Procurement and Integrity Presented at Danish Embassy Jakarta 22 January 2013 Laode M Syarif, Ph.D Senior Adviser on Justice and Environmental Governance Partnership for Governance Reform www.kemitraan.or.id
it is impossible for one dealing with government funds not to TASTE, at least a little bit, of the King s wealth (Kautilya, The Arthashastra, 350-283 BC)
Do Not let Corruption to become part of the Indonesian culture (Muhammad Hatta, 1961,)
Why Indonesia URGENTLY needs Good Procurement system?
We are not Denmark DENMARK: Score 91 /Ranking 1 Indonesia Score 32 of 100 Ranking 114 of 177 State Under: Niger, Philippines, Ethiopia, and Niger. Note: we are a member of G-20
Corruption Trend 2011 Semester I- 2012 436 Corruption cases 285 corruption cases 1.053 accused person 597 accused person State lost Rp. 2.169 Triliun State lost 1.22 Triliun. Sumber: ICW-Trend Korusi 2011 & Semester I 2012
Most Corrupt Sector 2010-2011 2010 2011 Infrastructure (85 cases) Education (54 cases) Local gov budget (82 cases) Local gov budget (51 cases) Education (47 cases) Social aid (42 cases) Sumber: ICW-Trend Korusi 2011
10 Most Corrupt Sector 1 st Semester 2012 Sumber: ICW-Trend Korusi Semester I-2012
Misappropriation Misused of State budget Bribery Mark Up Actors: executive-parliament-law enforcement agenciesjudiciary-businessmen/women Example: more than 300 Head of Districts/Cities are prosecuted/investigated on corruption cases
Modus: Sem I-2012 Sumber: ICW-Trend Korusi Semester I-2012
Most Vulnerable Intuitions to Corruption Local Government Provincial Government State Owned Companies Parliament Ministries/State Agencies Note: Number of cases mostly occurred at sub-national but the amount of money involved is less compared to Central Gov corruption Sumber: ICW-Trend Korusi 2011
Survey: Corruption in Procurement- Ja-Bo-De-Ta-Bek, 2010 Respondent: 720 vendors 92,7% respondents admitted that they bribe officials. ONLY 1,3% respondents was not involved in bribery. Main reasons: To win the tender (89,7%). Gift to the owner of the project (4,3%) and A sign of Gratuity (3,9%). Source: Indonesia Procurement Watch, 2010
Just a few examples Driving License Simulator Case Hambalang Sport Complex Case
Source of Corruption Potential 2014 Gov Employ Expenditure Subsidy: Rp 333.7 T - Energy : Rp282.1 T - Non-Energy: Rp51,6 T APBN 2014 Rp 1.842,5 Triliun Capital Expenditure: Infrastructure, etc Social Aid: all of them are prone to corruption
How to save our APBN 2014?
Comprehensive Strategy Source: Kemitraan, State of Play of Anti Corruption, 2010
Closing the Loop P R O A C T I V E Compliance training Integrity testing Zero tolerance policy Code of Conduct Business collective Action Supplier white list Reward to whistle blower Integrity Pact Medium Return, Medium Risk Community Integrity Building Multi-stakeholder initiatives with oversights Holistic/step change High Return, High Risk R E A C T I V E Whistle blower hotline Whistle blower protection Supplier black-list Low Return, Low Risk COMPLIANCE Ethics advice center Ethics officer Code of Ethics Compliance-plus ethics Low Return, Low Risk INTEGRITY
National Procurement System is one of the main tools to prevent corruption, inefficiency and collusion
E-Proc Institutional Structure Limited Human Resources Nation-wide responsibility but only has an office in Jakarta Insufficient E-Procurement Network We CAN NOT relay 100% to LKPP
Where we learn from..?
UNCITRAL Model Law on Procurement of Goods, Construction and Services with Guide to Enactment General provisions Method of procurement & their conditions for use Tendering proceedings Principal method for procurement of services Procedures for alternative methods of procurement. Review
Article 9. Public procurement and management of public finances 1. Each State Party shall, in accordance with the fundamental principles of its legal system, take the necessary steps to establish appropriate systems of procurement, based on transparency, competition and objective criteria in decision-making, that are effective, inter alia, in preventing corruption. Indonesia has ratified this Convention by UU No 7 /2006 on UNCAC
4 pillars of Indonesia s e-proc System Strong legal basis Professional and accountable Institution Accommodate public Participation E-Proc Prevent Corruption and inefficiency
Kemitraan s Intervention Government Private sector Civil Society Organisations (CSOs)
Government Evaluating and revising the existing Procurement Policy Dissemination & adaptation of new e-procurement system/policy at sub-national level. Establishing e-proc agency at sub-national level. Training government officials Drafting pro SMEs sub-national regulation
Private Sector Training SMEs on E-proc in 12 provinces Disseminating E-Proc policy in 18 provinces Conducting Assessment on Procurement Integrity Index in EIGHT provinces. (Business & Media) Providing Module and Training for SMEs at local level.
Business Association Engaging Business Associations and Chamber of Commerce (APINDO-KADIN-GAPEKNAS-GAIKINDO-ARDIN) Training and facilitating business association through BERSIH (Business-Ethic-Rules- for the System of Integrity enhancement) movement. Drafting and mainstreaming Ethic in business practices.
Lesson Learned Procurement reform requires collaborative effort (Gov-Priv-CSO) SMEs at local level can win big tender in e-procurement (Bandung & Makassar case). Private sector needs neutral forum to meet/discuss their problems with Government and CSOs. E-proc institutions in Papua-East Java- South Sulawesi-Central Kalimantan-West Java show some good achievements. E-proc can reach remote areas (West Sumatera/Riau).
New Initiatives Establishing Independent Procurement Monitoring Network (involving companies and People) in 5 provinces Certification of company who implement BERSIH. will be Certified by APINDO. Up-scaling and expanding our success stories.
Closing note Written laws are like spider's webs; they will catch, it is true, the weak and the poor, but would be torn in pieces by the rich and powerful. - Anacharsis- Scythians Philosopher, 6 Century BC
We DON T want this to happened
Laode M. Syarif, Ph.D Mobile: +62-8111- 899-689 Email : laode.syarif@kemitraan.or.id Partnership for Governance Reform (www.kemitraan.or.id)