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later were good enough to avert catstrophe. However, there was undoubtedly severe hardship in certain areas of the north and the per capita production of food in the north continued its decline. The crunch will come again next spring, by which time there will be more than a million extra mouths to feed.
5. By the autumn it was possible to detect small signs of improvement in the economy. There were certainly more goods available in Hanoi not only in the proliferating little private shops, but also in the state department stores which were now more likely than not to have lights on and the goods attractively displayed. The black market rate for the US dollar stabilised after a worrying ascent in the spring and in November a controlled progressive devaluation of the Dong was initiated. By the end of the year, the official rate, despite some fluctuat- ions, was about 60% of the black market rate, an improvement since the summer when it was at about 10%. There was some evidence too, that inflation was no longer in the high hundreds: year on year it was perhaps about 400%.
6. The opening and closing reports to the National Assembly session in December, by Vo Van Kiet and Do Muoi, however, were sombre in the extreme and did not mince words about the slowness with which the reform process was being implemented or about the serious imbalances remaining in the economy not least that between the rates of growth of GDP and the population. Whatever else, we cannot accuse the Vietnamese authorities of false optimism. Indeed, the degree of freedom allowed now in the National Assembly and other public bodies would preclude it.
7. Part of the problem of food is that the physical means to transport grain from the comparatively rich south are still quite inadequate. The railway is single track and the rolling stock dilapidated. The only road link is two lanes wide at best and in very bad repair. The few small coastal vessels are rustbuckets. All this has now been compounded by the fact that the central government, having at last decided to restrain its spending, does not have the money to purchase the grain. The problem has been further complicated by enormous post-harvest losses due to poor storage facilities, disease and pests.
8. The problem of grain illustrates nicely the much wider problem of the large and growing disparity between the mainly stagnant north and the fast developing south. It is difficult for us to assess from here. Ho Chi Minh City is, after all, farther away from Hanoi than is Bangkok. The resources of this Embassy do not allow us more than occasional visits which are usually predicated on specific business such as consular cases. I am afraid that we shall soon have to face up to what we do about pursuing UK commercial, consular and other interests in the south. Others intend to solve the problem by opening offices in Ho Chi Minh City. The French have been there for years, the Thais are probably opening up and the Australians are putting in a modest trade office.
9. The year has seen an encouraging increase of sensible interest in Vietnam on the part of British companies. These /are
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