THE ECONOMIC SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82S00205R000200010017-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 22, 2016
• Document Release Date: July 6, 2012
• Sequence Number: 17
• Publication Date: March 23, 1970
• Content Type: IR

Declassified in Part - Sanitized Copy Approved for Release 2012/07/06: CIA-RDP82S00205R000200010017-4
Intelligence Report
DIRECTORATE OF
INTELLIGENCE
The Economic Situation in South Vietnam
(Biweekly)
Secret
112
23 March 1970
No. 0418/70
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Secret ``" r
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
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Secret
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
23 March 1970
INTELLIGENCE MEMORANDUM
The Economic Situation in South Vietnam
Summary
Deliveries of rice from the delta to Saigon during
the first two months of 1970 were the largest for any
comparable period since 1965, but still were well below
expectations. Farmers apparently still are holding out
for higher prices, while the big rice merchants are
waiting for paddy prices to fall.
Saigon retail prices have declined gradually since
Tet and on 16 March were only five to six percent above
the level of December 1969.
Confidence in the piaster fell to a new low in
mid-March as the government acted to reduce the flight
of capital, and rumors of other measures were wide-
spread. On 17 March the price of dollars reached a
new high of 390 piasters per dollar.
ANNEX: Monthly and Weekly Currency and Gold Prices
(Graph)
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Delta Rice Deliveries
1. Deliveries of rice from the delta to Saigon
during January and February were the highest for any
corresponding period since 1965, but still were well
below expectations. The 1969/70 crop, of which the
major portion already has been harvested, is estimated
to be the largest in five or six years, and officials
believe that 500,000 to 600,000 metric tons of rice
should be available for delivery to Saigon during
1970. Deliveries during January and February--when
shipments traditionally are at a high level--totaled
69,300 tons, a rate that, even if continued, would
result in total deliveries for the year of only about
420,000 tons. Paddy prices for farmers have been high
for many months and after a slight decline in January
began to rise again. Yet, despite the big crop and
the high prices, farmers have been reluctant to sell.
2. Surveys by both Vietnamese and US agricultural
representatives indicate that all parties in the rice
trade are engaged in speculation. The farmers are not
selling because they have less need for cash following
last year's high paddy prices and they expect prices to
rise still further. Moreover, they fear continuing
inflation and prefer to hold rice rather than piasters.
At the same time, some small rice dealers reportedly
are storing more rice than usual and even some mer-
chants not usually in the rice trade are purchasing
paddy. The major Chinese rice merchants, however, are
not buying rice for shipment to Saigon until paddy
prices fall--a development they expect in May when
farmers need cash for planting. They claim that the
price at which the government has offered to buy milled
rice is not high enough for them to make a profit. If
paddy prices continue to rise, which most observers
doubt, the farmers and small merchants will gain. The
big rice dealers will gain only if paddy prices fall
and Saigon retail prices remain high, which could occur
only for a short time.
3.
The
farmers and small merchants probably will
not be
able
to hold their rice off the market much
longer,
and
as lower-priced imports arrive in quantity,
prices
will
begin to fall. The extent of the decline
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and its effect on producer incentives will depend in
large measure on the government's ability to balance
the distribution and prices of both domestic and im-
ported rice. This will be a very difficult task,
judging from the history of periodic crises in the
rice market during the past few years.
4. Retail prices in Saigon have declined grad-
ually since Tet. Partial data indicate that between
mid-February and mid-March the USAID index declined
about eight percent and on 16 March was only five to
six percent above the monthly average price index for
December 1969.
5. Saigon newspapers succeeded in pressuring
the government to rescind the 100-percent tax increase
on imported newsprint announced last month. Following
a three-day protest shutdown by all Saigon dailies the
government agreed on 9 March to exempt from the higher
tax rate the quantity of newsprint that the newspapers
themselves determine is necessary for publication--
probably the bulk of imports. In addition, the dis-
tribution of newsprint henceforth will be controlled
by the Press Council, an organization of publishers,
editors, and journalists, rather than the Ministry
of Economy.
Currency and Gold
6. Saigon black market rates for dollars and
gold reached new highs on 17 March as the government
acted to stem the flight of capital, and rumors of
other measures abounded. The price of dollars, which
averaged 338 and 344 piasters per dollar during Jan-
uary and February, reached 390 piasters on 17 March.
.The price of a dollar's worth of gold leaf rose to
469 piasters compared with an average rate of 426
piasters during February. The rate for MPCs (scrip),
which averaged 177 piasters per dollar during Feb-
ruary, fell to 150 piasters on 13 March as press re-
ports indicated that the government intended to change
the official rate for scrip to 180 piasters. Scrip
is now on a par with the dollar at 118 piasters. The
rumors did not become fact, however, and by 17 March
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renewed demand for scrip had boosted the black market
rate to 186 piasters per dollar.
7. In a move designed to cut back the illegal
transfer of piasters and dollar instruments out of
the country the Ministry of Interior recently stopped
issuing exit visas for tourist travel to Hong Kong,
Singapore, and Bangkok. This measure probably will
have little effect, however, since the bulk of the
transfers apparently are accomplished by other methods
such as transfers through foreign bank accounts.
Nevertheless, the government's action combined with
rumors of devaluation and higher taxes on luxury goods
have reduced confidence in the piaster to an all-time
low. (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
MAR
,464
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Secret
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