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Indonesian Govt to Revise Regulation on Procurement Bidding
Source: http://www.thejakartapost.com
Source Date: Thursday, August 05, 2010
Focus: Health
Country: Indonesia
Created: Aug 09, 2010

President Susilo Bambang Yudhoyono said Thusday the government would soon revise a regulation on bidding process for public procurements of goods and services, blaming it as a key cause for sluggish public spending.

“Based on our evaluation, the regulation has slowed down the spending of the state and regional budget. This has shed the trickling economic advantage from happening.”

“The impact is clear, economic development particularly in the regional level could not be maximized as local governments are afraid of speeding up their spending,” said Yudhoyono prior to a Cabinet meeting attended also by governors, head of government agencies, state company executives and noted tycoons at the Bogor Presidential Palace.

Yudhoyono said the revision would be deliberately discussed on Friday.

Most bureaucrats in the central and local level have filed complaints over the rigidity of the presidential regulation No 80/2003 on procurements, which may risk them being prosecuted for power abuse or corruption should they fail to strictly comply.

Due to the revolving risks, the bureaucrats prefer to spend more time complying with the regulation, or in some cases, refusing to initiate procurement biddings.

“There have been numerous complaints over the regulation. This has caused most of the state and local budgets idle… The thing is the regulation should not be too bureaucratic,” said Yudhoyono.

According to Finance Minister Agus Martowardjojo, only 35 percent of state budget expenditure had been materialized in the first semester of this year, far lower from an expected 50 percent. Average budget spending by local administrations is more or less at similar level.

The nation’s more than Rp 1,000 trillion (US$100 billion) state budget this year is expected to help drive the economy in the form of public spending. However, with less is spent, few economic advantages from the budget has ever been enjoyed by businesses.

Indonesia’s economy is set to grow by 5.8 percent this year, fueled particularly by public, private and household spending.

Aside from the revision, the President has also highlighted several agendas in the meeting related with the need of the local governments to understand the state of the macro-economy in a bid to synchronize policies between local and central government.

Yudhoyono has also urged a discussion in the meeting to seek efforts from local administration to shift their budget spending focus on creating local economy and infrastructure and business development than on routine and consumptive expenditure.
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