The shape of the world a generation from now will be influenced far more by how we communicate the values of our society to others than by military or diplomatic superiority. William Fulbright, 1964

Thursday, August 30, 2007



The trade of the urban water carrier is medieval. It started long before the discovery of steel and the ability to shape it into piping. But these remnants of a pre-industrial age still ply the kampongs of Indonesia’s big cities, dragging crude two-wheeled carts awash with plastic drums of clean, but not potable, water.

These traders have bought the water from anyone with a tap that’s connected to the public supply. By the time this essential commodity is doled out to the end users, usually in pails of just a few litres, the price has jumped to 33 times the standpipe cost.

Good business for the supplier, but a raw deal for the consumer. And this is no niche market; 40 per cent of Indonesians don’t have access to piped water, so those who can’t afford the water carts use rivers for their ablutions. Watching waterways can be a relaxing pastime in other countries, but the stench and color of Indonesia’s trash-choked rivers is not a savory experience.

This grossly unfair trade in water was exposed in a World Bank report titled Voices of the Poor. The business exists because public utilities believe that if they install piped water in the poorest kampongs users wouldn’t have the money to pay their monthly bills like residents in upmarket areas.

But the World Bank researchers who undertook what they claimed was ‘the most comprehensive assessment of poverty in Indonesia for the last ten years’ say the poor can and will pay for cheap tap water.

On the surface it seems like an easy-fix issue demanding no high-tech solutions. Extend the reticulation, install a meter and register users. It’s not difficult paying bills in Indonesia where officials make regular visits to homes to collect dues and the culture tolerates tiny trades. It’s even possible to buy single cigarettes while basic commodities, like washing powder are sold in sachets affordable to those with little cash. And that’s a lot of people.

The Indonesian government reckons about 40 million live below the poverty line of spending US $2 a day, with a further 100 million teetering on the edge. In total that’s more than half the population.

But the water suppliers, known as PDAMs, are in a financial mess of their own. In the post-Soeharto shake-up they were transferred to local governments and many have become insolvent. They’ve been shackled by restrictions on borrowing so can’t spend on boosting services.

All that’s lacking is the political will to implement a new system – and that’s where the problem lies – not with lack of funds.

In fact the country is awash with cash according to a just released public expenditure review assembled by the World Bank along with the Indonesian Government. The review trumpeted:

“Indonesia’s post-crisis period is over; the country now has sufficient financial resources to address its development needs.’ This is the result of frugal accounting, revenue boosts and slashing subsidies – policies that have produced a US $15 billion windfall.

This is the biggest boost to the coffers since the 1973-74 oil shortage when prices suddenly quadrupled as a result of the Yom Kippur war, giving primary producers like Indonesia massive profits.

But how to spend this sudden surge of money? In the days when iron-fisted General Soeharto ran the country all expenditure was determined in Jakarta.

Suharto quit in 1998 after the Southeast Asian economic meltdown and massive riots against his authoritarian regime. Now Indonesia has democracy and decentralization. Of last year’s US $70 billion budget US $25 billion was distributed to provincial governments. The theory is that these administrations should know where the real problems lie – but that doesn’t mean they’ll be fixed.

For the 32 years of Soeharto’s rule the regions were denied any effective say in the nation’s affairs. They proposed projects that might or might not get the nod, according to the whims of bureaucrats in Jakarta and the political contacts of the provincial governor, usually a retired general.

The lack of ‘good governance’ skills at the local level has led to aid donors, like Australia, funding training programs to teach officials how to handle budgets and make decisions. But the bureaucracy is a lumbering, clunking rundown machine, the result of Soeharto’s ‘disguised unemployment’ policies of filling fictitious jobs.

Spending on government administration, excluding teachers and health professionals, saps almost 12 per cent of the budget. Similar countries allocate half this percentage.

Government desk jockeys are fearful of change; one study showed local administrations were taking nine months to frame annual budgets leaving only three months to quit the cash. Another factor making bureaucrats twitchy is the fear that if every piece of paperwork hasn’t been signed and stamped by a boss, they may be charged with corruption. At last count a massive 3.1 per cent of the GDP – that’s US $10 billion remained unspent.

In the past officials openly topped-up their meager salaries by taking a cut on projects. Deals with private contractors were inflated by up to 20 per cent with the surplus distributed to the pen pushers. This system, though now illegal, remains deeply entrenched.

So although Indonesia can now pay its bills the World Bank claims investment in infrastructure is only three per cent of GDP. This is half the expenditure recorded before Soeharto stepped down. Indonesia has now slipped way behind its neighbors, with a large number of its citizens unable to get basic services. Apart from the water problem, one third of the population doesn’t have access to electricity and most secondary and suburban roads would be better classified as goat tracks.

Past pro-poor programs have relied heavily on subsidies, though these are grossly inefficient and shoot wide of the mark. Although some fuel subsidies have been erased (the pump price of premium petrol is less than US $ 0.50), fiscal props still account for an outflow of US $12 billion a year. Most of this goes on electricity, which is good news for those with air conditioners and washing machines.

Indonesia, the world’s fourth most populous nation, is a signatory to the Millennium Development Goals, a worldwide bid to reduce poverty by 2015, with access to clean water a critical factor in improving health. So will a cashed-up Indonesia now seize what the World Bank calls ‘a unique opportunity’ and ensure all its citizens get access to taps, even if the water has to be boiled before drinking?

Don’t bank on it. The 500 people interviewed for the World Bank report took the opportunity to bad-mouth public administrators, a right they dare not exercise during the Soeharto era when dissidents might vanish, the media was muzzled and anyone in a uniform had to be respected – and feared.

Commented report author Nilanjana Mukherjee: “I've seen some radical changes in the past few years and a lot more people in the bureaucracy are open to dialogue. I think the water problem may be fixed but I fear the sanitary issues may not be addressed. There are major environmental problems here and the government isn't doing a lot.”

Old habits die hard: According to citizens surveyed the attitude of many government officials is that poor equals stupidity. So there’s no need to explain policies or enlighten those at the bottom of the heap with information that might get them uppity. As the proverb goes, what you don’t know, you don’t miss. The water carriers will be in business for a while yet.

(First published in Online Opinion (Aust) Aug 07) ##

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