Title: Direct appointment of state-owned enterprises in the procurement of goods and services: unfair competition in tender in Indonesia

Authors: Mukti Fajar; Reza Fahlevi; Yati Nurhayati; Hilaire Tegnan

Addresses: Faculty of Law, Universitas Muhammadiyah Yogyakarta, Jl. Brawijaya, Geblagan, Tamantirto, Kasihan, Bantul,Yogyakarta 55183, Indonesia ' Faculty of Law, Universitas Muhammadiyah Yogyakarta, Jl. Brawijaya, Geblagan, Tamantirto, Kasihan, Bantul,Yogyakarta 55183, Indonesia ' Faculty of Law, Universitas Islam Kalimantan MAB, Jalan Adhyaksa No. 2 Kayutangi Banjarmasin, Indonesia ' Faculty of Law, Andalas University, Kampus Limau Manis 25163 Padang, Indonesia

Abstract: This research aimed to analyse the provision of the direct appointment of state-owned enterprises in the procurement of goods and/or services in Indonesia. This is a qualitative normative legal research drawing on descriptive secondary data. The appointment of state-owned enterprises is regulated under the Ministerial Regulation on State-Owned Enterprises No. PER-05/MBU/2008 juncto Ministerial Regulation of State-Owned Enterprises No. PER-15/MBU/2012 on the General Guidance for the Implementation of Procurement of Goods and/or Services by State-Owned Enterprises. However, this business practice seems to have failed to bring about the results sought by the government. This study reveals that the regulation on General Guidance for the Implementation of Procurement of Goods and/or Services by State-Owned Enterprises contradicts Law No. 5/1999 on the Prohibition of Monopolistic Practices and Unfair Competition, especially Article 19d on discrimination and 22 on conspiracy with regard to the application of the principle of Lex Superior derogat Legi Inferior. The also shows that the appointment of state-owned enterprises in the procurement of goods and services entails corrupt practices and therefore does not guarantee a fair and competitive business environment in Indonesia. The study also reveals that there is corruption within the procurement of goods and services by state-owned enterprises in Indonesia.

Keywords: direct appointment; procurement; state-owned enterprises; SOEs; unfair competition; tender; Indonesia.

DOI: 10.1504/IJPM.2020.111359

International Journal of Procurement Management, 2020 Vol.13 No.6, pp.818 - 830

Received: 17 May 2019
Accepted: 10 Jun 2019

Published online: 04 Nov 2020 *

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