Government to increase local phone rates by 10 percent

JAKARTA (JP): The government will raise local telephone rates by about 10 percent in January, but will lower rates for domestic long-distance calls by 10 percent.

Secretary-general of the Ministry of Tourism, Post and Telecommunications Jonathan L. Parapak said at a hearing with the House of Representatives yesterday that details of the tariff adjustments would be announced later this year.

He said the rise in telephone rates would be made to adjust to the rupiah's sharp depreciation against the U.S. dollar and inflation.

Parapak said the installation charge for new telephone lines would be lowered by about 50 percent.

"We've studied everything carefully. The maximum adjustment rate will be no more than 3.47 percent, but we have to calculate many other things, defined as the Z factor, which includes the currency's depreciation. This is very complicated. Please don't simplify the matter," he said.

He said the government would continue its rate adjustment discussion and the new rates would be introduced Jan. 1, 1998.

Parapak said Telkom's statement in its prospectus for its initial public offering in October 1995 said its tariffs would be reviewed annually.

He said there was an equation considered when setting the maximum rate adjustment each year: the inflation rate minus the X factor. The X factor was decided by the government.

He said the X factor took into account many elements, including economic growth and the performance of telecommunications companies.

"Because inflation for 1996 was 6.47 percent and the X factor is 3, the maximum adjustment rate for telecommunications charges in 1997 is 3.47 percent," he said.

"But, in particular cases, the government also has to consider the Z factor, which could be added to the maximum adjustment rate of 3.47 percent," he said.

The government was still discussing whether to add the Z factor, which included the rupiah's depreciation.

The currency crisis, which has eroded the value of the rupiah by about 35 percent since July, has adversely affected some telephone operators, especially those with revenues in rupiah but expenses in dollars.

"Local telephone rates will hopefully be raised by a maximum of 10 percent while domestic long distance rates will be reduced by at least 10 percent.

"The new phone installation charge will be reduced 50 percent, and it will be the maximum rate, meaning that the charge will possibly be lower. We may keep the current cellular and international rates," Parapak said.

He said telephone rates in Indonesia were still among the world's lowest.

Current local phone rates start at Rp 115 (4 U.S. cents) a pulse (every 1.5, two or three minutes, depending on the distance and time period). Domestic long-distance rates are set at Rp 108 a pulse.

Installation fees for business subscribers currently range from Rp 190,000 to Rp 800,000 depending on the business' location. Installation fees for households vary from Rp 85,000 to Rp 590,000. Installation fees for subscribers with social missions range from Rp 60,000 to Rp 410,000.

In January 1997, the cost of local telephone calls rose 4.54 percent from Rp 110 to Rp 115 a pulse, while domestic long- distance calls were reduced by 1.82 percent from Rp 110 to Rp 108 a pulse and installation fees were cut by 5 percent to 28.13 percent.

Minister of Tourism, Post and Telecommunications Joop Ave said yesterday there were 6.94 million telephone lines in the country and 1.1 million cellular connections. (icn)