German firms have a lot to offer, but financing necessary changes in the industry will be an ongoing challenge
Like a house guest who stays too long, waste management is a problem that just won’t go away. To that end, nine German and other European companies took part in a late-October trade mission to Cambodia to learn about the challenges facing the country’s waste-management industry and what opportunities exist for their companies to impact its development.
Their ability to make an enduring impact, however, will be contingent on whether Cambodia can resolve the persistent financial struggles that have plagued the sector.
Demands are growing at an ever-accelerating rate. In 2021, the Phnom Penh Capital Administration reported collecting 1,000 tonnes of waste daily; two years later, that number has grown to 3,700 tonnes. The system, which faces myriad deep-seated structural challenges, has struggled to keep up.
Three challenges in particular rose to the fore during the mission: waste segregation, insufficient infrastructure for waste processing and recycling, and a lack of financing for a waste-collection ecosystem to be self-sustaining.
“If we can manage to establish the separate collection of waste, then we can do everything. Everything becomes possible,“ said Jürgen Stäudel, a strategic planning expert in waste management for German development agency GIZ, embedded with Cambodia’s Ministry of Environment.
Challenges begin at the household level, where efforts to encourage the segregation of waste have so far fallen flat. Food waste, electronics and recyclables end up in landfills, dramatically reducing the operational lives of those disposal areas. Overcoming this hurdle is essential to further developing recycling, composting, and all other circular economy initiatives, Stäudel said.
Disposing such high amounts of organic waste in landfills represents an unused opportunity, said GIZ Business Scout for Development Christoph Janensch.
“The Cambodian agriculture sector requires fertiliser,” he noted. “So Cambodia imports industrial fertiliser with limited own organic fertiliser production, because most organic waste ends up in the landfills.”’
Like its regional neighbours, Cambodia imports the vast majority of its fertiliser, leaving farmers vulnerable when external market and geopolitical factors, such as Russia’s invasion of Ukraine, cause fertiliser prices to spike. As a growing demand for fertiliser results from the likely impact of climate change upon the soil, this import dependency will continue to negatively affect food security.
A nascent composting industry does exist in Cambodia, including a substantial composting plant in Battambang. However, these initiatives are limited by the extent to which they can acquire waste that is uncontaminated by non-organic substances.
“Once the waste is mixed, it’s too expensive to sort it under current conditions,” said Stäudel.
Similar problems inhibit the country’s potential to use its waste to generate electricity. It is possible to convert waste into a refuse-derived fuel and incinerate it to create energy, but without prior sorting of the waste, such a process is difficult.
“Not segregating waste at the household level is a problem, as you have a lot of organic waste in the mix and organic waste is wet,” said Janensch. “Wet waste is not a good refuse-derived fuel.”
Compounding the issue of unsorted waste is the inability to generate enough revenue from energy sales to cover operational costs. Chinese investment companies have previously explored building waste-to-energy plants, but they ultimately abandoned the projects when it became clear that end-user payments would be insufficient to cover the costs of waste collection, according to an upcoming brief by GIZ.
Indeed, the need for a self-sustaining model to finance the country’s waste-management systems underpins all challenges in the sector.
“The problem is, if you start a waste-management system based on subsidies, taxes or funding from the government … as soon as these funding [sources] are gone, the systems are gone as well,“ said Florian Werthmann, founder and managing director of circular economy and consulting firm Ecologicon.
Consistent collection of waste-management fees has become a “hen and egg” for Cambodia, said Stäudel.
“We sometimes have the problem that citizens complain about the service, and then they don’t pay,” he noted. The result is that waste-management companies in Cambodia are often left without capital to improve their services, and thus are forced to operate using machinery that could at best be described as vintage.
Cambodia also currently lacks a mandatory extended producer responsibility (EPR) scheme, which would require companies manufacturing waste-generating products to pay for some of the disposal cost for that waste. While pilot projects in this area have been launched by organisations such as GIZ and UNDP, the system is still in its early stages and remains voluntary in character. Along with improvements in household waste fee collection, widespread EPR adoption will be necessary to make Cambodia’s waste-management industry sustainable and financially self-sufficient, noted Janensch.
“Without such a system, there is simply no viable business case for waste management,” he said. “If you are a company that actually manages waste, that actually collects it and has to dispose of it, you will eventually require both, a properly set up fee-based system for the households and extended producer responsibility for the corporate waste generators.”
These struggles in financing are reflected in Cambodia’s infrastructure deficits, especially when it comes to recycling. According to GIZ’s report, only 6.4 percent of the recyclable waste generated in 2022 was recycled within the country, with most of the rest exported to neighbouring Vietnam and Thailand. Cambodia will not be able to rely on its neighbours to manage its recycling needs for much longer, however.
“With Thailand and Vietnam closing their borders for recyclable plastic waste [in 2025], Cambodia will either have to find new export markets or set up a plastic recycling system, which includes e.g. bottle-to-bottle recycling plants for PET bottles,” said Stefan Bonin, managing director at Rieckermann Machinery and Industrial Tools.
Some small-scale operations to address this challenge have been set up already, doing very basic processing necessary to turn recyclable plastics into plastic granules, soft polyethylene staple fibre or other exportable raw materials, noted Janensch. Large-scale solutions would still require concerted effort and investment – in order to transform Cambodia’s recycling sector from a series of individual companies and initiatives into something more systematic. If Cambodia fails to do so, its recyclables will end up as trash, languishing in landfills rather than an exploitable resource.
German companies have both the expertise and the technology to make substantial improvements in Cambodian waste management. From recycling machinery to proper insulation of landfills to prevent groundwater pollution, German companies offer high-quality solutions. Where cost is prohibitive, well-maintained secondhand equipment is available. Indeed, Germany is a world leader when it comes to recycling and waste management.
But all these solutions will ultimately require funding from development banks, such as the World Bank or Asian Development Bank, to make them viable. Until the issues of self-sufficient financing and waste separation have been addressed, a long-term solution to Cambodia’s waste-management issues will remain out of reach.