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Indonesia Contextual Analysis in Water Supply and Sanitation Sector


1.1. Geography, Demography and Economy

Indonesia is the largest country in Southeast Asia, both in population and in area. It is an archipelago between the Indonesian Ocean and the Pacific Ocean. It has 17,508 islands of which 6,000 are inhabited. The length of archipelago is approximately 5,500 km running east-west, and its width is 1,770 km. The total land area is approximately 192 million ha. The islands are divided into three major groups, namely Greater Sunda Islands, which includes the islands of Sumatra, Java, Kalimantan, Celebes, and Papua. The other two groupings are the Lesser Sunda Islands (Nusa Tenggara) and the Maluku Islands.
Figure 1. Map of Indonesia

Indonesia has a total population of 237.5 million (2008), with an average population growth rate of 1.17% (2008). The distribution of population is uneven among the islands; with Java (the smallest among the major islands) being heavily populated (around 65% of the total population). Indonesia is divided into 30 provinces, 2 special regions, and 1 special capital city district. Following the implementation of decentralization beginning 2001, the 440 districts or regencies have become the key administrative units responsible for providing most government services.

Agriculture is Indonesia’s major economic activity. Water is a central input for agriculture production. Potential water resources include rainwater, groundwater and surface water. The amount of water in Indonesia fluctuates by season and it is distributed differently among the regions. In general, most Indonesian regions have an annual rainfall of about 2,000 – 3,500 mm (60 percent). Some areas (3 percent) have annual rainfall over 5,000 mm and other having rainfall of less than 1,000 mm annually.

With an average annual rainfall of 2,700 mm, only an average of 278 mm (10 percent) infiltrates and percolates as ground water. The  remaining (larger) portion flows as runoff or surface water. If this water – groundwater and surface water – can be managed properly, it would readily be available with a total amount of about 2,100 mm annually.

Indonesia is rich in natural resources – oil, gas, minerals, timber and rubber. Recently, the government has reduced its income dependence on oil and gas by encouraging investments in agriculture, forestry and manufacturing. More than half of Indonesia’s workforce is employed in agriculture, as small farmers or laborers on large estate. Another one-third of the workforce is in the service sector, and more than 10 percent are in manufacturing. Millions work in the informal sector, as street trading, making goods at home, or scavenging for scrap items.

Indonesia has a market-based economy in which the government plays a significant role. It owns more than 164 state-owned enterprises and administers prices on several basic goods, including fuel, rice, and electricity. In the aftermath of the financial and economic crisis that began in mid-1997, the government took custody of a significant portion of private sector assets through acquisition of nonperforming bank loans and corporate assets through the debt restructuring

The following is the economic profile described in the state budget 2008: 
•  Indonesia economic growth 2007 is 6.3% and will be estimated up to 6.8% in year 2008. 
•  Indonesia Gross Domestic Product in 2008 at the current level of growth will be come to Rp 4,306.6 trillion (US$ 478.5 billion).
•  Total government expenditure for 2008 will increase to Rp 863.4 trillion, with spending for capital goods- which will mostly be for infrastructure 48% to Rp 101.5 trillion 
•  Central Bank interest rate is 8% in 2007, and expected to 7.5% in 2008
•  Un-employment 10% in 2007 and expected to come down to 8% in 2008 
•  Income per-capita 1900 US$/years in year 2006-2007, it is increase from US$ 600/year in year 1997-1998.
•  Level of poverty from year 2000 to 2004 were decreased from 19.14%; 18.41% ; 18.20;  17.42% ; 16.60%, but increase to 17.75% in 2006. 
•  Indonesia Corruption Perception Index (CPI) is 2,4

The recent national economic profile, 2005-2008, presented below.

Table 1. National Economic Profile 2005-2008

Indicator 2005 2006 2007 2008
Economic growth (%)  5,7 5,5 6,3 6,1
Unemployment (%) 11,2 10,3 9,1 8,4
Poverty rate (%) 16 17,7 16,6 15,4
Inflation (%) 17,1 6,6 6,6 11,1
Exchange rate (to USD) 9,840 9,020 9,419 10,950
Central Bank rate (1 year) (%) 12,75 9,75 8,00 9,40
Stock composite index  1162,6 1805,5 2745,8 1355,4
State budget deficit (%) - 0,5 - 0,9 - 1,3 - 0,1
Forex reserves (USD Billion) 34,7 42,6 56,9 51,6
DSR (%) 17,3 24,8 19,2 4,7

Sources : Central Bureau Statistic (2005-2008), Bank Indonesia/Central Bank (2005-2008), Department of Finance(2005-2008), National Planning Board (2005-2008), Jakarta Stock Exchange (2005-2008).

Indonesia has managed its government debt burden well. The broadest measure of the impact of debt is the ratio of total government debt to total economic output or GDP. The ratio of public debt to GDP has fallen from 100 percent (1999) to 40.8 percent in 2006 and is expected to decline to 30-35 percent by 2009.This is comparable with neighboring countries.

Due to growth, fiscal performance and a strengthening currency, debt levels are now on par with regional competitors. As of end-2006, Indonesia’s government debt to GDP ratio stood at 40.8 percent. This level is comparable to regional competitors such as Thailand and Malaysia, and much better than the Philippines.

1.2. Water Resources
The Indonesia’s 1945 Constitution article 33 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 statement “under the control” does not mean all activities should only be implemented by the government, it is allowing to at certain extent on natural resources to be utilized by private, community or cooperative however it should be under the control of the Government. This includes land and water having economic value and social functions. Utilization should be based on sustainable manner and for the maximum prosperity of Indonesian people.

Law No. 7 Year 2004 on Water Resources stipulates that water resources shall be managed based on the principle of conservation, balance, public benefit, integrity and harmony, justice, independence, as well transparency and accountability. Based on this main governing law in water resources, river area shall mean the  integrated water resources management area in one or more river flow areas and/or small islands having an acreage that is less or the same as 2.000 km2. The stipulation of the river area comprise the river area in one regency/municipality, trans regency/municipality river area, trans provincial river area, trans national river areas and
nationally strategic river area.

Data on water resources which includes  surface and groundwater shows that the potential of surface water is among others are in Papua 1.401 x 109 m3/year, Kalimantan 557 x 109 m3/year, and Java 118 x 109 m3/year. Surface water is scattered in river bodies (5,886 units), in lakes, dams and wetland (33 million hectares).  Around 64 of 470 watersheds in Indonesia are in critical condition. Of those critical watersheds are 12 areas in Sumatra, 26 areas in Java, 10 areas in Kalimantan, 10 areas in Sulawesi, 4 areas in Bali and Nusa Tenggara, 4 areas in Maluku, and 2 areas in Papua.

River water quality in Indonesia is mostly affected by domestic waste as well as industrial and agricultural waste. River water monitoring has been carried out in 30 Provinces in 2004, with samples taken twice per year. The monitoring result indicates that parameters of DO, BOD, COD, fecal coli and total coli form are mostly above the water quality standards class I under Government Regulation 82/2001. For biological parameter especially fecal coli and total coli forms indicate most river in populated areas such as Java is very critical, for example in Kulonprogo River (Central Java), Ciliwung (Jakarta), and Citarum (West Java). Whilst, more than 98% of all water is groundwater, only the rest of 2% is in rivers, lakes and reservoirs. One half of this 2% is in artificial reservoir. Monitoring to 48 wells was conducted in Jakarta in 2004, and indicated that most of wells has contained coli forms and fecal bacteria. Iron (Fe) concentration in groundwater of Jakarta has been increasing, which some wells contain iron above the standard. Percentage of Jakarta’s wells containing Mangan (Mn) above standard was around 27% in June 2005 and increased to 33% in October 2005.

 Increasing population and development cause the increasing need for water resources. On the other hand, water resources availability is getting limited and critical at several locations. The decrease of water resources is due to some  factors, namely pollution, deforestation, heavy agriculture activities, the change of function of water catchment area, water user behavior, and natural phenomena (global climate change).

 Indonesia population growth rate is about 1.17% annually. Man activities and development for food production, housing, energy, industrial products, domestic purposes, have continued to put pressure on the existing water and water resources. The availability and performance of water resources infrastructure and  facilities in Indonesia can be illustrated as follows.

Number of rural household without access to drinking water is 30.88% in 2003 and without access to sanitation is 36.04 %. Clean water supply system serves about 45 million or 40% of urban population and 7 millions or 8% of rural population. Poor water continuity in water stressed areas forcing poor people obtains water at higher price than those with higher income. In Bengkulu, North Maluku, Central Kalimantan and West Kalimantan Provinces, drinking water supply mostly is obtained from river and unprotected wells. In several large cities, 73% of water need for household is obtained from groundwater sources. Total irrigated land is 6.77 million ha, where most of its water supply is critical to seasonal river flow factor (only 800,000 ha of water is supplied from dam). River basin infrastructure and  its utility facilities (i.e. irrigation networks,
water supply and sewerage facilities) are not in perfect technical conditions and also far from adequate. Hydrological network has not adequately receiving appropriate attention.

Other problems faced with respect to the institutional aspect are the limited role of the government at central and regional levels, weak institutional capacity in monitoring and evaluation, weak coordination among sectors, and absence of high-quality national strategic planning. The role of government institutions at central and regional levels is more dominant on development and rehabilitation of existing infrastructures. Monitoring and evaluation of water resources condition still is not adequate in term of its institutional capacity as well as the quality of its personnel. Some sectoral programs that are expected to contribute to the water resources conservation efforts is still not integrated. Performance of sector related to water resources conservation is not as yet adequately optimized due to weak coordination among sectors. And, absence of good national strategic planning  that could become reference and framework in program preparation and activities among various sectors and among region is also influential. These physical and institutional problems are being compounded with social problems due to negative water user behavior. Water saving  practice for irrigation up to present is still experiencing a number of constraints, especially due inefficient use of water that waste water, time, energy and also money. Furthermore not all farmers are organized in Water User Organization. Application of water saving technology is still limited while water consumption and water pollution is increased. The problems are further worsening by lack of controlled of pollution due to industrial waste.

These problems have contributed to the degradation of watersheds in various locations. Watersheds (DAS/river basin) which are being damaged and becoming critical are increasing. Data in 1984 showed 22 critical DAS and in  1992 the total critical DAS increased to 39, furthermore in 2005 it rose to 62 critical DAS. The facts of course cause more flood, drought, erosion and sedimentation all over Indonesia.

Land management in the upper watershed without consideration to soil and water conservation tends to create critical lands, causing devastating floods and drought in the middle and lower areas. Indonesia at present has approximately 8 million ha of critical agricultural land. Water functions such as lakes, rivers, or dams as well as irrigation canals tends to decrease along with an increasing rate of soil erosion creating siltation and swallowing processes. Water consumption tends to increase with population increase and sector's development that produces pollutant or by products. Inefficient irrigation  water management due to irrigation facility damages and inefficient irrigation water practices at farm levels lead to overuse of irrigation water. Extreme climatic change can give rise to flood and drought disaster. Such disasters are often caused by abnormal global climate changes, such as El Nino or La Nina. Long drought periods destroying hundreds of thousands of hectares of paddy rice field occurred in 1991, 1994, and 1997. Over pumping of groundwater without considering the ecosystem threshold has created intrusion of seawater, groundwater pollution, and land subsidence. Weak water user associations have also reduced the effectiveness  of irrigation water management at the farm level. To illustrate, it is reported that of 39,000 existing or newly created water user associations, only 11,000 units (28%) are in fact developed enough to function properly.

Indonesia is categorized as economic water scarcity country. Its water balances by islands (2003) shows that water deficit occur in the dry season in the islands of Java, Bali, and Nusa Tenggara Barat. Other islands show surplus during the wet and dry seasons. Total current water demands for domestic, irrigation, municipal and industry reach 1,074 m3/second. Water availability during low flows (dry season) at normal year only reach about 790 m3/second or only about 76% of the total water demands. In term of island viewpoint, water deficit occurs in islands in which population is dense and water availability is limited such as islands of Java, Madura, Bali, NTB, and NTT.

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