No, it's linked to the formula not being sterile in the beginning. Babies have died in Europe from this.
But yes, in the Third World, it's because:
Dirty water is used to make up the feeds.
Dirty water is used to "wash" the bottles/teats.
Formula is prohibitively expensive (once the free samples have run out...) - costing maybe two day's salary, perhaps.
Fuel used to heat the water to kill the bugs that exist within the formula is also scarce and expensive - and puts people into the situation of using fuel to heat water for the baby or use fuel to cook for the family - when they could just be using their clean, at the right temperature breasts to feed their baby.
There's a lot more to this than just "make the water clean and it's fine to promote formula".
Did you know, for instance, that in places where formula is marketed, breastfeeding rates are lower? Which gives the lie to the companies saying "oh, we're fulfilling a need" - no, they are CREATING a need by undermining confidence in breastfeeding, bribing doctors to promote the product, advertising on television and in print and in health journals and making outrageous claims for their product which is inferior to breastmilk in every way.
So no, it's not really all about the water. Clean water would help, obviously. But it would help everyone to have clean water, not just ff babies.