T

he Constitutional Court'€™s annulment of a law, which consequently bans private monopolies on domestic water resources, has resulted in increased confusion within the business community as it remains unclear how the resources will be managed, from processing to distribution.

Last week, the Constitutional Court revoked the 2004 Water Resources Law, which paved the way for the state to take over full control of water resources from the private sector and for concessions of water resources by companies that sold water-based products. The verdict also reinstates the previous 1974 Water Law until a new one is deliberated, but clarity about water firms'€™ existing contracts and remain uncertain.

The Association of Indonesian Producers of Packaged Drinking Water (Aspadin) chairman Hendro Baroeno said there was no longer a mechanism with which regional governments could grant concessions to companies that required water in their production cycles, potentially shutting down operations that are seen as the country'€™s only source of potable water.

'€œThe [1974] law was issued way before regional autonomy even existed, which meant that regency and city administrations today might not retain their authority on water management,'€ he explained.

Indonesia'€™s packaged drinking water industry, comprising 600 national businesses, is projected to produce 23.9 billion liters of packaged water this year, according to recent Aspadin data. Almost 80 percent of it will be consumed in Java and Bali alone.

'€œLet'€™s not leave them [water firms] without any legal basis to obtain commercial water use permits. We hope that regents and mayors alike will still be able to issue permits in their respective areas,'€ Hendro added.

Aspadin is gathering all the industries possibly affected by the law'€™s annulment, which extends beyond companies selling bottled water and soft drinks to other industries that utilize water as a major production component such as textiles, confectionery and hospitality.

Hendro expected the government to soon issue a regulation (PP) that would refine the gaping legal parameters left unanswered until a new law was passed.

Public Works and Housing Minister Basuki Hadimuljono has promised to draft a new water resources law to replace the one that the Constitutional Court had revoked, weighing the option of a public-private approach to water management.

'€œWe will [also] soon issue a government regulation that is based on the 1974 law. We'€™ll also establish an implementing body that would be in charge of managing water firms in the planned public-private partnership scheme,'€ Basuki said.

Triyono Prijosoesilo, chairman of the Association of Indonesian Soft Drink Producers (Asrim), said that it would be business-as-usual for soft drink operators, until a law was passed that would encompass all aspects of proper water use management.

'€œIndustry players refer to regional rules, so with the 2004 law repealed, what happens to the implementation of its derivative regulations?'€ Trijono challenged.

PT Tirta Investama, which carries the Aqua Danone brand widely used throughout the country, is yet to change its business plans and targets as it still studies the impacts of the Constitutional Court ruling and consolidates with Aspadin, said director Troy Pantow. '€œIn fact, we are upbeat to push new investments. We remain optimistic,'€ he told kompas.com.