The annual meeting of Ministers from Colombo Plan countries will take place in Saigon, Vietnam, beginning October 21. The Canadian Delegation is to be led by the Honourable W.J.Browne, Minister without Portfolio. At the Saigon meeting the representatives of participating countries will be expected to indicate their support for the continuation of the Colombo Plan. To the best of our knowledge, the donor countries of the Plan intend to continue their assistance to the under-developed countries of the Plan on at least the present scale. In line with practice in past years it would be expected that the Canadian representative at the Conference would be able to indicate the size of Canada's contribution for the next financial year in the course of his major statement to the Conference. A Cabinet decision is also required on this matter so that an item may be included in the Main Estimates for 1958-1959.

In the light of the present political situation in South and Southeast Asia, the Colombo Plan has taken on considerable significance as a means of preserving the ties of friendship and mutual interest, not only among Commonwealth countries, but also among the Asian and Western members of the Plan generally. The Colombo Plan presents to the world at large an example of successful co-operation in the field of economic development, despite recurring political strains. There is no question that if economic development is to continue at a pace which will offer some hope to the people of South and Southeast Asia, the countries of the area will need continuing outside assistance. There is no question, too, that there are worthwhile development projects in all of the Colombo Plan countries to which Canada can make an effective contribution.

The Canadian contribution to the Colombo Plan financial year 1956-1957 was $34.4million. This was an increase over the amounts previously voted, the additional money being provided to meet expenditures in connection with the Warsak project in Pakistan, the Canada-India atomic reactor near Bombay, and for the beginning of a modest programme of assistance to the non-Commonwealth countries of Southeast Asia. At the Colombo Plan Conference last year the Leader of the Canadian Delegation stated that for 1957-1958 Canada would again contribute $34.4million.

It is proposed, therefore, that, in line with the suggestion above that the Canadian contribution for 1958-1959 should not be reduced, the Leader of the Canadian Delegation to the Saigon Conference should be authorized to say that the Canadian Government will be prepared, subject to Parliamentary approval, to contribute $35million to development programmes under the Colombo Plan.

It would be difficult at this early stage to attempt to make a precise division of the $35 million among the various countries receiving Canadian assistance. A precise division of such an appropriation should be made only after proposed projects in the various countries have been examined in considerable detail. It seems desirable to avoid giving the impression to any country in the region that it is entitled to a specified scale of Canadian aid, whether or not it puts forward projects appropriate for Canadian assistance. Cabinet approval will, as in the past, be sought for the expenditure of this sum in terms of allocations to particular projects in particular countries, as these projects are investigated and firm proposals developed.

However, in giving authority to the leader of the Canadian Delegation to state that $35 million could be made available, Cabinet might wish to consider at this time the following broad allocation of funds amongst recipient countries so that officials may have some guidance in considering the number and type of projects which might be put forward before Cabinet in due course.

Capital Aid

India: In 1956-1957 slightly over $18million was made available to India; in 1957-1958 over $16million was made available to India. It is suggested that $16million of the $35million should be tentatively allocated to India.

Pakistan: In 1956-1957 slightly over $11million was made available to Pakistan; in 1957-1958 the figure was slightly over $15million. It is suggested that $11million should be tentatively allocated to Pakistan.

Ceylon: For the past several years $2million has been made available to Ceylon annually. In terms of Ceylon's economic development and need for foreign assistance this is a rather more generous scale of aid than that made available to India and Pakistan. However, it would seem undesirable at this time to make any reduction in the scale of aid to Ceylon and, therefore, $2 million might be tentatively allocated for aid to that country.

Other Countries in South and Southeast Asia: In the past there has been no separate allocation by Cabinet to the individual countries of the Plan other than to India, Pakistan and Ceylon. The scale of Canadian aid to other countries, such as Burma, Malaya, Indonesia, Vietnam, Cambodia, and Laos, is too small to make annual programming feasible. It is suggested that this year a specific sum should again be set aside for capital aid to the countries of Southeast Asia as a group but that of that sum a certain amount should be tentatively allotted to the new Federation of Malaya. In view of its new independence, it would be desirable for Canada to set up an annual programme of this sort in the same fashion as for India, Ceylon, and Pakistan. It is suggested that $3.5million should be allotted to capital aid to the countries of the Plan other than India, Ceylon, Pakistan, and that of this sum one-half million dollars should be tentatively allocated for capital aid to Malaya.

Technical Assistance: The above allocations refer to capital aid only. Experts and trainee programmes have been financed out of one lump sum for the whole of the Colombo Plan region. It would be well nigh impossible to work out a detailed budget for such technical assistance to each country in the region. Therefore, the practice of maintaining a global figure for technical assistance should be continued. In 1957-1958 it is anticipated that technical assistance will use about $2million of the total of $2.4million made available for this purpose. Technical assistance expenditures tend to increase about ten percent per year. Therefore, it is proposed that $2.5 (the balance of the proposed $35million) should be set aside for technical assistance for the whole of the Colombo Plan area.

While, as suggested above, detailed recommendations will be put before Cabinet as to the allocation of these sums to particular projects, it may be useful to indicate some of the proposals which may emerge after discussion with the Asian countries. One allocation which can be foreseen for India is a sum of possibly $1million to meet the further costs of the Canada-India Reactor; at present it is known that at least between $500,000 and $600,000 will be required to meet additional costs which Canada agreed to undertake at the time the project was approved. The bulk of the sum made available for Pakistan will be required to meet the costs of the Warsak project. In Ceylon it is anticipated that a number of small projects in the educational field and in the development of new agricultural settlement areas will be proposed, some of which may involve the establishment of counterpart funds through the provision of Canadian flour. In Malaya preliminary consideration is being given to the provision of a refrigeration plant like the one already provided for Ceylon. In Burma and Indonesia there are a variety of projects under consideration by the authorities of those two countries involving the supply of Canadian-made equipment.

I recommend⁶⁷ that:

1. Parliament be asked to approved a contribution in 1958-1959 to the Colombo Plan of $35 million; and

2. The Canadian representative at the Colombo Plan meeting in Saigon be authorized to announce that, subject to the appropriation of funds by Parliament, Canada will make a contribution of this amount.

[SIDNEY SMITH]

⁶⁷ Approuvé par le Cabinet le 12 octobre 1957./Approved by Cabinet on October 12, 1957.