The Corruption Eradication Commission (KPK) has received 2,100 complaints against state procurement as of November, supporting the urgency for an electronic procurement system, officials said.
On Thursday, the Finance Ministry, KPK, the Judicial Commission and the Financial Transactions Report and Analysis Center (PPATK) signed a memorandum of understanding (MoU) on e-procurement to curb corruption in public procurement by state ministries and institutions.
The Judicial Commission, KPK and PPATK will then procure goods under the Finance Ministry's e-procurement system.
"E-procurement is more transparent, consistent and accountable. It can reduce corruption, collusion and nepotism," said Finance Minister Sri Mulyani Indrawati during the signing.
The Finance Ministry managed to save Rp 220.23 billion (US$23.35 million), or 18.42 percent of Rp 1.08 trillion procured goods through e-procurement, it said in a statement.
Between February 2008 and December 2009 the total allocation of packages in the Finance Ministry's e-procurement center (LPSE) reached Rp 1.4 trillion of the total 21 working units in the ministry.
Mulyani said since the KPK was established in 2002, it had found 50 corruption cases of public procurement, which amounted to 35 percent of the total procurement in the seven-year period. She did not mention a figure.
"There have been many corrupt procurement acts by public officials, intentionally or not, because many officials are not yet aware of procurement regulations.
"There have been many public complaints too that tenders are won due to bribery."
From 2007 to 2009, the Business Competition Supervisory Commission (KPPU) had at least 50 corruption cases in public procurement.
Mulyani said e-procurement would limit interactions between public institutions holding the tender process and suppliers following the process.
"This service is expected to cut unhealthy interactions between *tender* followers and *tender* holders."
The Finance Ministry has implemented a similar electronic process to limit interactions between taxpayers and tax officials to avoid bribes. The system is considered to have been quite successful in increasing tax payments.
The LPSE system was designed by the Government Procurement Policy Agency (LKPP), established in 2007, to be used by public institutions nationwide.
The LKPP allows all public institutions to install their own LPSE system to create a more transparent procurement system.
Businesses that want to follow a tender process can do it online via the LPSE website. It can be checked on http://www.pengadaannasional-bappenas.go.id/eproc/app?service=page/Home
The KPK has said that a leakage in public procurement, in the form mostly of mark-ups and bribery practices, could reach up to 35 percent of the total annual budget.
For 2010, the state budget has allocated Rp 176.5 trillion (US$18 billion) for central government procurement projects.
The KPK said the potential losses could even be higher if account procurement projects carried out by local governments were taken into account.
