THE ECONOMIC SITUATION IN VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82S00205R000200010007-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 22, 2016
• Document Release Date: July 6, 2012
• Sequence Number: 7
• Publication Date: August 10, 1970
• Content Type: IR

Declassified in Part - Sanitized Copy Approved for Release 2012/07/06: CIA-RDP82S00205R000200010007-5
i%wi Secret '
Intelligence Report
DIRECTORATE OF
INTELLIGENCE
The Economic Situation in South Vietnam
(Biweekly)
Secret
112
10 August 1970
No. 0428/70
Declassified in Part - Sanitized Copy Approved for Release 2012/07/06: CIA-RDP82S00205R000200010007-5
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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.
GROUP 1
EXCLUDED FRAM AUTOMATIC
DOWNORADINO AND
DECLA95IF1CATIDN
Secret
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IJ.L:i tJ1\ L 1 NEW
CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
The Economic Situation in South Vietnam
Summary
Industrial output in South Vietnam increased at
a record rate of 25 percent in 1969. The textile in-
dustry, which suffered heavy losses of plant and equip-
ment during the 1968 offensives, achieved some of the
largest gains.
Shortages of funds and supplies at the Central
Office of South Vietnam (COSVN) apparently have led
to orders for an austerity drive by subordinate Viet
Cong units near Saigon.
For the first time in many weeks retail prices
in Saigon declined. The USAID index declined four
percent during the two weeks ending 3 August. Black
market currency and gold prices remained generally
stable.
Monthly and Weekly Currency and Gold Prices (Graph)
SECRET
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VL Vl\L 1
Industrial Production
1. Industrial output in South Vietnam grew at
a record rate in 1969. According to the official
index of industrial production, output increased 25
percent in 1969 compared with an average annual rate
of 13.7 percent during 1963-67 and a'decline of 9
percent in 1968 when many facilities were severely
damaged during the enemy offensives. Of the most im-
portant industrial products (see table), output of
all but one--cigarettes--not only exceeded the rela-
tively low level of 1968 but surpassed that of 1967.
It is not clear why cigarette production failed to
regain the 1967 level, but there is some evidence
that the supply of American
market increased in 1969.
cigarettes on the
black
Unit of
Measure 1967
1968
1969
Cotton Yarn
(000
m.t.)
7.4
5.0
7.6
Cotton Fabric
(mil
mtrs)
43.1
28.5
50.4
Beer
(mil
ltrs)
130.0
119.4
134.2
Soft Drinks
(mil
ltrs)
89.5
92.3
120.4
Refined Sugar
(000
m.t.)
90.3
96.1
108.4
Cigarettes
(000
m.t.)
11.3
10.3
10.5
Glass Bottles
(000
m.t.)
12.5
10.1
16.5
Paper and
Paperboard
(000
m.t.)
20.8
19.6
33.2
Cement
(000
m.t.)
180.8
144.7
247.2
Electric Power
(mil
kwh)
681.8
715.2
1,045.4
2. The textile industry, which was hardest hit
during the 1968 offensives, was able to make a quick
recovery thanks to US and Vietnamese government loans
and increased domestic procurement of cloth by the
Vietnamese Army. During the first quarter of 1970
output continued to grow at a rapid rate with produc-
tion of cotton yarn and fabric increasing 65 and 9
percent, respectively, above the level of the first
quarter of 1969.
3. With the exception of cotton fabric, cement
production made the largest gain (71 percent) in 1969.
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There is only one producer in the country, the govern-
ment-owned Ha Tien Cement Co., which has a clinker
plant in Kien Giang Province and a grinding facility
at Thu Duc near Saigon. Ha Tien's production declined
considerably in 1968 because poor security conditions
reduced demand for building materials and impeded ship-
ments of clinker from the delta to the Thu Duc grinding
plant. In 1969 the company produced about 35 percent
of the country's commercial supply of cement and cur-
rently is negotiating with a French firm to increase
by two thirds the capacity of the Thu Duc plant.
Viet Cong Austerity Campaign Near Saigon
4. The Viet Cong (VC) in one area near Saigon
have ordered sharp reductions in expenditures and in
the use of certain supplies as a result of problems
caused by the allied incursion into Cambodia.
5. The retrenchment in SR-5 probably reflects
shortages of funds and supplies at a higher level of
command, i.e., the Central Office of South Vietnam
(COSVN), since the roughly 3,000 combat and support
personnel of SR-5 are heavily dependent on COSVN sub-
sidies. Although the extent of COSVN support is un-
known, it probably approximates that of nearby SR-1
where at least 90 percent of total operating funds
have been obtained from COSVN. Any attempt by SR-5,
therefore, to operate with only minimum support from
COSVN would seriously hamper enemy activities in that
area.
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6. Retail prices in Saigon declined four percent
during the two weeks ending 3 August--a rare event thus
far this year. The decline reportedly was spread
throughout the 32 food and nonfood items sampled for
the USAID index. As of 3 August Saigon prices were an
estimated 26 percent above the average price level of
December 1969.
Currency and Gold
7. During the two weeks ending 4 August Saigon
black market currency prices remained generally stable
near the average price level of the past three months.
On 4 August the price of dollars was 384 piasters per
dollar compared with an average of 382 piasters during
May-July. The rate for MPC (scrip) was 202 piasters
per dollar on 4 August compared with the three-month
average of 199 piasters. The price of a dollar's
worth of gold leaf was somewhat less stable during
May-July, but on 4 August was only three piasters
higher than the July average of 466 piasters. (A
graph on monthly and weekly currency and gold prices
is included in the Annex.)
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Saigon Free Market Gold and Currency Prices
GOLD Basis gold leaf worth $35 per troy ounce
US $10 GREEN
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