Govt told to review ship procurement

Abu Hanifah, The Jakarta Post, Jakarta

Chairman of the House Commission I on Transportation Soemaryoto has urged the Indonesian government to review its ship procurement program under a soft loan agreement with the German government due to irregularities.

Soemaryoto said on Sunday that the review is needed because the appointment of the German shipbuilding company was not conducted through tender processes.

"Such an appointment has been applied over the last 22 years. It must be changed in the next ships' procurement," Soemaryoto told The Jakarta Post.

He admitted that a nine-member House delegation together with three government officials visited Germany between Nov. 18 and 22 to have a closer look at several shipbuilding docks that are producing the ships ordered by the Indonesian government.

Under the soft loan program, the German government will provide soft loans amounting to about Rp 14 trillion (US$1.45 billion at the current rate), to purchase 40 ships from Germany, Soemaryoto said, adding that the ships will be used to meet transport in the Indonesian archipelago.

Under the program, the German government holds a concession to produce all of the 40 ships ordered by Indonesia.

Indonesia has thus far received 22 ships, and is scheduled to receive another new one in February of next year.

The House team, Soemaryoto said, learned during the visit that other irregularities include a possible mark-up in the procurement of the ship engines.

Moreover, the ship being ordered does not meet the required specification, thereby making the cost of the vessels to be far higher than the previously predicted, he said.

"That's why the remaining 17 ship deals must be conducted through a tender process -- and the government must prepare the ship's standard design and choose the lowest price the docks might offer," Soemaryoto said.