Poor Water Supply and Sanitation in Indonesia: Business Potential

Despite the striving economy, Indonesia lacks quality water treatment, supply and sanitation, effective waste management, and adequate water access. As a result, these issues have posed a heightened challenge in Indonesia, especially with the growing business activities and increasing household consumption, giving rise to higher amount of plastic packaging, industrial waste and food waste. For many years, the government has been urged to address and improve this increasingly severe issues by enforcing wastewater treatment regulation with critical licensing process and facility construction in Indonesia. It is forecast that by the year 2025, about 67.5% of the country’s population will live in cities, making the water supply and sanitation issues even more critical.

The high demand for clean water supply has provided foreign entrepreneurs with vast business opportunities through providing easily accessible, sanitation and water treatment services.

This article discusses the current waste management trend and how investors can profit from tapping into the potential water treatment business area in Indonesia .

Water Supply and Management in Indonesia

Indonesia is the fourth most populous country in the world with over 260 million inhabitants with growing middle-income group. However, more than 27 million Indonesians still lack safe water. In addition, approximately 51 million Indonesians do not have access to proper sanitation facilities.

Furthermore, the production of municipal solid waste has increased from 0.8kg per capita to 2.1 kg per capita over the past 10 years. And, the lack of a comprehensive wastewater facilities and regulations will also damage the hotel and urban development, which is of significant importance for Indonesia’s economy.

As for low-income Indonesian families that account for millions of the country’s population, water facilities such as water wells, new water connections, and improved toilets are almost unaffordable without financial assistance. Hence, microfinance sector is growing in Indonesia to serve these low-income households to gain clean water access and basic sanitation facilities.

Regulations and Efforts by the Government

All private sectors, communities and the government have critical roles in improving the clean water access and sanitation In Indonesia. The government of Indonesia is looking for ways to accelerate the water access and improve water supply and sanitation services. The goal is to cut down the number of people without access to clean water supply and sanitation by more than 50%.

IPAL License

IPAL (Instalasi Pengolahan Air Limbah), also known as WWTP (wastewater treatment plant), is a wastewater treatment technology used to eliminate non-degradable pollutants – both biological and chemical – in the water so that the water can be recycled for other usages.

According to the Indonesian Law, all hotels, villas and restaurant are required to acquire an IPAL license for IPAL compliance. This is considered a very critical effort implemented by the government in order to achieve the clean water supply goals for the entire country.

AMDAL

AMDAL (Analisis Mengenai Dampak Lingkungan) is the environmental impact assessment system (EIA) in Indonesia. It is also one of the vital efforts from the government to study about the impact of an activity to the environment.

Based on the Indonesian environmental regulation, sectors that are mentioned in the AMDAL-obligatory list must obtain an environmental license or permit. These industries or sectors include the following:

• Pulp and paper industry with capacity or more than 300,000 ton pulp/year
• Cement industry
• Shipyard industries with graving dock system
• Estate Industry
• Black tin smelting industry
• Upstream petrochemical industry
• Propellant, ammo and explosive industry

Also read: The Rise of Wastewater Audits for Hotels, Villas and Restaurants in Indonesia

Business Opportunities in Indonesia

With regards to the enormous amount of waste produced, and limited access to water supply and sanitation in Indonesia, the business opportunities in the area of water treatment presented to investors are vast and diverse. The business opportunities can be, but not limited to the following:

• Waste management and recycling services and facilities
• Advanced technology for waste reduction and waste water treatment
• Composting industry
• Education related to environment and sustainability
• Social services
• Micro-financing for low-income households
• Transportation services for waste
• Incineration and landfill facilities
• Healthcare and medical industry

Cekindo is the leading business consultancy in Indonesia that serves clients from all over the world. Contact us for more information on environmental permits and business opportunities in Indonesia, and we will get back to you with a free quotation.