URBANISATION AND WATER INDUSTRY GROWTH IN MALAYSIA : ISSUES AND
CHALLENGES IN THE NEW MILLENIUM
Hashim, N. M.
Spatial Study Unit , Faculty Of Development Science
Universiti Kebangsaan Malaysia
UKM Bangi 43600 Selangor, Malaysia
ABSTRACT
In Malaysia, most river basins are in the process of being regulated but there is a need for
further regulation to meet long term demand. In order to fulfill future needs the water
resources of this country must be managed carefully. The main problem faced by Malaysia is
fulfilling the acceptable quality and quantity of water demand at the right time and place. This
is due to water pollution problem as well as the scattered distribution of rainfall. The quality
and reliability of a source of water vary considerably both in time and space. Under the
Federal Constitution of Malaysia, land as well as water matters are the responsibility of the
states. Hence, in terms of water supply, the states governments are responsible to develop the
resource as well as maintain the good quality of clean water. Under the states legislation, the
authorities or organisations responsible for water works are either state Public Works
Department (PWD), State Water Supply Department, State Water Supply Board or State
Water Supply Corporation or Company. Federal PWD headquarters in Kuala Lumpur is the
coordinating and implementing agency for all water supply planning schemes in Malaysia. It
is noted that more and more states are favouring the formation of water boards or towards
privatisation and some of the states planning towards fully corporatisation of the agency to
reduce the public administration budget. In terms of urbanization in Malaysia, the growth is
still in progress despite the recent economic downturn. Development on the west coast of
Peninsular Malaysia especially the state of Selangor, Negri Sembilan and Johor is espected to
increase in the near future with the commencement of hi-tech based industrial operations and
other forms of manufacturing activities as well as new urban centers. A substantial increase of
water demand is expected and in addition rapid development of landuse activities such as
urbanisation and industrialisation have caused a great change on the quality of water
resources. Based on the above discussion, it seems that the avaibility of water supply will
become insufficient for Malaysia in the near future due to rapid development and population
growth. This paper attempts to highlight the latest government efforts in managing water
resources as well as clean water supply to fulfill the urban demand. It also focusses on the
issues and challenges in managing the resources in line with the principles of sustainable
water use in the new millennium.
INTRODUCTION
Over the years, the Malaysian government through its privatisation policy has accorded high
priority to water supply development since water is regarded as a compulsary need for human
life. This paper will begin with an overview of urbanisation and urban development in
Malaysia in the past two decades. The paper will relate the matter with water supply
development and management in particular discussing the privatisation aspect in water supply
industries in Malaysia. This paper also focusses on the issues and challenges in strategized
sustainable urban water use as well as water supply industry and its management in Malaysia
towards the new millennium.
URBAN GROWTH AND DEVELOPMENT IN MALAYSIA
After Independence in 1957, the post colonial era brought a new dimension of urbanisation
and urban growth. The newly found power in 1963 when Malaysia was formed was used to
alter the urban system led by the British. Since 1957, a significant amount of natural land
cover or forested area in Peninsular Malaysia have been converted to buildup landuse
especially for agricultural purposes by the various type of government agencies. Table 1
showed the land development involved in the five years development in Malaysia.
Table 1 : Land development achievements by type of programme from 1971 to 1995 9(in hectar).
2nd Plan (1971- 3rd Plan (19761975)
1980)
Achievement
Achievement
FELDA
161900
206819
FELCRA
23576
27134
RISDA
19122
12341
STATE
143667
146466
PRIVATE
55502
64545
TOTAL
403767
457306
Source : Modified from Lai, 1991
Programme
4th Plan (19811985)
Achievement
161600
31100
9770
158000
57100
417570
5th Plan (19861990)
Achievement
175745
.
.
160000
17551
353296
6th Plan (19911995)
Achievement
.
.
.
4012
158696
162696
The urbanisation process has brought the population expansion especially at urban centers
due to pulling factors such as job vacancies and others modern and sophisticated facilities
served by the urban areas. Foreign and local investment in agricultural, commercial and
mining sectors had increased the proportion of built up areas as well as urban population in
Malaysia.
Table 2 : Urban population growth in Malaysia (by state)
State
Change in urban population , 19801991 (in thousand)
Johor
433.1
Kedah
181.2
Kelantan
154.5
Melaka
89.8
Negeri Sembilan
111.3
Pahang
116.3
Perak
418.2
Perlis
35.9
P.Pinang
370.5
Selangor
1,143.8
Terengganu
115.5
W.Persekutuan
225.7
Peninsular Malaysia
3,395.7
Source : Modified from Khoo, S.G & Kate, V.K. (1996)
Natural increase (%)
51.8
72.5
67.7
53.3
55.3
54.7
49.9
38.8
36.6
37.0
82.0
118.5
52.3
Based on Table 2, the overall urban population in Peninsular Malaysia is about 52.3 per cent
in 1991. However according to Samad Hadi (2000), the total urban population has increased
to 58.8 per cent in the year 2000. In the year 2000, the state of Selangor, Wilayah Persekutuan
and Penang emerged to be the most urbanised states and has achieved the urbanisation level
of developed countries, i.e 80 per cent the total population is urban dwellers. The same
reason is reffered to the phenomenon where the mentioned states were the leaders in
manufacturing industries in Malaysia.
GROWTH IN THE MALAYSIAN WATER SUPPLY INDUSTRY
In Malaysia, before 1940’s, all the major towns especially in West Coast of Peninsular
Malaysia had their own isolated water treatments. After the Second World War, the
development of water supply continued and the available water treatment plant were
rehabilitated and in addition new water schemes were implemented to meet the increasing
demand. By 1950 the country had 100 treatment plants producing about 195 million litres per
day (MLD) supplying a population of 1.15 million (JKR , 1995). As the population of
Malaysia increased, larger schemes have been undertaken by the government. Based on a
study by Chuan, T.S. (1991), there are more than 400 treatment plants producing
approximately 5000 MLD serving a population of about 14.3 million people.
In terms of water supply coverage, about 98% of the urban population and 75 % of the rural
population are served with pipe water supply and the national coverage is 87% (JKR, 1995).
The total capital for new schemes of water supply for various states in Malaysia is about RM8
billion under the 7th Malaysian Plan. The investment indicated the increment in water demand
was stimulated by the factor of urbanisation as well as increment in standard of living and
urbanisation level. Table 3 showed the estimation of investment that required for water supply
project in Peninsular Malaysia.
Table 3 : The estimation of investment needed for water supply in Peninsular Malaysia.
Period
Additional capacity (MLD)
1996-2010
5780
2010-2020
4279
2020-2050
13844
Source : Rozali ( 1999)
Investment per MLD
3 million
3.5 million
4 million
Total investmnet for each
period
RM17.3 billion
RM15.0billion
RM55.4 billion
Based on Table 3, the huge investment or capital is needed for water supply development in
Malaysia. It also clearly shows the significance of the investment to fulfill future needs. In the
early days when the development and operation of water scheme was low, the Federal
Government financing these projects using the allocated budget or through international
loans or lending agency. When the operation cost and capital involved in water projects
increased, the Federal Government suffered from foreign debt and in some circumstances, the
foreign debt put pressure on the efficiency and performance of central administration. In
order to overcome the financial problem, the Federal has come to the conclusion of
privatisation of water supply scheme in 1983. The transfer activities has seen as a best
solution in terms of reducing the Government international debt as well as avoiding birocracy
in water management. However, the water supply capital works is still under the Federal
Government eventhough the privatisation has tookplace. The reason is to reduce the impact of
water tariff increment if the private sector undertakes the capital wokrs as well as the
investment. The transfer of activities and function from government to the privates sector also
has increased and expand the water industry business not only in domestic but also in the
international level. However, the privatisation of water industry in Malaysia failed to fulfill
the public satisfaction and sometime the transparency of the privatisation process was
questionable.
PRIVATISATION OF WATER SUPPLY UTILITY : ISSUES AND CHALLENGES IN
THE NEW MILLENNIUM
Before 1983, the authorities that managed the water supply sector was either the State Water
Supply Departments (for the state of Selangor, N.Sembilan, Johor, Terengganu and Sabah) or
the State Public Works Departments (Kedah, Kelantan, Pahang, Perlis and Sarawak).
Through the water privitasion policy, that is from 1983 onwards, the state government had
taken initiative to privatize their water department, fully or apart. Some of the state
government had corporatized their water department and others privatized the whole water
supply services. In the year 2000, it is clearly showed that most of the states in Peninsular
Malaysia given way to the privatisation or corporatisation in order to upgrading their
management performance as well as for the purpose of water supply’s project continuity.
However, in reality there are several issues and problems arised regarding the process of
privatisation of water supply utilities in Malaysia. Some of the problems are seen as obstacles
towards privatisation processes as well as threathening the avalability of water resources.
Among the main issues brought to focus in recent years are 1) problems in operationalising
the privatisation 2) Increased of river pollution problems and 3) Lacking of water demand
management aspect.
The privatisation of water supply utilities in Malaysia has given rised to questions from
public. The question of transparency in the process is often highlighted by the public. The
public or the water users always argue who is behind the private sector ; is there any
‘invisible political hand’ or political pressure or political interest in dealing with the huge
mammoth projects awarded to the private sector? A recent newspaper survey revealed that
67% of the respondents disagreed with the water supply privatisation as solution to the water
crisis (water defisit and water mismanagement) in Malaysia, with special reference to the
Sungai Selangor Dam) (NST, 1999). Another issue in water privatisation is the sole emphasis
on water supply management whilst neglecting the importance of water demand management.
For example, the private sector always determines their solution of water crisis by proposing
new dams in the uphills. In Malaysia, the environmental NGO’s raised an issue on which
they agreed about the many options given to the dam operation such as enhancing the
unseenable sources i.e. groundwater where the abundance of these source was still under
utilised in Malaysia (CAP, 1999).
Water pricing is always an issue in water management in Malaysia. According to Ali Hamsa
(1999), under pricing of water makes the privatisation financially nonviable or difficult. At
the moment, the Federal Government is still committed to subsidized or expends billions of
ringgit as well as giving incentives to support the private sector especially in capital works
and long term investment. Recently the Selangor government has announced the new rate of
water tariff rates which has increased 20 to 75 percent. The justifications used by Selangor
government was not relevant at all. The political opposition party has responsed to the matter
and brought the discussion up to the highest level in state management. The same question
arised regarding the water increment i.e the transparency of the privatisation.
Land clearing in the urbanisation process is the main indicator in relating the urbanisation
process to the degradation of water resources in Malaysia. Water pollution and river basin
incapability to serve as water catchment had interupted the production of clean water in
Malaysia. For some reason, treatment plants within the urban corridor often ceased
operations due to water pollution. In the survey done by NST (1999), the respondents has
pointed out three factors influencing river pollution i.e. i) lack of official enforcement, ii)
indiscriminate garbage disposal and iii) excessive land development. In Malaysia, less
attention given to water demand management. As far as the water distribution is concerned,
the percentage of water wastages (non-revenue water- NRW) is very high and creates an acute
problem. The NRW ranged from 20 to 60 per cent in 1995 (Government Of Malaysia in
Chan, N.W ; 1998). The NRW actually calculates all wastage of water through leakages,
illegal connection and other losses.
As stated by the Director-General of the Department of Irrigation and Drainage (DID)
Malaysia ‘the key area in privatisation is to have more transparency in the process’ (Keizrul,
1999). Besides that, the public satisfaction factor must be considered as an important agenda
in privatisation. Make in a such a way that water becoming the ‘everybody’s business’.
According to Johari (2000), for privatisation succeed, there should be competetion in the
supply of public services. In terms of maintaining the ecosystem health, water resources
(water surface and underground) should be managed in the integrated drainage basin
perspective with special reference to urban drainage to control urban pollution loads. In order
to put this into practise, the use of the available National Water Resources Council will
accelarate this target. The ideal holistic and integrated drainage basin management governed
by the Council with special focus on water resources management as a main part of the
system was the only solution towards sustainable water use as well as conserving resources.
CONCLUSION
The concept of managing water resources through a holistic integrated drainage basin
perspective should be pursued in the new millennium. The governments (Federal and States),
the public as well as the private sectors must work together as partners in this business in
order to achieve the earlier mentioned objectives. All parties should feel as the stakeholders
in the ‘company’ in which they must have the same concern, the same target eventhough they
act in the different roles.
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