## 1vnmea2019003 ## Source details **Canonical URL:** [1vnmea2019003](https://www.imf.org/-/media/files/publications/cr/2019/1vnmea2019003.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2019/1vnmea2019003.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2019/1vnmea2019003.pdf.json) --- ### Summary of mission outcomes and context - TA mission at the General Statistics Office (GSO) headquarters: April 8–12, 2019. - GDP revisions increased levels by around 22 percent in current prices, with only minor changes in growth rates. - Adoption of 2008 SNA treatments: research and development and software now treated as part of gross fixed capital formation (GFCF). - GSO signed memoranda of understanding (MOU) with more than ten ministries/agencies and expanded economic censuses, improving coverage. - GSO plans projects on measuring the non-observed economy and producing Supply and Use Tables (SUTs); SUTs planned for reference year 2021. - Recommendation: conduct outreach and adopt a transparent revision policy with predetermined deadlines to explain revisions to users. ### Priority recommendations (high level) - May–June 2019: Release revised data in conjunction with suitable outreach to users (advance notice, reasons, size of effects, and explanations). — Responsible: GSO - December 2019: To minimize future revisions, ensure processes for updating the business register include new businesses in quarterly and annual surveys to make sure they are maintained with fully representative coverage. — Responsible: GSO - June 2020: Develop plans for ensuring coherence of data, including SUT reconciliation and integrating the Living Standards Survey and household employment data. — Responsible: GSO ### Detailed action plan (selected priority actions and target dates) - High priority (H) - Release revised data in conjunction with suitable outreach to users (advance notice, reasons, size of effects, and explanations of methods). — May–June 2019 - Establish a revision policy that is transparent and that will have predetermined deadlines so that users will be aware of the forthcoming revisions. — May–June 2019 - To minimize future revisions, ensure processes for updating the business register include new businesses in quarterly and annual surveys to make sure they are maintained with fully representative coverage (with ongoing monitoring). — December 2019 - Develop plans for ensuring coherence of data, including SUT reconciliation and integrating the Living Standards Survey and household employment data. — June 2020 - Medium priority (M) - Provide users with gross fixed capital formation composition by public/private and by type of asset. — December 2020 - The GSO should review the content of the annual questionnaire and add additional expense detail. — December 2020 - Remove inventory holding gains and losses from output and value added estimates. — December 2021 ### Background and rationale - Prior to the revision, data sources and coverage were inadequate to reflect a dynamic, growing economy; estimates for emerging industries lacked detail and coverage. - GSO report “Rationale for Remeasuring the Size of Gross Domestic Product” (provided to the mission but not yet published) indicates current data holdings are limited and cannot fully identify new activities. - Back-casting was used to extend revised 2016 census information to 2010, applying the same growth rates as the old series to new levels; GDP current price growth rates between 2010 and 2017 changed by an average of more than 0.5 percent per year. - In the absence of suitable time series indicators, GSO assumed a consistent rate of undercoverage over the whole period when reconstructing earlier years. ### Data enhancements and practical steps - Inter-agency cooperation: MOUs with taxation authorities, Ministries of Defense and Public Security, and others helped identify many previously omitted enterprises. - Censuses incorporated: economic census reference year 2016 and agriculture census reference year 2015 increased institutional units and revealed missing large enterprises and additional smaller enterprises. - For enterprises refusing to cooperate, estimate based on partial data from other sources (such as employment or taxes collected), possibly using ratios from similar reporting enterprises. - Quarterly estimates should be benchmarked to revised annual estimates to ensure consistency between annual and quarterly datasets. - Business register procedures must include births of new businesses on an ongoing basis; MOUs will enable monthly updates of new companies. - Outreach should include summary and detailed notes, multiple communication forms (paper, e-mail, websites), and a contact point for queries; users should be informed of prospects for further revisions. ### Methodological changes and guidance - Intangible assets - Intellectual property products (research and development and software) should be recorded separately in capital formation as GFCF in line with 2008 SNA. - 2017 values: research and development about 1.1 percent of GDP; software about 0.4 percent of GDP. - Recommendation: publish detailed GFCF by sector and by type of assets, at a minimum distinguishing private and public GFCF by tangible and intangible assets. - Inventories and holding gains - GSO’s current calculation of output uses: = Sales – Inventories at the beginning of the period + Inventories at the end of the period - GSO does not adjust output to account for changes in prices of inventory goods, thereby including holding gains in output and overestimating output. - Example showing price-driven inventory value changes: - Inventory January 1: Quantity 25, Average Price 50, Value 1250 - Sales: Quantity 120, Average Price 60, Value 7200 - Inventory December 31: Quantity 25, Average Price 70, Value 1750 - Correct valuation excluding holding gains can be achieved by deflating components with prices that match timing; simpler initial methods are acceptable. - Supply and Use Tables (SUTs) - GSO will develop a plan for compiling SUTs (planned for year 2021). SUTs enable detailed balancing of output and use of products, help identify data gaps and inconsistencies, and provide a framework for coherent GDP measures. - Cross-check with fiscal, trade, population, and employment data to assess plausibility of indicator ratios to GDP and its components. - Intermediate consumption (IC) - GSO currently uses fixed IC/output ratios updated every five years to derive value added by industry; this is problematic given many small and medium enterprises and rapid structural change. - Recommendation: explore administrative data for IC by industry or redesign the annual questionnaire to add expense detail or request regular updates from larger respondents. --- ### 14. Intermediate consumption ratios need to take into account the changing structure #### Key issue - Combination of fixed IC/output ratios for each industry with a revision of the industrial classification could cause problems. - When the industry of a respondent is reclassified, a different IC/output ratio could be applied and generate artificial changes. - Manufacturing processing services industries use materials owned by others, and therefore have very different IC/output ratios than manufacturers who own the materials and products. #### Officials met during the mission - Nguyễn Bích Lâm — GSO — Director General - Nguyễn Thị Hương — GSO — Deputy Director General - Dương Mạnh Hùng — System of National Accounts Department — Director Department - Nguyễn Thị Mai Hạnh — System of National Accounts Department — Deputy Director Department - Nguyễn Diệu Huyền — System of National Accounts Department — Statistician - Tăng Thị Thanh Hòa — System of National Accounts Department — Statistician - Nghiêm Thị Vân — System of National Accounts Department — Statistician - Ngô Như Vẻ — System of National Accounts Department — Statistician - Hà Quang Hải — System of National Accounts Department — Statistician - Nguyễn Trung Tiến — Trade and Service Statistics Department — Director Department - Nguyễn Thu Oanh — Integral Statistics Department — Director Department - Trần Thị Thu — Integral Statistics Department — Statistician - Đỗ Thị Ngọc — Price Statistics Department — Director Department - Lê Trung Hiếu — Agriculture, Forestry and Fishery Department — Director Department - Lưu Văn Vĩnh — Foreign Statistics and International Cooperation Department — Director Department - Bùi Bích Thủy — Figures and Events Journal — Deputy Director Department - Phạm Thu Hường — Figures and Events Journal - Phạm Đình Thúy — Industrial Statistics Department — Director Department - Trần Lan Anh — Industrial Statistics Department — Statistician - Nguyễn Văn Sơn — Statistical Legislation and Inspection Department — Deputy Director Department - Trần Tuấn Hưng — Statistics Methodology and Information Technology Department — Director Department - Trần Thị Luyến — Statistics Methodology and Information Technology Department — Statistician - Nguyễn Việt Phong — Construction and Invested Capital Statistics Department — Director Department - Vũ Thị Thu Thủy — Population and Labor Statistics Department — Director Department - Đỗ Anh Kiếm — Social-Environmental Statistics Department — Director Department - Nguyễn Thế Quân — Social-Environmental Statistics Department — Deputy Director Department #### Best practices for checking data (SNA framework) - The SNA provides a coherent, consistent, and integrated framework enabling compilers to confront and analyze their estimates to ensure consistency with available evidence. - Accounts are interconnected; transactions have counterpart entries enabling cross-checks across approaches (production, expenditure, income). - Use strong correlations among National Accounts components to ensure coherence (e.g., production approach aligned with expenditure approach). #### Commodity flow analysis (use and findings) - Commodity flow identity: supply = production + imports + margins and taxes less subsidies of products; demand = final domestic consumption + exports + inventories. - Identity allows analysis of supply-demand differences and residual estimation when a component is unavailable. - Recommendation: implement commodity flow analysis for key and significant products. Appendix Table 1. Commodity Flow Analysis Tool, Current Dollar (selected commodity: 171 - Electrical energy) - 2011: - Output 190,936,700 - Imports of Goods 0 - Trade margins 0 - Transportation margins 0 - Taxes on products 11,750,869 - Total Supply 202,687,569 - Intermediate consumption 118,439,843 - Final consumption expenditures of households and NPISH 76,869,184 - Final consumption expenditures of government 4,876,972 - Exports of Goods 0 - Total Use 200,185,999 - Balance / Imbalance 2,501,571 - 1.2% - 2016: - Output 135,981,300 - Imports of Goods 0 - Trade margins 0 - Transportation margins 0 - Taxes on products 8,353,997 - Total Supply 144,335,297 - Intermediate consumption 85,936,543 - Final consumption expenditures of households and NPISH 55,408,855 - Final consumption expenditures of government 3,280,150 - Exports of Goods 0 - Total Use 144,625,549 - Balance / Imbalance -290,252 - -0.2% Appendix Table 2. The Quarterly Supply-use Analysis Tool (SU06 - Crude oil and bituminous shale), Constant Dollar - Flow 2018Q1: - Gross Output 21,846,487 - Imports 4,354,760 - Margins 1,431,413 - Total Supply 27,632,660 - Intermediate Inputs 11,071,908 - Household Final Consumption Expenditures 0 - Government Final Consumption Expenditures 0 - NPISH Final Consumption Expenditures 0 - GFCF - Construction 0 - GFCF - Machinery and Equipment 0 - GFCF - Intellectual Property Products 0 - Exports 17,684,545 - Inventories and statistical discrepancy 40,166 - Total Use 28,796,619 - Net (Supply - Use) -1,163,959 - Flow 2018Q2: - Gross Output 21,042,762 - Imports 4,588,954 - Margins 1,418,802 - Total Supply 27,050,517 - Intermediate Inputs 8,330,226 - Exports 18,275,219 - Inventories and statistical discrepancy 216,474 - Total Use 26,821,920 - Net (Supply - Use) 228,598 - Flow 2018Q3: - Gross Output 21,510,714 - Imports 5,102,813 - Margins 1,465,483 - Total Supply 28,079,010 - Intermediate Inputs 10,328,677 - Exports 17,665,369 - Inventories and statistical discrepancy 8,446 - Total Use 28,002,492 - Net (Supply - Use) 76,518 #### Coherence analysis and outlier detection - Coherence analysis ensures different GDP measurement approaches are aligned and that each transaction in the SNA has counterpart entries. - Example: if output increases in oil and gas extraction, counterparty entries should appear in expenditure estimates (increase in final demand, exports, or changes to intermediate consumption). - Imports of goods and services are deducted from the GDP-E calculation because they are embedded in domestic accounts as either final consumption expenditure, gross capital information, or intermediate consumption. - Outlier and breaks in time series detection and validation: - Automated systems can flag questionable data points and rank them by quantitative impact; visualizations can also be used. - Identified items are investigated and documented to determine validity. #### Illustration: Oil and gas extraction revenue and exports - Appendix Figure 1 shows trend between operating revenue of energy producers and nominal exports of energy products. - In the most recent quarter, exports declined by more than 20 percent while revenues edged down. - After analyzing the data at the firm level and factoring in survey non-response the revenues were adjusted downwards to reflect future anticipated revisions in this data source and to increase the coherence between these correlated estimates. - Inventories were also considered to ensure revenues from sales and inventory additions/withdrawals (output) were still consistent with the export. *Source: 1vnmea2019003 - 1. Priority Recommendations; 14. Intermediate consumption ratios need to take into account the changing structure.* ### 1. Priority Recommendations _____________________________________________________________________ 6 ### 1. Priority Recommendations ### Summary of mission outcomes and context - A technical assistance (TA) mission was conducted at the General Statistics Office (GSO) headquarters from April 8–12, 2019 to evaluate revised GDP estimates and alignment with the System of National Accounts 2008 (2008 SNA). - GDP revisions increased levels by around 22 percent in current prices, with only minor changes in growth rates. - Adoption of 2008 SNA treatments: research and development and software are now treated as part of gross fixed capital formation (GFCF). - GSO has signed memoranda of understanding (MOU) with more than ten ministries/agencies and expanded economic censuses, improving coverage. - Outreach and a transparent revision policy with predetermined deadlines are recommended to explain revisions to users. - GSO plans include projects on measuring the non-observed economy and producing Supply and Use Tables (SUTs); SUTs planned for reference year 2021. ### Priority recommendations (high level) - May–June 2019: Release revised data in conjunction with suitable outreach to users (advance notice, reasons, size of effects, and explanations). — Responsible: GSO - December 2019: To minimize future revisions, ensure processes for updating the business register include new businesses in quarterly and annual surveys to make sure they are maintained with fully representative coverage. — Responsible: GSO - June 2020: Develop plans for ensuring coherence of data, including SUT reconciliation and integrating the Living Standards Survey and household employment data. — Responsible: GSO ### Detailed action plan (selected priority actions and target dates) - High priority (H) - Release revised data in conjunction with suitable outreach to users (advance notice, reasons, size of effects, and explanations of methods). — May–June 2019 - Establish a revision policy that is transparent and that will have predetermined deadlines so that users will be aware of the forthcoming revisions. — May–June 2019 - To minimize future revisions, ensure processes for updating the business register include new businesses in quarterly and annual surveys to make sure they are maintained with fully representative coverage (with ongoing monitoring). — December 2019 - Develop plans for ensuring coherence of data, including SUT reconciliation and integrating the Living Standards Survey and household employment data. — June 2020 - Medium priority (M) - Provide users with gross fixed capital formation composition by public/private and by type of asset. — December 2020 - The GSO should review the content of the annual questionnaire and add additional expense detail. — December 2020 - Remove inventory holding gains and losses from output and value added estimates. — December 2021 ### Background and rationale - Prior to the revision, data sources and coverage were inadequate to reflect a dynamic, growing economy; estimates for emerging industries lacked detail and coverage. - The GSO’s report “Rationale for Remeasuring the Size of Gross Domestic Product” (provided to the mission but not yet published) indicates current data holdings are limited and cannot fully identify new activities. - Back-casting was used to extend revised 2016 census information to 2010, applying the same growth rates as the old series to new levels; GDP current price growth rates between 2010 and 2017 changed by an average of more than 0.5 percent per year. - In the absence of suitable time series indicators, GSO assumed a consistent rate of undercoverage over the whole period when reconstructing earlier years. ### Data enhancements and practical steps - Inter-agency cooperation: MOUs with taxation authorities, Ministries of Defense and Public Security, and others helped identify many previously omitted enterprises. - Censuses incorporated: economic census for reference year 2016 and agriculture census for reference year 2015 increased the number of institutional units and revealed missing large enterprises and additional smaller enterprises. - For enterprises refusing to cooperate, the mission recommended making estimates based on partial data from other sources (such as employment or taxes collected), possibly using ratios from similar reporting enterprises. - Quarterly estimates should be benchmarked to revised annual estimates to ensure consistency between annual and quarterly datasets. - Business register procedures must include births of new businesses on an ongoing basis; MOUs will enable monthly updates of new companies. - Outreach should include summary and detailed notes, multiple communication forms (paper, e-mail, websites), and a contact point for queries; users should be informed of prospects for further revisions. ### Methodological changes and guidance - Intangible assets: - Intellectual property products (research and development and software) should be recorded separately in capital formation as GFCF in line with 2008 SNA. - 2017 values: research and development about 1.1 percent of GDP; software about 0.4 percent of GDP. - Recommendation: publish detailed GFCF by sector and by type of assets, at a minimum distinguishing private and public GFCF by tangible and intangible assets. - Inventories and holding gains: - The GSO’s current calculation of output uses: = Sales – Inventories at the beginning of the period + Inventories at the end of the period - The GSO does not adjust output to account for changes in prices of inventory goods, thereby including holding gains in output and overestimating output. - Example from the text showing price-driven inventory value changes: - Quantity Average Price Value - Inventory January 1 25 50 1250 - Sales 120 60 7200 - Inventory December 31 25 70 1750 - Correct valuation excluding holding gains can be achieved by deflating components with prices that match timing; simpler initial methods are acceptable. See IMF Working Paper 03/120 “Changes in Inventories in the National Accounts” for more details. - Supply and Use Tables (SUTs): - GSO will develop a plan for compiling SUTs (planned for year 2021). SUTs enable detailed balancing of output and use of products, help identify data gaps and inconsistencies, and provide a framework for coherent GDP measures. - Cross-checking with fiscal, trade, population, and employment data is recommended to assess plausibility of indicator ratios to GDP and its components. - Intermediate consumption (IC): - GSO currently uses fixed IC/output ratios updated every five years to derive value added by industry; this is problematic given many small and medium enterprises and rapid structural change. - Recommendation: explore administrative data for IC by industry or redesign the annual questionnaire to add expense detail or request regular updates from larger respondents. *Source: 1vnmea2019003 - 1. Priority Recommendations.* ### 14. Intermediate consumption ratios need to take into account the changing structure ### 14. Intermediate consumption ratios need to take into account the changing structure of the economy ### Key issue - The combination of fixed IC/output ratios for each industry in conjunction with a revision of the industrial classification could cause problems. - When the industry of a respondent is reclassified, a different IC/output ratio could be applied and generate artificial changes. - Manufacturing processing services industries use materials owned by others, and therefore have very different IC/output ratios than for manufacturers who own the materials and products. ### Officials met during the mission - Nguyễn Bích Lâm — GSO — Director General - Nguyễn Thị Hương — GSO — Deputy Director General - Dương Mạnh Hùng — System of National Accounts Department — Director Department - Nguyễn Thị Mai Hạnh — System of National Accounts Department — Deputy Director Department - Nguyễn Diệu Huyền — System of National Accounts Department — Statistician - Tăng Thị Thanh Hòa — System of National Accounts Department — Statistician - Nghiêm Thị Vân — System of National Accounts Department — Statistician - Ngô Như Vẻ — System of National Accounts Department — Statistician - Hà Quang Hải — System of National Accounts Department — Statistician - Nguyễn Trung Tiến — Trade and Service Statistics Department — Director Department - Nguyễn Thu Oanh — Integral Statistics Department — Director Department - Trần Thị Thu — Integral Statistics Department — Statistician - Đỗ Thị Ngọc — Price Statistics Department — Director Department - Lê Trung Hiếu — Agriculture, Forestry and Fishery Department — Director Department - Lưu Văn Vĩnh — Foreign Statistics and International Cooperation Department — Director Department - Bùi Bích Thủy — Figures and Events Journal — Deputy Director Department - Phạm Thu Hường — Figures and Events Journal - Phạm Đình Thúy — Industrial Statistics Department — Director Department - Trần Lan Anh — Industrial Statistics Department — Statistician - Nguyễn Văn Sơn — Statistical Legislation and Inspection Department — Deputy Director Department - Trần Tuấn Hưng — Statistics Methodology and Information Technology Department — Director Department - Trần Thị Luyến — Statistics Methodology and Information Technology Department — Statistician - Nguyễn Việt Phong — Construction and Invested Capital Statistics Department — Director Department - Vũ Thị Thu Thủy — Population and Labor Statistics Department — Director Department - Đỗ Anh Kiếm — Social-Environmental Statistics Department — Director Department - Nguyễn Thế Quân — Social-Environmental Statistics Department — Deputy Director Department ### Best practices for checking data (SNA framework) - The SNA provides a coherent, consistent, and integrated framework enabling compilers to confront and analyze their estimates to ensure consistency with available evidence. - Accounts are interconnected; transactions have counterpart entries enabling cross-checks across approaches (production, expenditure, income). - Use strong correlations among National Accounts components to ensure coherence (e.g., production approach aligned with expenditure approach). ### Commodity flow analysis (use and findings) - Commodity flow identity: supply = production + imports + margins and taxes less subsidies of products; demand = final domestic consumption + exports + inventories. - This identity allows analysis of supply-demand differences and residual estimation when a component is unavailable. - Recommendation: implement commodity flow analysis for key and significant products. Appendix Table 1. Commodity Flow Analysis Tool, Current Dollar (selected commodity: 171 - Electrical energy) - 2011: - Output 190,936,700 - Imports of Goods 0 - Trade margins 0 - Transportation margins 0 - Taxes on products 11,750,869 - Total Supply 202,687,569 - Intermediate consumption 118,439,843 - Final consumption expenditures of households and NPISH 76,869,184 - Final consumption expenditures of government 4,876,972 - Exports of Goods 0 - Total Use 200,185,999 - Balance / Imbalance 2,501,571 - 1.2% - 2016: - Output 135,981,300 - Imports of Goods 0 - Trade margins 0 - Transportation margins 0 - Taxes on products 8,353,997 - Total Supply 144,335,297 - Intermediate consumption 85,936,543 - Final consumption expenditures of households and NPISH 55,408,855 - Final consumption expenditures of government 3,280,150 - Exports of Goods 0 - Total Use 144,625,549 - Balance / Imbalance -290,252 - -0.2% Appendix Table 2. The Quarterly Supply-use Analysis Tool (SU06 - Crude oil and bituminous shale), Constant Dollar - Flow 2018Q1: - Gross Output 21,846,487 - Imports 4,354,760 - Margins 1,431,413 - Total Supply 27,632,660 - Intermediate Inputs 11,071,908 - Household Final Consumption Expenditures 0 - Government Final Consumption Expenditures 0 - NPISH Final Consumption Expenditures 0 - GFCF - Construction 0 - GFCF - Machinery and Equipment 0 - GFCF - Intellectual Property Products 0 - Exports 17,684,545 - Inventories and statistical discrepancy 40,166 - Total Use 28,796,619 - Net (Supply - Use) -1,163,959 - Flow 2018Q2: - Gross Output 21,042,762 - Imports 4,588,954 - Margins 1,418,802 - Total Supply 27,050,517 - Intermediate Inputs 8,330,226 - Exports 18,275,219 - Inventories and statistical discrepancy 216,474 - Total Use 26,821,920 - Net (Supply - Use) 228,598 - Flow 2018Q3: - Gross Output 21,510,714 - Imports 5,102,813 - Margins 1,465,483 - Total Supply 28,079,010 - Intermediate Inputs 10,328,677 - Exports 17,665,369 - Inventories and statistical discrepancy 8,446 - Total Use 28,002,492 - Net (Supply - Use) 76,518 ### Coherence analysis and outlier detection - Coherence analysis ensures different GDP measurement approaches are aligned and that each transaction in the SNA has counterpart entries. - Example: if output increases in oil and gas extraction, counterparty entries should appear in expenditure estimates (increase in final demand, exports, or changes to intermediate consumption). - Imports of goods and services are deducted from the GDP-E calculation because they are embedded in domestic accounts as either final consumption expenditure, gross capital information, or intermediate consumption. - Outlier and breaks in time series detection and validation: - Automated systems can flag questionable data points and rank them by quantitative impact; visualizations can also be used. - Identified items are investigated and documented to determine validity. ### Illustration: Oil and gas extraction revenue and exports - The graph (Appendix Figure 1) shows the trend between operating revenue of energy producers and the nominal exports of energy products. - In the most recent quarter, exports declined by more than 20 percent while revenues edged down. - After analyzing the data at the firm level and factoring in survey non-response the revenues were adjusted downwards to reflect future anticipated revisions in this data source and to increase the coherence between these correlated estimates. - Inventories were also considered to ensure revenues from sales and inventory additions/withdrawals (output) were still consistent with the export. *Source: 1vnmea2019003 - 14. Intermediate consumption ratios need to take into account the changing structure* --- _Source: https://www.imf.org/-/media/files/publications/cr/2019/1vnmea2019003.pdf_