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Coping with challenges of procurement
As part of public expenditure reform, PR No. 16/20018 must address three challenges in government procurement.
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Pumps procurement and good water management is necessary to address the threat of flooding in the underground. (The Jakarta Post/Wienda Parwitasari)
P
resident Joko “Jokowi” Widodo recently signed and issued Presidential Regulation (PR) No. 16 /2018 on Government Procurement to replace the PR No. 54/2010.
In essence, the government procurement regulation sets rules and procedures on how the government purchases goods and services. Government purchases are very important for it to function well, especially in providing public goods and public services.
It is expected to have big and positive impacts on business, economy and eventually, public welfare. The money allocated for purchasing goods and services comes from taxpayers, and should ultimately be spent in the public interest.
Statistics show that government spending on goods and services has increased tremendously in the last eight years, from approximately Rp 300 trillion (US$21.9 billion) in 2010 to almost Rp 800 trillion in 2018 nationally, and it is expected to increase in coming years.
As the largest buyer in the market, the government purchases almost everything from the market. Government buys not only routine, low-value items such as office supplies, but it also buys critical, high-value or strategic purchases such as medical equipment, medicines, weapons and satellites. As the demand for the provision of economic and social infrastructure increases, the government also procures more construction projects such as schools, hospitals, mass transportation systems, roads, bridges, dams and other projects. Therefore, it is imperative for the government to establish a good procurement system — including a procurement regulatory framework.
As part of public expenditure reform, PR No. 16/20018 must address three challenges in government procurement. The first challenge is the increasing magnitude and complexity of goods and services the government purchases. The second challenge is the fast-changing market and business environment. The third is the necessity of using government procurement as a policy instrument for development.
These three challenges demand more effective procurement procedures to deal with the market (outward view), better government capacity to manage procurement, including the ability to mitigate risks (inward view), and better alignment of the procurement policy with other development goals (inclusive view).
