Balikpapan, East Kalimantan. The government’s anti-competition watchdog hopes to call in State Enterprises Minister Dahlan Iskan to clarify a claim he made that 70 percent of state companies won project tenders through corruption.
Tadjuddin Noer Said, chairman of the Business Competition Supervisory Commission (KPPU), said on Thursday that his office would summon Dahlan sometime this month but could not give a date.
Speaking to reporters in Balikpapan, Tadjuddin said Dahlan’s claim supported the KPPU’s own suspicions about the high proportion of major projects that were won by state enterprises.
He said this dominance had hurt business competition because it went against anti-monopoly principles.
“We’ve long been suspicious of why state-owned enterprises seem to dominate these big projects, not just in Jakarta but nationwide as well,” Tadjuddin said.
He added that the KPPU was studying several recently awarded contracts to determine whether the state firms that had participated in the tenders had committed any violations. Any such findings will be immediately reported to the Corruption Eradication Commission (KPK) and the police, he said.
Tadjuddin also said that state enterprises should not participate in tenders for small-scale projects in the regions and instead give local companies the chance to work on them.
Previously, KPPU commissioner M. Nawir Messi said that up to Rp 200 trillion ($21 billion) in state money was embezzled through the tender system each year. He based the estimate on the KPPU’s analysis of tenders held since 2000.
From an average of Rp 1,400 trillion in state budget every year, around 40 percent, or Rp 650 trillion, went to the tender process and around 30 percent of the money were the result of markups or were not according to market price.
He said 40 percent of the state budget, or around Rp 650 trillion this year, was spent on projects that were farmed out through tenders. Of that amount, he continued, 30 percent is wasted on markups.
“Our observations show that there have been many projects whose values have been marked up by three to 10 times the real value,” Nawir said at the end of May.
“Every year, roughly 40 percent of the state budget is spent in tenders, so that’s nearly Rp 200 trillion worth of state money being embezzled by some of the people who win the bids.”
Nawir said inflated bids were approved either through complicity between the bidders and the state-appointed bid organizing committees, often involving bribes, or through the use of shell companies by the bidders to guarantee that they always won the contracts.