Chapter 7

Putting the ‘public’ in public
services: (Re)municipalisation
cases in Malaysia andthe Philippines
By Mary Ann Manahan and Laura Stegemann

Strong public institutions are critical for providing effective, quality,
affordable and democratic public services to people living in Southeast
Asia. This has been underscored by numerous social disputes during thelast decade, contesting ‘new’ public management and reclaiming public
services that are anchored in an ethos of transparency, accountability,community responsibility and participation as well as integrity.
(Re)municipalisation of public services has taken root in a number ofcountries like Indonesia, Malaysia and the Philippines, among others.
The cases are diverse but show common features. There are publicauthorities on the regional or municipal level reassuming control overprivatised services. We can also see a number of municipal governmentsthat use public money to create new public service structures that increase social welfare and climate resilience in response to their specificcontexts in public-public and public-community partnerships. These
cases emphasise that cities and municipalities can provide the means
and spaces for democratisation and progressive policies.1 This chapter
highlights novel pathways to deliver quality and democratic essential
services led by states, cities and municipalities. The cases include sociallyinnovative systems of public service provision beyond privatisation andcommercialisation. We have put a spotlight on examples from Malaysia
and the Philippines, with a focus on water, social protection and local
resilience to climate change.

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Selangor’s remunicipalised water system
A 2012 survey to map the degree of public versus private water service
delivery in Asia provided a large and broadly characteristic sample of 646
listed water utilities, most of which are public in nature – either as statesponsored agencies or municipal corporations.2 Privatised water supply
systems are found in key megacities, however, such as Metro Manila,
Jakarta and Kuala Lumpur where there have been decades long campaigns
to de-privatise water services. Among them, Kuala Lumpur, one of
Malaysia’s three federal territories enclaved within the state of Selangor,3
successfully returned water operations to public ownership (as part of theservice area of a new state-wide public water utility, Air Selangor). The
state of Selangor’s remunicipalisation process represents a complicatedand expensive two decades-long saga of regaining state autonomy andpublic control over the water system. Exposed to conflicts of interest
between private companies and the Selangor state government, citizens
had to cope with the consequences of poor service provision on a daily
basis, including poor water quality and high tariffs, exacerbated by water
shortages. As the richest and most populated state, remunicipalisation
was made possible through a combination of political and economic
will from the centre-left government, Pakatan Rakyat (People’s Pact),
which came into power in 2008. Its leaders put the re-consolidation of afragmented and unbundled privatised water sector (see Figure 1) at thecore of its strategy.
Until 1994, Selangor’s water system had been publicly managed andowned, generating annual profits of between €11.5 and €18.5 million.4
When the demand for water grew and the public utility could not keep up,
privatisation was seen as the only viable solution, which was in line withthe dominant mantra of neoliberal development at the time. The Selangor
state government signed a 25-year Build-Operate-Transfer (BOT)
contract in 1994 with Puncak Niaga Holdings, a company owned by the
Malay Nationalist party (UMNO)5-linked Rozali Ismail. In the years that113

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followed, Selangor’s water system was split and its parts successively
awarded to three more concessionaires: PNSB, owned by Puncak Niaga;
Syarikat Pengeluar, owned by SPLASH; and the consortium ABASS. In
2004, without any competitive bidding process, the state government
awarded Syarikat Bekalan Air Selangor Sdn Bhd (SYABAS), anothersubsidiary of Puncak Niaga Holdings, a 30-year contract that guaranteed
fixed government payments and triennial tariff increments from 2009
onwards. The concessionaire committed €2.26 billion as investments to
reduce non-revenue water (i.e. water losses due to theft and leakages) by
fixing pipes. The deal was pushed by Barisan National (National Front),
coalition of parties on the right and centre of the political spectrum),which governed Selangor until 2008.

RAW WATER

Selangor 100%

WATER TREATMENT

Splash
(44% of capaity)

WATER DISTRIBUTION

Abbas(14% of capaity)

Puncak Niaga Sdn Bhd(42% of capaity)
100%
40% Gamuda
30% Wan Azmi
Wan Hamzah
30% Selangor

91%

Selangor
Kuala Lumpur
Putrajaya
30%

Selangor

Syabas70%

Puncak Niaga Holdings Bhd
41,25% Rozali Ismail
6.19% EPF
5.74% Lembaga
Tabung Haji

Figure 1: Selangor’s privatised water system
Source: Razak, A. (2013) ‘Selangor water: Privatisation gone awry’, KINIBIZ Online, 26 February. http://
www.kinibiz.com/story/corporate/5104/selangor-water-privatisation-gone-awry.html

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In 2008, a new government led by Pakatan Rakyat granted Selangor state
the right to restructure and reconsolidate the water system. The politicalparty promised to freeze tariff hikes as part of its electoral campaign
focusing on social justice, human development, an equitable and sustainable economy, transparency and genuine democracy. However, thenational government failed to respond to requests to cancel the concessionaires’ contracts in 2008 and 2010.6 SYABAS, on the other hand, filed
claims to the state government for US$282 million as compensation for
impeding the raise of consumption tariffs, further claiming that the priceof US$0.45/m3 did not cover its operating costs of US$0.55/m3.7 The Selangor government denied the private company’s claims, arguing in turnthat SYABAS was in breach of its contract because of missed performancetargets, inefficiencies, non-disclosure of crucial information, overcharging for unrequested services such as a €12 million office renovation,
misallocation of state funds and non-compliance with government procurement processes. Operational irregularities continued to occur such as
overpayments to Puncak Niaga’s top management amounting to €2 million in 2009, as well as overcharging consumers on water bills that weredouble that of neighbouring states. Moreover, the quality and stabilityof service provision steadily declined as regular water interruptions, especially during summer months, and water rationing became the newnorm for 10 million affected residents. Following these supply problems,a Special Cabinet Committee on the Selangor water crisis was formed.
The committee found that SYABAS operations were indeed inadequate,
but conclusions fell short of recommending a full public takeover.
Meanwhile, state authorities and private operators exchanged accusations. From 2009 to 2014, the Selangor government made various
attempts to reconsolidate the fragmented water sector based on Article
114 of the 2006 Water Service Industry Act, a regulation which allows for thefull or partial remunicipalisation of a private business or licensee by thestate based on national interest. The government initially offered €2.2
billion to buy back utilities, but the concessionaires rejected the proposal.

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On 26 February 2014, the state government flexed its political muscle byestablishing a special purpose vehicle called Pengurusan Air Selangor Sdn
Bhd, or Air Selangor. This new entity operates and maintains the entire
water supply and distribution systems – from reservoirs to distributing
treated water to 10 million consumers in Selangor, Kuala Lumpur andPutrajaya (federal administrative centre of the Malaysian capital).8
The single, new public operator acquired the three concessionaires inline with the amount agreed upon in a memorandum of understanding
between the federal and state governments in 2014: SYABAS and PNSB
Water was purchased for a total of €1.9 million in 2015 and ABASS for€194.7 million in 2016. The negotiations with SPLASH took longer, with
the Selangor government finally accepting SPLASH’s €549.5 million
asking price in 2019, which according to critics is 10 times the original
takeover offer from 2013.9 Air Selangor has made a first payment of€409.5 million and the remaining amount will be paid over a period ofnine years. This completes the final step in remunicipalising the water
system, offering an opportunity to re-establish a reliable water systemthat will serve people in the long term. Air Selangor has already invested€237.1 million10 between 2016 and 2018 to upgrade and maintain thesystem. Throughout the process civil society and the current ruling party,
Pakatan Rakyat, played an important role in reclaiming water services,increasing the transparency of the negotiations and envisioning a better
public water management.

Advancing social protection and universal access toessential services in the Philippines
Public services such as libraries, health, fire protection, water andsanitation, and education are usually decentralised in Southeast Asia. For
many citizens, local government (municipal, village, provincial/state) isthe layer they have daily contact with. The relationships between local
administrations and citizens are mediated by the quality, effectivenessand capability of the former to meet the needs and demands of the latter.
Therefore, local governments tend to have the ‘comparative advantages

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Putting the ‘public’ in public services: (Re)municipalisation cases in
Malaysia and the Philippinescompared to central governments because of their proximity to people,
knowledge about local priorities and the pressure of local constituencies
for greater accountability, participation, and transparency’.11 Notwithstanding the potential weaknesses and susceptibility of local governments
to corruption and bad governance, some Philippine local governments
deliver inspiring counter-examples to advance universal access to public
services and social protection.

PHILIPPINES OF CASES 21
TOTAL NUMBER

Municipalisation 21

Health care &social services

4
Education

3

Energy1
Local government

6

Public (green) space maintenance 1
Food and catering 4
Security and emergency services 1

Water

7

Highlights• Philippine municipalities are creating new public services to increase welfare-based social protection.
• Binalonan started delivering effective health care services to residents, including care centres andfinancial support for health services. The municipality reduced chronic child malnutrition by 17% andincreased use of contraceptives by 51%.
• The municipality of Cainta Rizal launched its “One Cainta” program in 2016, providing free education
through the establishment of a college, enrolling 800 students per year, and additional health carefacilities, improving access to medical services for economically disadvantaged groups.
• Philippine municipalities are taking on an important role in increasing the country’s climate resilience,by establishing integrative approaches to farming and fishing, ecosystem protection, and energy
generation (Del Carmen and Lanuza).

The municipality of Binalonan in the province of Pangasinan, home to54,555 people12 and located 190 kilometres from the capital, has recently
used public funds to set up day care centres, provide financial assistanceto women, children and single parents as well as social privileges forsenior citizens. Further, it has introduced free primary healthcare services
and aid to people in need. This initiative is anchored on the municipal
government’s vision and core value to ensure ‘that [people who have]the least in life have the most in law’.13 Prioritising primary healthcare

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provision in line with national laws promoting maternal and children’s
health, the municipality has improved health indicators above thenational average. The chronic malnutrition rate among children ages 0-2
was at 9 per cent while the national average was at 26 per cent in 2016.
The rate of severe underweight has been reduced to 1 per cent and thecontraceptive use rate increased to 51 per cent in the same year. In 2015,
the Department of Interior and Local Government, the national agency
responsible for strengthening local government capacity to effectively
deliver basic services to the population, awarded the municipality a sealof good governance and hailed it as a children- and women-friendly local
government.
The municipality of Cainta, in the province of Rizal, has undertaken
similar initiatives. It is the second most populated municipality (322,128
people) and the richest in the country, with €70.7 billion in total assets
in 2017.14 Under the leadership of Mayor Johnielle Keith Pasion Nieto,who first won local elections in 2012 and was re-elected in a landslide
victory in 2016, the ‘One Cainta’ programme was launched to revive
and reinvigorate public services, foster municipal income growth andimplement proactive governance. In 2018, at the mayor’s initiative andwith support from the municipal council, a local ordinance was passed
to establish the One Cainta College introducing free tertiary educationand lifelong learning to low-income households. The mayor enlisted thehelp of a known educator and resident, Dr. Victoria Naval, who conducted
a six-month feasibility study and participatory consultations with local
communities in partnership with a national NGO as well as facilitated thecollege’s accreditation with the Commission on Higher Education.15 The
accreditation means that diplomas earned from the college can be used by
students for graduate study and work abroad. As its current president, Dr.
Naval oversees the college’s lateralised programme16 that provides fullbachelor’s degrees for full-time students and lifelong learning courses
for individuals regardless of age and gender. Funded by the municipality
directly, the college has admitted a cohort of 800 students in its first year.

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Photo: The author interviewed Dr. Victoria Naval of One Cainta College in 2019

Furthermore, as part of Mayor Nieto’s ‘development’ platform to uplift
impoverished people and ensure safer communities for everyone, thedelivery of health services is on top of his agenda. In that framework,
the municipality has undertaken the construction of new health centres
and birthing clinics, upgraded the municipal hospital andset up freeconsultations with the roll out of the Libreng Gamot (free medicine)program, targeting low-income and marginalised households. It has
further embarked on improvements to its municipal hospital by increasing
the number of hospital beds to accommodate more patients, augmenting
the staffing system, upgrading hospital facilities in the charity wards andaccrediting the hospital under the National Health Insurance Program.
The accreditation gives health insurance members access to free medicine
at the hospital’s pharmacy, which is paid for by the national government.
Municipal health care workers and senior citizens who are HealthGreen Card holders are also entitled to free hospitalisation that covers
medicines, medical examinations, laboratory and doctor’s fees and minor
surgical procedures performed at the municipal hospital.

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The Binalonan and Cainta cases stress the leadership roles that mayors
and local councils hold in delivering welfare-based social protection
and basic public services. In both cases local public authorities forward
visions and action plans that focus on upholding social and human rights,
benefitting especially the most vulnerable and marginalised members ofPhilippine society.

Case I: Selangor’s People’s Care Initiative
The Selangor government introduced the Inisiatif Peduli Rakyat17(IPR, People’s Care Initiative) as an integrated social protection
programme in 2008. Funded by state revenues, the programme
was set up to improve social welfare of different vulnerable
groups through better education, health care, water provision,transportation, housing and food.
In the realm of education, six initiatives were introduced. The Skim
Bantuan Tadika Selangor (Skim TUNAS) was set up in 2008 to enable
children ages 5–6 to attend kindergarten or pre-primary school.
Tuition fees are covered by public funds and are directly transferredto the institutions registered with the Selangor Kindergarten
Consultative Council. Another programme is the Hadia Pengajan
IPT scholarship, launched the same year with the objective ofimproving equal access to university education. The scholarshipfully covers tuition fees and provides a one-time payment of RM
1,000 (€215) for students qualified to study at a public college oruniversity. It focuses on low-income families or those earning lessthan RM 5,000 (€108) per month. A similar programme directly
targets children of farmworkers in Selangor.
Two programmes were introduced in 2008 and 2010 to improveaccess to health care. The Skim Mesra Usia Emas Scheme offers adeath benefit of RM 2,500 (€538) for registered senior citizens to120

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help surviving relatives cover burial expenses. In the frameworkof the Women’s Health Scheme, mammograms are free for women
aged 35 and over. Another initiative launched in 2017 provides a
subsidy for primary healthcare provision, targeting low-income
households. The state provides RM 500 (€109) per year for medical
expenses. Part of this scheme entitles residents holding a Peduli
Sihat health card,18 including their spouses and two children aged
21 or below, to free treatments at registered clinics.
Other programmes focus on access to affordable housing, water,
food, transportation and telecommunication services. The Rumah
Selangorku was introduced in 2012 to provide access to affordable
housing. Selangor residents earning below RM 3,000 (€646) per
month can apply for house financing not exceeding a value of RM
250,000 (€53,793). Since 2018, the Smart Motherhood Charity
programme has helped mothers from low-income households
reduce living costs by subsidising purchases of basic food andnon-food necessities up to RM 200 per month (€43) using stateissued cards in registered shops across Selangor. This welfare
programme recognises the special role of women in managing
family affairs and has benefited an estimated 5,000 households
belonging to the bottom 40 per cent income bracket. The Smart
Selangor Wi-Fi initiative provides free internet access at 300 spots
throughout the state. The state is currently improving access inlower income neighbourhoods, as well as in rural and high student
density areas. In the sector of public transport, the Smart Selangor
programme provides free bus service covering 11municipalities
and cities. Finally, with the Skim Air Darul Ehsan project, thePeople’s Care Initiative also provides free water to households that
consume 20 cubic meters or less per month.

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Locally anchored climate resilience strategies
The impacts of climate change are experienced in ways as diverse as
the environments where it unfolds. Market-based instruments are
increasingly recognised as insufficient to respond to the climate changerelated challenges that communities face in a variety of local contexts.
In contrast, locally anchored climate resilience strategies focus onadapting to a community’s specific experience of the threats, impacts
and consequences of the climate and ecological crises. They also include
mitigation strategies that increase resource and energy efficiency, led
by local communities. A crucial pre-condition here is the involvement,
ownership and even self-provisioning (self-help/community-organised
initiatives, often without government support) of affected communities
and people that nurture local capacities and knowledge.
With the world’s third largest exposure to climate risks,19 Philippine
municipalities and communities are building and expanding holistic
public service structures that respond to present and future risks andreduce people’s vulnerability to climate change-related and natural
disasters.
The first example comes from the town of Lanuza, located in Surigao del
Sur in the Southeastern Philippines. In 2016, local leaders implemented
a holistic project on disaster risk reduction and management that fosters adaptation policies anchored on a ridge-to-reef approach. As the
local economy depends on its forests, watersheds and mangroves, decision-makers take the entire ecosystem and its interconnectedness into
account in formulating programmes that tackle multi-faceted issues inthis town of 12,000 residents. The issues include sustainable livelihoods,
environmental protection and safeguarding the rights of vulnerable
groups such as women, children, elderly people and people with disabilities, all of whom are the most impacted by climate change and natural
disasters. In order to finance the initiative, the national and local levels

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work together. The municipality has secured €692,322 from the People’s
Survival Fund, a special fund in the National Treasury that supports climate change adaption and disaster risk reduction programmes in impoverished and vulnerable local communities, while the municipality itself
has allocated €148,987 in matching funds.
Similarly, in the same province the Siargao Climate Field School for
Farmers and Fisherfolks obtained public funds worth €1.43 million fromthe People’s Survival Fund and earmarked a further €226,758 from themunicipal budget. The climate field school is a joint undertaking between
the coastal municipality of Del Carmen and the Surigao State College ofTechnology. Established in 2016, it aims to improve food security andagriculture as the town’s principal source of livelihood. The school
provides technical assistance to farmers and fisherfolks and delivers tools
to reduce diseases caused by pathogens, bacteria and viruses transmitted
by insects and snails that affect agriculture-dependent households.
It promotes community education on weather forecasting and climate
variability to empower local farmers and fisherfolks by increasing theirdecision-making capacity. The project also finances a regional research
centre that surveys options for climate and disaster-resilient foodproduction.

Challenges ahead
The above cases stress the viability of (re)municipalisation in a region
where neoliberal reforms have long undermined public sector performanceand permeated the everyday lives of people. Remunicipalisation andmunicipalisation have articulated politics that move education, welfare
and socio-ecological relations to the centre. They stress the importantrole of targeted public spending strategies accompanied by visionary
political narratives and pragmatic policy programmes. While national
funds are an important source of money, local authorities can build on
local institutions and knowledge to set up programmes that adapt to123

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their specific needs. Malaysian and Philippine municipalities thus move
forward with recipes for public ownership with local ingredients.
One cannot overemphasise that (re)municipalisation means mobilisingpublic money. The main lesson here is that besides political will, fiscal
space and actual funds are available to take over a private entity and run
a service effectively. Selangor, as the richest state, can easily buy out
private concessionaires, but what if there is jurisdiction and political will to
remunicipalise but the authority in charge does not have the financial means?
Here, central government support and foreign development assistanceto capacitate and strengthen the local public sector’s ability to establish
and maintain a public service have to be considered as potential modesof cooperation. Then, there are issues surrounding user tariffs. It is
important, for example, to see how Air Selangor as a non-profit utility
will ensure that its water tariffs continue to be linked to social justiceand human rights goals. Citizens and civil society must also continue
to hold public utilities accountable to avoid pitfalls of the past and to
make sure that ‘new’ public utilities remain subject to the same and evenhigher standards than privatised services to live up to their very natureand mandate.
In short, the new generation of ‘the public’ must continue to expand its
capacities and listen to the needs of people and the environment to create
futures that sustainably challenge economic and political norms andadvance people’s rights, equity and resilience.

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ABOUT THE AUTHORS

Mary Ann Manahan is a Filipina feminist activist
researcher. She works with various social movements
and civil society groups on different initiatives thatdemand equity, environmental, gender and social
justice, and redistributive reforms. She holds anundergraduate degree in sociology and a Master’s inglobalisation and development.
Laura Stegemann has worked as a freelance research
assistant for the Public Alternatives Project at theTransnational Institute. Currently, she is doing a
PhD that falls within the framework of a research
project at the University of Glasgow on ‘Global
Remunicipalisation and the Post-Neoliberal Turn’.

Endnotes
1

Manahan, M. and Alvarez, K. (2019) ‘An Atlas of Praxes and Political Possibilities: Radical
Collective Action and Urban Transformations’, in Cities of Dignity: Urban Transformations
Around the World, forthcoming.

2

Dargantes, B., Batistel, C. and Manahan, M. (2012) ‘Springs of Hope: Alternatives to Commercialization of Water Resources and Services in Asia’, in D. A. McDonald and G. Ruiters (eds.)
Alternatives to Privatization Public Options for Essential Services in the Global South. New
York: Routledge.

3

Malaysia is a federal constitutional monarchy comprised of 13 states and three federal territories (Kuala Lumpur, Putraja and Labuan). Each state has its own constitution, legislative
assembly and executive council, responsible to the legislative assembly and headed by a chief
minister. For more information, see https://www.britannica.com/place/Malaysia/Local-government

4

Remunicipalisation Tracker (2015) ‘Water Remunicipalisation Selangor State’.
See http://www.remunicipalisation.org/print/Selangor+State (retrieved 31 October 2019).

5

The United Malays National Organization (UMNO) used to dominate Malaysia’s politics until
2018, when Pakatan Harapan, a coalition of centre-left and centre-right political parties won
the elections headed by Mahatir Mohamad. UMNO advances Malay nationalism, the protectionof Malay culture as the national culture and expansion of Islam across the country.

6

World Bank (2010) Private Participation in Infrastructure Database: Datasets for Malaysia andwater.

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7

Remunicipalisation Tracker (2015) ‘Water Remunicipalisation Selangor State’, op cit.

8

Air Selangor (n.d.) About Us. https://www.airselangor.com/about-us/our-transformation (retrieved
31 October 2019).

9

See Free Malaysia Today (2018) ‘Selangor bought SPLASH at 10 times its price, claims Khalid
Ibrahim’, 3 August. https://www.freemalaysiatoday.com/category/nation/2018/08/03/selangorbought-splash-at-10-times-its-price-claims-khalid-ibrahim/; and Aisyah, F. (2019) ‘Air Selangor’s offer for Splash turns unconditional’, Malaysian Reserve, 25 April. https://themalaysianreserve.com/2019/04/25/air-selangors-offer-for-splash-turns-unconditional/ (accessed 31 October2019). (retrieved 31 October 2019).

10

Fadli, M. (2019) ‘Air Selangor to become Klang Valley’s sole water supplier from Friday’, MSN
News, 9 October https://www.msn.com/en-my/news/national/air-selangor-to-become-klang-valleys-sole-water-supplier-from-friday/ar-AAH4ir9 (retrieved 31 October 2019).

11

United Nations Capital Development Fund (UNCDF) and Local Development Unit (2005) The
Role of Local Governments in Local Development Pro-poor provision of infrastructure services. Kigali, Rwanda: UNDESA, UNCDF, MDP Government of Rwanda, pp. 4-5.

12

Based on the 2015 Philippine Census. See https://psa.gov.ph/population-and-housing/statistical-tables/title/Philippine%20Population%20Surpassed%20the%20100%20Million%20Mark%20%28Results%20from%20the%202015%20Census%20of%20Population%29 (accessed 2 November2019).

13

Municipality of Binalonan website (n.d.) Social Services. http://www.binalonan.gov.ph/services/
social-services/ (retrieved 4 November 2019).

14

Republic of the Philippines, Commission on Audit (2018). 2017 Annual Financial Report, Local
Government Volume 1, Quezon City, p. 4. https://coa.gov.ph/phocadownload/userupload/Annual-Financial-Report/lgu/2017/2017_AFR_Local_Govt_Volume_I.pdf (retrieved 12 November 2019).

15

Interview with Dr. Victoria Naval, president of One Cainta College, Cainta, Rizal, 19 February
2019.

16

A lateralised programme takes into account the previous qualifications or competencies ofstudents who wish to start a bachelor’s degree or certificate course. For example, a student
who has done courses in college may then stop to work and support their family. The school
administration will take those previous courses into consideration and include that in determining the student’s programme or course work.

17

Inisiatif Peduli Rakyat http://ssipr.selangor.gov.my/ (24 April 2020).

18

Those eligible to hold this card are residents who were born in Selangor or who have been
living in the state for more than 10 years. There are 1,000 participating clinics in Selangor andKlang Valley.

19

Institute of Regional Development Planning, University of Stuttgart (2017) World Risk Index.
https://www.arcgis.com/home/webmap/viewer.html?webmap=ee5978152b5c4cd2aaaaaf3a14d379c8&extent=-180,-86.3126,180,88.0275 (retrieved 31 October 2019).

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