Recent reforms to promote social responsibility procurement in east asian states: a comparative analysis
| DOI | https://doi.org/10.1108/JOPP-11-01-2011-B003 |
| Pages | 61-94 |
| Published date | 01 March 2011 |
| Date | 01 March 2011 |
| Author | David Seth Jones |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue |
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 11, ISSUE 1, 61-94 SPRING 2011
RECENT REFORMS TO PROMOTE SOCIAL RESPONSIBILITY
PROCUREMENT IN EAST ASIAN STATES: A COMPARATIVE ANALYSIS
David Seth Jones*
ABSTRACT. In many countries, public procurement of goods, services and
works is required to serve wider social purposes apart from the needs of the
user agencies (which may be referred to as social responsibility
procurement). In recent years, reforms have been implemented in the
countries of East Asia to promote social responsibility procurement. They
have entailed four main types of social responsibility: (a) supporting small
and medium enterprises; (b) creating opportunities for small or start up
venture firms; (c) fostering environmental sustainability through green
purchasing, and environmentally sustainable construction (in the case of
public works); (d) promoting work safety in site management in public works.
The paper will examine the reforms in the countries of the region under
which various preferential arrangements have been implemented to meet
these objectives. It will consider why the reforms were adopted and also the
differences between the countries of the region in the priority given to each
of the reforms.
INTRODUCTION
Widely accepted principles of public procurement are value for
money and fairness based on equal access for all suitable suppliers.
These are considered to be best guaranteed by open and non-
discriminatory competition, in which the main methods of
procurement of goods, services and works are the competitive
quotation for low value purchases and the open tender or selective
open tender for high value purchases. Thereby, public agencies
responsible for procurement (known as procuring entities) solicit
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* David S. Jones, Ph.D., is Associate Professor, Faculty of Business,
Economics and Policy Studies, University of Brunei Darussalam, Brunei. His
research interests include public policy, development administration, public
financial management, and government procurement.
Copyright © 2011 by PrAcademics Press
62 JONES
competitive quotations from a limited range of suppliers, or invite
bids from all suitable suppliers and contractors. Contracts are then
awarded to the lowest quotation, or to the lowest or most
advantageous bid. Value for money and equal access, based on an
openly competitive procurement market, have been advocated by
international donor, financial and economic institutions such as the
World Bank, Asian Development Bank, UNDP, IMF, WTO and the EU
and have been the cornerstone of procurement policy in many
developed countries and, now, in an increasing number of developing
countries.
However, in many countries, public procurement is also required
to serve social purposes, which may be referred to as social
responsibility procurement. This involves favoring: (a) businesses
with special needs or those lacking resources to compete in domestic
or international markets that are considered vital for the future social
and economic well-being of a country; and (b) businesses which
incorporate a socially desirable component in their product, service
or works (such as environmental sustainability and work safety).1
Under social responsibility procurement the normal practices of
competitive procurement may be in part modified to accommodate
other criteria to meet the social needs mentioned above (McCrudden,
1998; Trepte, 2004; McCrudden, 2007; Arrowsmith, 2009).
In recent years, in the countries of Ea st Asia, social responsibility
procurement has been undertaken, with priority given to four types of
social responsibility. One is to support through the procurement
process small and medium enterprises (SMEs). Giving them greater
access to the public procurement market provides commercial
opportunities they would otherwise be denied in open competition
with large or multi-national companies. Another is to favor for the
same reason locally owned start up or small venture firms
specializing in innovative products. Equally important in certain
countries is the promotion of environmental sustainability through the
procurement of so-called green goods, and public works that are eco-
friendly and meet environmental standards. Increasing priority has
also been given to promoting work safety in public works projects by
awarding contracts to companies that can meet work safety
standards.
The article will examine how the four types of social responsibility
procurement mentioned above, are implemented in the countries of
RECENT REFORMS TO PROMOTE SOCIAL RESPONSIBILITY PROCUREMENT IN EAST ASIA 63
East Asia through various preferential arrangements. It will first cover
the preferential treatment afforded to SMEs and venture firms. It will
then consider preferential arrangements to promote environmental
sustainability in the procurement of goods and public works. This is
followed by an examination of the use of preferences to ensure high
standards of work safety in public works. In conclusion, reasons are
provided why these types of social responsibility procurement have
been adopted, and why differences exist in the extent to which such
adoption has occurred between the developed and developing
countries of the region.
The countries covered in the article are Japan, Korea, Hong Kong,
Singapore, and Taiwan amongst the developed countries of East Asia,
and China, Indonesia, Malaysia, Philippines, and Vietnam amongst
the developing and emerging countries. The sources used include
laws, regulations and administrative measures relating to
procurement, reports and publications of government agencies and
international bodies, published papers, and conference papers.
THE USE OF PREFERENCES IN SOCIALLY RESPONSIBLE PROCUREMENT
The four aspects of social responsibility procurement mentioned
above may be implemented through the use of preferences.
Preferential treatment may take various forms and occur at different
stages of the procurement process, as specified in the procurement
laws, regulations, and administrative measures of a country. It can
confer advantages directly on firms and products which meet the
social responsibility criteria. Conversely, it can confer advantages
indirectly by discriminating against firms and products that do not
meet such criteria.
Preferential Treatment of SMEs and Venture Firms
Preferential treatment of SME’s and venture firms may occur at
the outset by the use of set-asides for certain types of procurement,
by which they are the only firms eligible to submit a quotation or
tender. The set-asides may apply to procurements below a specified
value or to the procurement of certain goods and services which
these businesses are able to supply. Even when set-asides are not
used, such firms may also be given special consideration in
determining their eligibility to bid (Denes, 1997; Barraket &
Weissman, 2009; Qiao, Thai & Cummings, 2009).
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