By Wan Saiful Wan Jan

16 August 2009

This week (16 – 22 August 2009) is World Water Week. Hosted by the Stockholm International Water Institute, the theme this year is “Accessing Water for the Common Good”. A series of seminars and talks are being held in Stockholm to examine the topic from a global perspective.

To mark this year’s World Water Week, the Malaysia Think Tank is publishing the report “Water Provision in Malaysia: Privatise or Nationalise?”. The report, which can be downloaded here, looks at what we can learn from the global successes and failures of water management.

Our aim with this report is to make clear that the priority for any public policy, including the management and provision of water, must be the general public good. Policymakers need to put in place the policy that is best for the public, not the one that best suits their personal, political or ideological agenda.

Especially when it comes to critical resources like water, the ultimate goal must be to find who can best deliver an effective water supply at the best value for money for consumers.

For several years Malaysia has seen a growing resentment against private sector management of water supply. But those who support state management of water may find that their stance against privatisation of water services has more to do with ideology or pre-suppositions, and little to do with fact.

To understand why previous drives for privatisation in Malaysia received hostile reactions, we must dig a bit deeper. The purpose of privatisation, ultimately, is to allow healthy competition in the supply market to replace harmful monopoly. But, in the case of past Malaysian privatisations, what was dubbed “privatisation” failed to create much hoped for competition.

The lopsided agreements and exclusive rights granted to politically-connected firms meant that the monopoly remains. What the government called “privatisation” was simply a transfer of monopoly from the state to its various appendages which were repackaged as corporate entities. Simply, these so-called ‘privatisations’ were fake.

The poor way in which privatisation à la Malaysia has been carried out has turned many Malaysians against the privatisation of national assets or public utilities, especially when it comes to a vital resource like water. When one considers the abuses and inefficiencies that have occurred, one is indeed inclined to share their frustrations.

But, as shown by essays in our report, and the Malaysian experience of “faux-privatisation” over many decades, there is actually a strong case for challenging the total state management of water in order to allow consumers to make their own decisions.

The report’s first essay, “The Cochabamba Water War: An Anti-Privatisation Poster Child?” by David Bonnardeaux, explains why using Cochabamba, Bolivia as an anti-privatisation poster child is not only misguided but also counter-productive. If we are to collectively reach the goal of universal water provision and sanitation coverage, it is time to set aside ideological rhetoric, recognise that Cochabamba was the result of a unique set of circumstances, and assume a more pragmatic stance.

The second essay, “Chile: A Dynamic Water Market”, by Maria de la Luz Domper, presents a different picture. Drawing on Chile’s experience of nearly three decades, de la Luz Domper argues that the emergence of a water market in Chile has brought greater and better water provisions to its citizens.

In the third essay, “Water Provision for the Poor: How Ideology Muddies the Debate”, the author Alex Nash describes how campaigns by anti-privatisation ideologues, despite their claims of speaking on behalf of the common people, only result in a staunch defence of the corrupt, lazy or incompetent public utility managers and politicians.

Our report argues that, ultimately, Malaysians must shift the focus away from the pointless debate on private vs. public sector provision, and instead concentrate on what will benefit the rakyat most.

To improve the quality of water provision in Malaysia, what we need is a relaxation of regulations that prevent competition in the water market. There should be more than one service provider so that they can compete with each other to provide us, the rakyat, with the most efficient service at competitive prices. We should have the choice of which service provider we want to buy from. We have the right not to be ordered around by politicians who think they know best.

Liberalisation, if accompanied by greater competition and choice, ultimately benefits the consumer. On the other hand, monopoly, be it by the state or private sector, will only deny the citizens of Malaysia the right to choose what is best for themselves.

If Prime Minister Najib is serious about his economic liberalisation agenda, then liberalisation of the water industry is one area that he needs to look into. We know from Malaysia’s own experience that state intervention usually results only in corruption and cronyism. True and proper liberalisation – not a repetition of faux-privatisation like before – can significantly reduce this.

Evidence and experience, as presented in the essays in our publication, show that a truly competitive free market that empower the people are still the best way for us to ensure a better water provision for all Malaysians.

Only through the free water market can power be taken away from self-interested politicians and their cronies, to be vested back into the hands of the rakyat.

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Wan Saiful Wan Jan is Director General of the Malaysia Think Tank.

The report “Water Provision in Malaysia: Privatise or Nationalise?” can be downloaded free here.

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