25484 - SEF Magic Box

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Environmental & Social Review Summary

Project Number

25484

Company Name

MAGIC BOX COMPANY LTD

Date ESRS Disclosed

Mar 7, 2007

Country

Kyrgyz Republic

Region

Central Asia and Turkiye

Last Updated Date

Jun 3, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 22, 2007
Signed : Jun 25, 2007
Invested : Oct 3, 2007

Sector

Paper Packaging Products (Including Boxes, Cartons, etc.)

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

The expansion project is a new printing line located in the FTZ, which will be using various types of board and paper for small packaging of food items such as tea, sugar and candies. The new line will be similar to the existing one. It will have a five color units, sheet fed. There will be no ovens included because of sheet fed offset. The new line will be located in an additional hall similar to the existing building made of light construction typical of most halls for light industry.

Overview of IFC's Scope of Review

The review of this project consisted of appraising technical, environmental and social information submitted by the company and an appraisal visit by a technical specialist to the printing house and cardboard packaging plant respectively located in downtown Bishkek and in an Industrial Free Trade Zone (FTZ) 40km outside of Bishkek. Documentation reviewed includes the following documents:

- Basic information on Magic Box operations issued by the Sponsor and additional information provided by the IFC appraisal team; and
- Report named “Environmental information and Kyrgyz EHS regulatory documentation” dated October 2006.

The appraisal team interviewed corporate and site operations management, as well as the owner who is personally looking at EHS issues. A detailed EHS site visit of the two operations will take place during appraisal in April 2006.

It is assessed that the proposed project is in compliance withKyrgyz EHS laws and regulations and IFC requirements.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts that must be managed in a manner consistent with the following Performance Standards:

- PS1: Social and Environmental Assessment and Management System;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement; and
- PS4: Community Health Safety and Security.

There will not be land acquisition nor involuntary resettlement, and no impact on indigenous people or cultural property under the project, nor is it expected to have any impacts on natural habitats, forests, or protected or sensitive areas.

The relevant PS have been provided to and discussed with the client as have the relevant IFC Guidelines (i.e. General Environmental Guidelines, July 1998; Occupational Health and Safety Guidelines, June 2003; Printing Guidelines, July 1998.

The project involves the expansion of the two existing facilities with the same technology and organization used by Magic Box for the last six years.

Environmental, social, health and safety issues associated with this project include:

- Corporate capacity in environmental and social management;
- Air emissions and dust control;
- Liquid waste treatment and disposal;
- Hazardous materials storage and handling on site;
- Solid and hazardous waste management and disposal ;
- Housekeeping and Occupational health and safety management; and
- Employee safety and training and emergency response.

The Magic Box owner has endorsed all findings, management recommendations, and subsequent studies suggestions discussed during appraisal.

Based on the review of the information provided, face-to-face discussions with the client and review of regulatory documents signed by the local and regional administration, this project will have limited potential adverse environmental and social impacts. Also any impacts will be few in number, site-specific, reversible and easily addressed through agreed mitigation measures. As a result of the above this is a Category B project.

Environmental and Social Mitigation Measures

Key environmental, health and safety issues identified by IFC are listed below. IFC appraisal identified a number of EHS issues that received adequate response by the company. The sponsor is carrying on a regular basis a review of environmental and safety assessment in line with Kyrgyz legislation requirements. The two sites are regularly inspected by various municipal and national regulatory agencies.

- PS1: Social and Environmental Assessment and Management System

Mr. Muammar Akkaya is well aware of the social and environmental responsibility as Magic Box is key business player in the Kyrgyz capital. This is a fast growing company and the owner wants to play a role in being responsible in protecting the environment and developing his workforce. During appraisal management has demonstrated its commitment to working on social and environmental issues.

It is anticipated that Magic Box will develop an adequate environmental, health and safety (EHS) function by end of 2007 when the new production line comes into production to ensure proper environmental monitoring and implement all appropriate management procedures. We expect Magic Box to formalize and develop a capacity building program and training plan on environmental issues for company management and main employees.

Magic Box employs an occupational safety and health specialist who is in charge of coordinating safety and health preventive measures and applicable up-to-date improvements are implemented inside the workplace after joint discussions. Kyrgyz regulations include mandatory education and training for all staff employed, as well as an induction program for new workers.

- PS2: Labor and Working Conditions

The two facilities are located in and around Bishkek, the Kyrgyz capital. Current staff number is 92 with 85 blue collar and 7 white collar. Half of the workforce are women. As the company is expanding it is not anticipated to have any redundancies in the near future. 42 staff out of 92 have been hired within a year and an additional 15 to 20 are expected to join upon completion of the expansion project. The country trend is to have no union in the Kyrgyz private sector as it provides high salaries ($50-150) to all employees (i.e. $77 on average compared to $12 country wide). Employee and management relationship is executed in compliance with Kyrgyz Laws, with fair and equal treatment of labor force as the basis. Magic Box goal is have a variety of labor tools to facilitate labor relations and workforce flexibility.

There are a small number of unions left over from communist times, but they are not organized in any sector. In Kyrgyzstan, workers in the private sector do not belong to unions. Since the country’s independence in 1992, there have been no strikes or lockouts. Although there are some regulations on health and safety, each company must determine its own policies. In Magic Box the person in charge of safety briefs new staff about things to watch out for in the print house and cardboard packaging shop, mainly equipment using electricity and cutting device. Each machinery has some information on working conditions and matters to pay attention to. All factory workers are given personal protection equipment and are provided with summer and winter work clothes as well as steel tipped shoes pursuant to working conditions and local environment.

All workers are registered to a Social Insurance Institution for social security coverage. In addition the company is providing a good benefit package to all employees (education fund, bonuses, food supply, and a basic retirement plan.) and management appears experienced in handling labor management and in growing local workforces into active contributors to company operations. All new personnel have to go through health screening examination at start of their job. Furthermore, there are periodical bi annual and annual medical examinations to properly assess labor conditions in terms of occupational health.

- PS3: Pollution Prevention and Abatement

Effluent discharge management: Sewage from the packaging plant goes into septic tanks located around the FTZ. Sewage from the printing shop goes into the municipal sewer. There is a biological WWTP for the city of Bishkek treating domestic effluent. There is no discharge into the natural environment. Waste paints and chemicals are largely soluble therefore environmentally safe so they are discharged to sewage system. Magic Box waste water and fresh water usage are being supervised periodically by municipal authorities. We have asked the company to undertake monthly analysis of waste water samples taken from both site to verify compliance with IFC requirements. Effluent discharge could then be assessed to be in compliance with Kyrgyz and IFC standards.

Printing activities does not generate dust/particulates emissions. Noise limit values are stated in local permits. In such operations there are not major hazards typical of the pulp and paper industry such as use of chemicals, and exposure to noise and dust. There are not any heavy jobs involving exposure to heat and chemicals typical for paper industry.

Electricity, water and infrastructure needs are provided to Magic Box operation in the FTZ. The company has also acquired adequate land for the expansion project. The same apply to the printing shop located in the building of the Turkish University in downtown Bishkek.

Printing plates are of aluminum covered with a photosensitive coating. This coating is exposed to light and an image will be formed on the coating, to form ink receiving surface. Aluminum surface will act as water receiving service. These offset plates can be used and normal life cycle for them is even one million images. Plates are cleaned with solvents but the amount of solvents is very small.

In the FTZ facility Magic Box has a dedicated ware house for materials storage (including chemicals and raw materials) located within the facility. Hazardous products (chemicals) used for printing are mostly water-based paints and chemicals. Magic Box does not use UV paints as they prefer non hazardous products with the following exceptions:

- use of "kruse" brand developer chemicals in washing molds;
- ipa (izopropilalkol-brand shell) to clean the machine (about 400kg/year); and
- the following brands of paints: “Sun chemichal-huber-micro” inks.

The main raw material is paper and board including virgin fiber and recycled fiber, which is only processed by Magic Box in its printing and packaging lines. Some high quality special boards are delivered by companies in Turkey and in Europe. For board APP Ningbo is technically one of the most advanced board mills in the world and at the moment also the biggest one. Paper suppliers include famous brands like Sappi Gratkorn and M-Real Hallein both from Austria. All suppliers are high quality suppliers.

Waste generated by the company is made of cellulose and waste paper and appropriate for recycling. Most of the waste carton and paper is supplied to local toilet paper and napkin producers. Conventional aluminium molds are used in printing are sold to firms which use the material in roof insulation and for the manufacture of crates. Excess pallets which are used in loading/unloading operations are sold to local companies which recycle them for drinks and food packaging. Domestic solid waste is collected by the local municipality.

- PS4: Community Health, Safety and Security

General housekeeping at the two production units is good with high maintenance of the facilities. Magic Box needs to develop a health and safety management system that will go beyond the various requirements in Kyrgystan. Although a formal safety training procedure is in place however further development of policy, procedures and work instructions is needed as the company expands. The focus will be to develop a work-related risk assessment plan, conducts training, implement additional work-place monitoring and equipment/machinery preventive maintenance.

On Emergency Preparedness & Response, Magic Box has agreed to develop a formal emergency response plan and contingency planning in line with PS requirements. The buildings in the FTZ are located in an open area but this is not the case at the Turkish University. Sandwich panels and metal frames have been used in the FTZ. There are fire extinguishers properly maintained at regular intervals. The FTZ has its own fire engine and equipment. The company is insured against fire, flooding, terror from an insurance provider based in Turkey. Magic Box is committed to establishing and maintaining procedures to identify potential emergency situations (including life and fire safety), to respond to emergencies and to mitigate any resulting safety, health and environmental impacts.

On security, there is no private firm that has been contracted. The company print shop is located in the Turkish University which has diplomatic immunity and is being protected by the Kyrgyz police and Presidential forces. The production site in the FTZ has its own security force plus its protected by the military. In previous political turmoil Magic Box premises have not been affected. They have security cameras and one guard at each facility. Inspections are recorded with regular security feedback to the head of the security team and to management as needed.

Stakeholder Engagement

Relations between the city of Bishkek and Magic Box are excellent. During the appraisal visit we received information that there was no public opposition to the operations in the past. According to Magic Box owner there has been no complaint worth mentioning between the company and local communities. Relationships with local businesses, nearby factories in the FTZ and at the university as well as residential and land owners are good.

Listing of client contact details and links to documentation:

Muammer Akkaya, General Director
Magic Box Company
FEZ “Bishkek”
Kyrgyz Republic
Telephone numbers: + 996 312 48 69 74; + 996 312 48 69 47
Fax: + 996 312 48 58 06
E-mail: makmakr@yahoo.com

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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