Does non-revenue water affect Malaysia's water services industry productivity?

This study examines the total factor productivity (TFP) changes in the Malaysian water services industry from 1999 to 2012 using a global Malmquist Luenberger index method incorporating an undesirable output, namely non-revenue water. The results show that the Malaysian water services industry experienced a declining TFP of 0.72 percent per year, with technology regression being the primary cause of the annual TFP decrease. Several initiatives are suggested to reduce non-revenue water in Malaysia. The findings provide useful insights that can be incorporated into future reforms of the industry.