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The Corruption Eradication Commission is warning the government to anticipate increased financial losses to the state through graft next year given its increased procurement budget and the pervasive corruption that continues to cost the nation many millions of dollars every year.

Tumpak Hatorangan Panggabean, the chairman of the commission, also known as the KPK, told a national conference on goods and services procurement that since the KPK was established in 2005, it had investigated cases involving state losses of Rp 689 billion ($73 million) involving projects worth a total of Rp 1.9 trillion, or a staggering 35 percent of the total project value.

These figures only represent cases the KPK has investigated, indicating that the corruption is much more widespread.

Tumpak said the vast majority of the known corruption cases, or 94 percent, were due to a failure to hold open tenders and instead appoint contractors and suppliers directly .

The remaining 6 percent involved price markups, he said.

“The bigger the goods procurement expenses, the higher the potential for corruption,” Tumpak said. “[From 2005] until November 2009, the KPK received 2,100 reports about corruption occurring during procurement processes.”

He said with next year’s bigger state budget, of which Rp 99.7 trillion has been set aside for procurement, the government should anticipate increased losses.

“For this reason, the process of procurement needs to be well supervised,” he said.

Tumpak said the KPK was not only responsible for investigating and bringing to prosecution those involved in corruption, but also for preventing graft.

During the conference, the KPK will compile a report of the corruption eradication efforts at 200 state institutions.

Vice President Boediono, during his opening speech at the conference, agreed that there should be more preventive measures aimed at deterring corruption.

“We can do that by building good systems and regulations,” he said.

Boediono said Indonesia now ranked 111 out of 183 countries on Transparency International’s corruption index, up from 126 last year. TI said the slight improvement was due to reforms within the Ministry of Finance and the work of the anticorruption commission.

Boediono said, “Though the ranking is not good, it is better than the last year’s position of 126. We’re trying to achieve a higher ranking.”

He said that achieving a clean government would take a long time and there was still much work that needed to be done.

“We have to think of better remuneration,” he said. “We also need to establish the right conditions for clean government.”

Rustam Syarif, chief of the government’s services and goods procurement agency, known as the LPKK, an institution established in 2007, said the current 2003 presidential decree on goods and services procurement had numerous flaws.

“The system governed by the decree is still open to violations,” he said on the sidelines of the conference. “We also need to develop our human resources, because many violations occur because officials don’t understand the regulations.”

Public Works Minister Djoko Kirmanto, speaking during a news conference, said that in the case of procurements, the key point was good planning.

“If it’s good at the start, then it will be good during the later stages,” Djoko said.

He said he had implemented a semi-electronic procurement system at the ministry with increased transparency and better results.