SINGAPORE (AP) _ U.S. computer giant Compaq expects continued profitability in crisis-ridden Asia but will cut costs in its regional operations nonetheless, The Sunday Times reported.

Paul Chan, Compaq's Asia-Pacific vice president and managing director, said Friday the company plans to cut inventory and introduce more value-added products to ensure profitability in the region, according to the newspaper.

Chan stressed the need to ensure proper inventory levels by improving efficiency in the company's supply network.

Compaq's second-quarter sales in Asia-Pacific dipped 15 percent from the previous quarter, the report said. The company noted sales in Indonesia fell sharply because of the recent social and political unrest there.

``The Indonesian crisis has affected our volumes dramatically,'' Chan said. ``In 1996, it looked as if Indonesia was going to be a fairly large market for us, but then came the crisis.''

``Demand (there) is still good, but the credit is not,'' he added.

Compaq posted a dlrs 3.6 billion net loss in the second quarter because of huge charges related to its purchase of Digital Equipment Co. and global plant closings.

The company announced last month that it is closing six plants overseas and eliminating 5,000 jobs worldwide as part of a cost-cutting drive.

The plants to be closed include two in Scotland and one each in Brazil, China, Singapore and Taiwan. The company is also closing operations in Australia, Brazil and Japan used for final assembly of computers for shipment to customers.

Founded in 1982 and based in Houston, Texas, Compaq is the second-largest computer company in the world and the largest personal computer manufacturer.