GENERAL COMMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78T02095R000800020006-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 16, 2016
• Document Release Date: November 23, 2004
• Sequence Number: 6
• Content Type: REPORT

Approved For Rel
General Comments
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 1964 levels, but since that time production has
been well below that of 196+ 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 Dong
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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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
1+9
SIPH
81E
CEXO
36
Michelin
38
Tay Ninh
12
LCD
11
SPCK
1
Xuan.Loc
N.A.
Phouc Hoa
N.A.
CHPI
N.A.
01
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 73.5 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 profitability, 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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of the planted area, have been 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 1964, 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 years
14
18 to 27 years
24
13 to 17 years
2
8 to 12 years
1 to 7 years
The basic exchange rate for
3
23
exports in South Vietnam is 60
piasters to US $1 (35 piasters plus a uniform subsidy of 25
piasters). Since 1962, however, the GVN has imposed a, tax on
the export of rubber which yields a real rate of exchange for
rubber of only 46 piasters to US $1. This real. rate of 46 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 120
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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Table 1, 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.
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.
3.
Ex2orts
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. (See Table 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
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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 amount only 205 tons had come from
Vietnam during January-August. Further, U.S. consumption of
natural rubber in 1965 was 520,000 metric tons, of which
100,000 tons came from the U.S. stockpile.
According to the Annuaire Industriel 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.
1. Labor Force
It is estimated that there are roughly 200,000 people residing
on French-owned rubber plantations in South Vietnam. Of this total,
44,000 are actually engaged in the production of rubber. Approxi-
mately 3!,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-Vietnamese. In 1963, the total labor force
of 40,000 was broken down by type of worker as follows:
Senior Administrators 400
Professional and
Technical Personnel 450
Office Employees 1,200
Skilled Workers 24,000
Unskilled Workers 8,000
Apprentices 100
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 G.VN
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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Table 1
Major French-Owned Rubber Plantations in South Vietnam a/
25X1
Company
Plantation
Name
25X1 ,i antations des
Quan Loi e/ Binh Long
lerres Rouges
Production
Province Status
Binh Long Operating
normally as
of June 1965.
Binh Long Operating
normally
as of June
1965. .-
Long Thanh Bien Hoa
Courtenay e/ Long Khanh
Total Planted Exploited Annual Number
Area Control Area b/ Area b/ Area b of
/ Production c/ Employees
As,of October 1965, 8.3 6.9 5.4
some villages were
secure; VC present
in others.
As of October 1965, 3.9 3.3
some villages were
secure; VC present
in others.
As of October 1965, 2.8 2.3
some villages were
secure; VC present
in others.
As of October 1965,
area was in GVN
control.
6.4 3.2
4.1 2.6
7.5
2,700
2.8 3.6 1,100
1.8 2.6
800
2.3 2.1 8oo
1.8
1.6
Although Xa Cam and Xa Trach were operating normally in June 1965, transport of rubber to Saigon was reported to be almost impossible.
boo
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Table 1 - (Continued)
Major French-Owned Rubber Plantations in South Vietnam a/
25X1
Company
Societe Suzannah Long Khanh
Indochinoise de /
Plantations d' An-Loc Long Khanh
Heveas (SIPH)
Binh-Loc -Long Khanh
Ong-Que Long Khanh
3.9 2.3
4.6 2.1
3.5 2.0
As of January 1966, .7.6 2.3
area partly. under
VC control.
Remarks: The workers.at Gallia reportedly have been organized into a VC labor union and the CVT has been banned. The Ben-Cui plantation reportedly
was defoliated heavily in early 1965.
Plantation
Name Province
Ben-Cui Tay Ninh Temporarily As of February 1966, 2.0 1.4
closed in area almost com- -
October 1965. pletely under VC
control. -
n e
r con-
still as of trol.
'April 1965.
Gallia e/ Phuoc Tuy Production As of January 1966, 5.0 2.3
near stand- area u
d
VC
Long Thanh/ Bien Hoa As of October 1965, 4.3 1.8
Helena area under GVN con-
trol.
Production
Number 25X1
Total Planted - Exploited A
nnu of
Status Area Control Area b/ Area b/ Area b/ Production c/ Employees d/
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2.0
.3.0
1,100
1.9
2.8
1,000
1.3
1.4
500
1.5
2.1
600
1.3
2.4
800
-
2.0
2
5
1
000
.
,
1.7
2.2
1,000
V_F
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Table 1 - (Continued)
Les Caoutchoucs Tuc Trung Long Khanh
du Donai (LCD)
Trang Bon Bien Hoa
25X1
25X1
Plantation Production Number
Co- an Total Planted Exploited Annual of
y Name Province Status Area Control Area b/ Area b/ Area b
Production c~ Employees df
Cay-Gao e/ ' Bien Hoa
Major French-Owned Rubber Plantations in South Vietnam a/
5.6 1.5 1.0 1.3` 600
1.2 0.9 0.6 0.7 500
VC present within .1.1. 0.8 0.8 0.9 koo
plantation in?
October 1965.
Remarks: About half the employees reportedly-'left Cay-Gao in June 1965 and operations are at a reduced pace. These three plantations are owned
by the SIPH Company in France but are managed separately in Vietnam by LCD. Tuc Trunj and Trang Bom plantations reportedly were
partially defoliated in early 1965. ~
}
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Table 1 - (Continued)
Major French-Owned Rubber Plantations in South Vietna,-,: a/
Plantation
Company Name
25X1 Societe des . ' Loc Ninh
Caoutchoucs
d'Extreme-
Orient (CEXO)
Production
Province Status
Number 25X1
Total Planted Exploited Annual of
Area Control Area b/ Area b/ Area b/ Production J Employees d/
Binh Long Operating As of October 1965, 6.4 6.4 5.6 .,6.o 2,800
normally as some villages under
of June 1965. GVN control; others
under VC control..
Minh Thanh Binh Long
Under GVN control 1.4
as of October 1965.
Binh Long Operating Under GVN control 2.7
normally as as of October 1965.
of June 1965.
Bu-Dop e/ Phuoc Long Operations GVN control of some 1.7
almost ceased villages; VC present
as of June in others as of
1965. October 1965.
Dakkir
Phuoe Long
Operations
almost ceased
as of June 1965.
1.6
Phu-Rieng e/
Phuoc Long
Operations Partly occupied by
ceased as VC as of June 1965.
of June 1965.
1.3
1.4 1.4 1.8 boo
2.7 2.5
3.0 1,700
1.7 1.2 0.8 300
1.6 0.7 0.8 400
1.3 0.7 0.9 200
Re.z,r:a: Several of the technical installations at Phu-Rieng have been destroyed by air bombing. Transportation of rubber from Loc Ninh and
Xa Cat to Saigon reported to be almost impossible.
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Table 1 - (Continued)
Major French-Owned Rubber Plantations in South Vietnam a/
25X1
Plantation Production
Company - Name , Province Status
Number 25X1.
Total Planted Exploited Annual of
Area Control Area b/ Area b/ Area b/ Production C/ Employees d/
Ste- des Dau Tieng e/ Binh Duong Temporarily VC control of
Plantations et closed as plantation villages
Pneumatiques of October as of January 1966.
Michelin 1965?
9.3 6.9. 5.1 5.5 1,500
Thuan Loi e/ Phuoc Long Temporarily Area .t.Nsecure as 5.5 3.0 2.3 3.2 450
closed as of September 1965,
of June
1965.
Remarks: The Dau Tieng plantation was'closed rather than meet VC demands for higher taxes and increased rice rations for workers.
Technical installations at Thuan Loi partly destroyed by bombing and machinery and tools being stolen since management
has departed. According to one report it would take at least six months to resume normal activity at Thuan Loi if proper
security conditions were restored. In March 1966, it was reported that Michelin is attempting to sell these plantations
to the West German branch of Continental Tires (Allemand Continental Pneus).
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 Cc,:-oany
25X1 .
Ste. es
Heve:,s de
Tay -,i inh
Ste. des
Pla.rtati ons
d' =~veas de
X~ a: Loc
Les aoutchoucs
de 51~1ouc Hoa
Plantation
Name Province
Hiep Thanh Tay Ninh
Hang Gon
Long Khanh
Phouc Hoa Phuoc Thanh
Connie des Banmethout
Ha-~--;s Plateaux Mewal
In-,_..;chinois (ChPI)
Darlac )
(
Darlac )
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Table 1 - (Continued)
Major French-Owned Rubber Plantations in'South Vietnam a!
Production
Stat
Total Planted
Exploited
Ann
al
Number
25X1
us
Area Control Area b/ Area b/
Area b/
u
Production c/
of
Employees
d/
No GVN protection 4.3
as of October 1965.
Area under GVN
control as of
October 1965.
3.5 2.5 2.6 ' 1,400
2.0 1.4
4.5 1.8
)
Scc-~.f: to des
Pl&. 'rations de
Ca;.K20i (SPCK)
Cau Khoi e/ Tay Ninh
Partial GVN con- 2,3
trol. VC appearing
regularly as of
June 1965.
1.0 0.8
700
Boo
200
200
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Table 1 - (Continued)
Major French-Owned Rubber Plantations in South Vietnam a/
a. Plantations of more than 500 hectares. One hectare equals 2.471 acres.
b. Data are estimated and are in thousands of hectares.
c. Data are in thousands of metric tons and are for 1963.
d. Estimated number of permanent employees as of 1 January 1964. Data exclude occasional workers
and family members residing on plantations.
e. In August 1965 the Minister of Labor of the GVN selected these plantations for closure because
of the insecurity of the areas.
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 Approved For
Production of Rubber at
Large Plantations in South Vietnam
1957-65 a/
Monthly
Monthly
1964
1965
1957
59.4
January
7.2
7.9
1958
62.7
February
0.4
0.4
1959
65.6
'March
0.5
0.7
1960
68.2
April
3.5
3.4
1961
70.8
.May
6.1
5.2
1962
68.3
June
7.3
6.o
1963
67.3
July
7.0
5.6
1964
69.2
August
5.9
5.4
1965
(Jan-Nov)
50.6
September
6.3
1+.7-
October
7.2
5.5
November
7.9
5.8
December
9.8
N.A.
a Large plantations are defined as those of more than 500
hectares. These plantations account for roughly 90 per-
cent of the total output of rubber in South Vietnam.
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(Thousands of Metric Tons)
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Table 3
Exports of Rubber from South Vietnam
(Thousands of Metric Tons)
Monthly Monthly
12
64
i2~5
, _
,.
1957
66.0
January 7.
8
10.4
1958
68.5
February 6.
9
7.6
1959
78.4
March 3.
1
3.4
1960
70.1.
April 2.
1
1.6
1961
83.4
May 4.
2
2.8
1962
74.5
June 7.
1
4.2
1963
68.9
July , 5.
3
7.3
1964
71.6
August 7.
8
5.3
1965
61.9.a/
September 6.
0
6.0 a/
October 7.
6 _
4.2 a/
November 6.
1
5.3 a/
December 7.
5
6.5 a/
a/ The final official total for 1965 was announced as 61,934
metric tons. This. total is smaller than the sum of the
monthly totals (64,600 metric tons) which consists of
provisional figures for September-December.
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Table 4
Exports of Rubber from South Vietnam, by Country of Destination
25X1
(Millions of US D
ll
)
o
ars
Year
Total
France
Germany
UK
Japan
Italy
Netherlands
US
Belgium
Singapore
Other
1957
48.8
36.8
0.7
0.1
0
a/
10.3
a/
0.6
0.3
1958
35.6
28.5
0.7
1.2
0.1
0.1
4.5
a/
0.2
0.2
1959
.46.9
21.1
11.0
1.9
0.6
1.6
1.4
5.3
2.0
1.9
0.2
_ 1960
48.0
29.8
5.2
3.7
0.7
1.1
1.1
2.8
o.4
2.8
0.3
:, 961
43.8
25.2
6 3
6.6
0.1
1.0
0.6
2.9
0.5
0.2
0.5
~962
37.9
10-r,
4.9
7.3
1.7
1.1
0.4
1.3
0.3
0.2
1.2
1963
33.5
18.1
5.9
3.9
2.3
1.2
0.6
0.4
0.3
0.1
0.9
1964
33.3
15.0
7.7
3.5
2.8
1.6
0.7
0.4
0.3
0.2
1.2
1965 (January-
August)
16.6
7.2
3.3
1.6
1.8
1.2
0.4
0.1
0.3
a/
0.7
a/ Less than $50,000.
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