The Perbadanan Bekalan Air Pulau Pinang Sdn Bhd (PBAPP):

A Good Example of Corporate Social Responsibility of a

Private Water Company in Malaysia

Chan Ngai Weng, PhD

President, Water Watch Penang
www.waterwatchpenang.org Professor, Universiti Sains Malaysia www.pba.com.my
Email: nwchan@usm.my
CONTENTS
(1)INTRODUCTION
(2)HISTORY OF PBAPP
SDN BHD
(3)WHAT IS CORPORATE
SOCIAL
RESPONSIBILITY
(CSR)?
(4)CSR OF PBAPP SDN
BHD
(5)CONCLUSION.
(1) INTRODUCTION
OBJECTIVES OF THE PAPER:
(i) Showcase how a private water
company which is privatised
professionally in a transparent &
accountable way can be successful
(ii) Introduce the concept of Corporate
Social Responsibility (CSR)
(iii) Demonstrate how PBAPP has
embraced CSR & examine to what
extent other companies in Malaysia
can use their example
(iv) Promote CSR for all businesses in
Malaysia to ensure Sustainable
Development. 3
 WATER IS A
GIFT FROM
GOD & SHOULD
BE FREE FOR
ALL – 100%
AGREE
 HOWEVER, WATER IS ONLY
“FREE” IF YOU HARVEST IT
YOURSELF. DO NOT EXPECT
H2O TO BE TREATED & PIPED
TO YOUR HOUSE FOC!

FREE
PAY
“WATER PRIVATISATION SHOULD NOT BE
OPPOSED BLINDLY WITHOUT A STRONG
BASIS AS IT IS UNPROFESSIONAL,
CONFRONTATIONAL & GIVES NGOs A BAD
NAME”
WATER PRIVATISATION EXPERIENCES IN MALAYSIA
THERE ARE MORE CASES OF FAILURES IN PRIVATIZATION OF THE
WATER SECTOR IN MALAYSIA THAN THERE ARE SUCCESSES:
•SABAH is deep financial crisis and never recovered from massive
overspending and privatization resulting in a cycle of debt that caused
serious cash flow problems for the government (By the end of 2002, the
state owed RM524mil to three water concessionaires BUT such massive
debts have never happened in the old days before privatization)
•KELANTAN - Thames Water of London and the State-owned Kelantan
Darul Naim Foundation were involved but failed miserably
•INDAH WATER KONSORTIUM (IWK) - The Government had to buy back
IWK from Prime Utilities Bhd for RM192.54 million early 2000 (IWK was
awarded the sewerage treatment and management services in 1994)
•PUAS, Puncak Niaga – Viable but supported by loans from government
•Perbadanan Bekalan Air Pulau Pinang Sdn Bhd (PBAPP) with PBA
Holdings, is listed on the KLSE main board. Appears successful (State
still holds majority of shares, State Water Supply Dept controls PBAPP,
professionally run, manages the entire spectrum from source to tap,
diversifying outside the country, etc.
(2) HISTORY OF PBAPP SDN BHD

• PERBADANAN BEKALAN AIR PULAU PINANG SDN BHD (PBAPP) was

incorporated on 1.3.99 to undertake the role of the successor in the
corporatisation of the Penang Water Authority
• PBAPP was granted a license by the State Government pursuant to Part IV,
Section 16 of the Water Supply Enactment 1998 to operate as the water
supplier in the state
• PBA Holdings Bhd (PBAHB) was incorporated in Malaysia on May 25, 2000
as a public limited company under the Companies Act, 1965:
(a) Governmental Control – Government must still hold majority shares & have
the final say in major decisions except the operation
(b) Regulator Penang Water Supply Department (Government Agency)
(c) High Level of Professionalism (Success is determined by Public (Shares).
(d) Works with government agencies, consultants, NGOs, & public (Tariffs,
Shares Distribution, New Projects, etc)
(e) All projects based on Open Tender System & the Privatisation process is
transparent, viable, justifiable, ethical & equitable http://www.pba.com.my
 Perbadanan
Bekalan Air Pulau
Pinang Sdn Bhd
(PBAPP)
 (3) WHAT IS CORPORATE SOCIAL
RESPONSIBILITY?
•There are many definitions of CSR, and in the past 10 years
the concept of CSR has significantly evolved
•CSR is a concept that organisations, especially (but not
only) corporations, have an obligation to consider the
interests of “Social Responsibility” (i.e. responsibility to
customers, employees, shareholders, communities &
environment) in all aspects of their operations
•CSR is seen to extend beyond the statutory obligation to
comply with legislation
•CSR is closely linked with the principles of Sustainable
Development, viz. enterprises should make decisions based
not only on financial factors (profits), but also based on the
immediate and long-term social and environmental
consequences of their activities.
• The World Business Council for SD states that:
"Corporate social responsibility is the continuing
commitment by business to behave ethically and
contribute to economic development while improving
the quality of life of the workforce and their families as
well as of the local community and society at large.“

Models of CSR:

The Philanthropic Model – In the United States, CSR has been defined much
more in terms of a philanthropic model

The European Model – In much of Europe, this is much more focused on

operating the core business in a socially responsible way, complemented
by investment in communities for solid business case reasons

The “Greenwash” Model – In many parts of Asia many companies jump on the
bandwagon but their CSR is more greenwash than anything concrete.
 CSR is about how companies manage the business
processes to produce an overall positive impact on society,
while at the same time minimizing the negative impacts, as
shown in the Figure below:
 (4) CORPORATE SOCIAL RESPONSIBILITY OF
PBAPP SDN BHD
•PBAPP has fully committed itself towards its Corporate
Social Responsibility by contributing towards water
conservation and supporting as well as working closely
with NGOs, especially Water Watch Penang (WWP)
(www.waterwatchpenang.org) in its conservation
programmes
•PBAPP is committed to share its profits with its employees
& the public via Share Offers on the Stock Exchange
•PBAPP has achieved ISO9000 Quality Standards
•PBAPP has achieved and maintained ISO14001 Standards
•PBAPP is willing to share its success & experience with
other water companies
•PBAPP has funded other Social Programmes
Partnership with NGOs
Annual Water Conservation
Programme – PBAPP carries out
an annual water awareness &
education programme with
Water Watch since 1999

14
EXAMPLE: YOUTH ACTION FOR WATER PROGRAMME 2001

The main objectives :

Ø To provide students with
a relevant and empowering
educational experience
about protection of
watersheds and other
water resources.
Ø To teach students and
youths how to take action
on water issues.
Ø Involve young people in
investigation and action on
local water issues
Ø Encourage voluntary
action
Ø Establish and encourage
links between youth and
community and natural
resource professionals.

Activities
PUBLICATIONS ON WATER CONSERVATION

PRODUCTION
OF VCD ON
WATER
CONSERVATION
 NETWORKING

Penang
Botanic
Gardens
Networking with Local & Regional
Organisations
• Sustainable Penang Initiative
• MyWP
• Penang National Park (Achieved 2003]
• USM (RCE PENANG)
• UNDP
• WWF Malaysia
• MENGO
• JBA, JPS, PDC, DID, DOE & OTHER GOVERNMENT DEPARTMENTS
“WWP SCHOOL ACTIVITIES – CARING FOR OUR RIVERS CAMPAIGN”

Organised with PBA, FORD Foundation, Malaysian Nature Society

(Penang Branch), etc.
Objectives: to raise awareness on water conservation
to increase knowledge in water monitoring
to encourage schools to adopt a river for monitoring
Activities: walk along river bank of Sg. Air Terjun
test water quality
(physical, biological and chemical parameters)
18
 Watching Out
For Our Rivers -
Air Terjun River
(Tributary of
Pinang River)

Monitoring River
Water Quality &
Collecting Water
Samples for
Testing
 WATER SAVING CAMPAIGNS

WATER DEMAND
MANAGEMENT
 WORLD WATER DAY
CELEBRATION EVERY YEAR
SINCE 1999
PBAPP-WWP-N PARK RA “WATER DEMAND
MANAGEMENT PROJECT” 2007
N-PARK RESORT CONDOMINIUM
KEY PERFORMANCE INDICATORS OF PBAPP SDN BHD
BEST WATER SUPPLY COMPANY IN
MALAYSIA:
•PROFITS
•EFFICIENCY (ISO9001)
•TRANSPARENCY & PUBLIC
ACCOUNTABILITY
•ENVIRONMENTAL STANDARDS (ISO14001)
•MINISTER OF ENERGY, WATER &
TELECOMMUNICATIONS ANNOUNCED THAT
ALL WATER SUPPLY COMPANIES SHOULD
FOLLOW PBAPP’S MODEL & EXAMPLE
•PBAPP IS EXPANDING OVERSEAS –
CURRENTLY PROJECTS IN CHINA, MIDDLE-
EAST, SOUTHEAST ASIA.
LOWEST WATER TARIFFS IN MALAYSIA

State Domestic Rate (Average for1st 35m3) Industrial Rate (Flat/Base Rate)
Sabah 0.90* 0.90
Labuan 0.90 WHY? 0.90
Perak 0.67 1.20
Sibu 0.62 •Tariffs controlled by 0.97
Kuching 0.62 Government 0.97
Sri Aman, Miri, 0.62 0.97
Limbang, Sarikei, Kapit •NGOs have a say
Melaka 0.59 1.40
Perlis 0.57 •Share Holders have a 1.30
Sarawak 0.56 say 0.95
Bintulu 0.55 1.21
Selangor 0.55 •Industry has a say 1.20
Negri Sembilan 0.55 1.00
Kedah 0.53 •Chief Minister has the 1.20
Johor 0.53 1.20
Terengganu 0.44 final say 1.15
Kelantan 0.31 0.70
Pulau Pinang 0.31 0.90 *
* Ringgit
(Source: Water Water Association)
LOWEST NON-REVENUE WATER (NRW) RATES IN
MALAYSIA

MALAYSIA
= 40 %
(5) CONCLUSION
•The PBAPP example proves that privatization of
water is not necessarily bad, although the majority
of cases have failed in Malaysia
•Privatisation can be successful if carried out in a
transparent, accountable & professional manner
without political or other interventions
•Privatised water companies should embrace CSR
as a core business function (Government should
make CSR mandatory)
•Water companies must not view CSR as a liability
but as an opportunity to make more money
•WATER IS EVERBODY’S BUSINESS: GOVERNMENT-
INDUSTRY-NGO-PUBLIC
TERIMA
KASIH
www.pba.com.my

www.waterwatchpenang.org