THE ECONOMIC SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82S00205R000200010049-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 20, 2016
• Document Release Date: August 28, 2006
• Sequence Number: 49
• Publication Date: January 27, 1969
• Content Type: IR

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1
DIRECTORATE OF
INTELLIGENCE
Intelligence Report
The Economic Situation in South Vietnam
( Weekly)
State Dept. review completed
USAID review completed
Secret
118
27 January 1969
No. 0478/69
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Secret
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.
OROUP 1
EXCLUDED FROM AUTOMATIC
DOWNOIIADINO AND
DLCLA&DPICATION
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
The Economic Situation in South Vietnam
Summary
Orders for imports financed from South Viet-
nam's own foreign exchange earnings reached an
all-time high during the second half of 1968 as
businessmen regained confidence and importers began
to restock inventories. Japan continues to be by far
the principal source of these imports.
Retail prices in Saigon again declined slightly.
As of 13 January the USAID price index was at almost
the same level that prevailed in mid-July 1968. Free
market currency prices were down slightly during the
week ending 13 January, but the price of gold leaf
increased.
ANNEX: Weekly Retail Prices in Saigon (table)
Weekly and Monthly Currency and Gold
Prices (graph)
South Vietnam Economic Indicators (charts)
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Vietnamese-Financed Imports
1. Following a slowdown during the first six
months of 1968, orders for imports financed from South
Vietnam's own foreign exchange earnings reached an
all-time high during the second half of the year. The
value of import licenses issued was almost three times
that of the first half of 1968 and only slightly less
than the total for 1967, as shown in the following
tabulation.
Vietnamese-Financed Import Licenses
(Million US Dollars)
1967
1968
Jan-Jun
141.2
Jan-Jun
98.0
Jul-Dec
150.6
Jul-Dec
281.5
Total
291.8
Total
379.5
Licensing under AID's Commercial Import Program (CIP)
also was substantially higher in 1968 than in 1967,
especially during the second half of the year. Of,the
total value of import licenses issued during 1968,the
Vietnamese financed 62 percent with their own foreign
exchange, while the US financed the remainder through
the CIP and the Food for Freedom program (PL-480).
2. Part of the striking increase in orders for
imports during the second half of 1968 reflects a re-
sumption of normal business activity following the
recession that occurred in the wake of the 'het offen-
sive. Orders for imports also were stimulated by the
need to restock depleted inventories, and by specula-
tion based on expectations of future price and tax
increases and fear of a devaluation of the piaster. A
USAID report on licenses finances from Vietnamese for-
eign exchange in November 1968, when orders reached
their peak, showed that licenses issued for motorbikes
and parts, pharmaceuticals, and industrial machinery
and--parts were unusually large. Orders for motorbikes
were high in both October and November--$10.3 and $6.6
million--reportedly because of rumors of an increase
in import taxes on this item and because dealers are
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gambling on a slowdown in the war which would open up
a greater market in the countryside. Licensing of phar-
maceuticals during November amounted to $6.5 million,
or more than the total for pharmaceuticals during the
entire third quarter of the year. The increase re-
portedly reflects a buildup of inventories. In addi-
tion, the orders included drugs and vaccines for live-
stock,. and a considerable quantity of these items were
licensed in November as a result of the massive import
of baby chicks in preparation for Tet. Licenses issued
in November for imports of industrial machinery and
parts were valued at $6 million, up from $2.4 million
in October. According to USAID, much of this can be
attributed to improved security which encouraged manu-
facturers to undertake reconstruction or expansion.
3. Although complete information is not available,
licensing data for the third quarter of 1968 show that
Japan continues to be by far the principal source of
imports financed by the Vietnamese. During July-Sep-
temberoJapan was the source of $58 million worth, or
55 percent, of the goods ordered, while the US ran a
poor second with $8 million, or 7 percent. In mid-1968
the Vietnamese agreed to spend at least $50 million of
their foreign exchange in the US during 1968--compared
with an average of about $7.5 million during 1965-67--
in order to help reduce the US balance of payments
deficit. The data cited above for the third quarter
of the year as well as the low level of licensing dur-
ing the first six months indicate that this goal will
not be met. Almost all imports financed by the US
always have come either from the US or from underdevel-
oped countries by special agreement with AID.
4. During the week ending 13 January the Saigon
retail price index again declined slightly as lower
food, prices more than offset the continuing increase
in nonfood prices. Food prices fell two percent despite
increases of two to three percent in the prices of do-
mestic varieties of rice. The price of imported rice,
however, has remained stable since early December 1968.
Fresh pork prices fell, reportedly as a result of re-
newed sales of low-priced frozen pork to military per-
sonnel and civil servants through the government com-
missary system. With the exception of some out-of-
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season vegetables, prices of most other items deliv-
ered from the delta declined as supplies were plentiful.
Prices of nonfood items continued to increase slightly
because of higher prices for charcoal and calico. As
of 13 January the overall retail price index was at
almost the same level that prevailed in mid-July 1968.
The USAID price index for selected imported commodi-
ties was unchanged during the week ending 14 January
at a level only 10 percent above that at the beginning
of 1968. (A table of weekly retail prices in Saigon
is included in the Annex. Also included are charts on
the cost of living, money supply, and foreign exchange
reserves.)
Currency and Gold
5. Saigon free market currency prices were down
slightly during the week ending 13 January, while the
price of a dollar's worth of gold leaf increased five
piasters to 289 piasters. The prices of dollars and
MPC (scrip) declined two piasters each to 198 and 148
piasters per dollar, respectively. (A graph on weekly
and monthly currency and gold prices is included in the
Annex.)
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Weekly Retail Prices in Saigon
3 Jan
2 Jan
23 Dec
30 Dec
6 Jan
13 Jan
1967
1968
1968
1968
1969
1969
Index for All Items 225
308
398
408
400
22-4
Index for Food Items 242
44
Of Which:
(In Piasters)
Rice-Soc Nau
(100 kg.) 1,700
2,500
3,000
3,100
3,100
3,200
Pork Bellies
(1 kg.) 130
220
280
280
260
230
Fish-Ca Tre
(1 kg.) 150
230
310
320
310
300
Nuoc Mam (jar) 90
150
220
220
220
220
Index for Nonfood Items
1
22
241
307
15
212
21
Of Which:
(In Piasters)
-
Firewood (cu. meter) 560
600
760
780
800
800
Cigarettes (pack) 14
14
22
22
22
22
White Calico (meter) 33
52
70
80
82
85
Kerosene (liter) 10.5
9
10
10
10
10
a. Data are from USAID sources. For indexes 1 Jan 1965 = 100.
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Sa gon ee Mar Cet Gory and Currency Prices
$1DRN
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Saigon host of Living Index (For Working Class amity)
NOV
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