Returning Malaysia's Rivers To L - Malaysian Water Association.

Country Focus
Kuala Lumpur’s experience
with water reforms
by Singaravelloo Kuppusamy and Siew Hooi Tan
Courtesy of NS Shah
The capital of Malaysia continues to negotiate restructuring its water sector. Here is an
overview of the city’s experiments with managing water supply and distribution.
Water supply in Kuala Lumpur is closely linked to Selangor
state through one water utility company. This
is because the city of Kuala Lumpur has close historical
connections with Selangor, being its capital from 1880 to
1978. In 1974, Kuala Lumpur became a federal territory
under the federal government.
Kuala Lumpur is not large at 242 km 2 but more than half
is built up. High population growth means increasing future
demand for water. Kuala Lumpur is entirely dependent on
Selangor for its water supply.
Institutional Setting and Governance
Under the Federal Constitution, state governments are
responsible for water supplies. In the 1990s, structural
changes in the water services industry occurred across the
country with the corporatisation of water supply agencies
in some states, full privatisation in others, and adoption
of a dual system of public control of distribution and privatisation
of water treatment services in some. Selangor
opted for full privatisation.
State governments were trying to upgrade and expand
their water networks, turning to the Federal Government
for grants or loans. Many were unable to repay the loans.
A water crisis in 1998 and a National Water Resources Study
in 2000 prompted the federal government to intervene
directly in the state water industry. The study had recommended
reforms and identified various issues such as
water shortages. At that time, water supply services were
managed by the respective state governments.
The reforms were two-fold. First, the Federal Constitution
was amended to place water services into the
Concurrent List. Second, water-related agencies were
consolidated and placed under federal jurisdiction.
Water sources, water catchment areas and river basins
remained under the control of state governments, which
would receive royalties from the water utility companies
and federal assistance.
The management of water supply in Kuala Lumpur
is in accordance with the Water Supply Act 1998, which
provides for the supply and distribution of water in Kuala
Lumpur. However, it merely supports all laws affecting
water supply and distribution in Selangor. Two major
legislations in 2006 govern the water services industry in
Selangor. They are the National Water Services Commission
Act 2006 (SPAN Act 2006) and the Water Services
Industry Act (WSIA) 2006. The latter regulates water supply
and sewerage services in Peninsular Malaysia and the
Federal Territory of Labuan.
Under the SPAN Act 2006, the National Water Services
Commission or Suruhanjaya Perkhidmatan Air Negara
(SPAN) was established in 2007 as a water regulatory
body for Peninsular Malaysia and the Federal Territory
of Labuan to address issues such as poor water quality,
supply, NRW, leaks, pilferage, arrears in unpaid bills as
well as interstate disparity in tariffs, enforcement, and
performance of water utilities.
SPAN is empowered to issue licences to operators and
contractors, and to regulate them. Each licence is subject
to renewal every three years. Each operator is required to
submit a three-year rolling plan and a 30-year business
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