oversight

Vietnam Economic Data: Assessment of Availability and Quality

Published by the Government Accountability Office on 1999-06-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                   United States General Accounting Office

GAO                Report to Congressional Requesters




June 1999
                   VIETNAM ECONOMIC
                   DATA

                   Assessment of
                   Availability and
                   Quality




GAO/NSIAD-99-109
United States General Accounting Office                                                 National Security and
Washington, D.C. 20548                    Leter
                                                                                 International Affairs Division



                                    B-279772                                                                Letter

                                    June 1, 1999

                                    The Honorable Dana Rohrabacher
                                    The Honorable Zoe Lofgren
                                    House of Representatives

                                    The recent financial crisis in East Asia and the overall importance of the
                                    region to the United States has highlighted the need for reliable and timely
                                    economic and trade data on individual countries in the region. In recent
                                    years, the United States has taken several steps to normalize relations with
                                    Vietnam and is currently negotiating a long-term trade agreement with its
                                    government. You asked us to examine economic data on Vietnam, which
                                    has been experiencing considerable economic growth and development as
                                    it transitions from a centrally planned to a more market-based economy. To
                                    respond to your requests, we examined the availability, transparency, and
                                    quality of published economic and trade data on Vietnam.



Results in Brief                    Vietnam has released data on a number of key economic indicators such as
                                    the gross domestic product (GDP), imports and exports, foreign
                                    investments, and growth rates. However, it has not made available some
                                    other important data on the economy. For example, it does not publish the
                                    state budget and does not provide standard financial information used by
                                    the International Monetary Fund (IMF) for its monthly International
                                    Financial Statistics (IFS) publication. Virtually all countries in the world,
                                    including transitional economies and the poorest countries, publish their
                                    country pages in the IFS.

                                    When data is available, it is highly aggregated and difficult to interpret
                                    because the data collection, analysis, and reporting methods used to
                                    produce it are not transparent or readily available to users. While the
                                    quality of the data has improved in recent years, published indicators such
                                    as GDP contain weaknesses because they do not include important
                                    components of the economy. For example, small businesses, the service
                                    sector, and remittances from overseas are underreported, while growth and
                                    foreign investment estimates may be overestimated. Without more
                                    accurate data, it is difficult to effectively evaluate economic conditions in
                                    Vietnam and identify economic and financial problems that may be
                                    occurring. Several international agencies, such as the IMF and the World




                   Leter            Page 1                                  GAO/NSIAD-99-109 Vietnam Economic Data
                     B-279772




                     Bank, have recognized that data deficiencies exist and are currently
                     providing technical and financial assistance to the Vietnamese government
                     to help it improve the availability and quality of its data.



Background           Data on Vietnam’s economy and trade originates primarily from the
                     General Statistical Office (GSO), a Vietnamese government agency. Other
                     agencies such as the Ministry of Industry and the State Bank of Vietnam
                     also provide some data. The GSO publishes monthly and annual reports on
                     the economy and population that include information on the labor force,
                     GDP, foreign investment, industrial sectors, retail sales, prices, and
                     inflation rates, among others.

                     The IMF, the World Bank, and the United Nations also publish economic
                     and trade data on Vietnam, but as a standard practice they rely primarily on
                     the government for much of the information. The IMF has a permanent
                     representative in Vietnam who monitors economic conditions, and the
                     Fund periodically sends missions to Vietnam to collect additional
                     information and provide technical assistance. As it does with most other
                     countries, the IMF summarizes Vietnam’s economic and financial condition
                     in periodic staff reports that are available to the public and generates
                     confidential studies that examine specific topics such as banking.

                     For its part, the World Bank publishes the World Development Indicators
                     (WDI) in collaboration with 26 other public and private agencies, including
                     the IMF, the International Labour Organization, the United Nations, the
                     World Trade Organization, Moody’s Investors Service, Price Waterhouse,
                     and Standard and Poor’s Rating Services. The 1998 WDI includes a broad
                     range of economic, population, and environmental data on 210 countries
                     from 1960 to 1996. The United Nations publishes National Accounts
                     Statistics on different countries, including Vietnam, each year. The United
                     Nations Development Programme (UNDP) also issues a number of reports
                     and evaluations of poverty and economic conditions in Vietnam. There are
                     other publications with a narrower focus, such as the IMF’s Direction of
                     Trade Statistics Yearbook and the United Nations’ Monthly Bulletin of
                     Statistics.

                     U.S. agencies such as the Departments of Treasury, Commerce, and State
                     and the Trade and Development Agency rely mainly on international
                     agencies for data on Vietnam’s economy. However, several U.S. federal
                     agencies jointly publish an annual report on Vietnam, the Country
                     Commercial Guide, written by an in-country expert. The Department of



             Leter   Page 2                                  GAO/NSIAD-99-109 Vietnam Economic Data
                          B-279772




                          Commerce also releases data on bilateral trade between the United States
                          and its trading partners, including Vietnam. The United Nations publishes
                          similar bilateral trade data reported by member states.

                          Several economic magazines and journals also provide economic and trade
                          data on Vietnam. The Vietnam Business Journal, for example, publishes
                          indicators of Vietnam’s economy, foreign investment, imports, and exports,
                          using the government and international agencies as its sources. The
                          Economist Intelligence Unit Ltd., also issues quarterly reports on the
                          Vietnamese economy and covers major economic and trade indicators. It
                          pools data from various sources, including its own estimates.



Gaps in Availability of   Although the government does publish many key economic indicators,
                          there are major gaps. For example, by law, Vietnam’s state budget is
Data                      classified as a secret document and therefore cannot be made available to
                          the public. Under much pressure from international agencies and donors,
                          in 1998 top government officials indicated they would release the budget,
                          but as of March 1999, they had not yet done so. The government includes
                          some estimates of the budget in its aggregate economic indicators, but it
                          does not provide a breakdown of the data, making it difficult to determine
                          specific allocations. In addition, although the GSO did publish aggregate
                          budget figures in its 1994 Statistical Yearbook, it did not do so in 1996.

                          State-owned enterprises (SOE) are a key component of the budget and of
                          the country’s overall economy. The government has traditionally granted
                          SOEs special advantages over other businesses through greater access to
                          credit, control over markets, and other forms of indirect support. The IMF
                          has reported that SOEs may account for as much as 40 percent of Vietnam’s
                          GDP. However, the government releases very little information about how
                          much it spends to support SOEs and their true financial conditions. Some
                          donors have raised concerns about the financial viability of SOEs in
                          Vietnam and have warned that without reliable information, financial
                          problems may develop undetected.

                          Furthermore, the IMF’s monthly IFS reports do not contain a country page
                          for Vietnam because the government has not released certain key
                          indicators and other needed statistics. Country pages generally include
                          data on exchange rates, money, banking, interest rates, production, prices,
                          foreign reserves, international trade, balance of payments, and government
                          and national accounts. Virtually all countries in the world publish their
                          country pages in the IFS. According to IMF officials, the Vietnamese



                          Page 3                                 GAO/NSIAD-99-109 Vietnam Economic Data
B-279772




government has not done so in part because for many years Vietnam used a
national accounts system modeled after that of the former Soviet Union
and different from international reporting standards (the 1993 System of
National Accounts) advocated by the IMF, the United Nations, and the
World Bank. Vietnam adopted these standards in the late 1980s but has not
fully implemented the system and has not been willing to release some
statistics.

In 1998, the IMF said it was waiting for the government to approve
publication of Vietnam’s country page that the IMF had prepared.
Neighboring Cambodia and Lao PDR, both of which have also transitioned
from the Soviet accounting system, have published their country pages
since April 1996. Rwanda and Ethiopia, which had the lowest per capita
incomes in the world1 (about a third of Vietnam’s), have also been
publishing their country pages.

The amount of information reported in the WDI provides another
indication of a country’s overall data availability. The WDI contains up to
526 series of data indicators for individual countries, covering economic
and trade conditions as well as other demographic, environmental, and
social indicators. Vietnam and Lao PDR, for example, provided data for
only about 250 indicators between 1990 and 1995, while China, the
Philippines, and Thailand provided over 400 indicators during the same
period (fig. 1). In 1995, the median number of indicators available for the
63 countries that the WDI classified as “low income” was 322. Vietnam
provided 256 indicators for that year. Only 10 of the other low-income
countries provided fewer indicators than Vietnam.2




1Human   Development Report, UNDP, 1997.
2
 Afghanistan, Bosnia-Herzegovina, Cambodia, Eritrea, Lao PDR, Liberia, Myanmar, Somalia, the Sudan,
and Tajikstan.




Page 4                                              GAO/NSIAD-99-109 Vietnam Economic Data
                       B-279772




                       Figure 1: Available Data in the World Bank’s World Development Indicators, 1998.
                        Number of Data Indicators

                        500




                        400




                        300




                        200




                        100
                                  1990              1991        1992                  1993              1994            1995          1996
                                             T h a ila n d   T h e Ph ilip p in e s          C h in a          L a o PD R      Vie tn a m



                       Note: All four comparison countries are in the immediate vicinity of Vietnam. Thailand, the Philippines,
                       and Vietnam are similar in population size. China, Lao PDR and Vietnam have changed from the
                       Soviet to the System of National Accounts accounting system.




Transparency of Data   If the accuracy and quality of published economic and trade data are to be
                       properly assessed, the methods used by the sources of the data to collect,
Collection and         analyze, and present the data must be transparent. In other words, data
Reporting Methods      transparency means that methods should be clearly defined and explained
                       and made readily available to data users. Without such information, users
                       cannot adequately determine the value and meaning of the published
                       figures. For example, data can be very different depending on whether it is
                       developed through expert opinion, sampling, or census. If an agency relies
                       on other agencies for data, it is also important that it disclose the sources
                       and methods it uses to review and revise the data.

                       In the case of Vietnam, information on data collection and reporting
                       methods generally is either missing or unclear. The GSO does not publish
                       the methods used to collect and process economic and financial figures
                       and does not identify potential data limitations or gaps. International



                       Page 5                                                           GAO/NSIAD-99-109 Vietnam Economic Data
                       B-279772




                       agencies that re-publish the GSO’s figures in their reports also do not
                       disclose the methods they use to evaluate or revise the data. This process is
                       consistent with how these agencies report data for other countries. Most
                       tables we reviewed cited their sources as the GSO or another Vietnamese
                       agency and “staff estimates.” But the methods used to produce these staff
                       estimates were not specified. We also found that even when staff estimates
                       were cited, the published data often did not differ from the original GSO
                       figure. However, the IMF recently reported estimates that differed from
                       those published by the GSO.

                       The Country Commercial Guide primarily cited “unofficial estimates” as its
                       sources, without reporting the data collection methods used, but its figures
                       matched those we found in GSO publications.



Quality of Available   Although many of the published figures from the GSO, IMF, the World
                       Bank, and the Asian Development Bank corresponded with each other, one
Data                   should not interpret this to mean that they are valid or correct, but simply
                       that they came from the same source—the Vietnamese government (see
                       app. I).

                       According to international agency officials and other experts, the quality of
                       available data on Vietnam has improved in recent years. They all agreed,
                       however, that data on many key indicators such as GDP, growth rate, and
                       foreign investments still contained several weaknesses. In a June 1998
                       assessment of economic conditions in Vietnam, the UNDP concluded that
                       Vietnam “is in the midst of an information crisis which needs to be urgently
                       redressed to avert financial crisis”3 and advocated more reliable data on
                       the banking and corporate sectors in particular. Most banks are partially or
                       wholly state–owned, and information on their debt levels, loan portfolios,
                       and investments is not available in sufficient detail or is of questionable
                       reliability. Some international agency officials, for example, have raised
                       concerns that these banks have made many large loans to SOEs whose
                       assets are largely overstated. The IMF has indicated that the banking sector
                       in Vietnam is in worse condition than what the official data shows. Moody’s
                       has also cited weaknesses with the banking system and “considerable
                       uncertainty [arising] from the lack of transparency in the reporting of




                       East Asia: From Miracle to Crisis, Lessons for Viet Nam, UNDP Viet Nam, 1998. Italics in the original.
                       3




                       Page 6                                               GAO/NSIAD-99-109 Vietnam Economic Data
B-279772




official foreign exchange reserves” as key factors in giving Vietnam a
low-credit rating.4

Vietnam does not effectively measure certain components of the economy
in its calculations of GDP, which is a measure of the total output of a
country’s goods and services. For example, GDP figures do not accurately
reflect the large informal economy, small businesses, telecommunications,
or the service sector. Similarly, official trade estimates do not include
illegal smuggling of consumer goods, which has been estimated to account
for a significant portion of the economy, according to IMF and other
international agency officials. A State Department official also noted that
this reporting problem occurs in other developing countries.

Other indicators reported by the government, on the other hand, may be
overestimated. For example, the government announced that the economy
grew at a rate of 5.8 percent in 1998, but IMF officials made their own
in-country assessment and estimated a growth rate of between 3 and
4 percent. The government also reported $1.9 billion in disbursements of
foreign direct investments in 1998, but the IMF estimated only $600 million,
and Moody’s estimated $800 million. According to a State Department
official, Vietnam counts the value of land it contributes to joint business
ventures as part of a foreign direct investment. The IMF does not. This may
account for part of the discrepancy between official and independent
estimates. It also illustrates the importance of transparency in data
collection and reporting methods.

There are also a number of unexplained differences between reports
published by different international agencies and even between those
published by the same agency. One example is the average employment
(the average number of employees per enterprise) in the private sector, an
important component of Vietnam’s economy in terms of growth and
development. According to the 1996 IMF staff report, average employment
between 1992 and 1995 was between 7.4 and 5.1 employees. In another IMF
staff report 16 months later, the average employment for the same period
was reported as between 1.8 and 1.2 employees. It is not clear why a
1992 figure was revised in 1998, but agency officials noted that there are
often long delays and frequent adjustments of prior data by Vietnamese
government sources. The data series cited its sources as the GSO and staff
estimates.


4
Global Credit Research: Vietnam, Moody’s Investors Service, 1999.




Page 7                                              GAO/NSIAD-99-109 Vietnam Economic Data
                      B-279772




                      International agencies have various efforts underway to help Vietnam with
                      its data collection and reporting. The Asian Development Bank is
                      developing a project to assist Vietnam in preparing its state budget and
                      calculating GDP. The IMF has also been helping Vietnam develop its IFS
                      country page. This aid has included providing preliminary analytical tables
                      necessary for completing the country page in accordance with IMF
                      methodology. Other ongoing assistance is geared mainly toward the
                      collection of social and demographic data. Further monitoring will be
                      needed to determine whether these efforts are effective in improving the
                      quality of data.

                      In the late 1990s, the IMF developed and issued two sets of standards for
                      data production and dissemination by its member states. The key
                      objectives of one set of standards (known as the General Data
                      Dissemination System) are to improve data quality; provide a framework
                      for evaluating needs and setting priorities for data improvement; and guide
                      countries in the provision of comprehensive, timely, accessible, and
                      reliable economic, financial, and sociodemographic statistics. A more
                      detailed set of standards (the Special Data Dissemination Standard)
                      focuses on specific elements of data quality. A number of countries in East
                      Asia, including the Philippines and Thailand, have voluntarily subscribed to
                      the Special Data Dissemination Standard, but Vietnam and none of the
                      poorest developing countries receiving loans from the World Bank’s
                      International Development Agency have subscribed to this standard.



Agency Comments and   We sent a draft of this report to the Departments of Treasury and State and
                      to the Central Intelligence Agency (CIA). Treasury and the CIA indicated
Our Evaluation        that they had no comments. The Department of State provided oral
                      comments. Generally, State concurred with our overall findings and
                      conclusions. It also provided some technical comments, which we
                      incorporated where appropriate.



Scope and             To assess the availability, transparency, and quality of published economic
                      and trade data on Vietnam, we met with officials from a number of U.S. and
Methodology           international agencies, including the Departments of Commerce, State, and
                      the Treasury, the Trade and Development Agency, the CIA, the IMF, the
                      World Bank, the United Nations Statistics Division, and the UNDP. We
                      conducted a literature search and contacted researchers in the field. In




                      Page 8                                  GAO/NSIAD-99-109 Vietnam Economic Data
B-279772




addition, we contacted the Embassy of Vietnam in Washington, D.C., and
the U.S. Embassy in Hanoi.

We requested information on the methods agencies use to evaluate data
and on the strengths and limitations of the data. We also compared data
from different sources and from different time periods, concentrating on
1992, 1994, and 1996. Although we did not conduct a systematic
comparison of Vietnam’s data with that of other countries, we did make
some comparisons with readily available data in the WDI.

We did not travel to Vietnam, although we did meet with a Vietnamese
embassy counselor in Washington, D.C. We limited the documentation for
this report to nonclassified information. In addition, we did not address
perspectives from the business community regarding the availability and
quality of Vietnam’s economic data.

We performed our review from March 1998 to March 1999 in accordance
with generally accepted government auditing standards.


We are sending copies of this report to the Honorable Madeleine K.
Albright, Secretary of State; the Honorable Robert E. Rubin, Secretary of
Treasury; the Honorable William M. Daley, Secretary of Commerce; and
appropriate congressional committees. Copies will also be made available
to others upon request.

Please contact me at (202) 512-3092 if you or your staff have any questions
or would like additional information. Major contributors to this report were
John Oppenheim, Lê Xuân Hy, and Stan Kostyla.




Kwai-Cheung Chan
Director, Special Studies and Evaluations




Page 9                                  GAO/NSIAD-99-109 Vietnam Economic Data
Appendix I

Selected Economic Statistics on Vietnam                                                                                     ApIpenxdi




                                            GDP, revenue, and expenditures in billions of Vietnamese dong Exports and
                                            imports in millions of dollars.



                      General      General International International International United    World      Asian Department
                   Statistical Statistical     Monetary      Monetary      Monetary Nations    Bank Development Commerce
                 Office 1996a Office 1994b Fund 1998c Fund 1996d Fund 1997e           1998f    1998g Bank 1998h    of 1998i
    1992
GDP nominal          110,535     110,535      110,535       110,535                           110,535
(current)
GDP real              33,991      33,991       33,987        33,991                            33,991
(constant)
                                                                                                    j
Government                        21,023       21,000        21,023
revenue m
                                                                                                    j
Government                        23,711       25,800        25,121
expenditure
Total imports,         2,540        2,541       2,817         2,817         3,027    2,541      2,946
c.i.f. n
Total exports,         2,581        2,581       2,475         2,475         2,918    2,581          k
f.o.b. o
     1994
GDP nominal          170,258     170,258      170,258       170,258                           170,258    170,258
(current)
GDP real              39,982      39,982       39,982        39,980                            39,982     39,982
(constant)
                                                                                                    j
Government                                     42,100        41,440                                       38,299
revenuem
                                                                                                    j
Government                                     46,600        46,121                                       33,355
expenditure
Total imports,         5,826                    5,827         5,827         5,826    5,826      6,514      5,826
c.i.f. n
                                                                                                    k
Total exports,         4,054                    4,054         4,054         4,054    4,054                 4,054
f.o.b. o
     1996
GDP nominal          258,609                  258,609                                         258,609    258,609
(current)
GDP real              47,888                   47,888                                          47,888
(constant)
Government                                     60,900       62,000p                                 j     59,960
revenuem
Government                                     63,900       66,417p                                 j
                                                                                                          45,800
expenditure




                                            Page 10                                    GAO/NSIAD-99-109 Vietnam Economic Data
                                            Appendix I
                                            Selected Economic Statistics on Vietnam




                      General      General International International International United                      World      Asian Department
                   Statistical Statistical     Monetary      Monetary      Monetary Nations                      Bank Development Commerce
                 Office 1996a Office 1994b Fund 1998c Fund 1996d Fund 1997e           1998f                      1998g Bank 1998h    of 1998i
Total imports,        11,144l                   11,644                                   13,668       11,144 12,870           11,144     11,000
c.i.f. n
Total exports,         7,256l                     7,337                                    6,933       7,256            k      7,255      7,000
f.o.b. o
                                            aStatistical    Yearbook 1996.
                                            bStatistical    Yearbook 1994.
                                            cStaff     country report 98/30, April 1998.
                                            dStaff     country report 96/145, December 1996.
                                            eDirection     of Trade Statistics 1997.
                                            fDepartment  of Economic and Social Affairs, Statistics Division,
                                            Monthly Bulletin of Statistics, July 1998.
                                            gWorld      Development Indicators 1998.
                                            hFrom      http://internotes.asiandevbank.org/notes/vie/VIEOTH.htm.
                                            i1998      Country Commercial Guide, U.S. embassy, Hanoi.
                                            jReported      as missing.
                                            kReported      as c.i.f.
                                            lEstimated.

                                            mIncluding      grants.
                                            nc.i.f.:   cost, insurance, freight, that is, at the importer’s custom frontier
                                            of.o.b.:   free on board, that is, at the exporter’s customs frontier.
                                            pBudgeted.




(713020)                 eL
                          rtet              Page 11                                                       GAO/NSIAD-99-109 Vietnam Economic Data
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