Government, WB in conflict over telecoms regulatory body

Arya Abhiseka, The Jakarta Post, Jakarta

Controversy over the need to establish an independent regulatory body in the telecommunications industry resurfaced, when on Friday the government, the World Bank and experts voiced different opinions over the issue.

The government said the need was not urgent, but the World Bank and many experts insisted otherwise.

The Directorate General of Post and Telecommunications at the Ministry of Transportation, which also oversees communications, issued a statement on Friday that the establishment of the Independent Regulatory Body (IRB) was not imperative under Telecommunications Law No. 36/1999.

"We are not against the idea of the establishment of the IRB, however, our law states that the ministry is still the regulatory body for telecommunications," the directorate general's spokesman Gatot Dewa Broto said in the statement.

The government "is able to transfer its functions of regulating, supervising and controlling telecommunications to a regulatory body," said Gatot, quoting an explanatory clause of the law.

The functions are currently carried out by the directorate general.

However, Scott Wallsten of the World Bank's development Research Group said in a press statement on Friday that the IRB was urgent and imperative in view of the country's telecommunications situation.

In December of last year, he said, the government made a progressive move in ruling out a duopoly policy on the telecommunications sector by selling about 40 percent ownership of PT. Indosat, a state owned company, to Singtel, a Singaporean telecommunications company.

Wallsten said that privatization as a part of market liberalization was viewed as beneficial to the economy as it would result in an increase in telecommunication companies' sales, profit, investment and workforce.

However, liberalization, he continued, should be coupled with the establishment of the IRB to ensure fair competition in the telecommunications sector.

The IRB will monitor telecommunications policy and protect consumers' interests with regards to charges and telephone inter- connection and maintain healthy competition.

Wallsten said that according to the Ambrose research in 1990, competition was a huge drive for improvement in telecommunications.

Up until now, there are some 96 countries across the globe that have established IRBs.

Meanwhile, Roy Suryo, a telecommunications analyst said that state-owned telephone company PT Telkom had violated an agreement made with the House of Representatives, when it hiked phone charges early last month before the establishment of the IRB.

"The establishment of the IRB should have been finished before 2002 and is one of the seven preconditions that must be met before Telkom could increase its rates. They simply violated that," he said.

The government delayed the increase in phone charges late last month due to the public protests rather than the arguments put forth by experts such as Roy.

Last November, Director General of Post and Telecommunications Jamhari Sirat said that the draft regulation on the establishment of the IRB would be completed before the end of the year but a staff member from his office said that the regulation was not ready.

However, Suryo said that the government still had not finalized the concept for such a regulatory body.

"The IRB should have been functioning before the phone charge increase was imposed, because that body should have first analyzed the rate of the increase," Suryo added.