Legislative Body Proposes That Investments in Drinking Water Supply Projects No Longer Require PDAM Approval

Wahyu Sanjaya, a member of the Legislative Body (“Baleg”) of the House of Representatives (“DPR”), has proposed that private investment in drinking water supply system (“SPAM”) projects no longer require approval from regional drinking water company (“PDAM”). According to him, PDAMs have often been resistant to private sector involvement, thereby hindering investment.

Based on Law No. 17 of 2019 on Water Resources, as amended by Regulation of the Government in Lieu of Law No. 2 of 2022 on Job Creation (collectively referred to as “Law 17/2019”) and Regulation of the Government No. 122 of 2015 on SPAM (“Regulation 122/2015”), PDAMs serve as the primary gateway for private-sector collaboration on drinking water supply projects. However, even though the private sector is willing to invest in advanced technology, it often faces obstacles because PDAMs do not grant approval. “It’s true that there has been a PPP (‘public-private partnership’) scheme all along, but whether or not approval is granted ultimately comes down to the PDAMs,” said Wahyu.

Wahyu proposed that, under the Draft Bill on Drinking Water and Sanitation, the investment licensing process for SPAM be directly granted to the central or regional government. According to him, this step needs to be regulated so that investment plans do not stall at the first level, namely PDAM. As a result, drinking water supply programs can develop more evenly throughout Indonesia without relying solely on funds from the State Budget (APBN) and the Regional Budget (APBD).