House passes state treasury bill on management of state funds

The Jakarta Post, Jakarta

The House of Representatives passed on Thursday the long-awaited state treasury bill into law, which Minister of Finance Boediono claimed will greatly improve the management of state funds and assets and thus help prevent corruption.

"This is a very fundamental and important law, which will have a long-term impact on the management of our state finances, which, God willing, can reduce malfeasance, including leakage of state funds," Boediono told lawmakers in a speech at the House plenary session.

But he acknowledged that in the end, efforts to create a strong and clean treasury management system will all depend on the goodwill of government officials in charge.

"The government officials must truly implement their duties in accordance with the spirit of this law. If the system is already good, in the end it will depend on the people (officials)," he said.

Indonesia has been regarded as one of the most corrupt countries in the world particularly due to rampant corruption in almost all levels of government and state institutions. But since the late 1990s financial crisis and the downfall of former authoritarian leader Soeharto, there has been strong pressure for the government to curb corruption and create good governance.

The State Treasury Law provides rulings on how state funds, assets and debts should be managed by government officials both at the central government and local administrations. This law is crucial to allow the enforcement of the State Finance Law, which provides basic principles in public financial management, approved by the House in March this year.

The House is expected to pass into law another bill on the auditing of state financial accountability to also support the implementation of the State Finance Law.

All these three laws, the draft of which had been submitted to the House in September 2000, are designed to replace Dutch laws on treasury management, which can no longer accommodate modern financial transactions, greater democracy and transparency.

In the area of state asset management, for instance, the State Treasury Law stipulates that the sale of assets (including land) owned by the state or local administrations must be conducted after obtaining approval from the House or local legislative council, except under certain conditions.

For state assets excluding land worth between Rp 10 billion and Rp 100 billion, the sale must be approved by the President, while for assets worth less than Rp 10 billion must first obtain the approval of the Minister of Finance.

The law also rules that the sale of the assets must be conducted via tender.

In the past, the sale of state assets had been a major source of corruption by government officials and well-connected people.

Last month, President Megawati Soekarnoputri was strongly criticized after her government awarded a Rp 1.3 trillion real estate project in Central Jakarta's Kemayoran area to her eldest son. The project, which is located in a 14-hectare plot of state land, was given without tender. Although Megawati's government did not violate any law (the 1925 Dutch law on treasury management does not stipulates a tender mechanism), many said the move was unethical. Her son has since withdrawn from the company that was awarded the contract.