New govt ruling on procurement signed

The Jakarta Post, Jakarta

President Megawati Soekarnoputri has signed a ruling which tightens procedures for procurement in the public sector, to help curb flourishing corruption, according to a government official.

Signed on Monday, the new ruling could in turn help Indonesia secure more loans from the country's creditors, such as the World Bank, Mahendra Siregar, an advisor to the office of the coordinating minister for the economy said on Wednesday as reported by Dow Jones.

Details of the ruling were not available, except that it would promote transparency and efficiency in the procurement of goods and services.

It should underline the government's commitment to fight rampant corruption in the public sector.

International institutions -- such as the World Bank and the Asian Development Bank -- have often stated that corruption is mostly evident during the procurement of goods and services for state institutions.

The World Bank had even suggested that leakage in the process could account for up to 50 percent of any project's value.

The bank is currently one of Indonesia's major traditional lenders, providing $400 million in loans annually to help finance various development projects across the country. The amount is a far cry from the some $1.5 billion disbursed annually in the early 1990s.

Many analysts attribute the decline in the bank's loans to rising concerns about the misuse of loans by corrupt officials and business players.

The new ruling would come ahead of the government's plan to propose a law on public procurement, which is now in the drafting stage. The law, which will replace Presidential Decree No. 18/2000 on public sector procurement, will ensure severe punishment for corruption in the procurement process.