From a ‘political good’ to an ‘economic good’: The Case of Jakarta, Indonesia


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Publication Title

From a ‘political good’ to ‘economic good’: the case of Jakarta, Indonesia

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Nicola Colbran, Norwegian Centre on Human Rights

Publication Date

27 Nov 2008


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The article first discusses the history of water supply in Jakarta, examining the provision of water under Dutch colonial rule as well as post independence, including the condition of the government water supply company, PAM Jaya immediately prior to privatisation in 1998. Under colonial rule and post independence, water was essentially a political good and the provision of water to affluent areas was generally prioritised, either to facilitate the development of the city according to race (under colonial rule), to demonstrate a newly “modern” independent Jakarta (under Soekarno), or to support regional economic growth and generate profits (under Soeharto). By 1998, PAM Jaya had numerous problems, including poor quantity and quality of water provision, uneven distribution of water services, high levels of unaccounted for water, large company debt and management problems.

The second section analyses the privatisation process and the impact of privatisation on water provision. In Jakarta, the privatisation process lacked transparency and was riddled with corruption, collusion and nepotism. Jakarta was divided in half, and the management of the water system was allocated to two concessionaires, Thames Water and Suez under terms extremely favourable to the two companies. As to the impact of privatisation, neither of the water companies has delivered the improvements promised in their contracts. Of all technical targets, both operators have only met water production.

Thirdly, the article looks at the Constitutional Court challenge to the 2004 Water Resources Law. Five applications for judicial review of the Law were lodged with the Constitutional Court in 2004 and 2005. It was argued that the Law does not adequately recognise the right to water as required by the Constitution, and that it facilitates private sector participation in the water sector contrary to the Constitution. Under the Constitution, production sectors (such as water) that are vital to the State and that affect the livelihood of a considerable part of the population must be controlled by the State and used for the greatest benefit of all people. It was argued that privatisation by its nature is contrary to this requirement. The Court dismissed the application and the article will examine the wider implications of the decision.


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