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)