Vietnam: Institutional arrangement in GDP measurement of provenience /city and national economy and solution to reconciliation of differences between national GDP and regional GDP in Vietnam Nguyen Van Nong Deputy Director, SNA Department GSO, Vietnam

Vietnam: * ,6 Sq.km, * ,8 thous. pers * 63 provinces in 6 Regions as below: + Red River Delta : 11 Provinces; + Northern Midlands and Mountain areas : 14 provinces; + North. Central and Central Coastal areas:14 provinces; + Central Highlands : 5 provinces; + South East : 6 provinces; + Mekong River Delta: 13 provinces; Vietnam: * ,6 Sq.km, * ,8 thous. pers * 63 provinces in 6 Regions as below: + Red River Delta : 11 Provinces; + Northern Midlands and Mountain areas : 14 provinces; + North. Central and Central Coastal areas:14 provinces; + Central Highlands : 5 provinces; + South East : 6 provinces; + Mekong River Delta: 13 provinces;

I. DEMAND FOR INTEGRATED INDICATORS IN NATIONAL ACCOUNTS BY REGION (PROVINCE/ CITY) Based on the social-economic management system in the country, cities and provinces in Vietnam are given responsibility for establishment local economic development plan with own budget. Thus calculation of some integrated economic indicators of SNA by region/provinces is necessary to meet the following demands : Based on the social-economic management system in the country, cities and provinces in Vietnam are given responsibility for establishment local economic development plan with own budget. Thus calculation of some integrated economic indicators of SNA by region/provinces is necessary to meet the following demands : Assess economic growth rate and structural development of the region. Assess economic growth rate and structural development of the region. Assess the comparative advantages of the region as well as protect and manage natural resources, environment Assess the comparative advantages of the region as well as protect and manage natural resources, environment Assess social needs and manage regional budget. Assess social needs and manage regional budget. Serve as part of a statistical database for social – economic development strategy of the whole country. Serve as part of a statistical database for social – economic development strategy of the whole country.

II. institutional arrangement and GDP ESTIMATION PROCEss OF NATIONAL ECONOMY AND BY PROVINCE AND CITY (called the decentralization process applied from 1994 to 2009) Currently, GO, GVA/ GDP of national economy are independently compiled by central statistical office (GSO) while similar indicators at local level are compiled by provincial statistics offices (PSO): Currently, GO, GVA/ GDP of national economy are independently compiled by central statistical office (GSO) while similar indicators at local level are compiled by provincial statistics offices (PSO):

1. Institutional arrangement and GDP measurement process a. Calculation of national GDP by GSO: a. Calculation of national GDP by GSO: GDP = GO - IC + import duties, as follows: GDP = GO - IC + import duties, as follows: * Branch statistics departments are in charge of collecting information and calculating national GO by kind of industry and by kind of ownership at current and constant prices to provide to SNA department for the compilation of national GDP. * Branch statistics departments are in charge of collecting information and calculating national GO by kind of industry and by kind of ownership at current and constant prices to provide to SNA department for the compilation of national GDP. * National GVA /GDP at current and constant prices are calculated on the basis of national GO and input-output or value added-output ratios by kind of industry and by kind of ownership. * National GVA /GDP at current and constant prices are calculated on the basis of national GO and input-output or value added-output ratios by kind of industry and by kind of ownership. * National GDP at current and constant prices by industry and by ownership are published quarterly, yearly * National GDP at current and constant prices by industry and by ownership are published quarterly, yearly b. Calculation of GDP by province and city: b. Calculation of GDP by province and city: Similar to calculation at national level, identification of RGDP by province and city is based on production method (RGDP = RGO – RIC + import duties). These are compiled at the provincial level by PSO following the same procedures as adopted at the central level. Similar to calculation at national level, identification of RGDP by province and city is based on production method (RGDP = RGO – RIC + import duties). These are compiled at the provincial level by PSO following the same procedures as adopted at the central level.

2. Achievements and shortcomings a. Achievements After 17 years of implementing the compilation of regional/provincial account indicators at 63 province and cities, the following key outcomes can be drawn: a.1. The indicators meet crucial needs of local governments and regional economic research, allowing them to evaluate economic growth rate, and shift in national and local economic structures. a.1. The indicators meet crucial needs of local governments and regional economic research, allowing them to evaluate economic growth rate, and shift in national and local economic structures. a.2. They serve as the basis to formulate social-economic development plans and strategies designed by National and Provincial Assembly. a.2. They serve as the basis to formulate social-economic development plans and strategies designed by National and Provincial Assembly. a.3. GSO has been able to set up the procedures and and methodology for regional account indicators compilation. a.3. GSO has been able to set up the procedures and and methodology for regional account indicators compilation. a.4. GSO has been able to train a large number of national and provincial accountants. a.4. GSO has been able to train a large number of national and provincial accountants.

b. Limits and shortcomings b. Limits and shortcomings The practice adopted for compiling regional/provincial account indicators shows the following weaknesses: low data quality, large discrepancy between national GO and GDP at one side and RGO and RGDP at the other side. low data quality, large discrepancy between national GO and GDP at one side and RGO and RGDP at the other side. b.1 The total of RGDP of 63 provinces is far bigger than the national figure: * 5.0% (2005) and 8.2% ( 2007) at current prices; * 5.0% (2005) and 8.2% ( 2007) at current prices; * 24% (2005) and 32% ( 2007) at constant prices; * 24% (2005) and 32% ( 2007) at constant prices; b.2 The growth rate of RGDP for 2005 was 2.37 % higher than the national rate and for 2007 was 2.51% higher. This means that in 2007, GSO annouced the growth rate of 8.5% while the provincial average rate was 11%.

c. Causes of the differences: c.1. Scope and sources of information are not inconsistent and inadequate as the statistical unit in Vietnam is the enterprise, and not the establishment as recommended by the UN: c.2. Price and price indexes get troubles: One of the reasons for this is the inconsistency among provinces in calculating RGDP in constant prices: One of the reasons for this is the inconsistency among provinces in calculating RGDP in constant prices: Some provinces do not deflate output in current values, but calculate gross output of Agriculture, Forestly and Industry in constant prices using a list of fixed price per output quantity of a base year. Some provinces do not deflate output in current values, but calculate gross output of Agriculture, Forestly and Industry in constant prices using a list of fixed price per output quantity of a base year. Some provinces, that don’t have their own price index, use national price indexes constructed by the General Statistic Office, or price indexes developed by other provinces. Some provinces, that don’t have their own price index, use national price indexes constructed by the General Statistic Office, or price indexes developed by other provinces.

c.3. Independence and objectiveness of statistics are not respected due to competition for high achievement of local governments. c.4. Compiling procedures and methods of GDP and RGDP are still inadequate, inconsistent and there’s lack of closed cooperation between central level and local level. c.5. Statisticians’ qualification is still limited, particularly at provincial /cities level.

III. SOLUTIONS TO reconile DIFFERENCEs AND ERRORS BETWEEN NATIONAL GDP AND RGDP To deal with the above gap, GSO is planning to implement the following during the 2010 to 2013 period: 1. The first: The GDP and RGDP compilation procedure remains the mixture of centralization and decentralization, using the production approach but with important changes in shared responsibility: a. For central level (GSO) GSO are in charge of compiling national GO and GDP. In data collection, GSO is responsible for calculating and allocating to provinces and cities GO, IC, GVA and import duties of corporations, government units and other organizations which have large scale and multi- establishments in different provinces (with more than one establishment situated in various provinces).

b. For provincial level (PSO) PSOs directly collect and calculate GO, GVA of corporations, local government units, household businesses, other organizations that operate only locally. These data are then combined with data on multi-regional units collected and processed by GSO. 2. The second: To identify establishments and ancillary units of multiregional enterprises, corporations as residents by provinces and cities. 3. The third: National GDP and RGDP at current and constant prices are published quarterly, yearly by GSO only.

Thank you for your attention