Foreign telecoms operators<\/p>\n
For the first time in Indonesia's 50-year history, foreign
\ncompanies will be allowed to directly provide domestic public
\ntelecommunications services. This will be done under 15-year
\njoint operation contracts with the state domestic
\ntelecommunications monopoly, Telkom, starting early next year.<\/p>\n
Subscribers in West Java, Central Java, Sumatra, Kalimantan
\nand the eastern islands will have the new experience of being
\nserved by such giant telecommunications operators as Telstra Inc.
\nof Australia, Nippon Telephone and Telegraph of Japan, France
\nTelecom and West Inc. of the United States.<\/p>\n
This dramatic development has been made possible through the
\ngovernment's announcement early this week of the winners for four
\nout of five designated regions. The foreign investor\/operator for
\nthe eastern islands (Sulawesi, Maluku, Nusa Tenggara and Irian
\nJaya) is expected to be appointed within the next few weeks.<\/p>\n
Telkom, however, retains the management of basic
\ntelecommunications services in the greater Jakarta area and East
\nJava.<\/p>\n
We think the government deserves appreciative applause for its
\nsuccess in attracting such giant telecommunications firms to
\ninvest in the country. The long-term joint operation contract,
\nwhich requires the contractor not only to operate existing
\ntelephone networks, but also to invest in and build, operate and
\ntransfer hundreds of thousands of new telephone lines, obviously
\ninvolved complex bidding terms and tough negotiations.<\/p>\n
The terms of the joint operation contract and the build,
\noperate and transfer arrangements had to be made adequately
\nattractive, otherwise the foreign investors would not have been
\ninterested in view of the long pay-back period, the political
\nrisk factor and the complex issue of currency convertibility. The
\ninvestment has to be made in foreign exchange, while the revenue
\nstreams will be in local currency. On the other hand, the
\ncontracts also have to greatly benefit Telkom and contribute to
\nthe country's telecommunications development in general.<\/p>\n
Judging from the basic requirements imposed on the foreign
\ninvestors\/operators, we can rest assured that the contracts will
\nbe greatly beneficial to accelerating Indonesia's
\ntelecommunications development. First of all, two million new
\ntelephone lines are expected to be installed by the foreign
\ninvestors before the end of March 1999. And, as the government
\nhas estimated, Telkom can expect to get Rp 13.98 trillion
\n(US$6.28 billion) in revenues from initial investor payments,
\nminimum guaranteed incomes and shares from the distributable
\nincomes from the five contractual regions during the 15-year
\ncontract period. At the end of the contract, Telkom will take
\nover all of the telecommunications networks from foreign
\ninvestors for free.<\/p>\n
However, the biggest benefit, we think, will be the transfer
\nof skills and technology from the foreign investors\/operators to
\nIndonesia, especially Telkom. The domestic telecommunications
\nmonopoly will benefit greatly from the training and education
\nprograms to be conducted by the foreign operators for the Telkom
\nemployees they inherit in their respective contractual regions
\nand the new recruits they can be expected to hire. It is
\nencouraging to note that the contracts specifically require the
\nforeign operators to allocate at least 1.5 percent of their
\nrevenues for training and education and another one percent for
\nresearch and development. Since the foreign operators also are
\nrequired to establish joint ventures with national companies,
\nmany local firms will also benefit from the transfer of skills,
\nin addition to their share of the operation incomes.<\/p>\n
We also have to admit that state-owned Indosat, which recorded
\ngreat success in its international share listing in New York last
\nyear, is an example of how an Indonesian company can acquire
\ninternational quality standards for its management and services
\nthrough a joint venture. Indosat was a joint venture between
\nTelkom and International Telephone and Telegraph of the U.S. for
\n20 years before the government bought the U.S.company's shares in
\nlate 1980.<\/p>\n
However, the success of the five joint operation contracts
\nalso will depend on how Telkom and the government (Ministry of
\nTourism, Post and Telecommunications) exercise their rights of
\nintervention and supervision of the foreign operators, as
\nstipulated in the contracts.<\/p>\n
Obviously, Telkom and the government should restrict their
\nintervention only to the most strategic matters. Hopefully, we
\nwill not hear complaints from the foreign telecommunications
\noperators -- as we have often heard frustrations voiced by
\nforeign oil contractors -- over the manner in which they are
\nsupervised and monitored by the state-owned Pertamina oil
\ncompany.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/foreign-telecoms-operators-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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