Access to Clean Water:
A Problem for Indonesia
Access to clean water is one of Indonesia's biggest
problem. According to the Millennium Development
Goals (MDGs) Report 2007, published by the National
Development Planning Board, piped water is accessible
to 30.8 per cent of households in the country's cities
and 9 per cent in its villages. Such fi gures show the
limitations of the municipality's water service provider,
Lack of investment in clean water is one reason
PDAM gives for its limited outreach. Based on a
government statement, to meet the MDGs target by
2015, Indonesia needs Rp43 trillion (US$4.6 billion)
in clean water funding. The government currently
provides Rp500 billion.
In order to close the funding gap, the government
expects private investment in drinking water
The need for clean water funding is something that
cannot be covered by private investment. In Indonesia,
most PDAM utilities have small scales of economy and
are therefore unattractive to investors.
There is no evidence to suggest private investors
will improve the effi ciency and effectiveness of water
services, whereas the government has a duty to do so.
Increasing public funding for clean water
infrastructure is the most rational approach for
Indonesia. This effort should begin with an analysis
of the needs of locals. This should be done through a
democratic and participatory process.
There are resources and mechanisms the government
could employ to increase clean water funding, such as
state and local budgets, grants, government bonds and
In order to use a grant system, the government
should improve its proposal management and clearly
focus on real needs in order to widen clean water
PDAM could use existing funds more effi ciently.
if it could reduce leakages from 40 per cent to 20 per
cent, it would have more disposable funds to invest
in infrastructure. PDAM should use cost recovery
principles, as long as costs are not passed on to
consumers. Cost recovery principles should also be
supported by a proper subsidy mechanism.
Bond investing is a traditional lending instrument
for public services. The mechanism needs conditions,
such as strong capital structure at local level.
A few of mechanisms in place now do help the
poor access clean water at affordable prices. The most
important thing is to make sure the mechanisms run
properly and that the needs of people at the local level
are met through appropriate funding.
Taken from The Jakarta Post, April 5, 2008