SOUTH VIETNAM'S EXPORTS: RECENT DEVELOPMENTS AND PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001700050030-2
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 18
• Document Creation Date: December 20, 2016
• Document Release Date: March 10, 2006
• Sequence Number: 30
• Publication Date: March 1, 1973
• Content Type: IM

Approve,. Release .06104119 CI,..5.0875.01700050030,
Approve,. Release .06104119 CI,..5.0875.01700050030,
?
Approved For Release 2006/04/19 : CIA-RDPk5?
DIRECTORATE OF
INTELLIGENCE
1 30 -2
Confidential
- 3
Intelligence Memorandum
South Vietnam's Exports: Recent Developments and Prospects
Confidential
ER IM 73-33
March 1973
Copy No. S5
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
25X1 Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
1111111111111111111?111111111111111111111111111111
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
CONFIDENTIAL
South Vietnam's Exports:
Recent Developments and Prospects
March 1973
South Vietnam's merchandise exports, depressed by the war and equal to only a
small fraction of imports. nearly doubled in 1972, reaching about US $23 million.
Dominated in earlier times by rice and natural rubber, exports from South Vietnam had
peaked in 1960 at about $84 million. As security in the countryside began to deteriorate
in 1965, exports fell to only $12 million by 1968. Despite economic recovery during
1969-71, exports stagnated at this level because of a consistently overvalued piaster.
The resurgence of exports during I 972 was largely the result of government measures
conceived to stimulate export industries and included the long-overdue devaluation of the
piaster and an export subsidy program. The most striking aspect of the increased level
or exports in 1972 was the emergence of product lines that in the past had not been
significant on the export list. In particular, shrimp and forestry products emerged as major
exports along with rubber, although the relative importance of rubber diminished.
Despite military and political uncertainty surrounding the cease-fire agreement, most
indicators point to further expansion of exports during 1973. If the stimulus of recent
government measures is sustained, South Vietnam could export as much as $50 million --
largely in shrimp and logs ? during 1973, and, as a result of events already in train,
exports will probably not fall below $25 million under any but the worst military
conditions.
Over the longer term, world demand trends for fish and forestry products appear
favorable for continued growth or their export by South Vietnam. Exports of these
commodities could increase to significant proportions, while only accounting for a
fractional share of total world demand. Other agricultural commodities -- such as fresh
fruits and vegetables -- could also account for a substantial increase in South Vietnam's
CX ports.
Note: Comments and queries regarding this publication are welcomed. They may be
25X1 directed to
Approved For Release 200eatinarat3W2i0875R001700050030-2
25X1
111111101111.11111=111.111152.11111Mai
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
CONFIDENTIAL
D ISCUSSiON
Past Trends in Commodity Exports
1. The economy of South Vietnam historically has not depended
heavily on exports as a stimulus to output or a source of foreign exchange.
Commodity exports expressed as a share of national output have remained
especially low, accounting for less than 3% of GNP in any year since 1962.
More important, they have never covered more than about one-third of
imports since independence was achieved in 1954. The escalation of the
war in 1965 led to a further deterioration of the export sector. This --
coupled with government policy unfavorable to export development and
a consistently overvalued piaster -- resulted in a steady decline in exports
through 1969 and ensuing stagnation until the past year.
Composition of Exports in the Post-Independence Era
2. The value of South Vietnam's exports between 1955 and the
beginning of large-scale hostilities in 1965 (see Figure 1) fluctuated
considerably mainly because of the vagaries of domestic agricultural
Figure 1
South Vietnam: Exports
Million US $
100
80
60,
40
20
0
llI
I
LLLJI
I
1 I
I
I
1955 60 65 70 72
515342 373
1
Approved For Release ciRki)4V1IPUT-U141-00875R001700050030-2
Approved For Release 2006MSIFFMNPIIM875R001700050030-2
production and world market prices. Two major commodities ? rice and
natural rubber ? traditionally accounted for about 85% of total exports.
Rice exports rose from a value of $8 million in 1955 to an annual level
of $35.7 million in 1963, dropped sharply in 1964 to $5.4 million, and
ceased completely by 1965 (see the Table). Export earnings from natural
rubber during the same period peaked at a level of $48.8 million in 1957
and after 1961 began a steady decline through 1965, attributable largely
to the decline in the world price levels for rubber.
3. Other commodity exports from South Vietnam were negligible
until the most recent times. Fish products, feathers, and tea -- though
ranking among the "leading" exports ? accounted for only a small fraction
of the total. Other commodities oil the export list throughout the years
included cinnamon, fresh fruits and vegetables, vegetable oils, kapok, duck
eggs, sand, wood products, and scrap iron.
Geographic Patterns of Exports
4. The basic geographic pattern of South Vietnam's exports was
established in this early period and remained largely unchanged until very
recent times.1 France was the major purchaser of South Vietnam's
commodity exports, accounting for roughly 35% annually. France's historic
ties and economic interests, particularly in the rubber industry, explained
its consistently high share. Other principal recipients of South Vietnam's
exports included West Germany (rubber and feathers), the United Kingdom
(rubber), and Japan (rice, in the early 1960s). Other markets in Asia
included Singapore, Hong Kong, Taiwan, and South Korea, none of which
ever received more than 13% of total exports. Exports to the United States
were relatively insignificant -- less than $2 million annually throughout
most of the 1960s ? and consisted primarily of feathers, cinnamon, and
rubber.
Effects of the War on Export Trends
5. The step-up of the war, beginning in 1965, soon caused a major
drop in exports. Deterioration of security in the countryside reduced rice
output and interfered with rice marketing, leading to a complete cessation
of rice exports in 1965. Natural rubber production, which dropped 13%
during 1965, continued to decline through 1969. As world prices for rubber
declined, foreign exchange earnings from this commodity fell even further,
from $26 million in 1965 to about $9 million in 1970. Wartime disruption
precluded development of other agricultural products for export. A modest
recovery of rubber output in 1970 and 1971 as security conditions improved
1. Figure 2 compares geographic distribution of South Vietnam's exports in 1963 and 1970, by
major commodity.
2
Approved For Release 20CANN:faktaliAto0875R001700050030-2
IVIINJUI3NOD
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
Composition of South Vietnamese Exports ,by Major Categorya
Rice
Rubber
Fish
Products
Feathers
Tea
Other
Total
Million
US
Per-
cent
Million
US$
Per-
cent
Million
US$
Per-
cent
Million
US$
Per-
cent
Million Per-
US$ cent
Million
US$
Per-
cent
Million Per-
US$ cent
1955
8.0
11.6
40.1
58.1
0.1
0.3
1.4
2.0
0.1
0.1
19.2
27.8
69.0
100.0
1958
13.5
24.5
35.6
64.5
0.2
0.4
0.5
0.9
0.4
0.7
5.0
9.1
55.2
100.0
1960
27.2
3/.2
48.0
56.9
0.2
0.2
0.6
0.7
1.0
1./
7.4
8.8
84.4
100.0
1962
1963
8.8
35.7
15.5
37.9
67.0
0.5
0.9
0.9
1.6
1.9
3.4
6.6
11.7
56.6
100.0
46.5
33.5
43.7
0.6
0.8
0.7
0.9
1.9
2.5
4.3
5.6
76.7
100.0
1965
1966
26.0
73.2
0.9
2.5
0.9
2.5
/.1
5.9
5.6
15.8
35.5
100 0
1967
22.0
79.7
1.0
3.6
0.8
2.9
2.1
7.6
1.7
6.2
27.6
100.0
1968
13.3
81.1
0.6
3.7
0.5
3.0
1.0
6.1
1.0
6.1
16.4
100.0
1969
9.7
82.9
0.1
0.9
0.3
2.6
0.7
6.0
0.9
7.7
11.7
100.0
1970
9.4
83.9
0.1
0.9
0.2
1.8
0.1
0.9
1.4
12.5
11.2
100.0
1971
8.9
78.1
0.1
0.9
0.3
2.6
0.1
0.9
2.0
17.5
11.4
100.0
9.4
76.4
0.5
4.1
0.4
3.3
2.0
16.3
12.3
100.0
a. Because of rounding, components may not add to the totals shown.
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
91VIINHUMNOD
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
CONFIDENTIAL
South Vietnam: Exporis, by Country
of Destination and Major Commodity
United States
United Kingdom 73.0
West Germany 8.6"t,
Janan 5.6"0
France 21.4u
Other Countries 52.70
515343 3,3
$76.7 Million $11.4 Million
1963 1970
Rubber
Figure 2
United States 2.6"0
United Kingdom 6.1.
West Germany 7.9.0
Japan 9.1i.0
1,ritnee
Other Countries 25.6.,,
Rice Other
was not accompanied by proportionate increases in foreign exchange
earnings because of declines in the world market price.
6. Other product exports ? such as fish, forestry products, tea,
feathers, and cinnamon ? were also adversely affected by the erosion of
security in the countryside. Abandonment of productive agricultural land,
curfews and off-limits areas imposed on the fishing industry, government
restrictions and enemy taxation of logging operations, and general disruption
of distribution facilities all served to depress exports further. By 1969, total
exports had fallen to a historical low of only $11.2 million, reflecting in
part the large-scale and broadly scattered economic disruptions brought
about by the 1968 Tet military offensive.
7. Exports did not recover as rapidly as output from the low of
the 1968 Tet offensive, and rose only $1 million between 1969 and 1971.
In no small measure, this lag was the product of an increasing overvaluation2
2. Although continuing rapid inflation in South Vietnam called for frequent adjustment of exchange
rates, the GVN was slow to respond. Thus, during 1968-70 domestic prices rose 126%, but the
export rate held steady at 118 piasters per US $1 until October 1970.
4
Approved For Release 20a/IDINEMENN5Vb0875R001700050030-2
Approved For Release 2006/MifittMer5R001700050030-2
of the piaster at the official exchange rate and a lack of interest on the
part of the government for measures that would stimulate exports. An
additional cause was the fact that marketing of the lion's share of exports
was in the hands of French rubber planters and the government had had
only limited experience in this field.
Recent Government Policy Measures Affecting Exports
8. In the later part of 1970 the Government of Vietnam (GVN)
moved from a single exchange rate to a multiple-rate structure. In general
Mins, existing low rates for essential imports were retained while rates for
luxury goods imports and merchandise exports were raised greatly. The
exchange rate for most merchandise exports was increased from II 8 piasters
per US $1 to 275 piasters per US $1 (see Figure 3). Successive devaluations
South Vietnam: Export Exchange Rates
piustprs
600
,100
200
Figure :3
0
1966 67 7(1 71 7:3
(?\011111fil. 1,111. 01'110,1 Iry dosi,inett,r1 pl.t.tml
Jun,. .P21,. July 1:111. Amitot ()I?tr,1)1,:. .115, II Iloovnif,,, .1,5. 3,1 ?,?1
.11(1111eirt 1973, .175,
5,176 3 7:1
5
Approved For Release 20giaRIEtkik41660875R001700050030-2
Approved For Release 20 700050030-2
during 1971 raised the rate to 410 piasters per US $1 by the end of the
year. During 1972 the rate was raised almost monthly by 10 to 20 piaster
increments to 465 piasters per US $1 on 30 December and 475 piasters
per US $1 on 26 January 1973.
9. As an additional stimulus to exporters, the GVN in May 1972
instituted an export subsidy program. Under this program, most exports
were allowed a subsidy equaling the difference between 500 piasters and
the official export exchange rate, which continued to be shifted up. In
mid-September this subsidy was raised by a flat 50 piasters, bringing the
effective rate to 550 piasters per US $1. At the same time an additional
25-piaster subsidy for a period of no longer than one year was authorized
to those exporting goods never before sold abroad. In January 1973 the
general subsidy was again raised, this time to a flat 100 piasters above the
official 475 rate. Thus the effective exchange rate for exports recently has
been 575 piasters per US $1, and exporters of new products are eligible
to earn 600 piasters per US $ L Other export stimuli introduced by the
government include an increase from the earlier 3% to the present 10%
in the share of hard currency sales that exporters can reclaim for their
own use, continuation of unlimited credit at preferential interest rates, and
elimination of taxes on certain commodity exports.
10. In addition to providing stronger export incentives, the
government has taken steps to develop a coordinated export policy,
encourage export-related private-sector growth, and streamline export
procedures. Late in 1971 a National Export Development Council was
formed as a joint public/private body to formulate and coordinate export
planning and development. Composed of members from all relevant
government ministries and representatives from the business community,
the Council -- although not fully activated till the fall of 1972 ? appears
to provide a suitable framework for export-policy formulation. Another
measure is the proposed development of an export-processing zone to be
located in a portion of the US base at Long Binh near Saigon. Although
still in early stages of planning, the zone is expected to provide export
industries with ample investment incentives and tax privileges.
11. The overall effect of the 1971-72 measures on exports is fairly
easy to explain, even though it is much more difficult to relate it to the
exportability of particular products. In short, the successive devaluations
of the piaster have made South Vietnam's products and services less
expensive to foreign buyers than they have been at any point in modern
times. Specifically, they have led to a comparative price impt:ovement of
somewhere between 10% and 90% over 1963, an outstanding export year
for South Vietnam, and much greater improvement over the situation in
6
COWFIDENTJAL
Approved For Release 2006/ 4/1u : LAH-KUlablO 100875R001700050030-2
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
CONFIDENTIAL
1968 (see Figure 43). Thus, South `..ietnamese whose particular products
have been priced too high for the world market in piaster terms have seen
Figure 1
South Vietnam: Changes in the Purchasing Power
of the Piaster
190:1 loo
200
175
t 150
a.
tr.
125
100
50
25
Err,,?1 Ft i, swit h
ii bsidy
Index 11:1,edti It I
Index
191;3
-
6.1
11111, 13111 ti he '',11,111111T
111,1,,
_I _1 1 I
65 00 07 08 69 70 71
72
a dramatic improvement in competitiveness, and those who were able to
sell at earlier, less favorable exchange rates can enjoy higher profits and
afford to expand their enterprises without changing the foreign-exchange
prices to overseas buyers. Indeed, there is some clear evidence that increased
profits have stimulated investment in some export lines. The result has been
3. The indexes in Figure 4 (with the ratio for 1963 serving as the base) represent the quantity
of goods that can be purchased in South Vietnam for the piaster equivalent of, for example, US $100
compared with the quantity of goods purchased for US $100 in the world market. By rising above
the 1963 level in 1972, the two internal price indexes ii,dicate that South Vietnam's competitive
position is now superior to that of 1963. Because no single available price index is entirely satisfactory
to represent the piaster price of South Vietnamese exports, the two indexes were constructed to
bracket the "true" index.
CONFIDENMAL
Approved For Release 2006/04/19 : CIA-KUVOI3 u0875R001700050030-2
Approved For Release 200VQ4/19 : GIA-RDP85T00875R001700050030-2
CONFIDENTIAL
the considerable expansion of fishing and logging activities. Unfortunately,
the absence of detailed data on operating costs in other activities makes
it comparatively difficult to predict where similar expansion will arise next.
Emergence of New Export Lines
12. Despite the severe 1972 business recession and the North
Vietnamese offensive last March, merchandise exports from South Vietnam
last year nearly doubled to reach some $23 million. The significance of
this upsurge lies not only in the absolute gain but also in the new commodity
composition. While traditional exports, in particular natural rubber,
declined, them was a surge in exports that had been insignificant or nil.
Based on preliminary payments data, 1972 exports were as follows:
Million US $
Percent
Total
22.7
100
Fish products
5.5
24
Forestry products
3.0
13
Natural rubber
7.2
32
Military scrap
2.5
11
Duck feathers
0.7
3
Other
3.8
17
13. Taken together, fish and forestry products ? which made up only
5% of the total in 1971 ? surpassed natural rubber in 1972. The increase
in fish-product exports, to more than 4 times the previous peak (in 1966),
began early in 1972 as boats and processing equipment purchased in 1971
became operational. Nearly all fish exports have been iced and frozen shrimp
shipped from exporters in the southern Delta town of Rach Gia and in
Saigon. Principal markets for the fast-growing shrimp industry include
Singapore, Hong Kong, Thailand, and ? most important ? Japan, where
roughly two-thirds of total shrimp exports have been shipped during the
year.4 With capital investment in trawling boats and processing facilities
continuing throughout the year, development of a strong shrimp-export
industry is well under way.
14. In view of heightened military acitivity in log-producing areas and
consequent government restrictions during much of the year, the emergence
of forestry products as a leading export item is particularly notable. South
4. Many of those shipped to Thailand are packaged or processed for re-export to Japan.
8
CONFIDENTIAL
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
Approved For Release 2006/05NMWM9W5R001700050030-2
Vietnam's forestry industry has an ample resource base, but costs of
extraction and transportation have been high because of the war. Exports
of foresty products, insignificant through 1971, rose to $1.3 million in the
first half of 1972 and apparetitly increased rapidly in the remainder of'
the year. These exports are primarily pine logs for the Japanese market.
Considerable quantities of crude logs produced in the Central Highlands
have been shipped directly from the Camh Ranh area. There is some
evidence that exports of hardwood logs have been contracted, and the totals
for forestry export probably include small amounts of hardwoods. In
November the government lifted some restrictions on the exploitation and
transportation of logs in Military Region 3, which should help exports in
1973.
15. Rubber exports in 1972 fell by about 23%. During 1972, rubber
outnut was well below 1971's 38,000 tons as a result of widespread damage
to the trees (which had come through earlier campaigns relatively
undamaged) and the destruction of the An Loc processing facility.
Preliminary estimates of the damage inflicted during the 1972 offensi,e
indicate that proeuctive capacity has been reduced significantly, particularly
in Binh Long Province, where nearly hall' of South Vietnam's rubber is
produced.
16. Other commodities exported in 1972 include a variety of
products, most of which have been exported in small quantities in the past.
Of these, duck leathers continued to be a ielatively large source of for-
eign exchange -- accounting for about three-quarters of a million dollars
in 1972. Military scrap -- mostly scrap metal ? accounted for more than
$2 million, but this situation clearly is transitory, resulting from the war.
Other exports include tea, cinnamon, fish sauce, rice paper, noodles, and
ceramic handicrafts. Although complete details of total exports during 1972
are not yet available, preliminary reporting indicates that as many as twenty
new products were added to South Vietnam's export list, presumably
reflecting new market conditions that resulted from piaster devaluations.
Export Possibilities
17. With the cease-lire, the drawdown of US military assistance, and
a continuing high level of imports, 11,e rapid development of South
Vietnam's export sector is crucial. This growth will not be limited by the
absolute capacity of foreign markets because South Vietnamese exports are
so small. The main constraints, rather, appear to be domestic ones -- the
abilities to produce what can sell abroad, channel investment into export
industries, control product quality, and develop effective marketing. Given
South Vietnam's limited industrial base, the export outlook in the short
run at least appears strongest for primary products, notably fish and forestry
9
CONFIDEN
Approved For Release 2006/04/19 : CIA-KuZ475R001700050030-2
1
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
CONFIDENTIAL
Products. Rice alio rubber -- the major exports of the past -- do not show
very bright prospects for the near term. Other commodities -- most of them
likely to be agricultural products -- could possibly emerge as major earners
of foreign exchange, as did certain new lines in 1972.
Prospects for 1973
18. Political and military events surrounding the 1973 cease-ire
agreement, which cannot now be predicted with any assurance, will
undoubtedly affect the economy and the level of exports. Some exports,
however, are less sensitive to security conditions and probably will continue
to expand in any likely case. In particular, the fishing industry, as new
boats and equipment recently purchased from the United States are brought
into use, should be able to continue export expansion. Forestry product
exports, on the other hand, will be more dependent on security conditions,
although past experience indicates that accommodations with the Viet Cong
in rural and forested areas can be arranged. The natural rubber industry,
regardless of security conditions, will remain depressed during 1973 because
of' the extensive war damage to trees and processing facilities.
19. The specific outturn for South Vietnam's exports during 1973
is difficult to project, but there is little reason to expect a decline from
the 1972 level of some $23 million. If the expansion of exports experienced
during 1972 can be sustained, exports could be expected to increase to
as much as $50 million. Information filed by exporters with the Ministry
of Economy indicates that fish products and wood are to be shipped at
fair:y high levels in the early part of this year and suggests significant
increases over 1972 levels. Furthermore, the recent upward adjustment of
the export subsidy program should provide added stimulus to encourage
investroent in export-oriented industries.
Outlook for Specific Commodities
20. Certain idznitilliae patterns in world commodity demand and
South Vietnamese production provide the basis for roughly estimating the
course of' export development both during 1973 and thereafter. These
underlying patterns are discussed in the following commodity sections.
Rice
21. Although South Vietnam probably is capable of producing an
exportable surplus of rice, it is irlikely to achieve substantial rice exports
once again. The basic short-term rroblem is one of qinlity, for Vietnamese
rice is generally unpopular in most rice-consumhv nations. In addition, the
qualities of rice in which South Vietnam might trade in the foreseeable
10
CONFIDENTIAL
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
CONFIDENTIAL
future are ones for which exports must be supported by suppliers' credits,
a condition South Vietnam is unlikely to meet.
22. If production of rice in South Vietnam exceeds domestic human
consumption requirements in coming years, surpluses most likely will be
utilized lot livestock feed and industrial purposes rather than for export.
The possibility exists, however, that at least a portion of domestic rice
surpluses ? particularly of industrial grades ? can be channeled into expo. t.
A recent analysis of the Singapore market, for example., suggests that
Vietnam could sell as much as $4 million there annually.
Rubber
23. Natural rubber will probably continue to be one of South
Vietnam's leading merchandise exports. The cessation of hostilities should
enable t'.bber poduction and exports to increase substantially above the
low 1972 level within a few y.ars because South Vietnam's rubber marketing
capability is well developed and South Vietnam has direct ties to rubber
manufacturers abroad. Moreover, improved droduction techniques and more
efficient plantation operations should allow for some increases in yields.
Nonetheless, the future growth of rubber production will be seriously
retarded by irreparable damage to rubber trees and the time required to
bring abandoned areas back into production. Also, a high percentage of
Scuth Vietnam's rubber trees are old and must be replaced by new plantings,
which require six to seven years to come into production.
Fish and Fish Products
24. South Vietnam's growing fishing industry appears to offer
considerable potential for future exports. Despite significant increases in
fish production in recent years, South Vietnam's total fish catch has been
far below potential. Endowed with a large coastline and an abundant supply
of many different varieties of marine life, South Vietnam possesses large
supplies of saltwater fish as well, as high unit-value shellfish, including shrimp
and crab. The impediments to the development of a fish-export industry
have included wartime curfews and off-limits areas, the lack of investment
in fishing boats and equipment, shortages of adequately trained labor, and
a fragmented and poorly organized marketing structure. Most obstacles can
be overcome ? as they were during 1972 ? with relatively low levels of
capital inputs.
25. World demand for fish has been growing at a high rate, particularly
in Asian markets. Total world imports of fish in 1970 amounted to more
than $3 bil:ion, increasing at an average annual rate of growth ci 8.6%
since 1958. Growth of import demand for Asian countries has averaged
11
Approved For Release 2c1Q/NAWMIT1441-00875R001700050030-2
Approved For Release 20e,M191:i9riliri8n00875R001700050030-2
A Viotruunoso Shrimp Trawler Recently Purchased from tho United States
about 12.2% during 1959-70. The Japanese share of total Asian fish imports
increased from only 4% in 1958 to nearly 60% by 1970. This large national
market has continued to grow, as evidenced in the lb'lowing tabulation
of Japanese fish imports5:
Million US
1972
1967
/970
19 71
(Nine Months)
Total
131.4
263.4
444.2
407.6
Fish
33.6
85.6
126.3
122.0
Shellfish
97.8
177.8
317.9
285.6
Roughly 35%-50% of total Jadanese fish imports and about 30% of total
shellfish imports have been supplied by countries in Asia, notably South
Korea, the Philippines, Thailand, Malaysia, Taiwan, and Hong Kong.
Dramatic increases in sales to the Japanese market have been experienced
5. Including both processed and unprocessed fish products. Shellfish include all crustacean and
molluscan categories.
12
CONFIDENTIAL,
Approved For Release 2006/04/19 : CIA-RDv85T00875R001700050030-2
Approved For Release 201/0(4)/lieMPITA0/0875R001700050030-2
by several A%ian (anintries. For exampl(?, South loican exports ()1 list] ;111(1
shellfish to Japan rose limn an annual lev(?1 of $16 million in l?)(1 to)
$44 million in 1971 and $48 million for the hist iii months of 1972.
Japan thus n?piesents a sizable fon Vietnam's fish expo! ts, and --
as evidenced by flue ice( nt surge in South Vietnamese shrimp sales -- thete
apPeats 10 he no signilicant bairivi precluding (Idly, assuming competitive
prices ;111(1 teasonable quality.
Praducts
26. South Vietnam poss(sses vast large': unexploded timber
resources, which are estimated fo cover 6 million t ) I 2 million hi:claws.
Lack of ...avorable security conditions has been the uieuif factor precluding
ex port oevelopment. Difficulties in transport .g timber, recurring
governmei I restrictions On logging operations, unceitainty of deliveries, and
lack of ,;(ialilative standards are ainomg the probli-As facing the industry.
The best near-term prospects, rather. appeal to be in crude hardwood and
softwood logs and in pulpwood lines; sawmills and wood-processing facilities
in the country are !ew in number, are auitiquiated, and Often cannot even
provide products in sufficient quantity and quality to meet domestic
requirements. Although investment in processing equipment has been
negligible because of kvarlinv.? uncertainty, theR is some possibility that
South Vietnam could develor, a processed-wood industry (such as plywood)
for export within the next few years. given required new investment.
27. Demand in international markets for v ood and wood products,
already growing rapidly, will no doubt continue to :illIC;ISC during the next
several years. World demand for crude woods ? hard and softwood logs,
sawn lumber, and pulpwood ? grew at an average anima, rate of about
8.4% during 1964-70. Again, the Japanese market for these products is large,
accounting for about 30% of total world Mports in 1970, and its average
annual growth was about 7 during 1968-71. Nearly half of the Japanese
market is supplied by Asian countries (principally Indonesia, Malaysia, and
the Philippines), all of which have experienced substantial increases in wood
exports in the last decade.
Other Exports
28. Prospects for the development of a dynamic export sector in
South Vietnam will also depend largely on the growth of commodity exports
that cannot be specified on the basis of present and past experience. The
experience of export growth in other rapidly growing less developed
countries underscores the importance of providing for this phenomenon in
projections. The plywood industry in South Korea, for example, increased
its sales abroad from nearly zero in 1960 to $30 million, or 12% of total
13
CONFIDENTIAL
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2
Approved For ReleaseRIM/H):19fffU5T00875R001700050030-2
expoits, hy l9w). Sim Taitvan expanded its export has(' to include
mach iinfoiewen item!, as canned mushionnis and aspararits, which rre),v
how (.y4.110.111%, nothing I() values ()I' 1. million and 1;33. I million
icspeclively in ley. Ilian live yea's. A simila experience could occur in
Smith Vietnam a,. conditions in the (1)(1111o/side implove,
abandoned lands ale ?Thimed or new "ands opened, and the 'ohm force
expamled. ('()iiiiin)(11,',."; that might entei ex)oi I markets in 'nor,
..iimilicant quantities could %veil include poultry pioducts, leedriains, 'testi
fruit!: and vegetable,;, poicessed and ,,einipoicessed food pioducts, and sinmle
consumer Jumbles.
Government roli6es tor the Lorger Tem)
SI1CCe Ss Of Vietla effOrIS 10 eXpand eXporIS \V ill In'
()II :I rOVel 11111(111 110IICICS I()
CXI)("I Pilldni,)11111 alll()111! Ile the 111',IIIIIel,:11Ce UI
1;11(' 1)(111eN 11111 lelleek III(' Of till'
pl:rdet. Although a subsidy plograin can he Willie(' III the !Thor' lift ti
lokvei prices ol exports ;it tificiallv and stimulate 3)10(1m-ion of expo' I roods.
in the long term such ;1 policy could encomare itiell icient industries and
inhibit devL?lopulL?iit of production for domestic uses. If prices ;lie to play
their important signal role ;1110C;III(111 there will he a
nee!: tor lurther nario?ving of the existing gap bet?vt?en the ;I fective
exullange rates for imports and exports. l process that ?vill probably take
several years to achieve.
30. As the profit rate in South Vietilamee exporting beconli?s more
dependent on cost reduction and less on subsidies, promotion of private
illVeSIII1C111 ill MOIL' elhiLielut 111()Ileti of production will be nce(le(I.
S011Ill Viet I131111'SC law 011 l'Oreirll investment k hit a rood
(leal depends ((It tile Inireancracy's application of the law. Other government
policies necessary mei the longer term include assurance (it rreater ciedit
;ivailability to export in(lustties, cikaniragenient of quality control and
prmluct standarditation, education in marketing techniques, ;111d
simplification of export proccdun.-...
14
CONFIDENTIAL
Approved For Release 2006/04/19 : CIA-RDP85T00875R001700050030-2