As Indonesia strengthens its environmental governance framework, businesses  particularly in manufacturing, energy, and extractive industries, are facing increasing regulatory expectations in how they manage Hazardous and Toxic Materials (Bahan Berbahaya dan Beracun or “B3”) waste.

A recurring question for many foreign and domestic investors is whether companies are allowed to sell or transfer B3 waste or its residual materials for industrial reuse. While this may appear as a sustainable and cost-efficient solution, Indonesian law subjects B3 waste management to strict regulatory control. Improper handling or trading of such materials can expose companies to substantial legal risks.

How Do Companies Sell B3 Waste for Industrial Use?

In principle, companies may sell or transfer B3 waste for industrial reuse — but only under specific and highly regulated circumstances.

The transfer must be made to a recipient company that is licensed by the Ministry of Environment and Forestry to process or utilize B3 waste. This ensures the transaction is part of a legally sanctioned waste management process rather than a commercial trade.

Examples include metal sludge reused by smelters or oil residues reprocessed by certified waste management companies. However, such utilization must adhere to strict environmental and safety standards, and each transfer must be documented under an official B3 waste manifest system.

The law requires that:

1. The recipient must hold valid environmental licenses for B3 utilization or processing.
2. All transfers are traceable through manifests and transport documentation.
3. Funds or contracts related to B3 waste transfers are structured to reflect regulatory compliance — not informal trade.

Legal Framework, Risk, and Exposure: From Generation to Utilization

The management of B3 waste in Indonesia is primarily governed by Law No. 32 of 2009 concerning Environmental Protection and Management (“Law No. 32/2009”) and its implementary provisions under Government Regulation No. 22 of 2021 on Environmental Protection and Management (“GR No. 22/2021”).

These regulations define the responsibilities of B3 waste generators include the proper storage, transportation, utilization, and disposal of waste materials. Complementing this, Minister of Environment and Forestry Regulation No. 6 of 2021 (MEF Reg. No. 6/2021) provides the technical framework for B3 waste utilization, establishing that reuse or transfer is only permitted if conducted by licensed waste processors or utilizers.

Failure to comply with B3 waste management regulations can lead to severe consequences, including administrative sanctions, fines, business license suspension, or criminal liability for environmental pollution.

Importantly, liability extends to the original waste generator. Even if waste is transferred to another party, the company remains responsible should improper disposal or misuse occur downstream. Hence, it is crucial and critical compliance safeguards by partnering only with certified B3 waste processors and maintaining complete documentation.

Strategic Long-Term Value for Chinese-Based Companies

For Chinese enterprises investing in Indonesia, particularly in sectors such as manufacturing, energy, infrastructure, and mining, the B3 waste regulatory framework presents both challenges and opportunities.

1. Industrial Symbiosis Opportunities: The framework allows for licensed reuse of B3 waste between companies — creating opportunities for industrial symbiosis, where one company’s waste becomes another’s resource. For instance, waste oil or metal sludge can serve as feedstock for downstream industries, provided regulatory requirements are met.
2. Technology and Partnership Potential: Chinese companies specializing in waste treatment technologies can explore partnerships or joint ventures with Indonesian entities to establish B3 waste processing facilities. Such ventures not only serve compliance needs but can become profitable sustainability-driven businesses.
3. Investment Incentives and Market Positioning: By demonstrating responsible waste management and environmental compliance, Chinese investors position themselves favorably for government partnerships, green financing, and preferential treatment under Indonesia’s growing focus on sustainable industrialization.

B3 waste management is not merely a regulatory obligation — it’s a strategic component of sustainable business operations. Companies that manage hazardous materials responsibly can minimize legal exposure, enhance operational efficiency, and strengthen trust with regulators and local communities.

If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.

Author:
Budhi Satya Makmur