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27 MARCH 2002 CAREFUL STUDY AND JUSTIFICATION NEEDED BEFORE PRIVATISATION OF WATER IN MALAYSIA The Consumers' Association of Penang and Sahabat Alam Malaysia today urged the Cabinet and the Works Minister not to proceed with any plans to privatize the management of water until a full and careful study justifying the benefit of such a move is in place. We are deeply concerned by Datuk Seri S. Samy Vellu's comments in newspapers today that Malaysia may have to privatize water management fully as it is no longer viable for State Governments to shoulder the heavy role of water supply. He was reported to have said that the privatization proposal was in accordance with the Asian Development Bank's recommendation that advised governments to open up and privatize water management and allow investors to set their own charges to ensure profit. He did however give the assurance that water tariffs would always be subject to government control. The Minister was going to table a report to the Cabinet highlighting the problems faced by State Governments in supplying water and the solutions. Water is an essential public resource which must be controlled and managed by the Government in the public interest. Handing this very vital resource completely over to the private sector for profit will have serious consequences, as it can result in the inequitable distribution of water where the poor who cannot afford water will suffer. Ensuring adequate water resources also involves environmental considerations, such as proper watershed management and conservation natural resources such as forests and the protection of highlands. This cannot be left to the private sector. Further, claims that privatization will definitely bring benefits to the Government and the public must be definitely proven and amply justified before implementation. Recent experiences both in Malaysia and in other countries are enough lessons to undertake a prudent and cautious approach in privatization policy. In Malaysia itself, the IWK experience in sewerage privatization and the subsequent government intervention is a clear example of lessons to learn from. Currently in the United Kingdom, the railway system has been nationalized due to problems in privatization. The same was the case with the privatization of power in California recently that led to major problems for consumers. The Malaysian Government must not blindly adopt ADB policies without careful consideration as to whether such policies are in our national interest. Further, the 8th Malaysia Plan has stated that a National Water Policy is currently being formulated to provide the framework for water conservation and management. This policy is long overdue and must be expedited. Consultations with the public are also essential in ensuring feedback and valuable inputs into the development of the policy.
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