Fonterra will begin working with Indonesian dairy farmers as it starts expanding its footprint in the country.
The co-operative has begun construction on a $36 million blending and packing plant in West Java - it's the largest manufacturing facility Fonterra's built in Asia in a decade.
Fonterra's managing director of the Asia Pacific region, Pascal De Petrini, says the plant will help meet Indonesians' growing appetite for dairy.
He says demand is rising there at 5 per cent a year.
The plant will be complete in March next year.
Mr De Petrini says while it will initially process milk powder from New Zealand into infant formula and other products - that will likely change as Fonterra works more closely with Indonesian dairy farmers.