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of troops and modernize its largely outdated equipment.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.