Indofood unperturbed over KPPU's monitoring

Indofood unperturbed over KPPU's monitoring

Tony Hotland, Jakarta

Giant food producer PT Indofood Sukses Makmur is reacting
calmly to allegations by a monopoly watchdog that the company has
hampered fair competition in the country's instant noodle market.

Indofood director Fransiscus Welirang said that the Business
Competition Supervisory Agency (KPPU) was simply doing its task
and it was nothing unusual.

"What's unusual about it? The KPPU is just doing its job and
it's indeed stipulated by law that the KPPU must monitor dominant
market players," he told The Jakarta Post on Wednesday.

Law No. 5/1999 on antimonopoly and fair competition stipulates
that a market player with a market share of more than 50 percent
is considered dominant and therefore must be monitored by the
KPPU.

"But prove first that we're monopolizing, that we've prevented
other competitors from emerging or expanding," he said.

Fransiscus acknowledged that Indofood had the potential to
monopolize the sector, but it was not the company's fault at all.

"We've been in the business for almost 30 years, since the
1970s and of course we've grown. It's not our fault then that we
have such market dominance. Other producers are newer than us on
the whole," he said.

He also refuted KPPU's statement that Indofood had not
submitted company data on pricing structure and production costs
as requested by the agency.

"We've submitted our costing structure, including data of
material costs for the noodles, seasoning and packaging. They
then can calculate the marketing fee and general expenses. We're
a public company and we're open to monitoring.

"Apparently the KPPU has a different perception of what
documents we should've submitted. They have not clarified yet
what they actually need aside from what we have provided," said
Fransiscus.

He affirmed Indofood would cooperate with the KPPU as long as
the monitoring process did not disrupt the company's
effectiveness and productivity.

The KPPU has said it is monitoring Indofood since its enormous
production capacity could impede competitors from effectively
responding to growing public demand.

Indofood has a daily flour production capacity of around
10,640 tons compared to other competitors' 2,800 tons. It can
produce 13.7 billion packets of noodles per year, way over the
national output of around 12 billion. In 2002, Indofood had a 88
percent market share for instant noodles.