Project reference prices up for review

Finance Minister Apisak Tantivorawong said on the sidelines of the Asean Countries Public Procurement Knowledge Exchange Forum hosted by World Bank yesterday that he had assigned officials for the task.
He said e-bidding for government projects over the past three years could have saved up to Bt90 billion, ranging from 10-18 per cent of the current reference price methodology.
“So, I think we may be able to lower our reference prices for future bidding projects,” said Apisak.
Government agencies cannot implement investment projects if bidders proposed investment cost more than the reference price set by the government.
Apisak said there are two main factors in calculating reference prices: cost of materials and statistical cost of previous projects.
Previously, the fall in crude oil prices also contributed to lower cost of government investment projects, as bidders could benefit from lower energy cost, he said.
Apisak said if statistics showed a consistent lower price on government projects for many years in a row, it would be reasonable to lower the reference price. The government has continued to run large budget deficits as it plans to invest more in a mass transit system, road, high-speed rail, double track rail, airports and sea ports, especially in the Eastern Economic Corridor.
Apisak also told the forum that Thailand has enforced a new public procurement law in August this year. The law aims to create more transparency in public investment projects while at the same time ensuring effectiveness of public spending.
State enterprises that operate commercial activities are now drafting regulations to be compatible with the law. The government is allowing flexibility in the operations of state units, as they have to compete in the open market, he said.
Apisak assured that the new public procurement law would not slow down budget disbursement as data showed disbursement had gone relatively smoothly in October, the first month of the 2018 fiscal year. According to the Comptroller-General’s Department, disbursement of capital spending in October amounted to Bt32.2 billion, or 4.88 per cent of planned total capital spending. The disbursement was 0.92 per cent lower than the target.
Ulrich Zachau, World Bank’s country director for Southeast Asia agreed with Apisak’s view, saying that Thai new procurement law is a good one.
Meanwhile Agus Prabowo, chairman of the National Public Procurement Agency of Indonesia, said that Indonesia had reformed its public procurement system eight years ago. The procurement law aims to eliminate corruption and ensure efficient budget spending.