Japanese support continues to provide doctors and dentists from Japan to supplement the limited number of doctors and dentists in the Ryukyus. That ends the table I discussion. For the use of the committee, I have prepared a separate summary statement in support of the $5.3 million supplemental request to be submitted when the Price Act authorization is increased. It is appended at the end of this state ment. GENERAL FUND OF THE U.S. CIVIL ADMINISTRATION Table II shows a summary of the proposed budget for the general fund of the U.S. civil administration. Section A shows the beginning cash, and section B the estimated revenues. We estimate that earnings from the import, markup, and sale of petroleum products, in line B1, will go over $7 million in fiscal year 1967. The other major source of income, line B2, is the three USCAR corporations (electric power, water, and development loan). Line C1, shows the expenditures of the earnings of these corporations. We will turn over $3.3 million of the petroleum revenues to the local government, line C2. Lines 3 and 4 show the important public works projects, the water and sewer systems. Through fiscal year 1967, the general fund will have contributed $16.6 million to the water system. Beginning in fiscal year 1967, funds will be available to support the construction of the sewer system. Line 5 is assistance to municipalities, commonly called the "Hicom Fund" since it is used by me to provide principally to remote towns and villages small grants for such improvements as simple water and drainage systems, and rural electrification projects. The municipalities also contribute funds and the villagers contribute labor. Line 6 is a reserve for disaster relief. In line 7, the principal expenditures are for the addition to and major modification of facilities and equipment used in the import, storage, and distribution of petroleum, oil, and lubricants. ADMINISTRATIVE ACTIVITIES Table III shows a summary of project 8710, USCAR's administrative activities. I have shown fiscal year 1966 in three columns: the original appropriation in column (3), proposed adjustments in column (4), and the revised estimate in column (5). In this connection you have before you House Document 405 which is a supplemental request for $40,000 in fiscal year 1966 to cover the costs of the DAC pay increase. There have been unforeseen requirements which we have absorbed as follows: A pay increase for local nationals granted by the Army-Air Force Wage Board and an increase in the original estimate for personnel costs. To stay within the fiscal year 1966 budget including the proposed supplemental, we are eliminating all except the most urgent temporary duty travel and deferring some civilian home leave and reemployment leave until next year. Also, we are reducing our public information program and deferring operating expenses. Administrative activities for fiscal year 1967 require $2,893,000, an increase of $120,000 over fiscal year 1966. Most of this amount is for the increase for civilian personnel under the new pay scales. The increases in the other administrative activities are the amounts considered necessary for the continued operation of the civil administration. BUDGET OF THE GOVERNMENT OF THE RYUKYU ISLANDS With the increase in its own revenues and those from the United States and Japanese Governments in fiscal year 1967, the budget of the Government of the Ryukyu Islands is expected to be about $87 million. This includes $13.8 million of the proposed U.S. aid total and $13.4 million of the Japanese aid total. Although this represents an increase of 30 percent over its fiscal year 1966 budget, the chief executive and his staff have assured us that they will be able to assimilate it. The U.S. civil administration will maintain constant surveillance and assist in overcoming such obstacles as may be encountered. The funds that are released by the increased United States and Japanese funding will be utilized by the government of the Ryukyu Islands for a number of important activities. These include, among others, meeting the increased costs for operation and maintenance of the expanding school system, and for the government's increased contributions to the expanded social insurance program; financing additional much-needed economic and public works projects; and increasing its financial assistance to the municipal governments. Also, the released funds will assist the government of the Ryukyu Islands in meeting the costs of Japanese Central Government functions which it must finance while separated from Japan, without neglecting other important activities. ECONOMIC INDICATIONS FROM LONG-RANGE PLAN At this point, I would like to insert in the record and discuss chart A which shows gross national product and national income. This information is taken from the long-range plan. The gross national product in fiscal year 1965 was $369.1 million and is projected to reach $781.8 million in fiscal year 1972 in terms of constant fiscal year 1965 dollars. The annual average rate of growth would be 11.3 percent compared to 13.1 percent during the period fiscal year 1960-65. This growth rate is one of the best in the world, but it is not indicative of the gap between the Ryukyus and Japan in public health, education, and welfare. National income is anticipated to rise from $340 million in fiscal year 1965 to $700.2 million in fiscal year 1972, an average annual rate of growth of 10.9 percent. Per capita income is expected to increase from $364 in fiscal year 1965 to $705 in fiscal year 1972, also in constant fiscal year 1965 dollars. This should put the Ryukyus further ahead of most of the lower prefectures of Japan since today they are equal to or slightly higher than a number of prefectures. We have difficulty in making valid and timely economic comparisons with Japanese prefectures for three primary reasons. First, prefectural statistics become available about 3 years after those of Japan's Central Government. Second, the Ryukyuan statistical system differs from the prefectural system. The Ryukyuan system is de signed as a national government system and has no interprefectural duplications. Third, there are no precisely comparable prefectures to the Ryukyus as will be shown in these next two charts. Chart B shows commodity imports and exports, actual through fiscal year 1965, and the long-range plan projections through fiscal year 1972. The large imbalance in trade results from the lack of raw materials in the Ryukyus. The main exports are sugar and pineapple to Japan. Japan subsidizes the high cost of sugar production by paying much higher prices than she pays to other countries which are competitive on the world market. In the long-range plan, government measures, such as subsidies, are programed to assist private industry in increasing the ratio of exports to imports from 38 percent in fiscal year 1965 to 42 percent in fiscal year 1972. The chart indicates a heavy deficit in the balance of payments, but this is not the case as shown on chart C. Receipts and payments are about equal because the spending in the economy by the military base and U.S. personnel makes up the large imbalance in trade. There is no prefecture in Japan where the economy is propped for the most part by military spending. Thus our "comparable area" comparisons are derived from the lowest income prefectures because Okinawa was the lowest prior to World War II. The rapidly expanding aid program of the Japanese Government has changed the character and complexion of our U.S. budget request. We seek to develop the most effective application of United States and Japanese aid so as to bolster the three social programs (public health, education, and social welfare) in which the Ryukyus are substantially behind Japan. At the same time we seek to insure that the activities and individual items funded are of highest priority to the local government. Our principal programing job in the Ryukyu Islands is to insure that the government develops an annual program which is best suited to achieving the objectives of the long-range plan. With many unfulfilled requirements remaining in the developing society of the islands, we realize that the local government in its eagerness must not program beyond its execution capabilities and the ability of the economy to absorb the total government program. For fiscal year 1967, this limit is estimated to be about $87 million. Our current long-range plan is based upon a judgment that the Ryukyuan economy vitally needs and can absorb, and the GRI can administer, increases in budget planning levels averaging 13.3 percent for each year of the planning period, fiscal year 1968 through fiscal year 1972. If this proves true, the GRI budget will increase to $163 million by fiscal year 1972. This will enable a substantial reduction of the gaps between the Ryukyus and Japan in the levels of public health, education, and social welfare. This completes my statement on the budget. 62-633-66-2 |