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SCMP Reporter

THE Government has decided to compile gross national product (GNP) statistics for Hong Kong to better reflect the fast-increasing external investment income made by Hong Kong residents.

  The new information is to supplement and not replace existing gross domestic product (GDP) figures.

  While GDP measures the total value of economic production within Hong Kong, GNP calculates the total income of residents of an economic territory, irrespective of whether the income is generated within or outside the territory.

  Buoyant Hong Kong-China trade has prompted many Hong Kong residents to make cross-border investments. GNP statistics which embrace these external income flows will provide a complementary picture of Hong Kong's overall economic activity.

  Analysts who want to analyse economic phenomena related to the aggregate income of residents such as domestic demand, inflation and propensity to consume or invest will find GNP a more useful instrument than GDP.

  GNP is obtained by subtracting the income earned by non-Hong Kong residents from GDP and then adding the income earned outside the territory by Hong Kong residents.

  ''GNP will enable us to gain a better understanding of our economy, because Hong Kong has become a regional financial centre that generates a lot of external income flow,'' said Commissioner for Census and Statistics Frederick Ho.

  Some analysts attribute Hong Kong's high inflation in recent years to strong domestic consumption fuelled by the earnings of Hong Kong residents from their investments in China and other countries.

  It is therefore necessary to have GNP as an indicator of overall economic performance.

    Data for GNP will be collected through statistical surveys. The first round of surveys will start in October.

  ''The first set of GNP statistics for 1993 will be available by the end of 1995. In due course, data collection will be expedited, so that by 1998 the release of GNP in respect of 1996 will be advanced to March 1998,'' Mr Ho said.

  He declined to forecast whether GNP would be higher than GDP.

  The initial survey subjects cover 12,000 companies, half of which are financial intermediaries such as banks, fund managers and trustees.

   The other half will be made up from samples of commercial companies and manufacturing firms.

  ''Since external investment transactions of individuals are mainly conducted through financial institutions, efforts of surveys will be focused on income flows routed through relevant business establishments,'' Mr Ho said.

  The Census and Statistics Ordinance will provide the legal authority for data collection and will ensure confidentiality of all data, which will not be released to other Government departments.

  In compiling GNP statistics, the concept of ''resident'' is crucial. The Government will use internationally accepted statistical standards to define income flows and delineate residents and non-residents.

  ''Residents of a territory include individuals and organisations. For individuals, [the term] residents refers to those who normally stay in the territory, irrespective of their nationalities,'' he said.

  ''For organisations, [the term] residents refers to those which ordinarily operate in the territory. Conceptually, the residence status of individuals and organisations depend on their centre of economic interest,'' he said.

  The total income earned by residents from outside Hong Kong includes two types of income: investment income and labour income. Capital gains are not included.

  The decision to compile GNP figures was based on the conclusion of a feasibility study conducted in 1993 at the request of the Executive Council.

  During the study, international experts and several business organisations were consulted.

  The study found concern among prospective data suppliers about supplying additional information and resistance to this had diminished. It then established the minimum cost for compiling GNP by reducing data collection costs and reducing the reporting burden on the data suppliers.

  The cost of compiling GNP statistics will be about $9.5 million annually, while the cost for GDP is about $6 million.



GNP figures will indicate external HK investments