THE ECONOMIC SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82S00205R000200010031-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 20, 2016
• Document Release Date: August 25, 2006
• Sequence Number: 31
• Publication Date: August 11, 1969
• Content Type: IR

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DIRECTORATE OF
INTELLIGENCE
Intelligence Report
The Economic Situation in South Vietnam
(Biweekly)
State Dept. review completed
USAID review completed
Secret
11 August 1969
No. 0500/69
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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
receipt by an unauthorized person is prohibited by law.
DOWNGRADING AND
DECLAS.SIFCOAY90N
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
11 August 1969
The Economic Situation in South Vietnam
Summary
The rice market in South Vietnam this
year appears to be free of many of the
supply and price problems that occurred
during 1967 and 1968. Deliveries of
rice from the delta are at the :.highest
level since 1966, farmers are getting
good prices for their paddy, import re-
quirements are lower, and government stocks
of rice are down to a more manageable
level.
A 24-hour general strike in sympathy
with Saigon Bus Company employees apparently
has been averted through the intervention
of President Thieu.
The Saigon retail price index
increased one percent during the two
weeks ending 28 July, but still was only
12 percent above the level of 6 January.
Prices of impotted goods continued stable,
but limitations on the availability of
foreign exchange may lead to higher prices
in the future. Free market prices of
dollars and gold increased, while the
rate for MPC (scrip) was unchanged.
South Vietnam Economic Indicators
(charts)
Monthly and Weekly Currency and
Gold Prices (graph)
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Rice Situation
1. There are several indications that the rice
market in South Vietnam is operating more smoothly
this year than it did during most of 1967 and 1968.
Although rice output declined in the 1968/69 crop
year, deliveries of rice from the delta are at
the highest level since 1966, farmers are receiving
good prices for their paddy, import requirements
are lower, and government stocks of rice are
down to a more manageable level.
2. Deliveries of rice from the delta to
Saigon totaled 189,000 metric tons during the
first half of 1969 compared with 161,000 and
116,000 tons during the comparable periods of
1967 and 1968. Because the bulk of the 1968/69
crop already has reached the market, average
monthly deliveries should be smaller until late
in the year when the new harvesting period begins.
Officials anticipate, however, that-deliveries for
1969 will total more than the 310,000 tons
delivered during 1968.
3. The farmers have had a stronger incentive
to market rice this year because of the large
increase in paddy prices since January. The
average price of paddy in the delta increased
about 50 percent during the first half of the
year, whereas in 1968 paddy prices fell early in
the year and remained low. This increase can be
attributed largely to the 25 percent increase in
the wholesale price of imported US rice in late
1968, declining stocks of imported rice held
by the government in Saigon and the rice-deficit
northern provinces, and probably to reduced
transport costs as road security improved. Other
factors in the increase are the increase in the
general price level and the normal seasonal rise
in paddy prices between harvest periods.
4. Rice imports in 1969 will be less than
half the level of 1967 and 1968, or only about
300,000 tons. At the endcE 1968 the government
held enough rice to cover normal consumption in
the rice deficit areas for about six months, or
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double the amount US and Vietnamese officials
consider the ideal level. As a result of the
excessive stocks and rising delta deliveries,
few imports have been necessary, and only
47,000 tons arrived during the first half of
1969. By the end of June, however, rice stocks
had declined to somewhat less than the ideal
level. About 250,000 tons of imported rice
are scheduled to arrive during the last half
of the year to meet consumption requirements and
to replenish stocks. According to US officials,
if shipments arrive as scheduled there is little
chance of stocks falling below a safe level.
Isolated shortages of rice could develop in I
and II Corps, however, because of bureaucratic
and transport delays.
General Strike Averted
5. A 24-hour general strike in Saigon
apparently has been averted by President Thieu',,s
agreement to meet with striking Saigon Bus
Company workers should other efforts to mediate
the issues fail. On 1 August the 500-600 bus
company workers went on strike to protest the
government's decision to dissolve the financially
ailing Saigon Bus Company and sell its assets to
private interests. The strike assumed larger
proportions on 3 August when the Saigon/Gia Dinh
council of the Vietnamese Confederation of Labor
(CVT), the largest trade union organization in
South Vietnam, agreed to join the bus workers
in a 24-hour sympathy strike at a time to be
decided by the council's executive board. CVT
president Tran Quoc Buu, who was out of town
when the meeting was held, reportedly asked
President Thieu to intervene. One of the reasons
why the bus workers' cause stirred the interest
of other unions is probably that the bus company
is the only sizable government-owned enterprise
in which the workers participated in management
decisions. The employees had hoped to take over
the assets of the company themselves using their
severance pay from the government and additional
funds from their union.
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Prices
6. Retail prices in Saigon increased one
percent during the two weeks ending 28 July,
but still were only 12 percent above the level
prevailing on 6 January. Food prices rose
slightly, resulting in an increase of 16 percent
for the year to date. One of the major reasons
for this rise in the food price index has been
the 20 to 27 percent increase in the prices of
domestic rice since the middle of April. Non-
food prices were generally stable during 14-28
July at a level three percent above that pre-
vailing at the beginning of the year.
USAID Retail Price Indexes for Saigon
(1 January 1965 = 100)
All Items
Food Items
Nonfood Items
2
Jan
1968
308
344
241
6
Jan
1969
400
443
319
14
Jul
1969
445
508
329
21
Jul
1969
443
504
332
28
Jul
1969
448
512
328
7. The price index for imported goods remained
stable during the two weeks ending 29 July. -Unless
more foreign exchange is made available for imports,
however, prices may begin to rise. According to
embassy officials, funds currently available
through the US-financed Commercial Import Program
(CIP) amount to only about half of the estimated
backlog of pending and approved import license
applications. Moreover, Of the $40 million in
CIP funds allotted for the July-September period
almost half had been issued by the end of July.
It also appears that the Vietnamese Government
is limiting the licensing of imports purchased
with its own funds in order to reduce the drain
on foreign exchange reserves. On 30 July the
Ministry of Economy suspended the processing
of import licenses for several types of motor
vehicles and ordered importers to refund customers'
deposits. Without some decrease.`in`the demand
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for imports it is likely that the government will
have to be much more selective in deciding the
amount and type of goods that may be imported.
(Charts on the cost of living, mon y supply,
and foreign exchange reserves are included in
the Annex.)
Currency and Gold
8. During 15-29 July the free market price
of dollars continued the steady upward trend that
began in mid-May. On 29 July the price was 208
piasters per dollar compared with the official
exchange rate of 118 piasters per dollar. This
rate, however, is only eight piasters above that
prevailing at the beginning of the year. The
price of a dollar's worth of gold leaf increased
four piasters to 284 piasters, or slightly above
the average price during the first six months of
1969. The rate for MPC (s'rip) was uncharged at
161 piasters per dollar. (A graph on monthly
and weekly currency and gold prices is included
in the Annex.)
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Saigon Cost of Living Index * (For Working Class Family)
South Vietnam Money Supply
South Vietnam Foreign Exchange Reserves
JUN
131
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MAY
467
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Saigon Free Market Gold and Currency Prices
App