Jakarta – Indonesia has proposed raising domestic phone charges by an average of 15 percent starting next year in a move which will help state phone monopoly PT Telekomunikasi Indonesia (Telkom) boost its revenues and reach its fixed line growth target.

The proposal will now be presented to Transport Minister Agum Gumelar for formal approval on Thursday, and despite previous rejections for tariff increases analysts believe this latest compromise – proposing a lower hike – will go through.

"Based on the parliament's agreement on November 26 the government will raise telephone tariffs on January 1, 2002 by an average of 15 percent," the spokesman at the transport department, Tulus Rahardjo told Reuters.

Last month parliament rejected the government's proposal for a flat increase of 21.67 percent for 2001 saying it was inappropriate in the current economic climate. But a commission said it might approve a rise next year if the government came up with a modified formula allowing a smaller rise for non-commercial subscribers.

Increasing phone tariffs is a sensitive issue in the poverty-stricken country, the hardest hit by the Asian financial crisis of the late 1990's.

Telkom said in October it might not be able to reach a 1.9 million phone line target by 2004 if tariffs were not increased this year. "With the current proposed hike, we will only be able to increase the new fixed lines by 1.2 million," Rahardjo said, referring to the proposed 15 percent increase.

Although the current proposal was less than the original almost 22 percent hike, the transport department would still stick to a cumulative rise of 45.5 percent over three years.

Indonesia has a population of 210 million but only 7.8 million lines. Its telephone penetration rate of 3.7 percent is one of the lowest in the world.Telkom ended up 25 rupiah to 2,625 rupiah.