To further stabilize the soaring prices of staple foods, the government introduced a new policy package on Friday that includes tax incentives on related commodities and a Rp 3.6 trillion worth of subsidies.

"To stabilize food prices, we will decrease import tax for soybeans, wheat and flour, and implement export tax for crude palm oil to secure the domestic price of cooking oil," Coordinating Minister for Economy Boediono told reporters after a cabinet meeting led by the President.

He said the government would pay for the value-added tax for flour and cooking oil.

Boediono said the government would increase the amount of rice given to poor people to 15 kilograms per family per month, from the previous 10 kilograms per family per month, under the Rp 1,600 per kilogram price.

The import tax for rice, he said, would also be decreased from Rp 550 per kilogram ton Rp 450 per kilogram.

"Amid all that, we will continue to increase rice production through, among other, promoting the use of high-quality seeds," Boediono said.

On cooking oil, he said the government would implement a 15 percent progressive export tax on crude palm oil with a minimum price of $1,100 per ton, while implementing five percent export tax for biofuel, with a minimum price of $1,100 per ton.

All imports of soybeans would be freed of import duty, and the income tax from the soybean import transaction would be dropped to 0.5 percent from 2.5 percent.

"We will also give a Rp 1,000 subsidy per kilogram of soybean to producers," he said.

Import tax on flour would also be totally scrapped, he said.

To further boost the food price control program, the government said it planned to distribute soft loans worth Rp 2 million for 50,000 entrepreneurs.

Finance Minister Sri Mulyani said the Rp 3.6 trillion food subsidy consisted of Rp 2.6 trillion on rice, Rp 500 billion for market operation on cooking oil, with the remaining Rp 500 million for direct cash aid for tofu and tempeh producers.

As the new incentives and subsidies would require the government to review its current spending budget, Sri said a new draft on the state budget would be submitted to the House of Representative in the middle of this month.

The government said it revised the state budget earlier after the global increase on oil price effected economic conditions in the county.