The law would require the private sector to allocate a certain amount of funds for water conservation, which would be stipulated separately in a derivative government regulation (PP) to be issued later. It would also require the commercial use of domestic water resources to get approval from stakeholders in the surrounding area, according to Article 51.

The law, which consists of 16 chapters and 79 articles, cancels earlier plans to force companies to allocate 10 percent of their profits for water conservation, to pay certain fees to guarantor banks and to forbid the private sector from accessing drinking water — all of which were previously major sources of headaches for industry players.

“Of course, we accommodated the aspirations of the business sector,” said Lasarus, deputy head of the House’s Commission V, who led the working committee on the water bill deliberations, after a plenary session that passed the bill. “In the tranisition period we will still use the old law as we await the derivative PP to be issued.”

The new law ends four years of legal loopholes in water resources management after the Constitutional Court in 2015 annulled Law No. 7/2004 on water resources and reinstated the old Law No. 11/1974.

The new Water Resources Law was meant to fill in the regulatory loopholes, after one and a half years of deliberations among stakeholders that triggered business players from different sectors, from mining and textiles to industrial parks and water bottlers, to unite under the Indonesian Employers Association (Apindo) to object to an earlier draft deemed unfriendly to businesses.

Lasarus said the law aimed at better managing domestic water resources to guarantee people’s right to access water while also preventing exploitation for industrial use of water resources.  

For instance, Article 50 restricted access to the drinking water procurement system to state-owned enterprises, regional government-owned enterprises, or village administration-owned enterprises.

This excludes bottled water like Aqua and Nestle’s, which were considered “manufacturing products to fulfill market segments for practicality and lifestyle”, according to an elucidation of Article 50 of the law.

“For water uses for the market for bottled water, as long as the resource is still available, there is no restriction to access it. We have also revoked the points that were complained about by business people, including the 10 percent allocation from a company’s profits [to water conservation] and the requirement of a bank guarantee,” said Lasarus. 

Apindo also said it welcomed the new law for those two reasons.

“It is enough to accommodate our aspirations; we appreciate it,” Apindo chairman Hariyadi Sukamdani told The Jakarta Post.

Hariyadi said there is one concern left from the industry perspective, which is that the law opens access to water resources for the public, while previously access to water resources could be restricted to commercial use only in support of the hygiene that is crucial for maintaining the sterile water needed especially by the food and beverage industry. This raises concerns over water contamination, he added.

The bill was passed against the backdrop of weak economic activities with growth reaching a two-year low of 5.05 percent in the second quarter this year compared to the same period last year, with the manufacturing industry’s contribution to gross domestic product continuing to wane to below 20 percent from almost a third years ago.

This has triggered industry players to call for a more supportive business and investment climate in Indonesia, which President Joko “Jokowi” Widodo said would depend on investment as an engine for growth in the near future.

Law and Human Rights Minister Yasonna Laoly said the water law was “absolutely” needed for the better management of domestic water resources to preserve the country’s water, maintain sustainability and meet Indonesians’ need for 60 liters of water per person per day.

“The decline in water availability amidst the rising needs for water today obliged us to manage our water resources better by considering social balance, the environment and the economy, to fulfil the people’s needs for water,” said Yasona.

He emphasized that the water law was a manifestation of the government's commitment to assert the state’s authority over water resources and ensure control over water management. 

— Esther Samboh contributed to the story

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