"The government is firm that Malaysia will not liberalise the water industry as it is considered a basic utility and should not be opened for international market forces to determine," Energy, Water and Communications Minister Lim Keng Yaik was quoted as saying by the official Bernama news agency.

Two new water-related bills to be debated in parliament next week will provide a new regulatory framework, with the federal and state governments to share responsibility for the sector.

Lim was responding to concerns from civil society groups who said that once water supply and services are provided on a commercial basis, foreigners could be drawn into the sector and lead to rising prices.

"The rationale for introducing the bills is to ensure quality and reliability where water supplies are concerned," Lim told The Star newspaper, after a spate of complaints over tainted and muddy water.

"We want to ensure the industry is regulated and that consumers enjoy better services," he added.

But the Coalition Against Water Privatisation (CAWP), one of the key groups lobbying against the legislation, said on Wednesday Lim's comments meant little, given Malaysia's international trade obligations.

"In the real politics of negotiations, trading off the competitive advantage of one country for another is a key feature. So Lim's nice statements don't carry any weight," CAWP's coordinator Charles Santiago told AFP.

Malaysia has obligations under the WTO General Agreement on Trade in Services (GATS) to liberalise a number of service sectors, and Santiago said this could put Malaysia under pressure to open up water services.

"Commitments have to be made at the WTO," he said. "The EU has already requested the opening up of water services under WTO GATS negotiations."

The CAWP is expected to meet with Malaysian parliamentarians Thursday to discuss amendments to the legislation.

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