Balikpapan, East Kalimantan. The Business Competition Supervisory Commission (KPPU) estimates that approximately Rp 200 trillion ($21 billion) in state funds are embezzled every year through fraudulent bid processes.
KPPU member M. Nawir Messi said that every year, roughly 40 percent, or around Rp 650 trillion of Indonesia’s state budget are spent on projects offered through bids.
And of the Rp 650 trillion, 30 percent is spent on “markups.”
Nawir said the estimation was based on the KPPU’s monitoring of bid activities since its establishment in 2000.
“From our observations, there have been many projects whose values are marked up by three to 10 times the real value,” Nawir said in the East Kalimantan town of Balikpapan on Thursday.
“Every year roughly 40 percent of the state budget is spent in tenders, so there is some Rp 200 trillion worth of state money enjoyed by certain people who win the bids.”
Two major fraudulent practices involving bid players are illicit partnerships between tender participants and the organizing committees, and among the tender participants themselves who try to win parties through illicit back door deals.
“This condition can be found in almost all regions. And not only the state budget — regional budgets are also victim to this situation, which is detrimental to the state and the public,” Nawir said.
He added that the situation could often be attributed to weak law enforcement in the tender areas, where tender participants proven guilty of breaching regulations were only sanctioned administratively with a maximum of Rp 20 billion of fines.
Nawir said the KPPU is unable to adequately enforce the problem given the large number of projects offered in bids, and the small size of the organization.
KPPU, he said, prioritizes on projects worth at least Rp 100 billion.
Nawir added that the commission had been cooperating with the National Police and the Corruption Eradication Commission (KPK) to deal with “troubled” bids.