PM says country needs new statistical method to calculate GDP figures

04:39 PM @ Thursday - 14 August, 2014
The methods local authorities are using to calculate the gross domestic product (GDP) are inaccurate and impractical, and not used in any country in the world, the Prime Minister said at a Ministry of Planning and Investment’s conference held on August 7.

“Local authorities all report high GDP growth rates of 9, 10, 11, 13 and 14 percent. Meanwhile, the GDP of Vietnam is just a little bit higher than 5 percent. It is unreasonable,” Dung said, adding that if re-calculating GDP in accordance with the international practice, the figures would be lower.

The Prime Minister called on province and city leaders to “look at the situation realistically”, saying that statisticians have been following the calculation method “which is not applied in any country in the world”.

Analysts have commented that the Prime Minister has officially posed the question about the reliability of the statistics, which economists have been doing for several years.

The macroeconomics report released by the National Assembly’s Economics Committee in late June 2014 also pointed out some problems in the GDP calculation method.

Vu Hoang Ha, former Binh Dinh provincial Communist Party Committee’s Secretary, when talking to journalists on the sidelines of the National Assembly’s session in October 2008, said that the GDP indexes reported by some provincial authorities were “inaccurate”.

“All provinces and cities reported the GDP growth rates of nine percent and higher. If so, the GDP of the whole country must be higher than the nine-month figure of 6.52 percent released by the General Statistics Office,” Ha said six years ago.

Analysts said that when calculating GDP, local statistical officers may easily make mistakes by counting the product values twice.

Minister of Planning and Investment Bui Quang Vinh agreed, saying that this is the major reason which produces inaccurate figures and provides “only a virtual picture” about the high GDP.

Vinh stressed that it is necessary to change the GDP calculation method applied by local authorities.

However, analysts commented that local authorities are not the only people pursuing unreasonable calculation methods.

According to Bui Trinh, a statistical expert, Vietnam calculates GDP by adding all the added value gained by all economic sectors and the collected import taxes.

Under the method, the added value created by the foreign invested enterprises (FIEs) operational in Vietnam for more than one year would be counted when calculating.

As such, the GDP statistics produced by the calculation method do not truly reflect the national economy.

“The FIEs which exploit natural resources in Vietnam transfer profits abroad, but the profits are still counted as a part of Vietnam’s GDP,” he commented.
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