ECONOMIC HARDSHIPS IN VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP03T02547R000100280001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: December 20, 2016
• Document Release Date: May 4, 2007
• Sequence Number: 1
• Publication Date: December 31, 1981
• Content Type: REPORT

Approved For Relea e 2007/05/06: CIA-RDPO3TO254 8000100280001-1
CENTRAL INTELLIGENCE AGENCY
NATIONAL FOREIGN ASSESSMENT CENTER
31 December 1981
ECONOMIC HARDSHIPS IN VIETNAM
Q*c ~ `,~`-ems
Since the end of the war in 1975, the long-suffering northern
Vietnamese have seen their hopes for a better life collapse, and the
southern population has had its apprehensions about life under Communist
rule confirmed. The standard of living throughout Vietnam since late
1978 has been lower than at any time during the war, although
food-growing peasants and some heavily in lved in the private sector have
managed to avoid any real suffering.
The people feel most keenly a shortage of food. Judging by official
claims for the 1981 harvest and the current level of Soviet aid, there
is probably only about 10 kilograms of food per capita per month.
Shortages of nearly everything else are widespread, from the most
ordinary consumer goods to fuels and electricity to transport services.
Government control of what few goods are still available has been
weakening, and more people have been forced into the free market for
survival.
Shortages of. Food and Consumer Goods
Grain production, which was 8.9 million tons in the initial full
post-war year of 1976, dipped almost 20 percent by 1978 due to bad
weather and mismanagement, but recovered to 8.9 million tons in 1980.
During the same period, the population grew by 4.9 million. Official
should feed about 2
which
rations,
million at the be inniing of the
per month per worker and 8 kilogra
y 1
average set at 15 kilograms4-
than 10 kilograms. Beginning sometime in 1980, the government ceased
feeding nonfood-growing southerners because it was unaole to collect
enough food for rations in both parts of the country. I 25X1
Industrial output after the war rose 43 percent from 1975 through
1978, starting from a very low base and boosted by the availability of
billions of dollars of Communist and non-Communist aid. During 1978-
1980, however, industrial output dropped some 15 percent due to the
cumulative effects of mismanagement, socialization policies that under-
mined incentives, and shortages of spare parts and raw materials. The
end of Chinese aid in 1978 deprived Vietnam of its largest source of
imported-consumer goods, while the failure to utilize the South's consumer
goods-oriented industrial establishment ruined the regime's hopes for
meeting its needs domestically. 25X1
This memorandum was prepared by the Office of East Asian Analysis in25X1
response to a request by Chairman of the National Intelligence Council.
Comments and queries may be addressed to Chie , Southeast Asia Division,
Office of East Asian Analysis
25X1
0 percent of the total population of
i1Qg_rams
d;--with_t he
979, the average had fallen to less
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Simultaneously with the dev len mPnt of deficits in food---and daily
necessities in Vietnam, the USSR by default gained a near-monopoly
position as aid donor (after China ended its aid, and western donors
suspended their programs after the first exodus of the boat people and
the invasion of Kampuchea). Moscow, already concerned by a level of aid
to allies that has risen to more than $25 billion a year in recent
years, has offered only min)'mum economic aid and has off Hanoi's
repeated demands for more.
Growth of the Private Sector
The Vietnamese found that they could not survive on the official
economy alone, and from late 1978 on, turned more and more to the free
market for the margin of survival. The government reluctantly sanc-
tioned a wider scope for the private sector and eventually acknowledged
that until the economy achieves a higher level of socialist development,
free markets could legitimately supply the majority of the people's
needs in the south and Dlav an increasingly larger role in the north.
The private sector has made up enough of the deficits still left
after Soviet aid to enable the population to survive, although at a very
uncomfortable level. Its sources of supply include grain withheld from
the state by peasants, privately produced consumer goods, consumer goods
sent by overseas Vietnamese and goods stolen from state channels.
Stealing from the state has become big business for a host of traders
and corrupt officials.
There was some increase in supplies during 1981, althou
suggests a permanent improvement. Because of good weather in tR-nvi'th
and the effects of a new system of contracts with peasants that allowed
them to keep output above stipulated levels, grain output rose to an
officially announced 9.6 million tons. Together with an estimated
750,000 tons of Soviet aid grain and after deductions for various losses
and for seed, there should have been enough to provide average rations
of 10 kilograms per capita per month. The actual situation was probably
slightly better, because southern peasants under-report their harvests
in order to put aside grain for sale to private traders. The supply of
industrial goods may also have risen somewhat due to agreements signed
with Moscow that called for a 9 percent increas n commodities to be
exchanged during 1981-85 compared with 1976-80. 25X1
Government Attempts To Improve Economy
There was no improvement in government management of the economy
over the past year. Hanoi's appeals for aid from the non-Communist
world have generally fallen on deaf ears, notwithstanding recent moves
by the EC and France to provide about $350,000 of aid for humanitarian
uses over the' next three years. Management of foreign trade (annual
deficits have run $600-$800 million since 1976) has failed to produce
more for export or to obtain more loans to finance imports. Production
by state industries in 1981 actually fell continuing the trend dating
back to 1978. F777 I
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The state's most efficacious moves during 1981 were in competing
harder for grain from peasants and goods from private producers through
higher prices. Procurement prices for so-called voluntary sales to the
state reportedly rose by up to 200 percent, depending on locality.
Concurrently, salaries for workers and officials were supplemented by up
to several hundred percent to enable them to buy art of their needs on
the high-priced free market.
To finance these moves, the government had to expand the money
supply by about 15 percent. As of the second half of 1981, the rate of
inflation had climbed to three digits, according to some reports,
driving more and more people to seek refuge in foreign currencies,
particularly the dollar. The government tried to gain control over all
foreign currency in the country by requiring registration, but eventually
had to devalue the dong from 2.19 to 9 for each dollar. Thp Mac
market rate reportedly has risen to 40 dong per dollar. 25X1
The situation for the Vietnamese people now is more complicated
than simply a lowering of the standard of living from the war years.
For southern peasants and those who have the energy to hustle in the
private sector, life is reasonably good. Suffering is heavily skewed
toward the officials, soldiers, pensioners, nonfood-growing peasants,
and others in north and south who depend on the government for their
primary or sole support. Those drawing salaries from the official
sector with no or limited opportunities to interact with the private
sector are suffering most of all. F77777 I 25X1
-3-
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SUBJECT: Economic Hardships in Vietnam
Original to Requestor
5
- OCO/IMB/CB
1
- EAA Front Office
1
- Chief,
Southeast Asia Division
1
- PDB
1
- NIO/EA
1
- D/NFAC
1
- Director, INR/EAP, State
1
- EA/IMBS, State
1
- Chrono
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