Addressing corruption risks in public procurement, a priority in Indonesia and across Southeast Asia

Posted on 31 October 2017


Addressing corruption in public procurements in the Southeast Asia is one of the top priorities of the UNODC Regional Office for Southeast Asia and the Pacific. Corruption risks in public procurement pose one of the most important challenges to achieving the Sustainable Development Goals. While USD 2.5 trillion is needed globally to achieve the Sustainable Development Goals by 2030, it is estimated that USD 1.26 trillion is lost each year through corruption in developing countries. Public procurement is estimated to account on average for 15-20% of GDP in developing countries and about a third of national government budgets, making it the largest single area of government spending. The size of the procurement market, its amount as a percentage of GDP and the fact that procurement involves interaction between public and private sector, makes it vulnerable to corruption and a primary area of concern for the integrity of public administration. Estimates indicate that 20-25% of the procurement budget is drained through corruption (OECD, 2013). Preventing and combating corruption in public procurement is therefore central to improving the efficiency and effectiveness of public services, and hence to achieve the 2030 Agenda for Sustainable Development.

In order to address these issues, a " National Workshop: Corruption Risk Management in Procurement: Experiences and Way Forward" was jointly organized by the National Public Procurement Agency and UNODC in Surabaya, Indonesia. The workshop gathered 40 participants from the National Public Procurement Agency, the Supreme Audit Institution, internal audit departments of line ministries, and regional government representatives from Indonesia to identify corruption risks in the pre-tender, tender and contract management stage of public procurement processes.

In Indonesia research by the National Public Procurement Agency has shown that schemes to syphon funds out of the public purse through procurement processes are often well thought through and planned in advance. Sometimes, it is already in the planning phase, when needs assessment are being conducted or specific terms of references developed, that the formal process is being tweaked to ensure that a specific company wins the contract at a later stage. Public officials and external contractors collude in this process and officials receive bribes in terms of kick-backs.

Participants at the workshop discussed the various risks and corruption schemes in public procurement, after prioritizing the risks following the UNODC methodology, participants developed a follow-up action plan with concrete measures, responsibilities and timelines to address the risks identified. It was reiterated that a corruption risk assessment needs to be conducted on a regular basis at each agency as the risks will change over time with corrupt actors trying to find new loopholes as old schemes are being inhibited through successful corruption risks mitigation strategies. Participants highlighted the challenges associated with political or high-level interference in the procurement process as well as the implications for career progression. Effective strategies to document decisions and protect oneself from professional and personal consequences were also discussed.

Feedback has shown that 83% of the participants perceived that their capacity to identify and address corruption risks has increased thanks to the workshop and 82% of the participants were highly satisfied with the workshop. The workshop participants have also expressed their commitment to implement the action plan they have developed during the workshop in their respective agencies.

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