Government to lower telecoms construction target

JAKARTA (JP): The government will lower the target for the country's telecommunications development to a more realistic level, bearing in mind that the country has yet to overcome its economic crisis, a senior official has said.

Minister of Communications Agum Gumelar said on Thursday that the government was in the process of reviewing the target of building four million fixed telephone lines across Indonesia to reflect both the public's purchasing power and the rupiah's exchange rate.

"We are experiencing difficulties in reaching the target due to the weakness of the rupiah exchange rate, finalization of joint operation schemes (KSOs), and delays in the rate increase plan," he said in a hearing with House of Representatives Commission IV for infrastructure and transportation affairs.

Agum said that the four million target had been established based on predictions of demand, the buying power of the public, and costs of construction prior to the economic crisis.

"Because the crisis is not over yet, it would be reasonable to lower the development target," he said.

The government had set a development target of four million fixed telephone lines by 2004, of which state-owned telecommunications companies (telcos) PT Telkom and PT Indosat were expected to contribute 1.9 million and 1.5 million fixed telephone lines respectively.

The remaining 600,000 fixed telephone lines were to be constructed by satellite-based telco PT Pasifik Satelit Nusantara (PSN) and various local operators such as Ratelindo.

Director general of Posts and Telecommunications Djamhari Sirat said that Telkom and Indosat were no longer a wholly state company but a public company.

"Investors would be angry if we insisted on a high target and put the companies' financial positions in danger," he told reporters outside the hearing.

Djamhari said that a target could be set, but how well it was achieved was still largely dependent upon external conditions like market demand, and the political and economic situation.

Separately, Telkom's director of operations and marketing Komarudin Sastrakoesoemah said that the target should be flexible and constantly reviewed in accordance with changes in market conditions.

"A target should be a nominal one, so that if it is exceeded it will be an achievement," he told reporters, adding that it should be a realistic figure.

Komarudin said that Telkom's shareholders were always keeping a close watch on how many phone lines were targeted by the government and how many Telkom was expected to build.

"If they think the figure is realistic then the value of our shares will go up because people will want to buy; on the contrary, it will go down if shareholders believe the target is unrealistic," he said.

Telkom was capable of building 1.5 million to 1.9 million phone lines in three years provided that within that period the government also increased telephone rates by at least 45 percent, Komarudin said.

"Without the rate increase we could build only 160,000 phone lines per year," he added.(tnt)