A Decade of Public Procurement Reform


Posted : December 6, 2017

Jakarta – On December 6th, 2017, the National Public Procurement Agency (LKPP) is having its 10th birthday. Government of Indonesia established the agency because there was a need of procurement system with clear regulation and procedures, better institutions, capable human capitals, transparent and accountable business process, and legal problem handling based on justice.

“Ten years ago, LKPP was established as part of government financial reform. In public financial management, procurement is an important component because state expenditure is done through that process. LKPP’s mission is to reform Indonesia’s procurement system,” said LKPP Deputy for Strategy and Policy Development, Robin Asad Suryo, in a media discussion on Tuesday, December 5th, 2017.

Robin explained that a decade before, Indonesia’s public procurement was way beyond neighbor countries such as Singapore and Malaysia. Procurement was manually and traditionally managed, run by temporary committees who had to work on procurement on top of their core tasks. Such system was of course not feasible to handle procurement, which had 30% of state budget, or now equal to around 10% of Gross Domestic Product.

In ten years, LKPP has been working to improve the system. Procurement now is done electronically, thus more accountable and reduce risk of corruption. Procurement staff has been receiving capacity building to enable them work better. More procurement service units (ULP) are also permanent, so they can focus to develop their strategic functions. LKPP works on these issues with several partners, including MCA-Indonesia.

“The Procurement Modernization Project of MCA-Indonesia, which was designed by the Government of Indonesia, is a catalyst for LKPP,” said MCA-Indonesia Procurement Modernization Project Director, Firman Dharmawan, in the discussion that was conducted to commemorate LKPP’s birthday.

He said that considering MCA-Indonesia’s time limit of five years, the project was focused on 44 pilot ULP. After 4.5 years, the project has acquired various achievements.

Now 41 ULP have been facilitated to be permanent. Functional positions in pilot ULP has reached 241 people. 569 staff of pilot ULP have finished basic managerial and leadership training, and 512 of them have graduated from the intermediate level. 663 staff have participated in basic procurement skills training – 544 of them have graduated from intermediate level, and 323 have finished the advanced level. Both trainings were also attended by non-ULP staff, including auditor: 212 people in leadership training and 456 in procurement skills training.

In addition, this project has been preparing pilot ULP to implement catalog contract, a procurement system that saves time, energy and cost for public procurement of items that are routinely needed and available freely in the market, such as uniform and stationeries. Through catalog contract, at least 29% of Owner’s Estimate or equal to Rp 22.6 billion has been saved in the pilot ULP.

Indonesia Corruption Watch (ICW) Investigation Division Coordinator, Febri Hendri, appreciated the efforts of LKPP and its partners. However, he believed that there is room for improvement, such as in electronization and transparency.

“E-procurement is a good system, but now is only used to input quotations electronically. Evaluation and winner selection process should also be done in electronic system. Now these two processes are done manually, so there are still gaps that can be manipulated. We should minimize subjectivity,” he said.

Hendri also suggested LKPP to implement open contracting, which makes all related document in particular procurement to be open for public. Therefore, the public can also evaluate the whole procurement process.

This media discussion was also aired through MNC Trijaya Radio on December 6th, 2017. The record will soon be available at  MCA-Indonesia’s Youtube channel. (Bunga Manggiasih/MCA-Indonesia)