Improvements in the value added calculations and analyses in vietnam transport

1
Introduction
1. Importance of the thesis
SNA is the system of accounts closely related with each other. It is composed
of general economic indicators presented in the form of accounts to reflect the social
reproduction and gross domestic product within a certain period (usually a year). The
basic purpose of the SNA is to provide information for macroeconomic analysis,and
policy making to lay foundations for monitoring, managing and reacting to the
economy. During the opening process, integration of the SNA applied uniformly
throughout the country is an objective necessity.
Transport is one of the key industries, are indispensable in the economic
structure of each country. The exact value-addeddeterminationin the transport sector
(VA
vt
) will help ensure the accuracy and reliability of the gross domestic product
(GDP), thereby contributing to improve effectiveness and efficiencies ofthe decisions
on the socio-economic development.
Since SNA is formally adopted in our country (1993), there have been a
number of researches related to the method calculating VA and VA
vt
. On these
perspectives, this research has addressed and clarified some issues, which are more or
less related to the VA and VA
vt
such as the method calculating production value in
national accounts reporting regimes; Statistical information system of the road
transport in our country; methods calculating the production value of the transport
sector at current prices in Vietnam etc.
However, so far in Vietnam, no in-depth research referring to the complete and
comprehensive methods of collection, calculation and analysis of VAvthas showed
the contribution of this sector to the national economy. The research

perfectingcalculating and analytical methods of VA
vt
is not only meaningful in terms
of methodology, but it also contributes to improve transport sector statistics in our
country in the future.
Wishing to practically contribute to improve the accuracy and reliability of
VA
vt
indicators, better meetthe needs of transport statistics, and economic
information statistics in general, the researcher selected the title of my doctoral
dissertation as “improvements in the value - added calculations and analyses in the
Vietnamese transportation industry”.
2. Objectives of the research
The thesis of improvements in the value- added calculations and analyses in
Vietnam transportation consists of
2
- Clarifying the VA
vt
method according to SNA.
- Studying the situation, improving and proposing the method of calculating,
analyzing VA
vt
Vietnam
- Studying the current problems, and proposing to improve the statistical information
system for the calculation and analysis of VA
vt
Vietnam
- Testing and analyzingVAvtin Vietnam Railways in the 2008-2012
Period
3. Subject and scope of the research

Subject of the research is the calculation and analysis of VA
vt
Vietnam
Scope of the research:
- Focusing the research on the method of calculating the current value of the
VA
vt
Vietnam of the SNA department according to the General Statistics Office for
the transport sector nationwide.
- Improving the calculation of VA
vt
according to the currenttransport sectorof
the SNA department and the method of production.
- Improving the analysis of VA
vt
Vietnam according to the transport sector.
- Improving the information source serving the VA
vt
Vietnam under the
direction of the researcher.
- Testing and analyzing VA
vt
Railways 2008-2012.
4. Research methodology
To accomplish the research objectives, the thesis will use a combination of the
following methods:
(1) Literature review: Collect and analyze some articles and works related to
the thesis topic to inherit and develop their research, and prove that the subject of my
thesis is not a duplicate topic, except for a new research.
(2) Information collection: To obtain a theoretical basis, legal basis and source

of data for the calculation and analysis of VA
vt
, the researcher gathered legal
documents relatingto the statistics field in general and Statistics in the transport sector
in particular; materials (including books, newspapers, magazines, research) on the
method of calculation and analysis VA
vt
; the relevant data from the statistical reports,
financial reports of enterprises and transport sector, from the thematic surveys and
sample surveys. Besides, the researcher also referred to the opinions of experts
3
working at the General Statistics Office, transportation - relatedstatistics departments,
as well as statistics staff directly working in the Ministry of Transportation, in the
transport businesses to see the actual situation of the statistical information, the
calculation of key indicators of the industry in general and railways transport in
particular, as well as the inadequacies in the analysis VA
vt
nationwide which the
Department of National Accounts System is currently facing.
(3) Descriptive statistics, statistical analysis: technical tables, graphs, statistic
grouping, structural analysis, factor analysis, analysis of variation over time, model
diagrams used in the thesis to calculate and analyze VA
vt
.
5. Contributions of the thesis
The thesis has a number of new academic contributions as follows:
(1)Systemizing and clarifying theoretical issues related to the
VAvtmethodology according to the SNA.
(2) Analyzing the situation of calculatingthe current VA
vt

Vietnam for the
country's transport sector according to the Department of National Accounts System.
(3) Clarifying the analysis of the current VA
vt
Vietnam of General Statistics
Office.
(4) Analyzing the situationof information system to calculate and analyze the
current VA
vt
Vietnam of General Statistics Office.
(5) Improving the method of VA
vt
calculation and analysis of the SNA
(6) Improving the information system for the VA
vt
calculation and analysis
towards the direction of the completed one
(7) Testing and analyzing VA
vt
inVietnam Railways.
6 Structure of the thesis
In addition to the Introduction; Conclusions and Recommendations, the main
contents of the thesis consist of three chapters:
Chapter 1: Overview of the value added calculation in the transport sector according
to the System of National Accounts
Chapter 2: Improvements in value added calculation and analyses in Vietnam
Transport Sector
Chapter 3: Testing and analysis of VA
vt
Vietnam Railways for the period 2008 -2012

4
CHAPTER 1
OVERVIEW OF THE VALUE ADDED CALCULATION IN THE
TRANSPORT SECTOR ACCORDING TO THE SNA

Transport is one of the key industries, are indispensable in the national
economy. Its critical role is partly reflected by the industry’s VA generating for the
economy. In order to properly assess these contributions, it is essential thatthe
method calculating transport VAvt should be carefully studied. To create a basis for
the proposal, and improvements in calculating and analyzing VA transport industry in
our country, the first chapter will focus on the following issues: (1) Overview of the
System of National Accounts; (2) The common problems of the transport sector; (3)
the VA
vt
calculation method according to the SNA.
1.1 Overview of the SNA
The SNA is a system of economic indicators presented in the form of double-
entry bookkeeping accounts or statistical tables built according to international
standards generally, to reflect the productionconditions and results, as well as the
process of creating income, distribution, redistribution,its final use of the income of
the economy and institutional sector. The SNA represents a tool to measure the social
production results and the model analyzing fundamental economic phenomena at the
macro level.
1.1.1 The process of formation and development of SNA
The System of National Accounts of the United Nations has been introduced
by the world's leading economists. Its foundation has been laidsince the seventeenth
century with the proposals of the economists such as W.Petty (1665) and G.King
(1688).
In 1953, the United Nations established the first SNAwhich was based on the

report of the research team from Cambridge University (UK). This is also the first
version of the System of National Accounts - SNA version - 1953.
In 1968, the United Nations and OECD revised and extended the SNA, and
made public the SNA -1968.
With the aim of simplifying and facilitating, as well as adding indicators
reflecting changes in the economy, since 1968 to date, the UN has, in turn, published
the versions SNA - 1993; SNA - SNA 2003 and - 2008.

5
1.1.2 Role of The SNA
- Providing conceptual systems, general accounting rules to build the system
of macroeconomic information to evaluate and analyze the performance
efficiencies of the economy.
- Describing and analyzing the basic economic phenomena, from
production, consumption and accumulation of wealth in the economy.
- Allowing the construction and analysis of economic models.
- Meeting the needs of international comparisons.
1.1.3 Basic concept of the SNA
The concept of production: Production is the process of using labor and
machinery of the institutional unit to transfer the cost of these materials and
services into other products and services. All goods and services produced are able
to sell in the market or at least capable of providing them to another instituation
with charge or free of charge.
Residential Concept: An institutional unit is considered to be a residential unit
when there is a center of economic benefits within that country’s territory.
Concept of economic territory: The economic territory of a country consists
of the geographic territory under the administration of the State in which residents,
commodities, property and capital freely circulate. In the country with coastlines,
the economic territory also includes the islands under the sovereignty of the
nation,and its fiscal and monetary policy similiar to the mainland.

Central concept of economic benefits: An institutional unit is called the
center of economic benefits within the territory of a country, if that unit has its
headoffice, production sites, or buildings in the economic territory of the country,
carrying out production activities and economic transactions for a long time
(usually above1 year).
1.1.4 Major groups of the SNA
(1) By industry: Industry subdivision means the national economy is divided
into different groups based on the production characteristics of the units
participating in this division
(2) By institutional sector: Institutional sectorsubdivision means the
economy is grouped into different parts called institutional sectors, which are
based on the characteristics of operating funds, the purpose and field of
institutional units’performances.
6
(3) By products: Product classification institutes product sub-categories
based on the major use of the product.
1.1.5 Basic content of the SNA
The economic indicators of the SNA are: (1) Gross output (Gross Output -
GO), (2) intermediate costs (intermediate Consumption - IC): (3) Value added
(Value Added - VA); (4) Gross Domestic Product (Gross Domestic Product -
GDP; (5) Gross national income (Gross National Income - GNI), (6) Net national
income (Net National Income- NNI), (7) National disposable income (national
Disposable Income- NDI), (8) Final consumption (Consumpion C), (9) or Savings
(saving - S), (10) Exports of goods and services (export - E), (11) Imports of
goods and services (import - M)
The accounts and I –O tables: (1) Production account; (2) income
distribution account; (3) Financial capital account; (4)Economic foreign relations
account and (5) Table I - O.
1.2 Common isues in the transport sector
1.2.1 Transportation and its role

Transport concept: In fact, each approach has its transport definition. To
conduct a statistics research, it is essential to have a concept which not only
describes the nature of phenomena, but also lays a foundation for research,
quantification of transport activites. To do this, the researcher argues that
“Transportation is the activity that moves goods and passengers to a certain place
so as to meet socio – economic needs”.
The role of transport: (1) Assisting the ongoing production process; (2) The
travel needs of the people; (3) Contributing to the implementation of the socio -
economic links among local locations and creation of economic relationship
among nations; (4) To promote economic and cultural activities of each region or
area; (5) Strengthening national defense.
1.2.2 Classification of transport: There are numerous different classifications of
transport, here are 3 major classifications.
By mode of transport: (1) Waterway transport; (2) Rail transport; (3) Road
transport; (4) Air Transport; (5) Pipeline transport.
According to transport objects: (1) Cargo; (2) Passenger.
Under the scope of transport: (1) Local transport; (2) International transport

7
1.2.3 Transport system of Vietnam
According to the table of Vietnam industry classification in 2007,
transportation activities are classified as a Class I industry "H: Transportation
warehousing and storage"
Calculation principles of the transport sector: (1) fully calculating all
means of transport and economic sectors; (2) calculating transport activities
considered as production activities only; (3) covering transport unit’s side business
with no loss and profit accounting in the transportation industry.
Calculation scope of the transport industry: (1) freight and passenger; (2)
loading and unloading operations in ports, railway stations and bus stations; (3) for
– hire vehicles, loading and unloading, warehousing; (4) other transportation

services.
1.3 Method calculating value added according to SNA in the transport sector
After presenting statistical principles of transport objects as well as the
principles VA
vt
, the thesis presents the methods calculating VA
vt
according to the
SNA: production and distribution methods. On the other hand, the thesis has also
clarified information sources to ensure the application of this methodology.
Calculating VAvt according to the production method
VA = production value - intermediate cost
According to the method of production, VA, the production value, IC of the
transport sector can be calculated at current prices or comparative prices.
According to the distribution method: According to the distribution method,
VAvt totals distribution factors: (1) workers’ income earned from production ; (2)
other production taxes; (3) depreciation of fixed assets; (4) production surplus.
Information sources serving calculating VA
vt
To calculate VAvt according
to the production and distribution methods, It is necessary that information related
to the production value targets and IC of the transport sector, first income of
workers and the business, and the depreciation level of fixed assets should be
collected. All this information can be gathered from the following reports and
surveys:
- Report of the Railway Corporation.
- Reporting of Aviation Corporation.
- Report of Maritime Corporation.
8
- Report of the provincial Statistics Bureau and centrally-managed cities.

The Report of Statistics Departments has been collected, compiled from: (1)
periodic statistics report of state enterprises; (2) results of annual enterprise
surveys; (3) individual establishments’ annual business results from the sample
survey; (4) annual results from quantities of the individual establishments (5) The
transportation survey results from non - state enterprises and individual busineses


CHAPTER 2
IMPROVING THE VAvt CALCULATION AND ANALYSIS IN THE
CURRENT TRANSPORT SECTOR
In this chapter, the authors focus on the situation and propose the
improvements in VAvt calculation and analysis, as well as information source to
ensure thatcalculation and analysis.
2.1 Overview of the SNA statistics in Vietnam
To lay a foundation for conducting a research into improving VA
vt
calculation
analysis of VA
vt
Vietnam, simultanously ensure its accurate and timely data, in the
opening of chapter 2, the researcher has focused on clarifying some common issues
of the Vietnamese statistics sector such as organizational system; distribution and
decentralization in compiling SNA statistics; compare the levels implementing SNA
statistics in Vietnam with the provisions of the IMF.
2.2 Improving the method calculating value added in Vietnam Transport sector
on a national scale
2.2.1 The situation of the method calculating VAvt in the transport sector
nationwide
Currently, the VAvt in the transport sector is being calculated on a national
scale by the Department of National Accounts System, which implemented it

quarterly and yearly, mainly in accordance with the production method (VASX = GO
- IC) and calculated according to the transport industry.
In the diagram below:
GOhh, t and Goss, t is the transport production value at time t at current prices
and comparative prices
9
IChh,t and ICss t, t is the transport intermediate cost at time t at current prices
and comparative prices
VAss,t and VAhh, t is the value-added at time t at current prices and
comparative prices
PPI is an index of freight rates

IC


IC܁܍܋ܜܗܚ



Figure 2.1: The process of calculating the present VAvt Vietnam
The current process of calculating VAsx of the Department of National
Accounts as follows:
(1)Calculating GO in the transport sector: The Department of National
Accounts calculates GO in the transport sector according to comparative prices,
based on the increasing speed of freight and passenger movements. The value of
transport services is allocated on the following principles: the more movements, the
more transport services, therefore, the transport value is allocated according to the
weighted freight and passenger transport value in the total value of freight and
passenger
(2)Calculating IC transport industry: Based on IC transport coefficients

provided by the General Statistics Office to calculate the transport IC at comparative
prices and current prices.
IC
ss/hh,t
= GO
ss/hh,t
x IC Transport Sector
(3) The VA
vt
: Application of the production calculation method for calculating
VA
ss,t
, and VA
hh,t

܄ۯ
ܛܛ/ܐܐ,ܜ
= ۵۽
ܛܛ/ܐܐ,ܜ
− ۷۱
ܛܛ/ܐܐ,ܜ

After presenting the situation of calculating GO, IC in the transport sector, the
thesis provides some comments and conclusions on advantages and disadvantages

GO
ss,t

IC
ss,t

VA
ss,t

GO
hh,t

IC
hh,t

VA
hh,t
PPI
_


=

=

10
and some problems that need further researching in perfecting the current VAvt
calculation method of the Department of National Accounts:
Strengths
: the current calculation method of Department of National Accounts
has theavailable original information source, just gathers information about the
volume of freight and passenger movements.
Weaknesses
: Calculating GO in the transport sector at comparative prices
based on the speed of freight and passenger movements, then turningthis calculated

GO intothat of the current price, based on PPI which has not taken advantage of all
information sources reported from the levels and firms in the transport sector. On the
other hand, based on the data speed of original freight and passenger movements will
increase the errors of GO, because the speed of freight and passenger movements
may not be accurately reflected, whenthe time gap between the original period and
calculation period is longer.
The IC industry Transport at current prices and comparative prices over years
are based on the same transport coefficients IC 2007, which does not reflect the
intrinsic VA over years, because of the intermediate cost rates over years may not
always be equal according tocomparative prices and current ones.
A number of issues need further research and improvement:

- ForState transportation businesses, production value and IC in the transport
sector are compiled at current prices from the annual report, then converted GO and
IC transport sector at comparative prices through PPI and intermediate costs.
- For non - state transport enterprises and individual transportation
establishments, the survey may directly collect information about revenues. With this
information and data, transportation production value can be completely calculated at
current prices. Furthermore, non - state transport enterprises and individual
transportation establishments do not own large production scales. Hence, it can be
coordinated with the Price Statistics Department for information about the input
index in order to transfer IC to the current prices, after comparing prices based on the
coefficient IC.
2.2.2 Improving the method of calculating the value added in the transport sector
nationwide
2.2.2.1 Improving the method of calculating the value added in the transport sector
for State transport enterprises
The improvement in the VA
vt
method for state transport enterprises is shown

by the diagram 2.2:
11

- =

Transportation Price Index (PPI)


- =

ICSector

Chart 2.2: Process of calculating the VAvt
for State transportation businesses

Specifically, the process of calculating VAss, t for these enterprises is shown
as follows:
(1) From the periodic reports of the transport industry, GOhh, t, IChh, t can be
collected.
(2) From the indicators collected in the report and associated with PPI , GO
ss,t
,
IC
ss,t
can be calculated as follows:
۵۽
ܛܛ,ܜ
=
۵۽
ܐܐ,ܜ

۾۾۷
ܜ

IC
ss,t
can be calculated in 02 ways:
The first: method shows that if IC in the transportation sector provided by the
surveys of the General Statistics Office is applied (IC of the Transport Sector is
currently applied in 2007), the freight price index (PPI) oughts totransfer in the same
year as that of IC in the transport industry provided by the General Statistics Office
(transfer the freight price index in 2007). The calculation formula can be shown as
followings:
IC
ୱୱ,୲
= GO
ୱୱ,୲
xICTransportSectorin2007

VA
hh,t

IC
hh,t

GO
hh,t

VA
ss,t

IC
ss,t

GO
ss,t
12
The second: method argues that it can be calculated according to the annual IC
in the transport sector, based on information collected by GO, IC Transport sector at
current prices according to the formula:
ܫܥ
௦௦,௧
= ܩܱ
௦௦,௧
ݔ
ூ஼
೓೓,೟
ீை
೓೓,೟
,Afterwards, the freight price index from the Price Statistics
Department is applied.
(3) Application of the production calculation method for calculating VA
ss,t
, and
VA
hh,t

܄ۯ
ܛܛ/ܐܐ,ܜ
= ۵۽
ܛܛ/ܐܐ,ܜ

− ۷۱
ܛܛ/ܐܐ,ܜ

In conclusion, this above – mentioned calculation process has taken an
advantage of the information from the periodic transport statistics reports in order to
calculate GO
hh,t
and IC
hh,t
, thereby overcoming the existing reality that reflects the
shortcomings of production price index calculation.
2.2.2.2 The method of calculating VA in the transport sector for non - state
transport enterprises and individual transportation establishments
The improvement in calculating VA in the transport sector for non - state
transport enterprises and individual transportation establishments is shown in the
diagram 2.3

_ =


The freight price index (PPI) The input price index

ICSector
- =


Diagram 2.3:The process of calculating VA in the transport sector for non - state
transport enterprises and individual transportation establishments

VA
hh,1

IC
hh,t


GO
hh,t

VA
ss,t

IC
ss,t

GO
ss,t
13
Specifically, the process of calculating VAss, t for these enterprises is
presented as follows:
(1) From the survey results according to the Decision No. 612 / QD –TCTK,
dated 12/9/2011 of the General Department of Statistics, GOhh, t can be calculated
(2) With this available GOhh, t, associated with PPI to determine Goss, t.
(3) Determining IC
hh,t
according to the formula:
IC
hh,t
= IC

ss,t
x Material input price index at time t
With this formula, to calculate the transfer IC
ss,t
to IC
hh,t
the material input
price index is needed. However, the fact that there is PPI only. For this reason, to
use the formula, the material input price index is replaced by the PPI.
4) Calculating VA
ss,t,
VA
hh,t
according to the production method with the
following fomula:
VA
୦୦/ୱୱ,୲
= GO
୦୦/ୱୱ,୲
− IC
୦୦/ୱୱ,୲

The application of the VA calculation process for State transport enterprises
and individual transport establishments can limit the errors when calculating IC
Transport Sector in the current calculation of the Department of SNA (see the
diagram 2.1)
2.3 Improving the current analysis of the value-added in the Vietnamese
transport industry
2.3.1 Situation of analyzing the value-added in Vietnam transport sector at present
In our country, the VAvt targets calculated by the Department of National

Accounts System serve the annual calculation of GDP of the economy . Therefore,
the VAvt analysis lies within the calculation of simple statistical indicators such as :
(1) Determine the absolute and relative VAvtvariation; (2) Use statistics tables and
graghs to illustrate thesefluctuations.
The current analysis of Vietnam VAvt has not clarified the position and role of
the transport sector in the economy, as well as evaluated the level of development in
the transport sector .
2.3.2 Improving the current analysis of value-added in the Vietnam transportation
industry
On the basis of the current VA research and analysis, the proposed VA
vt

calculation method, the dissertation improves this analysis with the following
contents:
14
- Analyzing VA
vt
according to the time to clarify the degree of increase or
decrease in this indicator over time, thus making comments on VA
vt
fluctuations over
time.
- Analyzing the transport market share through the calculated VA share of the
transport sector in the total VA
vt
and GDP of the economy, from which an overall
assessment of transport sector’s role in general and each transport sub- sector in the
economy in particular.
- Analyzing the factors affecting VA
vt

by a number of analysis methods ( index
method, method of analyzing each section of the fluctuations) through some
economic equations as follows:
Table 2.1: Criteria group used in the analysis of VA Transport Sector
due to the effects of the factors
Targets Symbol

First targets
1 Production value according to the transport sub - sector GO
2 Intermediate transport costs according to the transport sub - sector IC
3. Labor costs according to the transport sub - sector V
vt
4. Depreciation of the fixed assets according to the transport sub –
sector
C
1
5. Transport labor quantity according to the transport sub – sector L
vt
6. Transport business results according to units in kind Q
Calculation targets
7.

Revenue

per

user

calculated


according

to


VA
=
VA
\
business results
according to units in kind
D
8. Capacity of using costs
ሺ
L
vt

,
C
1

,
V
vt
ሻ
=
୚୅
ୡ୭ୱ୲ୱ

H

9.

Average

imcome

per

labor
=
୪ୟୠ୭୰

ୡ୭ୱ୲ୱ
ሺ
୚
౬౪
ሻ

୪ୟୠ୭୰

୤୭୰ୡୣ
ሺ
୐
౬౪
ሻ

V
bq

10. Total costs = C

1
+ IC + V
vt
TCP
11.
Cost

structure
=

஼
భ
ሺ
௢௥
௏
ೡ೟

;

௅
ೡ೟
ሻ
்஼௉

D
12. Capacity of using costs according to the business results of the units
in kind
=
୕
ୡ୭ୱ୲ୱ

H
Q
15
Equation 1: Analysis of VA fluctuations in the transportation industry affected by
revenue per user and transport volume
VA = 
୚୅
୲୰ୟ୬ୱ୮୭୰୲୰ୣୱ୳୪୲ୱୟୡୡ୭୰ୢ୧୬୥
୲୭୲୦ୣ୳୬୧୲୧୬୩୧୬ୢ
XTransport results according to the unit (Q)
Or: VA = D x Q
Q: indicators of transport results according to the units in kind
Equation 2
: Analysis of VA in the transportation industry affected by capacity of
using costs and cost scales
VA = 
VA
costs
Xcosts = HxCP
CP: Cost, could be: C1 (depreciation of fixed assets); V (labor cost); L (labor
scale)
Equation 3
: Analysis of VA fluctuations in the transportation industry affected by
capacity of using labor costs, average income per worker and labor scale
VA = 
VA
LaborcostsሺV
୴୲

ሻ
X
LaborcostsሺV
୴୲
ሻ
laborforce
ሺ
L
୴୲
ሻ
Xlaborforce
ሺ
L
୴୲
ሻ

Or: VA = H x V
bq
x L
vt
Equation 4: Analysis of VA in the transportation industry affected by capacity of
using costs, cost structure and cost scale
VA = 
VA
C
ଵ
ሺhoặcV
୴୲
; ICሻ
X

C
ଵ
ሺhoặcV
୴୲
; ICሻ
TCP
XTCP
Or: VA = H x d x TCP
Equation 5
: Analysis of VA in the transportation industry affected by the revenue
and capacity of using costs calculated according to the results of units and scale cost
VA = 
VA
Q
X
Q
costs
XcostsOr ∶ VA = DxH
୕
xCP
CP can be: C1 (depreciation of fixed assets); V (labor cost); L (labor scale); IC
(intermediate costs).
2.4 Improving information sources, ensure the application of the value- added
analysis and calculation in Vietnam transportation sector
Based on the reality of the information system and the transport statistics
reports, the author of the thesis has made the following primary recommendations to
16
ensure the information needs for the application of the value – added analysis and
calculation:
* For State transportation enterprises

- To accurately determine the indicators of GO, IC transport, worker’s initial
income (V), production surplus (M) (from which VAvt can be determined), the
researcher suggests supplementing the indicators of gross transport revenues and
costs to the annual statistics reporting regimes accompanied with The Prime
Minister’s Decision No 77/2010/QD- TTG, dated on 30/11/2000
- To determine enterprices’ monthly VA (from which quartly and yearly
statistics can be compiled), the researcher suggests adding the indicators of revenues,
total transport costs and labor scales to the table No 01 – CS/VTKB.
* For State transport enterprises and individual transportation establishments, to
have adequate information for VA analysis and calculation, some problems in carrying
out the periodic statistics surveys of non – State enterprises, cooperatives and individual
transport – related establishments according to the Decision No 612/ QD – TCTK dated
on 12/9/2011 of the Head of GSO should be improved such as (1) Don’t select a
sample with only criterion which is the number of workers, choose the sample with
many different criteria, in accordance with each type of enterprise; (2) Addition to the
survey indicators (including identified indicators ) for the enterprise branches located in
each local area to separate the pure local database ; (3) Simultanously, establishing the
database storage and data sharing system among the units responsible for collecting,
processing and storing data with other units in the statistics or non – statistics/statistics -
related industries.

CHAPTER 3
TESTING AND ANALYZING THE VALUE – ADDED IN THE VIETNAMESE
RAIL TRANSPORTATION SECTOR IN THE PERIOD 2008-2012

In this chapter, after generalizing the rail transportation in Vietnam and
worldwide, the researcher will focus on calculating and analyzing the VAvt in the
Vietnamese rail transportation in the period 2008 -2012. On the other hand, for the
sake of collation and comparison, in this chapter, VAvt Vietnam Railways in the
period 2008 -2012 is calculated according to the current method of the Department of

the SNA.
17

3.1 Overview of the rail transportation sector in Vietnam and in the world
By generalizing the rail transportation in Vietnam and worldwide, the
researcher clarifies the development trends, models of production organization, rail
administrations in Vietnam and throughout the world. On the other hand, from the
history of formation and development of Vietnam rail transportation over time, the
thesis has clarified the role of transportation for the course of industrialization,
modernization and country’s defense.
3.2 Calculating the value – added in the rail transportation sector
(1)Calculating VA
vt
Vietnam Railways according to the current method of the
Department of the SNAmeans calculating GO in the rail transportation from the
comparative prices based on the growth in freight and passenger movements, then
transfer the current prices through annual rail freight rates. Rail IC at current and
comparative prices is calculated by using IC 2007. VAvt at current and comparative
prices is calculated according to the production method.
Table 3.2:Results of the VAcalculation in the rail transportation sector in the
period 2008-2012 according to the calculation of the Department of the SNA
(According to PPI of yearly freight and passenger transportation)
Year
Targets
2008 2009 2010 2011 2012
HHLC
đs
(mn tonnes.km) 4170.9 3864.5 3960.9 4162 4024.5
HKLC
đs

(mn of passenger
arrivals.km)
4560.4 4138.1 4377.9 4571 4600.6
T
HHLC
(times) 1.0743 0.9954 1.0202 1.0720 1.0366
T
HKLC
(times) 0.9787 0.8881 0.9396 0.9810 0.9874
GO
hgh,ss,t
(bn. VND) 1096.655

1016.093

1041.44 1094.315

1058.162

GO
hk,ss,t
(bn. VND) 1542.795

1399.93 1481.055

1546.381

1556.395

GO

ss,t
(bn. VND) 2639.45 2416.023

2522.495

2640.696

2614.557

IC 2007(%) 47.56 47.56 47.56 47.56 47.56
IC
ss,t
(bn. VND) 1255.322

1149.060

1199.699

1255.915

1265.123

VA
ss,t
(bn. VND) 1384.128

1266.963

1322.796

1384.781

1371.074

18
PPI
hk
(%) 122.39 104.075 114.55 118.37

122.00

PPI
hgh
(%) 123.44 103.874 110.21 112.84

107.82

GO
hgh,hh,t
(bn. VND) 1353.711

1055.416

1147.771

1234.825

1149.910

GO

hk,hh,t
(bn. VND) 1888.227

1457.047

1696.548

1830.451

1898.802

GO
hh,t
(bn. VND) 3241.938

2512.463

2844.319

3065.276

3039.712

IC
hh,t
(bn. VND) 1541.866

1194.928

1352.758

1457.845

1445.687

VA
hh,t
(bn. VND) 1700.072

1317.536

1491.561

1607.431

1594.025

(Source: rail transportation statistics yearbook and researcher’s calculations)
HKLC
đs
:Number of rail passenger arrivals
HHLC
đs
;Volume of rail freights
T
HHLC
:The growth rate of the original volume of freights
T
HKLC
:The growth rate of the original passenger volume

PPI
hgh
:the index of freight rates
PPI
hk
:the index of passenger travel rates
(2)Calculating towards the researcher’s improved method
From the annual report of the rail transportation sector sent to GSO, the author
of the thesis calculates GO, IC, VA rail transport at current prices.
VAvt rail transport can be calculated in 2 ways:
Method 1: Calculating VAvt rail transport in the period 2008- 2012 according
to PPI transport and the coefficient IC/GO transfers to the orginal year 2007.
Calculating GO rail transport according to the prices of the orginal year 2007,t
ܩܱ
௦௦,ଶ଴଴଻,௧
=
ீை
೓೓,೟
௉௉ூ
మబబళ,೟

IC rail transport according to the prices of the orginal year 2007,t
ܫܥ
௦௦,ଶ଴଴଻,௧
= ܩܱ
௦௦,ଶ଴଴଻,௧
ݔܫܥݎ݈ܽ݅ݐݎܽ݊ݏ݌݋ݎݐ2007
VA
vt
rail transport according to the prices of the original year 2007,t

ܸܣ
௦௦,ଶ଴଴଻,௧
=  ܩܱ
௦௦,ଶ଴଴଻,௧
− ܫܥ
௦௦,ଶ଴଴଻,௧

Calculating VAvt rail transport in the period 2008-2012 according to the PPI
rail transport and IC/GO transferring to the orginal year 2007 has the following
strengths and weakneses:
19
Strengths: Taking an advantage of IC rail transport 2007 to calculate VAvt rail
transport according to comparative prices.
Weaknesses:
- Depending on IC rail transport calculated by the surveys to build up the
interdisciplinary balance (I/O) and compile basic coefficients of SNA 2007 (be used
for 5 years)
- Calculating the annual transportation freight transferred to that of the original
year (2007)
Method 2: Calculating VAvt rail transport in the period 2008 -2012 according
to annual PPI and IC/GO
From the report of business results in the rail transportation sector, GO rail transport
(GO
hh,t
)and IC at current prices can be collected. With two indicators and PPI
vt,t
,
transport rates of year t (provided by the Department of Price Statistics), GO rail
transport can be determined according to comparative prices, year t
GO

ୱୱ,୲
=
GO
୦୦,୲
PPI
୴୲,୲

With the GO
ss,t
just found out, determine IC rail transport at comparative
prices, year t (IC
ss,t
) with the following fomula
ܫܥ
௦௦,௧
= ܩܱ
௦௦,௧
ݔ
ܫܥ
௛௛,௧
ܩܱ
௛௛,௧

Finally, VAvt rail transport at comparative prices, year t(VA
ss,t
) can be
determined
VA
ୱୱ,୲
=  GO

ୱୱ,୲
− IC
ୱୱ,୲

Calculating VAvt rail transport in the period 2008 -2012 according to PPI
transport and IC/GO has the following strengths and weakneses:
Strengths:
-Information sources are available and practical for each transport sub – sector,
therefore, when the information is compiled for GO, IC rail transport at current prices
can be calculated.
-The transport freight rates are provided by the Department of Price Statistics
Weaknesses: Coinciding IC rail transport at comparative prices and current
prices each year
20
(3) Comparing the results of calculating VAvt rail transport according to the
improved method (VA -1) and the current method of the Department of the SNA
(VA -2)
- The calculation results of two methods have shown the strengths of a new
method - the method that the researcher of the thesis reccommends is to minimize
errors when calculating VAvt. Thanks to the direct use of the indicators GO and IC
transport at current prices, the method that the researcher of the thesis reccommends
has overcome weakneses of the current VAvt method of the Department of the SNA.
The reason for these weaknesses is that the original speed of freight and passenger
movements (orginal year 2007) has been used to calculate GO at comparative prices,
and IC transport 2007 has also been used to calculate IC transport at comparative
prices. Hence, the errors of the VAvt indicator increased.
Table 3.7: The results of calculating VA – 1 và VA - 2
Targets
2008 2009 2010 2011 2012
VA -1 (bn.VND) 1405.103 705.069 838.060 959.247 1235.976

VA - 2 (bn.VND)
1700.072 1317.536 1491.561 1607.431 1594.025

(Source: the author’s calculations)

Chart 3.1:The results of calculating VA – 1 and VA - 2
(Source: the author’s calculations)
3.4 Analyzing the VA
vt
rail transport
In this section, after analyzing the fluctuations of the VAvt rail transport over
time, analyzing the structure of the VAvt rail transport according to the elements, the
researcher of the thesis has deeply analyzed the market share of the rail transportation
and the factors affecting the VAvt in the rail transport sector.
0.000
500.000
1000.000
1500.000
2000.000
2008 2009 2010 2011 2012
VA - 1
VA - 2
21
-Analyzing the market share of the rail transportation:The researcher has
analyzed the market share of the Vietnamese rail transportation sector in the period
2008 -2012 through the transport business results, the indicators of quantities and
tendency towards the choice of goods owners and residents’ transport means. The
results of this analysis reflects that in the period 2008 -2012, because of numerous
objective and subjective causes, the market share of the rail transport sector tended to
decrease gradually and did not keep up with the socio – economic development of the

country.
-Analyzing the factors affecting the VAvt rail transport
From the research results of chapter 2, the thesis has used economic equations
established, simultaneously applied some analytical methods to find out the effects of
the factors on VA such as revenue per user, transportation volume, capacity of using
costs, structure of costs and cost scales, speed of using labor costs, average income
per worker and labor scale etc. to lay a foundation for propose solutions to improve
the efficiencies of production and business, as well as the contributions of the rail
transport sector to the economy.
Analyzing the VA affected by revenue per user and transport volume
VA = 
VA
transportresults
accordingtounitsinkind
XTransportresultsaccordingtounitsinkind

Table 3.19: The results of analyzing VAvt rail transport at current prices due to
the effects of the indicaors of transport results calculated in kind
according to the method of anlyzing and compiling each part of the fluctuation
Factors affecting VAvt rail transport at
current prices

Number
of rail
passenger
arrivals
Volume
of rail
freights
Number of

rail
passenger
movements
Volume of
rail freight
movements

∆
ܦ
∗
ܳ
ଵଵ




ሺ
Bn
.
VND
ሻ

246.336 326.316 268.508 318.957
ܦ
ଵଵ
∗
∆
ܳ



ሺ
Bn
.
VND
ሻ

24.183 - 37.001 6.423 -31.691
1
2
∗
∆
ܦ
∗
∆
ܳ


ሺ
Bn
.
VND
ሻ

3.105 - 6.293 0.899 - 5.269
22
∆
ܸܣ
ሺ
ܦ
ሻ

=
∆
ܦ
∗
ܳ
ଵଵ
+


1
2
∗
∆
ܦ
∗
∆
ܳ

ሺ
Bn
.
VND
ሻ

249.441 320.023 269.407 313.688
∆
ܸܣ
ሺ
ܳ
ሻ

=

ܦ
ଵଵ
∗
∆
ܳ
+
1
2
∗
∆
ܦ
∗
∆
ܳ

ሺ
Bn
.
VND
ሻ

27.288 - 43.294 7.322 - 36.960
∆
VA
=
∆
ܸܣ
ሺ

ܦ
ሻ
+

∆
ܸܣ
ሺ
ܳ
ሻ

ሺ
Bn
.
VND
ሻ

276.729 276.729 276.729 276.729
(Source: the author’s calculations)
Remarks: The VAvt rail transport at current prices in 2012, compared with that
of 2011, increased by 276.73 billion VND or 28.85%, due to the following factors:
(1)The number of rail passenger arrivals grew 2.52%, which led to the
increase in the VA
vt
rail transport by 27.288 billion VND.
(2) The volume of rail freights decreased 3.86%, which caused VA
vt
rail
transport to fall by 43.294 billion VND.
(3) The number of rail passenger movements increased by 6.7%, leading to the
rise in VA

vt
rail transport by 7.322 billion VND
(4) The volume of rail freight movements went down by 3.3%, causing the
VA
vt
rail transport to diminish by 36.96 billion VND.


CONCLUSIONS AND RECCOMENDATIONS
Conclusions
Transportation industry is one of the key economic and technical sectors of the
reproduction process in particular and the socio – economic life in general. Transport
statistics is a relatively complicated statistical field, but the focus, innovation and
approach to the new, modern and advanced methods have not been paid attention for
long.
Based on the research, with the situational analyses of the major advantages
and disadvantages of transport statistical information systems, gaining experience of
a number of countries around the world and in the region; based on the contents, the
requirements of national statistical system indicators; combined with the practical
23
experience of the researcher and colleagues, the author has studied and improved the
proposed method of calculation and analysis of the Vietnam VA
vt
, which is not only
in line with international practice, but also suitable with our country’s conditions.
- From the situational research and analysis of the current method determining
VA
vt
,Vietnam of the SNA, the writer of the paper has improved the VAvt calculation
method to meet the general requirements of the SNA.

- Based on the proposed VA
vt
,calculation method, the researcher has perfected
the analysis of VA
vt
,Vietnam so as to evaluate the contributions of the transportation
sector to the economy, determine its market share etc. from which the business
efficiencies and the contributions of the transportation industry to the cause of
building and defensing the country has been improved.
- From the current information system of transport statistics, to meet the needs
of calculating and analyzing VA
vt
, , the researcher has made detailed
recommendations to add some indicators and regulations of the suitable deadline
submitting the report in order to perfect the transport statistics information system.
- To verify the method of proposed VA
vt
, calculation and analysis, the author
has tested and analyzed Railway VAvt in the period 2008-2012.
Recommendations
- To improve the efficiencies of the VAvtcalculation and analysis, GSO need to
conduct research, soon complement and make recommendations of additional
indicators, proposed by the author, to the Government and the Ministry of
Transportation. Simultaneously, the deadlinesubmitting reportsshould be more
suitable to meet the requirements of compiling the data at current prices. The transfer
the comparative prices to the current prices in the VAvt calculation should be
terminated soon.
- To meet the needs of information for the VA
vt
, analysis, GSO needs uniform

regulations of the deadline for submission of statistical reports of transportation
businesses like other businesses (commercial and service enterprises etc.).
- According to the current VA
vt
,calculations of the System of National
Accounts, in case there is not enough information to calculate GO Transport sector at
the current prices, transferred to the comparative prices. It is necessary that the
method for estimating GO transport according to the growth in the volumes of
present originalfreight and passenger movements should be switched to that of
uninterrupted ones.
24
- In the absence of the index of production costs in the transportation industry,
the VA
vt
,can be conversed from the current prices to comparative ones with the
following formula:
VAvt of the
reporting year at
current prices
=

Production value
of the reporting
year at
comparative
prices
x
The VA rate, compared
to the production value
at the real prices of the

reporting year


- The researcher recommends that the GSO should study and issue statistical
reporting regimes in the transport industry, more suitable for the objects, in order to
overcome the current limitations of the reverse calculation of GO transport from the
current prices. Because of no price index of transport production, IC transport ought
to be used 2 times at current and comparative prices.
- Each specialized transportation sub -sector needs to conduct its own anual
calculation and analysis, and from which the market share should be assessed,
simultenously found out the factors which need adjusting (increase or decrease) or
overcoming in order to improve its market share and the sector's contribution to the
GDP of the economy.