Government Contracting Agency of Public-Private Partnerships for Higher Education Infrastructure

 

Gene Maxcell[1]

 

Appropriate infrastructure will be required in Indonesia to accelerate its national development in a sustainable way. Infrastructure is defined as technical, physical, systematic, hardware and software facilities which are required in order to serve society and support networks so that the development of the economy and society may be implemented properly.[2] The Government of the Republic of Indonesia is broadly supportive in terms of infrastructure development but remains challenged by its limited state budget. In an attempt to overcome this challenge, the government has decided to engage in the intensive development of a type of procurement scheme which known as Public - Private Partnerships (“PPP”).

 

Generally speaking, PPP are addressed under Regulation of the President Number 38 of 2015 on Public-Private Partnerships for the Procurement of Infrastructure (“Regulation 38/2015”). Through PPP schemes, the government may opt for and assign optimum maintenance responsibility to the private sector as regards infrastructure cooperation and public services may thus be implemented in a sustainable manner.[3] Types of infrastructure which may become the objects of PPP schemes are economic and social infrastructure, and this includes educational infrastructure.[4]

 

As background information, the 1945 Constitution of the Republic of Indonesia mandates that the state should organize a national education system in order to develop the nation at certain intellectual level. A strategic role as regards the implementation of this mandate is at the higher education level, as  affirmed under the Preamble to Law Number 12 of 2012 on Higher Education (“Law 12/2012”). Higher education itself is to be organized by universities, which comprise both public universities and private universities. 

 

In general, the nation's universities possess academic and non-academic autonomy. [5] One of the ways in which this autonomy can be implemented is through the establishment of public university – legal entities (perguruan tinggi negeri badan hukum – “PTN-BH”).[6] These are further defined under Regulation of the Government Number 26 of 2015 on the Forms and Mechanisms of Public University Legal Entity Funding (“Regulation 26/2015”), which states that PTN-BH are universities which are established by the Government of the Republic of Indonesia as autonomous public legal entities.[7]

 

Moreover, PTN-BH may be categorized as state institutions. Pursuant to Article 1 (29) of Regulation of the Government Number 27 of 2014 on the Management of State/Regional-Owned Assets, institutions refer to non-ministerial organizations and other forms of agency which utilize the national budget in order to complete certain tasks based on the 1945 Constitution of the Republic of Indonesia or other laws and regulations. Furthermore, Article 1 (22) of Regulation of the Government Number 4 of 2014 on the Implementation of Higher Education and Management of Higher Education defines non-ministerial government institutions as central government institutions which perform certain tasks in relation to government duties.

 

Based on the definitions outlined above, PTN-BH may fit the definition of non-ministerial government institutions. This categorization is also supported by an explanation offered by Prof. Jimly Asshidiqie, who states that non-structural state institutions can be categorized and classified based on their establishment, structure and political functions. In regard to the concept of establishment, non-structural state institutions are established based on Regulations of the Government.[8] Thus, as PTN-BH are established based on a Regulation of the Government, they may, therefore, be categorized as non-ministerial government institutions.

 

In relation to PPP, the question then arises as to whether the rectors of PTN-BH are authorized to act as Government Contracting Agencies (“GCA”). Pursuant to Regulation 38/2015, a GCA refers to a Minister/Head of Institution/Head of Region or State-Owned Entity/Regional-Owned Entity as a provider or organizer of infrastructure in accordance with the relevant laws and regulations.[9] GCA are mainly responsible for the overall implementation of PPP schemes and specifically of the procurement process, including, among other areas, budgeting for the implementation of procurement, stipulation of procurement committees, provision of data and information rooms, approval of procurement documents, issuance of winning bidder appointment letters and the signing of PPP agreements.[10]

 

As the chairperson of PTN-BH, a rector may arguably act as a GCA during the procurement of education infrastructure through PPP schemes. Nevertheless, Law 12/2012 states that the Minister of Research, Technology and Higher Education (“MORTE”) is responsible for the organization of higher education activities.[11] During the "Infrastructure Summit 2019" event which was held at Graha Sanusi Hardjadinata Padjadjaran University on 26 April 2019, it was implied that the MORTE can be considered a GCA candidate during the procurement of educational infrastructure through PPP schemes.[12]

 

Further studies are therefore required in order to clarify the extent of PTN-BH autonomy and thus answer the question of who may act as GCA as regards higher education infrastructure. At the time of writing, the Draft Government Regulation on PTN-BH was still under discussion. However, once this draft has been promulgated, GCA for the procurement of educational infrastructure through PPP schemes may ultimately be defined more clearly.

 

 


[1] Lawyer at Melli Darsa & Co. (an Indonesian member law firm of PwC Global Network)

[2] Art. 1 (4), Regulation 38/2015.

[4] Art. 5 (1), Regulation, 38/2015.

[5] Arts. 62 (1) and 64 (1), Law 12/2012.

[6] Art. 65 (1), Law 12/2012.

[7] Art. 1 (3), Regulation 26/2015.

[8] Jimly, Beberapa Catatan Tentang Lembaga-Lembaga Khusus dalam Penyelenggaraan Pemerintahan Negara, Seminar Nasional Lembaga-Lembaga Non Struktural, Kementerian Pertahanan, March 2011, p.3.

[9] Art. 1 (3), Regulation 38/2015.

[10] Art. 4 (1), Regulation of the National Procurement Board Number 29 of 2018 on Procedures for the Procurement of Implementing Business Entities for Infrastructure Procurement through Public-Private Partnerships Based on the Initiative of the Minister/Head of Institution/Head of Region.

[11] Initially, Law 12/2012 in general referred to the minister in the field of education. However, through the establishment of Regulation of the President Number 13 of 2015 on the Ministry of Research, Technology and Higher Education, it was subsequently clarified that higher education activities fall under the authority of the MORTE.

 

Gene Maxcell[1]

 

Appropriate infrastructure will be required in Indonesia to accelerate its national development in a sustainable way. Infrastructure is defined as technical, physical, systematic, hardware and software facilities which are required in order to serve society and support networks so that the development of the economy and society may be implemented properly.[2] The Government of the Republic of Indonesia is broadly supportive in terms of infrastructure development but remains challenged by its limited state budget. In an attempt to overcome this challenge, the government has decided to engage in the intensive development of a type of procurement scheme which known as Public - Private Partnerships (“PPP”).

 

Generally speaking, PPP are addressed under Regulation of the President Number 38 of 2015 on Public-Private Partnerships for the Procurement of Infrastructure (“Regulation 38/2015”). Through PPP schemes, the government may opt for and assign optimum maintenance responsibility to the private sector as regards infrastructure cooperation and public services may thus be implemented in a sustainable manner.[3] Types of infrastructure which may become the objects of PPP schemes are economic and social infrastructure, and this includes educational infrastructure.[4]

 

As background information, the 1945 Constitution of the Republic of Indonesia mandates that the state should organize a national education system in order to develop the nation at certain intellectual level. A strategic role as regards the implementation of this mandate is at the higher education level, as  affirmed under the Preamble to Law Number 12 of 2012 on Higher Education (“Law 12/2012”). Higher education itself is to be organized by universities, which comprise both public universities and private universities. 

 

In general, the nation's universities possess academic and non-academic autonomy. [5] One of the ways in which this autonomy can be implemented is through the establishment of public university – legal entities (perguruan tinggi negeri badan hukum – “PTN-BH”).[6] These are further defined under Regulation of the Government Number 26 of 2015 on the Forms and Mechanisms of Public University Legal Entity Funding (“Regulation 26/2015”), which states that PTN-BH are universities which are established by the Government of the Republic of Indonesia as autonomous public legal entities.[7]

 

Moreover, PTN-BH may be categorized as state institutions. Pursuant to Article 1 (29) of Regulation of the Government Number 27 of 2014 on the Management of State/Regional-Owned Assets, institutions refer to non-ministerial organizations and other forms of agency which utilize the national budget in order to complete certain tasks based on the 1945 Constitution of the Republic of Indonesia or other laws and regulations. Furthermore, Article 1 (22) of Regulation of the Government Number 4 of 2014 on the Implementation of Higher Education and Management of Higher Education defines non-ministerial government institutions as central government institutions which perform certain tasks in relation to government duties.

 

Based on the definitions outlined above, PTN-BH may fit the definition of non-ministerial government institutions. This categorization is also supported by an explanation offered by Prof. Jimly Asshidiqie, who states that non-structural state institutions can be categorized and classified based on their establishment, structure and political functions. In regard to the concept of establishment, non-structural state institutions are established based on Regulations of the Government.[8] Thus, as PTN-BH are established based on a Regulation of the Government, they may, therefore, be categorized as non-ministerial government institutions.

 

In relation to PPP, the question then arises as to whether the rectors of PTN-BH are authorized to act as Government Contracting Agencies (“GCA”). Pursuant to Regulation 38/2015, a GCA refers to a Minister/Head of Institution/Head of Region or State-Owned Entity/Regional-Owned Entity as a provider or organizer of infrastructure in accordance with the relevant laws and regulations.[9] GCA are mainly responsible for the overall implementation of PPP schemes and specifically of the procurement process, including, among other areas, budgeting for the implementation of procurement, stipulation of procurement committees, provision of data and information rooms, approval of procurement documents, issuance of winning bidder appointment letters and the signing of PPP agreements.[10]

 

As the chairperson of PTN-BH, a rector may arguably act as a GCA during the procurement of education infrastructure through PPP schemes. Nevertheless, Law 12/2012 states that the Minister of Research, Technology and Higher Education (“MORTE”) is responsible for the organization of higher education activities.[11] During the "Infrastructure Summit 2019" event which was held at Graha Sanusi Hardjadinata Padjadjaran University on 26 April 2019, it was implied that the MORTE can be considered a GCA candidate during the procurement of educational infrastructure through PPP schemes.[12]

 

Further studies are therefore required in order to clarify the extent of PTN-BH autonomy and thus answer the question of who may act as GCA as regards higher education infrastructure. At the time of writing, the Draft Government Regulation on PTN-BH was still under discussion. However, once this draft has been promulgated, GCA for the procurement of educational infrastructure through PPP schemes may ultimately be defined more clearly.

 

 


[1] Lawyer at Melli Darsa & Co. (an Indonesian member law firm of PwC Global Network)

[2] Art. 1 (4), Regulation 38/2015.

[4] Art. 5 (1), Regulation, 38/2015.

[5] Arts. 62 (1) and 64 (1), Law 12/2012.

[6] Art. 65 (1), Law 12/2012.

[7] Art. 1 (3), Regulation 26/2015.

[8] Jimly, Beberapa Catatan Tentang Lembaga-Lembaga Khusus dalam Penyelenggaraan Pemerintahan Negara, Seminar Nasional Lembaga-Lembaga Non Struktural, Kementerian Pertahanan, March 2011, p.3.

[9] Art. 1 (3), Regulation 38/2015.

[10] Art. 4 (1), Regulation of the National Procurement Board Number 29 of 2018 on Procedures for the Procurement of Implementing Business Entities for Infrastructure Procurement through Public-Private Partnerships Based on the Initiative of the Minister/Head of Institution/Head of Region.

[11] Initially, Law 12/2012 in general referred to the minister in the field of education. However, through the establishment of Regulation of the President Number 13 of 2015 on the Ministry of Research, Technology and Higher Education, it was subsequently clarified that higher education activities fall under the authority of the MORTE.

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