Public procurement changes run into opposition
Dadan Wijaksana, The Jakarta Post, Jakarta
The government is reviewing a presidential decree on public procurements to reduce corruption, but the effort has met with stiff resistance from various sides, including business associations.
In preparation since 2000, the revisions to the decree were recently finalized by a review team comprising various state departments and institutions. The draft decree giving effect to the changes is scheduled to come into effect next year.
While the draft decree has yet to be approved by President Megawati Soekarnoputri, criticism has already been voiced by business associations, including the Indonesian Chamber of Commerce and Industry (Kadin), and the National Construction Services Development Institute (LPJKN).
Kadin and the LPJKN raised objections to the fact that under the revised decree, contractors will be allowed to win procurement projects without having to be accredited with either Kadin or its affiliated associations.
Presidential Decree No. 18/2000 stipulates that only companies accredited by Kadin and its affiliated associations can participate in a tender process.
"Under the draft decree, accreditation is not important. This is, of course, not true as in the current era of free competition companies need to have certificates setting out their qualifications," LPJKN chairman Sulistijo recently said.
The two influential private sector organizations also said that the absence of such accreditation could open the way to backdoor deals, as the authority to determine the winner of a tender would entirely lie with the head of the project.
Responding to this, the National Development Planning Board (Bappenas), which coordinated the work of the review team, said the main aim of the revision was to avoid or reduce backdoor deals in the first place.
"Eliminating the certification requirement means a shorter bureaucratic chain for businessmen who wish to participate in tenders," a source at Bappenas told The Jakarta Post, adding that the certification process was prone to abuses and bribery.
Bappenas executive secretary Koensatwanto Inpasihardjo said in a press statement that the revision was expected to gradually turn the nation into an efficient economy rather than a high-cost economy as it was today.
The revised decree was formulated in response to widespread leakage at almost every stage of the procurement process.
Various international institutions -- including the World Bank and the Asian Development Bank -- have frequently stated that corruption in equipment procurement in government institutions was one of the areas most tainted by corruption in Indonesia.
The World Bank even suggested that leakage in the procurement process could reach up to 50 percent of all funds allocated for procurements.
Key points in revision of Presidential Decree No. 18/2000
* Elimination of need for accreditation with Kadin or its affiliated associations. * For projects valued below Rp 50 billion, companies do not have to undergo a pre-qualification process. * Fewer documents required. * Medium and large-scale enterprises are prohibited from participating in tenders for projects reserved for small businesses, that is, projects worth less than Rp 50 billion. * Provides a legal basis for the establishment of an agency tasked with monitoring tender processes, and improving the quality of the regulations related to procurement.