In order to fulfil their obligations for PET recycling under the Waste Disposal Act, members of the PET industry created a modified deposit-refund system where manufacturers and importers paid into a fund and consumers were given a refund for returning PET bottles. The industry formed a foundation to administer the recycling fund that was meant to cover consumer refunds and collection and recycling costs for the bottles. PET manufacturers and importers were required to pay into the recycling fund according to their sales. Initially, consumers returning bottles to any of the more than 10,000 established collection locations were paid a refund of 2.00 New Taiwan dollars (NT$), or approximately US$0.06. Recycling plants paid collectors NT$0.50 per bottle for each bottle delivered. By 1992 Taiwan's PET recycling rate was 80 percent.

As recovery of PET bottles increased, payment of the refunds resulted in a deficit in the fund. The problem was further exacerbated by free riders - PET packaging manufacturers not registered with or reporting to the Recycling Fund Management Committee. The refund value has since been reduced - first to NT$1.00 and then to NT$0.50 per bottle and the government is considering whether to eliminate the deposit altogether.¹²

The Recycling Fund Management Committee has been working to increase manufacturer's and importer's compliance with the system. From July 1998 to May 2000, the number of enterprises reporting to the Committee increased from 1,648 to 2,258. Furthermore, audits of 655 companies performed in 1999 and 2000 revealed errors and under-reporting that resulted in over 259 million NTD in unpaid fees.

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