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VN to scope its non-observed economy

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A Vietnamese woman rides her bicycle loaded with flowers as she looks for customers along a street in Hanoi on November 21, 2018. Manan VATSYAYANA/AFP

VN to scope its non-observed economy

Vietnam will officially measure the non-observed economy next year to take stock of economic activity taking place unlawfully or at an unregistered household level, under a project recently approved by Prime Minister Nguyen Xuan Phuc.

Measuring the non-observed economy will provide a more comprehensive evaluation of the scale of the Vietnamese economy. Using this updated information, state management could be improved.

The measurements will include the underground economy, illegal economic activity, household self-consumption production and other activities missed by the statistics system.

Pilot measurement scheduled for 2019

The Ministry of Planning and Investment will be in charge of developing the project’s theoretical framework and studying international expertise to create a list of non-observed economic activities and input statistics into the information system.

A pilot measurement is scheduled to be carried out this year. Starting from next year, the non-observed economy will be measured officially with periodic updates following established regulations.

At a Wednesday reception for the chief representative of the International Monetary Fund (IMF) in Vietnam Jonathan Dunn, the prime minister asked the IMF to support Vietnam’s measurement efforts.

In response, Dunn said that he would relay the PM’s request to IMF leaders, saying he believed the IFM would help Vietnam improve its economic measuring.

He said that even the official economy of Vietnam had not been measured adequately because many figures were not updated regularly enough and became outdated as the country’s economic structure changes rapidly.

General Statistics Office director-general Nguyen Bich Lam, in an interview with Vietnam News Agency in June last year, said besides providing a more accurate picture of the economy, measuring its non-observed parts would provide a base for the creating of policies to expand the tax base and improve tax collection. It could also be a basis for policies to gradually transform informal economic activities into formal ones.

The government recently asked the Ministry of Finance to develop a project to prevent tax losses in the non-state economic sector, with a focus on the informal economy.

Fullbright University Vietnam researchers have estimated that the non-observed economy makes up around 25-30 per cent of the country’s GDP. The non-observed economy was estimated at 15 per cent of GDP in 2006 and reached 27 per cent GDP in 2015.

With its average annual expansion rate of 1.2 per cent, Vietnam was one of the three countries in Asia with the fastest growing scale of non-observed economy, after Indonesia and China. VIET NAM NEWS/ANN