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.