_x000C_eProcurement in Korea: Implementation and Impact

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e-Procurement Experience in Korea : Implementation and Impact June 2012

Ho In Kang |

Administrator Public Procurement Service (PPS), the Republic of Korea

Contents
Ⅰ. Public Procurement in Korea Ⅱ. e-Procurement in Korea Ⅲ. Impact of e-Procurement Ⅳ. Future Goals

Public Procurement in Korea

Public Procurement in Korea
Public Procurement Size
Public Procurement Total (2011) : USD 100 billion (10% of GDP)

Public Procurement Service (PPS)
The government’s central purchasing agency Covers central govt. procurement above threshold Goods & Services Construction Works above $100,000 above $3,000,000 Individual Agencies $66 bn

Local govt. and public enterprises may use PPS’s procurement services by request

PPS $34 bn

4

e-Procurement in Korea

Korea ON-line E-Procurement System
KONEPS (Korea On-line E-Procurement System)
Govt. e-Procurement system operated by PPS
Transactions via KONEPS
Total Public Procurement Public Procurement via KONEPS e-Bay $104 bn

Used by 44,000 public entities* and 228,000 suppliers

$92 bn $77 bn $56 bn $43 bn $76 bn $65.7 bn

One of the largest e-Commerce systems in the world

73% 55% 2004 60% e-Bay e-Bay (2010) (2010)

2007

2010

* Figure accounts for most public entities, except 20 public enterprises that operate independent e-Procurement systems

6

e-Procurement in Korea
Single Window to Public Procurement
All tender notices are published through KONEPS

End-to-end Functional Coverage
KONEPS processes the entire procurement procedures through subsystems: e-bidding, e-contracting, e-ordering from online shopping mall and epayment

“KONEPS”
Korea ON-line E-Procurement System

e-Bidding

e-Contracting

e-Payment Online Shopping Mall

e-Ordering

7

e-Procurement in Korea
One Stop Service through Data Integration
KONEPS exchanges data with 140 external info systems for supplier information, bid evaluation, bonds and payment, minimizing paper document submissions Before

Public Buyer

Bid
Ministry of Strategy and Finance Industry Associations

Supplier

National Tax Office

Surety Companies

Construction Authorities

Credit Rating Companies

CertificationRelated agencies

8

e-Procurement in Korea
One Stop Service through Data Integration
KONEPS exchanges data with 140 external info systems for supplier information, bid evaluation, bonds and payment, minimizing paper document submissions After Contract Delivery
Ministry of Strategy and Finance Industry Associations

Public Buyer

National Tax Office

Credit Rating Company

KONEPS
Construction Authorities Surety Companies

e-Bid
Korea Financial Telecommunications & Clearings Institute

CertificationRelated agencies

Supplier

8

KONEPS - Implementation and Evolution
Phased Transition to e-Procurement

KONEPS e-Bidding
(e-Document Interchange)

Online Shopping Mall Mobile Bidding

EDI

e-Payment

Single Portal e-Contracting

[2000]

[2001]

[2002]

[2003~present]

9

Impact of e-Procurement

Impact of e-Procurement
Increased Opportunities for SMEs
SMEs’ registration for bid participation doubled since KONEPS (2002) - 70,864 SMEs (2001) 147,186 SMEs(2003)

SMEs’ Share in PPSconducted procurement
PPS contracts for goods Contracts awarded to SMEs

$17.9 bn $13.9 bn
(75%)

Increased participation by SMEs
$8.2 bn $4.5 bn
(55%)

SMEs share in Online Shopping Mall Sales
- 26.6% (2006) 61.5% (2008) 74.9% (2010)

2003

2010

* Foreign procurement, construction mgt. and superintendence not included 11

Impact of e-Procurement
Transition to e-Business
Early e-GP promoted the growth of e-Certification industry
e-Certificates in Use
1.1 m (2001) 8.7m (2003) 24.4m (2010)

Growth of e-Commerce in Korea
$999.6 bn

Catalyst for the growth of e-Commerce
- Strong full through effect in e-Commerce - Internet banking, online stock trading and e-Shopping $119 bn

$413.6 bn

2001...
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