“CONSUMER MANAGEMENT – CONSUMER

ASSOCIATION PERSPECTIVE OF MALAYSIA WATER

INDUSTRY”

By

Chan Ngai Weng, PhD

Professor, Universiti Sains Malaysia

President, Water Watch Penang (WWP)

www.usm.my www.waterwatchpenang.org

Email: nwchan@usm.my

•INTRODUCTION

•PERCEPTION OF MALAYSIAN WATER INDUSTRY

ISSUES BY CONSUMER ASSOCIATIONS IN

MALAYSIA

•CONSUMERS’ ASSOCIATIONS’ EXPECTATIONS OF

MALAYSIAN WATER INDUSTRY

•CONSUMERS’ ASSOCIATIONS’ MAIN CONCERNS

OF MALAYSIAN WATER INDUSTRY

•CONCLUSIONS

AGENDA

•BLUE GOLD - The Water Industry sees water as “Blue Gold”

•PRIVATISATION - Extremely Lucrative & is promoted globally

•WATER GIANTS -Some of the world’s biggest multi-nationals

are water companies

•WATER WARS – The “Water Giants” have water businesses

in many developing countries, but have faced fierce

resistance from consumers/consumer associations/NGOs

INTRODUCTION

•Consumer Associations in Malaysia are

highly professional nowadays.

•They don’t see The Malaysia Water

Industry (e.g. Water Companies) treating

water as “Blue Gold” & exploiting it as a

Commodity for profiteering.

•But they are aware that MNCs have

exploited water in other countries & are

strongly against such developments.

•Consumer Associations firmly believe

that consumers must pay for piped

water, but not to the extent that

consumers are short-changed or the

poor are denied access.

PERCEPTION OF CONSUMER ASSOCIATIONS – on

“Water as Blue Gold”

Consumer Associations in Malaysia are

NOT against Privatisation of the water

industry in Malaysia. They are all for

privatisation that is:

• “Professionally Executed”

• “Based on Open Tender”

• “Transparent”

• “Accountable” &

• “Improves Services & Quality”

PERCEPTION OF CONSUMER ASSOCIATIONS –

On Privatisation The Cochabamba

protests of 2000, also

known as the

"Cochabamba Water

Wars",

Jakarta 2010

France: 1999-The city of

Grenoble took back its

water utility when it

discovered that Suez was

overcharging customers.

•Consumer Associations are formed to protect

consumers’ interest.

•Consumer Associations want to know WHO the

Malaysian Water Industry is protecting? - Consumers or

Water Service Providers/Water Companies?

PERCEPTION OF CONSUMER ASSOCIATIONS – on

Protection of Consumers’ Interest

Consumers Association

of Kapar Selangor

(CAKS)

Muslim consumer association of

Malaysia

•Consumer Associations obviously fight for the

lowest price for consumers.

•Consumer Associations obviously want Water

tariffs to be subsidised.

•Bankruptcy - But Consumer Associations are also

aware that if prices are suppressed so low that

Service Providers go bankrupt, then consumers

would also suffer!

•Generally, Consumer Associations are happy with

Reasonable Tariffs – no problem with Cost

Recovery.

•Consumer Associations will support Consumer

Goods Subsidy Removal if Subsidies given to

“Suppliers” are also removed.

PERCEPTION OF CONSUMER ASSOCIATIONS – on

Water Subsidy * Consumer

Associations

are aware

that RM

millions of

subsidies are

given to

Independent

Power

Producers

(IPP),

Private Water

Companies ,

Highway

Concessionar

ies, etc.

How do Consumer Associations Perceive:

(i) Federal Take Over of State Water Industry

(ii) Water Tariffs

(iii) Water Conservation

(iv) NRW

(v) Service Efficiency & Quality

(vi) Other Water-Related Issues

PERCEPTION OF CONSUMER ASSOCIATIONS – on

Other Aspects of the Malaysian Water Industry

On Federal Take Over of State Water Industry

PERCEPTION OF CONSUMER ASSOCIATIONS – on

Other Aspects of the Malaysian Water Industry

Consumer associations do

not really care who takes

over the water industry, as

long as water is supplied to

consumers (professionally,

of good quality, reasonable

tariff & accountably).

Consumer Associations all over the

world are DEAD AGAINST “Rise in

Tariffs” by the water industry, but NOT

in Malaysia.

PERCEPTION OF CONSUMER ASSOCIATIONS –

On Water Tariff The Cochabamba

protests of 2000, also

known as the

"Cochabamba Water

Wars",

Jakarta 2010

France: 1999-The city of Grenoble took

back its water utility when it discovered

that Suez was overcharging customers.

India

(ii) On Water Tariffs

PERCEPTION OF CONSUMER ASSOCIATIONS – on

Other Aspects of the Malaysian Water Industry 83,233% Profit for a Glass of water? We call on the

Ministry of Domestic Trade, Cooperatives and

Consumerism to immediately enforce the Price

Control and Anti Profiteering Act 2011 on shops,

restaurants and coffee shops who are charging

consumers up to RM1.50 for a glass of water.

[SYABAS charge RM2.00 for 1,000 litres of water in

Selangor = a glass of water (300ml) = RM0.0006 sen.

Hence, shops earn a profit of 83,233% for each

glass of water sold. This is really daylight robbery!!

Letter to Editor, 9 Feb 2012

What disturbs you the most about local

manufacturers?

Manufacturers are in the business of

making profits. We are not anti-business

but we are against bad business practices,

i.e. businesses which cheat and exploit

consumers, sell or make unsafe products,

or displace local communities or pollute our

environment.

When their guiding principle is to make as

much profit as possible, there needs to be

stringent controls and enforcement against

unfair trade or contracts and business

malpractices.

The problem is not whether the

manufacturers are local or foreign. The

problem is the lack of adequate laws and

enforcement to protect consumers

12

Source:

13

14

On Water Conservation

PERCEPTION OF CONSUMER ASSOCIATIONS – on

Other Aspects of the Malaysian Water Industry

What are CAP’s biggest successes in protecting consumers?

* It was CAP’s pressure and work on environmental issues that was instrumental in

the formation of the Department of Environment in 1975

* The Penang Hill project which was cancelled in 1991 following the rejection of its

Environmental Impact Assessment by the Department of Environment was another

success which helped protect the watershed areas of Penang.

* But we consider raising awareness among Malaysians on both consumer,

environmental and developmental issues to be our biggest achievement. Malaysians

who are aware of their rights and problems will go a long way in helping to create a

healthy, just and green Malaysia.

Save water — and money

Our growing population, agricultural needs, inefficient appliances and sometimes inconsiderate

consumer behaviour put pressure on our water supplies. Here are some tips on how you can

conserve water — and save money. These days most water authorities urge people to reduce

their water use, and supply brochures and pamphlets with savings tips. For them, conserving

water means less need to spend money on new dams — instead, they can spend it on improving

existing infrastructure. For you, conserving water is likely to mean saving money — the more you

use, the more you pay. In addition, if you're also saving hot water (for example, in the shower),

you'll reduce your energy bill.

Water conservation initiative in Penang

The Consumers’ Association of Penang (CAP) lauds the Penang Water Supply

Corporation Sdn Bhd’s (PBAPP) Aquasave programme to promote water

conservation in the state. This water conservation effort has been long due.

PBAPP has stated that Penangites are high water users, consuming 286 litres of

water per person daily, compared with the national recommendation of 220 litres

and United Nations’ recommendation of 165 litres. This is very high indeed.

We concur with the water saving and conservation measures proposed by Prof

Chan Ngai Weng, President of Water Watch Penang. Besides this, water demand

management should be adopted in every aspect of the planning, management and

maintenance by PBAPP……On the whole, the way Penangites and non-domestic

users are currently using water is not sustainable. We need to change our water

consumption behaviour to protect our precious water resources for the future.

Press Statement - 13 August 2010

16

On Non-Revenue Water (NRW)

• Malaysia Water Industry Guide 2010 gave an average NRW

at 36.63% = 1.8 billion m3 of water lost = Loss of RM1.64

billion!

• The Main Reason why Consumer Associations are

reluctant to “Blindly” allow water suppliers to raise tariffs

is the fact that water suppliers have failed to reduce NRW

• Consumers should not be liable to pay for NRW. They

should only pay for the actual cost of production minus

NRW!

PERCEPTION OF CONSUMER ASSOCIATIONS – on

Other Aspects of the Malaysian Water Industry

18

Source:

•MONITOR YOUR CALLS

•MONITOR YOUR RESPOND TIME

•MONITOR TIME TAKEN TO SOLVE A PROBLEM

•COMPUTERISE YOUR MONITORING SYSTEM

•REWARD PEOPLE (NON-MONETARY) WHO REPORT

PROBLEMS (LEAKAGE, THEFTS, POLLUTION, ETC).

2010 = 36.63 %

2010 in Malaysia:

Water Production = 13,500 MLD

NRW = 36.63 % = 4,945MLD = 1,804,943MLY

86 Teluk Bahang

Dams (Size 21,000

Million Litres)

Based on Average Price of Water of 70 sen/m3

Loss = RM3.46 Million Per Day

= RM1.26 Billion Per Year

20

Recently Consumer Associations have

highlighted the Seriousness of NRW & Informed

Water Authorities on the Need to be Responsible

in Reducing NRW

Recent reports show that the

three migrated states of Negeri

Sembilan have reduced NRW

from 49.2% at the end of 2009 to

43.4% in 2010, Melaka from

29.7% to 26% and Johor from

31.9% to 29.9% (Source:Kettha).

No, it

is only

30 %

It is

50+ %

WATER QUALITY SUPPLIED IS NOT UP TO STANDARD

CONSUMER ASSOCIATIONS’ PERSPECTIVE OF MALAYSIAN WATER SERVICE PROVIDERS

•Consumer Associations expect good water quality

•In general, Consumer Associations view piped water

quality as poor. Hence, there is a lack of confidence

in water quality. Hence the Proliferation of “Water

Filters”

•In recent years, Consumer Associations view piped

water quality deteriorating (due to increased

complaints of sediments, rusty pipes, colour, odour,

etc)

•Consumer Associations are generally unhappy

about poor water quality

•Hence, consumer Associations are reluctant to

support tariff increase.

Thursday October 22, 2009 (The Star) Water quality in Kelantan not up to standard The quality of water supply in Kelantan does not meet the standard set by the Health Ministry, said the Auditor-General’s Report.

22

•

Nik Aziz (picture) cited a letter dated October 30 sent by the National Water Services

Commission (SPAN) to the office of state water supplier Air Kelantan Sdn Bhd

(AKSB), informing them that Kelantan had been listed together as having a “less than

satisfactory” water quality (The Malaysian Insider, 21 Nov 2011).

The listing was based on a report prepared by the Ministry of Health from January till

July/August this year. “The states which showed a less than satisfactory performance

was Kelantan, Pahang , Labuan, Perak and Perlis.

“Based on the report, e-coli levels in treated water provided by AKSB was 0.88 per

cent, lower compared to Pahang (1.12 per cent), Perak (0.90 per cent), Perlis (1.21

per cent) and Labuan (1.01 per cent),” Nik Aziz said.

23

PERCEPTION OF CONSUMER ASSOCIATIONS – on

Other Aspects of the Malaysian Water Industry

On Groundwater

Protection of Water Resources •CAs is feels that protection of water resources is the joint responsibility of government & water service provider (WSP)

•Even if WSPs have no jurisdiction/TOR to protect water resources, they should do it Voluntarily(Part of CSR)

•WSPs should buy up land in water catchments that are privately owned

•Government owned catchment land should be gazetted as water catchments (for protection)

•Consumers will not accept WSP’s excuse of “non-responsibility” when a catchment is destroyed.

They see water catchments & water supply as ONE.

PERCEPTION OF CONSUMER ASSOCIATIONS – on

Other Aspects of the Malaysian Water Industry

High Degree of Professionalism from WSPs

CONSUMERS’ EXPECTATIONS OF MALAYSIAN WATER INDUSTRY

•Highest degree of professionalism

•"The best in the business” everyone says good things about

•A high standard of service, ethics and success

•Professional/Corporate Image/Reputation backed by practice

•Domestic & international business relationships

•Great understanding of effective communication styles

•“Friendly & Professional Customer Service” - attentive,

understanding, caring, non-offensive and courteous staff

(“Customer is always right)

•Command consumer confidence - Be able to deliver.

Competence •A WSP’s success depends on (i) the perceived value of its

services and (ii) its overall competency (competency of the

organization, of its staff, its equipment and infrastructure)

•Incompetent WSPs must be severely dealt with, either by

sacking/replacing them or punishing them with severe fines

•Customer satisfaction surveys indicates that the majority are

dissatisfied with incompetent WSPs but are happy with

competent WSPs (even when water tariffs are higher)

•Ideally, government/customers should evaluate the

performance & competency levels of WSPs on a yearly basis

•Consumers expect the highest level of competency, whether

it be the WSP itself or their staff

•Staff with a “Critical” no. of complaints should be sacked.

CORPORATE SOCIAL RESPONSIBILITY (CSR) - Support & Collaborate with NGOs

• Smart-Partnerships

• Funding & Other Support

• Consultancy/Sub-contracts

• Public Awareness & Education

• Public Relations & Image

• Public Surveys/Opinion Polls

• Social, Environment, Education, Entertainment etc

WORLD WATER DAY

CSR is about how companies manage the business

processes to produce an overall positive impact on society,

while at the same time minimizing the negative impacts, as

shown in the Figure below:

CSR INVOLVES SMART-PARTNERSHIPS WITH NGOs

•PUBLIC AWARENESS & EDUCATION

•PROMOTION OF DEMAND MANAGEMENT & RECYCLING

•“SMART-PARTNERSHIP” WITH GOVERNMENT

•“WATER AUDITS FOR BUSINESSES, FACTORIES & HOTELS

•CONSULTANTS IN EIA

•CONSULTANTS IN FIXING WATER TARIFFS

•LINKAGE BETWEEN GOVERNMENT-INDUSTRY-RAKYAT

Minggu Alam Sekitar

2010 (DOE & WWP)

Accountability

•WSPs, like elected governments, must be held accountable

for all their actions & mistakes

•When a water project fails and the public is affected, then

those responsible for it must be held accountable

•WSPs must be held accountable for all aspects relating to

water management under their jurisdiction

•Accountability is needed to protect the public interest and

promote government and corporate accountability

•When a WSP is Accountable, its image will be greatly

enhanced & public confidence boosted

•An accountable WSP is more likely to get public support in

the event of asking for price increase, new projects, etc .

Stay Within Core Function

•WSPs are expected to be responsible for what they have

been set up to do (Do NOT branch out for whatever reasons!)

•WSPs are expected to manage water resources from

impoundment to treatment, distribution & services, but

responsibility does not end here

•WSPs are also responsible for protection of water resources

•Responsible WSPs are expected to use holistic management

•Responsible WSPs are expected to make profits but not to

the extent of “Profiteering”!

+

CONSUMERS EXPECT NRW TO BE REDUCED

Osaka = 5 %

Shanghai = 20 %

Bangkok = 37 %

Kuala Lumpur = 43 %

Jakarta = 50 %

Delhi = 53 %

Manila = 60 %

(Source: ADB)

ADB Report in 2007 -

Cambodia’s Phnom Penh Water

Authority has managed to reduce

NRW from 90 % in 1993 to 8 %

in 2007, & 5.85 % in 2010 &

provides continuous drinking

water supply (Drinkable from

Tap).

PUT YOUR OWN

HOUSE IN ORDER!

MALAYSIAN AVERAGE OF 36.63% IS

NOT ACCEPTABLE!

Responsibility = Compensation

•COMPENSATION-WSPs expected to compensate

consumers for losses, accidents, inconvenience,

medical costs, etc. related to water supply

•Some form of compensation should be paid out

when customers suffer due to a WSP’s mistake

•Compensation does not necessarily = $

•Currently, WSPs do not pay compensation, but

people caught stealing water, polluting water or not

paying their water bills, they are punished

•If a WSP compensates its clients, the consumers

feel BETTER! They know their WSP CARES!

Fair Tariff/Price

CONSUMERS’ EXPECTATIONS OF WATER MANAGEMENT ORGANISATIONS

Surprise! Surprise! Consumer Associations & Consumers in

Malaysia are not overly concerned about Water

Tariffs/Price

What does this tell you?

MALAYSIAN WATER TARIFFS ARE VERY LOW

WHAT DOES THIS

MEAN?

THIS MEANS THERE IS

TREMENDOUS

POTENTIALS FOR

INCREASING TARIFFS

& MAKING MORE

PROFITS!

TARIFFS MUST BE

AFFORDABLE & FAIR. WATER

SERVICE PROVIDERS MUST

NOT BE SEEN AS

“PROFITEERING”, “GREEDY”

OR “UNSCRUPULOUS”!

Denmark (Copenhagen) – US$8.92/m3

France (Paris) – US$4.11/m3

Sweden (Oslo) – US$3.90/m3

Germany (Frankfurt)– US$3.27/m3

Desalinated Water - US$1.76 – US$2.06/m3

Japan (Tokyo) – US$1.44/m3

USA (New York) - US$1.30/m3

Indonesia (Jakarta) - US$0.77/m3

Singapore - US$0.62/m3

Australia (PAWA) – $0.60/m3

China (Beijing) – US$0.41/m3

Thailand (Pattaya)- US$0.2143/m3

Cambodia (Phnom Penh) - US$0.20/m3 Malaysia - US$0.0947/m3

MALAYSIA’S LOW TARIFFS JUSTIFY COST-

RECOVERY & TARIFF RISE

Source: http://www.ib-net.org/en/tariffs_map.php 12/3/11

•POOR QUALITY OF WATER SERVICE

•UNPROFESSIONAL PRIVATISATION & PRIVATISED

WATER COMPANIES HOLDING GOVERNMENT AT

RANSOM

•WATER SERVICES FALL INTO THE WRONG HANDS

WITH GOVERNMENT & CIVIL SOCIETY LOSING

CONTROL

•TOO MUCH POLITICKING IN THE WATER

INDUSTRY!

•CONSUMERS BEING TAKEN FOR A RIDE!

CONSUMER ASSOCIATIONS’ MAIN CONCERNS ON

MALAYSIAN WATER INDUSTRY

THE MOST DREADED CONCERN OF MALAYSIAN

CONSUMER ASSOCIATIONS & CONSUMERS!

CONCLUSION • CONSUMER ASSOCIATIONS ARE HIGHLY

PROFESSIONAL WITH HIGHLY QUALIFIED,

INFORMED & CAPABLE STAFF – MWI MUST

WORK WITH CAs

• CONSUMER ASSOCIATIONS [& CONSUMERS]

HAVE RIGHTS & THEY WILL FIGHT FOR IT!

• CONSUMER ASSOCIATIONS EXPECTATION OF

MWI IS VERY HIGH – THEY EXPECT THE BEST

PRODUCT & WILL GO TO GREAT LENGTHS TO

PROTECT CONSUMERS!

• CONSUMER ASSOCIATIONS ARE WILLING TO

SUPPORT HIGHER TARIFFS & “PAY FOR GOOD

PRODUCT & EFFICIENT SERVICE” BUT

AGAINST “PROFITEERING & CORRUPTION”

• CONSUMER ASSOCIATIONS ARE NOT

AGAINST PRIVATISATION & WILL SUPPORT IF

IT IS PROFESSIONAL, TRANSPARENT,

ACCOUNTABLE & PRO-CONSUMERS

CONCLUSION • CONSUMER ASSOCIATIONS EXPECT NRW TO

BE REDUCED TO ACCEPTABLE LEVELS

(PENANG’S NRW IS THE BENCHMARK)

• CONSUMER ASSOCIATIONS ARE ALL FOR

“WATER CONSERVATION” & DEAD AGAINST

“WATER WASTAGE”

• CONSUMER ASSOCIATIONS SUPPORT

GAZETTEMENT OF WATER CATCHMENTS &

FOREST PROTECTION

• CONSUMER ASSOCIATIONS SUPPORT GREEN

& BLUE TECHNOLOGY

• CONSUMER ASSOCIATIONS ARE DEAD

AGAINST “CONSUMERISM” (I.E. OVER-

CONSUMPTION) & CAMPAIGN FOR

“RESPONSIBLE & HEALTHY CONSUMPTION”

41

Word of Caution

The Malaysian Water Industry

(Government Ministries, SPAN,

Government Agencies, Water

Companies, Other Water Service

Providers, NGOs & Civil Society

[Local Communities] need to work

closely/consult with Consumer

Associations towards Long-Term

Sustainability of Water Resources.

42

THANK YOU

HELP CREATE

A “WATER

SAVING

SOCIETY” IN

MALAYSIA

Chan Ngai Weng, PhD Professor, Universiti Sains Malaysia

President, Water Watch Penang (WWP) www.usm.my

www.waterwatchpenang.org Email: nwchan@usm.my