Prabowo to Upgrade LKPP to Government Procurement Agency
President Prabowo Subianto has announced plans to elevate the status of the National Public Procurement Agency (LKPP) into a Government Procurement Agency. The strategic move is designed to consolidate all procurement of goods and services to improve the efficiency of state spending in the 2027 State Budget Draft (RAPBN).
The plan was delivered during the President’s speech on the 2027 State Budget Bill and Financial Note at the DPR Plenary Session in Senayan, Jakarta, on Friday (14/8). Prabowo stressed the need for support from the House of Representatives (DPR) to realise this institutional transformation.
According to the President, inefficiency has been rampant because ministries, agencies, and regional governments often purchase goods with similar specifications independently. This practice leads to price variations and weakens the state’s bargaining power with suppliers.
Prabowo likened the current procurement practices to thousands of buyers who do not communicate with each other, despite all being part of the Government of the Republic of Indonesia. He emphasised the importance of centralised coordination to optimise the use of the state budget.
LKPP data shows that procurement consolidation at the regional government level has already yielded tangible results, with efficiency gains of 20.86 per cent in 2025, rising to 25.43 per cent in 2026. The President is optimistic that if this practice is expanded with discipline, savings could reach 30 per cent.
With total procurement spending reaching Rp1,200 trillion, the projected efficiency could save the state budget up to Rp360 trillion. As an example, Prabowo highlighted the procurement of interactive smartboards, which regional governments previously purchased for Rp150 million per unit, but after consolidation, the price was reduced to just Rp26 million per unit.
“That is almost six times the savings. This is real,” Prabowo stated, concluding his explanation on the urgency of transforming LKPP into the new agency.