Asia Pacific Procurement Forum First Consultative Meeting – 24 -25 August 2009 Opening Address Vice President Lawrence Greenwood

Asian Development Bank ----------------------------------------------------------------------------------------------------------------------------

Ladies and Gentlemen--good morning and welcome to the First Consultative Meeting of the Asia Pacific Procurement Forum. ********** It is our pleasure to host this important initiative, a first in the Asia Pacific region. The response has been beyond our expectations. We have with us this morning delegates from 24 counties, as well as a number of partner organizations and civil society. Many have traveled long distances and taken time from busy schedules. We very much appreciate this interest and will do our best to make your efforts worthwhile. Over the course of the coming two days, you will be asked to design the Asia Pacific Procurement Forum—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 involving procurement policy makers from across Asia and the Pacific. ********** I will not go into the details of the forum but would also like to take a few moments to tell you why procurement is gaining increasing importance here in ADB and within the broader development community. **********


Procurement is important for many reasons Procurement is especially important at a policy level because sound public procurement policies and practices are among the essential elements of good governance. Good practices reduce costs and produce timely results; poor practices lead to waste and delays. Procurement is at the heart of delivering public services. It underpins how governments construct infrastructure, supply schools and clinics, and contract professional services. And that public investment is key to achieving faster economic growth and reducing poverty. The impact is significant because the numbers are big. On behalf of its citizens, a government typically spends 10 percent or more of GDP on the procurement of goods and services. In many Asian countries it is much higher (up to 30% in Vietnam, for example). The difference between doing this well and not doing it well is enormous. If a country could save just 10% on its procurement budget, it could fund its entire national health budget from these savings. Moreover, every country citizens are paying much more attention to procurement than ever. Improved transparency, the development of new media, especially the internet, and more robust civil society organizations have increasingly focused the spot light on corrupt and inefficient procurement practices. And citizens are holding governments accountable for such practices. Thus, given procurement's economic and political impact, it is little wonder it has become a top priority. **********

Public procurement has also become a lot more complicated because of the proliferation of players and stakeholders involved. First, there are now many more players involved in procurement. A decade or two ago, three or four ministries, usually those in charge of public works and key infrastructure (such as telecommunications and energy), undertook most public procurement. With the almost universal trend towards decentralizing government functions, public procurement is being spun-off to other national ministries or departments and to local governments. This is a very positive development. It puts the decision-making on procurement in the hands of those responsible for delivering the services, and puts the delivery closest to the end-user—the public. But the transition to decentralized procurement will be challenging, requiring new processes and extensive capacity building efforts.


Apart from the agencies doing procurement, a range of organizations have sprung up to monitor how governments spend the tax payer's money. An example of such civil society interest is Procurement Watch, present at this meeting. Civil society has become an important stakeholder in public procurement policy And so have foreign corporations. Public procurement is becoming increasingly linked to trade and foreign investment. A country’s procurement system is a statement to its trading partners on how it conducts business. If the national procurement policies are incomplete, contradictory, and not embodied in law, then foreign firms will be less inclined to bid on contracts and invest in production facilities, or, if they do, will seek a price premium to cover the added risk. Policies and laws that explicitly discriminate against foreign firms are even more damaging to national welfare. ********** Looking Forward Sound procurement must be built on several fronts—laws, institutions, procedures, and human resources 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 are required. Perhaps the biggest step is to recognize public procurement as a strategic governance issue. Only when so recognized will it command the necessary policy attention and commitment of resources. The Asia Pacific Procurement Forum will definitely contribute to this goal. Let me thank Hamid Sharif and his team for their work in helping organize this meeting and all of your for taking time from your busy schedule to be here. Thank you and have a great conference.


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