Leading the Way: Successful model for privatising water supply in Malaysia

Successful model for privatising water supply in Malaysia

In 1999, the government of the Malaysian state of Johor decided to privatise the water supply system to ensure adequate and uninterrupted supply of treated water to the state. The contract was won by Syarikat Air Johor Holdings (SAJH), a subsidiary of Ranhill Berhad, for a period of 30 years commencing March 1, 2000. The contract requires the company to abstract raw water, distribute it to domestic and commercial consumers, levy and collect water charges, and operate and maintain the water treatment, reticulation and supporting systems.

Currently, SAJH has an area of 19,210 square km under its jurisdiction, and serves a population of about 3.49 million. Since 1999, the company has been actively undertaking initiatives to improve its operational performance and service delivery. During 1999-2012, the company’s revenue grew by 340 per cent and its customer base by 50 per cent, while the proportion of non-revenue water (NRW) fell by 42 per cent.


SAJH’s water supply network spans over 20,308 km, according to the latest available data (2012). There are 44 water treatment plants in the state with a total installed capacity of 1,826 million litres per day (mld), although the current operational capacity is 1,533 mld. The company has 597 reservoirs to store water. The current network covers 100 per cent of the urban population and 99 per cent of the rural population of the state.

The past 10 years have brought considerable improvements in nearly all key performance parameters. Water production increased from 1,079 mld in 1999 to 1,362 mld in 2006 and 1,533 mld in 2012. It registered a compound annual growth rate (CAGR) of 2.74 per cent during 1999-2012. The number of water connections increased from 663 in 1999 to 838 in 2006 and 997 in 2012, registering a CAGR of 3.17 per cent.

One of the most noteworthy initiatives of the company has been its extensive NRW reduction programme. SAJH brought down the proportion of NRW from 45 per cent in 1999 to 30 per cent in 2006 and further to 26 per cent in 2013. An interstate comparison reveals that it is one of the lowest in Malaysia. This has been achieved through the regular monitoring of reservoir storage levels and leakages in the pipeline network. The company also uses an NRW management system for monitoring and analysing data pertaining to actual consumption and water losses. It regularly repairs or replaces faulty or obsolete pipelines.

Moreover, SAJH has adopted strategies to improve revenue collection by reducing the billing cycle and collection period. During 1999-2002, the billing cycle was reduced from an average of 40 days to 30.41 days, and the collection period from 75 days to 38.9 days. It has also introduced an e-billing service to enhance customer satisfaction. The service allows customers to update their accounts, view their water bills, and conduct other transactions such as online bill payments and tracking previous payments. These initiatives have contributed to improving SAJH’s financial performance. During 2006-2012, the company’s revenues increased from $130 million to $249.7 million, recording an increase of over 90 per cent.

To further improve its water supply services, the company has undertaken various quality monitoring, customer satisfaction and IT initiatives. A quality assurance department comprising a surveillance team and central laboratory has been established for testing the quality of water supplied. The department has developed a water quality information system to provide regular information on water quality parameters such as total dissolved solids, biological oxygen demand and chemical oxygen demand. In order to reduce excessive water consumption and wastage, SAJH uses monitoring systems to keep track of reservoir storage levels, leakages and pressure. At least 10 meters have been installed at different strategic points to monitor reservoirs and the pipeline network.

SAJH has established a 24×7 operation-cum-information centre to register complaints about leakages, supply disruption, faulty meters, etc., and to provide water connections and supply information based on the queries made. At present, about 70 per cent of the complaints received at the centre are related to pipeline leakage, 13 per cent to water supply disruption, 7 per cent to meter issues and 4 per cent to low pressure. To reduce the complaint response time, the company has set up maintenance depots at strategic locations across the state. A toll-free line has also been launched to increase the interaction between citizens and the service provider. The information centre supports several software applications, including the job management system, call centre manager, billing information system, remote monitoring system, and geographic information system (GIS) to enable real-time monitoring of the entire water distribution network.

In addition, SAJH implemented an integrated GIS in 2006 to improve the efficiency of its water supply management operations. The system has been integrated with almost all water supply operations in Johor, which enables SAJH to monitor water quantity and quality and service levels. It provides information on the pipeline network, infrastructure facilities and water quality indices. It also provides data on water quality, customers’ water billing systems, complaint systems as well as remote monitoring systems. SAJH has introduced the Aqua SMART system to manage and monitor the flow and pressure in the water distribution network. For administration purposes, the state has been divided into district meter zones (DMZs). The company has deplo-yed a production control system to facilitate the maintenance work of production assets and an SMS-based remote monitoring system to monitor reservoir performance. This not only helps the company in managing and monitoring the flow and pressure in each DMZ but also reduces losses due to overflow and leakages.

SAJH’s operations and treatment plants are ISO 9001:2000 certified, ensuring quality, and its laboratory is accredited to ISO/IEC 17025. The company won the first position in the potential organisation category at the Global Emerging Knowledge Organisation (GEKO) Awards held in 2008. It also received an award in the best practices organisation category at the GEKO awards 2009. The company has also received recognition from the World Bank as a training centre for water supply operations, maintenance and management.

This is one of the very few cases in Malaysia where a private player has successfully managed the water supply system. According to a survey conducted by SAJH in 2012, 81 per cent of its customers were satisfied with its water services. Thus, the company has not only increased the coverage of water supply services and reduced operational costs, it has also accorded equal emphasis to enhancing customer satisfaction. It serves as an example to other governments or operators planning to privatise water supply systems in their areas.