Water Law will decentralize control of country’s water resources and allow private sector involvement.
On July 19, the Indonesia Constitutional Court upheld the constitutionality of the Water Resources Law (Law No.7/2004), which provides for the decentralization of control over Indonesia’s water resources to regional entities and water user associations, and contains provisions allowing for private sector involvement. The Court was responding to a case filed by numerous civil society organizations and thousands of individuals which argued the Water Law would turn water into a profit-oriented business and possibly threaten people’s access to safe and affordable water.
The Water Resources Law was approved in February 2004 by the Indonesian Parliament amidst public criticism and strong opposition. It cleared the way for the then long-delayed disbursement of the final $150 million tranche of the World Bank’s Water Resources Sector Adjustment Loan (WATSAL), which provided balance of payments assistance for policy, legal, regulatory, and administrative reforms in the water resources and irrigation sector.
The World Bank is currently lending $70 million to Indonesia on a new water resources program loan to implement water sector reforms in approximately half the country. Meanwhile, the ADB is assisting the Government of Indonesia in streamlining the implementation of the Water Law. It recently completed a Technical Assistance grant to GoI whose aim was to help develop and implement a regulatory framework for water supply and wastewater enterprises in Indonesia, with a view to promoting “good governance in the water supply and wastewater sector and to create enabling conditions for private sector participation.”
World Bank Water Resources & Irrigation Sector Management Program (World Bank website)ADB Technical Assistance grant to Indonesia on water supply & wastewater sector (Acrobat pdf 110 KB) (ADB website)