By Lenita Sulthani

JEMBRANA, Indonesia, April 25 (Reuters) - Indonesia, which has the world's highest human death toll from bird flu, launched an exercise on the resort island of Bali on Friday to test its ability to deal with a pandemic triggered by the virus.

The three-day simulation, the country's biggest ever test, involves about 1,000 people, including police and military personnel, some wearing white protective suits and going from door to door in the test village in the west of the island.

"This is to show to the world that we are ready, that we are prepared," said Nyoman Kandun, director-general of communicable disease control at the health ministry.

The United Nations' Food and Agriculture Organisation (FAO) said last month that Indonesian efforts had done little to control bird flu and it needed more help in controlling the virus.

Under the exercise, poultry was culled and buried in infected areas and the village is due to be quarantined on Saturday.

Indonesia has suffered 107 human deaths from bird flu, out of 132 confirmed cases, compared with 240 deaths globally, according to data from the World Health Organisation.

Contact with sick fowl is the most common way of contracting the H5N1 virus, which is endemic in bird populations in most of Indonesia.

Experts fear the virus could mutate into a form that people can easily catch and pass to one another, in which case infections would soar, causing a pandemic that could kill millions of people worldwide.

"The keyword is preparedness... because we do not know where, when and how the pandemic will occur," Kandun said.

On Sunday, as part of the exercise, Bali airport will also be equipped with body-heat detectors to screen potential infections among travellers in and out of the island.

The Sanglah hospital in Bali has been designated to treat bird flu cases, while patients with other diseases at the hospital will not be allowed to leave until the quarantine period ends.

An Indonesian health official said this week that in the case of a pandemic an estimated five million Indonesians could be infected with the virus, with between 5 to 10 percent of those infected dying.

Indonesia has also been locked in a dispute with the international community over sharing bird flu virus samples, which is regarded as vital to developing vaccines.

U.S. Health Secretary Michael Leavitt said this month that he had stressed the need for transparent sharing of the virus during talks with Indonesian President Susilo Bambang Yudhoyono.

But Indonesia has refused to freely share virus samples with the WHO until a new global mechanism is in place to ensure that specimens will not be used for commercial purposes without the country's approval.

Jakarta says it wants guarantees from richer nations and drugmakers that poor countries would get access to affordable vaccines derived from their samples. (Editing by Ed Davies and David Fogarty)

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