Govt to raise telecom tariffs by 15% in March

Govt to raise telecom tariffs by 15% in March

Dow Jones, Jakarta

The government plans to raise telecom tariffs by an average 15 percent in March after a two-month delay due to nationwide protests against price hikes this month, a government official said Tuesday.

Indonesia's had planned to raise the tariff in January to help boost profits at state-owned PT Telekomunikasi Indonesia (TLK), or Telkom, and make the company a more attractive target for a foreign investor.

"We are still planning to raise tariffs because if we don't Telkom won't be competitive," Djamhari Sirat, a senior official at the transport ministry, told reporters.

President Megawati Soekarnoputri's government is likely hoping that a decision this month to reduce planned hikes to fuel and electricity prices means the public will accept the higher phone charges.

The government scaled back its price hike plans for fuel and electricity after protests broke out across the country. Protesters complained the government shouldn't raise prices at a time unemployment is growing.

But Indonesia needs to reduce subsidies on utilities, thus pushing up prices, to help reduce its budget deficit.

The country's creditors, including the World Bank, say the subsidies are expensive and don't target the really poor.