"The government is likely to retain the taxes until after the general and presidential elections next year because it does not want to see riots, sparked by shortages in cooking oil," Nafis Daulay, chairman of the Indonesian Edible Oil Industry (AIMMI), told Reuters from Medan, North Sumatra.

"What we can do is wait and see how the government is going to work it out with the IMF (International Monetary Fund)...But we don't know," he said.

Daulay said Indonesia had agreed with the IMF that the taxes would be reviewed in January and that the new rate should stand at no more than 20 per cent.

CPO export tax stands at 60 per cent, RBD palm oil and olein at 55 per cent and crude palm kernel oil at 50 per cent. An export boom, triggered by the falling rupiah, prompted thegovernment to impose the hefty export taxes.

The general election is scheduled for June 1999, to be followed by presidential election expected to take place in November.

A spokesman for the trade and industry minister said the government was still studying the possibility of reducing the taxes, but added that any new measures would be taken after the religious festivities to avoid price rises.

Demand traditionally rises ahead of religious festivities for Christmas and Eid al-Fitr in January.

Cooking oil is one of the basic commodities in the world's fourth most populous country of 200 million. Food riots have rocked Indonesia this year, sparked by rising prices of essentials during the country's worst economic crisis in decades.

The government usually boosts stocks of basic essentials ahead of important political events, such as the elections to avoid price fluctuations.

Traders said the high export taxes had discouraged many players from exporting CPO, but that smuggling was still taking placemostly out of small ports in Sumatra.

"The problem is still smuggling, but it is hard to find out about the quantity," said one trader in Medan. Smugglers and customs officials falsified export documents, he added.

"Smugglers will write down in the documents they are exporting stearin, whose taxes are much lower. In fact, they export CPO. This is possible in cooperation with the customs officials," he said. Crude stearin's export tax stands at 25 per cent.

Officials at Indonesia's main CPO export port in Belawan, North Sumatra, denied that smuggling took place but said smuggling did go on in smaller ports elsewhere in Sumatra.

The trader said Indonesia exported 200,000 tonnes of CPO and its by-products in November. CPO exports alone stood at 50,000 tonnes.

Preliminary figures showed exports so far in December at 80,000 for CPO and its by-products, with CPO alone standing at just 5,000, he said.

AIMMI's Daulay said a lack of fertiliser and lower pricesof fresh fruit bunches in the domestic markethad prompted farmers to sell to Malaysia, the world's top CPO producer.

He said farmers used fishing ships to smuggle the fruit out.

Another trader in Medan said 250,000 tonnes of CPO andolein had arrived in Java monthly since July, from Sumatra, where most of the plantations and refiners were situated.

Arrivals totalled 371,000 tonnes in November, he added.

Indonesia's cooking oil consumption in 1998 is expected to reach two million tonnes. This year's CPO output was expected to total 4.8 million tonnes, traders said.