MANILA, March 7 (AFP) -- Maoist guerrillas in the Philippines are set to rake in millions of dollars from extortion this year, boosted by protection money forked out by politicians contesting the May elections, the military said Sunday.

The armed forces said they were on course to rid about half the Philippine territory of communist insurgency by the middle of the year, but conceded that the Communist Party of the Philippines has retained the ability to raise funds by threat or use of force.

"The going rate is from 5,000 to 20 million pesos (about 109-435,000 dollars) from municipal councilor to president," military spokesman Major Eugenio Julio Cosias said in a statement.

"The rates may vary in different regions and depending on the candidate's affinity to the (rebels)," he said, adding that the Maoists' allies did not have to pay.

"In the last three national elections, the NPA (the party's 5,000-member New People's Army) is estimated to have amassed a conservative estimate of 93.8 million pesos," Cosias said.

The NPA ambushed an army unit on Mindoro island south of Manila on Saturday, killing 11 soldiers and wounding seven others.

The soldiers were on a mission to go after rebel extortionists, Philippine Army spokesman Lieutenant-Colonel Marcelo Burgos said Sunday.

The NPA also extorted 42.2 million pesos from business establishments across the country last year, with another 28.7 million pesos separately collected from logging firms, Cosias said.

"The main targets are agro-industrial firms, mining companies, bus operators, construction companies undertaking government projects, and even small businesses such as (neighbourhood grocery) store owners," he said.

He said the NPA levies standard rates of six to seven percent of the gross income for logging operators, one to two million pesos for bus companies while for big ranch proprietors, its collection is based on the number of cattle.

For big landowners, the NPA takes 20-25 percent of net income for 151 hectares or more.

He said the rebel collectors demand payments in 100- or 1,000-peso bills only although payments may be converted into goods such as computers, guns, mobile phones and medicines.

The NPA punishes those who refuse to pay or who renege on their payments, Cosias said, adding that rebel attacks on at least 61 businesses last year caused damage worth 103 million pesos.

The chief armed forces spokesman, Lieutenant-Colonel Romeo Brawner, told reporters Thursday they are on track to declare 14 of the country's 79 provinces "insurgency-free" at the end of the month with nine more expected by June.

Eight provinces were declared NPA-free last year, he added.

The NPA claims it has more than 100 "guerrilla fronts" or shadow governments across the country.

Formed in 1969, it operated in most provinces in the late 1980s except for Muslim-majority areas in the south, which faced Muslim separatist rebellions.