Asia Pacific Procurement ForumFirst Consultative Meeting

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24 -25 August 2009

Opening AddressVice President Lawrence GreenwoodAsian Development Bank----------------------------------------------------------------------------------------------------------------------------Ladies and Gentlemen--good morning and welcome to the First Consultative Meeting of theAsia Pacific Procurement Forum.**********It is our pleasure to host this important initiative, a first in the Asia Pacific. The response hasbeen beyond our expectations. We have with us this morning delegates from 24 counties, aswell as a number of partner organizations and civil society. Many have traveled long distancesand taken time from busy schedules. We very much appreciate this interest and will do our bestto make your efforts worthwhile.Over the course of the coming two days, you will be asked to design the Asia PacificProcurement Forum

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to decide what issues the forum should tackle and how it should be run.Your efforts will lay the foundation for a dialog spanning several years and involvingprocurement policy makers from across Asia and the Pacific.**********I will not go into the details of the forum (you have two days to do that!) but simply want tocongratulate you on beginning this work. I would also like to take a few moments to tell you whyprocurement is gaining increasing importance with ADB and within the broader developmentcommunity.**********

Procurement is important for many reasons

Procurement is especially important at a policy level because sound public procurement policiesand practices are among the essential elements of

good governance

. Good practices reducecosts and produce timely results; poor practices lead to waste and delays. Procurement is at theheart of delivering public services. It underpins how governments construct infrastructure,supply schools and clinics, and contract professional services.In short, procurement is interwoven with key development issues

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economic growth, povertyreduction, decentralization, and private sector development. It is also closely linked to trade andforeign investment. Weakness in the procurement system adversely affects welfare andprospects for growth.There is also straight-forward

economics

. On behalf of its citizens, a government typicallyspends 10 percent or more of GDP on the procurement of goods and services. In many Asiancountries it is much higher (up to 30% in Vietnam, for example). The difference between doingthis well and not doing it well can be enormous. If a country could save just 10% on itsprocurement budget, it could fund its entire national health budget from these savings.And, foremost on everyone's mind? Procurement is at the root of most allegations of

corruptionand government inefficiency

.With public procurement so broadly having an impact on development, with such large potentialgains, and with heightened interest by the public, it is little wonder that procurement reform isnow a top priority.**********Apart from economics and accountability, other factors are at work in raising the profile of theotherwise dry topic of how governments buy things.

First, there are now many

more players

involved in procurement. A decade or two ago, three orfour ministries, usually those in charge of public works and key infrastructure (such astelecommunications and energy), undertook most public procurement. With the almost universaltrend towards decentralizing government functions, public procurement is being spun-off toother national ministries or departments and to local governments. This is a very positivedevelopment. It puts the decision-making on procurement in the hands of those responsible fordelivering the services, and puts the delivery closest to the end-user

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the public. Accountabilityis established and, at the same time, public visibility into how public funds are spent isenhanced.And apart from the agencies doing procurement, a range of organizations have sprung up tomonitor how governments spend the tax payer's money. An example of such

civil society

interest is Procurement Watch, present at this meeting.Moreover, public procurement is becoming increasingly linked to

trade and foreigninvestment

. A country’s procurement system is a statement to its trading partne

rs on how itconducts business. If the national procurement policies are incomplete, contradictory, and notembodied in law, then foreign firms will be less inclined to bid on contracts and invest inproduction facilities, or, if they do, will seek a price premium to cover the added risk. Policiesand laws that explicitly discriminate against foreign firms are also damaging to trade andinvestment.**********

Looking Forward

Sound procurement must be built on several fronts

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laws, institutions, procedures, and humanresources all require attention.These are the essential elements of a good procurement system, and they are well understood.But putting them in place is challenging. Significant resources and a long-term commitment arerequired. Perhaps the biggest step is to recognize public procurement as a

strategicgovernance issue

. Only when so recognized will it command the necessary policy attentionand commitment of resources.