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Indonesia: Affirmative Action Program Adopted for Papuan Businesses

(Dec. 18, 2012) On October 17, 2012, Indonesia’s national government issued a regulation that places a limit on which businesses may submit bids for government construction in Papua. Presidential Decree No. 84/2012 specifies that only companies owned by natives of Papua may make bids on infrastructure projects in the province valued at under Rp500 million (about US$52,000). The hope is that this will help increase development in the area and create prosperity. (Margareth S. Aritonang, Affirmative Action to Start in Papua, THE JAKARTA POST (Dec. 17, 2012); Peraturan Presiden Republik Indonesia, Nomor 84 Tahun 2012, Tentang Pengadaan Barang/Jasa Pemerintah Dalam Rangka Percepatan Pembangunan Provinsi Papua Dan Provinsi Papua Barat [Presidential Decree of the Republic of Indonesia Number 84 of the Year 2012, Concerning Government Procurement of Goods and Services to Accelerate the Development of the Papua and West Papua Provinces] (Oct. 17, 2012), Institute for the Procurement of Goods and Services website.)

The Decree also specifies that all state-owned companies and private businesses doing construction work in the two provinces of Papua and West Papua must look for Papuan business partners to participate in procurement of the necessary goods and services for that construction. (Aritonang, supra.) Under article 2 of the Decree, companies established outside of Papua must work with local businessmen for procurements worth up to Rp5 billion (about US$18,835). In addition, Papuan businessmen will be exempt from some requirements to take part in this type of procurement activity; this provision was added to give opportunities to local companies. Companies that do not use Papuan partners in these projects are subject to sanctions. (Id.)

Projects valued at more than Rp5 billion will be bid on as open tenders, but participants cooperating with local businesses in Papua and West Papua will be given priority. (Newly Established Presidential Regulation Gives Privilege to Papuan Businessmen, Unit to Accelerate Development in Papua and West Papua website (Nov. 1, 2012).)

According to Amiruddin Al Rahab of the Special Unit to Accelerate Development in Papua and West Papua, a government office, the Decree “will undoubtedly improve the life of Papuans economically, which will gradually bring peace to the land.” (Aritonang, supra.) Among the projects that Papuans will now be more likely to join are the 909 kilometers of roads in Papua and 803 kilometers of roads in West Papua that the government intends to complete by 2014. (Id.)

Previous efforts to improve the lives of Papuans include a scholarship program for state-owned universities, mobile health services for remote areas, and agricultural projects such as sago plantations and pig farms. Special funds of about Rp30 trillion (about US$3.1 billion) have been distributed over the last dozen years, with the aim of helping Papuans. However, John Gluba Gebze, a former leader of the town of Merauke in Papua, argues that the funds have not helped development in the two provinces and that monies have been misused. “The central government thinks that money will take care of everything. I think that the government should come up with a clear and comprehensive plan on what to do, and prepare necessary human resources, before transferring the money,” he suggested. (Id.)

Gebze’s criticism is in part supported by the findings of an audit of the funds for Papua and West Papua, which indicated that at least Rp3.34 trillion had been misspent or embezzled. (Id.) He also suggested that having more, smaller provinces, rather than just Papua and West Papua, would be helpful, pointing to the six provinces on the island of Java and ten on Sumatra. The Indonesian legislature is reportedly considering creating new provinces in Papua and did establish two sub-provincial districts, Arfak Mountains and South Manokwari, both in West Papua, this year. (Id.; Constance Johnson, New Province, Autonomous Regions Planned,GLOBAL LEGAL MONITOR (Oct. 24, 2012).)