indonesia: the new water resources law
and privatization
“Water must
be utilized by those who render the most
economic advantage”
Asian
Development Bank, 2001.
“The
important branches of production for state
and relating to the life of people shall be
occupied by state”.
Indonesia
Constitution, 1945.
“Earth,
water and any property contained in them
shall be occupied by state and shall be
optimally used for people
welfare”.
Indonesia
Constitution, 1945.
WATSAL program - world bank
In 1997, the World Bank concluded that
it could not continue to assist the water
and irrigation sector in Indonesia without
major restructuring or reform in the
sector. So, in April 1998 after the
economic crisis, the World Bank offered a
loan program, the Water Resources Sector
Adjustment Loan (WATSAL), to the Government
of Indonesia to restructure the water
sector.
The offer was accepted and in 1999 a
loan agreement of US$300 million was
signed, with the money to be returned in 15
years and with a grace period of three
years. Loan disbursement would occur in
three stages, with the last being under the
condition that the Indonesian government
would approve the draftWater Resources
Law.
the new water resources law.
On February 19, 2004, the Bill of Water
Resources was passed into law by the
Indonesian House of Representatives,
despite it being postponed several times
due to objections by farmers, city
consumers, religious and community
organizations, NGOs and academics. Their
objections were based on aspects of the law
that set the agenda for the privatization
and commercialisation of water. Articles in
the law allow not only for provision of
drinking water but the occupation of water
resources, such as ground and river water
and parts of rivers, by private parties,
effectively giving them control of water
for agricultural irrigation, energy and
industry.
Rather than attempting to develop water
management schemes using a more integrated
system that pays attention to conservation
and offers mechanisms to solve possible
water utilization conflicts, the law is
dominated by economic interests and is
strongly influenced by the World Bank,
which had essentially determined its
substance.
occupation of water
A crucial part of the law is the
stipulation of Water Right, which has
become the basis of the allocation and
occupation of water resources to the
private sector. Through this instrument,
the Water Resources Law provides a limit
regarding the form and amount of water that
can be utilized by a community. Criteria
are established for the daily use of water
giving priority to commercial utilization,
as exemplified by the Asian Development
Bank Statement: “Water must be utilized by
those who render the most economic
advantage” (ADB, 2001). The commercial
allocation and limitation of water has
meant that communities will have to obtain
permits and pay for water for
non-commercial activities, which they had
previously collected at no cost.
Additionally, the law introduces the
Commercial-Use Right and the Business-Use
Right, which effectively allows for the
transfer of control of water, from local
and traditional communities to the private
sector, and determines the right of
cultivation of existing water resources.
This is due to the establishment of a
permits based system of access to water,
developed under the law. While such
bureaucracy is an impediment to less
capable communities, this system favours
the private sector, who have the capacity
to apply for a formal permit to occupy and
distribute water. A consequence has been
the assignment of water resources to the
private sector who are increasingly
monopolising the harvesting of water, and
charging for its distribution.
privatization of drinking water and
irrigation
Even though the Law does not explicitly
use the word “privatization”, it allows
private parties to play a role in the
implementation of water management as well
as being entitled to charge fees for the
use of water services. The involvement of
the private sector in several forms and
stages of water management clearly shows an
agenda for privatization.
The Water Resources law means that
agricultural activity will not only become
more expensive as farmers are paying the
new costs of private water management, but
also because previous subsidies from the
Government will cease. Particularly wet
ricefield farmers will be affected, and
consequently may not be able to sustain
themselves. This will have implications on
food sovereignty and may result in
Indonesia depending on foreign imports of
food.
constitution and violation
As a basic human right, the Indonesian
Constitution of 1945 guarantees the equal
access to water, and it is the
responsibility of the State to provide it.
Privatization and commercialization of
water management violates this right, and
the Water Resources Law limits the role of
the State as a regulator. In practice this
means that the State will have no control
over water management nor ensure the supply
of good quality water.
The social role of the State should not
be substituted by private parties that have
profit as its main goal, and vulnerable
people in society, the poor and sick, will
be particularly exposed and find it
difficult to obtain healthy water for
consumption.
In July 2004, WAHLI/Friends of the Earth
Indonesia together with the Federation of
Indonesian Farmers Association, the
Indigenous People Alliance and many other
institutions, submitted a legal suit
against the Water Resources Law to the
Constitutional Court.
more information
WAHLI/Friends of the Earth
Indonesia
