Why is it so much cheaper in Malaysia than in Indonesia?
Clean water prices for apartment residents are often a major complaint in Indonesia, as rates are often inflated and compared to commercial rates. Conversely, in Malaysia, water prices are much more affordable.
This significant price difference is not only due to currency differences, but also to four underlying structural and regulatory factors.
1. Fundamental Differences in Subsidies and Tariff Classification
A. Subsidy Support from the Government
The Malaysian government consistently provides large subsidies for domestic water, which covers all types of residences, from landed houses, condominiums, to apartments.
- In some states, such as Selangor, residents even receive free water for their initial use (for example, the first 20 m3 is free).
- As a result, the base price of water in Malaysia is set low nationwide.
In contrast, in Indonesia, water subsidies are very limited and regulated by the regional water companies (PDAMs). Tariff increases frequently occur to cover high operational costs.
B. Fair Tariff Classification
In Malaysia, apartments and condominiums remain categorized as "Domestic Consumer".
- This means that apartment water rates are exactly the same as those for regular homes. Building managers are not permitted to raise rates above domestic standards.
In contrast, in Indonesia, many apartments are charged "commercial water rates" because building managers use a single master meter from the state-owned water company (PDAM) and then sell the water back to residents. This is why apartment rates can be two to three times higher than typical residential rates.
2. Strict Anti-Mark-up Regulations for Managers
One of the main causes of expensive water in Indonesia is markup (resale at an increased price) by the management.
- Malaysia: Apartment managers (Joint Management Bodies/Management Corporations) are strictly prohibited from selling water at commercial prices. They are only allowed to charge the PDAM water rate plus a small service charge. Managers are not allowed to profit significantly from water sales.
- Indonesia: Apartment managers have greater freedom to set internal rates. They often sell water at an inflated "premium" rate, ostensibly to cover other building operational or maintenance costs, which are then passed on to residents.
The bottom line: In Indonesia, what often makes rates expensive is the markup from the management, not just the basic PDAM rates.
3. Infrastructure Efficiency and Operational Costs
The efficiency of national water management also affects the selling price to consumers.
- Malaysia: Nationally, Malaysia has a more manageable level of water loss (Non Revenue Water/NRW) due to consistent infrastructure investment and support from the state and federal governments.
- Indonesia: Water utilities (PDAMs) in many areas face very high NRW (even reaching 35% to 50%). The more water lost through pipes, the higher the PDAM's operating costs, and these costs are ultimately passed on to consumers in the form of higher tariffs.
Water Tariff Comparison
To put this in perspective, domestic water rates in Malaysia (for example, in Selangor) range from RM0.57 to RM2.00 per cubic meter (approximately Rp2,000 to Rp7,000).
Meanwhile, in major Indonesian cities, the typical household rate has reached Rp4,000 to Rp12,000 per cubic meter. However, rates for apartment residents (due to their commercialization) often skyrocket, reaching Rp15,000 to Rp30,000 per cubic meter.
On average, water rates paid by consumers in Malaysia can be two to three times cheaper.
Final Conclusion
Apartment water rates in Malaysia are cheaper because of:
- State subsidies
- Uniform domestic rates for all types of housing
- Strict anti-markup regulations for managers
- Support from efficient water infrastructure
On the other hand, apartment rates in Indonesia are expensive due to the commercial classification by PDAM, which is further exacerbated by high profit markups from building managers.
