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Indonesia: Water Law Overturned by Court

(Mar. 3, 2015) Indonesia’s Constitutional Court, on February 18, 2015, revoked the 2004 Law on Water Resources. The Court also reinstated the previous, 1974 Water Law as the controlling legislation until a new measure is adopted. (Fedina S. Sundaryani, Court Bans Monopoly on Water Resources, JAKARTA POST (Feb. 20, 2015); Law No. 7/2004 on Water Resources (Mar. 18, 2004), ECOLEX [click on link for full text in English translation]; Undang-undang Republik Indonesia No. 7 Tahun 2004, Tentang Sumber Daya Air, House of Representatives of the Republic of Indonesia website; The Law of the Republic of Indonesia Number 11 of the Year 1974 on Water Resources Development, FAOLEX; Undang-undang Republik Indonesia No. 11 Tahun 1974 Tentang Pengairan, Constitutional Court of Indonesia website.)

The reason for the decision was reported to be to maintain access to clean water for the whole population. The 2004 Law had permitted private sector companies to sell packaged tap water. The Justices stated that the provisions had been unconstitutional, because the Constitution specifies that the right to water is a basic right and control of water resources is a government mandate. (Sundaryani, supra.)

Article 33 of the Indonesian Constitution states that the “land, the waters and the natural resources within shall be under the powers of the State and shall be used to the greatest benefit of the people.” (The 1945 Constitution of the Republic of Indonesia (as amended through 2002), art. 33 ¶ 3, International Labour Organization website.)

According to the Court, private sector actors will not be granted exclusive rights to particular water resources (rivers, springs, lakes, etc.), but will be able to apply for licenses to sell specific amounts of water, to be determined by the government and local residents. Sales of clean Indonesian water outside of the country will not be permitted. Justice Aswanto stated that the “private sector cannot monopolize water resources and can only sell a limited volume of water.” (Sundaryani, supra.)

The decision came in a case brought by several plaintiffs, including two Muslim organizations, Muhammadiyah and the Indonesian Council of Ulema, together with the former Minister of Youth and Sports Adhyaksa Dault and Rachmawati Soekarnoputri, the daughter of the first President of Indonesia, Sukarno. (Dina Manafe & Markus Junianto Sihaloho, “Incompetent” Ruling Threatens to Leave Indonesia Without Bottled Water, JAKARTA GLOBE (Feb. 26, 2015).)

Reaction to the Decision

Bisman Bakhtiar, an expert on energy and mining law, applauded the decision, stating that the “private sector should not have full control over water resources. The commercialization of water is not prohibited but the government can now be stricter on companies to ensure that no one company is monopolizing water resources.” He also advocated strict sanctions on companies that take water without proper permission. (Sundaryani, supra.)

The Indonesian Consumers Foundation agreed and also called for the government to adopt legislation covering all essential commodities. According to Edo Rakhman of the Indonesian Forum for the Environment, the repeal of the 2004 Law should be beneficial for some communities. Rakhman noted, “[t]his should push the government to protect locals and ensure that their water is not over-extracted by companies.” (Id.)

The Indonesian Minister for underdeveloped regions was also pleased with the decision, stating that the 2004 legislation had benefited private businesses at the expense of the farmers and indigenous communities who had difficulty obtaining clean, fresh water. He said, “[n]ow it is time to empower the local community so that they can manage their resources well to their benefit.” (Manafe & Sihaloho, supra.)

Response from the Industry

According to Troy Pantouw of Tirta Investama, the Indonesian partner of Aqua Danone, “[w]e will follow all legally binding rulings. We will also discuss this with [the bottled water company association] to discuss the possibilities arising from this decision. … We hope the bottled water business can still grow in the future.” (Id.) Aqua Danone employs 12,000 people in the country. (Id.)