The Failure of Privatisation of Sewerage Services in Malaysia

Article No.


End the confusion, Indah Water

The Star Dec 25, 95


Contention is no work, no payment

The Star Jan 25, 96


Inexcusable for IWK to be ignorant of the functioning of a septic tank



Give sound clarification on desludging of septic tanks

NST Jan 8, 97


Treating sludge for disposal not a simple task

The Star April 14, 97


IWK continues to pull wool over public's eyes



Desludging interval of two years an "estimate

NST Sept 26, 96


Give sound clarification on desludging of septic tanks

NST Jan 8, 97


Address issue of undersized septic tanks
NST Feb 18, 97


Experience alone not enough to meet the sewerage needs of Malaysia



Service before payment approach to sewerage privatization



Make sure services are up to mark

The Star Nov 27,96


Review of sewerage pact justified

The Star July 16, 98


Consumer association’s move lauded

The Sun May 17, 03


Paying IWK to pollute our rivers?
The Star April 30, 07


In 1994, the Malaysian Government privatised the sewerage services throughout the country except the states of Kelantan, Sabah, Sarawak and the municipality of Johor Baru. The concession was given to Indah Water Consortium (IWK) for a period of 28 years. Before privatisation, sewerage services were the responsibilities of local and city councils.

This is one privatisation in Malaysia which had been mired in controversies, confusion and consumer dissatisfaction. Within a short span of less than five years, the major shareholders of IWK changed hand twice with the original promoters laughing all the way to the bank. It then became the subsidiary company of Prime Utility Bhd. During this period, the Government, under public pressure, had also ordered IWK to reduce its charges twice.

In year 2000, the Government "de-privatised" IWK and paid Prime Utility RM200m to take over IWK. On top of that the Government also had to forego its soft loan to IWK, reported to be over RM1b.

With the takeover of IWK shrouded in secrecy, the public could not help the nagging thought that the Government, instead of penalising the businessmen who were handed privatised projects on a silver platter, had rewarded them for their failures with multi-billion ringgit bailouts at the expense of taxpayers.

IWK is now a wholly owned company of the Minister of Finance Incorporated.


(a) Initial public outcry

Traditionally, sewerage services formed part and parcel of maintenance services provided by local authorities. The assessment rates that local authorities used to charge have all along been based on the services provided and one of the main items was sewerage services.

When IWK started charging ratepayers for sewerage services, local authorities did not make any corresponding reduction in the assessment rates to compensate for the services they had stopped providing. This led to the public's hue and cry by against the privatisation of sewerage services.

To appease the ratepayers' anger, IWK countered with promises and came out with grandiose schemes to improve the existing sewerage systems in the country. However, they raised more questions than answers, which made the ratepayers even more dissatisfied. To find out more, read the article I wrote entitled "End the confusion, Indah Water" (The Star, Dec 25, 1995).

In early 1996, the Federation of Malaysian Consumers Association (FOMCA) launched a "Nationwide one million signatures campaign" to protest against the services and billings by IWK. As the saying goes, there is one born every minute, and so out of the one million that FOMCA was trying to solicit for support, there was one who, for some unknown reasons, came out in support of the privatisation of sewerage services in its present form. But in his article "IWK's bills - why the protest?" (The Star, Jan 20, 1996) the reasons put forth by him were only half-truths and a misjudgment of consumers' intelligence on the subject. I felt compelled by a sense of fair play and justice to respond which I presented in my article: "Contention is no work, no payment" (The Star, Jan 25. 1996).

(b) IWK not even conversant with the design and function of septic tanks

"Septic tanks are among the simplest forms of sewage treatment first developed by the French in 1860s" so said IWK. It was reported that there were over 1.2 million of them in Malaysia when sewerage services were privatised to IWK in 1994, making them the most common type of sewerage treatment system in this country.

As the custodian of all the sewerage facilities in this country, one would expect that IWK should be very conversant with the design and function of septic tanks. But alas, and for unknown reasons, IWK seemed not to be, judging from the many statements they made in the local press, in particular, "Importance of an efficient household septic tank" by their senior general manager of communications, which appeared in NST Feb 20, 1996. The statements made in this article are contradictory, misleading and technically incorrect.

I responded with the article "Inexcusable for IWK to be ignorant of the functioning of a septic tank". This article was sent to NST, but was not published.

Typical Septic Tank

Not only did IWK show its ignorance by making incorrect statements on septic tanks in the press, but it made also gross misrepresentations, deliberately or otherwise, in their full-page advertisements in local dailies. In one of these published in The Star (Dec 31, 1996) IWK showed a septic tank consisting of only the sedimentation component, omitting completely its filter bed or a soakaway. (see Diagram A, C & D - reproduced from IWK's advertisement). I took exception to the omission and wrote "Give sound clarification on desludging of septic tanks" (NST Jan 8, 1997).

Diagram A
Diagram C
Diagram D

In another advertisement by IWK in The Star, April 1, 1997, it boasted that it was working round the clock to improve the water quality of our streams and rivers. It also claimed that they were further treating septic tank sludge at sewage treatment plants before disposing it in an environmentally safe manner. Yes, IWK should be doing just that, but were they? I disputed its claim in my article "Treating sludge for disposal not a simple task" (The Star, April 14, 1997).

In spite of all my refutation of IWK's half-truths and misleading statements on septic tanks, it dropped yet again another bombshell - "Septic tanks need to be desludged for everyone's good", NST, May 25, 1998. I responded with "IWK continues to pull wool over public's eyes" (unpublished)

(c) The Department of Sewerage Services was equally not conversant with the workings of a septic tank
Department of Sewerage Services (DSS) is the regulatory body under the Ministry of Local Government and Housing set up to make sure that IWK does its business - properly. But sad to say, it seemed to me that DSS was equally not conversant with the workings of a simple septic tank, by design or otherwise. It was a classic case of the blind leading the blind.

Many statements were made in the press by DSS and IWK concerning the need and frequency of desludging septic tanks. Both maintained that it was a design requirement that septic tanks should be desludged once in two years. To me, the two-year frequency is at best a "guestimate". I explained this in my article "Desludging interval of two years an "estimate"(NST, Sept 26, 1996).

In my article "Give sound clarification on desludging of septic tanks" (NST, Jan 8, 1997) I raised my objections to IWK's advertisement, which gave misleading information on septic tanks. DSS took great exception to my views. In the article "SSD, IWK can meet nation's sewerage needs" (NST, Jan 16, 1997) DSS contended that I had missed the point on the issue of the frequency of desludging of septic tanks, which according to DSS, would not contribute to the wellbeing of the environment. I said my piece in my article "Address issue of undersized septic tanks" (NST, Feb 18, 1997).

I thought my last article would end once and for all the public debate on septic tanks. But it was not to be and DSS responded with another article "Clearing the air on septic tank issue" (NST, March 3, 1997). DSS contended that DSS and IWK have adequate experience in meeting the sewerage needs of the country. Its Director General, the late Dato' Lum, who knew me since mid 60s when we were both working in JKR, also extended his invitation for me to visit his Department to discuss with them on matters related to septic tank design and maintenance. I felt my disagreement with DSS and IWK was not just on the desludging of septic tanks but also on the overall concept of privatisation of sewerage services. So, instead of accepting his invitation, I replied with another article "Experience alone not enough to meet the sewerage needs of Malaysia" (Unpublished).

Note: We finally resolved our public squabble when we sat down for a lunch among mutual friends. I agreed not to write further on condition that DSS and IWK refrain from making misleading statements in the press.

(d) Whither the privatisation of the nation's sewerage services?

In one of my articles I have concluded that the privatization of sewerage services would be doomed to failure if IWK and DSS remained ignorant about the workings of "the simplest form of sewerage treatment developed by the French in the 1860s". Just desludging septic tanks - without formulating any development programmes to replace them and without rehabilitating and improving other sewerage treatment plants - will not be effective in improving the water quality of our rivers and waterways; nor will it reduce the risks of outbreaks of waterborne diseases, which were the principal objectives of this privatization exercise.

Due to rampant public outcry, the Government ordered several reviews of IWK's charges and services.

The first of these was in early 1996 when the Government announced that IWK's then-current charges and services were unacceptable and that it wanted IWK to resubmit a fresh proposal for negotiation. It was reported that the concept of "service before payment" would be incorporated in the new proposal. However, as nothing was forthcoming from IWK and DSS on this new concept, I wrote an article, "Service before payment approach to sewerage privatization", to the press, but it was not published.

Again in the third quarter of 1996, the Government ordered IWK to suspend billing and to formulate new charges, but nothing was reported on the review of the scope of services. I took the opportunity to highlight the importance of reviewing the contract and wrote the article, "Make sure services are up to mark", (The Star, Nov 27, 1996). But again, nothing on the scope of services was touched on in the subsequent review.

In mid-1998, the Government announced that it would review the whole concept of privatization of sewerage services. It was good news to know that the Government had finally woken up and realized the inherent deficiencies in the existing privatization contract. I applauded the Government's decision and wrote the article, "Review of sewerage pact justified" (The Star, July 16, 1998).

Once again, nothing came out of this review.

It was reported in The Star on April 2, 2007 that the Selangor state government had decided to “expose IWK because the company failed to provide quality service, as several rivers in the state were polluted with ammonia and waste”. The Selangor Mentri Besar also wanted the privatization of IWK to be reviewed because it had failed.

Hopefully this time, something positive is done.

(e) Civil suits by IWK against consumers for failure to pay IWK bills

Many consumers with individual septic tanks or with sewers connected to communal sewerage treatment facilities have not been happy with the service, or lack of it, provided by IWK and have defaulted in payment of IWK bills.

The Perak Consumers’ Association (PCA) announced that it had mobilized a panel of lawyers to assist consumers who had been issued court summons for their failure to pay IWK bills. I fully supported the move by PCA in my letter to The Sun “Consumer association’s move lauded” (The Sun, May 17, 2003).

The first landmark court case reported in the printed media was on March 13, 2004 in which the High Court in Ipoh allowed an appeal by a businessman to strike out a suit by IWK compelling him to pay for services purported provided.

On Jan. 14, 2007, The Star reported another court case also in Ipoh with the headline: "No payment for services not provided, court tells IWK”.

(f) Paying IWK to pollute our rivers?

It was reported in The Star on April 2, 2007 that the Selangor state government had decided to “expose IWK because the company failed to provide quality service, as several rivers in the state were polluted with ammonia and waste”. The Selangor Mentri Besar also wanted the privatization of IWK to be reviewed because it had failed.

Then the bombshell came in a report in The Star on April 25, 2007 in which the National Resources and Environment Minister told the press that IWK was the main polluter of rivers in Peninsular Malaysia.

In response to these two reports I could not help but to write another letter to The Star entitled “Paying IWK to pollute our rivers?

Hopefully, this is the finale of my comments on the failure of IWK.


Many friends have asked me whether I have paid IWK bills. I told them no because I have yet to receive any from IWK.

My house in Section 14, PJ has a septic tank. In late 1996, two years after the privatization of sewerage services in Malaysia, I noticed that effluent from the tank discharged directed into the drain without going through the granular filter bed. I discovered that the filter was completely clogged up!

In December 1996, I completely rehabilitated the filter bed at a cost of RM1,200, including the desludging of the sedimentation tank. I did not bothered to inform IWK then because from what they published in the printed media, IWK did not seem to know that for a proper functioning of a septic tank, a filter bed or a soakaway was necessary.

In May 22, 1997, my house received a notification of desludging service from IWK to inform me that the scheduled date for desludging service for my house’s septic tank would be on June 18, 1997.

As I had done it at my own cost only six months ago, I wrote a letter, dated June 9 (AR Registered), which was acknowledged, to inform IWK what I had already done to my septic tank.

Since then I have heard nothing from IWK, neither have I received any IWK bill. But as a concerned citizen, I have regularly desludged my house’ septic tank at my own cost. 2008