Govt drafts law on public sector procurement

The Jakarta Post, Jakarta

The government is currently drafting a law on public sector procurement as part of efforts to help curb rampant corruption in the country.

The law, which someday will replace Presidential Decree No. 18/2000 on public sector procurement, will ensure severe punishment for corruption in the process.

State Minister of National Development Planning Kwik Kian Gie said on Thursday that the presidential decree was deemed not effective enough to ensure that corruptors got heavy punishment.

He was speaking in a speech at a gathering of government and business officials discussing trade liberalization issues.

A government special team has completed a revised version of the above presidential decree to help boost transparency in public sector procurement, but the revision has yet to be approved by President Megawati Soekarnoputri.

Kwik said that, so far, procurement had often been carried out in an inefficient way and sometimes the process was not transparent.

Both the revised decree and the bill are aimed at gradually turning Indonesia into an efficient economy rather than the high- cost economy it is today, in response to widespread leakage at almost every stage of the procurement process.

Various international institutions -- including the World Bank and the Asian Development Bank -- have frequently stated that corruption in equipment procurement in government institutions is one of the areas most tainted by corruption in Indonesia.

The World Bank even suggested that leakage in the procurement process could account for up to 50 percent of all funds allocated for procurement.

"The procurement process should be monitored tightly," Kwik said. "And to promote efficiency and transparency in the procurement of goods and services, reward and punishment should be implemented. Therefore, a law that has more severe penalties is needed."

The revised decree has sparked some protest from business associations, as under the decree, contractors will be allowed to win procurement projects without having to be accredited with either the Indonesian Chamber of Commerce and Industry (Kadin) or its affiliated associations.

Previously, a source at the National Development Planning Board (Bappenas), where the revised decree was deliberated, said that the certification process was prone to abuse and bribery.

Similar to the revised decree, the bill also aims to support small enterprises entering bids for procurement projects.

In the revised decree it is stated that medium- to large-scale enterprises are prohibited from participating in tenders for projects reserved for small businesses, that is, projects worth less than Rp 50 billion.