In February 2004, despite public criticism and strong opposition, the Indonesian Parliament approved the Water Resources law. Among other things, the law provides for the decentralization of control over Indonesia’s water resources to regional entities and water user associations. It also contains provisions allowing for private sector involvement, which led critics to argue that the law would also pave the way for the privatization and commercialization of Indonesia’s water resources, possibly threatening the people’s access to safe and affordable water. The law’s clearance allowed for the long-delayed disbursement of the third and final tranche, totaling US$150 million, of the World Bank’s Water Resources Sector Adjustment Loan. This loan provides balance of payments assistance for policy, legal, regulatory, and administrative reforms in the water resources and irrigation sector.
Three months later, the Indonesian government discussed plans to privatize state-run regional water companies. The Minister of Settlement and Regional Infrastructure Patana Rantetoding claimed that “Of some 300 state-owned water companies in the country, only 9 percent are considered healthy.” Stressing the need for better management, he announced that several IFIs, including ADB and the World Bank, had pledged to fund the program. Activists consider the government plan a confirmation of their suspicion that the water resources bill was indeed the start of a privatization process that will, in the words of Heine Nababan, a member of the Coalition of People’s Right to Water, turn water into a profit-oriented business.