Water Privatization in Indonesia

Color me less than shocked that water privatization schemes in Indonesia have only exacerbated water problems. Like so many nations, Indonesia faced massive pressure from the World Bank and International Monetary Fund to privatize their social services in the 1990s. Facing real problems from the Asian economic collapse in 1997-98, Indonesia agreed to do so. Bill Guerin explores the failures of privatizing the water system of Jakarta. His findings:

"Yet ever since Jakarta's water supply was formally privatized in 1997, prices have risen astronomically while access has dwindled for poor residents. Nearly half of Jakarta's residents now lack a piped water connection, more than the entire urban population of Brazil's Rio de Janeiro, a World Bank sanitation specialist recently noted."

Privatization was simply foisted upon the Indonesian people, and even the government. The process for taking over the water system was not open to the public. There were no public bids on the contracts. No public debate took place. Immediately upon the French and British conglomerates taking over, water prices for Jakarta residents skyrocketed. Water went up 20% in 1998 and another 35% in 2001. Millions of impoverished Jakarta residents could not afford to pay for the most basic element of human existence.

What did the companies do with those profits? They pocketed them. Water supplies did not improve. Jakarta remained depended on dwlinding underground water resources. Promised improvements in the city's shaky water infrastructure never happened.

The Indonesia government is claiming it will resist further privatization schemes. The two major conglomerates have recently pulled out, leaving Jakarta in the lurch. Can the Indonesian government fix the problems building for the last decade? I'm pretty skeptical given the nation's poverty and governing problems. Perhaps they can stop the situation from worsening. But Indonesia will feel the fallout from privatization for a very long time to come.