Examining the current state of Indonesia’s market for new water supply infrastructure investment and provides a near term outlook for development going forward. Indonesia’s water utility segment, increasingly fragmented since decentralization began in 2000, now hosts over 350 firms, of which more than half are not financially viable.
While smaller water utilities are short of funds and struggling to meet performance criteria, the upcoming Bandar Lampung water supply project tender will prove to be crucial test for the country’s policymakers and their commitment to the PPP program. The regions of Java and Sumatra present the most developed markets for new PPP opportunities. A selection of international players including Manila Water, Abengoa, and Mitsubishi are showing interest in a market whose large scale and previous PPP experience bodes well in the long term.
This report highlights the following:
- Indonesia’s municipal water market faces a fragmented water utility sector and legal uncertainty
- Growing PPP opportunities in Indonesia’s developed markets
- Investment in future PPPs depend on legal clarity and successful water supply tender
