malnutrition. This discomforting effect of plastics
on marine life came to fore in the late 1970s when scientists from the National Marine

22
Mammal Laboratory concluded that plastic entanglement was killing up to 40,000
seals a year.

Eskeland, Gunnar S and Emmanuel Jimenez (1992) studied the environmental harms
and health hazards caused the plastic product and provided some policy instrument
with taxonomy in their study. Having established the inevitability of plastics in India
and also having accepted the few environmental harms and health hazards caused by
them, the question that has to be tackled now is this—how should the environmental
problems caused by plastics be addressed, given that they cannot be completely done
away with? There are various policy instruments that can be employed for abating the
pollution in the developing countries caused by plastics.

Bast Joseph L, Hill Peter J and Rue Richard C backed the Government`s role as
regulator in their study: Government as Command and Control Regulator, reported
that the government’s role as command and control regulator involves the
promulgation and enforcement of rigid and uniform standards and the requirement of
specific behavior from various parties. It formulates a set of dos and don ts
that are backed by penalties (fines and imprisonment).

Burnett H Sterling (1996) reported in their study “Five Steps to Effective Regulatory
Reform” National Center for Policy Analysis that government imposes an enormous
burden on taxpayers. The entire course of promulgating and enforcing a command
and control regulation involves massive expenditure by the government. The
government begins by setting up a committee to analyze and recommend on an
environmental problem. The government ponders over the committee report and
tables a bill for consideration before the legislature. The legislature takes its own time
and passes the bill. The bill receives executive consent and becomes an Act.
Thereafter, agencies are set up and people recruited and equipped to ensure the
enforcement of the Act. From cradle to grave, a command and control regulation
requires heavy government expenditure and all of this is financed through the hard
earned money of taxpayers. In US, the private sector spent more than $668 billion
annually (i.e. more than $6,000 per household) till 1994 to comply with federal
regulations. Similarly, the cost of environmental regulation in US quadrupled between
1977 and 1994. US annually lost around $1.3 trillion of economic activity due to

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federal regulations till 1994. What is more, billions of dollars were spent by the
government to study, produce and enforce regulations.

Anderson, Terry & Donald Leal (1991) depicted in their study "Marketing Garbage:
The Solution to Pollution” that the system of tradable pollution permits allows more
flexibility than the current pollution control regime does. For instance, polluters
would be allowed to increase pollution at some location where water quality is high in
return for reducing pollution in an area where it is low. It also improves overall
efficiency. If a permit is held by a firm that is capable of reducing pollution at lower
cost than other firms, then a high cost firm could purchase that right to pollute from
the low cost firm. The low cost firm would then reduce the pollution level it had
previously been allowed to discharge and still make a profit from the sale of the
permit. Another value of this system is that the cost of achieving a given level of air
and water quality is much lower in this system than in other systems.

Segal Geoffrey F and Moor Adrian T (2000) in their study “Privatising Landfill:
Market Solutions for Solid-waste Disposal” suggested a system of government-
owned privately operated landfills, contracting out the service of waste disposal to
control solid –waste stream. In the light of these facts, entrustment of landfill
management to private parties even while retaining government ownership is a
feasible way of guaranteeing meticulous waste disposal. Under a system of
government-owned privately operated landfills, the local government will be
contracting out the service of solid waste disposal. The government will continue to
provide the service, but would not actually produce it. The government will have a
role in the sense that it would maintain all assets, oversee the system, maintain or
enforce regulatory authority, create the framework for running facilities, specify
controls on the solid-waste stream and take advantage of competitive opportunities to
save money and improve services. Besides this the government will maintain some
liabilities, remain responsible for most capital needs and incur the costs of framing
and monitoring contracts.

Swedish Waste Management (2000) Annual Publication of RVF reported that the final
stage in the life cycle of plastics is disposal. In India, there are three common ways of
getting rid off plastics; by dumping them in landfills, by burning them in incinerators
or by littering them. In the case of littering, plastic wastes fail to reach landfills or

24
incinerators. It is the improper way of disposing plastics and is identified as the cause
of manifold ecological problems. Incineration is a process in which plastic and other
wastes are burnt and the energy produced, as a result, is tapped. In Sweden, 95
percent of the heat generated from incineration is used for district central heating
thereby covering roughly ten per cent of the country's total need.

Freedonia Group Inc (2005) found that, Pipe demand in the US was expected to reach
more than 16 billion feet in 2005. Within the construction market, rapid growth is
expected in drainage/irrigation and drain/sewer applications. The eight leading plastic
pipe producers accounted for 34 percent of plastic pipe sales in 2000. Competitive
strategies used by pipe manufacturers include low cost leadership and development of
value-added products. Low cost leadership can be achieved through backward
integration, permitting ready access to stable and low-cost feedstock materials.
Sizable producers also have more control over additive and other costs by virtue of
their purchasing volume. Chevron Phillips Chemical is a major high density
polyethylene resin producer that is integrated downstream into high density
polyethylene pipe production. The firm produces drain, sewer and gas distribution
pipe using different densities of its MARLEX resins. Because of the commodity
nature of many plastic pipes, control of costs is crucial. Firms that purchase resins
from outside suppliers constantly strive to reduce raw materials.

Central Institute of Plastics Engineering & Technology (CIPET) (2011) reported there
are 25,000 to 30,000 plastic processing units in the country. Consumption of plastics
will be touching 4 million tons per annum in almost 2 years and is growing at a rate of
14 percent per annum.The plastic industry has been witnessing tremendous growth
due to the widening of its application spectrum and penetration of new generation
polymers in all the key sectors of Indian economy. In spite of all these records,
compared to world standards, the size of the Indian plastic industry is small. This is
because of the low per capita consumption of plastics, which is 3 kgs. as compared to
20 kgs., the global average. However, the per capita consumption of plastics is
expected to increase to 5.5 kgs by the year 2003 and this will be a tremendous boost
to the industry in the future.

The fastest growing applications are in packaging, and PET bottles. In building
construction, plastics are only 1-3 percent of the total material tonnage, but at least 10

25
percent of the total value, mainly in secondary construction. The fastest growing
plastic markets in building construction are pipes, windows, and doors and geo
textiles in public works. The electrical industry is another major consumer of plastics
with cables and wires. There is rapid growth of applications in agriculture and
consumer goods also.

CRISIL Report Indian Plastics Industry-Vision (2012) in its report on Indian Plastic
Industry – Vision 2012 reported that the domestic demand is growing at 9 % and it
has reached at 4.47 MMT in 2005.With GDP in the same period growing at 6.3 %, the
plastic industry has grown 1.5 times GDP. India`s per capita consumption is one fifth
of the world average, i.e world average is 25 kg and India is 5 kg.India holds immense
potential for use of plastic in agriculture and infrastructure. India has an ambitious
growth target of 4.1 % in agriculture.

According to the report of CRISIL, plasticulture can overcome many obstacles, by

yield improvement, water savings, soil conservation, protection against adverse
climate condition. By reducing the excise to 8 %, it will lead to reduction in cost and
will boost up demand for plasticulture applications.Plasticulture will contribute Rs
73,000 crores of agriculture GDP.Plastic is clearly superior for piping system.
Compared to plastic, other materials have higher frictional losses, resulting in more
power required for pumping. World plastic trade is growing at a steady 5 %. India
plastic exports have increased faster than the world average. World trade in plastics at
140 MMT by 2012 is a lucrative opportunity for India. India with a 1.5 % share in
world export volumes today is not in a position to capture this opportunity. India’s
increased focused on polymers as against proceeded plastic is contrary to global trade.

Malaysia- German Chamber of Commerce & Industry (2010) reported that with an
annual average of 20% export surplus, Malaysia is one of the 20 largest export nations
worldwide and is ranked 28th out of 121 countries by the “Global Enabling Trade
Report 2009”, published by the World Economic Forum. Malaysia’s total trade in
2008 amounted to RM 1,185 trillion, which depicts an increase of 6,8% compared to
2007 trade balance; exports even rose 9,6%, while total imports grew by 4.9% to RM
504.57 billion. But the weak global markets also affected Malaysian trade in 2009. In
the first 6 months of 2009, total trade accounted for RM 441.75 billions, decreasing of
about 30% in comparison to the first half of 2008. The plastics industry is one of the

26
most dynamic growth sectors within the Malaysian manufacturing sector. Currently
there are about 1,550 plastics products manufacturers in the country, with
employment totaling about 96,100 employees recording a decrease of 3,100 persons
compared with 2007. This decline can be attributed to continuous efforts by local
manufactures to use automation technology and high speed machines.The plastic
products industry has a broad and rapidly growing range of industrial and consumer
application. Nevertheless, the industry faces a number of major challenges, such as
declining market demand due to the impact of the global economic slowdown, high
production cost and environment concerns. Plastics used in toys, medical devices and
food containers have been regulated for more than two decades. With the introduction
of the Restriction on Hazardous Substances (RoHS), Waste Electrical and Electronics
Equipment (WEEE), Energy Using Products (EuP), End of Life Vehicle (ELV) and
Regulations such as Registration, Evaluation and Authorization of Chemical
Substances (REACH) by the EU and other developed economies, the use of plastics in
electrical and electronics equipment, parts and components, automotive parts and
components, and articles in general such as furniture, labels, shoes and packaging
have come under more stringent scrutiny and surveillance by these regulatory bodies.
Globalization poses both challenges and opportunities simultaneously for Malaysian
plastics manufacturers. Therefore, it was imperative for Malaysian plastics
manufacturers to sustain their competitiveness, through improved technologies and
enhanced skills and penetrating new markets in developed and developing economies.

Commission of the European Community (1999) the Study on "Financial costs of

Plastics Marking" was launched by the Commission of the European Communities
(DG-XI) in February 1999. COWI Consulting Engineers and Planners conducted the
study under the framework contract for "Scientific and Economic Assessment in
Relation to Community Waste Policy". The study had been carried out in the period
February 1999 to June 1999. The objective of the study was to determine the financial
costs for the EU plastic converter industry of using certain compulsory marking
schemes. The study includes also assessments of the impacts on sub-sectors within the
converter industry, impacts on the SME’s, trade implications and finally, the study
comprises a brief appraisal of the implications for the CEE accession countries. The
study did not include any considerations on the possible benefits from mandatory
marking.

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Background Recycling and reuse of plastic material can assist reducing the amounts
of plastic waste to dispose of, and reducing resource use in plastic production.
Mandatory marking of plastics presents a possible means for increasing the current
rates of recycling and reuse. Mandatory marking would however lead to cost
increases in the plastic converting industry. An assessment of these costs thus
constitutes an important input into the further considerations on mandatory marking
schemes as an appropriate means to increase recycling and reuse.

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