Asia: Why Recycling Systems Work Differently in Practice

Asian recycling systems often differ from policy design because material flows follow local economics, enforcement and established informal networks. Isamu Sato argues that successful EPR and resource-circulation frameworks must reflect real operating conditions, offer meaningful incentives and connect formal systems with the channels already handling vehicles and materials.

Isamu Sato of RCWS discusses how recycling systems operate across Asian markets. — Isamu Sato – image credit: ICM (IARC 2026)

Isamu Sato, Managing Director of Resource Circulation Research Works Inc. (RCWS), discusses why recycling systems often operate differently from their policy design. Drawing on examples from Japan, India and Thailand, he examines the influence of informal material flows, enforcement, economic incentives and local market structures on the practical development of EPR and resource circulation.

Recycling and resource circulation systems are often discussed in terms of policy design and regulatory frameworks. However, in practice, the way these systems operate on the ground can differ significantly from their intended function.

At RCWS, we focus on understanding how systems operate in real-world conditions across different regions.

One recurring observation is the gap between formal systems and actual flows. While many countries adopt established models, often inspired by Europe or Japan, these systems do not always function as expected. Materials and vehicles frequently move through channels that are only partially captured, or not captured at all, by the formal system, often because these routes are faster or more economically viable for operators.

This becomes clearer when looking at different contexts in Asia.

In Japan, systems tend to be relatively well-connected. Regulatory frameworks, industry practices, and financial mechanisms are broadly aligned, enabling materials to be captured and processed within the formal system and contributing to a degree of predictability.

India presents a different type of challenge. Formal systems have been introduced, in some cases based on established international models. However, in practice, the connection to real-world operations remains limited. A portion of materials continues to flow outside the formal system, partly due to limited enforcement and the continued role of informal channels.

In countries such as Thailand, structural conditions create yet another dynamic. Market size, fragmentation, and the presence of multiple parallel flows make it difficult to establish a single, coherent system. The challenge is not only about introducing formal frameworks but also about how these frameworks interact with existing practices, including established scrap dealer networks.

In this context, the question is not only whether informal flows should be integrated, but also when and how such integration can realistically take place. In some markets, this perspective itself is still developing.

Across these contexts, enforcement is often seen as a key solution. However, in reality, enforcement tends to be limited, not only in emerging markets but also in more developed systems. Without consistent implementation, formal requirements alone rarely change operational behavior.

At the same time, incentives are often not strong enough to change established economic behavior. Small or symbolic financial signals may encourage limited participation, but they are rarely sufficient to shift existing flows. If the economic structure does not align with how materials are actually handled, operators will continue to follow existing channels.

These dynamics are particularly relevant as many markets in Asia continue to evolve, creating both uncertainty and opportunity for industry actors. Questions around how secondary material markets such as PCR will develop, how EPR frameworks may adapt, and how emerging waste streams, including those linked to electrification, will be integrated, remain open. For many industry players, these uncertainties also represent potential areas of opportunity.

From this perspective, the challenge is not simply about introducing systems, but ensuring that systems are connected to real-world flows and supported by meaningful economic signals. This also has implications for how future policy frameworks, including EPR systems and potential PRO structures, are designed and implemented in practice.