THE ECONOMIC SITUATION IN SOUTH VIETNAM
Document Type:
Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP82S00205R000200010023-7
Release Decision:
RIPPUB
Original Classification:
S
Document Page Count:
9
Document Creation Date:
December 20, 2016
Document Release Date:
August 25, 2006
Sequence Number:
23
Case Number:
Publication Date:
December 29, 1968
Content Type:
IR
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CIA-RDP82S00205R000200010023-7.pdf | 317.01 KB |
Body:
l-`/ airy
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]DIRECTORATE OF
INTELLIGENCE
Intelligence Rcp.rt
The Economic Situation in South Vietnam
($iweekly)
State Dept. review completed
USAID review completed
Secret
118
29 to cemkrer 19 6g
No. 0510/69
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Secret
WARNING
This document contains information affecting the national defense of the
United States, within the meaning of Title 18, sections 793 and 794, of the
US Code, as amended. Its transmission or revelation of its contents to or
receipt by an unauthorized person is prohibited by law.
~~ -- GROUPI
EXOLUDBD FROM AUTOMATIC
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
The Economic Situation in South Vietnam
Summary
The black market rate for dollars continued
to rise sharply to a new high of 315 piasters per
dollar on 16 December. Political uncertainty
caused by US troop withdrawal and the government's
recent tax measures have resulted in increased de-
mand for dollars, while new US regulations on cur-
rency transactions have begun to reduce the supply.
Following several weeks of relative stability,
the USAID retail price index for Saigon rose three
percent during the week ending 15 December. Higher
food prices probably were the result of a temporary
shortage of some items due to Viet Cong sabotage
of two bridges on Route 4 in the delta.
Employment in the US sector of the economy
rose to a new high during the year ending 30 June
1969, but has since declined as US military units
and US companies under contract to the military
have begun a cutback in personnel. Employment of
third country nationals continues at peak levels,
but is scheduled to decline 80 percent during the
next two years as more Vietnamese are trained to
take over the jobs now held by skilled foreign
workers.
ANNEX: Currency and Gold Prices (Graph)
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Currency and Gold
1. Black market prices of both dollars and
gold jumped sharply to new highs during the week
ending 16 December. The price of dollars rose 21
piasters to 315 piasters per dollar, and the price
of a dollar's worth of gold leaf jumped 48 piasters
to 415 piasters. The rate for MPC (script) in-
creased less sharply--from 143 to 150 piasters per
dollar. in addition to political considerations,
particularly the impact of the US troop withdrawal,
there apparently have been several economic factors
operating during the past several weeks to place
greater pressure on the market. On the demand
side, the increased austerity taxes on imports have
made the price of smuggled goods more attractive
and thus increased the demand for black market
dollars to pay for them. In addition, rumors of a
currency exchange and/or devaluation are widespread,
encouraging people to convert piaster holdings into
dollars. Although it may not have a large impact
on the monetary situation, it is interesting to
note that the Viet Cong have been admonishing their
cadre to reduce holdings of piasters in favor of
goods and dollars for these same reasons. While
the demand for dollars has increased, the new con-
trols on postal money orders
apparently have begun to reduce the supply of dol-
lars on the black market. As the demand for dol-
lars increases and the supply is reduced, the black
market price of dollars can only go up. (A graph
on monthly and weekly currency and gold prices is
included in the Annex.)
Prices
2. Retail prices in Saigon rose three percent
during the week ending 15 December, mainly because
of higher food prices. The increase in food prices,
which had declined steadily for several weeks,
probably was related in part to the Viet Cong's
destruction of two bridges on Route 4 near Can Tho
on 12 and 13 December. Route 4 is the major com-
mercial link between Saigon and the delta, and
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traffic delays may have caused temporary shortages
on some foodstuffs. On 15 December the USAID in-
dex was 36 percent above the level at the begin-
ning of 1969. The price index for imported com-
modities was unchanged during the week ending 16
December, at a level 75 percent above that prevail-
ing at the beginning of the year.
USAID Retail Price Indexes for Saigon
-
7
(1 January-1367
7
100)
All Items
Food Items
2
Jan
1968
308
344
241
6
Jan
1969
400
443
319
1
Dec
1969
537
616
381
8
Dec
1969
529
609
382
15
Dec
1969
543
627
388
US Sector Employment
3. Employment of Vietnamese and third country
nationals (TCNs), mostly Koreans and Filipinos, by
US agencies and contractors in South Vietnam
reached an all-time high at the end of June 1969,
despite the fact that US military construction
activity reached a peak near the end of 1966. As
shown in the table below, US contractors laid off
large numbers of Vietnamese between the end of 1966
and mid-1967. During the year ending 30 June 1968,
however, total US sector employment rose, with the
military categories accounting for most of the in-
crease. The increase in hiring during that period
was due primarily to the demand for services by
the steadily growing US military establishment and
to reconstruction activity following the 1968
enemy offensives.
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Employment in the US Sector
(in thousands)
31 Dec
30 Jun
30 Jun
30 Jun
30 Sep
1966
1967
1968
1969
1969
I. Vietnamese 142
132
146
160
153
US Civilian Agencies
3
4
5
4
4
US Military
81
81
89
99
96
US Contractors to
the Military
57
45
50
55
51
US Contractors to
Civilian Agencies
1
2
2
2
2
II. Third Country
III. American
10
11
13
13
11
Total
167
160
175
193
184
4. The reasons for the increase in employment
during the 12 months ending 30 June 1969 are not
clear, but there apparently were a number of con-
tributing factors. US contractors have been in-
volved in the repair and improvement of roughly
3,000 miles of South Vietnam's roads and rail lines
and the modernization and improvement of Vietnamese
military installations. During this period the
demand for services and maintenance at US military
bases probably continued to grow, and in some in-
stances Vietnamese civilians took over jobs
formerly filled by US military personnel. Finally,
employment of TCNs, who are mainly skilled workers,
reached a new high because mobilization reduced
the supply of skilled Vietnamese labor.
5. During the third quarter of 1969 employment
in the US sector declined five percent as US con-
tractors cut back both Vietnamese and American
personnel. Employment of Vietnamese at US military
installations also declined somewhat, probably as
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a result of the initial reduction of US forces in
South Vietnam. TCNemployment remained stable,
but is likely to decline during 1970 as US-Viet-
namese discussions now under way probably will open
up more employment opportunities for Vietnamese.
6. The Vietnamese have always resented the
fact the TCNs had to be brought into the country
to do work for which Vietnamese were not trained.
In addition, the government has had difficulty
regulating the entry of TCNs, many of whom are in
the country without valid visas or work permits.
To impress upon both US officials and contractors
its displeasure with the growing number of TCNs,
the Vietnamese Government periodically has allowed
large numbers of applications for work permits
and visas to pile up. In September, however, US
and Vietnamese officials agreed to discuss ways of
reducing the number of TCNs in South Vietnam, and
in mid-December the South Vietnamese Government
announced that foreign employees of US contractors
will not be required to pay the permit fee. Ac-
cording to US officials, a plan is being considered
which would reduce the number of TCNs to a maxi-
mum of 4,000 by the end of 1971.
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Ap
Saigon Free Market Gold and Currency Prices
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