Tug of War Over Water Resource Bill

Writer: Safrezi Fitra

Editor: Safrezi Fitra

6/9/2019, 14.30 WIB

Entrepreneurs are worried that water resource bill could threaten the existence of the packaged drinking water industry.

Telaah - Air
Lukas Gojda/123rf

The government and the House of Representatives’ Working Committee (Panja) had approved the water resource bill (RUU SDA) two weeks earlier. However, its ratification was not discussed in the plenary meeting on Tuesday (9/3). The bill has also been included in the national legislation program since last year.

The House of Representatives (DPR) Deputy Speaker Utut Adianto, who led the plenary meeting, said some technical preparations are still required before turning the bill into law. “We ask for the House approval. The decision-making on the water resource bill can be re-scheduled in the next plenary meeting," Utut said in the meeting at the Parliament Building.

There are fierce discussions about the bill. After the Constitutional Court (MK) overturned the Water Resource Law No. 7/2004 in 2015, the government and DPR need a new law. In 2017, the DPR initiated discussions on the water resource bill.

The bill initially accommodated some recommendations made by MK when deciding to cancel the previous law. However, entrepreneurs of packaged drinking water (AMDK) protested and claimed that the bill could kill their industry.

The Association of Indonesian Producers of Packaged Drinking Water (Aspadin) Chairman Rachmat Hidayat said the bill grants permission to state and regional enterprises to utilize drinking water, including the packaged ones. The private sector working on the packaged drinking water business was not mentioned in the bill, even though this industry has a significant contribution to the Indonesian economy.

Based on Aspadin’s data, the packaged drinking water business currently absorbs 50 thousand direct workers in 900 companies. The industry accounts for 3.3 percent of gross domestic product (GDP) and involves 250 thousand indirect workers through its supply chain (distribution). Several packaged drinking water brands produced in Indonesia are Aqua, Pure Life, Ades, Vit, Oasis, Prim-a, Le Minerale, and others.

“The prohibition for private packaged drinking water entrepreneurs to use water as the raw material can harm hundreds of businesses and thousands of workers. It can also diminish investor confidence and business certainty in Indonesia,” he said during a public discussion at the PBNU Office in Jakarta, last July.

Objection from Entrepreneurs

Three articles in the water resource bill are considered burdensome for entrepreneurs. First, the permit requirements in Article 47, which can kill the drinking water business. This article requires companies to have bank guarantees following the volume of water used. Entrepreneurs must also allocate 10 percent of their net income. This allocation will later be used for spring water conservation.

Second, the equalization of packaged drinking water with piped water in Article 51 paragraph 1. It means the control of drinking water business is only for the state and regional enterprises. Third, the provision that water sources can be opened for people to take water freely, as mentioned in Article 63.

The articles threaten the existence of the packaged drinking water industry. Entrepreneurs said the packaged drinking water should be excluded from the water resource bill. The reason is that the packaged drinking water is part of the food and beverage industry, not part of the clean water to fulfill the people needs like cooking, bathing, and washing.

Target Pertumbuhan Air Minum dalam Kemasan
Packaged Drinking Water Growth Target (ANTARA FOTO/APRILLIO AKBAR)

Public Works and Public Housing (PUPR) Minister Basuki Hadimuljono ensured that the role of the private sector in drinking water management would be included in the bill. He also stated that the private sector does not need to work with SOEs or ROEs in managing the packaged drinking water industry. The reason is that the bill only rules drinking water system (SPAM), while packaged drinking water will be regulated separately.

“Regulations for packaged drinking water are not equated with SPAM-based water management. The industry uses permits for ordinary water, which is SIPA [groundwater usage permit],” he said during CNBC Indonesia Conference on Water Security and Sustainability.

According to Basuki, the final draft of the water resource bill is already following the rules issued by the government after the cancelation of the 2004 Water Resource Law. The rules are Government Regulation (PP) No. 121 on water resources exploitation and PP No. 122/2015 on SPAM.

Based on PP No. 121, the government can permit the use of water resources to the private sector, especially the packaged drinking water industry. However, its utilization is prioritized for people’s basic needs and irrigation first. After everything is fulfilled, then the private sector can utilize it.

Besides in the packaged drinking water industry, Basuki said private involvement would remain to exist in SPAM. The reason is that the government cannot work alone in fulfilling the needs of clean water for all Indonesian people. Based on data from the Public Works and Public Housing Ministry’s Agency for the Improvement of Drinking Water Supply System (BPPSPAM), the government has only fulfilled 70 percent of clean water needs.

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