VIETNAM: RECONSTRUCTION AND THE POSTWAR ECONOMY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000400070008-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 12, 2016
• Document Release Date: July 26, 2002
• Sequence Number: 8
• Content Type: REPORT

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Vietnam: Reconstruction and the Postwar Economy
Central Intedltgence Agency/
National Foreign Assessment Center
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Key Judganents
More than three years after the fall of Saigon
and over two years since Hanoi's declaration of
nification, there has been little progress in
wising Vietnamese output and living standards
eyond levels of 15 years ago. The largely agri-
ultural, market; oriented southern economy has
et to recover from its near collapse of 1975 and
s only slowly lbeing integrated into the more
ndustrialized, Communist system of the north.
Output goals under the current five-year plan
(1976-80) and t:he rapid development of an effi-
cient integrated economy are becoming less and
less attainable. In particular, targets for gains ir.
gross national product (GNP) averaging about
15 percent annually and for achieving food self-
sufficiency by 1980 are now well out of reach.
Last year, for c;xample, real GNP was only 3
percent above 1974. At the same time, Hanoi
had to import 1.5 million tons of wheat and rice.
Imports this year will be even greater because of
severe flood damage.
Lack of progress in attaining economic goals is
strengthening pressures within the Hanoi Polit-
buro to push for more rapid integration of both
economies before 1980. Thus, in March 1978 the
government nationalized the commercial sector
in the south. The action, which struck heavily at
Vietnam's 1.5 million ethnic Chinese, is intended
to eliminate- the freewheeling private market in
the south and to bring the distribution and
pricing of scarce commodities fully within the
government orbit. This effort and others that will
probably follow are more likely to constrain than
to hasten economic growth over the next few
years.
For the moment, Hanoi remains wary of so-
cializing land holdings too quickly in the sensi-
tive southern agricultural sector. Most estab-
lished farms in the Mekong Delta remain
privately owned, even though farmers must in-
creasingly deal with state agencies in purchasing
necessary inputs and disposing of their products.
Despite this go-slow approach in expanding state
ownership, agricultural production in the south
has lagged. Mekong Delta farmers believe gov-
ernment takeover of their land is inevitable and
have responded by growing only enough to meet
compulsory sales to the state and the needs cif
their families. In these circumstances, Hanoi
stands little chance of boosting southern grain
output enough to offset the annual shortfall in
northern areas of 500,000 to 1 million tons. Total
staple food production last year-13 million
tons-barely matched the combined 1974 level
for North and South Vietnam.
Hanoi's most ambitious postwar effort in agri-
culture and at socioeconomic reform is embodied
in the "New Economic Zones"-primitive are~is
in the countryside set aside for agricultural
development. The areas are Hanoi's attempt to
deal with millions of urban unemployed, lagging
food production, uneven population distribution,
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and inadequate political control in some southern
areas. The government has pressured: but, unlike
neighboring Cambodia, hits not physically
forced., city dwellers to resettle in these areas.
About 1-1.5 million people h~~ve been. moved, but
many have drifted back to the cities because of
harsh living conditions in the; new areas. So far,
very few of these areas have :actually supplied an
agricultural surplus to the state.
Industrial enterprises have recovered from
most of their wartime damage,, but, on the whole,
the sector is producing below plan targets. South-
ern industry-largely textiles, food processing,
and light metal manufactures-is still operating
well below capacity. Industry there is Hanoi's
next likely candidate for nationalization with the
aim of restructuring output to reflect peacetime
economic circumstances. Currently, ownership in
southern industry is a melange, ranging from
pure private enterprise to full state control.
Table 1
1974
1975 1976
1977
Index: 1974 =100
Real GNP ........_ .......................
100
87 98
103
Agricultural Production ............
100
90 107
1.02
Industrial Production ................
100
85 89
98
Staple Food Output ..................
12.9
l".lillion Mel:ric Tons
11.5 13.2
13.0
Of which:
Paddy Rice .......................
12.1
10.6 ] 2.0
11.2
Imports .............................._......
2,000
Million US $
900 800
900
Exports ................._.....................
250
1.60 250
300
Vietnam's chronic trade gap-$600 million
and growing-still must be covered by foreign
aid. The bulk of postwar aid-pledges totaling
$5.6 billion-is being supplied by Vietnam's
Communist allies. China's recent suspension of
all economic aid to Vietnam will trouble but not
cripple the languishing- economy. Non-commu-
nist aid remains small despite an initial flurry of
postwar offers. Western donors have been turned
off by Vietnam's demonstrated inability to ab-
sorb the amount of aid already lined up. The
large gap between aid pledges and .completed
projects reflects a variety of factors including:
? Slow decisions on organizing aid programs by
Vietnamese policymakers.
? Insufficient managerial and technical talent.
? Hanoi's reluctance to allow Western advisers
and technicians into the country.
? A port and transportation infrastructure not
up to the task of efficiently absorbing aid.
Hanoi is interested in attracting foreign invest-
ment but so far has failed to garner any commit-
ments from Western firms. One potential bright
spot in foreign economic relations is the recent
signing of oil exploration agreements with West
German, Canadian, and Italian firms, although
the Vietnamese have indicated they would prefer
US technology and expertise. Drilling in areas
originally explored by US firms before the fall of
Saigon may resume by early 1979. Even if
results are favorable, Vietnam will not be pro-
ducing crude much before the mid-1980s.
ii
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Vietnamese leaders have been surprisingly forthcoming with economic
data, since 1975. Hanoi has released substantial information as a condition of
Vietnam's membership in the International Monetary Fund. Production data
by sector as well as information on five-year plans are published regularly in
the Vietnamese press; journal and press articles lamenting shortcomings in
the economy also appear frequently. Nonetheless, Vietnam is still a relatively
closed country and most data on the domestic economy cannot be accurately
verified from other sources. Non-Communist aid and trade statistics gener-
ally are available from partner countries, but Communist aid and trade data
arc estimates.
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Key Judgments ........................................................................................ i
Methodological Note ................................................................................ iii
Postwar Policies ........................................................................................ 1
Development Planning .............................................................................. 1
Disappointment in Agriculture ................................................................ 2
Northern Rice Production .................................................................... 2
Southern Rice Production .................................................................... 2
Postwar Food Supply ............................................................................ 3
Socialization of Agriculture ...................................................................... 4
Northern Vietnam ................................................................................ 4
Southern Vietnam .................................................................................. 4
New Economic Zones ................................................................................ 5
Indust.ry .................................................................................................... 7
Socialization of Industry ...................................................................... 8
Trade Nationalization .............................................................................. 9
Foreign Economic Relations .................................................................... 10
Trade and Aid ...................................................................................... 10
Postwar Aid Donors ............................................................................ 10
China's Economic Role ........................................................................ 11
Response to China's Aid Cutoff .......................................................... 13
Foreign Investment ................................................................................ 14
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Vietnam: Reconstruction and the Postwar Economy
Postwar Policies
Hanoi's victory in 1975 wrenched the economy
of South Vietnam from its material and institu-
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ajor step toward integrating the south-nation-
lizing private commerce. The measure struck
In March :1978 the government took another
toyed to move back to family farms or to
rirnitive "New Economic Zones," which the
overnment has set aside for agricultural devel-
pment. Hanoi claims to have resettled 1-1.5
illion people, but estimates are imprecise and
any people have drifted back to cities because
f poor conditions in the new areas.
capital inflows from Saigon's allies, which had
sustained consumption and provided the bulk of
raw materials and machinery for industry,
quickly disappeared. Saigon's sizable army and
its top-heavy services sector, built up in urban
areas to serve wartime needs, suddenly be-
came superfluous. Some 3 million people-con-
centrated in Saigon-found themselves unem-
ployed. Farmers adjusted to disruption and
uncertainty by reverting to subsistence produc-
tion. As a result, in the space of several months
southern living standards fell by more than one-
third to the austere levels of the north.
Lacking both popular backing and sufficient
economic control, Hanoi was not immediately
able to impose a socialist institutional structure
on the south. The southern people with their
strong, private capitalist. tradition and their ac-
customed highf;r living standards, have remained
unwilling to accept the collectivized and Spartan
way of life of the north. 'The government has had
to accommodate these attitudes by moving more
slowly than it wanted.
Hanoi has taken a stab at unemployment and
t urban-rural imbalances by pressing the unem-
heavily at Vietnam's 1.5 million ethnic Chinese
by eliminating the freewheeling private market
in the south.
Hanoi also dissolved the dual currency system,
which had existed in the north and south since
1975. The new currency regulations simulta-
neously eliminated the large cash holdings of the
Chinese and other private traders. Concerned
about these new moves, Chinese in large num-
bers have been trying to leave Vietnam. So far
about 160,000 have returned to China, mostly
from northern Vietnam.
For the time being, Hanoi remains somewhat
wary of socializing land holdings too quickly in
the sensitive Mekong Delta agricultural sector.
Most established rice farms remain privately
owned, even though farmers must increasingly
deal with state agencies to purchase necessary
inputs and dispose of their products. The new
farmlands opened up to absorb urban unem-
ployed have been operated as state or collective
farms from the start. Nonetheless, there are
hints that the pace of socialization may be
stepped up because of dismal agricultural per-
formance under existing arrangements.
Development Planning
Thus far the Vietnamese have made very
limited progress in implementing ambitious de-
velopment plans. National output since the war is
only 3 percent above the 1974 level, a far cry
from the 13- to 14-percent annual gain called for
in the 1976-80 development plan. In 1977, real
GNP is believed to have increased only 5
percent.
The current plan deernphasizes Soviet-style
development of heavy industry specified in ear-
lier plans for North Vietnam, in favor of south-
ern Vietnam's more generously endowed agricul-
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tural sector. This sector and consumer goods
industries are assigned the "basic" role in devel-
opment and in producing for export; heavy indus-
try is intended to complement agriculture by
providing the mechanical inputs needed to boost
farm output. Of the anticipated total investment
of 30 billion dong ($14 billion),' about half is
domestic savings and half ca~~ital from. Commu-
nist countries. Capital frol~i non-Communist
countries apparently has not been. specifically
budgeted against the investn-sent plain.
The pace of investment ha;; fallen off because
of shortfalls in domestic savings, inefficiencies in
absorbing aid, and the distractions of the border
war with Cambodia and the rift with China, both
of which have occupied Hanoi's time and di-
verted much of the military from its important
economic reconstruction task. Achievement of
even half the growth rate projected. by the cur-
rent five-year plan will require a rapid. reduction
of existing supply and institutional bottlenecks,
unusually favorable weather conditions, stronger
demand for Vietnam's traditional exports, more
flexible and better utilized external assistance,
and more efficient generation and collection of
domestic savings.
Disappointment in Agriculture
Vietnam has been singularly unsuccessful in
solving longstanding agricultural. problems.
Hanoi had optimistically hoped that its victory
over South Vietnam would, by 1980, restore the
colonial trade pattern of large southern rice
surpluses compensating for northern deficits and
sufficient to finance indusi vial developrnent.z
Nonetheless, continued disruption of southern
production and marketing and a lack of incentive
for farmers have prevented rice output from
consistently reaching the peal: 1974 level of 12.1
million tons of paddy, and annual grain imports
of 1-2 million tons. have been required. Self-
sufficiency, which earlier hlld been physically
' Converted at the official exchange rate; converting at a more
realistic exchange rate yields anticipated investment of $7-8 billion.
During the 1935-40 period, annual exports of rice from south-
ern Vietnam averaged about 1.5 million ions. After World War II
exports were resumed at a much lower level, gradually diminished,
and finally ended in 1965.
possible by 1980, is now out of reach until the
mid-1980s.
During the war years, difficulties encountered
in supplying adequate quantities of food in both
the north and the south were attributed to
wartime conditions. Since the spring of 1975,
however, food supplies have further diminished
while excuses based on the ravages of war have
lost credibility. Declines in agricultural produc-
tivity can, in part, be linked to adverse weather
and war-related damages, but the primary prob-
lems are mismanagement and emphasis on ide-
ology at the expense of practical and pragmatic
approaches to dealing with agricultural prob-
lems.
Rice production in the northern part of the
country has been virtually stagnant over the past
decade. Output varied between 4 million and 5
million tons between 1965 and 1975 but may
have reached nearly 6 million tons in 1976.
Throughout the war, North Vietnam imported
annually 500,000 to over 1 million tons of
grain-largely rice from China and wheat from
the USSR=to offset lackluster production and
rising consumption.
Climate and terrain in the north limit arable
riceland to 2.2 million hectares, but the north has
been. able to double-crop about 800,000 hectares;
high-yield varieties are used on about 40 percent
of total planted area and account for about 60
percent of output. Future gains in the north will
probably. be limited to less than 5 percent annu-
ally, especially if more intensive use of fertilizer,
.irrigation, and machinery are not sufficient to
offset a decrease in labor resulting from pro-
grams to reduce the population density of the
Red River Delta.
Southern Rice Production
in the south, rice production is far below
potential and still below the record 7.1 million
tons grown in 1974 prior to the Communist
takeover. Despite the war having limited cultiva-
ble land by about 1 million hectares to a maxi-
mum of 2.9 million hectares, rice output showed
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steady gains from the late 1960s through 1.974
from the use of high-yield varieties, fertilizers,
and machines. Farmers were stimulated by rela-
tively high incomes and an adequate supply of
consumer goods. 'The south was near rice self-
sufficiency in 1974.
The departure of Americans and other West-
rners in 1975, hawever, crippled the long-term
evelopment effort through loss of technically
rained personnel and termination of the flow of
achinery, parts, fuel, fertilizer, and pesticides.
ncreased land and labor inputs since then have
of yet offset other impediments to southern
roduction. Nearly 400,000 hectares of new rice-
land have been opened in the south, mostly by
laborers transferred from urban areas. Double-
cropping has been promoted on about 400,000
hectares as well. High salinity in? coastal regions
will limit further extension of dry season area
until water-control networks are constructed.
High-yield varieties are used on about 30 percent
of rice acreage but maximum yields are reduced
by inadequate fertilization, pest control, and
irrigation.
Inadequate fertilizer supplies have been a
roblem for the Vietnamese. Phosphoric fertiliz-
rs based on the north's extensive apatite depos-
ts are generally sufficient but tend to be low
rade. Nitrogenous fertilizer plants begun in the
orth in the mid-1960s and reconstructed during
nd after the war have had many startup diffi-
ulties and are nog yet producing a significant
arketable output. As a result, Vietnam must
ontinue to rely on imports for almost all its
itrogenous fertilizer needs. Total s w~ ~ r it-
izer imports are pr~,bly_~n_~he_order of 400,000
to 500,000 tons ann~l.~y, compared with_500,000
to 600,000 tons annually during_1970-74. Severe
problems of deterioration in storage, poor distri-
bution from plants and ports to farms, and poorly
developed extension services to guarantee ade-
quate and timely fertilizer use compound existing
fertilizer shortages.
Postwar Food Supply
The ending of imports from the United States
d China's switch from providing foodgrain
grants to making foodgrain sales to Vietnam
have added to postwar domestic food supply
problems. With its victory over the south, Hanoi,
in addition to its own chronic deficit of 500,000
to 1 million tons, acquired a new annual food-
grain deficit of approximately 800,000 to 1 mil-
lion tons--that would have to be made up
through significantly increased production or
purchases from abroad.
After the Communist takeover, traditional
marketing arrangements were broken, supplies of
inputs became uncertain, economic incentives
were eliminated, and farmers became aware of
the inevitable takeover of their private plots by
the state. Consequently, southern rice farmers
reverted to little more than subsistence farming.
In addition, poor weather and increasing inci-
dence of crop diseases and insects have physically
held back production. As a result, total rice
output for both the north and the south in 1977
was a disastrous 11.2 million tons-1.8 million
tons below the 1977 target and 800,000 tons
below actual production in 1976.
Preliminary reports indicate no improvement
in rice production in 1978. In addition to fre-
quent adverse weather throughout the year, un-
usually severe flooding from typhoons and rains
in September caused serious damage to Mekong
Delta ricefields and to a lesser extent, to fields in
the Red River Delta. Moreover, the high-yield
rice strains planted in 1978 proved to be particu-
larly susceptible to insect and disease damage. I f
reports of severe .flood and insect damage are
borne out, annual grain import needs will cer-
tainly top 2 million tons.
The postwar situation would be worse without
relatively rapid gains in output of secondary
crops-manioc, corn, and potatoes. Measured in
paddy rice equivalents, output of these crops
together rose from 900,000 tons in 1975 to 1.2
million tons in 1976 and to 1.8 million tons in
1977. The crops mature quickly and require far
less water than rice but are considered inferior to
rice by consumers. The slaughter of cattle and
hogs also rose in 1976 and 1977 in response to
consumer food needs, the reduced availability of
fodder, and fears of state confiscation.
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The net effect of the agricultural sector's
failure to meet domestic needs hays been to shift
development efforts away from industry and into
agriculture. As the food slipply worsened during
1977, industrial development projects were cur-
tailed or reoriented to meet the needs of the
agricultural sector. Throughout 1977 and 1978,
food rations were tight nationwide but. were
reduced severely in Ho Chi Minh City (Saigon).
There, residents were toll to g;o to the New
Economic Zones to grow their ovvn food. Mili-
tary units were ordered to curtail or even halt
training activities and were given ?t major role in
developing agricultural lardds.
Socialization of Agriculture
Northern Vietnam
only several hundred and produce mostly indus-
trial and plantation crops, such as coffee, tea,
and jute. Ultimately, Hanoi intends for all agri-
cultural production to take place on large, wage-
labor, state farms.
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Southern agriculture-and hence total food
output-will languish in uncertainty as long as
the transformation of production from highly
capitalist to socialist remains incomplete. In the
year immediately following South Vietnam's de-
mise, Hanoi appeared Content to socialize agri-
culture only slowly, except in the central prov-
inces where the authorities had both the control
to force rapid socialization and the cadre to
manage a socialized agricultural sector. In the
Mekong Delta, however, Hanoi was wary of
The Hanoi government was having problems
with agricultural producers long before it ac-
quired control of the southern part of the coun-
try. As recently as late 1,974. onti_.thitiL~the
farmers in three northers , .provinces .were _ re-
ported to__be totally unwllling to join state-
controlled cooperatives. Many cooperatives were
diverting their produce to the black market
where returns were substantially higher than
those obtained by selling to state buying stations.
Farmers still complain that. taxes ati confiscatory
levels and unreasonably lo~.v prices for goods sold
to the state give them no reason to exert more
than minimal effort to expand production. None-
theless, private plots currently account for only 5
percent of overall agricult1.tra1 production in the
north.
Vietnamese officials are especially frustrated
because agricultural production in the north has
not increased substantially since 1.955, despite
the existence of collectives for over 20 years and
an increase in the number of farlrl workers over
the past three years. The socialization program
in the north is continuing. the consolidation of
cooperatives into larger, more economical units
of 300 to 400 hectares and developing more state
farms. Currently there are probably less than
half the peak level of 41,000 cooperatives that
existed in 1960, but they are substantially larger
in area. The state farms in the north now number
repeating the 1956 doctrinal disaster that forced
collectivization of farms in North Vietnam at the
expense of some 100,000 lives.
Socialization has taken place most intensely in
the central areas stretching from Binh Tri Thien
to Thuan Hai Provinces. Most of the south's 130
to 140 agricultural cooperatives are located in
this area. After the establishment of agricultural
committees in April 1975, confiscation of agri-
cultural lands in these provinces began almost
immediately, beginning with fields belonging to
plantations, private holdings of those who sup-
ported the former government, and lands and
.fields of religious organizations. The emphasis on
secondary and industrial crops in this region and
dependence on rice from other areas facilitated
socialization. Nonetheless, even here socializa-
tion is incomplete and consists largely of simple
work exchange teams and production collectives.'
' Hanoi views the "cooperativization" of Vietnamese agriculture
as a three-stage process. The first step is the establishment of
"mutual aid" or "labor exchange" teams which can either be
seasonal or year-round, but which are considered merely the early
stages of socialism. In the sewnd stage, peasants join low-level
agricultural cooperatives in which some implements are owned in
common and private land ownership rights are only partly dis-
solved. In the third stage, higher level agricultural production
cooperatives are organized; these are considered fully socialistic and
require that all means of production, including land, be owned in
common. The process is not simultaneous throughout the country
and a mixture of stages exists at any one time.
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Hanoi rates only half of all southern cooperatives
as "good." Most of the cooperatives are not an
optimum size, they tend to act independently
instead of coordinating plans at district and
provincial levels, and there are not enough prop-
erly trained party functionaries to manage them.
South of Thuan Hai, and especially in the
Mekong Delta, socialization is piecemeal. Areas
long under Communist control during the war-
such as parts of Minh Hai and Kien Giang-are
heavily socialized, and all New Economic Zones
have been socialized from the start. Otherwise,
the government has tried to tighten control over
private farmers by taxing away as much as 50
percent of output and by requiring them to
purchase needed fertilizer, tools, and other inputs
from state agencies with payment in produce.
"Pilot cooperatives" have been set up in many
districts in hopes that a demonstration effect will
sway peasants to reform voluntarily. So far,
farmers have resisted socialization. They have
limited surplus production because of high tax
rates and because a lack of consumer goods
makes valueless the chits earned by rice sales to
the state.
This passive resistance by southern farmers
may no longer be tolerated by Hanoi. State grain
collection has fallen steadily since 1976 and
production is not rising as fast as possible. Hanoi
probably has not abandoned its goal of socializa-
ion by 1980, and the sweeping nationalization of
;ommerce in March 1978 appears to be a pre-
~de to more rapid change in the agricultural
actor. Significantly, the architect of North Viet-
~am's bloody 1956 land reform, Truong Chinh,
s now Chairman of the National Assembly. So
>E'ar he has been. restrained only by Premier Pharn
Van Dong's desire to explore more pragmatic
methods first. Should forced collectivization
come to pass, it will place tremendous hardships
on the rural peasantry and undoubtedly will
generate strong resistance from them.
Given the chaotic condition of agriculture in
he south, forced collectivization may be the
ost effective means of mobilizing production to
eat state needs. But whether it can be accom-
plished by the early 1980s is another question.
Formal socialist organization of agriculture it
the People's Republic of China, for example, wa,.
carried out only after eight years of preparations.
and the groundwork for agricultural reform in
northern Vietnam was begun in 1945 under the
Viet Minh, with comprehensive socialization firs'
initiated in 1959 after land reform was
implemented.
Regardless of the pace of socialization, Ha
noi's goal of rice self-sufficiency by 1980 is now
out of reach. It would require annual output
gains of some 10 percent, measured from the
1976 level of 12 million tons, which Vietnam has
neither the technology nor the expertise ttn
achieve. Under the existing pace of socialization,
and if farmers have some material incentives to
boost output, growth rates of about 5 percent
could result in self-sufficiency by 1985. If Hanoi
moves too quickly now to collectivize Mekong
Delta farmlands, output will likely stagnate or
fall for several years as reforms sink in. Should
output then rebound, perhaps growing by 5 to lt)
percent annually, rice self-sufficiency still would
not be attained until the mid-1980s.
The so-called New Economic Zones are the
key to restructuring Vietnamese society. The
zones are the vehicle through which Hanoi plans
to relocate and provide work for millions of
people displaced by the war, to redistribute pop4-
lation from the overly dense Red River and
Mekong River Deltas, and to increase food. pra-
duction.? The resettlement program also per-
forms apolitical and social function by inserting
more trustworthy northerners among the leas
' During the war, large numbers of people in the south fled to the
cities, creating a labor shortage in the rural areas and contributing
to low agricultural yields. Ho Chi Minh City's population, fir
example, grew at the extraordinary rate of 7 percent annually
between 1960 and end 1975, climbing from 1.4 million to nearly 4
million. At the close of the war, the south was over one-third
urbanized, while only 10 percent of the population in the north lived
in cities of more than 20,000. The population of Vietnam is
currently estimated to be 51.2 million. It is divided fairly evenly
between north and south and is growing at the rate of 2.6 parent
annually.
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Vietnam Provinces`
"Based on map flank Chink
Viet Nam, " Nanei, 1976
Provinces containing new
economic zones and other
population relocation sites
150 Mlles
.150 Kilomelera
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ideologically committed southern population.
Hanoi hopes to resettle 4 million people between
1975 and 1980, including 1.5 million people from
Ho Chi Minh City. Long-range plans call for the
relocation of 10 million people nationwide by
1990.
The settlements are located on farmlands
abandoned during t:he war or on large tracts of
previously uncultivated land. Zones usually con-
tain 4,000 to 5,000 hectares each, enough land
for over 1,000 families. The south has the great-
est number of zones with 82 reportedly estab-
lished as of March 1978.
The zones are organized differently depending
upon their location and the objectives of . Viet-
namese officials. Some, for example, are little
are than villages run by committees trained
nd appointed by the Communists; others serve
s reeducation camps for former South Vietnam-
se Arrny officers. Sites in the south have been
elected for relocation of much of the urban
population in the south; other areas throughout
the country are designated for resettlement by
residents of the cities of central Vietnam, for
resettlement of Montagnards, and for receiving
the surplus population from the Red River Delta
of the north. Large, zones in the south are run as
collective and state farms from the start and
form the nucleus for the full socialization of the
agricultural sector there. In the north, many of
the new zones are the basis for consolidating
small cooperatives and expanding wage-labor
state farms.
Anywhere from. 1 million to 1.5 million per-
sans already have been relocated in the zones. An
April 1978 Hanoi news report stated that 1.5
illion South Vietnamese, including 660,000
rban dwellers, had returned to their native
illages or had moved tc- the zones during the
receding three years. The chairman of the State
lanning Comnnission has said that 1 million
eople were resettled in 1976-77. A news report
rorn Ho Chi Minh City ill April 1978 stated that
50,000 residents of the city had moved to the
rnintrvside slnc,e the end of the war.
The range in the estimate for persons moving Industrial enterprises have recoverea rrom
to the zones rnay. reflect the fact that many most of their wartime damage, but on the whole
people have returned to urban areas after being
relocated. As many as 250,000 to 500,000 are
believed to have returned to Ho Chi Minh City,
giving that city a current population of about 3.5
million. In any event, resistance from southern
urban residents to resettling appears to be in-
creasing. In some towns, as many as 70 percent
of those ordered to the zones managed to avoid
deportation. Refugees from Ho Chi Minh City
estimate that only 20 percent of those ordered to
resettle have actually gone and not returned.
The relocation problem reflects the harsh liv-
ing conditions in the new economic zones. A
foreign journalist who visited some zones called
them "the Vietnamese equivalent of Siberia.'"
Refugee reports depict them as death camp4
guarded by armed cadres where the work is
arduous, provisions few, housing frequently non-
existent, and the chances of starvation high.
Officials in Ho Chi Minh City acknowledge
that, in the rush to relocate people, sites are often
improperly prepared. Army units, normally en-
gaged in clearing land and improving irrigation
in the zones, have been diverted by hostilities
along the Cambodian border._ Ensuing skirmishes
have act~dally destro ed a number of the sites in
TTav Ninh,~4_ns Th v. An Giang,_ .and.. Kierl
Gian Provinces, forcing the government to slow
programs for resettling the thinly populated
areas along the Cambodian border.
Hanoi may be setting the stage for a more
radical use of zones to transform South Vietnam-
ese society. The March 1978 decree nationalis-
ing all private commerce deprived merchants of
their livelihood and made them instant candi-
dates for movement to relocation sites. Moreover,
the unemployed, former soldiers and government
officials, and skilled and unskilled laborers are
being compelled to move to the agricultural
frontier. To enforce resettlement, for example,
Hanoi is denying rations and identification cards
to those scheduled for the zones, leaving them no
alternative except to go.
Industry
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the sector is producing belcaw plan goals. Indus-
trial production has increased about 10 to 15
percent annually since its 1975 low. Large north-
ern installations that were put back on stream
soon after the end of the war? account for the bulk
of the increase. Most branches of heavy industry,
notably electric power, mtaallurgy, chemicals,
cement, and coal 5 are exceeding scheduled tar-
gets. Light industries, such as food processing,
paper, plywood, glassware, plastic:;, and deter-
gents, are generally producing on or slightly
below target. Production oi` building materials,
fertilizer, machinery, spare Darts, and almost all
consumer goods is well belc+w planned levels.
Shortfalls in consumer goods and light manu-
factures reflect the failure of southern industry
to recover after 1975. In the turmoil of South
Vietnam's fall, many installs?tions were damaged
by northerners and southerners alike. Later,
machines were indiscriminately removed and
sent north on Hanoi's orders. The refugee exodus
in 1975 included most of the south's capable
industrial managers and skilled technicians. In
addition, southern industries depended to a high
degree an imports of raw an