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R e f u R b i s h m e n t

E-scrap in Malaysia

Facts can often get in the way of a good story - and that is certainly true in the case of electronic scrap exports from the developed to the developing world. While the global media prefers to focus on the undoubted abuses within this trade, there are companies on both sides of this development divide that are engaged in an environmentally-sound exchange which helps satisfy a vast market requirement.
By Adam Minter


August 2011

f there are two sides to every story, then Net Peripheral - a Malaysian importer, refurbisher and marketer of used US computer monitors - is the flip-side to the well-known tale about developed world waste ending up in Asias digital dumps. Here, on a tropical afternoon at its Penang warehouse, a pallet of used computer monitors imported from the USA sits out of the sun after having arrived the previous day, the latest shipment from a US supplier who, over the course of four years, has sent roughly 300 000 monitors to this facility. Despite years of hype suggesting that electronics scrap exports to the developing world are environmentally destructive, the most notable characteristic of this facility is how unremarkable it is: monitors are documented, refurbished and repaired in a warehouse operation that meets strict ISO 14001 standards, and then are shipped out to customers in the developing world who cant afford to buy new. The only abuse around here might be the Britney Spears playing on a radio.

Twitter Revolution
But the most important side of the story is not in the developed world, but rather in places like Egypt, Indonesia, developing Africa and less developed parts of Malaysia where emerging middle classes are anxious to get on-line but cant afford new computers given percapita incomes that fall below - and sometimes well below - US$ 1000 per year. For example, according to people who directly supply used computer equipment to the Middle East, at least 60% of all computer purchases in parts of Egypt are second-hand. In other words, the so-called Twitter Revolution of 2011 didnt take place on iPhones, but rather on repaired, five- to ten-year-old desktops and monitors from exporters in the USA, the EU, Japan and elsewhere in the developed world.

He had noticed that scrap appliances - specifically televisions - which still had re-usable value were being labelled as hazardous wastes. The EPA basically wanted to treat CRTs like fluorescent light-bulbs, he recalls. The problem is that nobody upgrades a light-bulb. But you can upgrade and repair a television. In 2001, Mr Ingenthron decided to take a chance on a business he didnt completely understand, as he recalls it and shipped his first load of tested, working CRTs to China. Shortly thereafter, he received an invitation from the Guangzhou Electric Repair Research Institute to give a speech at a conference. He accepted on the condition that he would be given the opportunity to visit Chinese re-use and repair facilities.

Learning moment
What he saw, he tells me, was a learning moment. I stood inside one of these huge places, owned and run by mostly Taiwanese contract manufacturers, who were manufacturing monitors from old CRTs, he recalls. It was the same year that the world received some of its first disturbing images from Guiyu, the now notorious Southern Chinese electronics dumping ground. And it occurred to me that what we were starting to see in the media was grossly over-simplified, he says. Exported electronics, especially CRTs, were not just being dumped in China; they were also being repaired, refurbished and resold on an industrial scale in China. Soon after, Mr Ingenthron undertook a second trip to China, this time following up with some of his own CRT loads - and he had some additional learning moments. He elaborates: I saw that theyd take a CRT tested as working and theyd throw it on the floor. And theyd explain the technical reasons and I realised that they were way beyond us. Those reasons included incompatibilities between monitors manufactured for the US market and the intended re-use market, availability of repair kits, and age of the equipment (decade-old equipment isnt, generally, going to sell for re-use). But the opportunity was enormous. Re-use means that a US$ 110 picture tube for a monitor drops to US$ 10, he explains. The profits are huge.

Su Fung:

Ignoring the facts

To be sure, significant volumes of American electronic scrap still leave US ports for digital dumps in developing countries. But to suggest that such exports are the exclusive face of electronic waste exports to the developing world is to ignore and denigrate the developing worlds vast electronics re-use and refurbishment industry, its historic dependence upon imported materials, and its increasing dependence upon local sources. Its also to ignore important facts in the developed world. For example, as of November 2010, more than 100 US companies had filed written notifications with the US Environmental Protection Agency (EPA) certifying their intention to export intact, re-usable cathode ray tubes (CRTs) of the kind that Net Peripheral imports. Thats a significant number of companies, with significant volumes, risking serious legal sanction if they are not following through on their commitment. Likewise, a recent European Union-sponsored report on Ghanas imports of used electronics determined that 70 percent were, in fact, destined for the reuse and refurbishment market; only 15 percent ended up in the digitaldumps.

Often because something cant be exported for repair it ends up in a backyard, in China, being burnt.
Companies like Net Peripheral were developed to supply markets like these. And Malaysia, with some of the best downstream hazardous material recycling in Asia (and, arguably, the developing world), makes it easier - though by no means easy - for legitimate exporters to send material knowing that hazardous byproducts will be processed in a manner that meets international environmental standards. Its a closed loop so long as Malaysia has exporters willing to supply the high-quality monitors that the refurbishers require.

The CRT exporter

Robin Ingenthron, President of Vermont-based electronics recycler American Retroworks, spent much of the 1990s working as the Recycling Programs Director at the Massachusetts Department of Environmental Protection. But when his wife accepted a new job in rural Vermont, he decided to change direction and duly founded American Retroworks.

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Fair trade recycling

It was around this time that Mr Ingenthron began to think about applying the fair trade concept to recycling. The argument is simple: if you want to improve electronics recycling overseas, the best way to do it is through trade and civil contracts. Export bans on electronic scrap, Mr Ingenthron believes, merely serve to maintain the status quo by rewarding underground operations. Look, if Im contractually bound not to send Net Peripheral in Malaysia Apple monitors, or not to send them a set number of 21-inch monitors, then I dont. Thats fair trade. Fair trade aside, its worth noting that there is pre-existing international law on this issue - the Basel Convention on Transboundary Movements of Hazardous Wastes and their Disposal. Mr Ingenthron knows, respects and supports the law - and hes quick to point out that Annex IX of the Convention explicitly allows for the export of re-usable and repairable products. But even the strongest advocates for export concede that the treaty is anything but clear on the standards for re-use. And thats one reason why fair trade recycling went from concept to guiding principle.

option - but there are others, such as legal exports in line with Annex IX of the Basel Convention. Mr Ingenthrons job was to convince these companies that it was not only safe to send the re-usable units overseas, it was arguably better for the environment than sending them to a shredder. Nonetheless, it wasnt an easy sell to potential customers and members deeply concerned that theyd be painted as exporters of digital death to the developing world.

Membership musts
To allay those fears, WR3A incorporated

Robin Ingenthron:

. it occurred to me that what we were starting to see in the media was grossly over-simplified.

No loopholes
In October 2006, Mr Ingenthron formed the World Reuse, Repair and Recycling Association (WR3A). The welcome letter for members read in part: the goals of our association are to meet world demand for legitimate, reusable and recyclable commodities without creating a loophole for illegal dumping of toxic materials. The WR3A serves as a mechanism of cooperative marketing for used monitors and TVs WR3A recognises that export for reuse and repair is not only legal (Annex IX of the Basel Convention explicitly allows export for reuse and repair), it is a win-win for legitimate recyclers and those trying to close the Digital Divide overseas it makes internet access and computer skills more affordable in countries which are striving to enter the digital world. From the outset, Mr Ingenthron sought out reputable companies that had intact, working monitors to sell and wanted to do the right thing. Coverage of overseas digital dumps by American mainstream media had led many of these companies to believe that the only right thing to do was to sell their monitors to domestic processors. Infact, that is one possible legal

Robin Ingenthron, founder of American Retrowrks and the WR3A association.

numerous musts into its membership requirements and trading practices. First off, WR3A requires its members to maintain records of their waste stream management - and, in particular, what happens to the leaded glass contained in the non-working monitors that arent shipped overseas. The idea is simple: if theyre auditing what happens to the broken monitors that must be recycled domestically, then theyre probably honest operators who arent also shipping overseas. Second, WR3A requires extensive, detailed documentation of what its members send abroad and, following EPA regulations, requires the documentation to be maintained for three years. And third, WR3A takes the time to find and certify legitimate CRT re-use and repair companies who can provide reconciliation reports on precisely what happens to each shipped CRT. WR3As approach has been remarkably successful over the years, with as many as 14 major companies sending their repairable materials to developing countries under its auspices. I get them to sort out the good ones, Mr Ingenthron explains, and remove the Japanese models due to incompatibilities that complicate refurbishment, the models that cant be refurbished because of the screen burn, the ones that cant be upgraded because theyre too old, and so on and so forth. Mr Ingenthron doesnt go through this kind of trouble just because hes a nice guy. He does it because he has a civil contract with a buyer, Net Peripheral in Malaysia, who expects nothing less. Thats the basic idea behind fair trade recycling, he explains. You do it because you have to do it under civil law. My partners expect it. And Net Peripheral, as the exclusive importer for WR3As CRTs, has reason to expect a lot.

The CRT importer

The new 50.000 USA. m2 warehouse of American Retroworks in Vermont,

American Retroworks operates a dvision in Mexico. It is co-owned by Las Chicas Bravas, a womens collective created to bring jobs to the area.

Over the last twenty years, the Malaysian government has actively encouraged manufacturing investment in the Penang region, and now - among Malaysians, at least - its well known for fast growth, hosting high-tech manufacturers like Sony, Dell and Intel. That critical mass of foreign high-tech manufacturing - and foreign environmental compliance departments - is perhaps the key reason why Penang has become something of a centre for electronic waste recycling in South East Asia. In an era of intense government and media scrutiny of waste management in the

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WR3A and Net Peripheral have started refurbishment of used flatpanel LCD monitors.

developing world, major PC manufacturers simply arent going to dump their electronics without a good downstream audit of whats going to happen to it. Likewise, many of these manufacturers are increasingly interested in receiving at least some of their scrap components back for re-use (for example, hard drive manufacturers buy back rare earth magnets from disassembled defective drives). Most of Penangs electronic waste facilities were established, at least in part, to meet this market. Of course, not every Penang electronics recycler is guaranteed to be doing the right thing, and many dont. But when they do right, the standard is exceptionally high.

Top reputation
And so that is why I was visiting Net Peripheral. As reputations go, they dont come much better. Allen Liu, the companys President, and Managing Director Su Fung Ow Young (she prefers to be known as Fung) meet me in a small conference room above their Penang factory. Mrs Fung places a pile of binder notebooks on the table containing hundreds of sorting reports showing how WR3As exported CRTs were classified upon arrival in Penang. Each is classified by size, graded by the condition of the case and screen, and sorted according to whether they require repair or whether they are un-repairable. Everything that comes in is recorded, she tells me. Sometimes they come in better than Robin (Mr Ingenthron) expected, and sometimes worse. Downstairs, Mrs Fung leads me into the companys 21 000 m warehouse where newlyarrived monitors have letters and numbers written in crayon across their screens. The grading system is precise and detailed. A grade A computer is in excellent condition; a B grade might mean theres some scuffing on the case; and so on.

CRT screens are graded by size and condition.

CRT cases and methodically clipping, poking and soldering the electronics on the inside, repairing and replacing electronics that failed for whatever reason in the USA. They work like surgeons, removing and replacing parts - some ordered from factories in Taiwan, and some recovered from monitors that ultimately were broken down for recycling - until the monitors innards work as well as they did when it was new. Theyve been here for ten years, Mr Liu tells me.I trained them. Migrants are common in Malaysias re-use and refurbishment industry, just like its scrap industry, in part because they tend to remain with employers longer. Of Net Peripherals roughly 60 employees, most are migrants, with a large percentage from Bangladesh. Mr Liu is a migrant too - from Taipei, Taiwan. He worked in the display industry for many years until the establishment of Net Peripheral in Indonesia nine years ago. The business didnt remain there for long: Indonesia, under pressure from activists, has been more ready than Malaysia to crack down on legal CRT imports. Mr Liu set up the Penang plant in Malaysia to protect ourselves. In addition, the company maintains a local service centre and two distribution centres one in Penang and the other in Indonesia.

Shipped with warranties

Across the Net Peripheral plant, two workers in gloves place CRTs removed from their cases on to a conveyor belt where they await a worker in a face-mask who polishes out scuffs and chips from the glass screen, all the while carefully maintaining the integrity of the tube and the electron gun which is partly encased during this process. These polished CRTs are then taken across the factory and placed into new or newly-refurbished cases, upgraded with new electronics, and then tested for white balance and blurring. If and when everything checks out, they are shipped out to customers - complete with warranties. Mrs Fung is in charge of the sales side of the business and shes quick to tell me that, before the company offered warranties on its goods, she had difficulty selling the monitors. You have to be able to guarantee that your quality is as good as new, she insists. Otherwise youll have trouble. Also because the Chinese are in this business, and so many of their monitors are defective its a real competitive advantage. She estimates that as many as 40% of refurbished Chinese monitors are defective - and the number appears to be rising.

Scratched flat panel display casings are painted.

Damaged screens are upgraded with new electronics.

Blurring problems
Refurbishment starts right away - if theres a scuff on the case, workers polish it out. But refurbishment isnt just a matter of touch-ups: a nearby table is covered with monitors undergoing a burn-in that allows Net Peripheral employees to judge whether or not there are blurring problems. This is the most common issue upon arrival and is 100% repairable. And beyond the burn-in area on the day that I visit, two Indonesian technicians are busy opening

Downstream hazardous CRT wastes are sent to licensed processing facilities.

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Scavenging CRTs
Before shipping for recycling, Net Peripheral will first attempt to scavenge the dead CRTs for reusable parts. After that, anything hazardous (such as CRT glass) is reported to the environmental department, thus setting off a clock requiring proper disposal within 90 days. For WR3As reporting and record-keeping purposes, the leaded CRT glass is the key hazardous waste that must be tracked. Its not easy: in many countries, this glass is such an expensive item to recycle that processors choose to landfill it instead. Fortunately for Net Peripheral, southern Malaysia is home to a CRT glass recycling facility where the material is re-melted into glass for new CRTs. The plant, operated as a joint venture by Samsung and Corning, provides Net Peripheral and, by extension, WR3A with a world-class, environmentally sound destination - for now, at least. Net Peripheral has been a certified collector for this world-class facility since 2007. Net Peripherals other downstream CRT wastes - in particular, printed circuit boards - are sent to one of two facilities, both of which are licensed to accept and process scheduled wastes by Malaysias Department of the Environment. These are Kualiti Alam, a massive hazardous waste processing facility in Kuala Lumpur, and Shan Poornam Metals, one of the most innovative and promising electronics and hazardous materials recyclers in Asia today.

client who has a tender to send CRTs from Malaysia to India for repair and re-use. However, because India has strict regulations on the import of used CRTs, the client sends them first to Penang where they are repaired at Net Peripheral; they are then sent to India, avoiding any issues at the ports. But the most difficult part of refurbishing, Mrs Fung sighs, is knowing that you have a good part but the trend for that kind of monitor is over for the markets in which Net Peripheral operates. In that case, perfectly good CRTs end up in the recycling bin. Now if you were allowed

to import repairable CRTs into Indonesia, where the practice is now prohibited, then you would have a lot less waste, she says. But these countries are closing their doors to it! Mrs Fung, as well as others well-versed in the industry, blame a series of factors for the closed doors, but two culprits stand out: misguided activists; and economic interests that want to enforce planned obsolescence and to encourage the purchase of new electronics. Working together, these two forces can be almost unstoppable.

CRT fade-out
Ironically, in the immediate term, the biggest threat to Net Peripheral and WR3A is the weakening market for CRTs. With the introduction of flat-screen monitors and HDTV, demand for traditional CRTs has dropped precipitously over the last 18 months, especially in the developing world. This problem is exacerbated by used CRT import bans in countries where demand for low-cost equipment could still support a green business like Net Peripheral. As a result, WR3A and Net Peripheral have started working on used flat-panel LCD monitors despite their small margins and new challenges (including the mercury-containing bulbs that illuminate the screens). Meanwhile, Net Peripheral has become active in refurbished computers although it doesnt yet import from WR3A. The downstream reconciliation process is much more difficult than with CRT glass going just to Samsung Corning, Mr Ingenthron explains. What isnt changing is that the developing world wants computers and internet access, and for the most part the people who form the developing world cant afford new. In China, home to a population of internet users who exceed the total population of the USA, the second-hand computer markets - stocked with used flatscreens and PCs originally manufactured for domestic and international markets - are invariably bigger, busier and more crowded than what youll find at a traditional home electronics retailer. Somebody overseas is supplying those facilities, and although its often hard to locate them, one thing is for certain: they are not shipping to Asias digital dumps.
Adam Minter is a Shanghai-based journalist who writes about business and culture for US and European publications. He also maintains a blog at:

Su Fung:

You have to be able to guarantee that your quality is as good as new...

Tough sales pitch

Boycotts dont change things, Mr Ingenthron tells me. You have to do it in a more proactive way, using civil agreements, using business. Its a tough sales pitch if your customers are afraid of being demonised for exporting harm, and re-use is rarely, if ever, mentioned by the media as a perfectly legal, legitimate and common reason for exporting old electronics to the developing world. Mrs Fung, while giving me a tour of Penangs industrial zones, groans with frustration at the South East Asian markets closed to imports of used electronics, irrespective of whether they are repairable. This grey area, it causes a lot of waste, she says. Often because something cant be exported for repair it ends up in a backyard, in China, being burnt. And thats good for the environment? Occasionally, Net Peripheral is in a position to help. Mrs Fung tells me, for example, about a

From left: Company President Allen Liu and Su Fung, Managing Director.

As an additional small venture, Net Pheriphalhas its own refurbished electronics store.

Of Net Peripherals roughly 60 employees, most are migrants, with a large percentage from Bangladesh and Indonesia.

August 2011