INTERNATIONAL WORKSHOP ON MEASURING GDP BY FINAL DEMAND

INTERNATIONAL WORKSHOP ON MEASURING GDP BY FINAL DEMAND APPROACH Shenzhen, China 25 -27 April 2011 Ha Quang Tuyen - Duong Manh Hung National Account Department General Statistics of Vietnam

Contents 1. Introduction 2. Compiling GDP by final expenditure (Gross capital formation) 3. Future forward

1. Introduction • Centralized Statistical System of Viet Nam is divided into three levels: Center statistics; provincial statistics and district statistics. • To gain the statistical information, GSO Vietnam has based on the statistical system from the centre to the provinces and districts and line ministries. • SNAD is a department of GSO • Apply SNA since 1993

Some main achievements of National account of Viet Nam SNA statistics has done The General Statistics Office has been compiled several accounts, such as: • GDP by production approach annually and quarterly; • GDP by final consumption approach annually; • Production account; • Distribution of Income Account; • Redistribution of Income Accounts • Rest of the World Account; • IO tables for the year 1989, 1997, 2000, 2007

NATIONAL ACCOUNTS Q GDP by production approach GDP by Expenditure approach GDP by Income approach A Consolidated Accounts: I: Production Account II: Generation of Income Account III: Allocation of Primary Income Account IV: Secondary Distribution of Income Account V: Use of Disposable Income Account IV: External Transactions REG’L

Gross capital formation • Fixed capital formation = Book value of fixed capital assets at end of year - Book value of fixed capital assets at beginning of year + Loss in value due to prices changes - Gain in value due to price changes

Data sources • Census • The rural, agricultural and fishery census • The establishment census of Vietnam • Surveys • The enterprises surveys • The non-farm individual business establishment survey • Administration report

Capital investment method • This method requires information on construction investment and working capital during the year. Construction investment comes from many sources such as: State budget, preferential credit and trade credit, own –funds, non-state sources, foreign direct investment, households and other sources. • Fixed capital formation does not include total construction investment, because a part of the capital does not increase fixed assets such as capital for buying goods for projects, capital to purchase land for a construction project, capital to built temporary accommodation for construction workers. •

Fixed capital formation method • Fixed capital formation = Total construction investment during the year - (Minus) Capital outlays not increasing fixed assets + (Plus) Investment capital not included in total construction investment (Capital formation of animals, Capital formation of orchards, Village budget for construction, Value of compensation and materials of residents for construction, irrigational works, welfare constructions etc. and charges for transferring ownership of assets during the year for secondhand assets, dwellings, buildings and land)

Data source • Information is obtained on capital investment from the annual reports of investment and construction statistics. Estimates of fixed capital formation are based on data for actual fixed capital formation or obtained by collecting detailed information on the structure of capital investment for some projects in order to calculate a ratio of fixed capital formation to total capital investment. • Data sources for fixed capital formation of animals, and the costs of ownership transfer of secondhand assets, dwellings, buildings and land during the year were mentioned above. • For the village budget for construction and the value of materials, and working time of residents for construction of irrigation works, welfare constructions etc. data are obtained from a survey to obtain the ratio of fixed capital formation over the value of total construction investment.

Change in inventories • This item is subdivided into 4 groups ▫ Raw materials, semi-finished products, finished products bough by production units and used as Intermediate Consumption to create new products. ▫ Work-in-progress products ▫ Cattle and poultry ▫ Finished goods in stock.

Changes in inventories method Changes in inventories = Value of inventories at the end of accounting period - Value of inventories at the beginning of accounting period +/- Revaluation of inventories

VALUABLES • Stones and precious metals like as diamonds, platinum, silver and gold that are not held by enterprises for use as an input into the production process. • Paintings, sculptures, etc. , recognized as works of art and antiques. • Valuables not elsewhere classified, such as collections and jewellery of significant value fashioned out of precious stones and metals.

Data sources • Capital formation of valuables is calculated as the value of acquisitions less disposals of valuables during the year. The information is based on the household income and outlay survey

ESTIMATES AT CONSTANT PRICES • Fixed capital formation ▫ For fixed capital formation of dwellings, constructions and other architectural work and unfinished construction use the deflator for construction to convert capital formation at current prices to constant prices. ▫ For fixed capital formation of machinery and equipment, the price index of machinery and equipment can be used to convert capital formation at current prices to constant prices. ▫ For fixed capital formation of agricultural products, divide into fixed capital formation of cultivation and husbandry, and then use the price index of cultivation and the price index of husbandry to convert capital formation from current prices to constant prices, respectively. ▫ Use consumer price indices to convert intangible fixed capital formation, capital formation of development lands, plantations, orchards and capital formation of cost of ownership transfer at current prices to constant prices

• Changes in inventories ▫ For materials, raw materials, fuels and semi-finished products and finished products use the price index of materials for each group to convert the current price estimates to constant prices. ▫ For capital formation of unfinished products use the price index of the main materials from which the products are made to convert from current prices to constant prices. Nevertheless, it is very difficult to define the main materials used to produce unfinished products, so use the price index of a corresponding group of goods. For changes in inventories of finishing products use the price index of Gross Output for the industry producing those products to convert from current prices to constant prices. ▫ For changes in inventories of animals for meat use the price index of Gross Output of livestock products to convert from current prices to constant prices.

• Valuables As no other relevant price indexes are available, use the price index for gold to convert valuables from current prices to constant prices.

Compilation issues the GDP in Vietnam

Gross domestic product by expenditure category at current prices Trill. VND 2007 2008 2009 2010 Gross domestic product 839. 2 1143. 8 1485. 0 1658. 4 Gross capital formation 298. 5 493. 3 589. 7 632. 3 Gross fixed capital formation 275. 8 437. 7 514. 0 572. 5 22. 7 55. 6 75. 8 59. 8 584. 8 809. 9 1091. 9 1206. 8 51. 7 69. 2 90. 9 104. 5 533. 1 740. 6 1001. 0 1102. 3 -35. 1 -181. 3 -225. 8 -171. 7 -9. 0 21. 9 29. 2 -9. 1 Changes in inventories Final consumption State Private Trade balance (goods & services) Statistical discrepency

Structure of gross domestic product by expenditure category at current prices % 2007 Gross domestic product Gross capital formation Gross fixed capital formation Changes in inventories Final consumption State Private Trade balance (goods & services) Statistical discrepancy 2008 2009 2010 100. 00 43. 13 39. 71 38. 13 38. 88 38. 27 34. 61 34. 52 35. 56 4. 86 5. 10 3. 61 3. 32 70. 81 73. 53 72. 77 73. 04 6. 05 6. 12 6. 30 6. 53 64. 76 67. 40 66. 47 66. 51 -15. 85 -15. 21 -10. 35 -10. 05 1. 91 1. 97 -0. 55 -1. 88

Gross domestic product by expenditure category at constant 1994 prices Trill. VND 2007 2008 2009 2010 Gross domestic product 461. 3 490. 5 516. 6 551. 6 Gross capital formation 203. 2 215. 9 225. 3 248. 7 181. 7 188. 6 205. 1 227. 5 21. 5 27. 3 20. 2 21. 3 335. 8 366. 6 381. 4 418. 3 30. 3 32. 5 35. 0 39. 3 305. 5 334. 0 346. 4 379. 0 -86. 8 -101. 8 -93. 4 -102. 8 9. 2 9. 7 3. 4 -12. 6 Gross fixed capital formation Changes in inventories Final consumption State Private Trade balance (goods & services) Statistical discrepancy

Growth rate of gross domestic product by expenditure category at constant 1994 prices 2007 2008 % 2009 2010 8. 46 6. 33 5. 32 6. 78 26. 80 6. 27 4. 31 10. 41 Gross fixed capital formation 24. 16 3. 82 8. 73 10. 89 Changes in inventories 54. 56 26. 98 -26. 18 5. 44 10. 63 9. 17 4. 03 9. 68 8. 90 7. 42 7. 60 12. 28 10. 80 9. 34 3. 68 9. 41 184. 19 17. 23 -8. 19 10. 02 Gross domestic product Gross capital formation Final consumption State Private Trade balance (goods & services)

Future forward • Conduct survey on “Compiling Quarterly GDP by final expenditure” , 2011 • SNA 2008, 2014

Thank you very much for your attention