water supply and sanitation in malaysia water supply and sanitation in malaysia water supply and sanitation in malaysia is characterised by numerous achievements, as well as some challenges. universal access to water supply at affordable tariffs is a substantial achievement. the government has also shown a commitment to make the sector more efficient, to create a sustainable funding mechanism and to improve the customer orientation of service providers through sector reforms enacted in 2006. the reform creates a modern institutional structure for the water sector, including an autonomous regulatory agency, an asset management company and commercialised state water companies that have to reach certain key performance indicators that will be monitored by the regulatory agency. the government has also stated its intention not to embark on new private sector contracts for water provision, after a bout of such contracts during the 1990s showed mixed results. malaysia: water and sanitation data access to an improved water source 100% access to improved sanitation 96% continuity of supply (%) not available average urban water use (liter/capita/day) 344 (total), 226 (residential) average water and sanitation tariff (us$/m3) 0.39 (2007) share of household metering 100% annual investment in wss unknown share of self-financing by utilities low share of tax-financing high share of external financing unknown institutions decentralization partial (operation and maintenance at the state level) national water and sanitation company pengurusan aset air (asset ownership for water), indah water konsortium (sanitation) - both only for peninsular malaysia water and sanitation regulator national water services commission (span) - only for peninsular malaysia responsibility for policy setting ministry of natural resources, environment and climate change sector law water services industry act 2006 number of service providers 12 (water only) a number of challenges remain, only some of which have been addressed by the reforms. first, tariffs are low, thus making cost recovery impossible at current levels so that the sector continues to depend on government subsidies. second, water losses as well as per capita water use remain high despite efforts at water demand management. third, a large-scale water transfer project from the pahang river to kuala lumpur is controversial because of its negative social and environmental impacts. fourth, the development of sewerage and wastewater treatment has lagged behind the development of water infrastructure. for example, much of the collected wastewater is not yet being treated. the sanitation sub-sector has been excluded in the 2006 reforms of the water supply sub-sector. water resources and use surface water stored in reservoirs, such as this reservoir supplying penang, are the most important source of drinking water supply in malaysia water resources in malaysia are abundant and available throughout the year. they are estimated at 580 km3/year (average 1977-2001), equivalent to more than 3,000 cubic meters per capita and year. in 1995, total water withdrawal was estimated at 12.5 km3, or less than 3 percent of available resources. 76 percent of water was used for agriculture, 11 percent for municipal water supply and 13 percent for industries. thus only less than 1% of available water resources is used for drinking water supply. malaysia is geographically divided in peninsular malaysia and eastern malaysia. peninsular malaysia is drained by a dense network of rivers and streams, the longest being the pahang river. other major rivers in the peninsular malaysia are the kelantan river, terengganu river, dungun, endau river, sedili besar river and selangor river. the west coast of peninsular malaysia is more urbanised and industrialised than the sparsely populated and water-rich east coast. major rivers in eastern malaysia include malaysia’s longest river, the rajang river (563 km) in sarawak. kuala lumpur's growing water needs require either better demand management or additional supplies kuala lumpur example. the malaysian capital kuala lumpur and selangor state, which surrounds the capital, are the industrial heartland of the country and home to almost half its population. the constant growth of the metropolitan area increases its water needs. in 1998 the main sources of water supply for the area were the ampang intake (18 megaliter per day) built in 1906, the klang gates dam (28 megaliter per day) built in 1928, and the semenyih dam (545 megaliter per day) completed in 1984. in february 1998 a water crisis had occurred as water levels in all three reservoirs dropped simultaneously. water rationing had to be introduced shortly before the commonwealth games were held in the city. the crisis was blamed on a drought induced by el nino. however, actual rainfall in the preceding months had not been significantly below average (according to 1998 klang valley water crisis). the government used the crisis to justify plans to build a mega project, the pahang-selangor raw water transfer project. the project includes the construction of the kelau dam on the pahang river in the neighbouring state bearing the same name, as well as the transfer of water via a tunnel through a mountain range. only months after the 1998 klang valley water crisis, the sungai tinggi dam had been completed with a capacity of 475 megaliters per day, thus increasing the supply to the klang valley by about 80%. the dam was part of the first phase of the selangor river water supply project. the second phase of the project was completed in december 2000, providing another 475 megaliters per day. the third phase was completed in july 2005, providing an additional capacity of 1050 megaliters per day. the three phases of the project thus increased the water supply capacity in the klang valley by 1950 megaliters per day. it thus more than tripled the water supply capacity to the klang valley in only seven years. as of 2005, total water resources for the kuala lumpur and selangor area were 2541 megaliter per day for 7.3 million inhabitants. this corresponds to 348 litre per capita and day, which is three times as high as, for example, per capita water use in germany. water from the pahang river is planned to be diverted to kuala lumpur to sastify the increasing water demands of the city and its fast-growing metropolitan area. nevertheless, the government states that the existing sources will meet supply only until 2007. therefore, it continued to pursue the pahang-selangor raw water transfer project, which had received a boost from the 1998 klang valley water crisis. an environmental assessment for the project was completed in 1999. in 2005 the japan bank for international cooperation (jbic) signed an agreement to provide a soft loan with 40 year maturity for the construction of the dam. however, following international protests the building of the kelau dam was on hold in 2010. critics argue that water demand management through the reduction of water losses and higher tariffs that would encourage water conservation can postpone the need for the transfer or even make it unnecessary. water losses, or more precisely non-revenue water, were estimated at about 40% in 1997. following a comprehensive loss reduction program initiated in 2000, physical water losses were reduced by 117,000 cubic meters per day until 2006 from half a million before the program. however, non-revenue water at syabas still stood at 35% in 2007, which remains higher than good practice for water utilities. the dam is expected to have significant environmental impacts, including on biodiversity, and social impacts on the indigenous people, the orang asli, who would lose some of their ancestral land that would be inundated by the reservoir. access according to the un’s joint monitoring programme for water supply and sanitation, which bases its estimates on national census and survey data, 100% of the population had access to an improve water source and 96% had access to improved sanitation in 2008, up from 88% and 84% respectively in 1990. history colonial history stand pipes that were a common sight in rural areas have now been largely relegated to the past. “over the past 200 years, malaysia has harnessed (its) abundant (water) resource for agriculture and water supply to industries and homes, where consumers have the convenience of running water at the turn of a tap. wells have since been relegated to the annals of history and stand pipes where villagers washed, bathed and collected water for cooking and drinking are a rarity. water delivery tankers, once not an uncommon sight, are now only contingency measures to tide over prolonged periods of drought.” the foundation for piped water supply was laid by the british in 1804, when the first aqueduct of brick was built to transport water from the hills to the town of penang. by the end of the 19th century piped water was available to urban households through house taps and stand pipes throughout the country. piped water was still untreated, as it was common at the time throughout the world. in 1906 the first slow sand filter plant in malaysia was built at the ampang intake for kuala lumpur. in 1934 the first rapid sand filter plant was built in ayer hitam in penang. both plants are still in service today. a report by the public works department of malaya at the time said: “malaya had a water supply system and a standard of technical service second to none in the colonial empire.” just before, and after independence however, infrastructure was neglected during the second world war and the subsequent insurgency. because of this and due to rapid population growth, kuala lumpur suffered water shortages. to remedy the situation, the klang gates dam and the bukit nanas treatment plant were commissioned, and the first phase was completed in 1957 ending a long period of water shortage and water rationing. water development has since figured prominently in malaysian development plans, focusing initially on urban areas. beginning with the 3rd malaysia plan (1976-1980) rural water supply also received a much needed boost. the share of households in peninsular malaysia receiving treated water in both urban and rural areas rose from 23% in 1950 to 85% in 1990. the investments were partly financed with royalties from oil and gas revenues which soared after the 1973 oil price increase. privatisation malaysia embarked on the privatisation of both water services and sanitation services during the 1990s, showing mixed results in both sub-sectors. water supply. in the early 1990s several states of malaysia embarked on a policy of private sector participation in water and sanitation. a first build-operate-transfer (bot) contract was awarded in 1992 by johor state for a water treatment plant for its capital. the bid was won by a consortium led by the malaysian company kembangan dinamik with a minority share by the french firm suez. more than a dozen other contracts followed in the 1990s in sabah, penang, kuala lumpur, kedah, kelantan and negeri sembilan. in 2002 the first state government in malaysia fully privatised its water supply through an outright sale of assets for the entire network (divestiture). water privatisation in kuala lumpur and selangor. in the federal capital territory of kuala lumpur and the state of selangor, which completely surrounds the capital territory, a 26-year bot contract for a 1,120 megaliter per day water treatment plant was signed with puncak niaga holdings in 1994 as part of the selangor river water supply scheme. the contract included a commitment to invest us$760m. the state government provided a revenue guarantee to make the project financially viable. in 2004 a 30-year concession was awarded without competitive bidding to syarikat bekalan air selangor sdn bhd (syabas), a subsidiary of puncak niaga holdings. the concession foresaw investment commitments of us$2.5 billion. it was supported by fixed government payments, since tariffs were too low to make the concession financially viable. the concession contract was signed by the federal government as well as the state government of selangor. both contracts were listed as “distressed” in 2010 pending a request of cancellation, according to the world bank’s private participation in infrastructure database. according to the international benchmarking network for water and sanitation utilities, the utility did not recover its operating costs in 2007. its revenues were equivalent to us$0.45/m3 and its operating costs were us$0.55/m3. syabas claims us$281 million in compensation because the government did not increase tariffs, as it was foreseen in the concession agreement. the government argues that the company has not met its performance targets and has not disclosed all the information it was obliged to disclose. the state of selangor has offered