Phone rate hike unlikely: Official<\/p>\n
JAKARTA (JP): The next government will most likely delay a
\nplanned increase of telephone tariffs in a bid to win the
\npeople's hearts, a senior government official said here on
\nThursday.<\/p>\n
Director General of Post and Telecommunications Sasmito Dirdjo
\nsaid that under the existing formula, telephone tariffs were set
\nto increase in 2000 by up to 75 percent.<\/p>\n
\"But, I'm not sure whether the new government will have the
\nguts to apply the rise. They probably won't do it because they
\ndon't want to make an unpopular policy that will harm their image
\nas a new government,\" he said.<\/p>\n
Sasmito acknowledged that the planned increase was too high,
\nbut insisted that the fare increase was necessary to offset
\nhigher investment and operational costs.<\/p>\n
The country's telephone tariff is adjusted every year based on
\na formula set by the government.<\/p>\n
According to a source in the telecommunications industry, the
\nForum for Telephone Tariff plans to propose to the government to
\ncut the tariff increase from 75 percent to 30 percent. The forum
\ngroups officials of state local telecommunications operator PT
\nTelkom and its Joint Venture (KSO) partners.<\/p>\n
\"The ideal rise, according to the real calculation based on
\nthe existing government's price cap, is about 75 percent. The
\namount was considered by forum members as being unrealistic, so
\nthey finally came up with 30 percent,\" said the source, who spoke
\nunder condition of anonymity.<\/p>\n
Gatot S. Kahrmadji, vice president of Ariawest International,
\none of Telkom's five KSO partners, said the increase was
\nnecessary to enable Telkom and its partners to build new lines.<\/p>\n
\"We really need to build more new lines to meet the demand.
\nBut a new investment or a bank loan is just impossible at the
\nmoment. The rise is the only hope,\" he said.<\/p>\n
Telkom's president A.A. Nasution claimed late September that
\nhis company was in good financial condition and suggested the
\ngovernment put off increasing the local phone call tariff in
\n2000.<\/p>\n
\"Based on the Activity Based Costing calculation, Telkom's
\nrate of return in 2000 without any tariff rise will be 19
\npercent, meaning Telkom will still be able to fulfill its short
\nand long-term obligations,\" Nasution stated in a letter to
\nMinister of Communications Giri Suseno.<\/p>\n
He added that given the low demand for new lines and the down
\nturn in economic conditions following the prolonged crisis, a
\ntariff increase should be avoided.<\/p>\n
Sasmito acknowledged that raising the telephone tariff during
\nthe ongoing crisis would attract heavy criticism from the public.<\/p>\n
He said however that the tariff increase was necessary, not
\nonly to help operators obtain more funds to support the
\nimprovement of facilities, but also to attract investors to re-
\nenter the country's telecommunications industry.<\/p>\n
\"Tariffs are a very important factor taken into account by
\nforeign investors when they intend to invest in (the
\ntelecommunications sector in) a country. How can we expect
\ninvestors to come here if we offer them a low tariff, which is
\ngood for customers, but will not guarantee a rapid and easy
\nreturn for foreign investment?\" Sasmito said.<\/p>\n
Telkom data reveals that the current rate of return for
\ninvestment in the Indonesian telecommunications sector of about
\n11 years fails to compete with the six to seven year rate of
\nreturn in many other countries.<\/p>\n
The data also reveals that Indonesia's phone call tariff is
\nthe lowest in Asia. It charges 2.1 US cents per minute, compared
\nto Singapore's 2.3 cents, Korea's 2.5 cents, Malaysia's 3.4 cents
\nand Sri Lanka's 2.5 cents.<\/p>\n
The monthly subscription fee in Indonesia is $2.88, compared
\nto Thailand's $4.18, Singapore's $7.66 and the Philippines'
\n$8.53. (cst)<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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