REPUBLIC OF INDONESIA NATIONAL PUBLIC PROCUREMENT AGENCY (N P P A)

KEY NOTE SPEECH FOR ASIA AND THE PACIFIC CONFERENCE ON ELECTRONIC GOVERNMENT PROCUREMENT (e-GP)

FROM: CHAIRMAN OF NATIONAL PUBLIC PROCUREMENT AGENCY

DENPASAR, 22 NOVEMBER 2011

REPUBLIC OF INDONESIA NATIONAL PUBLIC PROCUREMENT AGENCY (N P P A)

Bpk. Made Mangku Pastika, Governor of Bali; Bpk. Ahmad Heryawan, Governor of West Java; Bpk. Lukita Dinarsyah Tuwo, Vice Minister of National Development Planning/Vice Chairman of BAPPENAS; Mr. Steve Groff, Vice President of Asian Development Bank; Representatives and Colleagues from friendly nations of the Asia and the Pacific region; Representatives and Colleagues from NPPA, Ministries, Provinces and Asian Development Bank; Ladies and Gentlemen,

Good Morning, Assalamualaikum Warahmatullahi Wabarakatuh

It brings me much honor and pleasure on behalf of the National Public Procurement Agency (NPPA) to welcome you all for the opening ceremony of the Asia and the Pacific Conference on electronic Government Procurement (e-GP). This conference is made possible by the close coordination between the NPPA as the lead agency from the Government of Indonesia with the Asian Development Bank with the intent to bring together procurement specialists from across Asia and the Pacific along with development partners from multilateral and bilateral institutions and potential private sector partners. In addition, achievers in our nationwide drive to implement e-GP that hail from successful e-procurement units from across the archipelago are also present today, they merit my honorable mention. Distinguished guests, As procurement specialists, we would not question the importance and benefit of eProcurement in the development of our respective countries. If the process of procurement is implemented correctly, then we not only would derive benefits from significant savings of state finances, but also the opportunity to develop a more competitive and healthy business

climate. In addition, credible procurement processes are also viewed as a preventive means, which reduces corrupt practices.

However, in line with the current developments, our assessment is that the procurement processes that were done so far is not sufficient enough to support change and national and international dynamics that oftentimes move faster. In the past few years, our Government has indicated an increasing desire to implement a more effective procurement process, more efficient, more transparent, and more competitive. This is the underlying reason why we develop and implement electronic procurement systems or what we often refer to as electronic government procurement (e-GP)

Distinguished guests, As was conveyed by the Vice Minister in his remarks, Indonesia commenced to develop eGP in the year 2005. At that time, it was not easy to develop an e-Procurement system recalling that the telecommunications and communication infrastructural conditions were not adequate and the level of penetration, spread and ICT literacy that was not as good as those today. Furthermore, the capacity and competency of procurement specialist and business persons at the time needed to be enhanced, and also the geographic obstacle that Indonesia, as a sprawling archipelagic state poses.

However, these challenges did not dampen the will of the government to develop an e-GP system. At the time even through instructions from the President, resolutions from the National Technology Council and other related regulation, the government was given a mandate to formulate a national strategy in the framework of the development and implementation of e-GP in the short term.

The strategy that was taken by the government of Indonesia at the time among others the acceleration and strengthening of the ICT sector, the development of systems, business models and related e-GP, training and public awareness for procurement specialist, business persons, and the wider society as a result of paradigmatic shift.

In other words, mainstreaming e-GP in programs and policies in various sectors of national development is one of the key success factors of the implementation of the e-GP. Distinguished guests, Since the first time the e-GP was implemented in the year 2008, e-procurement service units is growing in numbers. In 2008, the number of e-Procurement units is only 11 units but continue to grow to 33 units in the year 2009, 137 units in the year 2010 and 293 units in the 2

year 2011. This indicates a larger need for procurement entities to conduct procurement through e-GP. In addition, this increase also reflects the greater trust of procuring entities and businesses that the e-GP system can deliver greater benefits.

The number of packages that are conducted through the e-GP also keep on increasing, starting from 33 works packets in 2008 to 23,719 packets in the year 2011. Also increasing at a meteoric rate is the transaction value, which was from about 53 billion Rupiahs in 2008 to about 51 trillion Rupiahs in the year 2011. The savings that occur show significant numbers which is about 12-15 percent or about four trillion Rupiahs in the year 2011.

However, according to our government these are not enough, especially if we compare between the total government procurement that is listed in the state budget with the total real transaction value that is currently processed through e-GP. As an illustration, the total volume of government procurement as was listed in the state budget of the 2011 fiscal year is equivalent to USD 39 billion, of this amount only about USD 5.7 billion are being spent through e-GP.

Consequently, in the framework of accelerating the implementation of the e-GP nationally, recently the Government through the Presidential Decree No. 54 of the year 2010 concerning public procurement of goods and services, stipulated the obligation of all procuring entities to utilize the e-GP for a part of or the whole packet of works for the year 2012.

As a result, in the year 2012, which is coming very soon, the traffic through the e-GP systems would drastically increase and the transactions processed through this system would also be greater. It is much hoped that the whole primary and supporting systems is ready and is working properly. Distinguished guests, In a sequential manner, the Indonesian government has initiated various measures to improve the e-GP systems. As was reported to the President and to the Minister and Vice Minister for National Development Planning/Head of the National Development Planning Agency, NPPA has gradually integrated the national e-GP systems. The systems integration is primarily meant to create a national single market that can easily be accessed by vendors and procuring entities alike as well as other related stakeholders.

The integration of the national e-GP system to become a unified single market is aligned to the future government policy direction and programs that is designed to create an Indonesia 3

that is locally integrated and globally connected. Presently, several e-Procurement service units located in several areas of the Province of Yogyakarta has an integrated e-GP system. Step-by-step, e-Procurement service units that are in the outlying regions, provinces, and other ministries and institutions would be integrated.

In addition, the regulatory and practical improvements of the e-GP is continuously reviewed or conducted as necessary, at regular time intervals by the NPPA with the main purpose to comply with the standards and international best practices. Distinguished guests, There is still plenty of work that we need to do to accelerate the implementation of e-GP in our respective countries. In my opinion, based on Indonesias experience, mainstreaming eGP in the implementation of national development at the respective nation states is one of the best ways to accelerate the e-GP implementation. In addition, the mainstreaming that we are about to do today and the two days ahead of us is also an effective way to entice our governments to further develop e-GP.

In this regard, let us utilize this conference as a forum for us to candidly share experiences, lessons learned and best practices with respect to planning and implementation of e-GP initiatives in Asia dan the Pacific region.

I would end my welcoming remarks by wishing that each and every one of you would have the same enthusiasm as we do in endeavoring towards creating fruitful outcomes from our deliberations in the conference and that this conference in Bali would leave an impressionable mark personally, professionally, and to the benefit of the institutions and countries that we serve.

I do hope that the conference generates to constructive wisdom, in-depth insight of procurement issues and agreed on a robust action plan for e-GP. I do also believe that the meeting was generating strong and better cooperation among us.

On behalf of the NPPA and the Government and peoples of Indonesia, I herewith officially open the Asia and Pacific Conference on Electronic Government Procurement for Effective Public Procurement.

Thank you very much. I hope that all of you will have a pleasant stay in Bali and receive warm hospitality by us. May God bless our deliberations.

Wassalamualaikum Warahmatullahi Wabarakatuh

Jakarta, 22 November 2011

Agus Rahardjo Chairman of National Public Procurement Agency