THE ECONOIMIC SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82S00205R000200010046-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 20, 2016
• Document Release Date: August 28, 2006
• Sequence Number: 46
• Publication Date: February 17, 1969
• Content Type: IR

Ap ro ed For Release 2007/03/08: CIA-RDP82S00205R0002Mdt-2
DIRECTORATE OF
INTELLIGENCE
Intelligence Report
The Economic Situation in South Vietnam
(Weekly)
State Dept. review completed
USAID review completed
Secret
1_.' 9
17 February 1969
No. 0481/69
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III
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25X1
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.
GROUP 1
ZX LUDED FROM AUTOMATIC
DOWNGRADING AND
DECLANNrnOATION
Secret
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
The Economic Situation in South Vietnam
Summary
Japanese businessmen and the Japanese Government
are not ready to invest immediately in the economy
of South Vietnam, but they continue to prepare for
the future. One group of Japanese businessmen re-
cently toured the country and others are planning
to follow.
The West German Government has loaned the
government of Vietnam $3.5 million to build a modern
slaughterhouse in Saigon.
Retail prices in Saigon declined slightly for
the second consecutive week in the pre-Tet period--
usually a time of rising prices. Prices of imported
commodities also declined slightly. Free market
currency and gold prices were mixed during the week
ending 3 February.
ANNEX: Weekly Retail Prices in Saigon (Table)
Monthly and Weekly Currency and Gold
Prices (Graph)
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Japanese Interest in Postwar Development
1. Japanese businessmen and the Japanese
Government still are interested in the economic
future of South Vietnam, but are not yet ready to
invest their money there. According to US Embassy
officers in Tokyo, most Japanese businessmen are
unwilling at present to do more than discuss in-
vestment possibilities. The Japanese Foreign
Ministry proposal for including $33 million for an
International Fund for the Rehabilitation of Indo-
China in the 1969 budget was vetoed by the Ministry
of Finance as premature. Nevertheless, both
private business and the government are preparing
now for greatly increased economic involvement in
the future. A group of Japanese businessmen re-
presenting the Keidanren, a federation of private
economic organizations, left South Vietnam on
7 February after touring the country for 12 days
on a fact-finding mission, and other groups are
planning similar visits. The Foreign Ministry
plans to send a team to South Vietnam to investi-
gate possibilities for projects and technical as-
sistance in the immediate post-hostilities period.
Two of Japan's largest auto makers, Nissan and
Toyota, have announced that they have begun "full-
scale studies" concerning the establishment of
motor vehicle assembly plants in South Vietnam.
2. According to press reports, the Keidanren
representatives spoke candidly to Saigon business-
men about the investment climate in Vietnam. Among
the reasons cited for Japanese reluctance to in-
vest were unfavorable Vietnamese investment regula-
tions, unstable market. prices, and the military
situation. Prior to the visit, Keidanren officials
had indicated that some construction of production
facilities could begin under present security con-
tions. The delegation also emphasized that the
main interest of the Japanese business community
is in the development of agriculture and related
industries. The Japanese agreed to form a joint
Japanese/Vietnamese group to study postwar projects,
but insisted that membership be limited to the
private sector. Keidanren spokesmen earlier had
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indicated that South Vietnamese Government repre-
sentatives would be included in such a group.
3. The Keidanren group was invited to South
Vietnam by Minister of State Thuc who heads the
joint American/Vietnamese postwar planning group.
Thuc reportedly was very pleased with the visit
and said he believed that the Japanese presence
had helped to restore the confidence of the Viet-
namese business community in the future of their
own country and to discourage Vietnamese from
transferring their funds to foreign countries.
New Saigon Slaughterhouse
4. The West German-Government has loaned the
government of South Vietnam $3.5 million for the
construction of a modern slaughterhouse in Saigon.
The agreement calls for repayment of the.loan
over the next 25 years with an interest rate of
three percent per year. West Germany also agreed
to provide technical assistance during the instal-
lation:and initial operation of the slaughterhouse.
The new plant will have the capacity to process
2,400 hogs and 300 cattle per day. It also will
have refrigeration and freezing facilities and
equipment for extracting protein, processing hides
and bones, and making fertilizer. According to
Minister of Economy Ho, the plant will be built
within two years and will be managed by private
business interests. Currently, the only large
slaughterhouse in the Saigon area is the government-
run Chanh Hung slaughterhouse in Cholon, which re-
portedly can process only about 700 hogs per day,
while the city's normal consumption requirement is
1,300 hogs per day.
5. The hog population has been declining
steadily during recent years, but as part of the
joint US/GVN protein production program, efforts
are under way to increase the output of pork by 10
percent per year. In the early 1960's South Viet-
nam was an exporter of live pigs, but during the
past three years has imported both live pigs and
frozen pork.
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6. Retail prices in Saigon declined slightly
for the second consecutive week--an unusual develop-
ment during a pre-Tet period when prices normally
rise. During the week ending 3 February food
prices fell three percent because of lower prices
for rice, fish, shrimp, and chicken, while nonfood
prices declined two percent as the result of lower
prices for firewood, charcoal, and calico. Prices
of most grades of domestic rice fell for the first
time since early October. The price of calico de-
clined for the first time since early December,
reportedly because little time remains for making
new clothes before Tet (17 February). The embassy
reports that the unexpected decline in the price
level stems from a combination of factors including
heavy import arrivals and secure highway transporta-
tion, which is allowing ample supplies of domestic
products to reach the market. (A table of weekly
retail prices in Saigon is included in the Annex.)
7. The USAID price index for selected imported
goods also declined slightly for the second week.
During the week ending 4 February the index de-
clined to a level only eight percent above that
prevailing at the beginning of 1968 as prices of
building materials, chemicals, fertilizer, motor-
bikes, radios, and sugar fell slightly.
Currency and Gold
8. Saigon free market currency and gold
prices were mixed during the week ending 3 February.
The price of dollars declined two piasters to 190
piasters per dollar, while the rate for MPC (scrip)
increased one piaster to 152 piasters per dollar.
The price of a dollar's worth of gold leaf was un-
changed at 282 piasters per dollar. (A graph on
monthly and weekly currency and gold prices is in-
cluded in the Annex.)
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sleekly Retail Prices in Saigon)
2 Jan
6 Jan
13 Jan
20 Jan
27 Jan
3 Feb
1968
1969
1969
1969
1969
1969
Index for All Items 308
400
394
405
02
393
Index for Food Items ILL
443
434
448
LZJ-
433
Of Which:
(In Piasters)
Rice-Soc Nau
(100 kg.)
2,500
3,100
3,200
3,250
3,250
3,200
Pork Bellies
(1 kg.)
220
260
230
220
220
220
Fish-Ca Tre
(1 kg.)
230
310
300
340
330
310
Nuoc Mam (jar) 150
220
220
220
220
220
Index for Nonfood Items
241
319
21
325
24
19
C- :Which:
(In Piasters)
Firewood (cu. meter) 600
800
800
800
780
760
Cigarettes (pack) 14
22
22
22
22
22
White Calico ~, e ter) 52
82
85
90
92
8C'
Kerosene (liter) 9
10
10
10
10
10
a. Data are from `oID sources. For indexes 1 Jan 1965 = 1000
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PIASTERS PE
R US DOLLAR
31 JAN
282
192
I f~ 0 d and Cu rency Prices
5
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