NSCB - NSCB Technical Notes on the Estimates of the Philippine System of National Accounts (PSNA) Series 2006-Q3

NSCB Technical Notes on the Estimates of
the Philippine System of National Accounts (PSNA) Series 2006-Q3
(posted 08 Feb 2007)

Technical notes on the PSNA are published in the NSCB website for a better appreciation of our national accounts. Reference should also be made to the earlier technical notes for the current national accounting practices adopted in the Philippines.

Durable Equipment

Durable equipment is in the expenditure accounts of the PSNA and is included under Gross Fixed Capital Formation together with Construction, and Breeding Stocks, Orchard Development and Afforestation. It consists of:

1) net acquisitions (acquisitions less disposals) of machinery and equipment (new or second-hand ) by producers. These capital goods have an expected life of a year or more and are not intended for military use;

2) outlays by producers on improvement and alteration of capital goods that significantly extend their useful life or increase their productivity;

3) costs associated with the acquisition of durable equipment such as dealer’s margin, installation cost, transfer cost of second-hand equipment, customs duties and other indirect taxes in connection with its acquisition.

In the national accounts, the following are excluded under durable equipment:

1) Small, inexpensive tools – Hand tools such as hammer, saw, srewdriver, etc., which are inexpensive and are used to perform relatively simple operations are treated as intermediate consumption goods. An essential characteristic of capital goods is that they are complex and expensive durable goods, which only highly trained operators can use and are used in production over many years;

2) Military weapons – Destructive, military weapons designed for combat such as guns, bombs, missiles, rockets and associated ships, planes and vehicles whose sole purpose is to launch such weapons are also treated as intermediate consumption goods. They are actually used to destroy and not to produce. However, transport equipment, which are used to carry personnel such as buses, troop carrying planes and ships are treated as capital goods. Hence, military equipment can be treated as durable goods if these are acquired by civilian users for the purpose of production such as for civil defense (police), or the military uses these equipment regularly for the purpose it was designed in the same way that a civilian producer uses it.

In the present PSNA, the data on military expenditures do not distinguish expenditures on weapons and equipment for national security reasons. Hence, all military expenditures are treated as part of the government current expenditures;

3) Consumer durables – These are durable goods acquired by members of the household for their own personal use.

Breeding Stocks, Orchard Development and Afforestation

Breeding Stocks include expenditures on animals that continue to be used in production year after year. They include breeders, draught animals, dairy animals, sheep raised for wool and layers. Animals reared for slaughter are not part of Gross Fixed Capital Formation.

Orchard Development refers to outlays on the cultivation of plantations and planting of permanent crops until these become productive.

Afforestation covers expenditures on activities such as clearing and planting of forest trees to develop new forest areas. This item includes both the government and private sectors outlays on afforestation activities.

Q2 2006 CONTRIBUTION TO REVISIONS

Based on the Revision Policy approved by the NSCB Executive Board and consistent with the international practice on the revision of National Accounts, we are reflecting the corrections and revisions in our previous estimates, based on the revisions and updates made by the data sources themselves, including those made by NSO on Exports, Imports, MISSI, QSPBI, Building Permits, and FTS; BSP on the BOP; DOE and MGB for Mining and Quarrying; DOTC for TCS; DBM and DOF for Construction; DBM for Government Services and Government Consumption Expenditure; as well as POEA for NFIA; and BAS, SRA, & FMB for Breeding Stocks & AFF.

For the second quarter, the major contributors to the revision on the production side came from

a. Construction, which contributed 0.45 percentage point;

b. TCS put in 0.11 percentage point; and

c. EGW with 0.05 percentage point.

On the other hand, the following were revised downward and made negative contributions to the revision of GDP:

a. Manufacturing, with negative 0.15 percentage point;

b. Private Services with negative 0.08 percentage point;

c. Trade with negative 0.03 percentage point; and

d. ODRE and Government Services with negative 0.02 percentage point each;

Meanwhile, NFIA was also revised downward, contributing negative 0.18 percentage point to the GNP revision.

As a result of all the revisions for the second quarter, GDP growth was revised upward from 5.5% to 5.8% while GNP growth was also revised upward from 6.6% to 6.7%. A more complete tabulation of our revisions is included in our publication.

For inquiries please contact:
Dir. Raymundo J. Talento
Tel.No.: (632) 895-2425
Email: rj.talento@nscb.gov.ph


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