Dow Jones, Jakarta

Dow Jones, Jakarta

Indonesian instant noodle producer Indofood Sukses Makmur said
Friday it has delayed the construction of a milk plant in East
Java worth US$36 million.

"We have delayed the project because we want to focus on our
core business," Indofood's Chief Administration Officer Indra
Josepha told Dow Jones Newswires.

Indofood's core businesses are instant noodles, in which it
holds around a 90 percent market share, and cooking oil.

Indra said the company hasn't yet decided when it will resume
the development of the plant.

"If the time comes, we will then restart the project," he
said, adding that there have been changes in the economic climate
recently that have pushed Indofood to delay the project.

He didn't offer further explanation.

Previously, Indofood said that the milk plant was expected to
produce a 60,000 tons of sweetened condensed milk and would start
operation in 2004.

Daniel Perdana, an analyst with Samuel Securities said that
the delay is aimed at making Indofood more efficient, and that
the market for the milk industry in Indonesia is still weak.

He said Indofood may switch the funds, which it initially
planned to invest in the milk plant, to cover the high costs of
buying crude palm oil - prices in the first half this year rose
significantly.

Indofood is expected to buy almost 350,000 tons of crude palm
oil, or around 60 percent of its total needs this year, to
produce cooking oil.

Hong Kong's First Pacific Co. has a 48.7 percent stake in
Indofood.

Shares in Indofood at 0340 GMT (10:40 am Jakarta time) Friday
were unchanged at Rp 975.