100 million customers await you!

The S a n i t a t i o n B u s i n e s s

100 MILLIONCUSTOMERS

AWAIT YOU!

The Sanitation Business

100 MILLION CUSTOMERS AWAIT YOU!

FIRST EDITIONApril 2008

100 Million Customers Await You! i

FORE

WOR

D100

MILL

ION

CUST

OMER

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AIT

YOU!

FIRST EDITION 2008

Published by:

The National Development Planning Agency,Ministry of Home Affairs, Ministry of Health,Ministry of Public Works, Ministry of Industry,Ministry of Finance, andMinistry of the Environment,

Working with Water and Sanitation Program - East Asia and thePacific (WSP-EAP), World Bank through the Indonesia SanitationSector Development Program (ISSDP).

Co-funded by:

Government of the Netherlandsand Government of Sweden.

ACKN

OWLE

DGM

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Indonesia Sanitation Sector Development Programii

Content and input:

Nugroho Tri Utomo (National Development Planning Agency) ; Sanitation Working Group,comprising members representing the National Development Planning Agency, Ministry ofHome Affairs, Ministry of Health, Ministry of Public Works, Ministry of Industry, Ministryof Finance, and Ministry of the Environment; and members of the ISSDP consultant team (J.Sinarko Wibowo, Hony Irawan, and others).

Photos:I S S D P, WA S P O L A , W S P - E A P, W i n a r k o H a d i , H e r i W i b o w o .

That’s right! There really are 100 million potential customers waiting for you. Data show that45% of Indonesian people do not have access to sanitation services. That’s more than 100million people. The government can’t necessarily deal with this by it self. Like it or not, peopleare waiting for your participation in providing sanitation services. As a business venture, ofcourse.

If we rely on the government to improve and develop sanitation facilities, it’s going to be along wait. Government efforts are limited by financial constraints. Existing facilities cannotbe properly maintained. And some facilities in disrepair and abandoned because they areunusable.

Now is the time for the private sector to get involved in sanitation. Perhaps the sanitationsector hasn’t seemed to be a very attractive prospect. Low status, small profits. But on thecontrary this business is actually just as good as any other business. This business is profitable,it benefits lots of ordinary people, and it helps create jobs. Your business could even givesanitation an improved image in your area.

It should be noted that the idea that sanitation is only for the poor is incorrect. Your customerswill be from the middle to upper classes too. They need sanitation services as well. Likegarbage transportation and emptying out septic tanks, for instance.

This book looks at a wide variety of initiatives that could be managed by the private sector.And at the back of the book, there’s a checklist of reasons why you should get involved in thesanitation business. After all, the purpose of this book is to encourage you to consider enteringthe sanitation business.

Budi HidayatDirector of Settlements and Housing – National Development Planning Agency

100 Million Customers Await You! iii

CON

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That’s Right! They’re Waiting for You 1

01. Public WCs 6

02. Septic Tanks 8

03. Emptying Septic Tanks 10

04. Sewerage Systems 12

05. Sewage Treatment 14

06. Garbage Transportation 16

07. Composting 18

08. Recycling 20

09. Final Disposal Site 22

10. Energy from Waste 24

Don’t Worry, You’re Not Alone 26

Design:

Qipra Galang Kualita, PT

Rudy Yuwono - Laksmi Wardhani - UtariNinghadiyati (concept and text).

M Taufik Sugandi - Endang Sunandar- Zarkonie (layout and graphics).

Hidayah Pujiwati - Echi Desvita – SalidaArianti (editorial support).

Translated from Bahasa Indonesia

Indonesia Sanitation Sector Development Programiv 100 Million Customers Await You! 1

THAT’S RIGHT!THEY’RE WAITING FOR You

In cities, there are actually millions of toilets that are not connected to septic

tanks or sewerage systems. More than 50% of garbage is not collected either.

A big problem? Yes, but it is also a big opportunity for you. And now is the time

for you to start a sanitation business. Don’t delay, make your move. There are

lots of opportunities for you to venture into. It’s profitable and it’s sustainable.

And prospects in this business will only get brighter.

To achieve the Millennium Development Goals (MDGs), especially for increased public access to improved

sanitation facilities, we need to invest Rp 5 trillion (US$ 530 million) per year. It would be too much to

expect the government to do that alone. It would be even more unrealistic to expect community-based

initiatives to fill the gap. This is an opportunity for the private sector to make up the investment shortfall.

Your entry—and that of other entrepreneurs—into the sanitation sector has been long awaited. We

believe that you can bring a breath of fresh air to the sector. As well as bringing investment, you can

bring more effective and efficient technological approaches. Sanitation facilities will be built to comfort,

health and environmental quality standards. Your competition with other private companies will create a climate

conducive to the development of better sanitation services. That competition will also stimulate innovation,

encouraging you and other businesses to offer innovative services.

The sanitation business can give you large profits. Just take a look at other companies involved in this business.

One is John Peter Simanungkalit in Bandung (see photo). With starting capital of just Rp 4 million (US$

430) in 1989, his garbage business now turns over more than Rp 1 billion (approximately US$110,000) a

month. There are success stories in household waste collection, too. As well as being profitable,

the sanitation business is sustainable. People will always throw away rubbish, urinate

and defecate.

Indonesia Sanitation Sector Development Program2

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Photo: Qipra Collection

The sanitation business is proven profitable, even though the

management is still generally done in the conventional ways. With

more efficient technologies and a more professional approach to

management, the sanitation business could yield even greater profits.

With an investment of Rp 4 million (US$430) in 1989, John Peter started up his business

trading in waste plastic, selling back scrap plastic from wastepickers to plastics dealers.

Since getting an extruder that turns scrap plastic into pellets, he has been selling direct to

factories. His revenues rocketed. Scrap plastic costs only Rp 400 a kilo and the pellets sell

for Rp 8,000 (US$0.85) a kilo. Thanks to this innovation, his business regularly turns over

more than Rp 1 billion (US$110,000) a month.

100 Million Customers Await You! 3

Private sector participation in the sanitation industry should

open up new job opportunities, including for less educated and

unskilled workers.

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THE OPPORTUNITIES KEEPON GROWINGOpportunities for private enterprise in the sanitation sector have never been accurately

calculated. But there’s no doubt that the opportunities are great. Overall, 45% of Indonesians,

in urban and rural areas, do not have access to proper toilets. Even more do not have access

to garbage services. So, it would be no exaggeration to say that the sanitation business in

Indonesia has 100 million potential customers.

The potential of the sanitation business keeps on growing with increased

public demand for better sanitation services. In the past, people were happy

if their city had a final disposal site. Even an open site was better than

nothing. But today, people want their final disposal sites to be sanitary

landfills. This is a golden opportunity for the private sector. Better quality

services are a competitive advantage for private companies.

Opportunities in the sanitation business come not only from government,

but from the private sector too. In the property sector, building managers

usually contract out management of their toilets. Opportunities in the

sanitation business come from the public as well, for example, the business

of emptying out household septic tanks.

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The sanitation business, especially the recycling business, is expanding

with people’s growing awareness of the environment. More and more

factories are required to maximize their use of recycled materials in

the manufacture of their products.


PUBLIC WCs

COMPOSTING

FINAL DISPOSAL SITE

SEWERAGE SYSTEM

SEWAGE TREATMENT

RECYCLING


GARBAGE COLLECTION

EMPTYING OUT SEPTIC TANKS

GARBAGE TRANSPORTATION

divided into the garbage business and the domestic

wastewater business. Any or all of the activities shown

in the picture could be your sanitation business. There

are lots of options available. You could be a planning

consultant or a sanitation facility building contractor. Or

a producer or supplier of sanitation equipment. If you

want to get even more involved, you could be an operator

or manager of a sanitation facility. Or even just as an

investor.

T he sanitation business can be defined as services

or production operations associated with improving

sanitation conditions. The business is generally


To make your business more profitable, try to make sure that your public latrines

are in an area where factory workers live in rented houses. And you should offer

something extra, hot water, for instance, or a larger MCK (bathing, washing and

toilet facility), which makes it easier for mothers to bathe their children. Another

opportunity you could look into is leasing mobile toi lets (see picture).

The Figures

Mobile toilets are in demand for outdoor events, such as exhibitions and concerts. One mobile

toilet, with six stalls, leases for up to Rp 1 million (US$108) a day. To purchase a mobile unit

outright is quite expensive, at around Rp 50 million (US$5,500) a unit. There are already several

local Indonesian manufacturers producing mobile toilets.

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Location & Innovation! To make sure that lots of people visit your toilets, choose a busy location like a bus terminalor a train station. You need to be innovative too. For example, you may choose to go for a luxury design with allmodern conveniences, like automatic flushing and disinfecting.

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There’s no doubt the business of public WCs in busy places is

financially tempting. They get more users a day than public latrines

in residential areas. And the users can afford to pay more. Rp 1,000

(US$ 0.11) to go to the toilet and Rp 2,000 (US$ 0.22) for a bath are

reasonable charges. If the public WC offers hot water, you can charge

up to Rp 3,500 (US$ 0.40). Your operating expenses could be less

than Rp 5 million (US$ 540) a month. A public toilet with 10 to 20

stalls could bring in Rp 1 million (US$ 108) a day. The cost of the

lease with the building owner varies from place to place. Some are

Rp 30 million (US$ 3,260) a year.


WCsPUBLIC

There is a need for public WCs. Especially in busy public places like train stations, airports, shopping centers

and the like. When nature calls, visitors to these places need public toilets. Workers in these places need

them too. People who live in houses that don’t have toilets need public WCs as well. And in Indonesia, there

are still numerous houses without toilets.

There is a variety of opportunities for you in the public WC business. One is managing public toilets under

contract. Another is leasing the facilities from the owner. You cover the operating costs, and in return you

get to keep the tariffs collected from users.

Not all property owners have public WCs that are ready for you to lease. Some property owners just rent out

unutilized plots of land. With an agreement in place, you are then free to build and operate public toilets on

this land. After a few years of operation as agreed the management of the toilets reverts to the land owners.

This kind of cooperation is called Build-Operate-Transfer or BOT.

There are opportunities to explore in building and operating public latrines in residential areas too. But revenues

might be lower than that of public WCs.

Public WCs are also often called toilets. Or if we want to be

sophisticated, they are called restrooms. In residential areas, if they

are used for bathing and washing, they are called “Mandi-Cuci-Kakus”

(Bathing, Washing-Toilet) or popularly referred to as “MCK”. You

might never have imagined that the WC business can be very

profitable. A discrete location (but well-sign posted) has proven to

be more successful.

One company operating in the business of public WCs in shopping centers in Bandung is PT Masadenta.Some of the toilets the company operates are in Kings Shopping Center and Plaza Parahyangan. They contractthe WCs from the building owners. PT Masadenta has been in business for more than 20 years, and hasmore than 600 employees.

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TANKSSEPTIC

Although there are national standards, most septic tanks are still not designed or built

to proper standards. If the government enforced compliance to the standards almost all

septic tanks in Indonesia would likely have to be reconstructed. This means enormous

market potential for those in the septic tank business. Just imagine, in Jakarta and

surrounding areas alone there are more than 1 million septic tanks. That doesn’t even

include new houses and buildings that are under construction. They need septic tanks,

too. They have no choice—Jakarta does not have adequate sewerage systems to

accommodate the need.

There are lots of ways you can take advantage of these opportunities in the septic tank

business. You could offer septic tank construction services. Of course your services would

have to differ from those offered by an ordinary builder. At the very least you should have

consultants ready to help customers choose the right type and size of septic tank. You

also need to give a guarantee on the septic tanks that you build. Most importantly, you

must guarantee that they function effectively and meet national standards.

Most middle-upper class homes and buildings in urban areas

in Indonesia have septic tanks. Unfortunately most of these

septic tanks are not properly designed, built or maintained.

If the standards for proper septic tanks are enforced, demand

for properly built septic tanks will significantly increase.

Nowadays there are lots of factory-produced septic tanks

on the market. Technological innovations are making them

even more effective.

2PT. Induro International is Southeast Asia’s top manufacturer of fiberglass reinforced plastics (FRP). Originallyset up in 1974 as PT Induro Fiberglass, the company changed its name to PT Induro International to get afoothold in the international market. The company has more than 30 years of experience in the manufactureof products from FRP, including processing tanks, vessels, scrubbers, fume stacks, chemical pipes, fittings& ducting, public transport components, automotive components, septic tanks, doors and toilets. PT InduroInternational made its debut on the Southeast Asian market in 1996. The company won ISO 9001 and ISO9001:2000 certification in 1999 and 2000, and is now moving into marketing consumer products.

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Another way of taking advantage of the opportunities in this business is to

get into the manufacturing of septic tanks (see photo). There is huge demand

for factory-made septic tanks nowadays. They are not only easy and quick to

install, but these products also scarcely ever leak. They also come in a variety

of sizes. There are small ones for houses and larger ones for businesses or

buildings. There are all sorts of innovations that could enhance your product

performance and effectiveness. For example, integrating bio-filters into the

septic tanks so that organic matter settles quickly, or incorporating chlorification

so that seepage outflow is bacteria-free.

There are strategies to ensure the loyalty of your customers. When you have

finished building or installing a septic tank in someone’s house, get him or

her to sign up for after sales maintenance services. For a monthly fee, your

inspectors will make regular check-ups. As well as ensuring that the septic tank

is not leaking, they will check its performance. Customers will also have their

septic tanks cleaned out regularly, at no extra charge.


Nowadays, in shops selling sanitation equipment, you’ll find factory-produced septic tanks.They are usually blue and made of fiberglass. At the top there’s a dark-colored lid. At firstglance, it looks like a water collection tank. These products are an alternative to conventional,brick-built septic tanks. They vary in size. The smallest is 1,000 liters and costs close to Rp3 million (US$326). There’s a 3,000-liter model too, at Rp 6 million (US$352).

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Materials and technology innovations have

made mass-produced septic tanks more

effective and practical. The spherical shape

al lows for better mix ing of sewage.

Polyethylene plastic construction makes for

lighter, more robust septic tanks.

Photo: Internet


SEPTIC TANKSEmptying

Septic tank emptying services are in demand. How could they not be? Almost 65% of homes in urban

areas use septic tanks. And once every 1-3 years, the sewage in the septic tank has to be cleaned out.

Here is a great opportunity for you.

You could get into the business as a provider of septic tank emptying services. For that, you need

sewage trucks and people willing to go out to people’s houses to pump out their septic tanks when

they are full. Your job is simply to pump the sewage from the septic tank and dispose of it at the

nearest sewage treatment plant. That’s it. In one day, one of your trucks could clean out up to four

household septic tanks.

As well as making sure there is no competition in your target area, there are several other things that

you need to think about before getting into this business. Firstly, the distance to the sewage treatment

plant from your target areas. The closer the sewage treatment plant, the more customers you can

potentially serve. Secondly, do you need to work with the local sanitation department? If so, there may

be local fees you need to pay.

There are lots of septic tanks in Indonesia, and they need to

be cleaned out regularly. This is creates a huge business

opportunity. Many provide this service, but there are still lots

of openings. And if you want to be more competitive, offer

an integrated service.

3Yustarman’s decision to open a septic tank emptying business turned out to be a good one. His growingbusiness generates a monthly profit of Rp 8 million (US$870), from the Rp 120,000- 130,000 (US$ 13-14)payments from his customers. Almost the same as his initial investment of just Rp 10 million (US$1090).He used this money to buy a pump, compressor and vacuum. Yustaram doesn’t have his own vehicles—heworks together with another company. But has managed to open two branches, in Kalibata, South Jakarta,and Rawamangung, East Jakarta. Head office is in Tomang in West Jakarta. He has 20 employees who helprun the day-to-day business of serving customers.

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The FiguresIn the septic tank emptying business, all your revenues come from

the people whose septic tanks you clean out. The tariff varies between

Rp 200,000-400,000 (US$ 22–44) per clean out, depending on the

volume of the septic tank and the distance from the house to the

sewage treatment unit. There are plenty of openings in this business.

If in one month, one truck pumps out 80 septic tanks, you pocket

around Rp 30 million on each truck you operate. On top of the cost

of leasing or loan repayments on the truck, you will have to pay your

workers’ wages, fuel costs and fees. Another cost is for disposal of

the sewage at the sewage treatment plant, which around Rp 15,000-

20,000 (US$ 1.60 – 2.20) per truck.

If you want it simpler, provide sewage trucks for local governments to lease. In some cities,

private companies simply rent out sewage suction trucks to the governments. Financial constraints

means that governments cannot afford to buy new trucks. Leasing suction trucks is quite

expensive, at around Rp 3.5 million–10 million (US$ 380 - 1,080) a month, per truck, depending

on the type and number of trucks leased. The larger the capacity, the higher the rental fee.

Jawa Tengah provincial government spends more than Rp 400 million (US$ 43,500) for a year’s

lease on three medium-sized suction trucks.

There are still plenty of opportunities in the septic tank emptying business, but you should

differentiate your services. Offer septic tank cleaning services as a part of a septic tank

maintenance package. The service you offer is total septic tank inspection and maintenance.

That way, you can ensure that septic tanks are functioning properly. You record the customer’s

details, including the number of people living in the house and the specifications of the septic

tank. Every time you clean it out, you make a note of the date. Many companies in other

countries offer this kind of service. One is Indah Water Consortium Sdn Bhd in Malaysia.

Especially for houses and buildings located outside its sewerage system. With this kind of

service, you’ll have loyal customers.

Integrated services, such as those offered by Indah Water, attract monthly customer

fees. They are around RM 6.00 a month for a simple house—about Rp 200,000 (US$ 22)

a year. Commercial buildings pay RM 25.00 a month, or around Rp 800,000 (US$ 87) a

year. For this fee, septic tanks are checked once a month, and septic tanks are cleaned

out once every two years. There is a surcharge for houses and buildings that produce

more than a set volume of sewage. These figures are obviously much more attractive

than the figures for conventional septic tank cleaning. This company uses very hi-tech

sewage trucks. The volume pumped out can be measured accurately, and only sewage

that has settled in the bottom of the septic tank is pumped out. In Indonesia, the entire

contents of the tank are pumped out.


SYSTEMSSEWERAGE

The development of a sewerage system requires very large investment. Especially sewerage systems on a city scale. As

an example, construction of a sewerage system for 10,000 homes in Denpasar cost more than Rp 5 trillion (US$ 530 million).

So, as long as septic tanks are allowed, sewerage systems won’t be popular. Limits on septic tanks are clearly needed

for the sewerage system business to grow.

Fancy getting involved? There are several pathways into the sewerage system business. If you have plenty of capital, you

could invest in and operate a sewerage system in a particular area. Not just anywhere, of course. Entrepreneurs like you

should develop sewerage systems in business and commercial areas or in elite residential areas. It would be even better

if you built the sewerage system while the area is being developed. Work together with the developer of the area.

Construction of sewerage systems in established areas is more complex. Just to install the pipeline, you would have to

dig up the road or move other existing pipe systems. And even then, the local residents might not want to have a sewerage

system.

Developing a sewerage system is costly, but there are strategies that you could adopt to make this business affordable.

Firstly, develop a sewerage system for small residential areas, with no more than around 100 houses. Secondly, use an

anaerobic treatment system to minimize use of electricity. Thirdly, think about developing a small-bore sewerage system,

which means you’ll only be collecting and treating sewage from individual household septic tanks.

Sewerage systems are not a new way of managing domestic

wastewater. The Dutch colonial government started building

them in the early 1900s. Unfortunately, their construction

almost came to a standstill after that. Now sewerage

systems are back in demand. This rekindled interest indirectly

opens up opportunities for you.

4

A sewerage system is a domestic wastewater treatment system, which is made up of a wastewater collectionpipe network and a treatment plant. In industrialized countries, sewerage systems are the norm, and septictanks are almost unknown. This helps prevent pollution of groundwater.

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The FiguresFormer governor of Jakarta, Sutiyoso, has said that potential earnings

from development of a sewerage system in Jakarta could be more

than Rp 1.5 trillion (US$ 160 million) a year. Sources of income are

not limited to users. Sale of raw water (effluent from sewage

treatment plants) could bring in Rp 250 billion (US$271 million)

annually. Sale of organic fertilizer (dried sludge from sewage treatment

plants) could raise Rp 350 billion a year. Sales of biogas could make

Rp 55 billion a year (US$5.9 million). Customer fees alone would

generate Rp 875 billion (US$ 95 million) annually.

If you have the expertise you can become a sewerage system operation contractor in a particular

area. The actual system will be developed by a developer or by the local government, you then

simply operate it for the term of contract. It is usually for a period of 15-20 years. You are

responsible for the smooth running and effectiveness of the system.

Not all sewerage systems are built for large areas; many are built for small ones. The

success story of Agus Gunarto’s small sewerage system in Malang offers inspiration to

other entrepreneurs, as does the success of the development of sewerage systems under

the SANIMAS program.

Only a few cities in Indonesia have sewerage systems. They include Jakarta, Bandung, Cirebon, Solo,

Surakarta, Yogyakarta, Medan, Tangerang, and Denpasar. And even these have limited coverage. In 2004,

Denpasar municipality began building its sewerage system. The first stage will be completed in 2008, and

should cover 10,000 homes. This system will consist of a sewage treatment plant with a capacity of 51,000

m3/day and a total of 130 kilometers of pipeline.

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Small-scalesewage treatment plantDried sludge from a sewage

treatment plant can be used

as fertilizer. It has a very high

N and P content, and it

doesn’t smell. In its blackish

dried form, it is not evident

that this fertilizer was made

from human excreta.

However, sewage sludge

treatment plants don’t necessarily

have to be built to serve the whole

city, or use technology that requires

a large area or be built far away on

the outskirts of the city. With a little

modification of the technology and

adoption of good business strategies,

the sewage treatment plant business

offers you fantastic opportunities.

To take advantage of this business opportunity, you can develop a small-scale mechanical sewage sludge

treatment plant that is big enough to serve the needs of a single sub-district. You can also use odor-free,

aerobic treatment technology. Then you won’t have to build it on the outskirts of town. Your operating costs

would be higher, but it will be off-set by the increased number of sewage trucks that come to your plant.

They don’t have distance as an excuse anymore. And, with better service and improved performance,

it would be reasonable for you to eventually charge higher fees. Additionally processed and dried

sludge can be sold as fertilizer for extra revenue.

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Sewage treatment plants can be built as small scale-systems using

aerobic treatment technology. This means that sewage treatment

plants don’t need large plots of land. The Association of Health

and Environmental Engineers has designed a blueprint for this kind

of sewage treatment plant. The system consists of an aerobic

digester, an anaerobic digester and a sludge drying bed. It requires

a plot of just 80 m2. With a capacity of 2.5m3/day, this system can

be built at a cost of around Rp 300 million (US$ 32,600) all in. The

installation is made from used containers that can be moved around.

Monthly operating costs are around Rp 2 million (US$ 217).

Illustration: D’Zarhoney

Padang municipality has a well-run sewage treatment plant. Everyday, this plant receives waste from 6-8

sewage trucks. This simple system relies on anaerobic pools and sun-drying of sludge. Other cities have

sewage treatment plants like this. Unfortunately, many of them are now not working as well as the one in

Padang.

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TREATMENTSEWAGE

Sewage sludge treatment plants are an important part of domestic wastewater management initiatives especially for cities

in Indonesia, where most homes rely on septic tanks or other on-site systems. Sadly, not all cities in Indonesia have sewage

sludge treatment plants. And those that do have sewage treatment plants, many of them don’t function anymore. One

reason for the failure of the anaerobic treatment function is insufficient inflow of sewage. Most drivers of sewage trucks

can’t be bothered to go to a treatment plant to unload the contents of their trucks, because most of the plants are on the

city outskirts.

Septic tanks and other on-site systems are used so that the

sewage sludge does not pollute the environment. But many

sewage trucks, dispose of sewage sludge into rivers. Their

excuse is that the treatment plant is too far away. Or that there

are no sewage sludge treatment plants in the area. But don’t

lose heart. Instead, look at this situation as an opportunity.

5

Sewage treatment plants in other countries use aerobic systems and mechanical sludge-drying. The dried sludgeis then used as fertilizer. Mechanical sewage treatment plants can be built on smaller plots of land. Which makesit easier to find a location for them. Sewage treatment plants don’t have to be on the outskirts of the city anymore.Which means that more sewage trucks can access them easily.

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TRANSPORATIONGARBAGE

The term 'garbage transportation’ usually refers to the transferring of garbage from a temporary

disposal site or transfer station to a final disposal site. It might seem a simple task, but the

investment and operating costs involved are actually very high. More than 60% of routine garbage

budgets are spent on these operations. The trucks are very expensive. An ordinary 6 m3 capacity

truck costs more than Rp 400 million (US$ 43,500). Arm-roll trucks cost even more and compactors

cost more still. The investment cost will be even higher if the garbage requires transportation by

train. There are lots of opportunities for you in the garbage transportation business. The most

feasible is becoming a garbage transportation contractor. Your partners could be regional government

or private companies. What you need is garbage trucks. The trucks could be the simple or more

sophisticated models, depending on the need. If it is your job to transport garbage from a transfer

station to a final disposal site, you will need large capacity trucks. Preferably fitted with compactors,

so you can make efficient use of fuel. If your job is to transport garbage from source, a small or

medium-sized truck will do.

Most rubbish has to be transported to a final disposal site.

It is taken there on various kinds of trucks. The costs involved

in providing the trucks and operating costs are enormous.

Not many cities are able to allocate the necessary budget.

Your participation in the form of investing in these trucks

would ease the burden of local government budgets.

6With the tagline “Cleanliness Solutions”, PT Ganda Madyaindo Tama (GMT) is gaining an ever stronger hold

in the sanitation business. Set up in 1983, this company operates in the business of indoor and outdoor

cleaning. This includes managing of a fleet of garbage trucks and providing garden maintenance services.

Today, the company set up by H. Sofyan and Aryuni Ch. Dewi, is responsible for sanitation in Menteng,

Central Jakarta, and Pasar Minggu in South Jakarta. It also collects garbage from Jakarta's Hilton Hotel,

and leases its trucks to Jakarta's sanitation department. PT GMT also handles the cleaning of the buildings

and offices of several private companies. To do all its work, the company employs 1,000 workers and has

25 dump trucks, 4 open trucks, 8 arm-roll trucks, 3 compactors, and a lift truck.

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There are a wide variety of businesses that produce lots of garbage, for example hotels,

industry, office building, restaurants, and shopping malls. Many of them do not have

adequate cleaning services. They need your garbage collection services too. Another of

your partners could be private real estate developers. They need to offer good quality

garbage collection and transportation services to market their homes successfully.

If you own a large fleet of trucks but don't fancy being a garbage transportation contractor,

you can open a garbage truck leasing business instead. Government sanitation

departments don't have enough money to buy all the trucks they need. For example,

300 of the thousand or so garbage trucks operating in Jakarta city are leased from

private firms. The cost of leasing trucks can run into thousands of dollars a month.

Several private companies do more than just transport garbage. One example

is PT Wira Gulfindo Sarana, which owns a private transfer station in East

Jakarta. This company also has capsule trucks to transport garbage to the

Bantar Gebang final disposal site. Recently this place was upgraded to a

garbage treatment plant that produces compost. For each ton of garbage,

Jakarta municipality pays almost Rp 130,000 (US$ 14).

You don't need to invest in trucks to get involved in the garbage transport business.

Motorbikes fitted with wagons are becoming more and more popularly used especially

for transporting garbage in residential areas.

It's not only trucks that transport garbage. In other countries, it is done by train. This is goodpractice if the site is a long way from town. Several private firms have proposed adopting thisconcept to transport garbage from Jakarta city to the Bantar Gebang dump. One of these isTailworks Corporation Berhad from Malaysia, who works in partnership with PT Kereta ApiIndonesia (the Indonesian Railway Company). Unfortunately, the Jakarta municipal governmenthas yet to make a decision on this proposal.

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COMPOSTINGIt's common knowledge that organic garbage can be turned into compost. Several community

groups have been doing it for their own use and for sale. This is an effective way of reducing

the volume of organic garbage. Unfortunately, from a commercial point of view, composting

might not be an attractive proposition. The unit selling price is low compared to the high labor

and time inputs. You can only expect to get around Rp 500 (US$0.50) per kilo, so you'll only make

a decent profit if you high volume orders. Or, you could make slight modifications to the compost

products to make them more attractive to your customers.

There's a guaranteed supply of raw materials—70% of

urban garbage is organic. You could opt to process garbage

to make compost or l iquid fertil izer. Both have their

advantages. Sales strategy is critical to giving your product

the competitive edge.

7PT Wira Gulfindo Sarana was known as the company that compressed and transported Greater Jakarta

area's garbage to the Bantar Gebang dump. In 1992, the company opened a transfer station, charging a

tipping fee of Rp 60,000 (US$ 6.50). But its main business was making compost. Garbage that could not be

processed was ball-pressed. Over time, the company, led by Budhi Sentosa Rachmat Kertadjaja, began to

concentrate on production of granular compost. The target market for this BIOKOM granular compost is

farmers outside the Jakarta area. The company is currently busy preparing itself to “Go organic” by 2010.

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You can add value to your compost by producing it in granular form. The technique is very

simple and the investment is minimal. It is more effective than conventional compost and

can increase rice productivity by 20% - 30%. Granules are more practical too. You should

learn from the experience of other granular compost producers.

Organic garbage can also be turned into liquid fertilizer. It has many advantages over compost.

It has a more concentrated nutrient content. It's easier to apply by splashing or spraying it

on the soil. Its selling price is higher. Liquid fertilizer can be made by mixing water with liquid

extract of organic matter that has been fermented anaerobically. It takes less time to produce.

Modern technologies have been developed to make the process of making liquid

fertilizer more efficient. One of these technologies is autothermal thermophilic aerobic

digestion (ATAD). One drawback is that, unlike compost, liquid fertilizer does not

function as a soil conditioner.

Liquid fertilizer has a higher economic value. It sells at Rp 30,000

(US$3.3) a liter. This product is sold in 500 ml and 1000 ml bottles,

making it easier to transport. One liter of liquid fertilizer reportedly

has a nutrient content equal to 50 kilograms of compost.

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Production of granular compost begins with drying ordinary compost. The dried compost is thenmilled and finely ground. It is turned into granules by mixing the ground compost with a littlewater and adhesive. This can be done in a cement mixer. This product is easier to sell in largequantities. One granular compost producers exports 2,000 tons of compost annually to Japan,the US, Italy and Taiwan.

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RECYCLING

Let's look at the journey of scrap plastic in the recycling chain. Take a 240 ml plastic mineral

water cup, for example. The wastepickers that collect these cups sells them for up to Rp 3,000

a kilo. In the hands of someone who owns a shredder, these plastic cups are shredded, and then

sold for Rp 5,000 a kilo. In the hands of someone with the right equipment, the shredded plastic

is then melted down and made into plastic pellets. This is sold to plastics factories for Rp 8,000

a kilo. This illustration shows that the economic value of recycling material increases more than

100% if we use appropriate technology to process it first. This is where you come into the

recycling business. Not in the collection chain, but in the processing chain. This is what John

Peter, who you read about at the beginning of this booklet, did.

By now most everyone would have heard the term recycling.

But perhaps not everyone realizes that there is an enormous

business potential in recycling. Nowadays, thousands of

different kinds of garbage can be recycled–plastic, paper,

metal, glass and bottles. Lots of people are recycling, but

only a few are using the latest technology. There are still

lots of openings for you to have a successful recycling

business.

8In 1996, Djiwo Siswo Yuwono set up the Ancol Sayang Lingkungan (Love Ancol Environment) Recycling

Group. With an investment of Rp 1 million (US$ 108), he began by making recycled paper from used materials

gathered from his neighborhood. Seeing how serious he was about doing this, PT Pembangunan Jaya,

through its corporate social responsibility (CSR) program invited him to work with them in processing their

waste paper. Today, Ancol Sayang Lingkungan Recycling Group gets orders not only from PT Pembangunan

Jaya, but from PT Indonesia Power, PT Astra Indonesia, and several other organizations. To expand its market

the group makes souvenirs and wedding invitations from recycled paper. The group has spread its wings

outside Ancol too, setting up satellite groups in Jatiwaringin, Tangerang and Puwakarta.

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A variety of recycling technologies are available. You need to use these to give you a competitive edge.

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It is not only plastics that can be recycled; other materials are paper,

metal and glass should play a part in your processing chain,

too. With good financial and technological capital, your

processing will be more efficient. Let wastepickers and

collectors gather the materials for recycling. Good relations

with them will guarantee you the supply of raw

materials you need.

There are still lots of opportunities to utilize new inorganic garbage, such as

the ever increasing volume of e-waste or electronic appliance waste. This

kind of waste is piling up by the day as we produce more and more of these

products and old ones become obsolete. E-waste needs to be processed

properly. It can't be incinerated because that would pollute the environment.

This type of waste can be recycled into other products. China, for example,

has managed to increase its national income from recycling e-waste. Japanese

investors set up special factories to collect the e-waste from the products

they make. The next step is to get other electronics producers involved. In

this way, e-waste can have a positive use and not pollute the environment.

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FINAL As long as there is garbage, there will be a need for final disposal sites. Even with composting and incinerators, final

disposal sites are still needed for dumping the residue and ashes. Up to now, most final disposal sites have been

built and are owned and operated by the government. But with mounting criticism from local communities, many

local governments have begun thinking about involving the private sector in their management. Here is an attractive

business opportunity for you.

One opportunity you could consider is managing final disposal sites under contract. In some countries, many municipal

governments work in partnership to manage and operate their final disposal sites. In Indonesia, there are very few

of these partnerships. One example is PT Patriot Bangkit Bekasi, which won the contract to operate the Bantar

Gebang final disposal site back in 2004. To get into this business, you need to provide the necessary heavy equipment,

workers, and a good environmental management plan. And of course, you'll need the right technical knowledge.

Municipal governments will pay for your services by the weight of garbage dumped at the final disposal site. This

ranges from around Rp 50,000 to 100,000 (US$5.40–10.80) per ton.

Ultimately, there would still be unrecyclable garbage that

has to be disposed of. So, there will always be a need for

final disposal sites. Most facilities that are good are sanitary

landfills. Many recent technological developments have

made final disposal sites more environment-friendly.

9The operational management of final disposal sites in Indonesia is still far from ideal. Their operation couldbe transferred to the private sector. The private company would then be responsible for operating the siteproperly. The government’s, sanitation department, would then take on the exclusive role of regulators.

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DISPOSAL


Another option is opening a private final disposal site. This would

be a profitable venture, but the investment cost is very high because

you need to secure a large plot of land, and on top of that it wouldn't

be easy to get started. To avoid opposition from the local inhabitants,

you have to go through the environmental impact analysis procedures

required by law. You don't want a repeat of the case of the Bojong

integrated final disposal site. To reassure the locals, apply garbage

disposal technologies that are more environment-friendly. Using better

techniques means you could charge larger tipping fees, too.

Managing a final disposal site would offer various sources of additional

income. First, selling biogas (see the next section on Energy from Garbage) to

the local people, or turning

it into electrical energy.

Reuse all the garbage in

your final disposal site,

because some of it,

organic and inorganic, has

a resale value. In some

countries, old landfills

are demolished and the

waste is reprocessed.

Many old landfills are demolished to reclaim reusable materials. Organic garbage is reprocessed into

good quality compost. Inorganic garbage is sorted as needed.

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the final disposal site is on. This means your final

disposal site can hold more garbage. And it is

safer for the local environment.


When sounding out these opportunities in the waste energy business, you must be very

careful as not all activities are self-financing. A waste power generator could not survive

on the revenue from sales of electricity alone. You'd still need to supplement revenue

with tipping fees to cover operating costs. Generating biogas might be more profitable

for you. Especially if you capture the energy from existing final disposal sites. Several

private firms are exploring the potential of waste gases from final disposal sites.

Unfortunately, most of them are just capturing and burning methane gas to get compensation

under the clean development mechanism (CDM) scheme. Not many genuinely want to

turn this biogas into energy. One is the power generation plant run on biogas at Suwung

final disposal site (Denpasar, Bali), which generates 2 MW of electricity. That's enough

to power 40,000 homes. The investment cost was US$ 20 million.

Climate change. The suspected causes are carbon dioxide, methane and other

greenhouse gases. The more of these gases are emitted, the hotter the earth

gets. With this knowledge, in Kyoto, Japan in 1997, industrialized countries

were asked to reduce their greenhouse gas emissions. A target was agreed

for each industrialized country. Amazingly, they don’t have to reduce their

own greenhouse emissions. If they want to pay for reducing greenhouse

gases in developing countries, they’ll get credit for working to achieve their

carbon emission targets.

That is why lots of industrialized countries want to finance initiatives to

reduce greenhouse gas emissions in Indonesia. Including management of

biogas from our final disposal sites. This financing mechanism is known as

the clean development mechanism (CDM). You could strive to obtain this

financial assistance if you want to run a business managing gases from final

disposal sites. Of course, there are procedures and bureaucracy that you have

to go through. It’s not easy, but many have tried, and succeeded.

Clean DevelopmentMechanism

An example of an electricity generating plant run on biogas, near Perth, Australia. Operating since 2003,this installation turns landfill biogas into 2.1 MW of electricity. Under the clean development mechanismscheme, credit is given for using methane gas from landfills. The CDM scheme in Indonesia offersenormous opportunities. Data show that Indonesia’s waste potential is vast. It could generate up to404 million m3 of methane emissions each year. The equivalent of 79 MW of electricity.

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ENERGY

The energy contained in waste can be captured in a variety of ways. One way is to incinerate

waste that is suitable for incineration. The heat produced can then be used to generate electricity.

Waste power generators use waste as fuel. Another way to process waste is to decompose the

waste until it produces biogas. This can only be done with biodegradable organic waste. A third

way is turning organic waste into waste briquettes. These burn easily, are smoke-free, and safe

for the environment. Waste briquettes retail at a far lower price than kerosene or gas. Another

option might be in the form of round baling.

Some kinds of waste have a high energy content. With the

price of oil rising all the time, energy sources that have a better

economic value are being sought and utilized more. There are

several ways of capturing energy from waste. With a growing

market, this business has a huge potential. So it's worth looking

into its feasibility.

The idea came from sawmill workers who use sawdust as a fuel. Ujan Solichin went ahead and developed

the idea into making “waste briquettes” from sawmill dust at his home in Pasir Angi, Ciamas, Jawa Barat.

They are called that because the main raw material in their production is waste. These briquettes sell for

Rp 1,600 a kilo (US$ 0.17). Which is well below the price of kerosene, which costs Rp 2,300 a liter. As well

as being cheap, the briquettes are odorless and smoke-free. It even produces blue flames. Not surprisingly,

the briquettes are sought after by large-scale businesses. With the help of nine employees who are paid

Rp 15,000 (US$ 1.60) each a day, this chief corporal is able to produce 100-200 kilograms of waste briquettes

a day. This is st i l l well below market demand, which is as much as 60 tons a week.

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FROM01 WASTE


DON’T WORRY There’s no need to worry about not having political support. If it has to do with public health,

no official is going to knock it back. You’ll get support. From the executive and the legislative

officials at national, provincial, district and municipal levels. In fact, recently, through programs

driven by the Indonesian National Development Planning Agency, government agencies are

meeting more frequently to discuss the development of the sanitation sector. Inter-agency

work groups have been formed at national and regional levels. They are working to coordinate

their authorities, responsibilities and roles to speed up sanitation development. The obligation

to meet the Millennium Development Goal targets is spurring everyone on to work harder and

work together.

From what you’ve read in this booklet, you are now aware

that there all kinds of opportunities in the sanitation

business. If you still don’t feel at ease, you might like to

know that there are things to help you on the way. Demand

aside, political support, regulations, tax breaks, and technical

assistance on sanitation sector development are all

available. Let’s hope these help persuade you to get involved

in the sanitation business.

YOU’RE NOTALONE

POLITICAL SUPPORT

Soon we’re going to have a Waste Management Law that will generate a comprehensive garbage management

scheme. The participation of all, including the private sector and communities, will be guaranteed under this

law. Optimal use of waste is a must for agencies responsible for the city’s sanitation. At a lower level, we have

many local ordinances that require communities to manage their own garbage properly, to have proper toilets,

and to not engage in activities that pollute. All are offences for which you can be fined or held in custody.

REGULATIONS


To give legal certainty to you and other entrepreneurs, we have the Presidential

Regulation 67/2005 on Public and Private Sector Partnerships in Infrastructure

Development. This regulation guarantees financial risk sharing between public

and private sector partners. Government will also help you to get public acceptance

for you project and financial support without sovereign guarantees, and protect

you against corruption, collusion and nepotism. The Ministry of Public Works,

through Regulation of the Minister of Public Works 21/2007 concerning the

Policy and Strategy for Development of a National Garbage Management System

also calls for an increase in the role of the private sector as partners in garbage

management.

Tax breaks may apply to some activities in the sanitation sector. These include paper

pulp production, land transportation, organic agro-industry, and production of

packaging from paper, card and plastic. This is implied in Government

Regulation 148/2000 on Income Tax Facilities for Capital Investment

in Certain Sectors in Certain Regions.

For capitalization, you can make use of credit facilities for small and

medium-sized enterprises. Loans start from Rp 100 million (US$10,800)

and go up to a maximum of Rp 2.5 billion (US$ 272,000). The interest

is linked to interest on Bank Indonesia Certificates. Getting a loan is

easy, too. You need to have been in business for a least two years. Then

you just have to submit a loan application, a business feasibility report,

business permits, and proof of your identity. Along with financial reports

for the past two years and your business credentials.

TAX BREAKS

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You might not be aware of it, but public sector participation in the sanitation business has gone a longway to help the government. People running garbage transportation businesses have reduced the needto purchase costly garbage trucks. Those in the public WC business have eased the government’sresponsibility to build public facilities. So it’s only right that the government should facilitate privatesector participation with various incentives and facilities.

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In Indonesia the Water Supply and Environmental Sanitation (WSES) Working Group has been set up

at the national level. This group comprises representatives of the National Development Planning

Agency, Ministry of Public Works, Ministry of Health, Ministry of the Environment, Ministry of Finance,

Ministry of Industry, and Ministry of Home Affairs. Representatives of non-governmental organizations

and the private sector provide input and coordinate programs. The same components make up working

groups at the district and municipal level.

100 million customers await you!

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