SUMMARY REPORT
AMRTA INSTITUTE SEMINAR
“Campaign to Take Back Jakarta Water from Private Concessionaires”
November 8-10, 2006, Jakarta
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The seminar focused on achieving common perception related to the campaign in taking back Jakarta water from private concessionaires. It is hoped that in the end of seminar there will be some action plan agreed by all participants that can be implemented in order to take back Jakarta water from private concessionaires. The participants of the seminar are mostly workers from TPJ and Palyja. The workers are also joined in PDAM Labor Union.
Day 1: Hotel Ibis Arcadia, Jakarta, November 8, 2006
Moderator: Eddy Riyadi Terre
Resources Person: 1. Dameria Hasibuan
2. Nila Ardhianie
3. Benny D. Setianto
4. Wijanto Hadipuro
5. Guillermo Amorebieta
On the first day of seminar, mainly the discussion focused on the impact of water privatization in Jakarta, which divided into some categories:
Financial Aspect
From the financial aspect, some important facts can be drawn:
· The cost of operational is very high. There are certain fees that had to be paid to the central company.
· Fee that had to be paid in order to have credit (credit guarantee).
· The high figures of debt that PAM Jaya had after the privatization occurred. PAM Jaya had debt not only to the private sectors, but also to the government. The debt to private sectors including shortfall and actual operational cost, which usually exceed the approved budget.
· The fact that TPJ and Palyja always mention that every year they keep losing profit is not true. From the financial report, it is shown that they always getting profit, instead of losing profit.
Legal Aspect
The term ‘legal aspect’ refers to the existing working contract between PAM Jaya and TPJ or Palyja. Regarding to legal aspect there are some facts that were important to affirm:
· According to The Foreign Investment Act No. 1/1969 Article 6, drinking water is closed for a fully foreign investment company. A company is classified as a fully foreign company if foreign investor owns more than 50% of its share.
· While the new Government Regulation No. 20/1994 on Foreign Investment Company Article 5 stated that drinking water is now open to be serviced by a joint venture between local and foreign company regardless their percentage of the share. On Article 6 (1) mentions that even if it is only 5% of the share is held by the local partner, it is called as a national (instead of foreign) company. Furthermore, Article 7 (2) stated that if eventually the foreign partner buys all the share so that it is now a 100% share owned by foreign investors it is still classified as domestic company. Thus, a 100% owned by foreign investor can still be classified as a domestic company through that kind of process. So, as a conclusion according to that legal logic, TPJ and Palyja are domestic company.
· What we can drawn from the current situation is that the Government Regulation No. 20/1994 has subverted the Act No. 1/1967 by elaborating the domestic company classification and violates Article 6 of the Act by issuing Article 5 of the Government Regulation.
· Furthermore, the Presidential Decision No. 7/1998 strengthens this by providing the possibility of private sectors to “participate” in the development and maintenance operation of infrastructure including water service provider.
· The cause-factor of this whole situation is the imbalance bargain between developing country and foreign investors.
· Another important information facts regarding to legal aspects related to the termination of cooperation between PAM Jaya and TPJ or Palyja. According to the cooperation agreement whatever the reason, whoever has the initiative to terminate the cooperation, the 1st Party (PAM Jaya) will have to pay an amount of money to the 2nd Party as a consequence. The 1st Party shall pay to the 2nd Party if:
a. There is a force majeure or change in law.
b. 2nd Party is bankrupt or termination by 1st Party.
c. The 2nd Party terminates the contract.
d. The 1st Party buys all the 2nd Party shares.
To conclude relating to legal aspects from the impact of Jakarta water privatization, there are some key points:
· From the earlier discussion it could be concluded that Indonesian government has a weaker position vis a vis foreign investors so that it has to alter its regulation to attract them.
· In PAM Jaya’s case, at least according to the 2001 agreement, it is also clear that PAM Jaya as well as Provincial Government has a weaker position vis a vis 2nd Parties whether it is TPJ or Palyja.
· Thus, the imbalance bargaining happens on the water-provider business in Jakarta.
Business Aspect
Some important facts that needs to be informed:
· The reason why Thames Water Overseas wants to privatize Jakarta water is because of the failure from post privatization regulatory model (contradiction between stable returns and the efficiency imperative versus politically acceptable rate of return and the equity imperative).
· Relating to business aspect from the cooperation between PAM Jaya and TPJ or Palyja, it needs to be affirmed that 2nd Party profit is based on Water Charge not on Tariff. The profit deviation between tariff and water charge becomes the cost that had to be paid by the 1st Party (shortfall) or in other words shortfall becomes a debt that had to be paid by the 1st Party to the 2nd Party. From this, it can be concluded that the cooperation agreement will guarantee that business interest of 2nd Party is safe from every kind of risk.
· In evaluating privatization there are basic frameworks that need to be implemented:
a. Environmental Assessment: a tool for anticipating the environmental effects of policy changes and new developments, enabling the incorporation of management or control measures into project and policy design.
b. Social Assessment: a tool used for ensuring the systematic analysis of social impacts of a proposed development or policy action.
c. Economic Assessment: consists of a set of decision-making tools intended to select the best and most appropriate projects within the water sector and in comparison with other sector.
· It is highly recommended that Jakarta government start to develop the worker cooperatives model in providing services that related to Jakarta water.
Argentina’s Experience on Water Privatization
· In Argentina, Suez has 3 cooperation agreements with Buenos Aires, Cordoba, and Santa Fe. It was in Santa Fe that the cooperation agreement with Suez for the first time can be terminated. The demand of the people forced Suez to leave Santa Fe. At the time being, 90% of the company is owned by the government, and another 10% owned by the workers. The same thing occurred when the people also forced Suez to leave Buenos Aires. As a result, Ayssa company was established in Buenos Aires with 90% of the company is owned by the government, and the other 10% owned by the workers.
· Mainly in Latin America there are some countries that want to implement water privatization policy (countries such as Colombia, Equador, Peru), while some countries are trying to regain the ownership from the private sectors (countries such as: Argentina, Venezuela, Uruguay, Paraguay, Brasil). Only Paraguay and Venezuela up to this moment who succeed to regain all of the ownership, from private sectors to state. They also implemented a regulation that specifically eliminating privatization.
· From the experience in Buenos Aires, there are some steps can be implemented as a lesson-learnt relating to Jakarta water privatization:
a. Change the mental of the people: relating to the development of public services (including the workers), and also the improvement of workers welfare.
b. Creating a structure that can involve the whole community (people, including workers).
c. Established a foundation named Fesma to help from the political aspect.
d. Established an organization called the 5th September to become the technical operator.
e. Impelementing water code system.
f. Conducting an internal discussion to discuss all problems related to water privatization, which involved the community, aside from the workers.
g. Creating a working contract collectively.
h. Participating in organizations and also developing a close cooperation with the government in examining all problems related to water, such as contamination, regulation, etc.
i. Making a labor union that has the capability to negotiate, not only protest.
j. Making the people to feel that they are part of the company.
k. Implementing integral software that can be accessed by the whole world. This software is used in order to increase transparency and accountability.
At the end of the 1st day seminar, the moderator concluded that the key word this experience is movement. Related to the campaign in taking back Jakarta water from private concessionaires, the workers need to have a platform based on common interest. Thus, in the end an action plan can be made and implemented.
Day 2: Hotel Ibis Arcadia, Jakarta, November 9, 2006
Moderator: Hamong Santono
Resources Person: 1. Dameria Hasibuan
2. Indah Budiarti
3. Benny D. Setianto
4. Guillermo Amorebieta
Workshop on Worker Discrimination at Suez and Thames
The 2nd day of seminar mainly discussed about the discriminations experienced by the workers from PDAM Jaya, TPJ and Palyja. Some of the issues discussed are:
· Discrimination is define as any kind of differentiating based on race, skin color, sex, religion, political view, nation, or society order which caused an elimination or reduction of common opportunity in gaining work or in works.
· PKB (Perjanjian Kerja Bersama) or Mutual Work Agreement is an instrument that has to be implemented in order to reduce discrimination at work. It is very important that every worker has their own PKB.
· With the single management, the classification of workers prior to the agreement are:
a. Permanent Employees
b. Contract Employees
à 2nd Party obliges to accept both types of workers.
· There are also options to be chosen:
a. Direct Employees
b. Direct Employees with ID Number
c. The Resigning Employees
· Regarding to the new cooperation agreement the workers are no longer assigned to PAM Jaya, they are considered as TPJ or Palyja workers.
· Workers in public services have the responsibility not only to fulfill their own needs, but most important is to fulfill the needs of public. Therefore, in order to increase the quality of public services, it is also important to increase the quality of workers. Discrimination has to be eliminated to achieve a condition where workers can have common opportunity, have access to a qualified working environment based on standard working condition requirements, so the in end a qualified worker can perform a qualified public service.
· Labor union plays an essential part in making pressure and finding new strategies to modify regulation that can be beneficial for the workers.
· It is important for labor union to have close-relationship with other labor union in other countries. Campaign can not only be conducted in the local level, but also in the international level.
Prioritizing action plan in terminating cooperation with private sectors:
1st Priority (Urgent) / 2nd Priority / 3rd PriorityPKB (Mutual Work Agreement) / Establish a welfare team / Demonstration
Review PKS (Cooperation Agreement) / Unity in vision / Collective action which workers agreed not to work
Consolidation (internal labor union) / Judicial review / Terminate cooperation with private sectors
Status of workers / Establish a team to make PKB / Make a work plan
Legal action (law enforcement) / Internal socialization among the workers / Eliminate all kinds of discrimination acts
Support from other organization (aside from labor union) / Negotiation facilitated by the labor union between PAM Jaya and TPJ or Palyja
Consumer oriented approach
PKS legal status
Day 3: SP-PDAM Office Pejompongan, Jakarta, November 10, 2006
Moderator: Nila Ardhianie
Resources Person: 1. Dameria Hasibuan
2. Indah Budiarti
3. Guillermo Amorebieta
The 3rd day seminar discussion still focused on discrimination and the role that labor union play in order to reduce the discrimination. There are some important issues that need to be informed:
· A labor union can be called a good labor union when it succeed in implementing all of its functions in order to achieve welfare for all the workers, either from salary, insurance, health, or other aspects. Therefore, a labor union has to be independent and has strong international affiliations.
· It is important to always shared information or socializing every information related to worker interest. Especially for public services, the information not only related to the worker interest but also the public interest.
· The key to success is a strong and solid structure. Without that, it is impossible to achieve a level of welfare that can satisfy all of the workers and people.
At the end of the last day seminar, all of the participants were asked to make an information data related to discrimination that occurred in TPJ and Palyja. The information must contain detailed description about what kind of discrimination, where it happens, who experience the discrimination, and also all supporting data and evidence regarding to the discrimination. A team also formed to coordinate in collecting the information data. The end result of this information data can be used as a tool or evidence in the legal action process. It is hoped that in the end discrimination can be eliminated. Once the discrimination is eliminated, then qualified workers can start to perform qualified public services.