Government hopes to raise telecom rates 45.49% over three years
Government hopes to raise telecom rates 45.49% over three years
JAKARTA (JP): The government is seeking the approval of the
House of Representatives to increase telephone rates 45.49
percent by 2002.
The director general of post and telecommunications, Sasmito
Dirdjo, said on Monday the new rates would be imposed over three
years, with a 21.67 percent hike in 2001, 15.60 percent in 2002
and another 8.22 percent in 2003.
He said he was hopeful the House would not object to the
planned rate increase.
"Increasing the rates is necessary in order to improve the
telephone services of the country, which is now far behind many
other countries in terms of the telecommunications sector," he
said during a hearing with House Commission IV for infrastructure
and transportation.
Indonesia has around six million fixed telephone lines and a
teledensity of 2.9 phone lines per 100 people. As a comparison,
this figure is much lower than in Vietnam, which has a
teledensity of four phone lines per 100 people, he said.
A teledensity of between 40 and 50 phone lines per 100 people
is a good density, while anything under 10 indicates a poor
density, he said.
Sasmito said both local and foreign investment was needed to
improve the telecommunications sector in Indonesia, but current
telephone rates were discouraging investors.
With the current telephone rates, the return on bank deposits
is still much larger than the return on investments in the
telecommunications sector, he said.
Increasing the rates by 45.49 percent over three years will
make the telecommunications sector more attractive, he said.
"The internal rate of return (IRR) on investments at the
current rate is minus 0.58 percent after eight years, meaning it
will take a long time for investors to get their money back," he
said, adding that increasing rates by 45.49 percent would raise
the IRR to 9.55 percent after eight years.
If the telephone rates were adjusted according to the proposed
hikes, the net income of state-owned PT Telkom would increase to
approximately Rp 4.22 trillion (US$468.9 million) in 2003, and
would bring in at least Rp 1.47 trillion in dividends to the
government, he said.
PT Telkom booked a net income of Rp 1.2 trillion during the
first semester of this year.
Sasmito said he hoped a decision would be made by the House
before the end of the year.
Separately, Yoseph Umarhadi, a member of Commission IV, said
the House would not agree to raise telephone rates before PT
Telkom finalized its restructuring and privatization plans, and
the problems with its joint operation partners.
"Besides, if the rates were hiked now it would cause a bigger
social conflict that would overshadow the advantages of the
hike," he said after the hearing. (10)