Water Supply and Sanitation in Indonesia - History and Recent Developments

History and Recent Developments

The first water utilities in Indonesia, called PDAM after their Indonesian acronym, were set up during the colonial period at the beginning of the 20th century. Following independence in 1945 they became part of local government. In the 1970s the central government became more involved in their financing and management. In 1987 a government act nominally handed water supply back to local governments, but in reality central government remained very involved. Only after the fall of Suharto in 1998 a serious effort at decentralization was made with the local government law of 1999 that effectively handed over responsibility for water supply to local governments.

Jakarta privatization. In June 1997 two 25-year water concessions were awarded without bidding to serve the city of Jakarta beginning in February 1998. A subsidiary of The French firm Ondeo (now Suez), called Palyja, was awarded the concession for the western part of the city and a subsidiary of the British firm Thames Water International called TPJ was awarded a concession for the eastern part.

Policy for rural water supply and sanitation. In 2003 the government adopted a National Policy for the Development of Community-Managed Water Supply and Environmental Sanitation Facilities and Services that provides a clear route map for sector reform (for details see above).