"We are seeking European investments in existing and new grinding projects in Indonesia," Indonesian Cocoa Association (Askindo) executive director PS Siswoputranto said.

"We have approached European industries because Europe is the biggest user of high-quality beans from Indonesia," he said in an interview.

Siswoputranto said Indonesia planned to expand its cocoa grinding capacity to 195,000 tonnes a year from about 120,000 tonnes at present.

This would be about half of its anticipated bean production of 420,000 tonnes in the next two or three years, he said on the sidelines of a Malaysian cocoa conference.

At present just 70,000 tonnes of cocoa is ground locally, he said. The increased capacity would involve setting up new grinders and revamping existing ones, he said.

Siswoputranto visited Europe lastmonth as part of a French-sponsored project by UN industry agency UNIDO to try to woo European investors.

The association would ask the government to consider exempting import duties on grinding machinery besides allowing tax holidays to draw foreign investments into the sector, he said.

Indonesia produces about 300,000 tonnes of cocoa beans annually, making it the number three grower after Ivory Coast and Ghana.

It has the potential to expand production up to 500,000 tonnes by the year 2005, Siswoputranto said. It costs about 50 US cents to produce a kilogram of cocoa in Indonesia. This is well below the current world market price of $1.40-$1.50 a kg.

Based on the expected production of 420,000 tonnes in the next two or three years, Indonesia will be able to export 225,000 tonnes of beans annually after processing 195,000 tonnes locally, Siswoputranto said.

He said Indonesia would discourage exports of unfermented and semi-fermented beans -- the less premium cocoa -- now mostly sold to the UnitedStates.

Indonesia's cocoa is grown mainly on Sulawesi island.

Siswoputranto said riots at a Sulawesi town of Pinrang on Wednesday had not so far disrupted the transportation of beans to the main cocoa Port of Ujung Pandang.

Mobs rioted in Pinrang, 180 km (112 miles) North of Ujung Pandang to protest against the slow repayment of money belonging to members of local cooperatives -- whose managers have been detained on charges of embezzlement.

But Indonesian traders said on Thursday some of the shipments had been disrupted.