Team proposes 21.67% rise in telephone rates

JAKARTA (JP): A team assigned by the government to review the country's telephone rate structure proposed a flat 21.67 percent increase this year, a senior official said.

"We are still waiting for the new minister (of communications) to be installed to report the findings of the review team, and of course we need the House of Representative's approval," director general of posts and telecommunications Djamhari Sirat said on Tuesday.

President Megawati Soekarnoputri's Cabinet is expected to be announced on Saturday.

The House is currently in recess.

Djamhari said the team had proposed that telephone rates for this year be increased by a flat 21.67 percent for local and long distance calls and the monthly subscription fee.

"We believe this is the best way to do it so that the public will not be confused over the rate scheme," Djamhari said on the sidelines of a seminar on Indonesia's telecommunications sector organized by the Center for Strategic and International Studies (CSIS).

The government had planned to raise telephone rates on June 10 but was forced to postpone and review the rates after telecommunications experts found that the increase could reach as high as 167.86 percent in some parts of Jakarta.

Telecommunications experts and the Indonesian Consumers Foundation (YLKI) said the rate structure was too complicated and baffling as it involved changes in the basic rate structure such as an introduction of a single rate zone for Jakarta.

The government then established a team to review the telephone rate structure. The team came up with two proposals for the hike, and both recommended abandoning the single rate zone for Jakarta.

The another option is to rebalance all components of the rate structure, meaning some components may experience a more than 21.67 percent increase while others less.

Telkom's director of operations and marketing Komarudin Sastrakoesoemah said earlier the company would go along with the government's proposal.

"Looking at the condition of our community now, we can understand the flat rate scheme," he said, admitting that the earlier proposal was confusing.

The 21.67 percent increase is part of the government's plan to increase telephone rates by 45.49 percent in three years to help attract foreign investment to the sector.

At the current tariff, investment return rate (IRR) was at less than 10 percent, much lower than a bank's time deposit interest rate of 15 percent, making it unattractive to investors.

Furthermore the hike is expected to increase the number of people connected to the telephone compared to the current 3 percent of Indonesia's population.

The government plans to increase the rates by another 15.60 percent in 2002 and by 8.22 percent in 2003. (tnt)