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

Tantri Yuliandini The Jakarta Post Jakarta

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

Telkom's vice president for tariff 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 have been 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 will comprise of an average of about 16.77 percent hike to local calls, about 13.3 percent increase for domestic long distance calls, and 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 a copy of the new tariff structure obtained by the Post, a local call to a destination up to 20 kilometers away will cost Rp 97.5 (about US$0.09) a minute compared to only Rp 83.5 a minute previously, and to a destination between 20 to 30 kilometers away it would cost Rp 130 a minute compared to Rp 111.3 a minute previously.

In the meantime, a telephone call to a local destination more than 30 kilometers away would only cost Rp 195 a minute compared to Rp 1,440 a minute previously.

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

The government's plan to increase domestic telephone rates have 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 towards a 45.49 percent gradual increase within three years.

However, it had to settle with an average of 15 percent increase as the House deemed the initial 21.67 percent plan 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 telecoms sector and help expand telephone network across the country.

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

Economist Raden Pardede of the Danareksa Research Institute had warned earlier of a soaring inflation rate 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 the crippling of 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 courage of the government when to implement the hike".

He said that the House had no qualms if Minister of Communications Agum Gumelar signs 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 sufficiently informed the public of the impending hike," Yoseph added.