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.