Procurement Mainstreaming Process in Indonesia

Figures about Significance of Public Procurement Public procurement in Indonesia is around 8 % of GDP and more than 20 % of public expenditure.

Limited competition and economy in Public Procurement (segmented markets, unfair practices) Leakages and Corruption (KKN) Bureaucracy in public and private sector, excessive licensing system, complicated method of payments, and bureaucracy in certification system Major deficiencies in Indonesian Public Procurement system

Since 1980 several adjustments of the Procurement Regulations attached to the Presidential Decrees dealing with Budget Implementation Special Presidential Decree for Public Procurement in 2000 (apart from Decree for Budget Implementation) Country Procurement Assessment Report (CPAR) in 2000 Implementation of Technical Assistance in Public Procurement Building a National high ranked interdepartmental Steering Committee with associated Working Group in 2001 to further develop Public Procurement Policy Some Initiatives of Public Procurement Reform in Indonesia until 2002

1.Planned National Procurement Law which provides clarity, uniformity and a basis for enforcement 2.Revision of existing Presidential Procurement Decree in crucial areas like Certification and segmentation, Consistency with local regulations, Legal basis for Establishment of a central Procurement Office, of all to improve competition Priorities and Intermediate steps (2003 – 2005)

Priorities and Intermediate steps (Contd) 3. Establishment of a centralized, high ranked, independent Procurement Office for Policy development, oversight, complaints management, information and training. It requires additional budgets, hierarchy, qualified leadership and staff 4. Intermediate Procurement office to start implementations and prepare a major National Public Procurement Office 5. Designing approaches for and Organizing Human resources development

Some Lessons learnt and future challenges Public Procurement reform must be coordinated with other reform areas (financial management, anti-corruption, civil service salary/career system, decentralization, market reform). Coordination may be supported by inter- department working groups Public Procurement reform must be coordinated with other reform areas (financial management, anti-corruption, civil service salary/career system, decentralization, market reform). Coordination may be supported by inter- department working groups

Some Lessons learnt and future challenges (Contd) The procurement reform must involve and mobilize different stakeholders: The procurement reform must involve and mobilize different stakeholders: top government officials to decide on and to back the reform top government officials to decide on and to back the reform project managers/procuring entities to follow and implement the spirit of the rules project managers/procuring entities to follow and implement the spirit of the rules business (associations) to agree with modernization of public market design business (associations) to agree with modernization of public market design recipients and civil society to claim for proper public performances recipients and civil society to claim for proper public performances

Some Lessons learnt and future challenges (Contd) Examples: NGOs and business associations can be involved in the Procurement policy working groups/discussions; procurement information (policies, opportunities) to be made available to the public; evaluation committees may be supported by independent experts Examples: NGOs and business associations can be involved in the Procurement policy working groups/discussions; procurement information (policies, opportunities) to be made available to the public; evaluation committees may be supported by independent experts

Some Lessons learnt and future challenges (Contd) Enforcement, professionalism and accountability have to be strengthened by qualification and (positive/negative) incentives mechanism Examples: Procurement training certificates for Project Leaders/procurement officers, advantages for proper project implementation, sanctions in case of mismanagement, control activities in the hierarchy, through auditing bodies, by complaints system Enforcement, professionalism and accountability have to be strengthened by qualification and (positive/negative) incentives mechanism Examples: Procurement training certificates for Project Leaders/procurement officers, advantages for proper project implementation, sanctions in case of mismanagement, control activities in the hierarchy, through auditing bodies, by complaints system

Some Lessons learnt and future challenges (Contd) The Procurement reform process should be lead-managed by a central (national) high ranked procurement office for policy development and oversight The Procurement reform process should be lead-managed by a central (national) high ranked procurement office for policy development and oversight

Thank You