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Jakarta Post
The Jakarta Post
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Govt relaxes water rules to allow private ownership

  • Grace D. Amianti

    The Jakarta Post

Jakarta | Tue, June 30, 2015 | 09:32 am

The government has decided to allow limited ownership in water resources development by private and foreign companies amid concerns that a recent court ruling will ban the private sector from the industry.

The government has completed two new regulations that will govern business activities in upstream and downstream water resources development, after the Constitutional Court earlier this year revoked a law that had allowed the private sector to monopolize the nation'€™s water resources.

'€œThe limited ownership by private and foreign companies is actually a form of relaxation by the government, a change from the full prohibition proposed previously,'€ the Industry Ministry'€™s director general of beverage and tobacco industries, Faiz Ahmad, said on Monday.

'€œThe final draft has accommodated recent suggestions from private businesses, even though water management by private firms will be highly regulated, because the government is maintaining its stance on prioritizing state control of drinking water,'€ he added.

Business owners involved in the Indonesian Employers Association (Apindo) and the Cross-Associations of Water Users Forum recently criticized the proposed new rulings, which were deemed as harmful to various industries and the entire economy.

The proposed new rulings also have the potential to severely harm the food and beverage industry, which currently employs 4.2 million workers directly and contributes 30 percent of Indonesia'€™s total Gross Domestic Product (GDP), according to Cross-Associations of Water Users Forum spokesperson Rachmat Hidayat.

Public Works and Public Housing Minister Basuki Hadimuljono said the decision to allow private and foreign ownership through limited shareholdings was based on the government'€™s acknowledgement of criticism from the business sector.

'€œPrivate and foreign firms will be allowed to fill areas where state and regional-owned companies are not able to manage,'€ he said.

'€œThe proposed rulings will prioritize state and regional-owned companies with larger portions of shares in water resources development, while allowing collaboration with foreign and local private firms,'€ Basuki added.

Besides giving larger shares to state and regional firms, Basuki said the upcoming regulations would also regulate allocations for joint operations between the government and private and foreign operators in watershed areas.

The government will soon issue ministerial regulations from both the Public Works and Public Housing and Energy and Mineral Resources ministries to regulate the limitation on private and foreign ownership, according to the Public Works and Housing Ministry'€™s director general of water resources Mudjiadi.

The proposed rulings '€” regulations on water resources and the water supply system '€” will be issued to fill the legal void following the revocation of the 2004 Water Resources Law by the Constitutional Court in February this year.

'€œThe proposed regulations have been finalized and will be taken to be signed by the President soon after the public works and public housing minister and I give our signatures,'€ Coordinating Economic Affairs Minister Sofyan Djalil said.

Besides annulling the 2004 law, which acts as the legal basis for water privatization in Indonesia, the Constitutional Court ruling reinstated the previous 1974 Water Law until a new law is introduced.

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