WORKSHOP ON THE DEVELOPMENT OF ASEAN SHORT-TERM INDICATORS

Transcription

1 Strengthening Regional Capacities for Statistical Development in Southeast Asia Project Sponsored by UNSD, ESCAP and ASEAN Secretariat Bangkok, 6-10 August 2001 MONTHLY MANUFACTURING INDUSTRY SURVEY: METHOD, PROBLEMS AND SOLUTIONS; THE CASE OF MALAYSIA DEPARTMENT OF STATISTICS, MALAYSIA KUALA LUMPUR AUGUST, 2001 WORKSHOP ON THE DEVELOPMENT OF ASEAN SHORT-TERM INDICATORS 1

2 NO. CONTENTS PAGE NUMBER 1 INTRODUCTION 1 2. PROFILE OF MANUFACTURING INDUSTRY 2 3. METHOD OF MANUFACTURING INDUSTRY SURVEY A GLANCE AT INDEX OF INDUSTRIAL PRODUCTION DATA PROCESS AND DISSEMINATION CONCLUSION 15 ATTACHMENTS - 2

3 MONTHLY MANUFACTURING INDUSTRY SURVEY: METHOD, PROBLEMS, AND SOLUTION; THE CASE OF MALAYSIA. 1. Introduction 1.1 Collection of a monthly production was started in The series are collected through a monthly survey namely Monthly Manufacturing Survey, and as its name suggested it is conducted on a monthly basis. Currently, output from this survey coupled with secondary record from other government agencies have been utilized by the Department of Statistics (DOS) to produce 2 publications which are: The Index of Industrial Production and the Monthly Manufacturing Statistics. The publications are published on the 6 th and 7 th weeks after the reference month respectively. Prior to that, summary data at major division level are published as preliminary release. Please refer to Appendix 1 for release dates. Index of Industrial Production (IIP) publishes annual, quarterly and monthly indices of industrial production at (a) major division level (b) major group and (c) industry level. Please refer Appendix 2i and 2ii for example of tables published. The Monthly Manufacturing Statistics (MMS) publishes information on (a) principal statistics of selected industries: sales value, number of employees engaged at end of period and salaries & wages paid; and (b) production of major products in selected manufacturing industries. Please refer Appendix 3 and 4 for examples of tables published. 1.2 Overview of the demand for data on Manufacturing Industry. Data on manufacturing industry, especially the IIP are very important for government planning and policy formulation. The Manufacturing sector as the engine of growth in Malaysia has contributed 33.4% to 1

4 the GDP in 2000, and this had increased as compared with 30% recorded in IIP is one of the leading indicators, which monitor the growth of nation s economy especially during the economic crisis in 1997/1998 and the current economic slowdown experience by all countries. Researchers and students of higher learning institutions, marketing analysts of financial institutions or stock market firms and managers from manufacturing companies have been utilizing data on the monthly manufacturing statistics for various purposes. 2. Profile of Manufacturing Industry. Currently there is no categorization of industry by large, medium, small or cottage is available. As IIP is calculated at national level; therefore priority is not given to geographical distribution of the establishment. However, all information regarding the geographical distribution of the establishment is known and maintained by the department. 3. Method of Manufacturing Industry Survey Survey Design Sampling frame Establishments covered by the MMS are obtained from the Directory of Manufacturing Establishments (DME) maintained by DOS. The main source of this Directory is the Registrar of Companies, Registrar of Businesses, the Employees Provident Fund (EPF), Malaysian Industrial Development Authority (MIDA) and other supplementary lists. List of establishments from the various sources above will be screened before being included in the DME. The purpose of screening is to determine their activities vis-à-vis their industrial code, number of employees, status of operation and others. 2

5 Information obtained from the Annual Manufacturing Survey and other surveys conducted by DOS are also used to update the frame from time to time to take into account new establishments, changes in activities of existing establishments, changes in the correspondence address and others related matters. Sampling Design From the list of establishments in the DME, a non-probability sample design is utilized to select sample frame for MMS. Establishments with a certain employment cut-off were then selected for each selected industry. Please refer Appendix 5 for employment cut-off of selected industries covered. The employment cut-off is introduced so that more industries could be covered and it would not be too cumbersome to obtain the monthly returns. This also relates closely to the timeliness needed and to minimize collection cost. For base year 1993=100, the manufacturing sector covered the production of 64 industries out of a total of 137 industries. Please refer Appendix 6(i) and 6(ii) for selected and not selected industries covered. These 64 industries covered 23 out of 28 Major Groups. Please refer Appendix 7(i) and 7(ii) for list of selected and not selected major groups covered. The selection of the industries and major Groups was based on their contribution to the census value added of the manufacturing sector in Please refer Appendix 8 for value added of selected industries after applying the employment cut-off. These selected industries accounted for 80.2% of the census value added. They were in turn represented by the production of 433 products, which accounted for 71.7% in terms of total production value in the manufacturing sector. Please refer Appendix 9 for list of products selected in the compilation of the index. The main characteristic products of each selected industry were selected on the basis of their contribution to the total production value of that industry. 3

6 As the index is based on coverage of representative ness, the assumption is that coverage of 80.2% of the census value added and 71.7% of the total production value is sufficient to represent the growth in the manufacturing sector. It is assumed that the production of the industries that are not included in the coverage of the IIP, if included, would not change the direction of the movement or trend of production of the sector. In summary, the coverage of the IIP in the manufacturing sector, 1993=100 can be stated as follows: No. Item RM Million % Of total 1. Total Census Value Added 44, (CVA) 2. CVA of selected industries 35, Total census value of manufactured products 4. Value of selected manufactured products 148, , The Mining Sector covered the production of crude oil, natural gas; tin concentrates and copper concentrates, which together accounted for 99.2% of the census value of the sector. Industries not selected in the compilation of the mining index are coal, bauxite, gold, amang retreatment, iron ore, and other non-ferrous metal ore mining, not elsewhere classified respectively. Below is the coverage of the IIP in the Mining Sector, 1993=100. No. Item RM Million % Of total 1 Total census value added (CVA) 2. CVA of selected industries 11, ,

7 The electricity sector covered the generation of electricity by plants licensed to generate as well as to sell the electricity. The plants accounted for 95.9% of the total electricity generated in Private installations, which produced and consumed the electricity for their own used were not included, examples are petroleum companies, which use owned gas to powered oilrigs or plant. Below is the coverage of the IIP in the Electricity Sector: No. Item Electricity Generated % Contribution (Million KWH) 1. Total 35, Public sector 34, Private installations 1, Sampling Size The selection of establishment in each selected industry in the Manufacturing Sector is determined by their employment cut-off size. For reference year 2001 there were a total of 2,785 establishments enumerated for which their products are used in the compilation of the IIP. Please refer Appendix 10 for the number of establishments covered and processed in the compilation of the Manufacturing index. 3.2 Questionnaires and Major Variables. Major variable in the questionnaire, which is used for the IIP compilation, is the production quantity for each product for the reference month (with unit of measurement fixed for each product). While other variables, which are listed below, are also included in the questionnaire for various purposes. Please refer to Appendix 11 on an example of the questionnaire. 5

8 (i) (ii) (iii) (iv) (v) (vi) (vii) Sales quantity for each product for the reference month (unit of measurement is the same as when it is produced) Sales value for each product for the reference month (RM) Value of goods sold in the same condition as purchase (RM) Value of raw materials, fuels and supplies purchase (RM) Employment and Salaries for the month; male and female!" By category of workers!" Working proprietors, active business partners and unpaid family workers!" Employees (full time and part-time)!" Workers employed through labour contractors Number of days on which the factory worked during the month Value of stocks owned (RM) Finished goods; Good in process Raw materials, fuels and supplies Goods purchased for resale 3.3 Data Collection Method Data is collected through a mailing system whereby questionnaires are posted to establishments selected in the frame. They are given 2 weeks after the reference month to respond. Respondents can either fax or post the return to DOS for each reference month. They can also submit their returns through (questionnaire formats will be sent to them upon request). Reminder letters and field visits by field officers from the state offices would help to increase response rate. Please refer Appendix 12 for an overview of the whole process. Each state offices does its own training on data collection while, personnel at the headquarters are given on-job training relating to data processing and data entry whenever is required. 6

9 Changes in the profile of the companies such as change of addresses, change of names, reclassification of industries, close down, not operating, below employment cut off, etc are updated in the survey frame 4. A. Glance at Index of Industrial Production Coverage and Classification The index of Industrial Production index (IIP) covers the Mining, Manufacturing and Electricity Sectors as defined in the Malaysia Industrial Classification (MIC), 1972 (updated 1979). United Nations in its publication Recommendation for the 1983 World Program of Industrial Statistics recommends that the industrial sector to be defined as including all establishments engaged, primarily, in mining, manufacturing and the production and distribution of electricity, gas and water. The production and distribution of gas and water is not covered by Malaysia s IIP due to lack of data availability on a monthly basis. IIP was first constructed with 1968 as the base year. Subsequently, the IIP was re-based to 1981, 1985, 1988 and The Department Of Statistics conducts the Census of Mining Industries and Census of Manufacturing Industries for the purpose of rebasing the IIP. As for the Electricity Sector, data are obtained from the power producers, i.e. Tenaga Nasional Berhad, Sabah Electricity Sdn. Bhd., Sarawak Electricity Supply Corporation (SESCO) and also the independent power producers (IPP s). The concepts and definitions used in the survey are defined, the Malaysia Industrial Classification (MIC), 1972 (updated 1979), published by the Department of Statistics (DOS). It adhered to that of the International Standard Industrial Classification of All Economic Activities (ISIC), Series M, No. 4, Rev 2, United nations, New York, 1968 and also the 7

10 International Recommendations for Industrial Statistics, United Nations Statistical Office, Statistical Papers, Series M, No. 48, Rev. 1, United Nations, New York, The MIC adopts the 4 level of classification as ISIC, which is Major Division (1 digit); Division (2 digit); Major Group (3 digit); and Group (4 digit). However, for the purpose of index compilation and data dissemination, the indices were group at Major Division, Major group and industry (5 digit level). No. Sector Classification of Index: 1. Manufacturing Major Division (1-digit) Major Group (3-digit) Industry (5-digit) 2. Mining Major Division (1-digit) Industry (5-digit) 3. Electricity Major Division (1-digit) 5. The data for computation of the IIP are sourced from a survey and secondary data are obtained from various agencies related to the industry below: No. Sector Source of data 1. Manufacturing Monthly Manufacturing survey and secondary data. 2. Mining Secondary data 3. Electricity Secondary data No. Sector/Industry Source of data 1. Manufacturing 64 industries Monthly Manufacturing survey conducted by DOS. Palm Oil and Palm Kernel Oil Sawmills Malaysia Palm Oil Board Forestry Department 2. Mining Crude and Natural PETRONAS Gas Tin ore Department of Mineral and Geosciences, Malaysia 8

11 3. Electricity Electricity generated and sold Tenaga National Berhad, Sabah Electricity Sdn. Bhd, Sarawak Electricity Supply Coporation, 13 Independent Power Producers. 4.2 Methodological Issue at Glance The index is a weighted average of quantity relatives calculated by Laspayres formula: I i =Σ R i W i Σ W i Where: I i R i W i Σ is the index for item i is the product relatives for item i for the reference month is the base year weight for item i extends over all the items included in the Index The weights given to each of the three divisions of Mining, Manufacturing and electricity is proportionate to its contribution to the Gross Domestic Product (GDP) in the base period. The total weight for the three sectors was taken as 100%. The three sectors weights for 1993=100 are as follows: Sector/Major Division Weight Overall Mining Manufacturing Electricity 7.44 There are no data on major groups and industries contributions to the GDP, therefore the weights given to the major groups and industries were derived from the census value added which was taken from the Census of Manufacturing Industries and Census of Mining Industries in the base year. For 9

12 the weights of the products, the value added cannot be use, it cannot be calculated at product level due to its joint production cost. The only available data is the production value of the products. For the index compilation, the value of production available from the Census of Manufacturing Industries was used to compute the internal weighting of the quantum data. On the other hand, the production value of crude oil and natural gas were used to assign weightage for these two products, as their value added was not available in the census Of Mining Industries. The weights at divison, major group and industry levels are shown in appendix 13. Issues that are related to the methodology of computing the index are: (a) Choosing the right base year, it is recommended by the UN Manual that base year period should be 5 years. However, due to economic reasons and other constraints it could not be done. The next rebasing after 1993, which was supposed to be carried out in 1998, was not done due to the economic recession. Instead reference year 2000 was chosen for the next rebasing of the IIP. Census of the Manufacturing and Mining Industries for reference year 2000 is now being carried out. (b) Selection of industries that represent the Manufacturing Sector There are industries which have high value added but could not be included in the index compilation because of problems in identifying the standard unit of quantity and the quality of its products. Sometimes the same product can be reported in different units of quantity, for example in the case of furniture, it can be quantified in term of pieces, number or sets and it may come in different qualities such as size, features, workmanship, material used etc. Due to this difficulty, industry 33200: Manufacture of Furniture and Fixtures, except Primarily Metal could not be selected. 10

13 (c) Selection of products that represent the industry The emergence of new products should also be taken into account when computing the indices. Products that were selected in a base year may not represent the industry over time, it may become obsolete and new products will emerge and become important in the industry. However, these products could not be selected, as they do not have the base period weights or quantities. (d) Quality changes Quality of products change over time, it may improve or decline. (e) Different Unit of Quantity Certain products were not selected in the computation of the indices due to the difficulty in obtaining standard unit of quantity. The same product can be reported in kilogram, pieces, meters etc. and this will create problems in unifying the quantity of such products. (f) Work-in-progress The criteria used in the selection of the industries were based on the contribution of census value added of the industries to the manufacturing sector. However certain industries such as Shipbuilding & Repairing and Machinery & Equipment have to be excluded as the products manufactured usually take more than one month to be completed and the quantity produced during the month could not be ascertained. However, if the value of the products is used in the computation of the indices, then a price deflator has to be developed. Unfortunately, such deflator is not available. (g) Late Response or Non-Response The accuracy of the data highly depends on the rate of response. If it is a single or a few establishments, the response from these establishments, which dominate the industry, are important to determine the accuracy of the indices. Late responses may alter the direction of the index of a particular industry. The output of these 11

14 establishments may also change considerably from month to month. Estimated production based on the previous month may not be accurate as the assumption made was that the production remains unchanged over time. 4.3 Overview of Stages in Compiling Index of Industrial Production. There are several stages in compiling the indices: (a) Industry indices For any month, the production of each commodity is expressed as a percentage of its average monthly production in a base year. The production figures of each product are thus expressed as a quantity relative. The relatives are multiplied by the fixed weights of the commodities as determined in the base year. The resulting products of the commodities within the industry are then aggregated and this total is divided by the sum of their weights or rather, their industry weights. The industry index is calculated. (b) Major group indices The industry indices computed so far is next to be grouped in their respective sections and an average quantity index for each group have to be computed The procedure of aggregating industry indices into group indices consists of multiplying each quantity index by its respective weights, adding the resulting products and then dividing this total by the sum of weights used by this group. (c) Major Division Indices The group indices are the combined to obtain the major division or sector indices. The same operation of multiplying each group 12

15 indexes of a particular major division with their respective group weights and then dividing their aggregated products by the total of the major divisional weights will produce the major divisional index. (d) Overall Production Index The three major division or sector indices are multiplied by their respective weights. The sum of their products, divided by the total weights used (in this case is 100.0) will give the final result of the current overall index figure. (e) Adjustment factor The indices computed so far are unadjusted indices and adjustment is required to eliminate the irregularities of days worked per month by the industries. An adjustment is made to eliminate the effect of the varying length in the calendar month and public holidays at the national level. In the case of the Manufacturing Sector, adjustments were made to exclude the public holidays, which were gazette, by the Federal Government at the national level. However, an assumption was made for the Mining and Electricity sectors that they are in operation throughout the year (including public holidays). Please refer to Appendix 14 for public holidays in the calendar month for Malaysia. (f) Provisional indices The indices computed for a current month in the monthly publication is provisional in nature. The indices will be revised in the following month s publication. (g) Quarterly indices are computed by averaging the indices for three months and the annual indices are computed by averaging the indices for the twelve months of the year. 13

16 5. Data Processes and Dissemination 5.1 Data preparation. Questionnaires received would undergo editing and coding process. Editing process includes comparing data and average unit price for reference month with the data of the previous month. Any substantial change would need clarifications and confirmation. Queries would be made through telephone calls. 5.2 Data Processing. After undergoing some editing checks, selected fields from the questionnaires are data captured using PCs. Survey results are then combined with the secondary data to produce indices for the current month and revised indices for the previous month. Questionnaires are the sent for complete data capture using the mainframe where all fields are now being data captured. The output of this process is mainly for data request requirement (Refer appendix 15). 5.3 Final Remarks. Some of the important problems encountered by the Department are as follows: Late response, average response rate when compiling the preliminary index is about 70%-75%. Late-response cases have been estimated using the previous month s data. To counter the late responses, indices for the reference month is revised in the following month s publication. Non-response, for establishments that do not response at the due date, these cases is referred to the state offices for fieldwork. However if the establishments are still not cooperating, then the last report of the establishment is used as estimated figure. 14

17 Obsolete products. At the moment, there is no treatment made to products that become obsolete over time. If it occurs, the product is treated to have zero production. New products. At the moment, there is also no special treatment for new products that emerge and become important in a certain industry. If it occurs, these products could not be included in the compilation and this would affect the representativeness of the index of the industry. At the moment, no solutions are available on how to dealt with problems stated below: o Products with different unit of quantity example: (i) computer paper ~piece, RM, tones; (ii) paper core ~piece, kilogram; o Products with standard unit of quantity but with a different quality example: Furniture & Fixtures except Primary Metal (33200); o Work-progress example: (i) Electrical Machinery and Apparatus (38310), (ii) Shipbuilding and Boat Building and Repairing (38410). Conclusion Malaysia has been producing indices of the industrial sector for many years; however, we feel that there is still room for improvements. This workshop is very beneficial in providing the necessary guidelines and methods in improving the various area of statistical work (especially in the compilation of the IIP) and thus producing outputs, which are internationally comparable. 15