Indonesian water governance field work underway

Indonesian water governance field work underway

An IWC-led research team has recently completed the first of three case studies under the Australian-Indonesia Infrastructure Research Award (AIIRA).
Indonesian water governance field work underway

Declan Hearne and Bronwyn Powell from IWC, Prof Brian Head (University of Queensland) working with local researchers, Bebi Sutomo, Hendrik Sipahutar and Fatmawati Voysey, spent two weeks in Ende, Flores, conducting research on the challenges facing local governments, water utilities and the sustainability of services in the current governance context.  Activities included interviews with key stakeholders, focus groups discussions and a workshop with a wide range of stakeholders from local government, the water utility (PDAM) and consumer representatives.

Decentralisation and water supply in Indonesia

Ende Indonsia 1Whilst coverage figures vary, Indonesia is considered to be ‘on track’ for meeting the Millennium Development Goal number goal 7 for improved water supply. With much progress already made, the Government of Indonesia (GoI) has set even more ambitious targets – to achieve universal access by 2019. The coverage provided by local water utilities is seen as a major part of meeting this goal. Severe lack of investments in local water utilities and stagnant water tariffs has resulted in an overall decline service delivery of capacity of local water utilities.

The decline in investment can be in part attributed to the Indonesian decentralisation process which started in 1999 and saw the transfer of a wide range of responsibilities from central to local government.  Whilst decentralisation was embraced by many local governments as it allowed for increased autonomy, it also brought greater responsibilities. Many local governments still struggle with the full range of responsibilities required of them from planning, infrastructure investment and maintenance and the provision of basic services such as water and sanitation.

Decentralisation saw the conversion of water supply departments under the national Ministry of Public Works into water utilities (PDAMs) as corporations own by local government. Under this model PDAMs are to be self-financing, however few in Indonesia have actually achieved full cost recovery status.

Governance challenges

Ende Indonsia 4Support given to water utilities (PDAMs) has traditionally focussed on technical improvements. However both international and local literature from Indonesia acknowledges that internal improvements focused only on operational capacities of PDAMs is insufficient if the operational environment in which the PDAM operates remains unsupportive. To explore opportunities to reform both the internal and external environment, the Indonesia Infrastructure Initiative (IndII) has piloted a partnership process which provides internal operational incentives only when the local governments agree that they will take steps to create a more conducive enabling environment for PDAMs. The process resulted in a memorandum of understanding and was known as a ‘social contract’ between the local mayor, the PDAM, the local water utility supervisory board and IndII. The purpose of this research project is to understand the potential of ‘social contracts’ as a tool to improve the external environment of PDAMs, and the services they provide.

The IWC with The University of Queensland is characterising the governance environments under which PDAMs operate to identify the potential for policy to stimulate the creation of positive governance relationships. In other locations such as Palembang, South Sumatra, where the PDAM has shown dramatic service delivery improvements, key characteristics for this success have included: strong leadership and support from the local mayor, the appointment of PDAM personal through fit and proper processes, direct capital investment to ensure the PDAM has the capacity to deliver water services, and support to tariff reform that supports cost recovery.

Ende Indonsia 3








In areas where governance and leadership aren’t as strong and where resources are scare, one of the first government activities sacrificed is proper coordination. A lack of coordination and poor understanding of roles and responsibility does not provide a productive environment for the reform of services. Between 2010 and 2011 IndII supported a six-month piloting of the social contract process – which including the signing of MOUs (the social contract) and agreeing a range of improvement steps for PDAM and local governments. The process was facilitated by IndII consultants and included internal performance measures such as increased distribution capacity, improved billing systems and training of staff, and in return, the local government was to take steps to better support tariff reform.

Ende in East Nusa Tenggara is the first of three case studies in the research. A further two will take place in early 2015. Analysis form all three case studies will be used to develop a policy note for the Indonesian government to direct how and when partnership agreements, such as the social contract, may be useful to unlock the benefits from effective collaboration in the governance of local water unitises.


Photos courtesy Declan Hearne, IWC

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