Bill passed to help curb graft
Dadan Wijaksana, The Jakarta Post, Jakarta
The House of Representatives approved on Thursday the state finance bill which is meant to ensure transparency and accountability in managing state finances.
It is hoped that the move will help curb the massive corruption by state institutions.
Minister of Finance Boediono told legislators during a plenary session at the House that the bill would pave the way for meeting "international best practice" standards and legislating good governance principles.
"This is part of our effort to install good governance with regard to state financial management, which needs to be carried out in a professional, open and accountable manner," Boediono said.
Under the newly approved bill, if any irregularities in the use of state funds are found, not only will officials in charge of the funds have to pay for the losses, they can also be put in jail for the crime.
Irregularities are defined as any difference in the use of state funds between the figure set out in the state budget and the amount used in the implementation stage, which is not properly accounted for.
The bill also emphasizes the principle of equality before the law, meaning that any officials ranging from a leader of a state- funded project to head of a state institution or minister who have committed the wrongdoing will be punished equally.
All these items were absent before in the country, mostly due to an unwillingness to provide a legal basis to back them up. This should partly explain why various findings of irregularities in the use of state funds have rarely been followed up on, with those responsible for misusing them still not only unpunished, but still serving in their government posts.
The most recent revelation by the Supreme Audit Agency (BPK) was that throughout 2001 and 2002, it had found Rp 456.3 trillion (about US$60 billion) worth of irregularities and abuse of state funds, mostly in the implementation of 2001 and 2002 state budgets.
BPK said that the findings were the result of an inspection which covered the implementation of budgets in 2001 and 2002 for regional and central governments, and state companies operating under the central government and in the regions.
However, despite the huge losses -- which amount to close to one third of the country's total outstanding debts -- no follow up action has been taken, let alone punishing those responsible for the losses.
Such lack of accountability has been going on for years, but Boediono was hopeful that the passage of the bill would mark a milestone for the reform of financial management of public money, which could prevent further corruption and minimize potential state losses.
The law, however, has yet to stipulate detailed information on the punishment in terms of fines and prison time, because that will be discussed during the deliberations on the state treasury bill and the state audit bill, which are considered to be part of a package under the state finance bill.
Aside from the draft law on state finance, the government in 2000 also submitted to the House the other two draft laws.
"Yes, the three are part of one package. The state finance bill is a sort of a grand concept that would lay the foundation for the deliberation of the other two.
"Everything that specifies all the operational technicalities for the state finance bill will be fully described in the two drafts," Boediono said.
Highlights of State Finance Bill
* Govt must submit macroeconomic assumptions of the following year to the House no later than May of the sitting year (This must be done in the next five years at the latest).
* Govt must propose a bill on state budgets for the following year no later than August of the sitting year. (This must also be done in the next five years at the latest).
* Regions must propose budgets for the following year to their local representative council in the first week of October of the sitting year.
* Central govt can provide loans and/or grants to regions, and regions can do the same to the central govt.
* Such loans/grants can only be given with the House's approval.
* Regions can provide loans/grants to one another with local representative council's approval.
* Central govt can provide or receive loans/grants to or from foreign countries/institutions with the House's approval.
* Central govt can transfer loans/grants it receives to regions.
* Central govt can privatize state firms after the House's approval.
* Regions can privatize regional state firms after the local representative council's approval.
* Central govt can inject capital to private firms after the House's approval.
* Govt submits reports of first-half implementation of budget in sitting year no later than July.
* The President must deliver an accountability speech on the status of state budget's implementation, audited by the BPK, six months after the sitting year ends. (This will become effective by 2006).
* Governors/Mayors/Regents must deliver similar speeches at local legislatures six months after the sitting year ends. (effective by 2006)