Government procurement of infrastructure projects through private sector participation has traditionally used either a public or limited tender, or in some cases direct appointment. Depending on the funding source, the procurement may be subject to either the standard government procurement regulations or the particular SOE’s own procurement rules.
In 2005, in response to the growing need for private sector participation, Indonesia started using PPPs to attract competitive bidding for infrastructure projects.
Various PPP projects have since been tendered, but only a few projects have so far been awarded. Whether using traditional procurement or a PPP scheme, in some cases the procurement process has been delayed, with bid dates extended or bid scope changed.
It can take at least a year from issuance of a request for proposals, to announcement of the winning bidder and the signing of the project documents. The longer this process, the harder it is for participants to comply with their original bid, as they become exposed to price increases and changes in law.
In this fashion, not only can the procurement process be delayed, but so will implementation of the project itself.
While the private sector generally considers that procurement processes in Indonesia have improved, concerns do remain over transparency.