THE ECONOMY OF SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500200009-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 27
• Document Creation Date: December 9, 2016
• Document Release Date: August 10, 2000
• Sequence Number: 9
• Publication Date: March 1, 1973
• Content Type: REPORT

 ~L ?'z/ 4L.L''r
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Confidential
DIRECTORATE OF
INTELLIGEN( E
Intelligence Handbook
The Econo~iy of South Vietsiam
iron ~ iaential
ER H 73-1
March 1973
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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 re-
ceipt by an unauthorized person is prohibited by law.
Classified by 015319
Exempt from genorol
declassification schodulo of E.O, 11652
exemption catogory 58(12,(2),(3)
Automatically declassified on
Date Impossible fo Doformine
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CONTENTS
Page
Introduction 1
Discussion 1
General 1
Population and Labor Force . 4
Land and Resource Base . 7
Transportation . 8
Domestic Trade and Finance 11
Domestic Trade 11
The Financial System 11
Agriculture 12
Industry 15
Government Finance 16
Foreign Trade and Aid 19
1. Labor Force, 1972 7
2. Output of Selected Agricultural Products 13
3. Output of Selected Industrial Products 16
Figures
1. Gross National Product
. 2
2.
Population
5
3.
Administrative Divisions and Military Regions
. 6
4.
Land Use, 1972.
. 8
5.
Land Utilization and Vegetation
. 9
6.
Production, Exports, and Imports of Milled Rice
;4
7.
Yanmar Agricultural Machinery Plant in Bien Hoa Industrial
Park and Yanmar Machinery for Sale in Ban Me Thuot,
Darlac Province
17
8.
Government Budget
18
9.
Value of Foreign Trade
20
10.
Composition of Imports
21
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mouth Vietnam
Railroad
Road
Z6 60 76 Milse
Z6 60 76 Kflomelore
501 ~~rove or a ease
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CENTRAL INTELLIGENCE AGENCY
Directora?e of Intelligence
March 1973
INTELLIGENCE HANDBOOK
THE ECONOMY OF SOUTH VIETNAM
INTRODUCTION
1. This handbook is designed to serve as a reference for basic
economic information on South Vietnam and complements one recently
published on North Vietnam.l For easy comparison, some basic economic
data for both countries are presented on the last page of this handbook.
Most of the data included in this handbook are unclassified and are based on
information released by the South Vietnamese government and the various
US government agencies represented in South Vietnam. Estimates were made
in instances where data were unavailable or incomplete.
2. Witll a per capita gross national product (GNP) of about US $120,
South Vietnam ranks above other countries of Indochina but significantly
below most other less developed countries of Southeast and East Asia.
Despite wartime destruction and disruption, South Vietnam's GNP has
grown at a respectable rate since 1964. In large part, this has been the result
of the growth of government services and construction associated with
military activities. Agricultural production declined during the peak war
years of 1965-68, while industrial output continued to expand until 1968,
1. Sce CIA ER H 72-2, The Economy of North Vietnam, December 1972, CONFIDENTIAL/NO
POREiCN DISSEM.
Note: Comments and ueries re ardin this publication are welcomed. They
may be directed the Office of Economic Research, 25X1 A
Code 143, Extension 6202.
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when plant damage from the enemy's Tet offensive caused a sharp decline.
During 1969-71, there was substantial recovery and growth in both
agriculture and industry, but the North Vietnamese offensive brougl-,t
growth to a Halt in 1972.
3. As a result of the rapid expansion of government expenditures, the
services sector of the economy currently accounts for more than half of
national output in what is basically an agricultural country (see Figure 1).
Agriculture, including fishing and for-
estry, contributes only about one-third to
national output, althuuglt it employs
more than 60% of the labor force. In-
dustry runs a poor third, accounting for
an estimated 12% of GNP and about 5%
of the labor force.
4. Tlie years of war have badly
distorted resource allocation in Soutli
Vietnam's economy, but have also
brought some important new assets. Tlie
growth of the private sector was buffeted
by changing security conditions and con-
Figure 1
Gross National Product
~s~2
bers of prime-age males into the armed
forces. Exports were nearly wiped out, and dependence on imports increased
greatly. The country shifted from a surplus to a large deficit in food. A
greatly increased urban population lead to be supported largely through
imports, which in turn created an appetite for modern imported consumer
goods. Because of the availability of relatively cheap imports, manufacturing
became largely a matter of processing imported raw materials. On t11e other
hand, gains to the economy included large-scale training of the population in
new skills and a fairly elaborate infrastructure in the form of ports, airfields,
and roads. Moreover, most of South Vietnam's productive facilities came
through the war with little damage.
5. The war also had a dramatic impact on monetary developments.
During 1965-72, consumer prices in Saigon increased nearly 900% and the
money supply more than 600%. The growth of demand, fed by massive
defense spending, greatly outstripped the productive capabilities of the
South Vietnamese economy. Even with large-scale foreign aid, there were
many goods and services for which the increase in demand could not be met
by imports. As a result, inflationary pressures were severe, alt}totiglt not
nearly so severe as in South Korea during the Korean War.
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6. Although many of these pressures are still present, there has been a
significant slowdown in the rate of price increases since 1970. This has been
due in large part to various economic reforms, including the adoption of
realistic-and fairly flexible-exchange rates and higher interest rates and the
relaxation of controls on domestic and foreign trade. Compared with annual
increases ranging from 30% to 55% during 1965-70, consumer prices rose
14% in 197 ] and 24% in 1972.2 Although the 1972 performance shows
some deterioration, it nonetheless should be considered quite good in view
of the many supply disruptions caused by the offensive and the increasing
cost of imports with successive devaluations and higher world market prices.
7. Inflation and certain government policy decisions have effected a
major redistribution of income in Sout}> Vietnam since 1965. The real
incomes of some groups have declined substantially. Military personnel and
civil servants, who once were the top salary earners, have fallen well behind
their counterparts in the private (non-agricultural) sector, and they have
suffered an absolute decline in real income in recent years as their wages
failed to keep pace with rising prices. Income from other family members
helped to offset the decline for several years, but opportunities for increased
Family employment have diminished with the withdrawal of US forces. While
urban households in general have either held their own or suffered a decline
in real income, the income of fanners, at least in the Mekong Delta, has risen
substantially since 1969. Farmers leave benefited from rising yields, low
fertilizer prices, generally good procurement prices, and a near absence of
taxation. There are, of course, thousands of rural inhabitants who, as
refugees, have not shared in this relative prosperity.
8. Despite the upheavals and distortions caused by the war, South
Vieti:am has potential for rapid private sector growth. The basic questions
are how to expand production, stimulate exports, and reduce dependence on
imports without severely depressing per capita private consumption. In the
past year or so the government has begun to cope with some of these issues
by offering general incentives such as devaluations, an attractive investment
law, tax reform, and broad planning guidance to private-sector interests. The
governnent, however, probably will continue to be heavily involved in many
activities usually reserved For the private sector. Some investment projects
will be too large for private interests to undertake, and there is considerable
prejudice against the ethnic Chinese community, the largest and most
dynamic element in the private sector.
9. For the foreseeable future, South Vietnam will be heavily
dependent on foreign capital (principally in the form of official aid) to
sustain its present living standards. Some 95"l0 ~f its iml;orts in 1972 were
2. Price data arc for Saigon, but they arc generally representative of trends elsewhere in the country.
CGNFIDENTTAL
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financed either by US payments for local transactions or by outright US
assistance. Other countries have shown a growing interest in providing
economic support to South Vietnam, but there is likely to be an enormous
gap between their support and South Vietnam's requirements.
Population and Labor Force
10. South Vietnam has never had a national census. Sample surveys
over the years indicate that the population is about 19 million and has been
growing about 3% annually. Probably about three-fourths of the population
is below the age of 40, and females slightly outnumber males.
11. Almost two-thirds of the population lives in the flat southern half
of the country. Most of the remainder is concentrated along the narrow
coastal strip running from north of Saigon to the Demilitarized Zone (see
Figures 2 and 3). Saigon is the largest urban center, with a population
estimated at about 3 million for tlt~ entire metropolitan area. Witll more
than 400,000 persons, Da Nang is the second largest city, and there are
several cities throughout the country with populations of roughly 200,000.
12. Although the population is still predominantly rural, there has
been a fairly large migration from rural to urban areas since 1964. This
movement stemmed largely from the intensification of military operations in
the countryside and the job opportunities created by the US military
buildup. In addition, the expansion of the armed forces was accompanied by
a flow of military dependents to the cities. As a result, a larger share of the
population is located in urban areas than is true for most other less
developed countries.
13. The largest movements of people in South Vietnam leave involved
those driven from their homes by the fighting. Since the war began, more
than 7 million Vietnamese have been refugees at one time or another. In
1972 alone, more than a million persons became refugees, and more than
half of these still are in government camps waiting to be returned to their
villages cr to be resettled elsewhere.
14. These large-scale population movements make it particularly
difficult to trace changes in the labor force in recent years. Currently, the
labor force is estimated aY about 7 million people, with employment grouped
as shown in Table 1. Tlie major shift has been the increase in military and
civilian government employment, which I~as roughly doubled since 1964.
Manning the fourth largest army in the world caused a considerable drain on
the agricultural labor force and a tight labor market in general. Labor
participation rates have increased for women, the young, and the aged, but
this has tended to reduce ttte productivity of the civilian labor force. The
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Population
Persene per squero mile
0 50 250 b00 760
0 10 , ;~:=183 2B0
Persona per squero kllomeler
1968 eefimafad cenaut
V Deo
Phu puoc
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p~Dac
I~h~ DOO~CI
Kien~
~inng
llue:
Thua
Thicn
Tay
Ninh
An
xuycn
Ba Xuycn
W_
tau
ghia
61nh
Duon~
Vinh
6inh
Phuoc
Long
Phuoc
Tuy ,
Binh
Tuy
"61m
Thuan
Binh
Dinh
Khonh
Hoa
Ninh
Tltuan
Phu
Ycn
Administrative Divisions
and Military Regions
--~~~~- Military rogion boundary
Provinco boundary
11u0 Autonomous municipality
:Yynp_Ilu
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Labor Force, 1972
Million
Persons
Percent
of Total
Total
7.0
100
Government sector
1.4
20
Military
1.1
16
Civilian
0.3
4
US sector
0.1
1
Private sector
5.5
~~
Agriculture
4,0
58
Forestry and fishing
0,4
6
Manufact!~ring and
construction
0,4
6
Commerce
0,3
4
Domestic servants
0,1
1
Other
0.3
4
labor market has eased somewhat during the past two years with the
accelerated US withdrawal Although the resulting unemployment has
caused problems in some urban areas, these have been minimized by a
number of factors, including assistance from the traditionally strong family
system and the fact that more than half of the jobs created by the US
presence have been ltcld by women, many of whom have again dropped out
of the labor force.
Ladd and Resource Base
15. South Vietnam, with an area of about
66,000 square miles, is about 700 miles long and
ranges in width from about 40 miles in the north to
120 miles in the south. Most of the northern
two-thirds of the country consists of sparsely popu-
lated mountains and hills, while the southern third is
a densely populated flat plan: consisting of the Dong
Nai and Mekong River Deltas.
501031 2-73
16. South Vietnam's major natural resource. is relatively abundant and
fertile farmland. At present, only about 60% of the arable land-about 15%
of the country's surface area-is under cultivation. Hardwood and pine
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forests, which make up one-third of the
land area, as shown in Figure 4, also
represent a largely untapped resource with
significant potential. South Vietnam's
metal and mineral resources are relatively
unexplored. The only minerals being ex-
ploited commercially are limestone, silica
sand, clay, and salt. Recent surveys leave
indicated a potential for offshore oil
reserves, but test drilling has been delayed
by the uncertain political and military
situation.
Land Use
1972
17. Security conditions have
affected the exploitation of other poten-
tially valuable resources as well. This is especially tn;e for farming, forestry,
rubber production, and, to a lesser extent, for fishing. The escalation of the
war in 1965 caused a decline in cultivated area of about one-]lalf million
hectares (more than 15% of the total cultivated area shown in Figure 5)
during 1965-67, but some of this land hay since been brought back into
cultivation. The primary development i;l land use in recent years leas been
the increased amount of double-cropping with both rice and vegetables. This
has been made possible by the fairly widespread introduction of small water
pumps that enable farmers to irrigate their plots in the dry season. Most of
the large-scale water control systems in existence prior to the war have either
been damaged or neglected. Although constructiun of new systems is under
way in some areas (both for irrigation and to prevent salt water intrusion),
South Vietnam is far behind many other Southeast Asian countries in terms
of the amount of cultivated land subject to water control.
Transport ~tion
18. The mainstay of the transportation system is the 12,500-mile road
network. The basic network was developed under the French and extended
and rehabilitated with US aid. Highways provide access to more regions of
the country than any other mode and carry most of the freight moved by
the transport system. Data are not available on tonnage carried by motor
carriers, but the increased ;use made of the road network is reflected in truck
registrations, which climbed from 37,000 in 1966 to 90,000 in 1970.
19. The basic Highway network is generally laid out in a nortl;-south
pattern centered on Saigon; the major port and hub of economic activity.
From the standpoint of commerce and the number of people served, the
most important roads are Routes 1 and 4, which link Saigon with the
northern part of the country and the Meko;tg Delta, respectively. Although
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I~~nd Utilization
and Vegetation
CULTIVATED AREAS
Rico
,.~ Tree crops, chiefly rubber
e Vegetable crops
NONCULTIVATED AREAS
+"~` Forest
Q Grassland
Marshes and other
inundated vogetation
Mangrove
1t'Dao
Phu puoc
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the road network is an important asset for future economic development,
the cost of maintaining it will be quite High.
20. The railroad system in South Vietnam was built by the French
during the colonial period and consists primarily of one line paralleling
Route 1 along the coast. Before World War II the system linked Saigon and
Hanoi and also connected with the Chinese rail network. Currently
consisting of 780 miles of meter-gauge single-track lines, only about half of
the main rail network is available for service because of war damage. This
system, which has no international connections or electrified lines, is
operated by the government-owned South Vietnam National Railway.
During 1965-71, use of th~~ rail system declined from 127 million metric
ton-kilometers to only ~8 million ton-kilometers.
21. The Vietnamese ~ lave always made extensive use of natural
waterways and man-made canals, most of which were built by the French
during 191 ~-30. South Vietnam has almost 3,000 miles of navigable inland
waterways, 80% of which are located in the Mekong Delta. Water transport
declined during the peak war years because of insecurity and lack of canal
maintenance. Improved security in the past three years, however, has
permitted increased use of waterways, and it is likely that waterways will
once again become the chief means of transporting produce, especially rice,
out of the Delta.
22. South Vietnam's long coastline and good Harbors in the northern
half of the country give it an excellent natural base: for expansion of coastal
and ocean-going shipping. During the late 19FOs, ports underwent rapid
development as a result of growing military logistical requirements. In 1959,
South Vietnam had one major port, Saigon, with a rated capacity of 8,400
tons per day. The only other port of any size was Da Nang, which was rated
at 2,000 tons per day. By 1972, Saigon's daily capacity lead climbed to
14,800 tons and Da Nang's to 12,250 tons, and new facilities had been built
at Cam Ranh Bay (6,700 tons per day), Qui Nhon (6,300 tons per day),
Vung Tau (2,550 tons per day), and Vung Ro near Nha Trang (2,000 tons
per day). The capacities of all ports except Saigon are being reduced to some
extent by the removal of some of the portable piers and other structures
erected by US forces.
23. The merchant fleet of South Vietnam is~ small, consisting of six
freighters of more than 1,000 deadweight tons. Coastal shipping expanded
considerably (with the use of leased vessels) when the railroad and roads
were interdicted in the northern part of the country. Improved security and
expansion of facilities in the northern ports for ocean-going vessels, however,
have resulted in a decline in coastal shipping since 1969.
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24. War requirements spurred development of air transport. South
Vietnam's civil air service now includes both domestic and international
operations by the national airline-Air Vietnam-and by nine foreign carriers.
Air 'vietnam connects Saigon with 23 other cities in South Vietnam. There
are over 140 weekly ciomcstic flights of DC-3s and DC-4s, ranging from two
to more than 20 flights per week between individual cities. Air Vietnam also
has routes extending to Laos, Cambodia, Taiwan, Japan, the Philippines,
Singapore, Malaysia, Hong Kong, and Thailand. Its aircraft inventory consists
of three Boeing 727s, two DC-6s, 16 DC-3s and DC-4s, and four smaller
planes.
Domestic Trade and Finance
25. Despite war disruptions, the free market distribution system in
South Vietnam has continued to function relatively effectively. The major
effect of hostilities has been the periodic shortage of basic commodities as a
result of temporary road interdiction. However, some traditional market
patterns have changed because of the war. Rice marketing, for example, is
now handled partly by the government, which sets the prices of imported
rice and distributes it and frequently purchases domestic rice in the Mekong
Delta for shipment to the northern rice-deficit provinces. The government
also attempts to influence domestic trade by maintaining price controls on
almost all commodities. These controls arc difficult to administer, and prices
vary widely from permissible limits. In addition, the government periodically
attempts to control the flow of goods throughout the country-and thus
limit Communist supply sources-by its operation of control checkpoints on
reads and waterways.
The Fi~tn~rcial System
26. South Vietnam's financial system is still relatively small and
immature, but its operations and efficiency have bec:~ much enlarged and
improved by recent reforms. The banking system consists of the National
Bank of Vietnam (the central bank), several commercial banks (the largest of
which is govcrnmcnt-owned), and several public credit institutions. The
major institutional sources of credit arc the commercial banks; noninsti-
tutional I~:nders (such as moneylenders, pawnshops, informal credit pools,
employers, landlords, friends, and relatives) still provide a major share
(probably more than half) of the credit to the private sector.
27. The organized financial system is only just beginning to play an
influential role in the economy. Until a few years ago there were virtually no
institutional sources of credit in rural areas. Now, private rural banks
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(approximately half of their capital provided by the govcrnmcr.l) arc
springing up throughout the country. Combined with the provincial branches
of the government's Agricultural Development Bank, the organized financial
system is providing agrowing-although still small-share of the credit needs
of the rural population.
28. Two other recent developments also have contributed to the
improvement in South Vietnam's financi~il system. They arc the increasing
size and activity of public credit institutions and interest rate reform. With
incrcascd funds and more vigorous leadership, development lending institu-
tions sharply incrcascd investment loan authorizations in 1972 despite great
uncertainty resulting from the offensive. The increase in hostilities did,
however, cause the postponement of the spending of most of these
authorized funds.
29. The interest rate reform in late 1970, which approximately
doubled both lending and deposit interest rates, was a major factor in the
relative economic stability in both 1971 and 1972. lay making interest rates
more accurately reflect inflation and real risk, the banking system was able
to attract a muc}t larger share of people's money incomes. Tltis slowed the
rate of growth of tnoncy supply, reduced speculative consumer purchases,
and improved popular attitudes toward the banking system. During the 1972
Communist offensive, for example, savings and time deposits rose substan-
tially.
Agriculture
30. Agriculture is the major economic activity in South Vichtam and
supplies nearly all of the country's exports. Most resources arc devoted to
rice production, alth~~igh in recent years increasing emphasis has been given
to other crops-particularly vegetables-and to livestock production. Fishing
and forestry combine to make up about 15% of the total value of
agricultural output, a share likely to rise fairly rapidly with the increasing
development of these resources for the export market.
31. Decreases in cultivated area and dislocation of the farm labor force
resulted in a decline in agricultural production of about 12~"o duriny~ the peak
war years. Starting in 1969, }towcver, i-nprovements in security, adoption of
new technology, and generally favorable price inc?ntives for farmers brought
about a rapid recovery. By 1970, output Itad surpassed the 1963-64 level,
with annual growth averaging about 9%n during 1969-71. Production
probably did not increase at all in 1972 because of disruption from the
enemy offensive and bad weather.
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32. Iticc is grown in all 44 provinces and ~~n rouZ;hly $0"/r~ of the
cultivated urea of South Viehrun. Most crops (sec Table 2) arc raised on
small family I'urms. Unly a few crops such as rubber, lcu, and col'1'ec arc
grown conurercially on plantations, many of which have been damaged or
Output of Selected Agricultural Products
1964
19G~4
1969
Tkvusrrud Mclrlr Tvns
1970
1971
Coff'cc
C
3
3
4
4
4
orn
F
it
4G
32
31
31
34
ru
s
M
i
526
420
440
473
498
an
oc
P
t
289
260
234
216
270
eanu
s
Rl
"
3G
32
34
32
37
cc (paddy)
R
bb
5,327
4,688
4,366
5,115
5,715
u
er
S
74
34
28
33
38
ugar cane
S
1,055
426
321
336
340
weet potatoes
T
301
'135
226
220
230
ca
5
5
5
5
G
Tobacco
V
7
8
8
8
y
egetables
108
193
235
Milllo-r N
t
21 g
244
Coconuts
141
111
u
s
98
118
125
a. for crop year ending 31 May of years shown.
abandoned during fire war. The Mekong Delta products three-fourths of the
annual rice output, and the major harvest occurs during December-January.
Most of the country north of Saigon produces less rice than it consumes and
consalucntly relies on imports from the Delta or outside sources. Prior to
1965, South Vietnam exported rice, but has since had to import large
quantities each year (see Figure 6). During 1965-69, production generally
declined, and the rapid gains since then have not been sufficient to meet
increased consumption requirements.3
3. The wide fluctuations in rice availability indicated by Figure 6 arc largely the result of sizable
changes in government stock levels, which, for example, reached a record high level in 1968.
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Thousond Motrlc Tona
4000
Flgura d
Production, Exports, and Imports of Milled Ripe
0
1960 61 62 83 84 65 66 67 68 89 70 71 72
?For crop your ondlnp !n your shown. For oxomplo, 1877 production Is for fho 1871/7?
crop yoor ondlnp 31 May 1872.
arse 7 77
Exports ~ '-"" """~
_'
.~ "~~
Imports
.~ ,./
Production"
33. Although farming in many areas is still carried on by traditional
methods, changes in production practices since 19(,8 have lifted many
farmers out of subsistence farming and allowed them to produce a surplus.
The introduction of high-yiclr? rice varieties in 19~r3 was the turning point.
The new seed required mor-; inputs such as frrti:'~rer, pesticide, and wafer
control mechanisms, all of which were available at reasonable rust. -Chr
increasal return from these v;lrictics-resulting from generally higher paddy
prices and yields-permitted substantial modernization in agriculture. Iligh-
yicld rice is now grown oft about one-fourth of the riceland and has barn
largely responsible for pushing average yields from the }err-war level of about
2.0 tons per hectare to the current ''.5 tons per hectare. Water pumps have
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CONI~'IIJL;NTIA~,
permitted a much t,r~;alcr amount of irrigation and thus double cropping;
and tractors and rololilla?s plow I'iclds earlier, more efl'icicnlly, and rttore
dtaiply than water buffalo.
34. Another significant warlinte development was the tuloplion in
March 1970 of a r?udical land reform program to give tenant f,u?mcrs rind
, squatters free tills to the laud Iltey ,ire cultivating, Within three years,
ownership of about one million hcclares (or? more than one-third of the total
cultivated area) was to be lransl'crrcd at government expense to plots than
? SOO,000 farm I'ar~tilics. 13y the Intl of 1972, new titles has) been issued for
about 700,000 hectares and applications had been approval I'or an
:ulditional 225,000 hcclares.
Industry
35. South Vietnam has a very small industrial scclorwith virtually no
heavy industry. Manufacturing consists primarily of small-scale consumer
industr?ics proccssi~~e imported raw materials and some local agricultural
products. Dour industries-foodstuffs, beverages, tobacco, and textiles-
account for about 70'%~ of manufacturing output, and a handful of firms
produce the lion's share. The remainder consists mainly of paper and paper
products, piustics and other chemicals, cement, glass, and the output of a
variety ol'smaller industries and handicraft enterprises. Almost all non-handi-
craft industry is concentrated in the Saigon metropolitan arcs because of the
availability of power, the large market, and greater security, Most of the
large firms arc owned by the. government or by local Chinese businessmen.
Table 3 presents output from the most important branches of industry in
recent years.
3C. With the exception of 19G>3, when some nrt~nufacturing facilities
were danriged during the Tet ol'fcnsivc, industry has grown at a fairly rapid
rate throughout the war. Manufacturing and electric power output combined
rose at an average annual rate of about 8'y, during 1965-71, and construction
activity (including US construction) probably grew somewhat more rapidly.
The 1972 aumy offensive, however, Icd to a substantial declcne in industrial
output. Uncertainty over security conditions caused a decimc in demand for
durable goods and forced production cut)xtcks in most large firms and
closurr of many small ones. Increased local procurement by Vietnamese and
US military forces was the only thing that kept some firms in operation.
37. During 1970-71, security and economic conditions stabilized
sufficiattly to attract a number of inquiries from p, ate foreign investors.
The government approved about a dozen proposals from foreign business-
men-mostly Japanese-to invest jointly with Vietnamese partners in
assembly plants for farm machinery, radio and television sets, light tntcke,
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GONY~ ~)1?,N'1.'1AL
Output of Selected Induvlrlnl 1'roducls
cu?r?rvdlty
1964
19h8
lif!lllr~r
19(,9
r l,ht~rs
1970
1971
Iiccr
r)5.7
119.4
134.2
148,7
14C, ~)
Soft drinks
54.3
92.3
77rvu.rarrd
120.4
Metrlt~ 7brrs
125.7
118.5
Cement
75.3
144.'
247.2
285.8
263.3
Cigarettes
G.I
10.3
10.5
r).7
12.2
Cotton yarn
7.8
5.0
7.G
11.7
13.4
Class bottles
Pnpcr and
1 I.0
10.1
IG.S
18.8
20.8
paperboard
18.2
19.6
33.2
42.8
48.5
Itc(ined sugar
SG.4
~?_
9G.I
Mllllvn /.in
108.4
rar Mrtcrs
1 15.5
202.1
Cotton fabric
51.7
28.5
50.4
58.0
(,4.1
Million Kilowatt llvrtrs
Clectric power
4G9.G
715.2 1,045.4
1,134.2
1,342.8
and sewint; machines. To date, rntly a few of these, such as the Yanmar
agriculturrl machinery plant shown in I~igurc 7, have come to fruition.
Domestic investors have continued to plan for new enterprises or the
expansion of existing ones, but security and business conditions in 1972
stopped most of than from going beyond the planning stage.
Government Finance
38. Government expenditures in South Vietnam have risen rapidly
since 19G5, reflecting the radically increased domestic costs of goods and
services, larger defense expenditures, and expansion of the civil service.
Spending by the government in 1972 arnountcd to about 3G5 billion
piasters, or almost seven times the 1965 level (sec ~iguro 8). The budget
planned for 1973 calls for an increase in spending Icvcls of nearly 20~Io in
current prices over those of 1972. The most outstanding characteristic of the
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~ :.,,,tr _. Via.,; .~. ._ _ _ . Fleur. Y
Y mer A Nculturai. Machine Plant In_the Blen Hor_Industriel park
Yanmar Machinery for Ssle irr Ban Me Thuot~ Dsrlac Province
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C+rJNI~ IllI;N'.L'~~~~
Governmont Budget"
1973
Plon
"Hcalduel. Flnonced prlmerlly by ~rorrowinp from fho Noflonel0anl:.
"'Ineludoa cuxfome dufloa end olhar Impo;1 faxoa, counforperl lunda ponerefed by
US?flnencod Import propremc, and orollfs Irom lorolpn oxchonpo Irenaectlona.
A moor rasull of fho Novemb