THE ECONOMIC SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82S00205R000200010009-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 20, 2016
• Document Release Date: August 25, 2006
• Sequence Number: 9
• Publication Date: July 13, 1970
• 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
112
13 July 1970
No. 0426/70
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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.
GROUP 1
FXCI,UDED FROM AUTOMATIC
DOWNGRADING AND
DECLASSIFICATION
Secret
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
The Economic Situation in South Vietnam
Summary
Since the passage of the land-to-the-tiller
program in March, many tenant farmers reportedly
have stopped paying rent to their landlords. The
government apparently has decided to accept this
de facto elimination of rents as official policy
in order to maximize the political impact of the
land reform,
In order to replenish foodstuffs and other
supplies captured or destroyed by Allied forces
in Cambodia, the Viet Cong have ordered a speed-up
in tax collections in the delta.
Retail prices in Saigon rose 24 percent during
the first half of 1970 compared with an increase of
only 10 percent during January-June 1969. Black
market currency and gold prices declined during the
two weeks ending 6 July.
ANNEX: Currency and Gold Prices (Graph)
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Elimination of Land Rent
1. The land reform program enacted in March
1970 apparently has resulted in the virtual elim-
ination of rent payments by tenant farmers? When
the hand-to-the-tiller law was passed, officials
indicated that rent payments to landlords would
cease at the time the tenant?s application for
title to the land was approved. Since March, how-
ever, there reportedly has been some resistance by
farmers in the delta to continued rent payments,
and the government has decided to maximize the
political impact of land reform by eliminating rent
for all tenant farmers at the same time, Although
the decree to implement the land reform program,
which was signed by the prime minister early in
June, does not specifically state that rents are
terminated, it provides that all cultivated lands
subject to the law are considered to have been ex-
propriated as of 26 March 1970, the day the law
was promulgated by President Thieu? The implication
of the implementation decree is that the land is no
longer the property of the landlord and that he is
not entitled to collect rent. The implementation
decree has not yet gone into effect, but US officials
are confident that immediate termination of rents,
which apparently already has occurred in many areas,
will become official government policy.
2m The remission of rents will be a real bene-
fit to the more than 500,000 tenant farmers who other-
wise might have had to continue paying rent for sev-
eral years while waiting for title to the land. At
the same time, however, it will adversely affect the
landlords who will lose all rental income but will
not be paid for their land until some unspecified
future date, For those landlords whose incomes con-
sist largely of rents, the Ministry of Land Reform
and Agriculture is considering some kind of advance
payment procedure or special loan until final pay-
ment can be made, Officials also are proposing that
landlords be given an additional payment for their
land, which would compensate them for the delay be-
tween expropriation and compensation.
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3. During the past year the lot of most South
Vietnamese farmers has improved considerably. There
was a good crop combined with high farm prices, im-
proved security which resulted in less Viet Cong
taxation and greater access to markets for both pur-
chases and sales, and now the elimination of rent.
In view of these improvements in the rural economy
during a period when real income of urban workers,
especially government employees, declined substan-
tially, some officials believe that on grounds of
equity the government should begin a serious effort
to tax the farmers. One proposal is to increase the
land tax, which is minimal and not being collected at
all in many areas. Property tax bills could be pre-
sented to new landowners at the time they receive
their titles. The land reform law provides, however,
that new owners are exempt from land taxes during
the first year of ownership. Another proposal is
to increase custom duties on imported agricultural
machinery and other inputs. While all of these
measures have merit, any move to tax the peasants
will be administratively and politically difficult.
VC Conduct Special Fund Drive
4. The Allied movement into Cambodia in May
apparently has forced the Viet Cong (VC) to speed
up revenue collections in the rich delta area in
order to compensate for losses of foodstuffs and
other supplies in Cambodia. A document issued by
the VC My Tho (Government of Vietnam Dinh Tuong)
Province Committee made an urgent plea for money to
compensate for logistical losses in Cambodia and
directed that all collection methods be used to
gather immediately at least two thirds of the tax
quota for the second half of 1970. Prior to the
Allied operation, Communist authorities also levied
emergency requirements for financial aid and, more
importantly, additional manpower on the delta in
order to support their activities in Cambodia.
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Prices*
5. Retail prices in Saigon increased five
percent during June and another one percent during
the week ending 6 July. According to the USAID
monthly average index, Saigon retail prices rose
24 percent during the first half of 1970 compared
with an increase of only 10 percent during the
first six months of 1969.
Currency and Gold
6. Saigon black market dollar and gold prices
declined during the two weeks ending 6 July to the
lowest levels since early March. The price of dol-
lars declined 11 piasters to 375 piasters per dollar,
but still was more than triple the official exchange
rate of 118 piasters per dollar. The price of a
dollar's worth of gold leaf fell 19 piasters to 464
piasters. The rate for MPC (scrip) also declined--
from 210 piasters per dollar on.22 June to 190
piasters on 6 July. The volume of transactions re-
portedly has been low for several weeks as traders
await legislative action on the government's request
for decree powers over economic affairs. (A graph
on monthly and weekly currency and gold prices is
included in the Annex.)
SE'ICE'I
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Saigon Free Market Gold and Currency Prices
600
GOLD Basis gold leaf worth $35 per troy ounce
US $10 GREEN
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