Hanoi  - Vietnam has told local rice exporters to boost exports, reversing its decision in March to stop signing new contracts and to cap rice exports this year at 3.5 million tons, officials said Friday.

Prime Minister Nguyen Tan Dung told government ministries Thursday to encourage more rice exports and asked commercial banks to provide loans for exporters to buy rice from farmers, said Deputy Trade Minister Nguyen Thanh Bien.

"The increase in the amount of rice to be exported this year is based on high rice output and on domestic and international demand for rice," Bien said.

The government said on its website Thursday night that Vietnam, the second largest rice exporter in the world, might export up to 4.5 million tons of rice this year.

"Rice exporters are allowed to export 3.5 million tons of rice in the first nine months of the year," said Nguyen Thi Nguyet, General Secretary of the Vietnam Food Association. "How much we can export in the last three months depends on the yield of the next rice crop."

Both Bien and Nguyet, however, said the prime minister had not yet issued any official document on raising the amount of rice to be exported this year.

In March, Dung ordered local rice exporters to stop signing new rice export contracts until the end of June and to cap the total amount of rice exports in 2008 at 3.5 million tons, to ensure food security.

Despite the move, domestic rice prices rose between 100 and 200 per cent in one week in late April to up to 25 million dong (1,560 dollars) per ton, leading to panic buying of rice by Vietnamese consumers.

"Prices fell soon after that because Vietnam has a bumper rice crop this year, and world rice prices have also fallen," Nguyet said.

The country's total unhusked rice output is estimated at 37 million tons in 2008, up 2.8 per cent against last year.

According to the Vietnam Food Association, Vietnam has this year exported 2.2 million tons of rice, earning more than 1.1 billion dollars. (dpa)