Telkom to raise phone rates by 15% on Jan. 15

Tantri Yuliandini, The Jakarta Post, Jakarta

State-owned telecommunications company PT Telkom said that it would increase domestic telephone rates by an average of 15 percent on Jan. 15 pending the signing of a ministerial decree expected next week.

Telkom's vice president for rates and interconnection Mundarwiyarso said that the company was ready to implement the hike and that it was only waiting for the minister of communications to sign the decree.

"All systems are ready, we were ready from the time the House of Representatives gave us the go ahead," he told The Jakarta Post, referring to the approval by the House in November to increase telephone rates in 2002.

Mundarwiyarso said that the average 15 percent increase would comprise of an average 16.77 percent hike for local calls and about a 13.3 percent increase for domestic long distance calls. Monthly fees will increase by Rp 7,000, Rp 3,200, and Rp 800 a month for business, residential and social services respectively.

According to the new rate structure, a copy of which was obtained by the Post, a local call to a destination of up to 20 kilometers away will cost Rp 97.5 (about US$0.09) a minute compared to only Rp 83.5 a minute currently, and to a destination of between 20 kilometers and 30 kilometers away it would cost Rp 130 a minute compared to Rp 111.3 a minute currently.

A telephone call to a local destination of more than 30 kilometers away would only cost Rp 195 a minute compared to Rp 1,440 a minute currently.

Separately, Dow Jones reported that Director General of Posts and Telecommunications Djamhari Sirat said that he expected the minister to sign the decree some time next week.

The government's plan to increase domestic telephone rates has been delayed several times since early last year due to strong opposition from the House, non-governmental organizations and the general public.

The government had planned a 21.67 percent increase last year as the initial step toward a 45.49 percent gradual increase over three years.

However, it had to settle for a 15 percent increase as the House deemed the initial 21.67 percent to be too high for the public to cope with at the current time.

The telephone rate hike was expected to attract foreign investment to the telecommunications sector and help expand the telephone networks across the country.

The increased telephone rates would put more strain on the general public. Furthermore, in addition to increased electricity rates and fuel rates also expected within the month, the hike in telephone rates would no doubt put strong pressure on inflation.

Economist Raden Pardede of the Danareksa Research Institute had warned earlier of soaring inflation in the coming months, which would pressure Bank Indonesia to retain its tight money policy.

High interest rates on the central bank's promissory notes had been blamed for crippling the country's business sector which saw a plunge in exports by 14.7 percent in November 2001.

Joseph Umar Hadi, a legislator from the Indonesian Democratic Party of Struggle (PDI Perjuangan), told the Post that as the House had given its consent "it now depends on the government when to implement the hike".

He said that the House had no qualms if Minister of Communications Agum Gumelar signed the decree next week, but that the government should give notice to the House before officially implementing the hike.

"We think that the government and Telkom have given sufficient notice to the public of the impending hike," Yoseph added.