THE ECONOMIC SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82S00205R000200010014-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 20, 2016
• Document Release Date: August 28, 2006
• Sequence Number: 14
• Publication Date: May 4, 1970
• Content Type: IR

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DIRECTORATE OF
INTELLIGENCE
Intelligence Report
The Economic Situation in South Vietnam
(Biweekly)
ARMY review(s) completed.
State Dept. review completed
SecriV
4 May 1970
No. 0421/70
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ON rut
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.
_ QROUP. I _..._..
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
The Economic Situation in South Vietnam
Summary
There have been some reports of opposition to
the government's new land reform program, but a sur-
vey of village and hamlet officials, who will be ad-
ministering the law, indicates that many of them
stand to gain personally by supporting the program.
Viet Cong budget data for 1970 indicate that
planned expenditures per man are roughly triple the
amount authorized in 1968, but still are well below
those for South Vietnamese forces.
Retail prices in Saigon rose sharply during
April, resulting in an increase of 15 percent for
the first four months of the year. Black market
dollar and gold prices declined somewhat at the end
of April for the first time in three months.
ANNEX: Monthly and Weekly Currency and Gold Prices
(Graph)
South Vietnam Economic Indicators (Charts)
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Reactions to Land Reform
1. The Saigon press and rural officials have
reported some initial opposition to the government's
new land reform program.. Much of the criticism ap-
parently stems from the belief that the land-to-the-
tiller program, which was enacted in March, is an
American idea forced on the Vietnamese. A district
official addressing a.Vinh Long Province pacifica-
tion meeting received strong applause when he said it
was a black day for Vietnam to have to accept a land
reform law written by anAAmerican. Opposition also
has been reported from some Hoa Hao groups in Chau
Doc and An Giang provinces in the delta. According
to embassy officers, however, these groups are com-
posed of a small number of large landowners who al-
most certainly will not gain the backing of Hoa Hao
leaders and who probably are not strong enough to
block implementation of the law to any significant
extent. Moreover, most Hoa Hao farmers are either
landowners with less than the new legal limit of 15
hectares or are tenants who will benefit directly
from the new law.
2. Despite this opposition, a survey of local
officials in the delta indicates that village govern-
ment officials--who will be administering the law--
have considerable self-interest in supporting the
land reform program. A MACV-sponsored survey of land
ownership and tenancy among village officials and
hamlet chiefs in five delta provinces was undertaken
during December 1969 and January 1970 as the result
of assertions by some US officials that the land re-
form program would meet considerable opposition by
village governments because they are largely con-
trolled by a land-owning,. rent-collecting gentry.
The survey was conducted among almost 700 officials
in 131 villages whose security status is represen-
tative of the range of security of all rural villages
in the delta. The results of the study showed that
about 60 percent of village officials have no personal
stake in land redistribution because they are neither
farmers nor landlords or because they are small-scale
owner-operators whose status would be unaffected by
the new law. About 30 percent of those interviewed
are tenant farmers who should be in favor of the law,
and the remaining ten percent are landlords who
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presumably will be opposed.. The study concludes,
therefore, that officials who stand to gain from
land reform outnumber those who would lose by
three to one. The surveyors did not directly ask
any of the officials, however, whether or not they
supported the government's land reform program.
VC Per Capita Expenditures
3. Viet Cong budget estimates for their per-
sonnel in the Saigon area indicate that planned ex-
penditures per man in 1970 are roughly triple the
amount authorized in 1968. According to a captured
document, Sub-Region 4 (SR-4) recently requested
authorization from the Central Office of South Viet-
nam (COSVN) for a budget totaling 155.8 million
piasters ($1.3 million at the official exchange rate
of 118 piasters per dollar) to support 3,000 per-
sonnel during 1970--an average of $435 per person.
This expenditure compares with reported authorized
spending in 1968 of $136 per combatant and $121 per
civilian cadre in SR-1. Both SR-1 and SR-4 are ad-
jacent to Saigon, the former on the northwest and
the latter on the east, where prices rose about 75
percent between January 1968 and January 1970.
While the report from SR-1 did not indicate what
types of expenditures were made, the 1970 request
from SR-4 stated that planned expenditures included
military and party activities as well as social
welfare. It is estimated that at least 80 percent
of regional VC budgets usually are allocated to
military activities, and in the case of subregions
that have military units directly subordinate to
them, as is true in both SR-1 and SR-4, the mili-
tary budget probably includes the cost of some arms
and ammunition as well as the cost of food, allow-
ances, clothing, medical supplies, and transporta-
tion, which probably account for the largest share
of expenditures.
4. Not unexpectedly, the per capita expendi-
tures of the VC are well below those of the South
Vietnamese military forces, even allowing for some
lack of comparability in the available data. A
study completed in 1969 for the US Department of
Army on the costs of supporting South Vietnam's
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military forces gives the following expenditures
per man for US FY 1968:
Regular Regional Popular
Forces (ARVN) Forces Forces
Total $2,052 $775 $447
of which:
Materiel and Main-
tenance 1,408 163 56
Pay and Allow-
ances 558 580 371
Also included in the above data are the costs of con-
struction, training, and miscellaneous items.
Prices
5. According to preliminary data, the monthly
average retail price index for Saigon increased about
seven percent during April. During the first four
months of 1970, therefore, retail prices in Saigon
rose about 15 percent. The sharp increase in prices
during April stems from a number of factors. The con-
tinuing low level of rice deliveries from the delta
has resulted in further increases in the price of rice,
the most important item inthe consumer price index.
In addition, constant rumors of devaluation and the
extremely low level of confidence in the piaster, as
reflected in the black market, have led consumers to
spend rather than hold their money.
Currency and Gold
6. Black market-dollar .and_gold prices declined
somewhat in late April for the first time since Janu-
ary. On 27 April the price of dollars was 413 piasters
per dollar, down nine piasters from the all-time high
reached the previous week. The price of a dollar's
worth of gold leaf fell 21 piasters during the two
weeks ending 27 April to 493 piasters. The rate for
MPC, on the other hand, rose to 230 piasters per
dollar, but still was slightly below the all-time
high of 233 piasters reached at the end of March.
-4-
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According to the embassy, recent more vigorous en-
forcement of customs regulations at Tan Son Nhut
airport, where a considerable amount of dollars and
piasters was seized, probably contributed to the
decline in dollar and gold prices. (A graph on
monthly and weekly currency and gold prices as well
as charts on the cost of living, money supply, and
foreign exchange reserves are included in the Annex.)
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?-i ee Market Baia and Currency Prices
1965
(ii'LL) 8-i, paid leaf worth $33 D- t.,,,
is 110 GREEN
98387 4-70
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ion Cost of Living Index* (For Working Class Family Without Rent)
Official GVN-index
South Vietnam Money Supply
XQU
1Ihons of Platers
South Vietnam Foreign Exchange Reserves*
i iiii antis cad C Qiiars
*Excluding holdings of commercial banks
983884-70
680. February
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Secret
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