1. 1 The Potential for International Comparability of Manufacturing Statistics in AMCs: the current situation and issues for the future Workshop on Manufacturing Statistics Rio de Janeiro, Brazil, 24-26 September 2007 EAMS Secretariat Tomoyuki Kuroda, Ph.D.

2. 2 Objective of this Presentation ◆ The following presentation looks at the current situation with regard to the international comparability of manufacturing statistics based on study carried out to date by the AMEICC WGS. ◆ It also puts forward issues for the future with regard to international comparability, drawing on the findings of the aforementioned study.

3. 3 Table of contents １ Overview and major findings ２ Issues regarding international comparability ３ Future effort to resolve issues

4. 4 Table of contents １ Overview and major findings ２ Issues regarding international comparability ３ Future effort to resolve issues

5. 5 1. Overview and major findings ー Overview of the study ー Target area:ASEAN + China, South Korea and Japan (extended to ASEAN+3) -Extending the study to cover all categories of ISIC- 4digit industries (Section-D) 2006 Target area: 8 ASEAN countries + Japan -Basic study on industrial statistics in general 2003 Target area: 10 ASEAN countries + Japan -Initial study into the international comparability of manufacturing statistics 2004 Target area: 10 ASEAN countries + Japan -Trial studies into the comparability of manufacturing statistics in three industries 2005

6. 6 1. Overview and major findings ー Study in 2003 ー Major findings from the study in 2003 There are differences between each country, including factors such as the definition and level of statistics compiled. - Differences in survey subjects (“establishments” vs. “enterprise”) - Differences in the level of compilation of lists (Directory) of establishments - Differences in statistical survey methods (different survey scopes, etc.) - Differences in organizational capabilities (budget and personnel, etc.) These were just some of the issues relating to international comparability highlighted as a result of research carried out.

7. 7 1. Overview and major findings ー Study in 2004 ー Main findings from the study in 2004 a) Factors relating to statistical survey methods - Because of differing survey period, it is not possible to conduct comparisons covering the entire ASEAN region on an annual basis. - Because of insufficient budget and human resources, some countries have made little progress in terms of compiling lists (Directory) of establishments/ enterprises. - Full-scale international comparability is unfeasible because of differences in the classification of the scale of survey subjects (e.g. scale of workforce). - Whereas surveys in some countries target “establishments,” surveys in others target “enterprises.” (Brunei, China, Vietnam)

8. 8 1. Overview and major findings ー Study in 2004 ー Main findings from the study in 2004 b) Factors relating to industrial classification (Section D) Countries can be broadly divided as follows, with ISIC Rev. 3 as the common factor. - Countries using ISIC Rev.3 (Cambodia, Laos, Myanmar, etc.) - Countries using their own system of industrial classification based on ISIC Rev.3 (other countries) Although there are a number of outstanding issues to be addressed before accurate comparisons can be made, including statistical survey methods, it is increasingly apparent that it may be possible to conduct international comparisons from the standpoint of industrial classification based on ISIC Rev.3.

9. 9 1. Overview and major findings ー Study in 2005 ー Main findings from the study in 2005 The previous trial study on international comparisons only on three industries in ASEAN countries ISIC Rev.3 ・ 17Textiles ・ 34Motor Vehicles, Trailers and Semi-trailers ・ 361Furniture Reasons for selecting the above industries The above industries were selected from those thought to be active in each of the ASEAN countries based on agreement from the ASEAN countries themselves.

10. 10 1. Overview and major findings ー Study in 2005 ー Envisioned study results Value of Input Cost, Gross Output and Value Added (Manufacture of Textiles) (As of May 31,2005)

11. 11 1. Overview and major findings ー Study in 2005 ー Major findings from the study in 2005 Trial international comparisons between three industries in ASEAN countries - In spite of differences between countries conducting censuses and those conducting sample-based surveys, data was obtainable for more or less all establishments for the Y2000. - The concepts and definitions used in each country with regard to factors such as methods of calculating total value added more or less comply with international standards. ⇒ There was determined to be sufficient data available for international comparability in the ASEAN countries in the future. Research indicated a number of outstanding issues however with regard to the conditions required for comparisons to be carried out, including the following. - Differences between “Establishment” and “Enterprise” based statistics - The need to investigate indices to enable comparisons in local currencies

12. 12 1. Overview and major findings ー Study in 2006 ー Major findings from the study in 2006 Items surveyed - Number of business establishments / enterprises - Number of employees - Total value addedetc. a) An ISIC Rev.3 4-digit data comparative matrix was compiled for the manufacturing industry as all categories of ISIC (Section-D). The matrix was evaluated in an attempt to identify issues relating to improvements in international comparability. b) Evaluation of the above matrix

13. 13 1. Overview and major findings ー Study in 2006 ー Major findings from the study in 2006 a) Four-digit data comparative matrix for the manufacturing industry Number of Establishments (original) Envisioned research results

14. 14 1. Overview and major findings ー Study in 2006 ー Major findings from the Study in 2006 b) Number of comparable industries based on the comparative matrix Envisioned numbers No. of 3-digit categories No. of 4-digit categories Number of comparable categories 3-digit categories4-digit categories2-digit

15. 15 1. Overview and major findings ー Study in 2006 ー Major findings from the Study in 2006 -Although each country essentially uses either ISIC Rev.3 classification or its own system of industrial classification based on ISIC Rev.3, detailed evaluation of four- digit data shows that the number of industries that are actually comparable in reality is relatively low. c) Issues regarding international comparability based on evaluation of the matrix Number of industries under ISIC Rev.3 Section D (manufacturing industry) (4-digit) Number of such industries that are comparable between ASEAN countries Number of such industries that are comparable between ASEAN countries, China, Japan and ROK 127 48 （ 38% ） 36 （ 28% ） “Industries that are actually compatible” here refers to industries that correspond to one item of data under one category (class) of ISIC (rather than being bundled together with other categories).

16. 16 1. Overview and major findings ー Study in 2006 ー Major findings from the Study in 2006 - Whereas it is possible for industries to be comparable if there is one-to- one correspondence between ISIC and industrial categories in individual countries, comparability becomes distorted in cases in which multiple ISIC categories only correspond to one category in the relevant country (i.e. if national categories are bundled together). Data includes “number of business establishments” or “number of companies” One-to-one correspondence with ISIC (i.e. comparable cases) Multiple ISIC categories correspond to one category under national data (i.e. cases with distorted comparability) Data does not include “number of business establishments” or “number of companies” (i.e. cases in which comparability is unclear) Example: The number of “business establishments” (“enterprises”) in the 10 ASEAN countries

17. 17 Table of contents １ Overview and main findings ２ Issues regarding international comparability ３ Efforts to resolve issues

18. 18 2. Issues regarding international comparability Main issues Based on findings from research carried out to date, some of the key issues relating to international comparability are as follows. (1) Reduced comparability when applied to actual figures (numerical data) (2) The absence of a harmonized industrial classification (4 digit level) (3) Differences in the development stage of statistics compiled (4) Issues relating to factors such as the definition of statistics and survey methods Focusing first of all on point (2), the EAMS intends to examine the issue of industrial classification in line with regional characteristics, based on ACIC/ISIC Rev.4. Each country will therefore be required to provide data from economic censuses carried out in 2005 or thereabouts. (This is expected to eliminate any issues arising as a result of sample design.)

19. 19 2. Issues regarding international comparability (1) Reduced comparability when applied to actual figures (numerical data) Industries tend to be uniquely bundled together in each country when it comes to actual figures (numerical data), even in the case of industries that exhibit “one-to- one correspondence with ISIC” at the industrial classification research stages. This results in the emergence of a large number of industries in which international comparability is not possible. a) The bundling of industries within data 1511 ISIC 4-digit data 1511 ＋ 1512 listed under same data category Data provision stage 1512 1513 1513 ＋ 1514 listed under same data category 1514

20. 20 2. Issues regarding international comparability Example In this example, the only comparable category is 1531. It is unclear as to whether 1520 is comparable or not. Comparison is not possible for any of the other categories due to the different methods used to bundle data together in Countries A and B. ISIC No. of business establishments in Country A No. of business establishments in Country B 4-digit data 151110 1512100 151360 151430 1520Blank50 15314030 (1) Reduced comparability when applied to actual figures (numerical data)

21. 21 2. Issues regarding international comparability Due to factors such as survey methods and sample sizes, multiple categories are inevitably bundled together at the data provision stage. b) Reasons for reduced comparability ⇒ Ultimately, if it is not possible to compare figures (data), it will not be possible to carry out international comparisons. It will therefore be necessary to focus investigations into comparability on figures (data) rather than conceptual research. To put it another way, it will be necessary to investigate factors such as the meaning of individual figures, the underlying definitions and survey methods in an effort to share information and establish mutual understanding between Member Countries. c) The significance of this issue (1) Reduced comparability when applied to actual figures (numerical data)

22. 22 2. Issues regarding international comparability (2) The absence of a harmonized industrial classification (4 digit level) There is no system in place to enable regional consensus with regard to industrial classification or data listing rules geared towards international comparability on the four-digit data level. a)The absence of any listing rules or guidelines relating to four-digit data ⇒ The absence of any obligation to publish four-digit data effectively allows each country to bundle industries together in its own unique way. This is a matter that needs to be addressed first of all in order to develop internationally comparable statistical data for the manufacturing industry. (It will be necessary to formulate a set of guidelines along the same lines as those drawn up by the TFSC at the time of the establishment of the ACIC.)

23. 23 2. Issues regarding international comparability (2) The absence of a harmonized industrial classification (4 digit level) - Factors such as survey methods and sample sizes - Due to the low frequency of revisions to national standard classification, data corresponds with manufacturing statistical surveys on a practical level in order to coincide with current economic conditions. b)Specific factors ⇒ Results in the bundling of industries - Confidentiality measures (Need to protect privacy due to small number of business establishments (enterprises)) (Confidentiality in industries relevant to security and other issues) ⇒ Either industries are inevitably bundled together for the sake of confidentiality or comparability is unclear due to data being left blank

24. 24 2. Issues regarding international comparability - In the absence of a set of harmonized rules regarding compliance with industrial classification, individual countries are free to randomly bundle industries together for a variety of different reasons. - As long as the situation remains unchanged, international comparisons on the four-digit level will continue to be unfeasible. - It is hoped that a set of guidelines will be established and a harmonized East Asian system of classification for the manufacturing industry (four-digit) developed based on ISIC Rev.4 and the ACIC in order to help enable the publication of four-digit data in the future. c) The significance of this issue (2) The absence of a harmonized industrial classification (4 digit level)

25. 25 2. Issues regarding international comparability (3) Differences in the development stage of statistics compiled Country ACountry B Annual surveys No regular surveys (most recent 3 years ago) Business establishments with 10 or more employees Business establishments with 20 or more employees All such establishments surveyedSample taken of such establishments 4-digit data publishedOnly 2-digit data published a) Example - Difference in the level of government priority placed on statistics - Incompatibility between the survey system and an increasing number of survey subjects in line with rapid economic growth - Issues relating to the statistics body’s budget and organizational capabilities - Issues relating to proficiency levels on site (both statisticians and survey subjects) b) Main factors

26. 26 2. Issues regarding international comparability It will be essential to take into account the level of statistics compiled in each country as part of the process of laying the foundations for international comparability. There is also an increasing need for initiatives such as the following. c) The significance of this issue (3) Differences in the development stage of statistics compiled - Capacity building programs in line with the situation in each country - Joint Study in more advanced countries and countries representative of the region

27. 27 2. Issues regarding international comparability － (4) Definitions, survey methods, etc. ー In addition to establishing a harmonized industrial classification, issues such as the following also need to be addressed. - A statistical unit : “Establishments” or “Enterprises” - The difference of a clear cut definition of how to classify a business unit based on its size (large, medium, small and micro) - Scope and Definitions of “Cost”, “Input”, “Output”, and “Value added” - Classification methods of Establishment (Activity base, Product base) - Methods of compiling lists (ex.directories, survey frame) of business establishments (enterprises) etc. c) The significance of this issue (4) Issues relating to factors such as the definition of statistics and survey methods

28. 28 Head Office Based on business establishments Survey based on enterprises 2. Issues regarding international comparability － (4) Definitions, survey methods, etc. ー Example - Differences between “Establishments” and “Enterprises” Plant 1Plant 2Plant 1Plant 2 Head Office - The difference of a clear cut definition of how to classify a business unit based on its size (large, medium, small and micro) Targeting all business establishments Only targeting business establishments with 20 or more employees Only targeting business establishments with 6 or more employees - Definitions relating to items such as “Input” and “Output” Country ACountry B Total productionTotal shipments Total used Converted to total used based on total purchased Definition of “output” Definition of “raw materials

29. 29 2. Issues regarding international comparability － (4) Definitions, survey methods, etc. ー - Classification methods of Establishment (Activity base, Product base) - Methods of compiling directories of Establishments / Enterprises Based on products manufactured ・ Maximum production ・ Maximum sales Based on activity ・ Major economic activity Target area:Coverage (nationwide, urban areas only, etc.) List updates:Survey methods and lists updated to reflect site closures/new openings, frequency of updates Dealing with small companies: Listing of home workshops and the informal sector ⇒ Unless ways of handling these differences between the conditions required for data comparison are investigated, it will not be possible to conduct valid international comparisons. It is however unfeasible to unify these concepts over a short period of time. It is therefore essential to proceed with the compilation of information geared towards the establishment of a set of basic guidelines to help countries is East Asia to implement revisions to their respective survey methods.

30. 30 Table of contents １ Overview and main findings 3 Future effort to resolve issues ２ Issues regarding international comparability

31. 31 - In the face of an increasingly united ASEAN+3 region, it is essential that experts in manufacturing statistics from each country exchange opinions and share information with one another. - Promoting cooperation between the AHSOM and AMEICC through the EAMS 1) The need for a forum to examine international comparisons of manufacturing industry statistics in the ASEAN+3 region 3. Future effort to resolve issues

32. 32 - A comparative matrix in line with figures will help clarify issues relating to international comparability in greater detail. - Examining a harmonized system of classification will help improve and maintain international comparability in practice. (2)Two effective approaches to improving international comparability: a comparative matrix and a harmonized East Asian version of industrial classification for the manufacturing industry 3. Future effort to resolve issues

33. 33 3. Future effort to resolve issues Envisioned comparative matrix Country ACountry B Reference year: 2006Reference year: 2005 Subject: Business establishments Country B Reference year: 2006 Subject: enterprises -4 employees or more -All establishments surveyed (census) -20 employees or more -All establishments surveyed (census) ・ All companies ・ All companies surveyed (census) No. of establishments No. of enterprises ISIC 1511200 ISIC 151260 ISIC 1513120 ISIC 151430 ISIC 151130 ISIC 1512- ISIC 151340 ISIC 15145 ISIC 15118 ISIC 151250 ISIC 15130 ISIC 1514- Definitions, methods, scope, etc. Industrial classification/figures

34. 34 3. Future effort to resolve issues Envisioned functional standardized ASEAN+3 system of industrial classification (4-digit) for the manufacturing industry Focusing on harmony between classification systems （ ISIC, ACIC, NSIC) ISIC Rev.4 Section A Section B Section C Manufacturing Section D ： ACIC Manufacturing industry classification in ASEAN+3 Section A Section B Section C Manufacturing Section D ： Compliance 4-digitCurrent: 3-digit Section A Section B Section D ： Future: 4-digit Manufacturing 4-digit Manufacturing industry only Section C Manufacturing Converter A standardized ASEAN+3 system of industrial classification (4-digit) for the manufacturing industry

35. 35 Thank you very much!