Crisis affects Indonesia's joint operation telecom project

Crisis affects Indonesia's joint operation telecom project

JAKARTA (JP): The monetary crisis has ground Indonesia's
telecommunications joint operation project with five foreign
telecom giants to a standstill, according to state-owned domestic
telecommunications provider PT Telkom.

Telkom president Asman Akhir Nasution said yesterday that the
five joint operators had so far built only about 25 percent of
the targeted two million fixed lines.

"The projects are not going well," he told reporters at a
telecommunications training session organized by Telkom.

"There is still a long way to go," he said, adding that the
transfer of technology had not been as expected.

The government has targeted to build 6.7 million fixed lines
during the current Five Year Development Plan which ends next
March.

The five private contracts, awarded in January 1996, were to
install and manage some two million fixed lines in Sumatra,
Kalimantan, Sulawesi, Central Java, and areas in the eastern
Indonesia. The management contracts terminate in 2010.

The foreign partners include telecom giants like France
Telecom, Britain's Cable & Wireless, Japan's NTT, Australia's
Telstra, and Singapore's SingTel.

Nasution said he was not pleased by the foreign contractors'
reasoning that due to the monetary crisis the installation of the
promised fixed lines would have to be postponed.

He added he was concerned by the lack of activity by the
private sector firms since last December.

However, he said Telkom would still be flexible with the
contractors' various requests.

"The government wants us to show good faith," he said.

He explained that Telkom had postponed the requirement for the
five private contractors to provide a bank guarantee of US$5
million each.

A monthly commission fee had also been reduced to a three-
monthly levy.

In addition, Telkom had provided an assurance that the
contractors would not be defaulted if they failed to deliver
their promises by the end of March 1999, he said.

"The question now is what will they give in return," Nasution
said.

The country is currently facing its worst ever economic crisis
after the rupiah began free falling in July. The currency
plummeted to its lowest level of Rp 17,000 to the U.S. dollar in
January, compared to Rp 2,450 in July.

Tighter monetary policy and good news emerging from a recent
meeting between Indonesia and the International Monetary Fund
have helped the rupiah strengthen to about Rp 7,500. (rei)