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,
PDAM.
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
infrastructure.
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
community-public
partnership.
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
services.
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.
Source: Developing
English Competencies for
Grade XI of Language Programme