Cut role of contractors, defense official says
Cut role of contractors, defense official says
The Jakarta Post, Jakarta
The government must cut out the role of contractors in its procurement policy to prevent the rampant practice of exhorbitant mark-ups, a senior official at the Ministry of Defense said on Wednesday.
Maj. Gen. Sudradjat, the director general for defense strategy, told The Jakarta Post that the current policy, based on a presidential decree dating back to the 1970s, still required that all government ministries use contractors to procure their needs.
This policy makes just about all government procurements susceptible to corruption practices and grossly inefficient, Sudradjat said, adding that this problem was not just confined to the Ministry of Defense.
President Megawati Soekarnoputri launched the debate about the exhorbitant markup practices in defense procurements during a visit to the Czech Republic last month.
While giving her wholehearted support to the development of TNI's weaponry and the national defense industry, the president said the defense ministry must first end corrupt practices, particularly the markups in procurements.
In the past, most of the lucrative defense contracts, including the purchase of warships, jet fighters and tanks, went to businesses owned by the children and cronies of then president Soeharto.
While the regime has changed, the government of President Megawati, who was elected on a platform of eradicating corruption, has not changed the government procurement system.
The Indonesian Military (TNI) has been campaigning to increase the government's spending on defense to help improve the welfare of troops and modernize its largely outdated equipment.
In a rare disclosure that many people said exposed the country's weak defense capability, the Navy said its warships were only good for sailing but not for combat while the Air Force said most of its aircraft had been grounded and its pilots undertrained due to a lack of funds.
Sudradjat said the current procurement policy also meant that some of the decisions about budget allocations were made at the Ministry of Finance or the National Development Planning Board.
Contractors looking for fat commissions also lobbied these two government agencies, he said.
Accountability for the procurement was difficult, he said.
Quite often, the Ministry of Defense or TNI ended up with equipment they did not need, or could not maintain, he said.
"If we have to reform our defense spending, we should start with the procurement policy at the Ministry of Finance," Sudradjat said.
He proposed the establishment of an independent logistic body in each ministry which would conduct all its procurements. This body would be directly responsible to the president, he added.
TNI has been operating on a shoestring budget, and the Rp 9 trillion ($900 million) budget allocated for defense barely covers 30 percent of its annual needs.
Sudradjat said the remaining 70 percent of the funds had traditionally been covered by contributions largely from defense contractors, making the system even more prone to corruption.
He said contributions from businesses run by foundations owned by the military's three services accounted for little, and the bigger share came from "local army friends", the term he used to refer to the contractors.
The government has ordered that all the foundations ran by the military's services -- the Army, Navy and Air Force -- must be audited to ensure that all the money was truly spent on the general welfare of troops.
Sudradjat said the Ministry of Defense would be fighting to double the budget allocation next year to Rp 18 trillion to reduce TNI's reliance on "non-budgetary" funds.
Indonesia's defense spending currently amounts to a mere 0.94 percent of its gross domestic products, far from the ideal level of 3.8 percent of GDP given Indonesia's geographical and population sizes, he said.
"Only by doubling the military budget will we see a meaningful change. I can assure you that you will then see a different defense posture," he said.