INTERVIEW-Ample Indonesia rice supply offers inflation breather

* Stockpile sufficient and expections high for good crop

* Palm oil export duty review decision due soon

* Non-oil exports seen jumping 12-15 pct to over $12 bln/month

* South-south trade booming and changing regional dynamic

By Fitri Wulandari and David Fox

JAKARTA, March 3 (Reuters) - Indonesia will not import more rice in coming months as stockpiles are now sufficient and expectations high for increased local production, trade minister Mari Pangestu said, offering relief in its fight against food inflation.

In an exclusive interview with Reuters, she said the government would soon announce results of a review on the current export tax system on palm oil products that seeks to encourage more downstream investment while controlling domestic cooking oil prices.

The minister, a petite 55 year-old with a PhD in International trade from the University of California , also revealed that the Association of Southeast Asian Nations (ASEAN) plus Japan, South Korea and China would this year likely finalise a pact for a regional "rice bank" to protect against the food price hikes seen recently -- and more severely in 2008.

Ample regional supplies and reduced prospects of buying from Indonesia -- which surprised markets with bumper rice imports in January -- could further ease pressure for a grain that has lagged a rally in other commodities and bring some breather for countries grappling with inflation.

"The amount of Bulog's imports is sufficient, Pangestu said, referring to the state procurement agency, adding the situation would be reviewed "as is normal" in August.

Indonesia has allowed Bulog to import rice since September to maintain a 1.5 million-tonne stockpile after failing to secure local supplies when domestic prices surged above 5,060 rupiah per kg (about $0.60 per kg).

Bulog maintains the stockpile to ensure the government can provide free or subsidised rice for millions of poor families and during disasters such as floods, quakes and tsunamis.

Indonesia in January suspended import duties on rice, soybeans and wheat as part of moves to fight food inflation. The measures may have worked, as raw food prices fell 0.3 percent in February from the previous month -- the first in four years -- leading overall inflation to ease, data showed.

Raw food prices were still up 14.8 percent last month on a year ago. Protests over higher prices were seen as a major factor in the ousting of autocratic ruler Suharto in 1998, and investor fears over inflation led to a sell-off in Indonesian stocks and bond in January.

Pressed for her view on rice prices, Pangestu said: "Prices continued to be high until around January but in February started to come down. Certainly for February it came down by about 3 percent and it will come down a little bit more in March as it is also the beginning of harvest."

RICE FOR THE POOR

According to the 2011 state budget, the government plans to spend 15.3 trillion rupiah ($1.7 billion) to distribute 3.15 million tonnes of subsidised rice for 17.5 million poor families -- higher than 13.9 trillion rupiah spent last year.

Indonesia has applied tight rice trade rules since 2004 and imports of the politically sensitive grain are not allowed during harvests to avoid pressure on local farmers. "There is no plan to change it (policy) at the moment," Pangestu said.

The main harvest runs from March to May/June, followed by a smaller one in August-September. Indonesia aims to be self-sufficient in rice production, a position attained in the early 1980s but lost as farmland was turned into housing estates for the booming population and rampant smuggling pressured growers.

The statistics bureau's first crop forecast for the year of 67.31 million tonnes of unmilled rice was below the agriculture minister's December projection for 68.8 million tonnes in 2011, but up from 66.41 million tonnes in 2010. This will lead to a 4.29 million-tonne surplus this year, in line with government aims for a 10 million-tonne surplus in 5-10 years.

PALM OIL TAX ON REVISION

Pangestu said the government was reviewing an export duty on palm oil, although she insisted it wasn't as widely unpopular as made out.

"Some investors who want to invest in the downstream sector want this. That's why we need to review export duties," she said.

"It'll still be a progressive tax, but where you start and how much and how do you do it is still being discussed," she said, adding the government will announce the decision soon.

Under the system, Indonesia uses the average spot CPO price in Rotterdam, Europe's vegetable oils market, during the preceding month as a reference price to decide the following month's palm oil tax rates. The world's top palm producer charges a minimum tax of 1.5 percent on crude palm oil exports if the reference price stands at $701-$750 a tonne and maximum 25 percent if the price rises above $1,250.

While the downstream palm oil sector for food products has seen rising demand from a growing population and higher food prices, the downstream sector for non-food palm products such as oleo chemicals and biodiesel has been progressing more slowly.

Indonesia is struggling to increase its capacity to absorb its palm oil output which is expected to reach 22 million tonnes this year, partly because of slow progress in implementation of plans for mandatory biodiesel usage for transportation.

ROBUST TRADE

Pangestu said Indonesia's trade balance was currently "very robust" and non-oil/gas exports should grow 12-15 percent this year to average more than $12 billion a month. Indonesia had a trade trade surplus of $1.91 billion in January.

"What's happening there's continuous volume increase in non commodities-based exports such as textile, garments, footwear and electronic products," she said.

Much of this, she said, had to do with recent implementation of free-trade agreements that has seen significant increases in exports to non-traditional markets -- particularly so-called "south-south" trade, such as that to ASEAN nations, which had doubled in the past five years.

"This partly reflects the regional-based story -- where you import components and then produce a particular type of product and then export your final product back to them," she said.

"The increase in purchasing power in all the countries in Asia is driving trades between us. The share of our trade that is being accounted for by emerging markets is about 30-40 percent, that's like almost doubling say 5-8 years ago." ($1 = 8,850 Indonesian rupiah) (Editing by Ramthan Hussain)