Govt urged to simplify project tender procedures

JAKARTA (JP): Three Indonesian businessmen called on the government yesterday to hold "limited" tenders for infrastructure projects and to simplify procedures by setting up a cross- sectoral committee to oversee projects.

Sjamsul Nursalim of Gajah Tunggal Group, Fadel Muhammad of Bukaka Group and Husodo Angkosubroto of Gunung Sewu Group said in a joint press conference that the government should choose limited tenders for infrastructure projects over direct appointments or fully competitive tenders.

Direct appointments, applied in countries like Malaysia, result in uncompetitive prices, while fully competitive bidding often places domestic investors at a disadvantage to international players, they said.

Only selected companies with experience in the areas should be allowed to make bids, they said.

"Children of government officials can, of course, take part in such tenders provided that they are really experienced in the field. If they are not, they shouldn't take part in the tenders," Fadel said at the press conference held at an international conference on infrastructure development in Southeast Asia.

International investors may participate in the tenders, but the government should have the political will to involve domestic companies in the project by requiring international investors to join domestic firms, he said, citing an example.

The three businessmen also expressed their concern with the long and tedious bureaucratic procedures that must be endured before projects can be started.

They called on the government to set up a cross-sectoral committee that would be able to process everything related to a project.

"Today, it can take years to process everything at governmental offices because we have to go to many offices. By that time we've already lost out on our financial commitments," said Fadel.

The three businessmen also noted that if private sector companies are invited to participate in infrastructure projects, they must be allowed to make profit.

"There is a question as to whether infrastructure is a public service or business oriented. The conference has agreed that it must be oriented to business," said Husodo.

State Minister of National Development Planning Ginandjar Kartasasmita said that Indonesia will need close to US$190 billion for infrastructure development from 1997 to 2004, the majority of which is expected to come from the private sector.

The three businessmen asked the government for "facilities" to assure them of turning a profit.

They suggested that investors be allowed to renegotiate with the government during the operation of their projects.

Investors should be able to ask the government to lower the amount of income it takes or extend the deadline of an infrastructure project in case of low earnings or losses. Conversely, the government should also be allowed to increase its income portion in case of big earnings.

"Such a scheme is fair because it gives certainty that the investors will be able to recover their investment and make a profit," said Sjamsul.

The practice is reportedly common in many countries, he added.

Fadel noted that if the management and operation of infrastructure projects have been given to private sector companies, the government must stay involved to make sure the prices of their services remain affordable to the public.

"If the government is not there any longer, the companies could raise the prices as they like, which could go against the interests of th public," said Fadel. (jsk)