FRENCH OWNED RUBBER PLANTATIONS IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP71T00730R000400330007-6
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: November 9, 2016
• Document Release Date: June 2, 1999
• Sequence Number: 7
• Publication Date: September 16, 1966
• Content Type: REPORT

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Approved For Release 1999/09/16 : CIA-RDP71 T00730R000400330007-6
16 Scptemlier it 6
Supplement to
French-Owned Rubber Plantations in South Vietnam
1. As a result of the recent economic reforms in South Vietnam,
the basic exchange rate given on page 3 of the April study is no
longer valid. Effective 18 June 1966 the official exchange rate of
35 piasters to US $1 was changed to 80 piasters to US
exchange transactions became subject to a surtax of 38 piasters per
US $1, yielding an effective rate of 118 piasters to US $1. In
addition, an export tax of 32 piasters per US $1 was levied on all
exports of rubber.
2. The following new data should be added to Table 2,
Production of Rubber:
December 1965
6.2
Total 1965
56.8
January 1966
3.4
February 1966
0.2
March 1966
1.5
April 1966
3.5
May 1966
4.1
3. The following new data should be added
Exports of Rubber from South Vietnam:
September 1965
6.0
January 1966
1.0
October 1965
4.4
February 1966
6.5
November 1965
5.6
March 1966
3.5
December 1965
5.2
April 1966
0.8
Total 1965
63.8
May 1966
3.3
330007-6
Approved For Rele , e+ti
 Approved For Release 19.99/09/16 :, CIA~RDP7,1 T00730R00g44 j099 6
French-Owned Rubber Plantations in South Vietnam
cnerai To -i'ont,J
1. Production
The production of rubber at the large plantations (plantations
of more than 500 hectares) in South Vietnam through April 1965 was
comparable to 1961+ levels, but since that time production has
been well below that of 1961 .as Table 2 shows. This decline has
resulted primarily from growing insecurity, military action, and
transportation difficulties in the plantation areas. Thuan Loi
and Phu Rieng plantations in Phuoc Long Province ceased pro-
duction in June 1965 as a result of air strikes 'during the Long
Xoai battle. In October 1965, the Dau Tieng and Ben Cui plan-
tations in Binh Duong Province also stopped production as these
areas came under increasing VC control. Transportation has become
a major problem for the plantations which must ship their rubber
to Saigon and procure food, petroleum, and other supplies for the
operation of the plantations. Periodically, the GVN supplies
armed convoys for these purposes and a tax payment to the VC can
apparently guarantee some additional transport.
2. Financial Situation
As a result of these factors and the increasing costs of
plantation needs, workers` demands for wage increases, a decline
in the world price of rubber, and an unfavorable exchange rate
for rubber exports, the profitability of rubber production at the
French plantations has been declining. The most recent detailed
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 Approved For Release 199910.9/1.6: CIA RDP 71_T.Q073OR000400330007-6
data available on the profits earned by the major French-owned
rubber companies in South Vietnam is for the year 1963. These
data show a total profit of roughly 230 million piasters dis-
tributed by company as follows (in millions of piasters):
Terres Rouges
49
gIPH
8L
C0
36
Michelin
38
Tay Ninh
12
LCD
11
SPCK
1
Xuan Loc
N.A.
-Phouc Hoa
N.A.
CHPI
N.A.
The profit of 230 million piasters in 1963 was realized on total
sales of 1,530 million piasters. Taxes amounted to roughly 500
million piasters and wages and other expenses totaled. about 800
million piasters. It should be noted that not all profits can
be transferred. In 1963, it appears that roughly 60 percent of
declared profits were transferable at the rate of 73.j piasters
to US $1. Although data on profits in 196+ and 1965 are not
available, it is believed that profits declined in these two
years.
As a result of this declining profita:oility, the French
planters have sought to reduce their expenses by cutting back
on fertilization and other care normally given to the trees,
thereby further reducing production. Moreover, new plantings,
which normally should take place at an annual rate of 3 percent
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 Approved For Release 1999/09/16 : CIA-,RDP71T00730R000400330007-6
of the planted area, have boon reduced or stopped. This action
will have serious long run consequences. Rubber trees generally
do not yield latex until 7 years and usually cease yielding at
33 Years. In 1901., the age of the rubber trees at the large
plantations in South Vietnam was as follows (in percent):
More than 33 years 34+
28 to 33 year,; 14
18 to 27 years 24
13 to 17 years 2
8 to 12 years 3
1 to 7 years 23
The basic exchange rate for exports in South Vietnam is 60
piasters to US $1 (35 piasters plus a uniform subsidy of 25
piasters). Since 1962, however, the GVT+ has imposed a tax on
the export of rubber which yields a real rate of exchange for
rubber of only 4+6 piasters to US $1. This real rate of 11-6 is
not only below the basic rate of 60, but is considerably below
the real rate of exchange for several new export items which,
because of heavy subsidies, are exported at a real rate of 1.20
to 150 piasters to US $1. The French planters have argued
repeatedly that the decline in the world price of rubber should
bring about a change in the export tax as is the case in Malaysia
where the rate of the export tax on rubber is tied to the world
price of rubber.
In addition to the export tax, the French-owned plantations
pay several other taxes. Of the total amount of taxes paid in
1963 by the ten major French-owned rubber companies listed in
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 Approved For Release 199909%%. CIA-RD .lit' 6Q73OR000400330007-6
the export tax accounted for 70 percent; land tax, 6 per-
cent; business income tax, 10 percent; consumption tax, 3 percent;
general tax, 6 percent; and other taxes, 5 percent.
According to French sources, French assets in the rubber
plantations in South Vietnam totaled roughly $100 million at the
end of 1963. Detailed data on capital investments and current
money value of each French-owned plantation are not available.
The director of Plantations des Terres Rouges estimated that the
capital value of the five plantations operated by his company is
roughly 925 million piasters, including industrial equipment.
3. - Exhorts '
As a result of the decline in production and VC hindrance
of the transport of rubber to Saigon, rubber exports have declined,
amounting to only 62,000 tons in 1965 compared with 72,000 tons in
1964. (Sae TWO 3). In spite of this decline, however, rubber
still is South Vietnam's most important export. It is estimated.
that in terms of value roughly 70 percent of total exports in 1965
consisted of rubber. France continues to be the most important
market for Vietnamese rubber, accounting for about half of total
exports of rubber. Germany, the UK, and Japan have purchased
most of the remainder in recent years as Table 4+ shows.
Although rubber exports occupy a key place in South
Vietnam's total exports, these exports are small in terms of
world exports of natural rubber. In 1965, for example, South
Vietnam's exports of 62,000 metric tons accounted for only
4 _
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3 percent of total world exports of natural rubber. For this
reason and because South Vietnamese rubber is of high quality,
it would appear that these exports could be absorbed elsewhere
should France curtail its imports of rubber from Vietnam. In
1965, for example, the U.S. imported 420,000 metric tons of
natural rubber. Of this anion , only 205 tons had come from
Vietnam during January-August. Further, U.S. consumption of
natural rubber in 1965 was 520,000 i,.etric tons, of which
100,000 tons came from the U.S. stockpile.
According to the Annuaire Industrial and Commercial Viet-
Nam, there are some 47 firms in Saigon-Cholon handling the
export of rubber from South Vietnam. Among the ten major French
rubber companies listed in Table 1, the following handle their
exports through their own export firms in Saigon: Plantations
des Terres Rouges, Societe indochinoise de Plantations d'Heveas,
Societe des Caoutchoucs d'Extreme-Orient, Societe 'des Plantations
et Pneumatiques Michelin, and Compagnie des Hauts Plateaux
Indochinois.
4. Labor Force
It is estimated that there are roughly 200,000 people residing
on French-owned rubber plantations in South Vietnam. Of this total,
40,000 are actually engaged in the production of rubber. Approxi-
mately 34,000 of the 40,000 are permanent workers and 6,000 are
employed on a part-time basis. Only about 200 of the total are
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believed to be non-Vie-tnwunese. In 1963, the total labor force
of 40,000 was broken down by type of worker as follows:
Senior Administrators
1100
Professional and
Technical Personnel
1150
Office Employees
1,200
Skilled Workers
21,000
Unskilled Workers
8,000
Apprentices
1.00
Part-Time Workers
6,000
Almost all of these workers are members of the Federation of
Plantation Workers union, an affiliate of the national
Confederation of Vietnamese Workers (CVT). These workers are
covered by a labor agreement which was first signed in March
1960. Since that time the agreement has been amended by agree-
ment between representatives of the Federation of Plantation
Workers and the Plantation Owners' Association. The most
recent negotiations between these two groups took place in
January 1966 when the Federation of Plantation Workers sought
a 5 percent wage increase. The Plantation Owners' Association
maintains that a wage increase must be preceded by a GVN
increase in the rate of exchange for rubber exports.
Because of the low salaries and the insecure conditions
at many of the plantations, some workers have left the plan-
tations. The personnel managers of the principal U.S.
contractor in Vietnam (Raymond, Morrison and Knudsen-Brown,
Root, and Jones) have recently discussed the recruitment of
these workers with CVT leaders. .
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