Discrepancy between GDP and GNI of Asian countries

[nufix]

why should I explain this? we don´t care if others think we are poor.

since it directly confronts your claim that there is no slum in Vietnam at all and oh relax, it is not a thought, it is a statistic.

 

[William Hung]

our city metro are under construction in Hanoi (5 lines) and Saigon (8 lines). the first metro is scheduled to open in 2015. all lines should be completed in 2020.

why should I explain this? we don´t care if others think we are poor.

What's the point of posting these? this thread has nothing to do with slums or high rise buildings.

 

[Viet]

What's the point of posting these? this thread has nothing to do with slums or high rise buildings.

what is your point? it is you who says something as "ridiculous" discrepancy in VietNam, and the money "flows" to foreigners.
who cares? you? if you put money into Vietnam, it is your right to earn the profit or accept the loss.

isn´t it your intention to make fun on our poverty? as I already say nobody in VN cares of what foreigners say or think.

the pics I posted are for @Phukimak.

since it directly confronts your claim that there is no slum in Vietnam at all and oh relax, it is not a thought, it is a statistic.

I just state facts: if you find slums in Saigon or Hanoi, let me know.

 

[William Hung]

As far as I am aware, that's correct. GDP is essentially for location (what is produced in the country) and GNI is for ownership (what is produced by the citizens of that country).

As far as the comparison between countries, I would not be hasty about mocking the others. It would be interesting to compare the GDP/GNI divergence of each country at comparable stages of development, where I suspect that all countries at lower levels of development show a large divergence, and then a reversal as the countries get richer and send capital abroad to economies that provide a higher return.

Yeah, that's about right. Per capita in dollars I assume.

GNP has taken a back seat in the last 2 decades or so probably because of globalisation and hot money. It's harder and harder to work out who owns what and where it goes to. Might have to ask LeveragedBuyout about that to be sure. But it is interesting to see for countries like Japan and the Middle East countries, who have so many assets and investments overseas, the difference between the two.

I would also presume African countries and maybe some Latin American ones with lax legal systems and low trade and investment barriers to have a negative GDP - GNP account.

I would say we must also be careful when reading GDP figures and it's growth rate. It can be deceiving as well.

We might look at a country with a high GDP growth rate and say ah, the business environment of that country must be improving alot, the future looks bright for them. Generally this is true, but not always the case. The situation in VietNam I mentioned in the previous post with @Viet is a case in point.

The increase in GDP might not be the result of an improving business environment (for both local and foreign companies), but it could be that foreign companies are attracted to move there due to the local govt giving in to the unprecedented demands of these foreign companies (as mentioned in the link I gave to @Viet).

Even when foreign firms are moving there in droves, the business environment could still be bad and undesirable. This news suggest it so:

Vietnam’s per capita income should have crossed $7,000: USAID economist | Business | Thanh Nien Daily

Another interesting thing mentioned in this article is that the GNI is well below what is to be expected.

It's true that developing countries in their developing stages require foreign investment and so a negative GNI:GDP ratio is to be expected. However even with a divergence between GDP and GNI, the GDP growth rate should also raise the GNI at a reasonable rate. This GNI growth is essential as they are a necessary ingredient for the social mobility of the local population, and hence, the development and future of the country. However, the USAID and World bank economists quoted in that article said VietNam's GNI is well below what is to be expected.

So yea, I too would like to compare the GNI:GDP graph of each countries throughout their developing stages. It would also need to include other indicators too, like the demograph and age of the population, the average workers wages, public debt, etc. to see the real development and potential of a country.

I took this link here from the Viet economy thread:

[OPINION] Vietnam: a poor country with rich country problems | Opinion | Thanh Nien Daily

It mentions VietNam's alarming public debt rate which may restrict what kind of economic reform it can achieve. It also said that VN's "golden age" has passed and that their aging population is slowing reaching the rate of more developed countries, instead of being more aligned with a comparable developing country.

So yea, I was being a bit trollish in mocking and calling their leaders "useless". But I don't think I have no justification in saying that whoever was in charge of their economy, did a really bad job.

Their business environment haven't really improved as needed for their country to be developed. Foreign companies are flocking due to lucrative and unprecedented "special offers" rather than great business environment. Though this might be easy to rectify through a policy change and good planning. But other things are not so easy to change like the ageing population, which will definitely affects the development of their country. Furthermore, the GNI haven't grown to a figure that was to be expected. So once the wages of workers inevitably increases, the generous tax holidays period drawing to a close, the foreign owned companies will naturally move out to a cheaper location, then what's VN's ageing population be left with? they didn't even had a chance to tax them properly!

 

[LeveragedBuyout]

I would say we must also be careful when reading GDP figures and it's growth rate. It can be deceiving as well.

We might look at a country with a high GDP growth rate and say ah, the business environment of that country must be improving alot, the future looks bright for them. Generally this is true, but not always the case. The situation in VietNam I mentioned in the previous post with @Viet is a case in point.

The increase in GDP might not be the result of an improving business environment (for both local and foreign companies), but it could be that foreign companies are attracted to move there due to the local govt giving in to the unprecedented demands of these foreign companies (as mentioned in the link I gave to @Viet).

Even when foreign firms are moving there in droves, the business environment could still be bad and undesirable. This news suggest it so:

Vietnam’s per capita income should have crossed $7,000: USAID economist | Business | Thanh Nien Daily

Another interesting thing mentioned in this article is that the GNI is well below what is to be expected.

It's true that developing countries in their developing stages require foreign investment and so a negative GNI:GDP ratio is to be expected. However even with a divergence between GDP and GNI, the GDP growth rate should also raise the GNI at a reasonable rate. This GNI growth is essential as they are a necessary ingredient for the social mobility of the local population, and hence, the development and future of the country. However, the USAID and World bank economists quoted in that article said VietNam's GNI is well below what is to be expected.

So yea, I too would like to compare the GNI:GDP graph of each countries throughout their developing stages. It would also need to include other indicators too, like the demograph and age of the population, the average workers wages, public debt, etc. to see the real development and potential of a country.

I took this link here from the Viet economy thread:

[OPINION] Vietnam: a poor country with rich country problems | Opinion | Thanh Nien Daily

It mentions VietNam's alarming public debt rate which may restrict what kind of economic reform it can achieve. It also said that VN's "golden age" has passed and that their aging population is slowing reaching the rate of more developed countries, instead of being more aligned with a comparable developing country.

So yea, I was being a bit trollish in mocking and calling their leaders "useless". But I don't think I have no justification in saying that whoever was in charge of their economy, did a really bad job.

Their business environment haven't really improved as needed for their country to be developed. Foreign companies are flocking due to lucrative and unprecedented "special offers" rather than great business environment. Though this might be easy to rectify through a policy change and good planning. But other things are not so easy to change like the ageing population, which will definitely affects the development of their country. Furthermore, the GNI haven't grown to a figure that was to be expected. So once the wages of workers inevitably increases, the generous tax holidays period drawing to a close, the foreign owned companies will naturally move out to a cheaper location, then what's VN's ageing population be left with? they didn't even had a chance to tax them properly!

Valid points, and I agree that Vietnam's economy should have been managed better. Such is the price of Communism, but at least by increasingly opening up to foreign investment, they will continue to strengthen market mechanisms, and hopefully improve the situation.

Using tax holidays to entice investment is a viable strategy. It builds up know-how locally, which cannot be taken back by the foreign firm. Salaries are taxed. Depending on the system, the products or services are taxed when sold. So even corporate tax holidays still produce tax revenue, if they are structured correctly.

 

[Battle of Bach Dang River]

Looking at the differences between GDP and GNI (aka GNP) is interesting and surprising.

Here are some 2013 figures from World Bank (GDP nominal per cap vs GNI per cap in $) :

China:
GDP: 6807
GNI: 6560

South Korea:
GDP: 25977
GNI: 25920

Japan:
GDP: 38492
GNI: 46140

Indonesia:
GDP: 3475
GNI: 3580

VietNam:
GDP: 1911
GNI: 1730

Thailand:
GDP: 5779
GNI: 5370

Philippines:
GDP: 2765
GNI: 3270

Here's the difference between GDP and GNI (note GNI is same as GNP) :



So in countries like Japan and US, their GNI is higher than their GDP as expected because their companies have lots of offshore ventures or investmemt abroad. The revenue and profits from them goes back into the pockets of Japanese and US residents. Singapore will probably have similar discrepancy.

It is surprising to see that Indonesia and Philippines have higher GNI figures than GDP. Maybe from foreign remittance maybe?

China has a lower GNI figure than their GDP as expected because plenty of companies are foreign owned. But the discrepancy is not bad, GDP is only about 3% more than GNI figure. SK has a healthy figure too, GDP only slightly higher.

Vietnam is hilarious. Their GDP is almost 10% higher than their GNI. This mean that their GDP figure, which is already low, is not representative of their residents income because 10% of those revenue and profits, actually go into the pocket of foreigners residing outside their country, e. g. Samsung, LG owners or shareholders in SK etc.

Thailand is a bit high too (about 7% discrepancy), but not with the ridiculous discrepancy like VietNam.

Am I interpreting this right?
@LeveragedBuyout, etc.

The difference between GDP and GNI doesn't really say anything about about living cost, standard, etc (for that, you look at PPP, etc).

What the figures here say, is how much the revenues and incomes generated in an economy goes into the pocket of local residents, and how much goes into foreigner or entities residing in another country.

According to the World bank data for 2013, about 3% of revenue and incomes generated by your economy goes outside to foreigners. It is expected, as foreign owned companies have shareholders living abroad. But 3% is not bad. I expect this 3% figure to go down lower in the future as PRC is pushing hard to support their local companies. They are making heavy investment abroad. Also they are cracking down on clever games played by foreign owned companies so expect this to make an impact too.

It is surprising to see Indonesia and Philippines have higher GNI than GDP. I'm not quite sure how to explain this. Maybe they have higher offshore ventures and investments than I expected.

VietNam, I think is useless lol.

As long as your country cannot do well as US, Japan ... you should shut up instead of laughing on others.
You are talking about GDP, GNI per capita, according to you, discrepancy between GDP and GNI, Vietnam gets 10% while China gets ONLY 3%. So, 3% x 1.3 billion chinese people =?$$$ go into the pockets of Americans, Japanese?
In fact, China is still the biggest "hen that laid the golden eggs" of the Westerners and Japanese...
Am I right?

Slums on the river, Ho Chi Minh City (Saigon), Vietnam.
Image of Slums on the river, Ho Chi Minh City (Saigon), Vietnam. from Impact Photos

Urban slum in Hanoi, Vietnam (Photo via Flickr, UN media)
Lessons from the Slums: Finding Solutions That Work » Moving Toward Sustainable Prosperity

BBC NEWS | Asia-Pacific | Vietnam's slum dwellers

Google: slums in Hanoi, Thi Nghe canal

Nhieu Loc-Thi Nghe canal TODAY you can swim on it...

 

[fuse2014]

So your oversea workers only make up less than 3% of your population so I think they alone cannot be the reason why your GNI is higher. If your SOEs and nationals have lots of oversea investments, then that is really impressive. I wasn't aware of this.

To be honest, I was expecting Thailand to be the country with higher GNI:GDP ratio. It is the Thai tycoons owning foreign ventures and investments that I always hear about.

yes, Indonesian doesn't really into migrating, the countries that home to sizable number of overseas Indonesians are those who have special relation with Indonesia, like Malaysia and Singapore who share similar culture, language and history, KSA with its religious connection or Netherlands with its colonial past...

our SOEs are not really that big actually, like Pertamina, they are smaller than Malaysia's Petronas, but Pertamina has some overseas operations in several countries like Sudan, Qatar, Libya, Vietnam and Malaysia, or our cement producer just bought cement factory in Vietnam and some investment in Thailand too, our Pharmaceutical Companies also doing good overseas like Kalbe Farma and Kimia Farma they already have big name in Africa and ASEAN (Kalbe is ASEAN's biggest pharmaceutical company), there are 8 Indonesia SOEs that have expansion plans in Vietnam this year, and some others in Myanmar. Our non SOE companies like Medco Energy, Indonesia's biggest energy company after Pertamina also has quite big investment in US, Libya, Oman, Yemen, Tunisia and Cambodia..

this is a news from 2012

RI firms invest heavily abroad

Direct investments made by Indonesian companies abroad almost tripled in value last year, central bank data reveals. Although the latest development is considered positive, many business players argue that it reflects deteriorating investment conditions domestically.

As of the end of December 2011, Indonesian companies had invested a whopping US$7.7 billion in a variety of business sectors in Asia, the Americas and Africa. The investment value grew by 185 percent compared to $2.7 billion in 2010.

“Indonesian companies have begun to see that the domestic market has become saturated and therefore they are looking for new markets by expanding their businesses abroad,” said Sofjan Wanandi, chairman of the Indonesian Employers Association (Apindo).

The investments, he said, were made largely in other Asian countries and in South America. “This is all part of globalization. You cannot stop domestic companies from going global if they want to do so,” Sofjan told The Jakarta Post.

source: The Jakarta Post

 

[FairAndUnbiased]

Valid points, and I agree that Vietnam's economy should have been managed better. Such is the price of Communism, but at least by increasingly opening up to foreign investment, they will continue to strengthen market mechanisms, and hopefully improve the situation.

Using tax holidays to entice investment is a viable strategy. It builds up know-how locally, which cannot be taken back by the foreign firm. Salaries are taxed. Depending on the system, the products or services are taxed when sold. So even corporate tax holidays still produce tax revenue, if they are structured correctly.

I disagree. The know-how does absolutely no good if there is not a complete industrial chain in the country. Lets say a company in a poor country suddenly has the knowhow from Intel on how to manufacture, exactly as Intel does, a Haswell processor. Lets even say they were *gifted* an Intel plant, pre-built, just missing some equipment. Can that company, never mind compete with Intel, produce a single chip?

1. You still don't know where to source the raw materials or even how to judge the raw material quality.
2. You still need to keep the equipment up to date and ship parts. Without a fast distribution system, the specialized transportation services needed to transfer precision equipment, good roads, airports, harbors, etc. your equipment can't even be shipped and your products can't ship.
3. You still have no markets.

Once the foreign investors leave, sure, the locals will have *bits and pieces of know-how that are absolutely useless outside the industrial ecosystem of that foreign company* - not enough to either build a competitor or to start related startups. Why was China able to modernize fast? Because China was already an industrial country in the 50's and 60's - thousands of tanks, planes, etc. were *rolling off assembly lines* and not bought. To make any vehicle whatsoever requires a complete industrial chain from nuts and bolts to radios to... etc etc. The industry was simply not up to date - not absent.

In other countries, the industry is *absent*. It is always easier to retool a steel factory from producing bad bolts, to good bolts, than to build an entirely new steel factory. It is like teaching - I can teach a graduate student who has some misguided thoughts in physics how to apply quantum field theory to semiconductors. I cannot teach an elementary school student even what a semiconductor is.

 

[LeveragedBuyout]

I disagree. The know-how does absolutely no good if there is not a complete industrial chain in the country. Lets say a company in a poor country suddenly has the knowhow from Intel on how to manufacture, exactly as Intel does, a Haswell processor. Lets even say they were *gifted* an Intel plant, pre-built, just missing some equipment. Can that company, never mind compete with Intel, produce a single chip?

1. You still don't know where to source the raw materials or even how to judge the raw material quality.
2. You still need to keep the equipment up to date and ship parts. Without a fast distribution system, the specialized transportation services needed to transfer precision equipment, good roads, airports, harbors, etc. your equipment can't even be shipped and your products can't ship.
3. You still have no markets.

Once the foreign investors leave, sure, the locals will have *bits and pieces of know-how that are absolutely useless outside the industrial ecosystem of that foreign company* - not enough to either build a competitor or to start related startups. Why was China able to modernize fast? Because China was already an industrial country in the 50's and 60's - thousands of tanks, planes, etc. were *rolling off assembly lines* and not bought. To make any vehicle whatsoever requires a complete industrial chain from nuts and bolts to radios to... etc etc. The industry was simply not up to date - not absent.

In other countries, the industry is *absent*. It is always easier to retool a steel factory from producing bad bolts, to good bolts, than to build an entirely new steel factory. It is like teaching - I can teach a graduate student who has some misguided thoughts in physics how to apply quantum field theory to semiconductors. I cannot teach an elementary school student even what a semiconductor is.

Please provide an example of a major MNC that locates a subsidiary (factory, branch, whatever) in a location that does not have its own supplier network and complementary industries (i.e. the subsidiary imports all the components necessary to manufacture, without relying on or developing local suppliers).

Alternatively, please provide an example of a major MNC setting up operations in a country, then leaving, and then the country either failing to attract other MNCs to take its place in that industry, or failing to set up local competitors to fill the vacuum.

I cannot think of any such examples, and I'm quite sure Intel has never located a plant in such primitive and isolated conditions (what would the advantage to Intel be in doing such a thing?), but perhaps you can help out, since you seem to have a specific precedent in mind.

 

[Jlaw]

yeah we are useless and poor. let´s have a party
where are now all the chinese who claim vietnamese are actually chinese?

New archaeological finding found Viest are monkeys, just not as loyal. You can read about it in the new Archaeology magazine.

have you realised that VN has no slums at all compared to countries having slums despite of higher GDP such as Philippines and Indonesia? do you notice that GDP is just a number of paper and is a subject of manipulation?

I can answer that.

Slum city emerges near famous market - News VietNamNet

Caught you lying again..

 

[FairAndUnbiased]

Please provide an example of a major MNC that locates a subsidiary (factory, branch, whatever) in a location that does not have its own supplier network and complementary industries (i.e. the subsidiary imports all the components necessary to manufacture, without relying on or developing local suppliers).

Alternatively, please provide an example of a major MNC setting up operations in a country, then leaving, and then the country either failing to attract other MNCs to take its place in that industry, or failing to set up local competitors to fill the vacuum.

I cannot think of any such examples, and I'm quite sure Intel has never located a plant in such primitive and isolated conditions (what would the advantage to Intel be in doing such a thing?), but perhaps you can help out, since you seem to have a specific precedent in mind.

Sure: Vietnam. They set up a test/assembly plant there whose job is solely to test and assemble Haswell chips. If you are unfamiliar with the semiconductor industry, there are basically 3 steps in fabricating a semiconductor device:

Raw Materials - substrate wafers, deposition gases, process gases, etc.
Foundry - using those raw materials, combined with extremely expensive capital equipment, to fabricate the semiconductor part of the chip.
Assembly/Test - potting the chip (putting it into a sealed protective casing with appropriate contacts and mechanical/thermal properties) then testing it for proper function.

Vietnam has an Assembly/Test plant but must import the patterned chips straight from Intel and import all their parts, equipment, etc. It has no real raw materials suppliers and no semiconductor foundries. If Intel closes their plant, they will have nothing - can't assemble other chips without retooling, but have to know which tools are best to retool - but they aren't trained on that - they have to know how to find clients for their assembly/test services, but other majors already have their preferred companies set, and they'll have to compete with the majors in a crowded global market. If they don't compete on the global market, there's zero domestic market in Vietnam since there are no semiconductor foundries to be clients.

Just think about this - Vietnam is in its 28th year of reform.

China was in its 28th year of reform in 2007.

In 2007, China already had a top 5 semiconductor foundry, had rising RD spending, top 5 in scientific publications, multiple recognized multinationals (Huawei, Lenovo, ZTE).

In 2007, China's major exports were televisions, mobile phones, heavy industrial equipment, steel, plastics and chemicals.

In 2014 - at the same number of years after reform - Vietnam's major exports are shoes, clothes, rice, shrimp and labor.

 

[Muzits]

what is your point? it is you who says something as "ridiculous" discrepancy in VietNam, and the money "flows" to foreigners.
who cares? you? if you put money into Vietnam, it is your right to earn the profit or accept the loss.

isn´t it your intention to make fun on our poverty? as I already say nobody in VN cares of what foreigners say or think.

the pics I posted are for @Phukimak.


I just state facts: if you find slums in Saigon or Hanoi, let me know.

i'm so goona vomit right now after reading you disgusting self-dreaming comments. man u really need sum professional help,cause u have totally been brainwashed to a madman. before u r dreaming too far away i have to say,why not just come and get those illegal-vietnamese workers out of China first.

 

[LeveragedBuyout]

Sure: Vietnam. They set up a test/assembly plant there whose job is solely to test and assemble Haswell chips. If you are unfamiliar with the semiconductor industry, there are basically 3 steps in fabricating a semiconductor device:

Raw Materials - substrate wafers, deposition gases, process gases, etc.
Foundry - using those raw materials, combined with extremely expensive capital equipment, to fabricate the semiconductor part of the chip.
Assembly/Test - potting the chip (putting it into a sealed protective casing with appropriate contacts and mechanical/thermal properties) then testing it for proper function.

Vietnam has an Assembly/Test plant but must import the patterned chips straight from Intel and import all their parts, equipment, etc. It has no real raw materials suppliers and no semiconductor foundries. If Intel closes their plant, they will have nothing - can't assemble other chips without retooling, but have to know which tools are best to retool - but they aren't trained on that - they have to know how to find clients for their assembly/test services, but other majors already have their preferred companies set, and they'll have to compete with the majors in a crowded global market. If they don't compete on the global market, there's zero domestic market in Vietnam since there are no semiconductor foundries to be clients.

Just think about this - Vietnam is in its 28th year of reform.

China was in its 28th year of reform in 2007.

In 2007, China already had a top 5 semiconductor foundry, had rising RD spending, top 5 in scientific publications, multiple recognized multinationals (Huawei, Lenovo, ZTE).

In 2007, China's major exports were televisions, mobile phones, heavy industrial equipment, steel, plastics and chemicals.

In 2014 - at the same number of years after reform - Vietnam's major exports are shoes, clothes, rice, shrimp and labor.

Thank you. Can you shed any light on why Intel would choose Vietnam as a location for this? No local sourcing, no local talent pool, and probably comparatively inferior infrastructure, let alone a government that's not known for friendliness to business--on the surface, a mind-boggling decision. Why bother exporting chips to Vietnam for this specific step, instead of co-locating with the foundries?

 

[FairAndUnbiased]

Thank you. Can you shed any light on why Intel would choose Vietnam as a location for this? No local sourcing, no local talent pool, and probably comparatively inferior infrastructure, let alone a government that's not known for friendliness to business--on the surface, a mind-boggling decision. Why bother exporting chips to Vietnam for this specific step, instead of co-locating with the foundries?

Electronics Manufacturers Bet Big on Vietnam » Techonomy

1.) Extremely cheap labor - note that test/assembly is the most labor intensive and least capital equipment intensive part of the semiconductor manufacturing process.

2.) Unlikely to leak IP to local competitors.

3.) Huge incentives to move.

 

[LeveragedBuyout]

Electronics Manufacturers Bet Big on Vietnam » Techonomy

1.) Extremely cheap labor - note that test/assembly is the most labor intensive and least capital equipment intensive part of the semiconductor manufacturing process.

2.) Unlikely to leak IP to local competitors.

3.) Huge incentives to move.

Thanks. The article you cited mentions that Intel invested in the training of local engineers. Surely that would constitute lasting value, even should Intel pull out? The article also mentions Samsung's increasing manufacturing investments, and Vietnam's advantage as a locale close to China's existing supply chain, so in combination, it is not unreasonable to believe that local industries will eventually experience a spill-over effect, especially as Vietnam's labor cost advantages continue to displace Chinese low-technology manufacturing.

Everyone has to start somewhere.