E-procurement Saves the Budget

The transparency in e-procurement system can limit the high cost in the procurement of items and services. Hence, it can drive companies’ or organizations’ income.

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Oleh: Puput Suwastika, M.M. – Trainer, Executive Development Services

*This article is publishe in Majalah Pajak Volume XXXV 2017 p. 58-59

In early 2008, the procurement of items and services in Indonesia was changed as there was a change known as e-procurement or e-purchasing. The implementation was spred to all government organizations, ministries, State-Owned Companies and other Government institutions.

The performance of the e-procurement’s implementation kept getting better. In 2015, the implementation of e-procurement in the procurement of items and services conducted by government could save the budget up to 30 %. President Joko Widodo said that the country saved up to Rp. 795 trillion with the use of system and a good supervision in the procurement of items and services.

The e-procurement system created by the government of Indonesia is an electronic procurement method using IT and electronic transaction in line with laws. The electronic procurement of items/services is done by e-tendering or e-purchasing as ruled in Presidential Decree No. 54 year 2010 about the Government Procurement of Items/Services that was later perfected into Presidential Decree No. 4 year 2015.

The principle and the initial aim of the e-procurement’s implementation is to make the efficiency in the procurement of items/services in terms of the use of resources, to make it effective as targeted, to create transparency in the process, to create a healty competition among services institutions, and to make the fair and accountable decision in procurement.

Until 2016, The Electronic Procurement Service (LPSE) formed to serve the procurement of items/services in the institutions of the government of Indonesia developed as many as 635 system and services units in the 34 provinces in Indonesia and 731 government institutions.

With the implementation of e-procurement system, the government managed to save the procurement items/services’ budget as seen in both the percentage of budget and the result of auctions for 10,14 % in 2015 and 9,26 % in 2016.

The Benefits for Companies

The spirit of the e-procurement’s implementation needs to be spread to all institutions in Indonesia, whether it’s state or private. In a study (E-Procurement Observatory, Politecnico Milano, 2006 – 2011), it shows several benefits from the implementation of e-procurement that can be beneficial for companies.

Firstly, there is efficiency seen from the reduce number of resources used and the procurement process becomes faster.

Secondly, this electronical system can improve the quality of the procurement results by creating the transparency atmosphere in the process, and it reduces the risk of fraud. There is also a possibility to get a more competitive price as there is a healthy and transparent competition.

Thirdly, dematerialization. This system reduces the use of paper, and it eradicates the cost of document’s storage from the transaction result of procurement. Fourthly, e-procurement can improve transparency aspect in the process. The working procedure, requirements up to winners are known easily. Furthermore, it reduces the risk of misconduct from the people in charge.

Finally, it contributes towards the improvement of competitiveness between suppliers. With this electronic system, the participation rate of suppliers is much higher and it creates an opportunity to get a result that is qualified in the quality, prices, time and numbers.

Those big benefits become strong attractions to be duplicated in various organizations. The big private companies working in oil, mining, flight and otomotive businesses have already implemented the e-procurement system.

Procurement is a field that is cost-heavy and it is prone to allocation mistakes. From research, the purchasing cost can reach up to 50% from the operational cost. The procurement process gives many opportunities to save the cost that can make big differences in the companies’ bottom line. The implementation of e-procurement is expected to lower the high cost. Thus, bigger income for companies and organizations is expected.