2015
Gross National
Income Inventory
MALTA European System of Accounts 2010
The ESA 2010 GNI Inventory provides a detailed explanation of sources
and methods used for estimating GNI in Malta. It is the basis for the
Eurostat assessment of the quality and exhaustiveness of GNI data and
their compliance with ESA 2010 in the context of the GNI for own
resources purposes. The Inventory is a reference document that is kept
up-to-date to reflect the latest methodology in place.
National Statistics Office
National Accounts Unit
12/1/2015
Gross National Income Inventory
European System of Accounts 2010
Sources and Methods for the Compilation of the Gross
National Income for the Maltese Islands
Compiled by the
National Accounts Unit
Economic Statistics Division
Version 1.0
December 2015
Foreword
This Gross National Income (GNI) Inventory was written by the staff of the National
Accounts Unit, within the Economic Statistics Directorate. Reference was also made to
reports written for the various European Union funded Eurostat projects. The input of the
Public Finance Unit and the Balance of Payments Unit was also important. The inventory
refers to annual national accounts data for reference year 2010 as published in News Release
195/2014 – A new Framework for National Accounts on 17 October 2014 and News Release
229/2014 – Non-financial Accounts by Institutional Sector: 2005-2013 on 3 December 2014.
The structure of the inventory is based on Eurostat’s guidelines as published in 2014,
Eurostat/C3/GNIC/271. This is the first version of the European System of Accounts 2010
GNI inventory. As an appendix to this inventory there is a set of Process Tables.
I would like to thank the writers of this document in particular the National Accounts team
and the Public Finance and Balance of Payments Units for their valuable input to this
document.
Reuben Fenech
Director General
December 2015
iii
Summary table of contents
Foreword .................................................................................................................................. iii Table of contents ......................................................................................................................vii List of charts .......................................................................................................................... xiii List of tables ........................................................................................................................... xiii List of abbreviations and acronyms ....................................................................................... xxv
Chapter 1: Overview of the system of accounts ........................................................................ 1 Chapter 2: The revisions policy and the timetable for revising and finalising the estimates;
major revisions since the last version of the GNI Inventory ................................................... 39 Chapter 3: The production approach........................................................................................ 51 Chapter 4: The income approach ........................................................................................... 269 Chapter 5: The expenditure approach .................................................................................... 305 Chapter 6: The balancing or integration procedure, and validating the estimates ................. 433 Chapter 7: Overview of the allowances for exhaustiveness .................................................. 451 Chapter 8: The transition from GDP to GNI ......................................................................... 505 Chapter 9: Main classifications used ..................................................................................... 545 Chapter 10: Main data sources used ...................................................................................... 569 Annex 1: GNI Process table ................................................................................................... 591 Annex 2: Process Table in millions of Euro (Data - Layer 1) ............................................... 619 Annex 3: Process Table – References to GNI Inventory (Layer 2) ....................................... 627 Annex 4: Process Table: Contributions to GDP and GNI ..................................................... 639 Annex 5: Instructions and notes for Process Table headings ................................................ 647 v
Table of contents
Foreword .................................................................................................................................. iii
Table of contents ......................................................................................................................vii
List of charts .......................................................................................................................... xiii
List of tables ........................................................................................................................... xiii
List of abbreviations and acronyms ....................................................................................... xxv
Chapter 1: Overview of the system of accounts ........................................................................ 1
1.1
Introduction ............................................................................................................... 1
1.2
The revisions policy and the timetable for revising and finalising the estimates;
major revisions since the last version of the GNI Inventory ................................... 10
1.3
Outline of the production approach ......................................................................... 15
1.4
Outline of the income approach .............................................................................. 19
1.5
Outline of the expenditure approach ....................................................................... 20
1.6
The balancing or integration procedure, and main approaches to validation .......... 24
1.7
Overview of the allowances for exhaustiveness...................................................... 27
1.8
The transition from GDP to GNI ............................................................................. 29
1.9
Main classifications used......................................................................................... 34
1.10
Main data sources used............................................................................................ 36
Chapter 2: The revisions policy and the timetable for revising and finalising the estimates;
major revisions since the last version of the GNI Inventory ................................................... 39
2.1
The revisions policy and the timetable for revising and finalising the estimates.... 39
2.2
Major revisions to the transition from ESA 1995 to ESA 2010 .............................. 40
2.3
Major revisions since the last version of the GNI Inventory other than those due
to conceptual changes in ESA 2010 ........................................................................ 44
2.4
Planned actions for improvements .......................................................................... 49
Chapter 3: The production approach........................................................................................ 51
3.0
GDP according to the production approach ............................................................ 51
3.1
The reference framework ........................................................................................ 53
3.2
The borderline cases ................................................................................................ 60
vii
3.3
Valuation ................................................................................................................. 65
3.4
Transition from private accounting and administrative concepts to ESA 2010
national accounting concepts................................................................................... 68
3.5
The roles of direct and indirect estimation methods and of benchmarks and
extrapolations .......................................................................................................... 72
3.6
The main approaches taken with respect to exhaustiveness.................................... 80
3.7
Agriculture, forestry and fishing (NACE Rev. 2 Section A) .................................. 85
3.8
Mining and quarrying (NACE Rev. 2 Section B) ................................................... 93
3.9
Manufacturing (NACE Rev.2 Section C)................................................................ 95
3.10
Electricity, gas, steam and air conditioning supply (NACE Rev. 2 Section D) .... 107
3.11
Water supply; sewerage, waste management and remediation activities (NACE
Rev. 2 Section E) ................................................................................................... 111
3.12
Construction (NACE Rev. 2 Section F) ................................................................ 117
3.13
Wholesale and retail trade; repair of motor vehicles and motorcycles (NACE
Rev. 2 Section G) .................................................................................................. 124
3.14
Transportation and Storage (NACE Rev. 2 Section H)......................................... 135
3.15
Accommodation and food service activities (NACE Rev. 2 Section I) ................ 140
3.16
Information and Communication (NACE Rev. 2 Section J) ................................. 151
3.17
Financial and insurance activities (NACE Rev. 2 Section K) ............................... 155
3.18
Real estate activities (NACE Rev. 2 Section L) .................................................... 186
3.19
Professional, scientific and technical activities (NACE Rev. 2 Section M) ......... 201
3.20
Administrative and support services activities (NACE Rev. 2 Section N) ........... 205
3.21
Public administration and defence; compulsory social security (NACE Rev. 2
Section O) .............................................................................................................. 210
3.22
Education (NACE Rev. 2 Section P)..................................................................... 212
3.23
Human health and social work activities (NACE Rev. 2 Section Q) .................... 223
3.24
Arts, entertainment and recreation (NACE Rev. 2 Section R) .............................. 235
3.25
Other service activities (NACE Rev. 2 Section S) ................................................ 248
3.26
Activities of households as employers; undifferentiated goods - and services producing activities of households for own use (NACE Rev. 2 Section T).......... 261
3.27
Activities of extraterritorial organisations and bodies (NACE Rev. 2
Section U) .............................................................................................................. 264
viii
3.28
Taxes on products, including VAT ....................................................................... 264
3.29
Subsidies on products ............................................................................................ 267
Chapter 4: The income approach ........................................................................................... 269
4.0
Gross domestic product according to the income approach .................................. 269
4.1
The reference framework ...................................................................................... 269
4.2
Borderline cases .................................................................................................... 274
4.3
Valuation ............................................................................................................... 274
4.4
Transition from private accounting and administrative concepts to ESA 2010
national accounts concepts .................................................................................... 276
4.5
The roles of direct and indirect estimation methods and of benchmarks and
extrapolations ........................................................................................................ 277
4.6
The main approaches taken with respect to exhaustiveness.................................. 277
4.7
Compensation of employees ................................................................................. 278
4.7.1
Wages and salaries ................................................................................................ 285
4.7.2
Employers’ social contributions ............................................................................ 287
4.8
Taxes on production and imports .......................................................................... 287
4.9
Subsidies................................................................................................................ 289
4.10
Gross operating surplus ......................................................................................... 291
4.11
Mixed income ........................................................................................................ 291
4.12
Consumption of fixed capital ................................................................................ 292
Chapter 5: The expenditure approach .................................................................................... 305
5.0
GDP according to the expenditure approach ......................................................... 305
5.1
The reference framework ...................................................................................... 306
5.2
The borderline cases .............................................................................................. 308
5.2.1
The borderline cases for HFCE ............................................................................. 308
5.2.2
The borderline cases for GFCF ............................................................................. 311
5.3
Valuation ............................................................................................................... 313
5.4
Transition from private accounting and administrative concepts to ESA 2010
national accounts concepts .................................................................................... 316
5.5
The roles of direct and indirect estimation methods and of benchmarks and
extrapolations ........................................................................................................ 318
5.6
The main approaches taken with respect to exhaustiveness.................................. 320
5.7
Household final consumption expenditure (HFCE) .............................................. 323
5.7.1
Overview ............................................................................................................... 323
5.7.2
Main data sources and their conversion to national accounts results .................... 327
ix
5.7.3
Detailed calculations by Coicop items .................................................................. 348
5.8
NPISHs final consumption expenditure ................................................................ 361
5.9
Government final consumption expenditure ......................................................... 367
5.10
Acquisitions less disposals of produced fixed assets ............................................ 377
5.10.1 Overview ............................................................................................................... 377
5.10.2 Main data sources and their conversion to national accounts result ..................... 386
5.10.3 Detailed estimation methods used by AN code..................................................... 390
5.11
Changes in inventories .......................................................................................... 416
5.12
Acquisitions less disposals of valuables ................................................................ 424
5.13
Exports of goods .................................................................................................... 426
5.14
Exports of services ................................................................................................ 430
5.15
Imports of goods .................................................................................................... 432
5.16
Imports of services ................................................................................................ 432
Chapter 6: The balancing or integration procedure, and validating the estimates ................. 433
6.1
GDP balancing procedure ..................................................................................... 433
6.2
Other approaches used to validate GDP ................................................................ 448
Chapter 7: Overview of the allowances for exhaustiveness .................................................. 451
7.0
Introduction ........................................................................................................... 451
7.0.1
Geographical coverage .......................................................................................... 451
7.0.2
General approach to exhaustiveness...................................................................... 454
7.1
Allowances for exhaustiveness in the production approach ................................. 458
7.1.1
Identification of types of non-exhaustiveness (for which adjustments are
needed) .................................................................................................................. 458
7.1.2
Adjustments made for the different types of non-exhaustiveness ......................... 462
7.1.3
Exhaustiveness methods ........................................................................................ 470
7.2
Allowances for exhaustiveness in the expenditure approach ................................ 497
7.2.1
Identification of types of non-exhaustiveness (for which adjustments are
needed) .................................................................................................................. 497
x
7.2.2
Adjustments made for the different types of non-exhaustiveness ......................... 498
7.2.3
Exhaustiveness methods ........................................................................................ 499
7.3
Allowances for exhaustiveness for the income approach ..................................... 502
7.3.1
Identification of types of non-exhaustiveness (for which adjustments are
needed) .................................................................................................................. 502
7.3.2
Adjustments made for the different types of non-exhaustiveness ......................... 503
7.3.3
Exhaustiveness methods ........................................................................................ 503
Chapter 8: The transition from GDP to GNI ......................................................................... 505
8.0
Introduction ........................................................................................................... 505
8.1
Compensation of employees ................................................................................. 510
8.2
Taxes on production and imports paid to the institutions of the EU ..................... 511
8.3
Subsidies granted by the institutions of the EU .................................................... 512
8.4
Cross-border property income ............................................................................... 512
8.4.1
Interest ................................................................................................................... 512
8.4.2
Distributed income of corporations ....................................................................... 525
8.4.2.1 Dividends............................................................................................................... 525
8.4.2.2 Withdrawals from the income of quasi-corporations ............................................ 528
8.4.3
Reinvested earnings (RIE) on foreign direct investment (FDI) ............................ 532
8.4.4
Other investment income....................................................................................... 534
8.4.4.1 Investment income attributable to insurance policy holders ................................. 534
8.4.4.2 Investment income payable on pension entitlements ............................................ 535
8.4.4.3 Investment income attributable to collective investment fund shareholders ........ 536
8.4.4.4 Rent on land and sub-soil assets ............................................................................ 543
Chapter 9: Main classifications used ..................................................................................... 545
9.1
Classifications used for the production approach.................................................. 545
9.2
Classifications used for the income approach ....................................................... 552
9.3
Classifications used for the expenditure approach ................................................ 554
9.4
Classifications used in the transition from GDP to GNI ....................................... 566
Chapter 10: Main data sources used ...................................................................................... 569
10.1
Statistical surveys and other data sources used for the production approach ....... 569
10.2
Statistical surveys and other data sources used for the income approach ............. 585
10.3
Statistical surveys and other data sources used for the expenditure approach ...... 586
10.4
Statistical surveys and other data sources used for the transition from
GDP to GNI ........................................................................................................... 589
xi
Annex 1: GNI Process table ................................................................................................... 591
Annex 2: Process Table in millions of Euro (Data - Layer 1) ............................................... 619
Annex 3: Process Table – References to GNI Inventory (Layer 2) ....................................... 627
Annex 4: Process Table: Contributions to GDP and GNI ..................................................... 639
Annex 5: Instructions and notes for Process Table headings ................................................ 647
xii
List of charts
Chart 1: Malta Statistics Authority organisational chart (as at 04.11.2015) .............................. 5 Chart 2: National Statistics Office organisational chart (as at 04.11.2015)............................... 6 List of tables
Table 1.2.1: Impact of changes from ESA 1995 to ESA 2010 on GNI for 2012, in millions
of Euro ..................................................................................................................................... 13
Table 1.3.1: Main aggregates of the production approach, 2010, in millions of Euro ............ 16
Table 1.4.1: Gross domestic product, income approach components, 2010, in millions
of Euro ..................................................................................................................................... 19
Table 1.5.1: Gross domestic product, expenditure approach components, 2010, in millions
of Euro ..................................................................................................................................... 21
Table 1.8.1: Transition from GDP to GNI transition for Malta, 2010, in millions of Euro .... 30
Table 1.9.1: Main components of the expenditure approach ................................................... 34
Table 2.2.1: Impact of changes from ESA 1995 to ESA 2010 on GNI for 2012, in millions
of Euro ..................................................................................................................................... 43
Table 2.3.1: Reservations 2014: Impact on GNI ..................................................................... 46
Table 3.0.1: The production approach to the GDP calculation by institutional sectors,
2010, in millions of Euro ......................................................................................................... 52
Table 3.0.2: The production approach to the GDP calculation by industry, 2010,
in millions of Euro ................................................................................................................... 53
Table 3.2.1: Insurance premiums as a percentage of intermediate consumption .................... 63
Table 3.4.1: Conceptual adjustments, 2010, in millions of Euro ............................................. 70
Table 3.5.1: Direct and indirect methods by activity, 2010, in millions of Euro .................... 75
Table 3.6.1: Exhaustiveness by activity, 2010, in millions of Euro ........................................ 83
Table 3.7.1: Contribution of Section A to total economy, 2010 .............................................. 85
Table 3.7.2: Section A (NACEs 01-03) by institutional sector for 2010 ................................. 86
Table 3.7.3: Extract of process tables 2010 for Section A in millions of Euro ....................... 86
Table 3.8.1: Contribution of Section B to total economy, 2010 .............................................. 93
xiii
Table 3.8.2: Section B (NACEs 05-09) by institutional sector for 2010 ................................. 94
Table 3.8.3: Extract of process tables 2010 for Section B in millions of Euro ....................... 94
Table 3.9.1: Contribution of Section C to total economy, 2010 .............................................. 96
Table 3.9.2: Section C (NACEs 10-33) by institutional sector for 2010 ................................. 97
Table 3.9.3: Extract of process tables 2010 for Section C in millions of Euro ....................... 99
Table 3.9.4: Section C: The number of sampled enterprises by the Structural Business
Statistics Unit for the year 2010 and the number of enterprises in the population
for the year 2010 .................................................................................................................... 100
Table 3.9.5: Data sources used in terms of GVA at basic price during the year 2010 for
activities in Section C (for S.11 and S.14) ............................................................................. 101
Table 3.9.6: Exhaustiveness adjustments in NACE 31, data in thousands of Euro,
for the year 2010 .................................................................................................................... 107
Table 3.10.1: Contribution of Section D to total economy, 2010 .......................................... 107
Table 3.10.2: Section D (NACE 35) by institutional sector for 2010.................................... 107
Table 3.10.3: Extract of process tables 2010 for Section D in millions of Euro ................... 108
Table 3.11.1: Contribution of Section E to total economy, 2010 .......................................... 111
Table 3.11.2: Section E (NACEs 36-39) by institutional sector for 2010 ............................. 112
Table 3.11.3: Extract of process tables 2010 for Section E in millions of Euro .................... 112
Table 3.12.1: Contribution of Section F to total economy, 2010 .......................................... 117
Table 3.12.2: Section F (NACEs 41-43) by institutional sector for 2010 ............................. 117
Table 3.12.3: Extract of process tables 2010 for Section F in millions of Euro .................... 118
Table 3.12.4: Section F: The number of sampled enterprises by the Structural Business
Statistics Unit for the year 2010 and the number of enterprises in the population
for the year 2010 .................................................................................................................... 119
Table 3.12.5: Data sources used in terms of GVA at basic price during the year 2010 for
activities in Section F (for S.11 and S.14) ............................................................................. 119
Table 3.12.6: Costs of materials for major and minor used for own-account construction
of dwellings ............................................................................................................................ 122
Table 3.12.7: Repairs and maintenance in main (H1) and secondary (H2) dwellings .......... 123
Table 3.12.8: Labour input and operating surplus ratio ......................................................... 123
Table 3.13.1: Contribution of Section G to total economy, 2010 .......................................... 125
Table 3.13.2: Section G (NACEs 45-47) by institutional sector for 2010 ............................. 125
Table 3.13.3: Extract of process tables 2010 for Section G in millions of Euro ................... 127
Table 3.13.4: Extrapolation model of output for NACE 45, in millions of Euro .................. 130
xiv
Table 3.13.5: Extrapolation model of output for NACE 46, in millions of Euro .................. 131
Table 3.13.6: Extrapolation model of output for NACE 47, in millions of Euro .................. 132
Table 3.14.1: Contribution of Section H to total economy, 2010 .......................................... 135
Table 3.14.2: Section H (NACEs 49-53) by institutional sector for 2010 ............................. 136
Table 3.14.3: Extract of process tables 2010 for Section H in millions of Euro ................... 137
Table 3.15.1: Contribution of Section I to total economy, 2010 ........................................... 140
Table 3.15.2: Section I (NACEs 55-56) by institutional sector for 2010 .............................. 141
Table 3.15.3: Extract of process tables 2010 for Section I in millions of Euro ..................... 143
Table 3.15.4: Breakdown of the output for NACE 55.1 for 2010 ......................................... 144
Table 3.15.5: Breakdown categories of tourism expenditure from the Tourism
Expenditure Survey ................................................................................................................ 148
Table 3.15.6: Breakdown of output of NACEs 56.1 and 56.3 for 2010, in millions
of Euro ................................................................................................................................... 150
Table 3.15.7: Breakdown of food and beverages within NACEs 56.1 and 56.3, 2010 ......... 150
Table 3.16.1: Contribution of Section J to total economy, 2010 ........................................... 152
Table 3.16.2: Section J (NACEs 58-63) by institutional sector for 2010 .............................. 152
Table 3.16.3: Extract of process tables 2010 for Section J in millions of Euro..................... 153
Table 3.17.1: Contribution of Section K to total economy, 2010 .......................................... 155
Table 3.17.2: Section K (NACEs 64-66) by institutional sector for 2010 ............................. 156
Table 3.17.3: Extract of process tables 2010 for Section K in millions of Euro ................... 156
Table 3.17.4: Gross value added at basic prices of NACE 64 ............................................... 158
Table 3.17.5: Extract from the income statement for core and non-core banks .................... 163
Table 3.17.6: Extract from the income statement for core and non-core banks .................... 165
Table 3.17.7: Extract from the balance sheet for core and non-core banks ........................... 168
Table 3.17.8: Extract from the balance sheet for core and non-core banks ........................... 169
Table 3.17.9: Extract from the balance sheet for core and non-core banks ........................... 171
Table 3.17.10: Production account for the 95 per cent category and 5 per cent category
of resident investment funds .................................................................................................. 175
Table 3.17.11: Insurance output distribution ......................................................................... 179
Table 3.17.12: The derivation of the three main variables used for the calculation of
insurance service charge ........................................................................................................ 182
Table 3.17.13: Calculation of passive reinsurance business, 2010, in millions of Euro ....... 185
Table 3.18.1: Contribution of Section L to total economy, 2010, in millions of Euro .......... 186
xv
Table 3.18.2: Section L (NACE 68) by institutional sector for 2010 .................................... 187
Table 3.18.3: Extract of process tables 2010 for Section L in millions of Euro .................... 187
Table 3.18.4: Total dwelling stock, output and intermediate consumption by type
of dwelling, 2011, in millions of Euro ................................................................................... 189
Table 3.18.5: Rented dwellings by type of dwelling, tenancy and type of rental
contract, Census of Population and Housing, National Statistics Office, 2011 ..................... 192
Table 3.18.6: Average rent paid by type of dwelling and rental contract, Census of
Population and Housing 2011, in thousands of Euro ............................................................. 193
Table 3.18.7: User cost components for 2010 in millions of Euro and in per cent ............... 194
Table 3.18.8: Distribution of major and minor repairs and maintenance by households
as per HBS 2008, as a percentage .......................................................................................... 195
Table 3.18.9: Distribution of repairs and maintenance by type of ownership and type of
expenditure, HBS 2008, as a percentage ............................................................................... 196
Table 3.19.1: Contribution of Section M to total economy, 2010 ......................................... 201
Table 3.19.2: Section M (NACEs 69-75) by institutional sector for 2010 ............................ 202
Table 3.19.3: Extract of process tables 2010 for Section M in millions of Euro................... 203
Table 3.20.1: Contribution of Section N to total economy, 2010 .......................................... 206
Table 3.20.2: Section N (NACEs 77-82) by institutional sector for 2010 ............................. 206
Table 3.20.3 Extract of process tables 2010 for Section N in millions of Euro .................... 208
Table 3.21.1: Contribution of Section O to total economy, 2010 .......................................... 211
Table 3.21.2: Extract of process tables 2010 for Section O in millions of Euro ................... 211
Table 3.22.1: Detailed breakdown with description of Section P (NACE 85) ...................... 213
Table 3.22.2: Contribution of Section P to total economy, 2010 .......................................... 214
Table 3.22.3: Section P (NACE 85) by institutional sector for 2010 .................................... 214
Table 3.22.4: Extract of process tables 2010 for Section P in millions of Euro .................... 215
Table 3.22.5: Output breakdown by institutional sector of Section P (NACE 85)
for 2010 .................................................................................................................................. 217
Table 3.22.6: Main data sources used to calculate S.11 and S.14 of Section P
(NACE 85) ............................................................................................................................. 218
Table 3.23.1: Detailed breakdown with description of Section Q (NACEs 86, 87-88) ........ 224
Table 3.23.2: Contribution of Section Q to total economy, 2010 .......................................... 225
Table 3.23.3: Section Q (NACEs 86-88) by institutional sector for 2010 ............................. 225
Table 3.23.4: Extract of process tables 2010 for Section Q in millions of Euro ................... 226
Table 3.23.5: Output breakdown by institutional sector of Section Q for 2010 .................... 228
xvi
Table 3.23.6: Main data sources used to calculate S.11 and S.14 of Section Q .................... 229
Table 3.24.1: Detailed breakdown with description of Section R ......................................... 236
Table 3.24.2: Contribution of Section R to total economy, 2010 .......................................... 237
Table 3.24.3: Section R (NACEs 90-93) by institutional sector for 2010 ............................. 237
Table 3.24.4: Extract of process tables 2010 for Section R in millions of Euro ................... 238
Table 3.24.5: Main data sources used to calculate S.11 and S.14 of Section R .................... 241
Table 3.25.1: Detailed breakdown with description of Section S (NACEs 94-96) ............... 249
Table 3.25.2: Contribution of Section S to total economy, 2010 .......................................... 250
Table 3.25.3: Section S (NACEs 94-96) by institutional sector for 2010 ............................. 250
Table 3.25.4: Extract of process tables 2010 for Section S in millions of Euro .................... 251
Table 3.25.5: Main data sources used to calculate S.11 and S.14 of Section S
(NACEs 94-96) ...................................................................................................................... 252
Table 3.25.6: Analysis of HBS 2008 results with SBS survey 2008 results for Section S
(NACE 95) ............................................................................................................................. 256
Table 3.25.7: Scale of prostitution in Europe ........................................................................ 259
Table 3.26.1: Contribution of Section T to total economy, 2010 .......................................... 261
Table 3.26.2: Section T (NACEs 97-98) by institutional sector for 2010 ............................. 261
Table 3.26.3: Extract of process tables 2010 for Section T in millions of Euro .................... 262
Table 3.26.4: Main data sources used to calculate S.11 and S.14 of Section T..................... 263
Table 3.28.1: National tax list for taxes on products for 2010, in thousands of Euro ........... 265
Table 3.29.1: Beneficiaries of subsidies on products for 2010, in thousands of Euro........... 267
Table 4.1.1: Gross domestic product, income approach components, 2010, in millions
of Euro ................................................................................................................................... 269
Table 4.1.2: Income approach components of GVA by NACE Section, 2010, in
millions of Euro ..................................................................................................................... 271
Table 4.5.1: Components of income approach by type of source and institutional
sector, 2010, in millions of Euro ............................................................................................ 277
Table 4.6.1: Exhaustiveness adjustments to D.1 by institutional sector, 2010, in
millions of Euro ..................................................................................................................... 278
Table 4.7.1: Compensation of employees by source and institutional sector, 2010 .............. 279
Table 4.7.2: Compensation of employees by institutional sector and NACE, 2010, in millions
of Euro ................................................................................................................................... 280
xvii
Table 4.7.3: Compensation of employees paid by NPISHs, by NACE and source,
2010, in millions of Euro ....................................................................................................... 284
Table 4.8.1: National tax list for taxes on production, 2010, in millions of Euro ................. 287
Table 4.8.2: Other taxes on production (D.29) at A*11, 2010, in millions of Euro .............. 288
Table 4.9.1: Other subsidies on production (D.39), 2010, in millions of Euro ..................... 289
Table 4.9.2: Other subsidies (D.29) on production at A*11, 2010, in millions of Euro........ 291
Table 4.12.1: New versus old GFCF ..................................................................................... 296
Table 4.12.2: Service lives ..................................................................................................... 298
Table 4.12.3: Service lives applied in the PIM model ........................................................... 299
Table 5.0.1: Main components of the expenditure approach, in thousands of Euro.............. 305
Table 5.2.1.1: FISIM calculation for household final consumption expenditure, 2010,
in thousands of Euro .............................................................................................................. 309
Table 5.4.1: Conceptual adjustments in the expenditure approach, 2010, in millions of
Euro ........................................................................................................................................ 317
Table 5.5.1: Basis for national accounts figures in the expenditure approach, 2010, in
millions of Euro ..................................................................................................................... 320
Table 5.6.1: Exhaustiveness adjustments in HFCE, 2010, in thousands of Euro .................. 321
Table 5.7.1.1: Extract of the process table 2010 for HFCE in millions of Euro.................... 324
Table 5.7.2.1: Data sources by Coicop 1-digit level .............................................................. 328
Table 5.7.2.2: Conversion of HBS data for national accounts purposes (by Coicop
divisions), 2008, in millions of Euro - Table 1 of the Phare program ................................... 331
Table 5.7.2.3: Conversion of HBS data for national accounts purposes (by Coicop
divisions), adjustments for definitions and concepts (national concept), 2008, in millions
of Euro - Table 1A of the Phare program .............................................................................. 338
Table 5.7.2.4: The discrepancies which exist between HBS 2008 estimates versus HFCE
in the domestic concept of year 2008, in millions of Euro .................................................... 341
Table 5.7.2.5: HBS 2008 ratios used for consumer imports .................................................. 344
Table 5.7.2.6: Coicop items for which other sources are used, 2010, in millions of Euro .... 346
Table 5.7.3.1: Household final consumption, 2010, in millions of Euro ............................... 349
Table 5.8.1: NPISH final consumption expenditure by COPNI as a ratio to GDP of
2010........................................................................................................................................ 361
Table 5.8.2: NPISH final consumption expenditure by NACE at 4-digit level as at
2000........................................................................................................................................ 365
xviii
Table 5.8.3: Process table 2010 of NPISH final consumption expenditure by COPNI in
millions of Euro ..................................................................................................................... 366
Table 5.9.1: Final consumption expenditure by sub-sectors for 2010 ................................... 369
Table 5.9.2: Government final consumption expenditure for 2010, in thousands of Euro.... 372
Table 5.9.3: Individual/Collective consumption expenditure for 2010, in thousands of
Euro ........................................................................................................................................ 374
Table 5.9.4: Final consumption expenditure by COFOG for 2010, in thousands of Euro .... 375
Table 5.10.1: The acquisitions less disposals of fixed assets by NACE sections (A*21)
and types of assets for the year 2010, in thousands of Euro .................................................. 379
Table 5.10.2: The percentages of acquisitions less disposals of fixed assets by NACE
sections (A*21) and types of assets for the year 2010, as a percentage ................................ 380
Table 5.10.3: The acquisitions less disposals of fixed assets by institutional sectors
(S.11-S.15) and by type of assets for the year 2010 .............................................................. 381
Table 5.10.4: Extract of process table 2010 for GFCF in thousands of Euro ........................ 382
Table 5.10.5: The detail of the assets with the corresponding CPA (2008) (2-digit) which
is usually and commonly published in the financial statements ............................................ 388
Table 5.10.6: The detail of the assets’ breakdown existing in SBS....................................... 389
Table 5.10.7: Distribution of major and minor repairs and maintenance by households
as per HBS 2008, as a percentage .......................................................................................... 393
Table 5.10.8: Distribution of repairs and maintenance by type of ownership and type of
expenditure, HBS 2008, as a percentage ............................................................................... 395
Table 5.10.9: The ‘cultivated biological assets’ (AN.115) in the Agriculture, forestry
and fishing (Section A), 2010 ................................................................................................ 400
Table 5.10.10: The different types of sources for asset (AN.1151) in Crop and animal
production, hunting and related service activities (NACE 01), 2010 .................................... 400
Table 5.10.11: R&D output table, in thousands of Euro ....................................................... 403
Table 5.10.12: GERD by sector of performance, in thousands of Euro ................................ 403
Table 5.10.13: Current costs as a percentage of total BERD for NACE 62 .......................... 404
Table 5.10.14: Business enterprise R&D by product, in thousands of Euro ......................... 405
Table 5.10.15: Capital expenditure by sector of performance, in thousands of Euro............ 405
Table 5.10.16: CFC ratio ....................................................................................................... 406
Table 5.10.17: GFCF table, in thousands of Euro ................................................................. 407
Table 5.10.18: Back casting of R&D Output for own final use and GFCF, in thousands of
Euro ........................................................................................................................................ 409
Table 5.10.19: Consumption of fixed capital of R&D assets in thousands of Euro .............. 409
xix
Table 5.10.20: Commodity flow model (CFM) ..................................................................... 410
Table 5.10.21: CPA concordance table (NACE Rev. 1.1)..................................................... 412
Table 5.10.22: GFCF on computer software, 2010, in thousands of Euro ............................ 414
Table 5.10.23: ‘Entertainment, literary and artistic originals’, 2010, in thousands of
Euro ........................................................................................................................................ 414
Table 5.11.1: The process table of changes in inventories, 2010, in millions of Euro .......... 417
Table 5.11.2: Stock holding periods ...................................................................................... 420
Table 5.11.3: Holding gains/losses by type of inventory in millions of Euro ....................... 423
Table 5.11.4: Impact on GNI - Changes in inventories net of holding gains and losses in
millions of Euro ..................................................................................................................... 423
Table 5.12.1: Extract of process tables 2010 for Acquisition less disposal of valuables in
millions of Euro ..................................................................................................................... 424
Table 5.12.2: Acquisitions less disposals of valuables, 2010, in thousands of Euro ............. 426
Table 6.1.1: Supply and use framework ................................................................................ 435
Table 7.0.2.1: Services activities covered by SBS since 2011 .............................................. 456
Table 7.1.2.1: Table 1A. Elements of non-exhaustiveness: Output approach - for
reference year 2010 ................................................................................................................ 465
Table 7.1.2.2: Table 2A. Exhaustiveness adjustment: Output approach - for reference
year 2010, in millions of Euro ............................................................................................... 466
Table 7.1.2.3: Exhaustiveness by activity, 2010, in millions of Euro ................................... 468
Table 7.1.3.1: Consumption pattern ....................................................................................... 474
Table 7.1.3.2: Impact on GDP and GNI – Narcotics, 2010, in millions of Euro ................... 475
Table 7.1.3.3: Scale of prostitution in Europe ....................................................................... 476
Table 7.1.3.4: Number of prostitutes in Malta in thousands .................................................. 477
Table 7.1.3.5: Impact on GDP and GNI – Prostitution, 2010, in millions of Euro ............... 478
Table 7.1.3.6: Legal domestic sales versus HFCE in the domestic market ........................... 481
Table 7.1.3.7: Comparison of data sources for tobacco ......................................................... 482
Table 7.1.3.8: Impact on GDP and GNI – Tobacco, 2010, in millions of Euro .................... 484
Table 7.1.3.9: Comparative price level indices for the main sub-groups of the survey,
EU 27=100 ............................................................................................................................. 485
Table 7.1.3.10: Comparing internal data sources with international studies on
consumption of alcohol in Malta ........................................................................................... 487
xx
Table 7.1.3.11: Comparing HBS results with derived estimates ........................................... 488
Table 7.1.3.12: Costs of materials for major and minor used for own-account
construction of dwellings ....................................................................................................... 489
Table 7.1.3.13: Repairs and maintenance in main (H1) and secondary (H2) dwellings ....... 490
Table 7.1.3.14: Labour input and operating surplus ratio ...................................................... 491
Table 7.2.2.1: Exhaustiveness by component, 2010, in millions of Euro.............................. 499
Table 7.3.2.1: Exhaustiveness by component, 2010, in millions of Euro.............................. 503
Table 8.0.1: Transition from GDP to GNI transition for Malta, 2010, in thousands
of Euro ................................................................................................................................... 505
Table 8.0.2: The BOP Enterprise survey sample base ........................................................... 507
Table 8.4.1.1: Interest received from (paid to) the rest of the world, in thousands of
Euro ........................................................................................................................................ 513
Table 8.4.1.2: International investment position in assets and liabilities for Malta .............. 514
Table 8.4.1.3: International investment position (IIP) in currency and deposits, assets
and liabilities .......................................................................................................................... 515
Table 8.4.1.4: Reporting enterprises for the non-bank financial sector ................................. 518
Table 8.4.1.5: International investment position in debt securities in assets securities
other than shares (AF.3) ......................................................................................................... 519
Table 8.4.1.6: International investment position in debt securities in liabilities securities
other than shares (AF.3) ......................................................................................................... 520
Table 8.4.1.7: International investment position in loans, assets and liabilities .................... 523
Table 8.4.1.8: International investment position in trade credits, assets and liabilities ......... 524
Table 8.4.2.1.1: Interest received from (paid to) the rest of the world, 2010, in thousands
of Euro ................................................................................................................................... 525
Table 8.4.2.1.2: International investment position in equities, assets and liabilities ............. 526
Table 8.4.2.2.1: Impact on GNI - Withdrawals of income from quasi-corporations
("holiday homes") in millions of Euro ................................................................................... 530
Table 8.4.2.2.2: Owned holiday dwellings abroad by country .............................................. 531
Table 8.4.2.2.3: Owned holiday dwellings abroad by citizenship of reference person ......... 531
Table 8.4.4.1: Property income attributed to policy holders as a percentage of service
charge - Residents .................................................................................................................. 534
Table 8.4.4.2: Property income attributed to policy holders – Transactions with
non-residents in millions of Euro ........................................................................................... 535
Table 8.4.4.3: Quarterly balance sheet of stocks to ECB ...................................................... 537
xxi
Table 8.4.4.4: Holders of CISs and PIFs ............................................................................... 539
Table 8.4.4.5: Property income attributed for domestic based MF by sector for 2013 ......... 540
Table 8.4.4.6: Property income earned from foreign MF – ISPs licence holders, in
thousands of Euro .................................................................................................................. 541
Table 8.4.4.7: Property income earned from foreign MF - Investment Registration
Scheme ................................................................................................................................... 542
Table 8.4.4.8: Property income earned from foreign MF in thousands of Euro .................... 543
Table 9.1.1: NACE activity breakdown in Malta’s national accounts .................................. 546
Table 9.1.2: CPA breakdown in Malta’s national accounts................................................... 550
Table 9.2.1: Main components of the income approach ........................................................ 553
Table 9.3.1: Main components of the expenditure approach ................................................. 554
Table 9.3.2: Product classifications used in for the computation of consumption
expenditure ............................................................................................................................. 556
Table 9.3.3: Classification used for NPISH final consumption expenditure ......................... 559
Table 9.3.4: Classification of the Functions of Government ................................................. 559
Table 9.3.5: Classifications used for the computation of assets for purposes of GCF .......... 562
Table 9.3.6: Investment matrix .............................................................................................. 562
Table 9.3.7: Detailed structure of the Classification by Broad Economic Categories .......... 564
Table 9.3.8: Detailed structure of the goods and services account ........................................ 565
Table 9.4.1: Detailed structure of the primary income account ............................................. 567
Table 10.1.1: Business Register ............................................................................................. 570
Table 10.1.2: Structural Business Statistics survey ............................................................... 571
Table 10.1.3: Short-Term Statistics surveys .......................................................................... 572
Table 10.1.4: Accomstat ........................................................................................................ 573
Table 10.1.5: Tourstat ............................................................................................................ 574
Table 10.1.6: Census of Aquaculture ..................................................................................... 576
Table 10.1.7: Census of Agriculture ...................................................................................... 577
Table 10.1.8: Census of Fisheries .......................................................................................... 578
Table 10.1.9: English Language Schools survey ................................................................... 579
Table 10.1.10: Harmonised index of consumer prices .......................................................... 580
Table 10.1.11: Financial Data Reporting System .................................................................. 581
xxii
Table 10.1.12: Remote Gambling Companies ....................................................................... 582
Table 10.1.13: ETC employers dataset .................................................................................. 583
Table 10.1.14: Intrastat .......................................................................................................... 584
Table 10.1.15: Extrastat ......................................................................................................... 584
Table 10.1.16: Monetary and banking statistics – Central Bank of Malta ............................ 585
Table 10.2.1: Labour Cost Survey ......................................................................................... 586
Table 10.3.1: Household Budgetary Survey .......................................................................... 587
Table 10.3.2: Census of Population and Housing .................................................................. 588
Table 10.4.1: Balance of payments report ............................................................................. 590
xxiii
List of abbreviations and acronyms
Accomstat
Accomodation Statistics Census
AN
non-financial assets
BCG
budgetary central government
BEC
Broad Economic Category
BERD
business enterprise expenditure on research and development
BOP
balance of payments
BPM6
Balance of Payments and International Investment Position Manual, Sixth
Edition
BR
Business Register
CATI
computer assisted telephone interview
CBM
Central Bank of Malta
CES
customs electronic system
CFC
consumption of fixed capital
CFM
commodity flow model
cif
cost, insurance and freight
CIS
collective investment scheme
CN
Combined Nomenclature
COA
chart of accounts
COFOG
Classification of the Functions of Government
Coicop
Classification of Individual Consumption by Purpose
COLA
cost of living adjustment
COPC
current operating performance concept
COPNI
Classification of the Purposes of Non-Profit Institutions Serving Households
CPA
Classification of Products by Activity
CPC
Central Product Classification
CPH
Census of Population and Housing
CPI
consumer price index
CPPI
construction producer price index
xxv
CS
capital stock
DAS
Departmental Accounting System
DG BUDG
Directorate-General for budget
DIER
Department for Industrial and Employment Relations
DOF
Department of Fisheries
DPL
Department of Public Lotto
DR
direct reporting
EAA
Economic Accounts for Agriculture
EAGGF
European Agricultural Guidance and Guarantee Fund
EBUs
extra-budgetary units
EC
European Commission
ECB
European Central Bank
ECU
European Currency Unit
EDP
excessive deficit procedure
EFL
English as foreign language
ELS
English Language Schools
EONIA
Euro overnight index average
ERR
external reference rate
ESA
European System of Accounts
ESDP
Economic Statistics Development Programme
ETC
Employment and Training Corporation
EU
European Union
EURIBOR
Europe interbank offered rate
Eurostat
the statistical office of the European Union
Extrastat
the collection of trade statistics for movements of goods between EU and nonEU countries
FADN
Farm Accountancy Data Network
FDI
foreign direct investment
FDRS
Financial Data Reporting System
FISIM
financial intermediation services indirectly measured
xxvi
fob
free on board
FSS
Farm Structure Survey
FTE
full-time equivalent
GCF
gross capital formation
GCS
gross capital stock
GDP
gross domestic product
GERD
gross domestic expenditure on research and development
GFCF
gross fixed capital formation
GNI
gross national income
GNIC
Gross National Income Committee
GNIAQ
Gross National Income Inventory Assessment Questionnaire
GNP
gross national product
GovERD
government expenditure on research and development
GVA
gross value added
HBS
Household Budgetary Survey
HERD
higher education expenditure on research and development
HFCE
household final consumption expenditure
HICP
harmonised index of consumer prices
HS
Harmonised System
IAS
International Accounting Standard
IBI
international banking institution
ICT
information and communication technologies
IF
investment fund
IFRS
International Financial Reporting Standards
IIP
international investment position
IMF
International Monetary Fund
IMTS
international merchandise trade statistics
Intrastat
the system for collecting information and producing statistics on the trade in
goods between countries of the European Union
IRD
Inland Revenue Department
xxvii
IRR
internal reference rate
ISCO
International Standard Classification of Occupations
ISIC
International Standard Industrial Classification of all Economic Activity
ISP
investment services provider
ISTAT
Italian National Institute of Statistics
IT
Information Technology
JVS
Job Vacancy Survey
KAU
kind-of-activity units
LCS
Labour Cost Survey
Lm
Maltese Lira
MCA
Malta Communications Authority
MCAST
Malta College of Arts, Science and Technology
MEPA
Malta Environment and Planning Authority
MF
mutual funds
MFC
Malta Film Commission
MFI
monetary financial institution
MFSA
Malta Financial Services Authority
MGA
Malta Gaming Authority
MIA
Malta International Airport
MMF
money market fund
MOU
memorandum of understanding
MSA
Malta Statistics Authority
MSDEC
Ministry of Sustainable Development, the Environment and Climate Change
MSE
Malta Stock Exchange
MTA
Malta Tourism Authority
n.e.c.
not elsewhere classified
NA
National Accounts
NACE
general industrial classification of economic activies within the European
Union
NAV
net asset value
xxviii
NC
national concept
NCFHE
National Commission for Further and Higher Education
NCS
net capital stock
ND
non-durable
NGO
non-governmental organisation
NPI
non-profit institution
NPISHs
non-profit institutions serving households
NPO
non-profit organisations
NSO
National Statistics Office
NUTS
nomenclature of territorial units for statistics
OECD
Organisation for Economic Cooperation and Development
PAPI
Paper-Assisted Personal Interview
para.
paragraph
PBS
Public Broadcasting Services
PI
portfolio investment
PIF
professional investments fund
PIM
perpetual inventory method
PNDS
pro-rata rates of non-deductibility
PNP
private non-profit
PPI
producer prices indices
PSS
Partial Settlements System
R&D
research and development
Rev.
revision
RIE
reinvested earnings
ROW
rest of the world
RPI
retail price index
SBS
Structural Business Statistics
SHP
stock holding periods
SILC
Statistics on Income and Living Conditions
SITC
standard international trade classification
xxix
SNA
System of National Accounts
SPE
special purpose entity
SPO
Sports Organisations
STS
Short-Term Statistics
SUT
supply and use table
TAPAS
Technical Action Plan for the Improvement of Agriculture Statistics
TARIC
integrated tariff of the EU
Tourstat
lnternational Tourism Survey
UN
United Nations
UNSD
United Nations statistical division
UoM
University of Malta
VAT
value added tax
VOR
value added tax own resources
WAR
weighted average rate
WHO
World Health Organisation
YOS
Youth Organisations Survey
xxx
CHAPTER 1
Overview of the system of accounts
1.1
1.1.1
Introduction
Compilation of national accounts in Malta started in 1954. Over time Malta’s
national accounts improved in quality but methodology and presentation did not change
much, retaining the 1954 System of National Accounts (SNA) system with elements from the
1968 SNA system also incorporated.
1.1.2
When Malta re-applied for European Union (EU) membership in September 1998,
preparations were underway to adopt the acquis communautaire in the field of statistics by
the National Statistics Office (NSO).
Actual implementation of European System of
Accounts (ESA) 1995 commenced in 2001.
For a start it was aimed to compile the
Production and Generation of Income accounts by industry using the Statistical classification
of economic activities in the European Community, NACE1 Revision (Rev.) 1 at division
level A*60 for benchmark years 2000 and 1999.
It was also planned to review the
expenditure approach. The task was formidable especially in Malta’s case because the
production approach was being compiled for the first time. The first ESA 1995 compliant
series was published in 2004 and was available on annual basis for the years 1995 to 1999
and on a quarterly basis from the year 2000 to the second quarter of 2014.
1.1.3
Before actual implementation a complete overhaul of the work of the NSO was
undertaken. Key surveys were introduced e.g. Business Register (BR), Labour Force Survey
(LFS), Household Budgetary Survey (HBS) and the Structural Business Statistics (SBS)
survey. A Census of Agriculture was also held in 2001 after a long absence. Numerous other
new censuses and surveys were carried out such as Information Society Statistics, Culture
Statistics, Short-Term Statistics (STS), Tourism Accommodation Survey and the Voluntary
Organisations Survey. Education, transport, travel agents, insurance, hotels, government
enterprises, and foreign owned companies continued being surveyed by the National
Accounts Unit.
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
1
1
Gross National Income Inventory
1.1.4
To bring government statistics in line with ESA 1995, an action group was set up
consisting of representatives from NSO, the Ministry of Finance, the Treasury and the
Central Bank of Malta (CBM). All the transactions of Government were ESA-coded and the
accounts of all extra-budgetary units (EBUs) were examined to determine their institutional
classification. NACE and Classification of the Functions of Government (COFOG) codes
were also assigned to the departments and units concerned.
1.1.5
Arrangements were also made with the respective bodies to make their databases
available to the National Accounts Unit.
These included Employment and Training
Corporation (ETC), the administrative employment agency, Malta Financial Services
Authority (MFSA), the Registry of Companies which provides the audited accounts of any
company operating in Malta, the government’s Departmental Accounting System (DAS), and
other government departments.
1.1.6
Another pre-requisite was the introduction of ‘new’ nomenclatures such as NACE,
Classification of Individual Consumption by Purpose (Coicop), Classification of the
Functions of the Government (COFOG), Classification of the Purposes of Non-Profit
Institutions Serving Households (COPNI) and the Classification of Products by Activity
(CPA).
1.1.7
Following the implementation of ESA 1995 in 2004, three benchmark revisions have
been made covering the years 1995 to date. These were linked to the implementation of
NACE Rev. 2 in 2011 and 2012 and the introduction of ESA 2010 in September 2014. The
latest updated Gross National Income (GNI) Inventory was published in 2008. With the
introduction of NACE Rev. 2, new data sources were integrated in national accounts
especially for the service industries. The ESA 2010 GNI Inventory will incorporate these
updates.
1.1.8
The European System of National and Regional Accounts (ESA 2010) is the newest
internationally compatible EU accounting framework for a systematic and detailed
description of an economy. The Regulation (EU) No 549/2013 of the European Parliament
and of the Council of 21 May 2013 on the European system of national and regional accounts
in the European Union was published in the Official Journal on 26 June 2013. Malta has been
granted a number of derogations which provide room for a staggered implementation of the
2
Overview of the system of accounts
said regulation through the Commission implementing decision of 26 June 2014 on granting
derogations to Member States with respect to the transmission of statistics pursuant to
Regulation (EU) No 549/2013 concerning the European system of national and regional
accounts in the EU.
1.1.9
The ESA 2010 differs in scope as well as in concepts from its predecessor ESA 1995
reflecting developments in measuring modern economies, advances in methodological
research and the needs of users. The structure of the ESA 2010 is consistent with the
worldwide guidelines on national accounting set out in the SNA 2008. In order to support the
application manuals and handbooks were published by Eurostat.
Main approaches used
1.1.10
In Malta, gross domestic product (GDP) at current prices is compiled from the
production, income and expenditure approaches. GDP expenditure components are also
available in chain-linked volumes. The production approach at current prices is considered to
be the main estimation method for compiling GDP, as the estimation of production is
supported by the most reliable sources. The expenditure components of GDP are estimated
on the basis of other independent sources and methodologies.
While in theory the
expenditure approach should reconcile with the production approach, in practice statistical
compilation may lead to a difference between them. The income approach to GDP estimate
cannot be taken for a fully independent approach, because operating surplus and mixed
income are not estimated separately, but are calculated as a balancing item between value
added derived from the production approach and other income components of value added
which are directly measured, namely, compensation of employees and taxes and subsidies on
production.
Geographical coverage
1.1.11
The territory of Malta is made up of the following three inhabitable islands: Malta,
Gozo (Għawdex) and Comino (Kemmuna). The islands of Malta are classified in one region
at nomenclature of units for territorial statistics (NUTS) level I and II. The islands of Gozo
and Comino are considered as one region at NUTS III level for the purpose of statistics.
Regional GDP data are available annually at NUTS III level at time t+12 months.
3
Gross National Income Inventory
1.1.12
The economic territory also includes:
i)
free zones, including bonded warehouses under Maltese customs control;
ii)
the national airspace and Maltese territorial waters; and
iii)
territorial enclaves in the rest of the world (ROW), such as embassies, used by the
Government of Malta with the formal political agreement of the governments in
which these units are located.
1.1.13
The economic territory excludes any parts of the Maltese territory used by
governments of other countries, such as embassies, and by institutions of the EU.
Organisation and responsibilities within the NSO
1.1.14
The Malta Statistics Authority (MSA) was established by Act XXIV of 2000, which
came into force on 1 March 2001. It was set up as an independent authority distinct from the
Government of the day to take over the functions previously done by a Government
department. The NSO was formerly known as the Central Office of Statistics. The Authority
exercises a regulatory function regarding resources relating to the collection, compilation and
publishing of official statistics, and to make provision with respect to matters ancillary
thereto or connected therewith.
1.1.15
a)
Its functions are defined in Section 7 of the said Act as follows:
To examine and submit, for the approval of the Minister, the business plan and
financial estimates drawn up by the Director General for the administration of the
National Statistics Office.
b)
To regulate and to generally supervise the production of official statistics in
accordance with international requirements and standards.
c)
To discuss and advise on statistical matters, including methodologies, relating to the
collection, compilation and dissemination of statistics.
d)
To establish priorities in responding to the demand for official statistics.
e)
To liaise between the office and other public bodies concerning the supply of data
and the coordination of activities with statistical implications.
f)
4
To publish the business plan after its approval by the Minister of Finance.
Overview of the system of accounts
g)
To disseminate the knowledge of official statistics.
h)
To consider and comment on, where necessary, the yearly report submitted by the
Director General on the work of the National Statistics Office as required by article
9(5)(g).
1.1.16
The Authority has a distinct legal framework, and the legal and judicial
representation is vested in the Chairperson. The NSO is the executive arm of the Authority.
Chart 1: Malta Statistics Authority organisational chart (as at 04.11.2015)
1.1.17
The Director General is the head of the NSO and has the legal representation of it.
The Malta Statistics Authority Act, 2000 makes provisions for this position in Article 9.
1.1.18
The NSO is structured in four directorates: Economic Statistics, Business Statistics,
Social Statistics and Support Services.
The first three directorates are responsible for
translating the Office's mission into statistical output that is timely, impartial, of a high
5
Gross National Income Inventory
quality and that is responsive to the country's needs in all contexts. These are supported by
the units within the Resources and Support Services Directorate. Three units - Methodology
and Research, Regional Statistics and Surveys - fall under the direct responsibility of the
Director General.
Chart 2: National Statistics Office organisational chart (as at 04.11.2015)
Director General
1
01
Methodology and Research
4.9
02
Regional Statistics
6
03
Surveys
1
Directorate A: Economic Statistics
vacant
A1
National Accounts
9.5
A2
Public Finance
5
A3
Balance of Payments
7
A4
International Trade and Transport Statistics
8
A5
Price Statistics
8.0
Directorate B: Business Statistics
vacant
B1
Structural Business Statistics
5.6
B2
Short-Term Statistics
7.5
B3
Agriculture and Environment Statistics
4
B4
Business Registers
4
Directorate C: Social Statistics
1
C1
Living Conditions and Culture Statistics
11
C2
Labour Market Statistics
9.1
C3
Population and Tourism
17
of which survey interviewers
12
Education and Information Society Statistics
4.9
Directorate D: Resources and Support Services
vacant
D1
Personnel and Budgetary Matters
12.8
D2
External Cooperation and Communication
5.3
D3
IT Systems
6
C4
1.1.19
The National Accounts Unit falls within the Economic Statistics Directorate. The
Economic Statistics Directorate is also responsible for the Public Finance Unit, the Balance
of Payments Unit, the International Trade and Transport Statistics Unit and the Price
Statistics Unit. Each of the five units has its own manager who reports to the Economic
Statistics Director, who in turn reports to the Director General.
6
Overview of the system of accounts
1.1.20
Within the National Accounts Unit there are three Principal Statisticians with sixteen
years of experience in national accounts, six Statisticians with two years of experience in
national accounts and a unit manager (as at November 2015).
1.1.21
The National Accounts Unit is responsible for the compilation of the ESA 2010 non-
financial accounts for the non-financial corporations, financial corporations, households and
non-profit institutions serving households (NPISHs). All the statisticians are involved in the
compilation of three main approaches to GDP, besides other specific tasks such as the
compilation of supply and use tables (SUT) and input-output tables, purchasing power
parties, the weighted average rate (WAR) and compensation tables for the value added tax
own resources (VOR), Institutional sector accounts and seasonal adjustment. Compilation of
annual and quarterly national accounts data are done simultaneously within the same unit
such that annual data are equal to the summation of the four quarters.
1.1.22
The full sequence of accounts for the general government sector is compiled by the
Public Finance Unit.
1.1.23
Regional GDP falls within the remit of the Regional Statistics Unit which reports
directly to the Director General.
1.1.24
The ESA 2010 financial accounts are compiled by the CBM. There is a formal
memorandum of understanding (MOU) between NSO and the CBM which stipulates that the
CBM will compile Malta’s financial accounts, which consist of stock positions and flows of
financial assets and liabilities of all sectors in Malta and the ROW sector on a quarterly basis.
This MOU stipulates that the compilation of balance of payments (BOP) statistics is a shared
responsibility between CBM and the Balance of Payments Unit within NSO. Also listed in
the MOU are all sources used by the National Accounts and Balance of Payments Units
which are provided on a regular basis by the CBM inclusive of timeframes and deadlines.
Supervisory and control system with regard to the compilation of national accounts
1.1.25
Most of the data sources are supplied to national accounts by other statistical units of
the NSO or external institutions, such as the Ministry of Finance, the CBM, the ETC, the
Malta Communications Authority and the MFSA.
Direct information obtained by the
7
Gross National Income Inventory
National Accounts Unit is generally limited to quarterly data from key enterprises. At
present the National Accounts Unit does not have Service Level Agreements and Standard
Service Levels signed with each unit responsible for the relevant data source. The receiving
of administrative data from external institutions is generally based on gentleman agreements
with the exception of two formal agreements with the CBM and the Ministry of Finance.
This implies that quality and coverage of the received data has to be scrutinised by the
National Accounts Unit on a quarterly basis.
1.1.26
The production and income approaches are based mainly on enterprise surveys.
These are generally compiled within NSO with the exception of Financial and insurance
activities which is mainly surveyed by the CBM. Enterprise survey results are generally
requested at company level. This level of details allows the National Accounts Unit to crosscheck survey results at company level with administrative sources such as annual accounts
and financial statements, data obtained from the tax administration or other units. This
procedure is applied for the largest companies within each NACE division. Data at company
level is often cross-checked with Intrastat, Extrastat, and BOP statistics. Data at company
level allows the National Accounts Unit to verify the weighting structure of each sample
survey as results are cross-checked with the population.
1.1.27
Data are initially analysed at 2- or 3-digit NACE by comparing results on year-on-
year changes and different ratio indexes e.g. average wages, productivity of labour and
intermediate to output ratios. In case of anomalies data are analysed as follows:
a) Comparison of sum of surveyed data and gross up data at 2- or 3-digit NACE
classification;
b) Comparison of year-on-year individual data in a given industry;
c) In the event of suspicion of error in individual data – verification with accessible
administrative data sources; and
d) In the event of suspicion of error in grossing-up sum of turnovers corrections are
carried out on weights.
1.1.28
The main variables in the expenditure approach computed by the National Accounts
Unit are the final consumption expenditure of households and NPISHs and gross capital
8
Overview of the system of accounts
formation (GCF). The final consumption expenditure of the general government is supplied
by the Public Finance Unit while exports and imports of goods and services are supplied by
the Balance of Payments Unit. Time series and ratio analysis is done on each expenditure
component with particular emphasis on imports and exports of goods and services.
1.1.29
A detailed analysis of Balance of Payments Unit and International Trade and
Transport Statistics Unit is adopted due to the possible impact this data has on statistical
discrepancy. In both cases data at company level is compared to national accounts data,
short-term statistics data, published company accounts and quarterly questionnaires to make
sure that any imports or exports reported are coherent across units.
Methodological
differences are sometimes detected. These are generally followed up after the news release.
1.1.30
The National Accounts Unit collaborates with the Balance of Payments Unit in the
adjustments made for non-resident locally VAT registered companies. In each quarter an
adjustment for trade in oil is worked out independently by the Managers of the National
Accounts and Balance of Payments Units in order to make sure that the adjustments made are
correct given the magnitude of the figures. This is done using an established methodology.
The National Accounts Unit also verifies that the adjustments made fit in a supply and use
framework for this particular product on a quarterly basis. A similar approach is adopted in
case of yachts and aircraft.
1.1.31
The balancing of commodity flows in SUT are a crucial instrument for final
estimation of GDP and its components. Due to resource constraints SUT are available for the
reference years 2004, 2008 and 2010 and are compiled with a time lag greater than the time
t+36 months required by Eurostat.
Inconsistencies in the system of national accounts
identified during the latest SUT were fully integrated in the latest benchmark revision. The
National Accounts Unit is currently developing quarterly SUT which will contribute to a
more structured supervisory and control system. This automated approach will enable the
National Accounts Unit to compile yearly and timelier SUT.
Risk analysis
1.1.32
In 2015 a risk committee was established at NSO.
This risk committee was
requested to analyse the potential risks identified by unit managers. By 2016 a permanent
9
Gross National Income Inventory
team will be working on the matter. The main threat identified by the National Accounts
Unit related to staff turnover which could lead to delays with respect to major projects
planned in for the coming years e.g. derogations.
Internal audits
1.1.33
1.2
The NSO is planning to establish an internal audit function in the near future.
The revisions policy and the timetable for revising and finalising the
estimates; major revisions since the last version of the GNI Inventory
1.2.1
Revisions are broadly defined as a change or changes in the value of a statistic
released to the public by the NSO. Revisions may be effected for at least eight reasons:
a)
incorporation of source data that is more complete or superior in some other way;
b)
incorporation of source data that bears out concepts more closely;
c)
replacement by source data of judgement values or values derived largely by
statistical techniques;
d)
incorporation of updated seasonal factors;
e)
updating of the base period;
f)
changes in statistical methods;
g)
changes in concepts, definitions, and classifications; and
h)
correction of errors in source data and computations.
1.2.2
“Current revisions” are those that affect the current monthly or quarterly data.
“Annual revisions” are made after the data for all the months or quarters of a year become
available. Less frequent revisions, often of an interval of more than four years, are called
“comprehensive”, “major”, or “benchmark” revisions. Typically, they are occasions for
major changes in statistical methods and changes in concepts, definitions, and classifications.
Often, these revisions are applied to the whole time series. Revisions that correct error have
no predictable time frame.
10
Overview of the system of accounts
1.2.3
a)
In effecting revisions, the NSO endeavours to follow the following practices:
The main users of official statistics are consulted in order to identify their needs and
priorities.
b)
Users are provided with a revision statement in respect of each statistical
compilation or series.
c)
All “current revisions” are maintained on a comparatively stable basis from year to
year.
d)
Any major conceptual or methodological revisions are introduced, in so far as is
reasonably possible, every five years.
e)
Wherever possible and reasonable, revisions are applied to several years of data in
order to provide consistent and usable time series.
f)
Information on revisions is made available to users regularly. For example,
i.
Preliminary (or provisional or estimated) data and revised data are identified as
such.
ii.
Advance notice is always given of major changes in concepts, definitions,
classification and in statistical methods.
iii.
The sources for revised data are profiled when the revised series are released.
iv.
Where a consistent dataset cannot be provided, breaks in series are
documented.
g)
Periodically, the sources, direction and dispersion of revisions in respect of major
statistical aggregates are analysed and made them available to users.
1.2.4
When an error in reporting or processing is detected, the revision is made in a
transparent and timely manner.
1.2.5
At present the Economic Directorate does not have a common revision policy.
National accounts data are published at time t+70 days following the end of reference period.
In practice, national accounts data are considered ‘closed’ for revisions up till 2010 following
the finalisation of the 2010 SUT. Consequently, every quarter, national accounts data are
revised backwards until the latest available SUT. Benchmark revisions are major revisions
11
Gross National Income Inventory
aimed at incorporating major new data sources or methodological changes, or a change in
what is being described. These imply a full backward revision of all time periods up till 1995
in case of national accounts data. Following the implementation of ESA 1995 in 2004, three
benchmark revisions have been made. These were linked to the implementation of NACE
Rev. 2 in 2011 and 2012 and the introduction of ESA 2010 in 2014.
1.2.6
The latest GNI Inventory was updated in 2008. With the introduction of NACE
Rev. 2, new data sources were integrated in national accounts especially for the service
industries. The ESA 2010 GNI Inventory will incorporate these updates.
1.2.7
Revisions due to the transition from ESA 1995 to ESA 2010 are summarised in
Table 1.2.1. GDP was revised upwards in 2012 by approximately 37.4 million Euro.
1.2.8
The most significant revision related to the capitalisation of research and
development (Table 1.2.1, column 1a/b) which resulted in an upward revision of 32.3 million
Euro in 2012.
1.2.9
ESA 1995 set a lower bound of 500 European Currency Unit (ECU) at 1995 prices
for small tools to be recognised as capital expenditure. Purchases of items below this
threshold were classified as intermediate consumption. In ESA 2010 no fixed threshold is
given; the criterion to be recognised as capital expenditure is the use in production for more
than one year. The reclassification of such items from intermediate consumption to capital
expenditure amounted to 7.2 million Euro in 2012 (Table 1.2.1, column 7).
12
Overview of the system of accounts
Table 1.2.1: Impact of changes from ESA 1995 to ESA 2010 on GNI for 2012, in millions of Euro
Millions of Euro
1(a)
1(b)
6
7
21.1
- 1.2
22.3
9.6
- 0.4
10.0
- 2.4
- 0.1
- 2.2
- 7.2
7.2
8
10
PRODUCTION APPROACH
1
2
3
4
5
Output of goods and services (at basic prices)
Intermediate consumption (at purchasers' prices)
Gross value added (at basic prices)
Taxes on products
Subsidies on products
6
7
8
9
10
11
12
13
14
15
EXPENDITURE APPROACH
Total final consumption expenditure
Household final consumption expenditure
NPISH final consumption expenditure
General government final consumption expenditure
Gross capital formation
Gross fixed capital formation
Changes in inventories
Acquisitions less disposals of valuables
Exports of goods and services
Imports of goods and services
16
17
18
19
20
INCOME APPROACH
Compensation of employees
Gross operating surplus and mixed income
Taxes on production and imports
Subsidies
Gross domestic product
Compensation of employees received from the
rest of the world
Compensation of employees paid to the rest of
22 the world
Taxes on production and imports paid to the
23 institutions of the EU
24 Subsidies received from the institutions of the EU
25 Property income received from the rest of the world
26 Property income paid to the rest of the world
27 Gross national income
Source: GNI Quality Report 2014
22.3
22.3
- 7.5
17.5
17.5
- 0.1
0.1
0.1
0.0
0.0
0.0
3.0
7.2
7.2
0.0
22.3
10.0
- 2.2
7.2
0.1
22.3
10.0
- 2.2
7.2
0.1
21
1.2.10
9.3
22.3
10.0
- 2.2
7.2
9.3
0.1
GDP was revised downwards by 2.2 million Euro following the reclassification of
some government, public and private sector entities (Table 1.2.1, column 6). On application
of the new ‘qualitative criteria’, in particular ESA 2010, para. 20.24 ‘output is sold only to
government’, Malta reclassified the government’s information and communication
technology company/authority into the general government sector from 1995 onwards. The
impact of the revised ‘50% criterion’ under the ESA 2010 resulted in the re-classification of
the Malta Freeport Corporation inside the general government sector for the period 1999 (4.1
13
Gross National Income Inventory
per cent) to 2011 (35.8 per cent). The issue of the delimitation of the Malta Freeport
Corporation was discussed at length in the Excessive Deficit Procedure (EDP) Mission held
in Malta on the 20 – 21 May 2014. Following a thorough assessment of the corporation’s
investment property and the lease agreement with the operator, it was discovered that the
quays, wharves and jetties are held by the corporation.
Therefore in addition to the
depreciation recorded by the corporation in its financial statements, the NSO imputed
additional depreciation for the element of the quays, wharves and jetties for a life time of 65
years. Based on the corporation’s draft accounts for 2013, the 50 per cent ratio for 2012 was
revised at 62.1 per cent and for 2013 at 63.5 per cent. Based on these results the NSO
decided to reclassify the Malta Freeport Corporation outside the general government sector
from 2012 onwards.
1.2.11
The new treatment of VAT-based third EU own resource does not impact GDP, but
in the transition from GDP to GNI, the amounts of taxes on production and imports (D.2)
payable to the ROW will decrease. Consequently, GNI increase by the amount of the VAT
based third EU own resource. The revision in 2012 will amount to 9 million Euro (Table
1.2.1, column 8).
1.2.12
ESA 1995 stated that the “Central Bank output should be entirely allocated to the
intermediate consumption of other financial intermediaries (subsectors S.122-S.123). In the
ESA 1995 time series NSO used to allocate that CBM output only to Deposit Money Banks
intermediate consumption.”
ESA 2010 states that “Commissions and fees for directly
measured services invoiced by the central bank both in respect of resident and non-resident
units should be allocated to these units. Only the part of the total central bank output (sum of
costs less commissions and fees) which is not sold has to be, by convention, allocated to the
intermediate consumption of other Financial Institutions – subsectors S.122 (deposit-taking
corporations except the central bank) and S.125 (other financial intermediaries, except
insurance corporations and pension funds) – in proportion to the respective value added of
each of these subsectors.” With this change there was an upward revision in the gross value
added of the Financial and insurance activities equal to 0.095 million Euro (Table 1.2.1,
column 10).
1.2.13
Other transition items which could have an impact on GNI namely; valuation of
output for own final use for market producers (2); non-life insurance - output, claims due to
14
Overview of the system of accounts
catastrophes, and reinsurance (3); weapon systems in government recognised as capital assets
(4); decommissioning costs for large capital assets (5); index-linked debt instruments (9); and
land improvements recognised as a separate asset (11), were not applicable.
1.3
1.3.1
Outline of the production approach
In the production approach, the performance of a national economy is measured
from the output side. In Malta, the production approach is considered to be the main
estimation method for compiling GDP; as the estimation of production is supported by the
most reliable sources.
Reference framework and main data sources
1.3.2
The production approach to GDP estimate is recorded in the production account,
which shows the transactions relating to the production process both for institutional sectors
and industries. Its principal items are output in resources and intermediate consumption in
uses. The balancing item of this account is value added (gross). Gross value added is
economically significant for both the institutional sectors and the industries; it represents
value generated by any unit engaged in a production activity. The production account at the
level of the total economy includes in resources, in addition to the output of goods and
services, taxes less subsidies on products, which are not allocated to institutional sectors or
industries. The addition of taxes less subsidies on products enables the calculation of GDP in
market prices as a principal macroeconomic aggregate.
15
Gross National Income Inventory
Table 1.3.1: Main aggregates of the production approach, 2010, in millions of Euro
Main aggregates
Millions of
Euro
Sum of all industries’ total output of goods and services (at basic prices) (Sections
add
3.7-3.26)
Sum of all industries’ total intermediate consumption (at purchasers’ prices)
less
(Sections 3.7-3.26)
Total gross value added (at basic prices)
17,598.9
11,808.1
residual
5,790.8
Taxes on products (Section 3.28)
add
827.7
Subsidies on products (Section 3.29)
less
18.9
residual
6,599.5
GDP (at market prices)
1.3.3
ESA 2010 identifies three types of statistical units; institutional units; local kind-of-
activity units (KAU); and homogeneous units. An institutional unit is an economic entity
characterised by decision-making autonomy and either keeps a complete set of accounts or is
able to compile a complete set of accounts.
In Malta business accounts are generally
available for entire enterprises, the enterprise being the smallest legally independent
institutional unit. The KAU concept is used in exceptional cases only for large enterprises
which are able to provide the basic data sources necessary for the compilation of production,
intermediate consumption, and compensation of employees, operating surplus, employment
and gross fixed capital formation (GFCF).
In such cases legal units are split across
industries.
1.3.4
The BR is primarily used as a tool for conducting surveys, or as a source of statistics
in its own right. The BR incorporates lists of enterprises, other organisations or units whose
activities contribute to the GDP. There is no entry threshold (size of activity, revenue or
number of employees). The BR relies heavily on various administrative sources to identify
the population of active enterprises for a given year. The main source for limited liability
companies is the registry of companies which is regulated by the MFSA, while sole traders'
main source is administrative records.
1.3.5
The Public Finance Unit identifies non-market producers. The main criterion for
sector delimitation is the quantitative test of the 50% rule (i.e. total sales (market output)
cover less than 50 per cent of costs which costs consist of: compensation of employees,
intermediate consumption, consumption of fixed capital, taxes on production. Apart from the
16
Overview of the system of accounts
50% rule, NSO’s decision is based also on the level of government’s input in the entity’s
decision-making, the concept of the economically significant prices and if output is sold only
to government. Maintaining the list of EBUs is the responsibility of the Public Finance Unit.
For consistency in coverage of sectors in the total economy, this list, together with relevant
information, is provided to the Business Registers Unit by the Public Finance Unit.
1.3.6
The most important data sources for the production approach are listed below.
Administrative sources
Surveys
Fiscal data
Structural Business Statistics (SBS)
Employment and Training Corporation (ETC) employment database
Accomstat and Tourstat
Intrastat/Extrastat
Census of Aquaculture
Monetary and banking statistics
Census of Agriculture
Audited financial accounts
Census of Fisheries
Annual accounts and financial statements
English Language Schools (ELS)
Departmental Accounting System (DAS)
Short-Term Statistics (STS)
Transition from basic data sources to national accounts concepts and exhaustiveness
1.3.7
Most of the enterprise data used in the production approach are obtained from
statistical surveys specifically designed for this purpose, or administrative records which
generally do not meet the ESA 2010 requirements. Consequently, conceptual adjustments are
made to bring basic data in line with ESA 2010 definitions. These conceptual adjustments
are listed below:
a)
research and development, software, entertainment, literary and artistic originals and
other intellectual property products misreported as intermediate consumption in
GFCF;
b)
to exclude durable goods of small value from GFCF;
c)
to distinguish between minor repairs by owner occupiers of a kind typically carried
out by owners (to be treated as intermediate consumption) and of a kind typically
carried out by tenants (to be treated as household final consumption expenditure);
d)
to allocate financial intermediation services indirectly measured (FISIM) and
insurance output to users;
e)
to exclude holding gains accounted for in changes of inventories;
f)
to exclude the value of rent on land from intermediate consumption;
17
Gross National Income Inventory
g)
to include net taxes on production to ensure that the output and gross value added
(GVA) are at basic prices; and
h)
to deduct cost price of trade goods to ensure that output is expressed in terms of
margins.
1.3.8
Value of production activities that are not directly observed are, in principle,
included within the national accounts production boundary. Exhaustiveness adjustments
amount to 3.7 per cent of total GVA at basic prices in the production approach. The
production approach includes adjustments for:
N1 - Producer deliberately not registering - underground; in relation to furniture
production (Section C - Manufacturing) and domestic help (Section T - Activities of
households as employers);
N2 - Producers deliberately not registering - illegal; are reported for illegal gambling,
prostitution and narcotics in Gambling and betting activities (NACE 92, Section R);
Other personal service activities (NACE 96, Section S) and Wholesale trade, except
of motor vehicles and motorcycles (NACE 46, Section G) respectively.
N3 - Producers not required to register relate to the production of construction of and
repairs to dwellings by non-market household producers involved in Construction
(Section F);
N5 - Registered entrepreneurs not surveyed - relate to Real estate activities (Section
L), Holiday and other short-stay accommodation (NACE 55.2, Section I) and Other
accommodation (NACE 55.9, Section I), Human health activities (NACE 86, Section
Q) and Other personal service activities (NACE 96, Section S) for which expenditure
based surveys are used;
N6 - Producers deliberately misreporting are reported for furniture production
(Section C), Wholesale and retail activities (Section G), Food and beverage service
activities (Section I), Real estate activities (Section L), Veterinary services (Section
M) and private tuition (Section P). In the case of Section I, the difference between
18
Overview of the system of accounts
the results obtained from the SBS and expenditure based statistics derived from the
HBS, the Tourism Expenditure Survey and the Tourstat survey is reported; and
N7 - Other statistical deficiencies includes adjustments for tips in Accommodation
and food service activities (Section I).
1.4
Outline of the income approach
1.4.1
The income approach provides estimates of GDP and its ‘income’ component parts
at current market prices. This approach does not provide an independent estimate of GDP,
since operating surplus is derived as a residual.
Reference framework and main data sources
1.4.2
GDP according to the income approach is the calculation of gross value added from
the summation of all income earned by resident individuals or corporations from the
production of goods and services in a given time period. These income components are
presented by in Table 1.4.1 below and are subdivided into; compensation of employees (D.1),
taxes on production and imports (D.2) less subsidies on production and imports (D.3) and
gross operating surplus (B.1g). Gross operating surplus in turn is broken down into net
operating surplus (B.1n) and consumption of fixed capital (K.1).
Table 1.4.1: Gross domestic product, income approach components, 2010, in millions of Euro
Main aggregates
Millions of Euro
Compensation of employees (Section 4.7)
add
2,845.3
Gross operating surplus (Section 4.10)
add
2,552.4
Mixed income (Section 4.11)
add
409.1
Taxes on production and imports (Section 4.8)
add
865.4
Subsidies (Section 4.9)
less
72.6
Gross domestic product (at market prices)
6,599.5
1.4.3
The target is to measure the addition to current economic activity as defined by
GVA.
Therefore, unrequited payments to households such as unemployment benefits,
19
Gross National Income Inventory
children’s allowances, or government pensions are not included. Although such transfer
payments provide residents with money to spend, the source of such income is not the
production of goods and services, but, for example, taxes and national insurance
contributions, transfer payments redistribute existing incomes and do not represent any
addition to current economic activity.
Transition from basic data to national accounts concepts and exhaustiveness
1.4.4
Surveys and administrative sources are based on business accounting, which
concepts may differ from those presented in ESA 2010. Most of the conceptual adjustments
impact the compilation of output and intermediate consumption and as a direct result the
calculation of operating surplus. These conceptual adjustments have been elaborated in
Section 1.3.
1.4.5
Exhaustiveness adjustments amounted to 0.6 per cent of GDP in 2010. These relate
specifically to N5 - Registered entrepreneurs may not be included in the statistics for many
reasons, and to N7 - Other statistical deficiencies related to wages in kind and tips.
1.5
1.5.1
Outline of the expenditure approach
The expenditure approach measures total expenditure on final goods and services
produced in the domestic territory, or, alternatively, the sum of final uses of goods and
services by resident institutional units plus exports less imports of goods and services.
1.5.2
The total is obtained from the sum of final consumption expenditure of households,
NPISHs and government on goods and services; GCF (capital expenditure on fixed and
intangible assets, changes in inventories and acquisitions less disposals of valuables); and net
exports of goods and services.
20
Overview of the system of accounts
Table 1.5.1: Gross domestic product, expenditure approach components, 2010, in millions of Euro
Main components
Million Euro
Household final consumption expenditure (Section 5.7)
add
5,101.3
NPISH final consumption expenditure (Section 5.8)
add
97.011
Government final consumption expenditure (Section 5.9)
add
1,286.441
Gross fixed capital formation (Section 5.10)
add
1,411.637
Changes in inventories (Section 5.11)
add
164.511
Acquisitions less disposals of valuables (Section 5.12)
add
-17.917
Exports of goods and services (Section 5.13-5.14)
add
1,011.4105
Imports of goods and services (Section 5.15-5.16)
less
1,0174.165
Total GDP by expenditure approach
6,599.507
Reference framework and main data sources
1.5.3
Household final consumption expenditure (HFCE) consists of expenditure incurred
on goods or services that are used for the direct satisfaction of individual needs or wants.
HFCE is first derived using the ‘domestic concept’.
In order to arrive to the HFCE,
expenditure of resident households abroad has to be added while expenditure of non-resident
households in Malta has to be deducted. This adjustment results in HFCE for residents.
HFCE is based mainly on extrapolations and models as it is derived mainly from the HBS,
the latest available being that of 2008 and imports of consumer goods using the commodity
flow approach.
1.5.4
Final consumption expenditure of NPISHs includes two separate categories; the
value of the goods and services produced by NPISHs other than own-account capital formation and other than expenditure made by households and other units; and expenditures by
NPISHs on goods or services produced by market producers that are supplied — without any
transformation — to households for their consumption as social transfers in kind. Final
consumption expenditure of NPISHs covers institutions such as charities, non-governmental
organisations, trade unions and political parties.
Data are extracted mainly from
administrative sources and by use of extrapolations and models given that a number of
sources are not available on annual basis.
21
Gross National Income Inventory
1.5.5
Final consumption expenditure (P.3) by government includes two categories of
expenditures; the value of the goods and services produced by general government itself (P.1)
other than own-account capital formation (corresponding to P.12), market output (P.11) and
payments for non-market output (P.131); and purchases by general government of goods and
services produced by market producers that are supplied to households, without any transformation, as social transfers in kind (D.632). General government pays for these goods and
services that the sellers provide to households.
Central government final consumption
expenditure is obtained from the DAS while EBUs and local councils are covered through
audited accounts and quarterly management accounts. Data are measured on an accruals
basis.
1.5.6
Gross fixed capital formation (P.51) consists of resident producers’ acquisitions, less
disposals, of fixed assets during a given period plus certain additions to the value of nonproduced assets realised by the productive activity of producer or institutional units. Fixed
assets are produced assets used in production for more than one year. GFCF can be broadly
broken down into dwellings; other buildings and structures; this includes major
improvements to land; machinery and equipment, weapons systems; cultivated biological
resources and intellectual property products.
1.5.7
The main data sources for other buildings and structures and machinery and
equipment are the SBS, annual reports and financial statements obtained from MFSA and
government statistics. The product breakdown for machinery and equipment is mainly based
on import data. The Census of Population and Housing provides data on the dwelling stock
in benchmark years. Thereafter, dwellings are based on the number of building permits
issued by the Malta Environment and Planning Authority (MEPA).
An architect is
subcontracted every two years or so to provide the construction costs for apartments and
houses in order to calculate dwellings. Repairs and maintenance of dwellings are based on
HBS, while a large component of costs of ownership transfers in case of dwellings is based
on administrative data sources.
Intellectual property products include mainly computer
software and research and development (R&D). These are derived using the commodity flow
approach which relies heavily on supply-side sources and the Frascati surveys in case of
R&D.
22
Overview of the system of accounts
1.5.8
The main sources used for the annual calculation of changes in inventories are the
SBS and annual reports and financial statements.
Inventories are split in the four
recommended categories in ESA 2010: materials and supplies, work-in-progress, finished
goods and goods for resale. However this breakdown is not explicitly shown in the national
accounts publications.
1.5.9
Acquisitions less disposals of valuables are non-financial goods that are not used
primarily for production or consumption, do not deteriorate physically over time under
normal conditions and are acquired and held primarily as stores of value. They are derived
using the commodity flow method and relies on supply based sources such as domestic
production, imports, exports margins for dealers and HFCE.
1.5.10
Exports and imports of goods and services consist of transactions between residents
to non-residents. Data are derived from BOP statistics. Goods are derived from International
trade statistics and adjusted by the Balance of Payments Unit in order to meet the
requirements of the Balance of Payments and International Investment Position Manual sixth
edition.
Transition from basic data sources to national accounts concepts and exhaustiveness
1.5.11
Conceptual adjustments reported in the expenditure measure relate mainly to the
allocation of FISIM in total final consumption expenditure, exports and imports, the
insurance service charge which is a national accounts concept and is not directly observed in
surveys, censuses or administrative sources, and other conceptual adjustments relating to the
transition between International trade statistics and BOP and national accounts concepts.
1.5.12
Other adjustments made to HFCE and which are not included as part of conceptual
adjustments include rents for owner occupied dwellings which are included under
Extrapolations and Models given that Malta uses the user cost method and not the
stratification method.
1.5.13
As with all the three approaches to measuring GDP, the National Accounts Unit
makes significant efforts to ensure exhaustiveness in the expenditure approach.
In the
expenditure approach, exhaustiveness adjustments had an impact of 2.4 per cent of GDP.
23
Gross National Income Inventory
Exhaustiveness adjustments are most prominent in HFCE. Included under N2, which covers
activities of producers that avoid registration entirely, are illegal activities such as narcotics
and prostitution. Exhaustiveness adjustments included under N7a, which refers to data that is
incomplete, not collected or not directly collectable, mainly relates to output for own final use
by market producers. Data under category N7b, which refers to data that is incorrectly
handled, processed or compiled by statisticians, includes estimates for wages in kind,
undeclared expenditure abroad and tips. For GFCF, only exhaustiveness adjustments for
individual housing construction, including reconstructions (N3), have been made. To ensure
exhaustiveness in this field exports and imports for narcotics and undeclared expenditure
abroad are included in imports.
1.6
The balancing or integration procedure, and main approaches to
validation
1.6.1
The methods of validating GDP in Malta can be grouped into three main processes
including: Macro-economic GDP balancing, supply and use table balancing and quality
checks during GDP compilation.
Macro-economic GDP balancing
1.6.2
Macro-economic GDP balancing refers to the reconciliation of the production
approach and the expenditure approach to derive a harmonised GDP figure for a given
reference period. Since the income approach is derived in part as a residual, it is not part of
the balancing process. The process involves the analysis of each time series – output,
intermediate consumption, net taxes on products, final consumption, GCF and net exports.
After each series is checked, the GDP on both approaches is iteratively corrected until an
acceptable discrepancy between the two is reached. In general, predominance is given to the
output approach, which is considered to be the more reliable approach between the two. The
final discrepancy prevailing at this stage in the balancing procedure is allocated to changes in
inventories recorded on the expenditure side. Changes in inventories are available on an
annual basis with a time lag of 36 months. Thus, initially a distinction between changes in
inventories and statistical discrepancy is not available.
During the macro-economic
balancing procedure, the discrepancy is allocated to changes in inventories which are
24
Overview of the system of accounts
considered as one of the least firmly based items. At time t+36 months the statistical
discrepancy is subsequently analysed at detailed product level within the SUT system.
Supply and use table balancing
1.6.3
SUT are available for Malta for the reference years 2004, 2008 and 2010 and are
entirely consistent with the requirements for current prices outlined in the ESA of 1995 and
2010. In Malta SUT are not integrated into the annual compilation process. SUT are
compiled with a time lag greater than the time t+36 months required by Eurostat by
derogation to allow for the lack of resources required to carry out the extensive work related
to the compilation of these tables.
1.6.4
Depending within which time frame the SUT are being compiled corrections are
carried out either in benchmark revisions or at the time of compilation of the SUT. As long
as the SUT are compiled within the cut-off date whereby a reference year is considered as
closed for revision purposes, there are no limits to what can be revised during balancing.
Any errors uncovered during the SUT process are corrected in any variable entering the
calculations of the production or expenditure approach. It is only when the SUT process
extends beyond the time frame following which a reference year can be revised, that the
target values for each GDP component are considered as fixed and any errors are allocated to
changes in inventories until a benchmark revision is implemented whereby such errors are
corrected.
1.6.5
The balancing procedure involves manual balancing of major imbalances, quality
checks, final automatic balancing of acceptable discrepancies and documentation.
1.6.6
Most of the balancing process is done manually. Major imbalances are analysed
first and after these are resolved to an acceptable extent, each and every product is analysed
consecutively. Initially, problems relating to classification are corrected, following which a
number of errors are generally revealed. Conceptual errors, under or over coverage at source
emerge when confronting the various data sources.
1.6.7
Quality checks are performed after the first and successive rounds of manual
balancing. The resulting SUT are compared to previous SUT for substantial changes in
25
Gross National Income Inventory
growth rates by product and also to product composition of both supply and uses. Ratio
analysis of the trade and transport margins, and the breakdown between use of domestic
output and import matrices are also carried out. Each major change is investigated and
corrected if necessary, or verified and documented. This process tends to uncover a number
of errors, especially in the allocation of unclassified or grey areas.
It is ensured that
allocation of data for which not enough information is available is at least consistent across
years until further complete information is available.
1.6.8
The final automatic balancing process takes place only when the final imbalances
that are to be allocated automatically are very small.
The final automatic balancing
procedure takes place in Excel and the process has been automated using Excel macros. The
first imbalances to be eliminated are imbalances in the import matrix.
Final product
imbalances in the rows are allocated to the largest user of that product, whereas final column
imbalances are subdivided equally amongst selected rows.
1.6.9
The final part of the SUT process involves drawing up a document with the major
errors uncovered, summary of discussion between experts and solutions proposed,
implemented or shelved for the next benchmark revision.
Quality checks during GDP compilation
1.6.10
The third part to the balancing process is a series of quality checks during GDP
compilation on an annual and quarterly basis. Annual sources such as SBS and results of
other censuses and surveys are all analyzed and wherever possible cross-checked between
administrative sources. Erratic movements in the respective time series or ratio analytics are
referred back to the source. For the computation of GDP on a quarterly basis almost all the
other units within NSO feed data into the national accounts. The details requested from each
unit are generally more detailed than what is actually published. This data are typically
checked by comparing it with the figures of the same quarter of the previous years and
comparing growth rates thus establishing trends so as to verify if there are any anomalies.
Data are also compared with the published news releases of the other units. Where possible
data at company level is requested from the different units in order to be able to cross-check
figures, so as to ensure consistency within NSO.
26
Overview of the system of accounts
1.7
1.7.1
Overview of the allowances for exhaustiveness
In Malta the estimation of the non-observed economy was attempted the first time in
the second EU Pilot Project in 2002/03 for reference year 2000.
The results of this
exhaustiveness exercise were fully included in the ESA 1995 and later in the ESA 2010 time
series for the years 1995 to date in the production, income and expenditure approaches.
1.7.2
This study of the non-observed economy focused on the basic data sources used in
the compilation of national accounts. Various databases were compared, including the BR,
the SBS which at the time was census based rather than sample based, and the ETC
employers’ database. Results of various NSO surveys like SBS were cross-checked with
unpublished official reports compiled by the Tax Compliance Unit which provided an insight
on the sales and profits by type of activity. ‘The Salaries and Benefits Report’, a study
carried out by a private firm, was identified as a source for wages in kind for the private
sector. This was supplemented by survey on fringe benefits for the general government
sector and public entities where the government is a major shareholder in order to achieve
exhaustiveness. During the first study it was established that national accounts was already
inclusive of a number of adjustments in professions traditionally regarded as potentially
understated, e.g. agriculture, doctors, dentists, lawyers, taxis, teachers, and holiday flats.
Moreover, official labour figures were already in use in order to ensure exhaustiveness in
activities not directly covered by NSO surveys or administrative sources.
1.7.3
With the introduction of NACE Rev. 2 in 2011, the SBS survey was fully integrated
in national accounts. Consequently, a number of service activities which were previously
covered by ad-hoc sources and lacked exhaustiveness are now based on a structured sampling
technique which ensures full coverage of all legal units and entrepreneurs listed in the BR.
Other new data sources include the Labour Cost Survey (LCS) which is now being used to
derive wages in kind.
1.7.4
Survey results provided by other units like SBS are nowadays cross-checked with
fiscal data which is available at company level.
This information is used to verify
adjustments made for non-response, confirm that the sample was properly weighted at NACE
division level especially with the use of fiscal data for non-financial companies. Fiscal data
27
Gross National Income Inventory
are also being used to supplement size class and turnover quartiles which in the opinion of
national accountants are under-represented in SBS. Generally any adjustments made are
minor and are included as data validation of source data rather than exhaustiveness
adjustments.
1.7.5
The labour input method is used extensively in activities which are not covered by
NSO surveys or administrative sources. Imputations in the production and generation of
income accounts are based on per capita ratios derived for output, intermediate consumption,
consumption of fixed capital and compensation of employees based on available information
in each activity.
These ratios are then multiplied by the full-time equivalent gainfully
occupied or full-time equivalent employees in case of compensation of employees derived
from the ETC employers’ database and to ensure exhaustiveness for the whole activity. This
type of adjustment is particularly relevant for Sections P to S; however, it is generally
reported as part of extrapolations and models rather than exhaustiveness.
1.7.6
The methods used to address exhaustiveness include:
a)
demand-based methods;
b)
other reconciliation methods involve data confrontation and reconciliation that are at
the core of national accounts compilation;
c)
expert judgement;
d)
supplementary, special purpose surveys conducted by the NSO are another tool for
assessing the exhaustiveness of the national accounts; and
e)
1.7.7
supply-based methods.
Exhaustiveness adjustments are integrated in national accounts from time to time
due to exigencies which arise in particular years.
This occurred in 2009 when a new
adjustment was necessary to cover importation of second hand cars through dealers. As from
2013, SBS data will no longer cover entrepreneurs with a turnover less than 7,000 Euro.
Consequently, an exhaustiveness adjustment will be introduced across all NACE divisions to
cover these registered entrepreneurs which are no longer surveyed.
During 2015 an
investigation was carried out with respect to the financial sector. The outcome of this
investigation will be integrated in the next benchmark revision.
28
Overview of the system of accounts
1.7.8
In the production approach the exhaustiveness adjustment amounts to 3.2 per cent of
GDP and is most prominent for registered entrepreneurs not surveyed (N5) and producers
deliberately misreporting (N6). In the expenditure approach the exhaustiveness adjustment
amounts to 2.4 per cent of GDP and is most prominent in case of data that is incomplete, not
collected or not directly collectable, and data that is incorrectly handled, processed or
compiled by statisticians (N7). The income approach is indirectly measured and thus any
adjustments made especially in the production approach will affect the gross operating
surplus. Specific exhaustiveness adjustments made in the income approach amount to 0.6 per
cent and relate to registered entrepreneurs not surveyed (N5) in case of data that is
incomplete, not collected or not directly collectable, and data that is incorrectly handled,
processed or compiled by statisticians (N7).
1.8
1.8.1
The transition from GDP to GNI
GNI is calculated by adding net compensation to employees and net property income
from the ROW and deducting net taxes on production and imports paid to the ROW.
29
Gross National Income Inventory
Table 1.8.1: Transition from GDP to GNI transition for Malta, 2010, in millions of Euro
Million Euro
GDP at market prices
6,599.506
Compensation of employees received from the rest of the world (+)
27.187
Compensation of employees paid to the rest of the world (-)
30.364
Net compensation of employees
-3.177
Taxes on production and imports paid to the institutions of the EU (-)
13.151
Subsidies received from the institutions of the EU (+)
20.284
Property income received from the rest of the world (+)
6,571.062
Interest
2,631.013
Dividends
3,941.271
Reinvested earnings
Other investment
-1.230
7
Property income paid to the rest of the world (-)
6,853.211
Interest
1,940.390
Dividends
5,416.703
Reinvested earnings
-510.917
Other investment
7.035
Net property income received from the rest of the world
-282.149
GNI at market prices
6,321.314
1.8.2
The BOP is the main source for items of relevance for GDP to GNI transition
variables. The basic data sources used by the BOP to compile the components required for
the transition from GDP to GNI calculations consist of an enterprise survey and the Partial
Settlements System. Other sources used include data from the Ministry of Finance, Ministry
for sustainable development, the environment and climate change, which provides data on
taxes paid to and subsidies on production received from the EU. Data collected by the tax
authorities are other sources used to calculate compensation paid to (received from) nonresidents (D.1) or dividends received by households from the ROW.
30
Overview of the system of accounts
1.8.3
The Balance of Payments Unit carries out monthly, quarterly and annual direct
reporting (DR) enterprise surveys. All questionnaires pertaining to surveys carried out by the
Balance of Payments Unit are based on the stock-flow-income model. The stock-flowincome model requests detailed information on changes in the international investment
position of enterprises by financial instrument. This model ensures that information collected
on income flows adhere to the concepts described in the International Monetary Fund (IMF)
Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6)
and ESA 2010.
1.8.4
The Partial Settlements System (PSS) captures cash-based transactions between
residents and non-residents that pass through the local banking system. This information is
collected by the CBM from banking institutions. The Balance of Payments Unit has access to
data collected via the PSS on receipts from and payments to the ROW classified by the nonfinancial and financial corporations, NPISHs, households and the general government
sectors.
1.8.5
Compensation of employees (D.1) is defined in BPM6 as the remuneration payable
to an employee in return for work done by the latter during the accounting period (BPM6,
para. 11.10).
Compensation of employees received from abroad is obtained from tax
authorities while outgoing flows are covered by an enterprise survey. The survey contains a
question which specifies that any compensation of employees paid should include payments
paid by employers on behalf of employees to social security schemes or private insurance or
pension funds as well as compensation paid in kind. Furthermore, it is clearly specified that
employees should include seasonal or other short-term workers.
1.8.6
The taxes on production and imports paid to the institutions of the EU include the
following taxes collected by national governments on behalf of the institutions of the EU:
levies on imported agriculture products, monetary compensatory amounts levied on exports
and imports, sugar production levies and the tax on isoglucose, co-responsibility taxes on
milk and cereals; receipts from trade with third countries: customs duties levied on the bases
of the Integrated Tariff of the EU (TARIC). Data on taxes on production and imports paid to
the Institutions of the EU is obtained from the Ministry of Finance on a monthly basis. This
data are subsequently checked with the DAS, and incorporated into the general government
accounts and in BOP statistics.
31
Gross National Income Inventory
1.8.7
Subsidies granted by the Institutions of the EU cover only current transfers made
directly by them to resident producer units (ESA 2010, para. 4.31). The subsidies that
resident producers are eligible for, under the European Agricultural Guidance and Guarantee
Fund (EAGGF). These monthly payments are being made to resident producers via the
‘Malta Paying and Receiving Agency’ at the Ministry for sustainable development, the
environment and climate change.
1.8.8
Interest income flows are defined in ESA 2010 as amounts that debtors become
liable to pay to creditors over a given period of time without reducing the amount of principal
outstanding and are recorded on an accrual basis. This form of property income is receivable
by the owners of deposits (AF.2), securities other than shares (AF.3), loans (AF.4) and other
accounts receivable (AF.8). Sources include the enterprise survey, the PSS, Profit and Loss
Statements of all the banks operating from Malta and collective investment schemes, the
Treasury Department, the Malta Stock Exchange, and ad-hoc survey to the Finance
Department of the CBM.
1.8.9
Distributed income of corporations (D.42) may be in the form of dividends (D.421)
or withdrawals from the income of quasi-corporations (D.422). ESA 2010 defines dividends
as income earned by owners of shares (AF.5). Dividends are recorded at the time they are
due to be paid as determined by the corporation. The same sources mentioned above are
used. In order to identify dividends related to foreign direct investment (FDI), the annual
enterprise survey requires companies to specify whether ten per cent of their equity belongs
to foreign shareholders or whether they have more than ten per cent shareholding in a nonresident company.
1.8.10
Withdrawals from the income of quasi-corporations includes net operating surplus
earned by non-resident owners of land and buildings in the domestic economy. Similarly, the
net operating surplus earned by resident owners of dwellings situated outside the domestic
economy should be considered as an inflow. Following the work done by the National
Accounts Unit in 2015, this item will be included in the next benchmark revision.
1.8.11
Reinvested earnings on direct foreign investment (D.43) are equal to the operating
surplus of the direct foreign investment enterprises, plus any property incomes or current
transfers receivable, minus any property incomes or current transfers payable, including
32
Overview of the system of accounts
actual remittances to foreign direct investors and any current taxes payable on the income,
wealth, etc., of the direct foreign investment enterprise (ESA 2010, para. 4.64). D.43 should
be recorded when earned, and the concept of operating surplus should be in line with the
current operating performance concept (COPC). This income flow is being calculated by the
BOP as the difference between total net profits valued using the COPC and dividends
declared for a given year (gross of tax) collected from the newly designed stock-flow-income
questionnaires.
1.8.12
Other investment includes property income attributed to insurance policy (D.441),
Investment income attributable on pension entitlements and Investment income attributable to
collective investment fund shareholders (D.443).
1.8.13
In the context of GDP to GNI transition calculations, D.441 refers to the primary
income received from (paid to) the ROW from the investment of insurance technical reserves.
Direct information from foreign insurance companies is not available; however, the BOP
Unit is able to provide the imported premiums and service charge through data collected from
insurance agents which represent foreign principals. On the other hand insurance principals
provide export data to the Balance of Payments Unit with respect to resident insurance
principals. An estimate has been derived using information on the property income attributed
to policy holders, and the service charge generated by resident principal insurers.
1.8.14
Investment income attributable to collective investment fund shareholders is covered
by an aggregated Profit and Loss Statement for domestic funds provided by the CBM from
where the net income/(expenditure) is obtained. Net income is distributed by sector based on
the number of shares owned by each sector including those attributable to the ROW and is
compiled by the National Accounts Unit. A Task Force comprising officials from the CBM
and the NSO was set-up in 2015 to derive estimates for ‘Interest and dividend obtained from
foreign mutual funds’. The work has been finalised and will be integrated in national
accounts and BOP statistics in the next benchmark revision. The estimate is based on
information submitted by the credit institutions that hold a license as investment services
providers (ISPs) and non-bank financial institutions that hold a license as an ISP. Other
sources of income investigated included data relating to a recent ‘Registration Scheme’
launched in 2014.
33
Gross National Income Inventory
1.9
Main classifications used
1.9.1
All the classifications used throughout the inventory are covered in Chapter 9.
1.9.2
The production approach is generally associated with the “statistical classification of
economic activities in the European Community” (NACE) and the Classification of Products
by Activity (CPA). Both are the subject of legislation at the EU level, which imposes the use
of the classification uniformly within all the Member States. National accounts data are
generally available at NACE division level A*88, however, a number of activities are
compiled at 3- or 4-digit NACE depending on the data sources available or the quarterly
indicators available for extrapolation purposes (refer to Table 9.1.1). At a national level the
CPA is used primarily in the compilation of SUT and is slightly more detailed than 2-digit
CPA (88 divisions) (refer to Table 9.1.2).
1.9.3
For the income approach, the ESA 2010, distributive transactions (D), the
classification of balancing items and net worth (B) and the classification of institutional
sectors (S) are generally used.
1.9.4
The considerable number of different classifications used for the expenditure
approach. Apart from the ESA 2010, classification of transactions in products (P), specific
codes are used for each individual component as listed in Table 1.9.1.
Table 1.9.1: Main components of the expenditure approach
ESA
Code
Description
ESA
Code
Components
P.3
Final consumption expenditure
P.3
Household final consumption expenditure
Coicop
P.3
Final consumption expenditure of NPISHs
COPNI
P.3
Final consumption expenditure by general government
COFOG
P.51g
Gross fixed capital formation
P.52
Changes in inventories
P.53
Acquisitions less disposals of valuables
P.61
Exports of goods
CPA/HS/BEC Code
P.62
Exports of services
BPM6
P.71
Imports of goods
CPA/HS/BEC Code
P.72
Imports of services
BPM6
P.5
P.6
P.7
34
Gross capital formation
Exports of goods and services
Imports of goods and services
Other Codes
Classification of
assets/CPA
Overview of the system of accounts
1.9.5
Classification of Individual Consumption according to Purpose (Coicop) is a
reference classification published by the United Nations statistics division (UNSD) that
divides the purpose of individual consumption expenditures incurred by three institutional
sectors, namely households, non-profit institutions serving households (NPISHs) and general
government.
1.9.6
GCF is classified according to ESA 2010 classification of non-financial assets and is
also available in CPA.
1.9.7
Imports and exports of goods are collected according to the Harmonised System
which is an international nomenclature for the classification of products (HS Code). At the
international level, the Harmonised System (HS) for classifying goods is a 6-digit code
system. Correspondence tables are used to classify trade in goods from HS Code to CPA in
the expenditure approach. The International Trade and Transport Statistics Unit also assigns
the Broad Economic Categories Code (BEC Code). The purpose of the classification is to
analyse international trade statistics by large economic classes of commodities, distinguishing
food, industrial supplies, capital equipment, consumer durables and consumer non-durables
in order to supplement the summary data already compiled on the basis of the sections of the
standard international trade classification (SITC). The sub-categories reflect the various enduses of commodities. This classification is used mainly for the identification of GFCF and to
build the initial import matrix during SUT compilation.
1.9.8
Imports and exports of services are provided by the Balance of Payments Unit
according to the sub-headings of the IMF's Balance of Payments and International Investment
Position Manual, Sixth Edition (BPM6). Adjustments to trade in goods are shown in Section
1.A.a Goods, while services are listed in Section 1.A.b Services.
1.9.9
The GDP to GNI transition items are classified according to the classification of
distributive transactions (D) in the ESA 2010 and the according to the sub-headings of the
primary account of the BPM6.
35
Gross National Income Inventory
1.10 Main data sources used
1.10.1
Chapter 10 serves as a guide to the main data sources used as the basis for the
Maltese National Accounts. Details are provided on the population, sample size, response
rates, methodology, variables covered, imputation methods and links to other European
surveys. It is important to point out that the same data sources are generally used in the three
approaches to GDP even though the chapter tries to distinguish between sources which are
mainly used for the output, expenditure and income approaches.
1.10.2
The main data sources used for the production approach include;
Surveys
a) The Business Register (BR) is used as a common sample frame for all enterprise
surveys and is essential in estimating GDP using the production approach;
b) The Structural Business Statistics (SBS) survey is the most important data source for
the all three approaches. The variables covered include output and intermediate
consumption for the production approach, compensation of employees for the
income approach and GFCF and changes in inventories for the expenditure
approach;
c) The Short-Term Statistics (STS) surveys which are used to derive indices used in the
extrapolation of non-benchmark years and other information such as employment,
wages and salaries, local and export sales, and investment covering NACE Rev. 2
Section B to N, excluding Section K;
d) The Accomstat and the Tourstat are two different surveys used in the production
approach in the compilation of Accommodation and Food Service Activities and in
the expenditure approach in the compilation of tourist final consumption
expenditure. Accomstat is an ongoing survey launched in 2001 aimed at collecting
information from collective accommodation establishments. In 2001, the NSO also
launched the Tourstat which is another ongoing sample survey, aimed at collecting
information from departing passengers;
e) The censuses of aquaculture, agriculture and fisheries, a survey of English language
schools and the harmonised index of consumer prices (HICP);
36
Overview of the system of accounts
Administrative
f)
Data for the central government sector is derived from the Departmental Accounting
System (DAS) to which NSO has access. Extra-budgetary units (EBUs) are covered
the Financial Data Reporting System (FDRS) and local councils by annual reports
and financial statements;
g) Annual reports and financial statements which are downloadable from the website of
the Malta Financial Services Authority (MFSA);
h) Fiscal data;
i)
The Employment and Training Corporation (ETC) provides data on full-time and
part-time employees and self-employed persons by gender on a quarterly basis. The
database is by employer and is exhaustive of all persons employed in Malta;
j)
Monthly trade in terms of arrivals and dispatches (Intrastat) of goods as well as the
monthly trade in terms of imports and exports (Extrastat) is mainly provided by
traders through Intrastat (Intra-EU) and customs (extra-EU) declarations; and
k) Monetary and banking statistics are supplied by the Central Bank of Malta (CBM).
1.10.3
The only survey identified in the income approach was the Labour Cost Survey
(LCS) which is an important source to identify wages in kind paid to all categories of
employees.
1.10.4
The main data sources used for the expenditure approach include:
a) The Household Budgetary Survey (HBS) is a survey conducted among the private
households to gauge changing expenditure patterns by residential households. The
main aim of the survey is to illustrate patterns in household expenditure and how
these are distributed among different goods and services; and
b) The Census of Population and Housing (CPH) is an important data source for Real
estate activities (NACE 68), particularly imputed rents which results are used for
both the production and expenditure approach.
1.10.5
The balance of payments (BOP) statement is to derive the GDP to GNI transition.
37
Gross National Income Inventory
38
CHAPTER 2
The revisions policy and the timetable for revising and finalising
the estimates; major revisions since the last version of the GNI
Inventory
2.1
The revisions policy and the timetable for revising and finalising the
estimates
2.1.1
Revisions to statistical information are an essential bridge between the timeliness
and accuracy of data. A statistical system that does not encompass revisions would soon
become irrelevant, as it would not be responsive to the availability of updated data, improved
methodologies and developments in the socio-economic spheres. This is especially the case
in complex statistical compilations such as the national accounts, which would require inputs
from a multitude of sources and substantial computations. Revisions reflect the availability
of new information as well as efforts to improve methodologies.
2.1.2
The national accounts is compiled from a myriad of data series derived from
administrative and survey sources, which are subject to sampling and non-sampling error.
Early estimates of the accounts are based on less information than will be available later.
Later information relies on more comprehensive and higher quality data sources, which can
yield substantial improvements in the quality of the accounts. The process of incorporating
these quality improvements inevitably leads to revisions of earlier published figures. Users’
needs are an important input, but at the same time it must be acknowledged that within the
time available for compiling the accounts, it is not feasible to revise backwards all available
quarters each time.
2.1.3
The revisions policy organises and limits the number of periods for which data may
be revised in terms of various frequencies. The depth of a revision refers to the number of
periods that are revised. As already explained the Economics Directorate does not have a
common revision policy and this is an area of future improvement. In the national accounts
39
Gross National Income Inventory
there are usually three frequencies at which data are revised backwards, namely quarterly,
annually and benchmark revisions:
a)
Every quarter: Data are revised for the previous quarters and the depth of the
revision depends on the latest finalised supply and use tables (SUTs); all quarterly
data are supported by revised annual data.
b)
Every year: The depth of the revision depends on the latest finalised SUTs.
c)
Benchmark revisions: These are major revisions aimed at incorporating major new
data sources or methodological changes, or a change in what is being described.
These imply a full backward revision of all time periods.
These benchmark
revisions are ideally carried out every five years, however, revisions resulting from
reservations or other methodological changes may lead to an anticipation of such
benchmark revisions.
2.1.4
At present the first annual data for time t+70 days i.e. 70 days following the end of
quarter by derogation. These data are revised every quarter the depth of such revision
depending on the latest finalised SUTs.
2.1.5
In addition to the SUT balancing process, national accounts revisions may be caused
by data re-assessment, as a result of changes to Business Register (BR) classification grossing
up, internal methodological review, or changes to international standards. These changes are
normally explained to users in news releases and would normally have to be taken back as far
as the beginning of the series depending on the type of revision involved. However, these
benchmark revisions only take place every five years.
Such benchmark revisions are
sometimes anticipated due to the implementation of some new methodology e.g. NACE Rev.
22 or European System of Accounts (ESA) 2010.
2.2
Major revisions to the transition from ESA 1995 to ESA 2010
2.2.1
Revisions due to the transition from ESA 1995 to ESA 2010 are summarised in
Table 1.2.1. Gross domestic product (GDP) was revised upwards in 2012 by approximately
37.4 million Euro.
2
Statistical classification of economic activities in the European Community
40
The revisions policy and the timetable for revising and finalising the estimates;
major revisions since the last version of the GNI Inventory
2.2.2
The most significant revision related to the capitalisation of research and
development (Table 2.2.1, column 1a/b) which resulted in an upward revision of 32.3 million
Euro in 2012.
2.2.3
ESA 1995 set a lower bound of 500 European Currency Unit (ECU) at 1995 prices
for small tools to be recognised as capital expenditure.
Purchase of items below this
threshold were classified as intermediate consumption. In ESA 2010 no fixed threshold is
given; the criterion to be recognised as capital expenditure is the use in production for more
than one year. The reclassification of such items from intermediate consumption to capital
expenditure amounted to 7.2 million Euro in 2012 (Table 2.2.1, column 7).
2.2.4
GDP was revised downwards by 2.2 million Euro following the reclassification of
some government, public and private sector entities (Table 2.2.1, column 6). On application
of the new ‘qualitative criteria’, in particular ESA 2010, para. 20.24 ‘output is sold only to
government’, Malta reclassified the government’s information and communication
technology company/authority into the general government sector from 1995 onwards. The
impact of the revised ‘50% criterion’ under the ESA 2010 resulted in the re-classification of
the Malta Freeport Corporation inside the general government sector for the period 1999 (4.1
per cent) to 2011 (35.8 per cent). The issue of the delimitation of the Malta Freeport
Corporation was discussed at length in the Excessive Deficit Procedure (EDP) Mission held
in Malta on the 20-21 May 2014. Following a thorough assessment of the Corporation’s
investment property and the lease agreement with the operator, it was discovered that the
quays, wharves and jetties are held by the corporation. Therefore in addition to the
depreciation recorded by the corporation in its financial statements, the National Statistics
Office (NSO) imputed additional depreciation for the element of the quays, wharves and
jetties for a life time of 65 years. Based on the corporation’s draft accounts for 2013, the 50
per cent ratio for 2012 was revised at 62.1 per cent and for 2013 at 63.5 per cent. Based on
these results the NSO decided to reclassify the Malta Freeport Corporation outside the
general government sector from 2012 onwards.
2.2.5
The new treatment of value added tax (VAT)-based third European Union (EU)
own resource does not impact GDP, but in the transition from GDP to gross national income
(GNI), the amounts of taxes on production and imports (D.2) payable to the rest of the world
(ROW) will decrease. Consequently, GNI increase by the amount of the VAT based third
41
Gross National Income Inventory
EU own resource. The revision in 2012 will amount to 9 million Euro (Table 2.2.1, column
8).
2.2.6
ESA 1995 stated that the “Central Bank output should be entirely allocated to the
intermediate consumption of other financial intermediaries (subsectors S.122-S.123). In the
ESA 1995 time series NSO used to allocate that Central Bank of Malta (CBM) output only to
deposit money banks (DMBs) intermediate consumption.”
ESA 2010 states that
“Commissions and fees for directly measured services invoiced by the central bank both in
respect of resident and non-resident units should be allocated to these units. Only the part of
the total central bank output (sum of costs less commissions and fees) which is not sold has to
be, by convention, allocated to the intermediate consumption of other financial institutions –
subsectors S.122 (deposit-taking corporations except the central bank) and S.125 (other
financial intermediaries, except insurance corporations and pension funds) – in proportion to
the respective value added of each of these subsectors.” With this change there was an
upward revision in the gross value added (GVA) of the Financial and insurance activities
(Section K) equal to 0.095 million Euro (Table 2.2.1, column 10).
2.2.7
Other transition items which could have an impact of GNI namely: valuation of
output for own final use for market producers (2); non-life insurance - output, claims due to
catastrophes, and reinsurance (3); weapon systems in government recognised as capital assets
(4); decommissioning costs for large capital assets (5); index-linked debt instruments (9); and
land improvements recognised as a separate asset (11), were not applicable.
42
The revisions policy and the timetable for revising and finalising the estimates;
major revisions since the last version of the GNI Inventory
Table 2.2.1: Impact of changes from ESA 1995 to ESA 2010 on GNI for 2012, in millions of Euro
1
Million Euro
PRODUCTION APPROACH
1(a)
1(b)
6
Output of goods and services (at basic prices)
21.1
9.6
- 2.4
2
3
4
5
Intermediate consumption (at purchasers' prices)
Gross value added (at basic prices)
Taxes on products
Subsidies on products
6
7
8
EXPENDITURE APPROACH
Total final consumption expenditure
Household final consumption expenditure
NPISH final consumption expenditure
9
10
11
12
13
14
15
General government final consumption expenditure
Gross capital formation
Gross fixed capital formation
Changes in inventories
Acquisitions less disposals of valuables
Exports of goods and services
Imports of goods and services
16
17
18
19
20
INCOME APPROACH
Compensation of employees
Gross operating surplus and mixed income
Taxes on production and imports
Subsidies
Gross domestic product
21
Compensation of employees received from the rest of
the world
22
23
Compensation of employees paid to the rest of the world
Taxes on production and imports paid to the
institutions of the EU
24
Subsidies received from the institutions of the EU
25 Property income received from the rest of the world
26 Property income paid to the rest of the world
27 Gross national income
Source: GNI Quality Report 2014
- 1.2
22.3
- 0.4
10.0
- 0.1
- 2.2
7
8
7.2
7.2
10
0.1
0.1
0.1
0.0
0.0
22.3
22.3
- 7.5
17.5
17.5
3.0
0.0
7.2
7.2
0.0
22.3
10.0
- 2.2
7.2
0.1
22.3
10.0
- 2.2
7.2
0.1
9.3
22.3
10.0
- 2.2
7.2
9.3
0.1
43
Gross National Income Inventory
2.3
Major revisions since the last version of the GNI Inventory other
than those due to conceptual changes in ESA 2010
2.3.1
The latest GNI Inventory was published in April 2008. With the introduction of
NACE Rev. 2 in 2012 a major revision was published, however, the GNI Inventory was not
updated in 2012. The next benchmark revision was published in September 2014. This
benchmark revision included revisions relating to ESA 2010 and a number of GNI
reservations which were tackled in 2014.
2.3.2
The implementation of NACE Rev. 2 was first published in September 2011, but in
the absence of the Structural Business Statistics (SBS) survey of 2008 the National Accounts
Unit could only provide preliminary figures based on SBS 2005. In December 2012 the
National Accounts Unit included SBS 2008 which was the first SBS in NACE Rev. 2. A
number of methodological changes were also incorporated.
The benchmark and
methodological revisions related to:
a)
Short-Term Statistics (STS) indices:
Following the change over to NACE Rev. 2 the National Accounts Unit integrated the
STS indices for NACE Section C namely NACEs 10, 11, 13-18, 20-25, 28-32,
NACEs 58-60 and 71 in December 2012, and NACE 45 in June 2013. This implies
that the extrapolation of non-benchmark years, today from 2014 onwards is based on
STS indices.
b) Retail sale of other household equipment in specialised stores (NACE 45):
The output of second hand car dealers remained stable in SBS 2009 when compared
to SBS 2008. Given that the number of ‘used’ newly licensed vehicles increased by
114 per cent when compared to 2008, the National Accounts Unit decided to
introduce an exhaustiveness adjustment in 2009. This amounted to 12.6 million Euro
in 2009.
c)
Other transportation support activities (NACE 52.29):
This industry was previously covered using the information available in the BR. The
SBS survey was considered of much superior quality as the information collected is
44
The revisions policy and the timetable for revising and finalising the estimates;
major revisions since the last version of the GNI Inventory
more detailed, thus the National Accounts Unit shifted to SBS data as the main source
for this industry.
d) Event catering and other food service activities (NACE 56.2):
Volume indicators were introduced in the extrapolation method for 2010 onwards, as
previously only price indicators were used.
e)
Veterinary activities (NACE 75):
The SBS is a new source for veterinary services.
Compared to the Household
Budgetary Survey (HBS) and the results of the Economic Accounts of Agriculture
(EAA), SBS data was considered as being underestimated and thus an exhaustivity
adjustment was introduced.
f)
Administrative and support service activities (Section N):
Rental and leasing activities (NACE 77) had been earmarked for a benchmark
revision since 2006 as the national accounts sources used were considered as nonexhaustive when compared to SBS data. As a result the GVA of NACE 77 was
revised upwards by 6.3 million Euro, 5.6 million Euro and 1.0 million Euro in 2009,
2010 and 2011 respectively.
Travel agency, tour operator and other reservation service and related activities
(NACE 79) had previously been based on the national accounts survey of travel
agencies which was discontinued some years ago so as to shift to SBS. NACE 79 as
published up till 2012Q2, excluded tour operators which have a substantial impact on
this NACE. As a result the GVA of NACE 77 was revised upwards by 27.2 million
Euro, 29.3 million Euro and 33.9 million Euro in 2009, 2010 and 2011 respectively.
2.3.3
Article 6 of the GNI Regulation foresees joint GNI information visits to be carried
out in Member States by the Commission's services and representatives from other Member
States. The visits aim at collecting additional information that is necessary to identify
possible weaknesses of the GNI Inventory, of the statistical sources and methods used to
calculate GNI and its components.
At the end of this analysis, Eurostat provides an
assessment on whether the Member States' figures are appropriate for own resource purposes
or whether further corrections and improvements are necessary. Based on the assessments by
Eurostat, the Directorate-General for Budget (DG BUDG) of the Commission notifies to the
45
Gross National Income Inventory
Permanent Representative of the Member State concerned the required corrections and
improvements in the form of reservations on the country's GNI data.
2.3.4
The reservations tackled in 2013 and 2014 were integrated in the benchmark
revision of September 2014. The overall impact is shown in Table 2.3.1.
Table 2.3.1: Reservations 2014: Impact on GNI
2004-2007: million Maltese Lira; from 2008 million Euro
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
14
16
26
33
119
147
131
128
139
136
Impact on GNI
Source: GNI Quality Report 2014
2.3.5
a)
The reservations which ultimately had an impact on GNI included:
Small durable tools which do not exceed 500 ECU (in prices of 1995) per item (or,
when bought in quantities, for the total amount bought) should be recorded as
intermediate consumption (applicable to years from 2004 to 2010):
Small durable tools are generally imported in Malta as there is little or no domestic
production. Import data was requested for Combined Nomenclature (CN) Chapters
82, 84, 85 for the period 2008 to 2013. Data was requested at the lowest level of
detail, such that the price per item could be derived. The data are available at
company level and at 8-digit CN code and also by Broad Economic Category (BEC).
It was established that Imports with a value of less than 500 Euro per item amounted
to 7.5 million Euro in 2008. This amounts to 0.1 per cent of total intermediate
consumption as published in News Release 237/20133. Intermediate consumption
was revised upwards to include small tools and consequently GNI was revised
downwards.
b)
Own-account construction of dwellings (including major repairs, renovation and
extensions of existing dwellings) by households should be included in the output
measure (applicable to years from 2004 to 2010):
3
Source: http://nso.gov.mt/en/News_Releases/View_by_Unit/Unit_A1/National_Accounts/Documents/2013/
News2013_237.pdf.
46
The revisions policy and the timetable for revising and finalising the estimates;
major revisions since the last version of the GNI Inventory
The value of own account construction by households, which generally relates to
major repairs, renovation and extensions of existing dwellings has been added to the
output for own final use in Specialised construction activities (NACE 43) in the
output approach. This had a direct impact on output and GDP in the production
approach, the gross operating surplus and mixed income in the income approach and
on gross fixed capital formation (GFCF) in the expenditure approach. This new
estimate for own account construction by households covers the value of materials,
the value of labour costs and the value of operating surplus as required by ESA
1995, para. 3.49 which specifies that output for own final use to be valued at basic
prices.
c)
The estimates for insurance services need to be improved on the following aspects
(applicable to years from 2004 to 2010):
i.
The use of non-life insurance services must be included in intermediate
consumption according to the service charge concept in line with the
recommendations of the GNI Committee.
According to ESA 1995 and ESA 2010, intermediate consumption should
exclude premiums which are classified as transfers and include the non-life
insurance service charge. However, before adjusting for the insurance service
charge for the total economy, insurance premiums have been first deducted
from the intermediate consumption. This was necessary given that enterprises
rarely report premiums separately both in annual accounts and financial
statements and also in other NSO surveys, which are the main data sources
used to compile National Accounts. The overall impact of this adjustment was
of a drop in intermediate consumption and consequently an increase in value
added and GNI.
ii.
Claim management expenses of insurance companies must be separated into
intermediate consumption and wages.
Output has been adjusted upwards by deducting the claims management
expenses and wages and salaries from the claims paid. Similarly the claims
47
Gross National Income Inventory
paid were added to intermediate consumption. Compensation of employees
was already inclusive of the wages and salaries allocated to claims
management expenses and thus no adjustment was needed. This adjustment
had a positive impact on value added and GNI.
iii.
Income attributed to resident holders of foreign insurance policies and income
attributed to non-resident holders of domestic insurance policies must be
included in cross-border flows of property income.
Direct information from foreign insurance companies is not available;
however, the Balance of Payments Unit is able to provide the imported
premiums and service charge through data collected from insurance agents
which represent foreign principals. On the other hand insurance principals
provide export data to the Balance of Payments Unit with respect to resident
insurance principals. An estimate has been derived using information on the
property income attributed to policy holders, and the service charge generated
by resident principal insurers. Due to the high import content when compared
to exports by resident companies the property income attributed to resident
holders of foreign insurance policies is much higher and there will be a
positive impact on GNI.
d) The treatment of entities with little or no physical presence:
Entities with little or no physical presence or special purpose entities (SPEs) were
included in national statistics for the first time in the ESA 2010 time series for the
period 1995 to date. Most of the companies were covered through administrative
sources. This adjustment had a positive impact on value added and GNI.
e) Inclusion of illegal activities in national accounts:
Prostitution and narcotics were included in national statistics for the first time in the
ESA 2010 time series for the period 1995 to date.
The likely earnings from
prostitution are now included in Other personal services (NACE 96) in the output
approach and in household final consumption expenditure in the expenditure
approach.
48
The margins earned on narcotics were included in the output of
The revisions policy and the timetable for revising and finalising the estimates;
major revisions since the last version of the GNI Inventory
Wholesale and retail trade (NACE G), while total value of narcotics consumed is
included in private household consumption expenditure and imports are valued at
the wholesale price.
2.4
2.4.1
Planned actions for improvements
In the field of national accounts there is always room for improvement. The office
has a commitment to produce efficiently and with minimum burden on respondents highquality statistics that are relevant, reliable and comparable, and to disseminate them in an
impartial, independent and timely manner, making them available simultaneously to all users.
In view of this the office is committed to improve the current systems in order to improve in
timeliness and provide a wider array of data.
2.4.2
Since the implementation of ESA 2010, a number of reservations which were
tackled during 2015 and 2016 will be integrated in the next benchmark revision. These
related to:
a)
Specific reservation 2: Measuring of changes in inventories net of holding gains and
losses;
b)
Specific reservation 5: Extrapolation of restaurants and bars output consumed by
residents;
c)
Transversal reservation I: Treatment of cross-border property income;
d)
Transversal reservation II: Calculation and allocation of financial intermediation
indirectly measured (FISIM); and
e)
Transversal reservation VIII: Calculation of intermediate consumption for actual and
imputed rentals in the estimation of the production of housing services.
2.4.3
Moreover, administrative sources have also been used to ensure exhaustiveness in
the financial sector. This exercise has been concluded in 2015 and will be included in the
next benchmark revision.
2.4.4
In accordance with Article 6(1) of Regulation (EU) No 549/2013, Malta was granted
temporary derogations in so far as national statistical systems of the Member States
49
Gross National Income Inventory
necessitated major adaptations for the application of ESA 2010. These derogations are listed
in the Commission implementing decision of 26 June 2014 on granting derogations to
Member States with respect to the transmission of statistics pursuant to Regulation (EU) No
549/2013 concerning the European system of national and regional accounts in the EU.
2.4.5
A number of projects will be launched in order to address these derogations,
however meeting all the obligations may not always be possible especially in relation to past
data due to lack of data sources. In view of this the National Accounts Unit will commence
research on the derivation of GVA at basic prices by industry at A*10, A*21 and A*64 (refer
to Table 9.1.1) breakdowns in previous year’s prices and chain linked volumes. Other more
long term projects include the compilation of the cross classification of fixed assets by
industry and by asset and the balance sheets for non-financial assets by sector.
2.4.6
Lately, SUTs analysis is being used during macro-economic balancing on a quarterly
basis compared to the broader balancing process previously adopted. In the long term efforts
are being made such that the compilation of supply and use tables is done on an annual basis
and to shift from the current time t+54 month deadline to that at t+36 months.
2.4.7
In the field of annual non-financial accounts by sector, administrative sources are
currently being analysed in order to improve the compilation of the non-financial sector and
the households sector.
50
CHAPTER 3
The production approach
3.0
3.0.1
GDP according to the production approach
In the production approach, the performance of a national economy is measured
from the output side. In Malta, the production approach is considered to be the main
estimation method for compiling gross domestic product (GDP); as the estimation of
production is supported by the most reliable sources.
3.0.2
The production approach to GDP estimate is recorded in the production account,
which shows the transactions relating to the production process both for institutional sectors
and industries. Its principal items are output in resources and intermediate consumption in
uses. The balancing item of this account is value added (gross). Gross value added (GVA) is
economically significant for both the institutional sectors and the industries; it represents
value generated by any unit engaged in a production activity. The production account at the
level of the total economy includes in resources, in addition to the output of goods and
services, taxes less subsidies on products, which are not allocated to institutional sectors or
industries. The addition of taxes less subsidies on products enables the calculation of GDP in
market prices as a principal macroeconomic aggregate.
3.0.3
The procedure for the calculation of GDP and the structure of GVA by institutional
sector for 2010 is shown in Table 3.0.1.
51
Gross National Income Inventory
Table 3.0.1: The production approach to the GDP calculation by institutional sectors, 2010, in millions of
Euro
Production Account
P.1
+
P.2
-
B.1g
=
D.21
+
D.31
-
B.1g* (1)
=
K.1
-
B.1n / B.1n* (1)
=
Output
Intermediate
consumption
Gross value
added
Non-profit
institutions
serving
households
(S.15)
Households
(S.14)
General
government
(S.13)
Financial
corporations
(S.12)
Nonfinancial
corporations
(S.11)
Total
economy
(S.1)
112.2
1,327.0
1,399.5
5,040.6
9,719.7
17,598.9
25.5
544.1
400.2
4,588.6
6,249.7
11,808.1
86.6
782.9
999.3
452.0
3,470.0
5,790.8
Taxes on products
827.7
Subsidies on
18.9
products
Gross domestic
6,599.5
product (GDP)
Consumption of
fixed capital
11.1
192.5
144.2
25.2
537.3
910.3
75.6
590.4
855.1
426.8
2,932.6
4,880.5
Net value added /
Net domestic
product
3.0.4
GVA by industry is generally calculated at by activity at NACE4 division level,
however as explained in Chapter 9 some industries are compiled in a much detailed
breakdown, such that approximately 146 industries can be identified. Table 3.0.2 provides
the structure of the Maltese economy by industry as at 2010.
4
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
52
The production approach
Table 3.0.2: The production approach to the GDP calculation by industry, 2010, in millions of Euro
Intermediate
Gross value
Gross value
Transaction in products ►
Output
consumption
added
added in %
Transaction in products code ►
P1
P2
B1G
B1G
ACTIVITY ▼
1
2
3=1-2
17,599
11,808
5,791
100.0%
219
123
96
1.7%
3,283
2,390
894
15.4%
c
c
c
c
2,481
1,731
750
12.9%
c
c
c
c
c
c
c
792
522
270
4.7%
1,047
428
618
10.7%
NACE
Section
Total Economy
A
A - Agriculture, forestry and fishing
B to E
B
B - Mining and quarrying
C
C - Manufacturing
D
D - Electricity, gas, steam and air conditioning supply
E - Water supply; sewerage, waste management and
E
remediation activities
F
F - Construction
c
G - Wholesale and retail trade; repair of motor vehicles
G
and motorcycles
H
H - Transportation and storage
981
634
346
6.0%
I
I - Accommodation and food service activities
708
436
272
4.7%
J
J - Information and communication
K
K - Financial and insurance activities
L
737
417
320
5.5%
5,041
4,589
452
7.8%
L - Real estate activities
461
114
347
6.0%
M
M - Professional, scientific and technical activities
646
325
321
5.5%
N
N - Administrative and support service activities
443
228
215
3.7%
560
205
354
6.1%
O - Public administration and defence; compulsory
O
social security
P
P – Education
399
63
336
5.8%
Q
Q - Human health and social work activities
519
148
371
6.4%
1,628
1,131
496
8.6%
118
55
63
1.1%
18
0
18
0.3%
-
-
-
0.0%
R
R - Arts, entertainment and recreation
S
S - Other service activities
T - Activities of households as employers;
undifferentiated goods- and services-producing
activities of households for own use
T
U - Activities of extraterritorial organisations and
U
c
bodies
Confidential
3.1
The reference framework
Statistical unit
3.1.1
ESA 2010 identifies three types of statistical units; institutional units; local kind-of-
activity units (KAU); and homogeneous units. An institutional unit is an economic entity
characterised by decision-making autonomy and either keeps a complete set of accounts or is
53
Gross National Income Inventory
able to compile a complete set of accounts. A KAU groups all the parts of an institutional
unit in its capacity as producer contributing to the performance of an activity at class level of
NACE Rev. 2 and corresponds to one or more operational subdivisions of the institutional
unit. The institutional unit’s information system must be capable of indicating or calculating
for each local KAU at least the value of Institutional units of production, intermediate
consumption, compensation of employees, operating surplus, employment and gross fixed
capital formation. The homogeneous branch consists of a grouping of units of homogenous
production. The set of activities covered by a homogeneous branch is identified by reference
to a product classification.
3.1.2
In Malta business accounts are generally available for entire enterprises, the
enterprise being the smallest legally independent institutional unit. The KAU concept is used
in exceptional cases, only for large enterprises which able to provide the basic data sources
necessary for the compilation of production, intermediate consumption, compensation of
employees, operating surplus, employment and gross fixed capital formation. In such cases
legal units are split across industries.
Business Register
3.1.3
Enterprises are identified from the Business Register (BR). The BR incorporates
lists of enterprises, other organisations or units whose activities contribute to the gross
domestic product (GDP). There is no entry threshold (size of activity, revenue or number of
employees). These units can be defined as those that exercise control over the use of
resources, including land, labour, capital, goods and services, in order to produce goods and
services for their own consumption or for consumption by other units. The BR is primarily
used as a tool for conducting surveys, or as a source of statistics in its own right. The
availability of a BR is of fundamental importance to the compilation of the statistics needed
to provide indicators of both short-term and structural economic developments.
3.1.4
a)
The standard objectives of the BR include:
Coverage: the aim is to cover as much national economic activity as possible,
including very small units, even though there is often an increasing ratio of costs to
benefits involved;
54
The production approach
b)
Quality: the BR helps to improve the efficiency of the national statistical system.
Overall quality is not easy to measure, though various specific aspects of it can be
used as indicators, such as coverage, accuracy of the data held, frequency of updates,
and consistency of processes; and
c)
Authority: the BR is recognised as the authoritative source of data on business
populations and demography by NACE. It is used as the sampling frame for all
surveys within the national statistical system.
3.1.5
The BR is used in five main ways:
a)
for the detection and construction of statistical units;
b)
as a tool for the preparation and co-ordination of surveys, and for grossing up survey
results;
c)
as a source of information for statistical analysis of the population of enterprises and
its demography;
d)
as a tool for the mobilisation of administrative data; and
e)
as a dissemination tool.
3.1.6
The BR relies heavily on various administrative sources to identify the population of
active enterprises for a given year. The main source for limited liability companies is the
Registry of companies which is regulated by the Malta Financial Services Authority (MFSA),
while sole traders' main sources are other government departments. In 2011, the units whose
turnover is less than 7,000 Euro started to be excluded at source. However, this practice
ceased to exist in 2015.
3.1.7
Each unit included in the BR is initially contacted through a BR questionnaire which
requires enterprises to provide details on physical location of establishments, form of legal
organisation, ownership, turnover and employment.
Updates for turnover, employment,
births and deaths are derived from the MFSA, fiscal information. Employment is general
updated from sample surveys.
3.1.8
The MFSA provides the Business Registers Unit with a full list of companies
registered inclusive of status and address every month. All new births and deaths in the
55
Gross National Income Inventory
population are identified and added or deducted from the active population. Those converted
from companies to partnership are also identified.
3.1.9
Other government departments supply the Business Registers Unit on a monthly
basis with the start-ups, referred to as births, the legal units which close down, referred to as
deaths and the estimated turnover submitted upon registration.
3.1.10
The BR is also regularly updated with information from other surveys mainly the
Structural Business Statistics (SBS) survey for a number of variables and Job Vacancy
Survey (JVS) for employment data. These are managed by two other different units within
the National Statistics Office (NSO). Other sources used are the Employment and Training
Corporation (ETC) employment database and Short-Term Statistics (STS) survey.
3.1.11
Non-profit institutions serving households (NPISHs) are identified from the
Voluntary Organisations Register which is an administrative source and refers to registered
non-governmental organisations.
3.1.12
The Public Finance Unit identifies non-market producers. The main criterion for
sector delimitation is the quantitative test of the 50% rule (i.e. total sales (market output)
cover less than 50 per cent of costs (consisting of: compensation of employees, intermediate
consumption, consumption of fixed capital, taxes on production)). Apart from the 50% rule,
NSO’s decision is based also on the level of government’s input in the entity’s decisionmaking, the concept of the economically significant prices and if output is sold only to
government. Maintaining the list of extra-budgetary units (EBUs) is the responsibility of the
Public Finance Unit. For consistency in the coverage of the sectors of the total economy, this
list, together with relevant information, is provided to the NSO’s Business Registers Unit, the
unit responsible for the BR in Malta.
3.1.13
Exhaustiveness Adjustments amount to 3.2 per cent of total gross value added
(GVA) at basic prices. National Accounts Unit includes adjustments for:
N1 - Producer deliberately not registering - underground;
N2 - Producers deliberately not registering - illegal;
N3 - Producers not required to register;
56
The production approach
N4 - Legal persons not surveyed;
N5 - Registered entrepreneurs not surveyed;
N6 - Producers deliberately misreporting; and
N7 - Other statistical deficiencies.
Details will be provided in Section 3.6 and Chapter 7.
Special purpose entities
3.1.14
Three main sources are used to identify special purpose entities (SPEs) a specific
question (5.5) in the BR questionnaire, which requires companies to state if they have a
physical presence in Malta by way of premises or employees (excluding any legal or financial
representative office/staff in Malta).
However, the information received from this
questionnaire is not a deciding factor on its own. The data are cross-checked with documents
submitted by the companies at the MFSA and data provided by a government department.
The government department was requested to identify a list of variables which are available
at company level that may enable NSO to identify SPEs.
In collaboration with this
government department, NSO designed a filtering system which is presently being used to
flag ‘potential SPEs’. The government department provides this information twice a year.
The flag ‘potential SPE’ indicates that further analysis is needed. The final residency status
assigned in the Business Registers Unit i.e. resident versus SPE is ultimately determined
following the analysis of documents submitted by each company with MFSA. The MFSA
website provides data on the involved parties and thus the ownership of each company and
the financial statements.
Data sources
3.1.15
Data sources are covered extensively in Chapter 10. The most important data
sources for the production approach are listed below.
57
Gross National Income Inventory
Administrative sources
Surveys
Fiscal data
Structural Business Statistics (SBS)
ETC employment database
Accomstat and Tourstat
Intrastat/Extrastat
Census of Aquaculture
Monetary and banking statistics
Census of Agriculture
Audited financial accounts
Census of Fisheries
Annual accounts and financial statements
English Language Schools (ELS)
Farm Accountancy Data Network (FADN)
Short-Term Statistics (STS)
3.1.16
Regular annual enterprise surveys are available for activities in NACE Sections B to
N (except Section K), and Section S for Repair of computers and personal and household
goods (NACE 95) only. These are all covered by the SBS survey. Other enterprise surveys
include those for English Language Schools (ELS) and Aquaculture, whose coverage is
complete. The Accomstat and Tourstat expenditure surveys are also very important for the
production approach. These are monthly surveys and are used for Accommodation and food
service activities (Section I).
3.1.17
The SBS survey is the most important data source for the production approach. It
covers approximately 30.7 per cent5 of total GVA presented in Table 3.0.2. It is a sample
survey covering NACE Rev. 2 Sections B to N (except Section K) and division 95. All size
classes and turnover quartiles were covered up till 2012. As from 2013 enterprises reporting
a turnover less than 7,000 Euro were excluded from the sampling frame. An exhaustivity
adjustment was introduced in national accounts as from 2013 to cover such enterprises. In
2010 the SBS sampling rate was of 34 per cent with a response rate of 65 per cent. The SBS
survey is available with a time lag of 2 years.
3.1.18
Periodic enterprise surveys and censuses are mainly related to the agriculture and
fisheries which accounts for 1.7 per cent of total GVA. These surveys are done every ten
years and thus administrative data (e.g. Farm Accountancy Data Network (FADN)) is used to
derive estimates in between censuses. The Household Budgetary Survey (HBS) is compiled
5
Process table; Surveys and Censuses; Sections B to G, J, L to N.
58
The production approach
every eight years and is a very important data source for the production approach. It is
widely used in NACE sections which are not covered by the SBS survey i.e. Education
(Section P), Human health and social work activities (Section Q), Arts, entertainment and
recreation (Section R), Other personal service activities (NACE 96), and Activities of
households as employers of domestic personnel (Section T). The HBS together with the
Census of Population and Housing (CPH) which is conducted every ten years is used in the
compilation of owner-occupied dwelling services.
Real estate activities (Section L)
contributes to 6.0 per cent to total GVA and are mainly due to owner-occupied dwelling
services.
3.1.19
Administrative Records such as annual accounts and financial statements are
available with a time lag of two years. Annual accounts and financial statements are used
across all industries and are mostly important together with fiscal data for NACE sections
which are not covered by the SBS in the non-financial sector. Fiscal information includes
data on all the active population in the BR, however it cannot be used for the banking and
insurance sub-sectors.
Annual accounts and financial statements may sometimes be
presented in an abridged format and thus not usable for national accounts purposes.
However, this issue is no longer relevant now that fiscal information is also available. In the
financial sector these two sources are used together with monetary and banking statistics
which are available on a quarterly basis.
These two data sources are also particularly
important with respect to NACE Sections P to T, given that no statistical surveys are
available for these industries.
3.1.20
The ETC employment database is another important source for the production
approach. It provides the number of jobs by NACE class. It is used as a quarterly indicator
in absence of annual data for most NACE divisions. Employed persons are fully covered by
enterprise surveys. However, in some NACE sections such as Education, Human health and
social work activities, Arts, entertainment and recreation, and Other personal service
activities, the ETC employment database is used to supplement estimates for enterprises not
covered by fiscal data or annual accounts and financial statements. It is an important data
source as it ensures exhaustiveness in national accounts.
59
Gross National Income Inventory
3.2
The borderline cases
3.2.1
The production boundary is defined as any activity carried out by an institutional
unit that uses inputs of material, labour and capital to produce output of goods and services
that are supplied to units other than their producers (or intended to be so supplied).
Production does not cover purely natural processes without any human involvement or
direction, like the unmanaged growth of fish stocks in international waters, but fish farming is
production.
3.2.2
a)
The following borderline cases in production are included:
the own-account production of all goods that are retained by their producers for
their own final consumption or gross fixed capital formation (GFCF).
Own
account production for GFCF includes the production of fixed assets such as
construction, research and development (R&D) activities, the development of
software and mineral exploration for own GFCF. Enterprises are required to
report ‘capitalised production’ in the Structural Business Statistics (SBS) survey.
This ensures that output is exhaustive in terms of output for own final use in most
of the industries i.e. Sections B to N except K. Other service activities rely on
information provided in audited financial accounts for an estimate of own account
production. However, most of these activities are service oriented and thus the
supply side estimates made for R&D and the development of software which are
tackled in detail in Section 5.10.3 tend to be more relevant in this case;
b)
c)
own-account production of goods by households pertains in general to:
i.
own-account construction of dwellings, tackled in Section 3.12;
ii.
the production and storage of agricultural, products tackled in Section 3.7;
the own-account production of housing services by owner-occupiers tackled in
Section 3.18;
d)
domestic and personal services produced by employing paid domestic staff
tackled in Section 3.26;
60
The production approach
e)
volunteer activities that result in goods, e.g. the construction of a dwelling, church
or other building are to be recorded as production are very difficult to capture
especially in absence of a regular Non-Government Organisation (NGO) survey;
f)
products bartered; The ESA 2010 system and International Financial Reporting
Standards (IFRS) require that all transactions are recorded in monetary terms.
The IFRS specify however that for recognizing revenue a reliable estimate is
provided for nonmonetary sales. This implies that audited accounts and thus
surveys and censuses are inclusive of products bartered;
g)
products supplied by one local kind-of-activity units (KAU) to another within the
same institutional unit to be used as intermediate inputs or for final uses are
included in production, which is tackled in Section 3.10; and
h)
products added to inventories of finished goods and work-in-progress are included
in the iteration used both in our source data and when administrative records are
used.
3.2.3
a)
Intermediate consumption includes the following borderline cases:
Costs of using rented fixed assets (mainly operating leasing); treatment in
business accounting is similar to ESA 2010 and thus intermediate consumption
derived from administrative sources is already inclusive of operating leasing;
moreover, this item is requested specifically in a number of surveys and is part of
the iteration of intermediate consumption.
b)
Inexpensive tools used for common operations and small devices such as saws,
spades, knives, axes, hammer, screwdrivers, spanners, wrenches and other hand
tools are treated as intermediate consumption and are listed as such in our
administrative sources such as fiscal data.
c)
Subscriptions, contributions or dues paid to non-profit business associations and
are listed as such in our administrative sources such as fiscal data and included in
the SBS iteration for intermediate consumption.
d)
Non-life insurance service charges are added to intermediate consumption after
excluding insurance premiums from intermediate consumption:
61
Gross National Income Inventory
Removing insurance premiums from intermediate consumption
Companies rarely report premiums separately both in annual accounts and financial
statements and also in other National Statistics Office (NSO) surveys, which are the
main data sources used to compile national accounts. Before adjusting for the
insurance service charge for the total economy, insurance premiums are first
deducted from the intermediate consumption. Intermediate consumption at NACE
division level A*886 has been adjusted downwards using ratios for the period 2003
onwards derived from administrative sources. Past data are not available and thus
for the period 1995 to 2002 the estimate is based on 2003 data. The data provided
by this administrative source could not be used directly as it does not cover
enterprises classified in the households sector (S.14). Administrative data was used
to derive the insurance premiums as a percentage of intermediate consumption at
A*887 (refer to Table 3.2.1). In order to derive the total premiums which are already
included in intermediate consumption the ratios derived in Table 3.2.1 were applied
to the intermediate consumption as derived from surveys and company accounts.
Adding insurance service charge to intermediate consumption
The derivation of the total insurance service charge is described in detail in Section
3.17. The breakdown between household expenditure and intermediate consumption
relies on administrative records which established that insurance premiums paid by
enterprises amounted to approximately 44.5 million Euro in 2008 and the Household
Budgetary Survey (HBS) which indicates that households paid approximately 69.4
million Euro in non-life insurance premiums.
The insurance service charge of non-life insurance has been broken down between
intermediate consumption and household consumption expenditure using premiums
as a proxy. On average 38 per cent of the insurance service charge of non-life
insurance is allocated to intermediate consumption and 62 per cent to household
consumption expenditure.
6
7
Refer to Table 9.1.1.
Refer to Table 9.1.1.
62
The production approach
Table 3.2.1: Insurance premiums as a percentage of intermediate consumption
NACE
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
All years
1
0.70%
1.00%
0.85%
0.94%
0.91%
0.92%
0.99%
0.91%
0.91%
0.96%
0.90%
3
2.02%
0.77%
1.20%
0.99%
1.05%
0.88%
1.72%
1.21%
1.12%
0.50%
1.10%
8
c
c
c
c
c
c
c
c
c
c
c
9
c
c
c
c
c
c
c
c
c
c
c
10
c
c
c
c
c
c
c
c
c
c
c
11
c
c
c
c
c
c
c
c
c
c
c
12
c
c
c
c
c
c
c
c
c
c
c
13
c
c
c
c
c
c
c
c
c
c
c
14
c
c
c
c
c
c
c
c
c
c
c
15
c
c
c
c
c
c
c
c
c
c
c
16
1.72%
1.17%
1.20%
0.72%
0.70%
0.48%
0.48%
0.40%
0.58%
0.48%
0.76%
17
c
c
c
c
c
c
c
c
c
c
c
18
c
c
c
c
c
c
c
c
c
c
c
19
c
c
c
c
c
c
c
c
c
c
c
20
c
c
c
c
c
c
c
c
c
c
c
21
c
c
c
c
c
c
c
c
c
c
c
22
c
c
c
c
c
c
c
c
c
c
c
23
0.65%
0.67%
0.69%
0.63%
0.54%
0.65%
0.72%
0.66%
0.60%
0.68%
0.65%
24
0.87%
0.89%
0.91%
0.49%
0.57%
0.31%
0.15%
0.18%
0.16%
0.11%
0.46%
25
0.66%
0.62%
0.60%
1.74%
1.38%
1.09%
1.14%
1.14%
1.06%
1.23%
1.09%
26
c
c
c
c
c
c
c
c
c
c
c
27
c
c
c
c
c
c
c
c
c
c
c
28
c
c
c
c
c
c
c
c
c
c
c
29
c
c
c
c
c
c
c
c
c
c
c
30
c
c
c
c
c
c
c
c
c
c
c
31
c
c
c
c
c
c
c
c
c
c
c
32
c
c
c
c
c
c
c
c
c
c
c
33
0.86%
0.48%
0.50%
0.46%
0.46%
0.27%
0.32%
0.24%
0.39%
0.33%
0.39%
35
c
c
c
c
c
c
c
c
c
c
c
36
c
c
c
c
c
c
c
c
c
c
c
37
c
c
c
c
c
c
c
c
c
c
c
38
c
c
c
c
c
c
c
c
c
c
c
39
c
c
c
c
c
c
c
c
c
c
c
41
0.43%
0.43%
0.38%
0.36%
0.35%
0.44%
0.30%
0.36%
0.37%
0.42%
0.38%
42
0.41%
0.58%
0.46%
0.88%
0.46%
0.50%
0.64%
0.46%
0.35%
0.45%
0.50%
43
0.62%
0.86%
0.87%
0.85%
0.93%
0.92%
1.09%
1.08%
0.96%
0.93%
0.91%
45
4.87%
4.88%
3.96%
4.90%
4.21%
3.04%
2.86%
3.18%
3.20%
3.03%
3.72%
46
2.93%
3.67%
3.67%
3.48%
2.86%
2.82%
2.74%
2.31%
2.13%
2.21%
2.74%
c
Confidential
63
Gross National Income Inventory
Table 3.2.1: Insurance premiums as a percentage of intermediate consumption (cont...)
NACE
c
64
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
All years
47
3.52%
3.57%
3.63%
3.63%
3.48%
3.19%
3.14%
2.89%
2.86%
2.88%
3.21%
49
c
c
c
c
c
c
c
c
c
c
c
50
1.43%
0.75%
1.10%
1.16%
1.22%
1.28%
1.39%
1.42%
1.39%
0.82%
1.15%
51
c
c
c
c
c
c
c
c
c
c
c
52
0.60%
0.76%
1.48%
1.34%
1.35%
1.16%
1.14%
0.98%
1.02%
0.98%
1.03%
53
c
c
c
c
c
c
c
c
c
c
c
55
0.91%
1.03%
0.97%
1.01%
1.12%
1.00%
1.11%
1.12%
1.12%
1.14%
1.06%
56
1.09%
1.12%
1.11%
0.98%
0.87%
0.78%
0.85%
0.91%
0.81%
0.77%
0.90%
58
0.67%
0.81%
0.85%
1.05%
1.34%
0.87%
1.06%
1.15%
0.91%
1.17%
0.98%
59
c
c
c
c
c
c
c
c
c
c
c
60
c
c
c
c
c
c
c
c
c
c
c
61
1.74%
0.36%
0.30%
0.35%
1.02%
0.21%
0.24%
0.16%
0.07%
0.61%
0.46%
62
c
c
c
c
c
c
c
c
c
c
c
63
c
c
c
c
c
c
c
c
c
c
c
68
0.83%
0.91%
0.82%
0.89%
0.40%
0.66%
0.66%
0.83%
0.68%
0.76%
0.71%
69
1.47%
1.54%
1.55%
1.51%
1.55%
1.32%
1.72%
2.71%
2.59%
2.26%
1.94%
70
0.65%
0.66%
0.45%
0.43%
0.38%
0.31%
1.04%
1.38%
0.99%
0.81%
0.60%
71
1.74%
1.90%
1.78%
1.64%
1.64%
1.38%
1.14%
0.91%
1.42%
1.16%
1.36%
72
c
c
c
c
c
c
c
c
c
c
c
73
0.72%
0.80%
0.79%
0.61%
0.58%
0.29%
0.27%
0.21%
0.24%
0.18%
0.32%
74
0.45%
0.68%
0.52%
0.62%
0.42%
0.60%
0.64%
0.62%
0.78%
0.74%
0.65%
75
0.17%
0.00%
0.19%
0.00%
0.16%
0.13%
0.13%
0.46%
0.63%
0.54%
0.30%
77
2.40%
2.17%
2.07%
1.47%
1.67%
1.66%
1.76%
1.03%
1.62%
1.46%
1.62%
78
0.71%
0.64%
0.62%
0.57%
0.69%
0.76%
0.90%
1.77%
1.96%
1.42%
0.97%
79
0.25%
0.23%
0.39%
0.39%
0.30%
0.33%
0.39%
0.28%
0.29%
0.29%
0.31%
80
3.57%
5.33%
2.96%
3.41%
2.09%
2.23%
3.27%
2.72%
3.40%
2.87%
2.88%
81
0.39%
0.66%
0.61%
0.75%
0.58%
0.59%
0.60%
0.62%
0.61%
0.52%
0.59%
82
0.75%
1.29%
0.61%
1.46%
0.56%
0.73%
0.79%
0.31%
0.25%
0.24%
0.45%
85
0.66%
0.61%
0.68%
0.75%
0.68%
0.68%
0.77%
0.71%
0.75%
0.65%
0.70%
86
1.74%
1.85%
1.54%
1.68%
1.96%
1.61%
1.37%
1.43%
1.19%
1.28%
1.52%
87
0.25%
0.21%
0.32%
0.44%
0.37%
0.56%
0.44%
0.37%
0.30%
0.37%
0.37%
90
0.67%
0.70%
0.54%
0.62%
0.46%
1.05%
0.89%
1.06%
1.16%
0.88%
0.83%
91
0.43%
0.41%
0.38%
0.35%
0.34%
0.29%
0.30%
0.23%
0.22%
0.24%
4.61%
92
0.36%
0.40%
0.12%
0.09%
0.09%
0.20%
0.17%
0.10%
0.12%
0.10%
0.01%
93
2.56%
2.18%
2.16%
2.52%
1.06%
1.14%
1.13%
1.70%
1.06%
1.45%
2.69%
94
0.00%
0.37%
0.15%
0.16%
0.40%
0.37%
0.71%
0.68%
0.49%
0.55%
0.42%
95
1.91%
0.99%
1.04%
0.78%
0.79%
0.74%
0.54%
0.77%
0.68%
0.82%
0.84%
96
1.35%
1.07%
1.07%
1.02%
1.12%
0.80%
0.93%
0.86%
0.79%
0.71%
0.92%
Grand total
0.43%
0.41%
0.38%
0.35%
0.34%
0.29%
0.30%
0.23%
0.22%
0.24%
0.30%
Confidential
The production approach
e)
Financial intermediation services indirectly measured (FISIM) is tackled in detail
in Section 3.17.
f)
Goods and services used as inputs into ancillary services.
g)
Expenditure by employees, reimbursed by the employer is assumed to be
disclosed as part of the costs of production.
3.2.4
a)
Intermediate consumption excludes the following borderline cases:
Items like valuables, mineral exploration, major repairs and improvements,
software, R&D are treated as GFCF. More details are available in Sections 3.12,
3.18 and 5.10.
b)
Expenditure items related to non-produced assets like long-term contracts, leases
and licenses are capitalised by enterprises and are thus excluded from intermediate
consumption at source.
c)
Expenditure by employers on wages in kind is deducted from intermediate
consumption as part of Conceptual Adjustments.
d)
Payments for government licenses and fees that are treated as other taxes on
production and are deducted from intermediate consumption as part of Conceptual
Adjustments.
e)
Discussions are held with enterprises involved in decommissioning for large
capital assets in order to make sure that such costs are not included in intermediate
consumption.
3.3
Valuation
3.3.1
Output (P.1) consists of the total of products created during the accounting period.
ESA 2010 distinguishes between three different types of output listed below and this
distinction determines the valuation principles to be applied to output.
a)
Market output (P.11) which consists of output that is disposed of on the market or
intended to be disposed of on the market;
65
Gross National Income Inventory
b)
Output produced for own final use (P.12) which consists of goods or services that
are retained either for own final consumption or for capital formation by the same
institutional unit; and
c)
Non-market output (P.13) which is provided to other units for free, or at prices that
are not economically significant.
3.3.2
Market output for market and non-market producers and output produced for own
final uses for market producers are valued at basic prices. The basic price is the price
receivable by the producers from the purchaser for a unit of a good or service produced as
output minus any tax taxes on products payable on that unit as a consequence of its
production or sale, plus any subsidies on products receivable on that unit as a consequence of
its production or sale. It excludes any transport charges invoiced separately by the producer.
It also excludes holding gains and losses on financial and non-financial assets.
3.3.3
Market output at basic prices is not always directly available at source and thus
adjustments are made in national accounts to ensure a transition from producer’s prices
reported by enterprises to basic prices.
3.3.4
Turnover is inclusive of duties and taxes on goods or services invoiced by the unit,
but excludes value added tax invoiced to customers and other deductable taxes directly linked
to turnover. Consequently, ‘Other taxes and duties linked to products’ are deducted from the
‘Production’ as provided in the Structural Business Statistics (SBS) survey.
3.3.5
Subsidies on products were limited to agriculture and low cost airlines in 2010
(Table 3.29.1). The Economic Accounts for Agriculture (EAA) are already inclusive of
subsidies on products and thus no adjustments are made in national accounts. However, there
are always some inconsistencies between the subsidies provided in EAA and those presented
in government accounts. These discrepancies are monitored on a regular basis; however, the
national accounts data are consistent with the EAA. The subsidy on low cost airlines is
added to Warehousing and support activities for transportation (NACE 52) in national
accounts and is consistent with government accounts.
66
The production approach
3.3.6
Output for own final use (P.12) is valued at the basic prices of similar products on
the market. If basic prices of similar products are not available, output for own final use
should be valued at costs of production plus a mark-up (except for non-market producers) for
net operating surplus or mixed income. Output for own final use (P.12) is being valued at the
basic prices with respect to software, research and development, services of owner occupied
dwellings generating net operating surplus and, own-account construction of dwellings
(including major repairs, renovation and extensions of existing dwellings) by households
included in the output measure own-account major repairs and maintenance by owner
occupiers, agriculture and fisheries. The application of a mark-up to arrive to basic prices
still needs to be implemented in case of individual companies which report capitalised
production or capitalised wages in annual audited accounts or in SBS.
3.3.7
The total output of non-market producers is valued by summing the costs of
production. i.e. the sum of:
a)
intermediate consumption (P.2);
b)
compensation of employees (D.1);
c)
consumption of fixed capital (P.51c); and
d)
other taxes on production (D.29) less other subsidies on production (D.39).
Market output by non-market producers is valued at basic prices. Total output of a nonmarket producer covering market, non-market and own final use output is valued by the sum
of production costs. The value of its market output is given by its receipts from sales of
market products, the value of its non-market output being obtained residually as the
difference between the value of its total output and the sum of its market output and output
for own final use.
3.3.8
ESA 2010 presents a list of exceptions and clarifications to the times of recording
and the valuation of output for a number of industries which are tackled in Sections 3.7 to
3.27.
3.3.9
Intermediate consumption consists of goods and services consumed as inputs by a
process of production, excluding fixed assets whose consumption is recorded as consumption
of fixed capital (CFC). The goods and services are either transformed or used up by the
67
Gross National Income Inventory
production process. Products used for intermediate consumption are recorded and valued at
the time they enter the process of production. They are valued at the purchasers' prices for
similar goods or services at the time of use. The purchaser’s price is the amount paid by the
purchaser, excluding any deductible value added tax (VAT) or similar deductible tax, in order
to take delivery of a unit of a good or service at the time and place required by the purchaser;
the purchaser’s price of a good includes any transport charges paid separately by the
purchaser to take delivery at the required time and place.
3.3.10
Output is inclusive of changes in inventories of finished goods and work-in-progress
in order to ensure that output is recorded and valued when it is generated in the production
process rather than when it is actually sold. Similarly changes in inventories of materials are
deducted from purchases of materials intended as inputs in the calculation of intermediate
consumption. These adjustments are often available at source especially in case of the EAA
and the SBS survey.
The iterations developed by the National Accounts Unit when
processing administrative data and individual company accounts also takes into account the
inclusion of changes in inventories in the calculation of output and intermediate consumption.
3.3.11
Value added at basic prices is derived as a residual between output at basic prices
and intermediate consumption at purchaser’s prices.
3.3.12
The main method for recording the VAT receipts is the time-adjusted cash and the
other taxes on products are recorded on a cash basis and are adjusted for accruals using the
Treasury’s accruals template, which are based on the realisable debtors’ balances as recorded
on the books of the tax authorities. Subsidies on products are accrual-based.
3.4
Transition from private accounting and administrative concepts to
ESA 2010 national accounting concepts
3.4.1
Transition from private accounting and administrative concepts to ESA 2010
national accounts concepts is an important part of national accounts compilation and
particularly of gross domestic product (GDP) by the production approach, the estimation of
which mostly depends on accounting statements' data. These are also used when compiling
National Statistics Office (NSO) surveys and administrative data. Thus, adjustments are
68
The production approach
necessary when using annual reports and financial statements at company level and also
when deriving figures from NSO surveys or administrative data.
3.4.2
When using annual reports and financial statements at company level output is
derived after adding changes in inventory of finished goods and work-in progress, selected
items of other income to ‘Sales/Turnover net of discounts, returns, value added tax (VAT)
and sales taxes’ output and subtracting cost of goods bought for resale. Only ‘selected items
of other income’ are added to turnover and changes in inventories because in company
accounts other income may include transactions which should not be included as output
according to ESA 2010.
These transactions may include; profit on sale of assets,
realised/unrealised gains on exchange, interest received, government training grants,
litigation revenues, and rent received. Such details may be derived from the notes to the
financial statements and the ‘Statement of cash flows’.
3.4.3
Similarly when using annual reports and financial statements at company level one
needs to identify items included as part of cost of sales, selling, distribution, administrative,
general and other expenses which may not be classified as intermediate consumption
according to ESA 2010. Basically, the identification task requires the removal from the
above mentioned expenses of items like; labour costs, depreciation, other taxes on
production, property income, current transfers, and capital gains or losses. Cost of sales is
inclusive of changes in inventory of finished goods and work-in progress and the cost of
goods bought for resale. These items are used in the calculation of output and thus are
deducted from cost of sales. Such details may be derived from the notes to the financial
statements and the ‘Statement of cash flows’.
3.4.4
When using fiscal data which was not intended for statistical purposes, a number of
variables need to be cross-checked with the financial statements especially in case of large
companies. Companies tend to use the generic headings such as ‘other expenses’ and include
anything from wages to provisions under this heading. Consequently, the National Accounts
Unit built a system which caters for national accounts adjustments made to the original fiscal
data.
The system is such that the original data are summed to the national accounts
adjustments and the result is used to derive ESA 2010 compliant variables.
69
Gross National Income Inventory
3.4.5
These conceptual and methodological adjustments which are made after acquisition
of source data into the system of national accounts are shown in Table 3.4.1.
Table 3.4.1: Conceptual adjustments, 2010, in millions of Euro
Conceptual
Add Subsidies on products (P.1 at basic prices)
Less Taxes on products (P.1 at basic prices)
Less Wages in kind (P.2)
Less Taxes on production (P.2)
Less Insurance premiums (P.2)
Add Insurance service charge (P.2)
Less Purchased R&D incl. in P.2
Other (Specific to a particular NACE)
e.g. goods bought for resale
-3.2
53.0
37.0
12.7
0.0
0.0
0.0
0.0
0.0
0.0
-206.6
-107.2
P.2
215.4
0.0
0.0
0.0
0.0
-21.7
-37.7
-45.6
34.7
-1.7
-206.6
-63.0
-218.7
53.0
37.0
12.7
0.0
21.7
37.7
45.6
-34.7
1.7
0.0
-44.1
GVA
3.4.6
Total Conceptual
Add R&D for own final use (P.1)
P.1
Allocation of FISIM
Add Software for own final use (P.1)
Other Conceptual
The reason of these adjustments is differences between business and national
accounting rules. The most important conceptual adjustments comprise:
a)
estimation of research and development and software misreported as intermediate
consumption in gross fixed capital formation (GFCF);
b)
distinction between minor repairs by owner occupiers of a kind typically carried out
by owners (to be treated as intermediate consumption) and of a kind typically carried
out by tenants (to be treated as household final consumption expenditure (HFCE));
c)
calculation of financial intermediation services indirectly measured (FISIM) and
allocation across users (has an impact on the intermediate consumption in
production approach of GDP calculation and on final consumption of households in
expenditure approach of GDP calculation);
d)
calculation of non-life insurance services (has an impact on the intermediate
consumption in production approach of GDP calculation and on final consumption
of households in expenditure approach of GDP calculation);
70
The production approach
e)
exclusion of rent on land from intermediate consumption; this adjustment which
amounted to 16.2 million Euro in SBS 20108 is done at source and thus it does not
feature in Table 3.4.1;
f)
inclusion of net taxes on production to ensure that the output and gross value added
(GVA) are at basic prices; and
g)
deduction of cost price of trade goods to ensure that output is expressed in terms of
margins (has an impact on the intermediate consumption in production approach but
is neutral on GDP); this adjustment which amounted to 206.6 million Euro in 2010
is shown in Table 3.4.1 and pertains to Travel agency, tour operator and other
reservation service and related activities (NACE 79). However an adjustment of
approximately 4.3 billion9 Euro at source is done mainly with respect of Wholesale
and retail activities and is thus not reported in Table 3.4.1.
3.4.7
It should be noted that other adjustments listed below may be included as part of
Extrapolations and Models or Exhaustiveness.
a)
Estimation of consumption of fixed capital (CFC) for other non-market producers
(e.g. government units) has an impact on the output in production approach of GDP
calculation and the consumption of fixed capital in income approach of GDP
calculation).
b)
Estimation of wages and salaries in kind (has an impact on the output and the
intermediate consumption in production approach of GDP calculation and on
compensations of employees in income approach of GDP calculation and on final
consumption of households in expenditure approach of GDP calculation) as an
Exhaustiveness Adjustments (N7).
c)
Estimation of mark-up factor for operating surplus of own-account production of
fixed assets (has an impact on the output in production approach of GDP calculation
and on GFCF in expenditure approach of GDP calculation) as an Exhaustiveness
Adjustments (N7).
d)
Estimation of consumption of own-account production of agricultural products (has
an impact on the output and the intermediate consumption in production approach of
8
9
SBS 2010 extract 30.08.2013
SBS 2010 extract 30.08.2013
71
Gross National Income Inventory
GDP calculation and on final consumption of households in expenditure approach of
GDP calculation) as an Exhaustiveness Adjustments (N7).
e)
Estimation of own-account GFCF by households (has an impact on the output and
the intermediate consumption in production approach of GDP calculation and on
GFCF in expenditure approach of GDP calculation) included as an Exhaustiveness
Adjustments (N3).
f)
Estimation of imputed rent for housing services provided to themselves by owneroccupiers (has an impact on the output and the intermediate consumption in
production approach of GDP calculation and on final consumption of households in
expenditure approach of GDP calculation) included as part of Other Extrapolation
and Models.
3.4.8
The calculation of holding gains and losses from inventories has an impact on the
output and the intermediate consumption in production approach of GDP calculation and on
the changes in inventories in expenditure approach of GDP calculation. This outstanding
reservation has been tackled in 2015 and will be integrated in national accounts in the next
benchmark revision.
3.5
The roles of direct and indirect estimation methods and of
benchmarks and extrapolations
3.5.1
The gross value added at basic prices in the production approach is mainly derived
from direct sources. Direct data sources account for 84.8 per cent of total gross value added
(GVA) at basic prices. These include: Survey and Censuses (33.9 per cent), Administrative
Records (50.3 per cent) and Combined Data (0.6 per cent). Extrapolations and Models
contribute for 13.2 per cent of GVA at basic prices of which consumption of fixed capital
(CFC) derived with the perpetual inventory method (PIM) contributing to 2.7 per cent and
financial intermediation services indirectly measured (FISIM) at 4.7 per cent of total GVA at
basic prices both of which are tackled in detail in Sections 4.12 and 3.17, respectively.
3.5.2
Other Extrapolations and Models contribute to 5.2 per cent of total GVA at basic
prices. These relate to:
72
The production approach
a)
Calculations for imputed rents which are based on the user cost method as defined in
the Commission Regulation on the measurement of Dwelling Services 1722/2005
and not on the stratification method, hence classified here amount to 4.4 per cent.
Data on the dwelling stock is derived from the Census of Population and Housing
(CPH) which is available at ten year intervals as per EU regulation. Interpolation in
between census dates is based on monthly data for dwelling permits and harmonised
index of consumer prices (HICP). The Household Budgetary Survey (HBS) is not
available on a regular basis. The latest surveys were conducted in 2000, 2008 and
2015. More details may be obtained in Section 3.18.
b)
Other Extrapolations and Models for Education activities account for 0.2 per cent of
total GVA at basic prices. These mainly relate to:
NACE 85 – NPISHs
Since the latest available Non-Governmental Organisation (NGO) survey dates back
to 2007, non-profit institutions serving households (NPISHs) data had to be
extrapolated using other indicators namely the number of students, employment
statistics, retail price index (RPI) and HICP. The next NGO survey will be done
following the finalisation of the HBS of 2015/2016.
NACE 85.59 English language schools – S.11 and S.14
Those English Language companies which fail to respond to the English Language
Schools (ELS) survey and fail to submit fiscal data or accounts with the Malta
Financial Services Authority (MFSA) are covered using Employment and Training
Corporation (ETC) employment data and output and intermediate consumption
ratios based on latest available accounts of the company. A further estimate for nonresponse is done for those companies where only data on number of students is
available. Data as at time t-2 is generally used for such extrapolations.
NACE 85.32 Technical and vocational secondary education; NACE 85.51 Sports
and recreation education – S.11 and S.14
Enterprises involved in Technical and vocational training and in Sports and
recreation activities which fail to submit fiscal data or accounts with the MFSA are
73
Gross National Income Inventory
covered using ETC employment statistics and the output per full-time gainfully
occupied and the intermediate consumption to output ratios derived for companies
which submit audited financial data. Industry data at time t-2 are generally used for
such extrapolations.
NACE 85.52 Cultural education – S.11 and S.14
Expenditure data from the HBS 2008 was used to derive part of the output which
mainly refers to music schools and music instructors’ services, fine arts schools and
arts instruction services, and other cultural educational services. This estimate will
be reviewed once the HBS 2015 results are available.
NACE 85.53 Driving lessons – S.11 and S.14
Expenditure data from the HBS 2008 was used to derive the output per driving test
as at 2008. Data for 2010 was extrapolated using annual data on the number of
driving tests provided by the transport regulator and the corresponding HICP. This
estimate will be reviewed once the HBS 2015 results are available.
74
The production approach
Table 3.5.1: Direct and indirect methods by activity, 2010, in millions of Euro
Combined Data
Administrative
Records
106
71
34
43
12
31
5
0
5
155
0
155
0
0
0
274
0
274
510
209
302
988
221
767
65
45
20
94
3
91
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
0
0
0
49
74
-25
50
74
-24
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
558
344
214
1,905
1,360
545
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
546
362
185
231
153
78
0
0
0
0
0
0
0
0
0
9
0
9
0
0
0
0
0
0
0
0
0
9
0
9
1,054
462
591
60
28
31
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
364
224
141
659
465
194
0
0
0
7
1
6
2
0
2
0
0
0
0
0
0
0
0
0
0
0
0
9
1
8
654
396
0
0
0
0
0
0
3
0
0
0
0
0
0
0
0
0
3
0
258
0
0
0
3
0
0
0
0
3
130
69
62
577
343
234
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
0
0
0
0
0
0
1
0
1
CFC
Dwellings Stratification
Method
11,694
8,784
2,910
CFM
4,485
2,520
1,965
Benchmark
Extrapolations
Total
Extrap+Models
Surveys and
Censuses
Other E&M
Total
Total
Total
Extrapolations and Models
FISIM
P.1
P.2
B.1g
A*21
ESA 2010 Code
Basis for national accounts figures
A
P.1
P.2
B.1g
B
P.1
P.2
B.1g
C
P.1
P.2
B.1g
D
P.1
P.2
B.1g
E
P.1
P.2
B.1g
F
P.1
P.2
B.1g
G
P.1
P.2
B.1g
H
P.1
P.2
B.1g
I
P.1
P.2
B.1g
J
P.1
P.2
B.1g
c
Confidential
75
Gross National Income Inventory
Combined Data
Basis for national accounts figures
Extrapolations and Models
Administrative
Records
Dwellings Stratification
Method
FISIM
Other E&M
Total
Extrap+Models
0
0
0
4,657
4,489
168
106
71
34
0
0
0
0
0
0
0
0
0
0
0
0
274
0
274
0
0
0
274
0
274
74.23
40.30
33.92
0
0
0
0
0
0
36
12
25
0
0
0
0
0
0
0
0
0
0
0
0
314
57
258
351
68
282
0.00
0.00
0.00
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
314
57
258
314
57
258
383
190
193
167
91
76
0
0
0
0
0
0
0
0
0
2
0
2
0
0
0
0
0
0
0
0
0
2
0
2
565
344
221
48
22
26
0
0
0
0
0
0
0
0
0
8
0
8
0
0
0
0
0
0
0
0
0
8
0
8
0
0
0
504
204
300
0
0
0
0
0
0
0
0
0
55
0
55
0
0
0
0
0
0
0
0
0
55
0
55
31
8
23
309
45
264
0
0
0
0
0
0
0
0
0
13
0
13
0
0
0
0
0
0
23
11
12
36
11
26
0
0
0
380
123
256
0
0
0
0
0
0
0
0
0
54
0
54
0
0
0
0
0
0
23
9
14
77
9
68
1
1
1
1,625
1,124
501
0
0
0
0
0
0
0
0
0
2
0
2
0
0
0
0
0
0
72
41
32
74
41
34
8
4
4
20
9
11
0
0
0
0
0
0
0
0
0
4
0
4
0
0
0
0
0
0
29
17
12
33
17
16
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
CFM
Benchmark
Extrapolations
CFC
Surveys and
Censuses
A*21
ESA 2010 Code
Table 3.5.1: Direct and indirect methods by activity, 2010, in millions of Euro (cont...)
K
P.1
P.2
B.1g
L
P.1
P.2
B.1g
_L
P.1
P.2
B.1g
M
P.1
P.2
B.1g
N
P.1
P.2
B.1g
O
P.1
P.2
B.1g
P
P.1
P.2
B.1g
Q
P.1
P.2
B.1g
R
P.1
P.2
B.1g
S
P.1
P.2
B.1g
T
P.1
P.2
B.1g
76
The production approach
FISIM
Other E&M
Total
Extrap+Models
0
0
0
0
0
0
0
0
D.211
D.212
D.213
0
0
0
477
12
339
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
D.31
0
19
0
0
0
0
0
0
0
0
1,965
3,719
34
31
5
155
0
274
302
767
29.8
56.3
0.5
0.5
0.1
2.4
0.0
4.2
4.6
11.6
B.1*g
Contribution to B.1g in %
c)
CFC
Dwellings Stratification
Method
828
CFM
0
Benchmark
Extrapolations
D.21
A*21
Administrative
Records
Combined Data
Basis for national accounts figures
Extrapolations and Models
Surveys and
Censuses
ESA 2010 Code
Table 3.5.1: Direct and indirect methods by activity, 2010, in millions of Euro (cont...)
Other Extrapolations and Models for Human health and social work activities
(Section Q) account for 0.2 per cent of total GVA at basic prices. These include:
NACE 86-88 – NPISHs
Since the latest available NGO survey dates back to 2007, NPISHs data had to be
extrapolated using other indicators namely the number of members, residents, or
organisations, employment statistics, and HICP. The next NGO survey will be done
following the finalisation of the HBS 2015.
NACE 86 – S.11 and S.14
Companies which fail to submit fiscal data or accounts with the MFSA are covered
using ETC employment data and output and intermediate consumption ratios based
on latest available accounts of the company and annual developments of HICP for
Hospital Services, General and Specialist Medical Practice Activities, and Dental
Practice Activities.
NACE 87 – S.11 and S.14
Companies which fail to submit fiscal data or accounts with the MFSA are covered
using ETC employment data and output and intermediate consumption ratios based
on latest available accounts of the company and annual developments of HICP for
77
Gross National Income Inventory
Retirement Homes for Elderly Persons. Data as at time t-2 are generally used for
such extrapolations.
NACE 88.91 Child day-care activities – S.11 and S.14
Only one childcare centre provides audited financial accounts. The output per fulltime gainfully occupied and the intermediate consumption to output ratios are
derived and used to cover the other childcare centres for which quarterly
employment data and the HICP for childminding services are applied. Industry data
at time t-2 is generally used for such extrapolations.
d)
Other Extrapolations and Models for Arts, entertainment and recreation (Section R)
account for 0.5 per cent of total GVA at basic prices. These include:
NACE 90 Creative, arts and entertainment activities / NACE 91 Libraries,
archives, museums and other cultural activities / NACE 93 Sports activities and
amusement and recreation activities – NPISHs
Since the latest available NGO survey dates back to 2007, NPISHs data had to be
extrapolated using other indicators namely the number of members, residents, or
organisations, employment statistics, and HICP. The next NGO survey will be done
following the finalisation of the HBS 2015.
NACE 90 Creative, arts and entertainment activities excluding film production –
S.11 and S.14
A large number of individuals are involved in this activity. Ratios derived from
Structural Business Statistics (SBS) survey of the year 2005 are used to calculate
output and intermediate consumption. The Structural Business Statistics Unit was
requested to cover this industry for national accounts purposes in 2005.
NACE 90 Film productions – S.11 and S.14
The Malta Film Commission (MFC) provides the expenditure incurred by nonresident film producers on a quarterly basis. In NACE 90 an estimate for resident
artists, musicians, sculptors, painters, and stage-set designers involved in such
78
The production approach
productions is calculated. Up to 2009 a ratio of about 15 per cent was applied to the
total expenditure incurred by non-resident producers, whereas as from 2010 onwards
this ratio was adjusted to 18.8 per cent. This ratio was based on an average derived
from detailed audited accounts of three particular films.
NACE 92 Remote gambling – S.11 and S.14
Companies which fail to submit accounts with the MFSA were covered by a 2 per
cent grossing up factor in line with balance of payments (BOP) estimates in 2010.
However, this grossing up factor varies from year to year.
NACE 92 Lotto receivers – S.11 and S.14
Information on the commission paid to lotto receivers used to be obtained from the
former Department of Public Lotto (DPL) up till 2004. Since then commissions paid
are extrapolated on the output generated by National Lottery Licensee. Intermediate
consumption is derived by taking output multiplied by the intermediate to output
ratio which is fixed at 10 per cent.
NACE 93.2 to 93.29 Amusement and recreation activities – S.11 and S.14
Companies which fail to submit fiscal data or accounts with the MFSA are covered
using ETC employment data and output and intermediate consumption ratios based
on latest available accounts of the companies who operate in the same NACE class.
Data as at time t-2 is generally used for such extrapolations.
NACE 93.13 Fitness facilities – S.11 and S.14
Output of Fitness Facilities is derived by applying output per full-time equivalent
(FTE) gainfully occupied of previous year raised by growth rate of HICP for Fitness
Centres and Gymnasia Services and multiplied by FTE gainfully occupied of current
year which is available through ETC data. The benchmark year goes back to 2004,
which refers to the year when the Sports Organisations (SPOs) survey was carried
out.
79
Gross National Income Inventory
e)
Other Extrapolations and Models for ‘Other services activities’ account for 0.2 per
cent of total GVA at basic prices.
Most of the operators are NPISHs which
extrapolations are covered in detail in Section 3.25. Since the latest available NGO
survey dates back to 2007, NPISHs data had to be extrapolated using other
indicators namely the number of members, residents, or organisations, employment
statistics, and HICP. The next NGO survey will be done following the finalisation
of the HBS 2015.
3.5.3
Activities listed above may in the future be covered by the SBS on a yearly basis and
thus the need for such extrapolations may diminish.
3.5.4
Benchmark Extrapolations account for 0.5 per cent of total GVA at basic prices and
are limited to Transportation and storage (Section H) and Real estate activities (Section L).
In case of Transportation and storage, the extrapolation of Taxi operations (NACE 49.32)
was based on information derived from benchmark year 2000 while the extrapolation of
horse drawn cabs (part of Other passenger land transport n.e.c. (NACE 49.39)) was based on
information derived from benchmark year 1999. Quarterly data on the number of total nights
spent by inbound tourists was used to extrapolate data up till 2011. As from 2012, the SBS
which is classified under Surveys and Censuses in the process table is being used and thus
there will no longer be the need for such benchmark extrapolations. The extrapolation of
Renting and operating of own or leased non-residential buildings (NACE 68.20) is based on
administrative records on rents on buildings paid by enterprises on benchmark year 2009.
This information was previously derived from the turnover by product provided in the SBS
for NACE 68.20. This information is no longer being collected and thus this extrapolation
method was developed. The SBS of 2015 will again request detailed information at NACE
class level and also at product level. This will allow the National Accounts Unit to reassess
the Benchmark Extrapolation method.
3.6
3.6.1
The main approaches taken with respect to exhaustiveness
Value of production activities that are not directly observed are, in principle,
included within the national accounts production boundary. The following three types of
activities are therefore included:
80
The production approach
a)
illegal activities where the parties are willing partners in an economic transaction;
b)
hidden and underground activities where the transactions themselves are not against
the law, but are unreported to avoid official scrutiny; and
c)
3.6.2
activities described as ‘informal’, typically where no records are kept.
Exhaustiveness Adjustments amount to 3.7 per cent of total gross value added
(GVA) at basic prices. Details are being provided in Table 3.6.1 and Chapter 7. National
Accounts Unit includes adjustments for:
N1 - Producer deliberately not registering - underground;
N2 - Producers deliberately not registering - illegal;
N3 - Producers not required to register;
N4 - Legal persons not surveyed;
N5 - Registered entrepreneurs not surveyed;
N6 - Producers deliberately misreporting; and
N7 - Other statistical deficiencies.
3.6.3
The Business Register (BR) does not include producers involved in underground or
illegal activities.
However, these are catered for in national accounts.
Estimates for
‘Producer deliberately not registering’ in N1 relate to furniture production (Section C –
Manufacturing) and domestic help (Section T – Activities of households as employers).
Illegal activities included in national accounts under N2 relate to illegal gambling,
prostitution and narcotics and are reported in Gambling and betting activities (NACE 92);
Other service activities (Section S) and Wholesale and retail trade; repair of motor vehicles
and motorcycles (Section G) respectively.
3.6.4
Included in N3 is the production of construction of and repairs to dwellings by non-
market household producers involved in Construction (Section F).
3.6.5
In Malta, activities not surveyed include parts of the Financial and insurance
activities (Section K), parts of the Human health and social work activities (Section Q) and
parts of Other service activities (Section S). Such companies are often included in the BR,
81
Gross National Income Inventory
however, data are not collected for the production and generation of income accounts by
National Statistics Office (NSO). Exhaustiveness Adjustments which have been reported in
case of Human health and social work activities (Section Q) and Other service activities
(Section S) are carried out as legal persons and registered enterprises are not currently
surveyed by NSO. Consequently, national accounts data for registered enterprises such as
physicians and the like are derived from expenditure based surveys and included as part of
N5. Data for ‘legal persons not surveyed’ (N4) are generally covered by annual accounts and
financial statements and fiscal data, in which case data were classified as Administrative
Records in the process tables and not included as Exhaustiveness. Similarly, ‘registered
enterprises not surveyed’ (N5) are generally extrapolated using employment data and thus
were not included as part of N5 but as part of extrapolations in the process tables. This
implies that the identification of N4 and N5 is often difficult and may be incomplete due to
classification issues during the compilation of process tables.
3.6.6
Estimates for ‘producers deliberately misreporting’ (N6) is being reported for
furniture production (Section C), Wholesale and retail trade (Section G) with respect to
second hand cars, Food and beverage service activities (Section I), Real estate activities
(Section L), Veterinary services (Section M) and Education (Section P), with the latter
specifically referring to private tuition. In the case of Food and beverage service activities
(Section I), the difference between the results obtained from the Structural Business Statistics
(SBS) survey and expenditure based statistics derived from the Household Budgetary Survey
(HBS), the Tourism Expenditure Survey and the Tourstat survey is reported.
3.6.7
‘Other statistical deficiencies’ (N7) include the following list estimates for
production for own final use by market producers and tips. Production for own final use by
market producers is spread across various activities while tips are limited to Section I.
82
The production approach
Table 3.6.1: Exhaustiveness by activity, 2010, in millions of Euro
Exhaustiveness
ESA 2010 Code
A*21
P.1
P.2
B.1g
Total
Total
Total
N1
N2
N3
N4
N5
N6
Total
Exhaustiveness
N7
19.0
0.5
18.5
20.4
1.1
19.2
4.5
0.0
4.5
0.0
0.0
0.0
185.3
63.6
121.7
59.7
23.4
36.3
12.8
0.0
12.8
301.7
88.7
213.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
8.5
0.0
8.5
8.5
0.0
8.5
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
1.0
0.5
0.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
6.3
0.0
6.3
0.2
0.0
0.2
7.5
0.5
7.1
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
0.0
0.0
0.0
0.0
0.0
0.0
4.5
0.0
4.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.5
0.0
4.5
0.0
0.0
0.0
10.4
0.0
10.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
11.8
3.3
8.5
0.0
0.0
0.0
22.1
3.3
18.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
53.0
33.9
19.1
2.8
0.0
2.8
55.8
33.9
21.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
A
P.1
P.2
B.1g
B
P.1
P.2
B.1g
C
P.1
P.2
B.1g
D
P.1
P.2
B.1g
E
P.1
P.2
B.1g
F
P.1
P.2
B.1g
G
P.1
P.2
B.1g
H
P.1
P.2
B.1g
I
P.1
P.2
B.1g
J
P.1
P.2
B.1g
K
P.1
P.2
B.1g
c
Confidential
83
Gross National Income Inventory
Table 3.6.1: Exhaustiveness by activity, 2010, in millions of Euro (cont...)
Exhaustiveness
ESA 2010 Code
A*21
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
L
P.1
P.2
B.1g
0.0
0.0
0.0
0.0
0.0
0.0
48.4
8.7
39.6
0.0
0.0
0.0
0.0
0.0
0.0
2.3
1.4
0.9
0.0
0.0
0.0
50.7
10.1
40.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
11.4
0.1
11.3
0.0
0.0
0.0
11.4
0.1
11.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
62.5
14.5
48.1
0.0
0.0
0.0
0.0
0.0
0.0
62.5
14.5
48.1
0.0
0.0
0.0
0.8
0.0
0.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.8
0.0
0.7
0.0
0.0
0.0
9.3
1.1
8.1
0.0
0.0
0.0
0.0
0.0
0.0
48.0
24.5
23.5
0.0
0.0
0.0
0.0
0.0
0.0
57.3
25.6
31.6
18.0
0.0
18.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
18.0
0.0
18.0
_L
P.1
P.2
B.1g
M
P.1
P.2
B.1g
N
P.1
P.2
B.1g
O
P.1
P.2
B.1g
P
P.1
P.2
B.1g
Q
P.1
P.2
B.1g
R
P.1
P.2
B.1g
S
P.1
P.2
B.1g
T
P.1
P.2
B.1g
84
The production approach
Table 3.6.1: Exhaustiveness by activity, 2010, in millions of Euro (cont...)
Exhaustiveness
ESA 2010 Code
A*21
N1
N2
N3
N4
N5
N6
Total
Exhaustiveness
N7
D.211
D.212
D.213
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
D.31
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
B.1*g
18.5
19.2
4.5
0.0
121.7
36.3
12.8
213.0
0.3
0.3
0.1
0.0
1.8
0.5
0.2
3.2
Contribution to B.1g in
%
3.7
3.7.1
Agriculture, forestry and fishing (NACE Rev. 2 Section A)
The activities of Section A are distinguished in three industries within the A*6410
NACE11 Rev. 2 divisions. NACE 02 Forestry and Logging is not existent in Malta. Section
A contributed 1.7 per cent to the total gross value added (GVA) in 2010.
Table 3.7.1: Contribution of Section A to total economy, 2010
NACE Division
A*64
Description
Million Euro
P.1
P.2
B.1g as a percentage of:
B.1g
GDP
GNI
B.1g
(B.1*g)
(B.5*5)
B.1g
Total
Total
Total
Section A
economy
economy
economy
78.2%
1.3%
1.1%
1.2%
Crop and animal
production, hunting and
01
related service activities
02
Forestry and logging
03
Fishing and aquaculture
146.4
71.3
75.2
0.0
0.0
0.0
0.0%
0.0%
0.0%
0.0%
72.5
51.6
20.9
21.8%
0.4%
0.3%
0.3%
218.9
122.8
96.1
100.0%
1.7%
1.5%
1.5%
Agriculture, forestry and
A
3.7.2
fishing
Three institutional sectors are involved in Section A. Table 3.7.2 shows that at 47.5
per cent households (S.14) were the largest contributors towards the GVA of Section A,
10
Refer to Table 9.1.1.
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
11
85
Gross National Income Inventory
followed by non-financial corporations (S.11) at 31.1 per cent and general government (S.13)
at 21.5 per cent.
Table 3.7.2: Section A (NACEs 01-03) by institutional sector for 2010
Output (Million Euro)
NACE
S.11
S.12
S.13
S.14
A
93.2
0.0
24.0
01
30.1
0.0
02
0.0
0.0
03
63.0
0.0
Intermediate consumption (Million Euro)
S.15
Total
S.11
101.8
0.0
218.9
63.3
20.3
96.0
0.0
146.4
0.0
0.0
0.0
3.7
5.8
0.0
A
S.11
S.12
S.13
S.14
S.13
S.14
S.15
Total
0.0
3.4
56.2
0.0
122.8
16.3
0.0
3.1
51.8
0.0
71.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
72.5
47.0
0.0
0.2
4.3
0.0
51.6
Gross value added (Million Euro)
NACE
S.12
Gross value added (Percentage)
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
29.9
0.0
20.6
45.6
0.0
96.1
31.1%
0.0%
21.5%
47.5%
0.0%
100.0%
01
13.9
0.0
17.2
44.2
0.0
75.2
18.4%
0.0%
22.8%
58.8%
0.0%
100.0%
02
0.0
0.0
0.0
0.0
0.0
0.0
n/a
n/a
n/a
n/a
n/a
n/a
03
16.0
0.0
3.5
1.5
0.0
20.9
76.5%
0.0%
16.6%
7.0%
0.0%
100.0%
Table 3.7.3: Extract of process tables 2010 for Section A in millions of Euro
Administrative Records
Combined Data
Benchmark
Extrapolations
CFM
CFC
Dwellings
FISIM
Other E&M
Total Extrapolation
and Models
Other
Total (Sources)
P.1
65.4
94.1
0.0
0.0
0.0
1.3
0.0
0.0
48.6
49.9
0.0
209.3
P.2
45.0
3.3
0.0
0.0
0.0
0.0
0.0
0.0
74.0
74.0
0.0
122.3
B.1g
20.4
90.8
0.0
0.0
0.0
1.3
0.0
0.0
-25.4
-24.1
0.0
87.0
Section A
Surveys and Censuses
Basis for national accounts figures
Extrapolations and Models
Adjustments
Allocation of FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
P.1
0.0
0.0
1.0
1.0
0.0
0.0
0.0
0.0
0.0
0.0
8.5
8.5
0.0
9.6
218.9
P.2
0.0
3.2
-2.6
0.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.5
122.8
B.1g
0.0
-3.2
3.7
0.5
0.0
0.0
0.0
0.0
0.0
0.0
8.5
8.5
0.0
9.1
96.1
Section A
86
Exhaustiveness
Data Validation
Conceptual
The production approach
NACE 01 Crop and animal production, hunting and related service activities
3.7.3
During 2010, NACE 01 contributed 1.3 per cent to total GVA and 78.2 per cent to
the GVA of NACE A. Table 3.7.2 shows that at 58.8 per cent households (S.14) were the
largest contributors to the GVA of NACE 01 followed by general government (S.13) at 22.8
per cent and non-financial corporations (S.11) at 18.4 per cent.
3.7.4
The main data sources used in the compilation of the production account of NACE
01 are:
a)
Economic Accounts for Agriculture (EAA) 2010; and
b)
Government Finance Statistics 2010.
3.7.5
The EAA, compiled by the Agriculture and Environment Statistics Unit at the
National Statistics Office (NSO), provide a wide range of indicators such as output,
intermediate consumption and consumption of fixed capital. Basic sources used in the
compilation of the EAA for Malta include data derived from various administrative sources,
surveys conducted by the NSO and data received from the Ministry of Sustainable
Development, the Environment and Climate Change (MSDEC). In 2010 this Ministry was
operating under a different name, namely that of Ministry for Resources and Rural Affairs
(MRRA).
3.7.6
No adjustments are made to the EAA in national accounts since:
a)
no units are engaged in seed production (for research or certification);
b)
there are no production units that provide associated agricultural services other than
agricultural contract work (i.e. the operation of irrigation systems);
c)
units for which the agricultural activity represent solely a leisure activity, kitchen
gardening in particular, are already included in the EAA; and
d)
the supply and use tables (SUTs) show that agricultural activities of units whose
principal activity is not agricultural, are negligible.
3.7.7
Agricultural output in the EAA comprises the output value of crops, animals,
agricultural services, and goods and services produced from inseparable non-agricultural
87
Gross National Income Inventory
secondary activities. Intermediate consumption covers purchases made by farmers for raw
and auxiliary materials that are used as inputs for crop and animal production; it also includes
expenditure on veterinary services, repairs and maintenance, and other services.
3.7.8
Preliminary GVA estimates are based on the latest EAA and on quarterly indicators,
namely exports, fruit and vegetables sold through organised markets and slaughtering at the
civil abattoir and poultry slaughterhouses. These estimates are eventually revised when the
EAA are published.
Market output (P.11) – Non-financial corporations (S.11) and households (S.14)
Crop output
3.7.9
Crop output includes the growing of forage plants, vegetables and horticultural
products, potatoes, fruits, and wine produced on farms.
3.7.10
Data on production volumes, prices and wholesale values are compiled from
organised fruit and vegetable markets, and form the major part of estimates for cropping
products. Volumes are grossed-up to cater for fruit and vegetable produce that tend to bypass
organised market structures. The grossing up factor is based on the results of the Survey on
Direct Sales of Fruit and Vegetable Production 2004, carried out by the Agriculture and
Environment Statistic Unit at the NSO in 2005. This survey, a technical action plan for the
improvement of agriculture statistics (TAPAS) project, analysed in detail the extent of direct
sales of fruit and vegetables in relation to market sales.
Thus, the Exhaustiveness
Adjustments for N6 in this case is provided at source and no adjustment is needed in national
accounts data.
3.7.11
Forage output is compiled from the Farm Accountancy Data Network (FADN) and
Farm Structure Survey (FSS). Data on tomatoes sent for processing is compiled through an
annual questionnaire sent to tomato processors. The Viticulture and Oenology Unit at the
MSDEC provides data relating to grapes used in the production of wine. Exports of potatoes
are compiled from trade data.
88
The production approach
Animal output
3.7.12
Animal output is estimated mainly on the basis of statistics provided by
slaughterhouses. The civil abattoir provides information regarding animals slaughtered at the
civil abattoir whilst poultry slaughterhouses provide information on poultry.
3.7.13
Output of rabbits is extrapolated on the estimated number of slaughtered rabbits and
the price of rabbits as shown in the retail price index (RPI).
3.7.14
The main producer of dairy products provides data related to the value and volume
of cow’s milk purchased from farmers.
3.7.15
The number of eggs produced is estimated on the number of laying hens, as
provided by the civil abattoir.
3.7.16
Production of honey is estimated on the price of honey and the results of the
Apiculture Census undertaken during the first two months of 2004 with a reference date, 1
September 2003.
Non-agricultural secondary activities (inseparable)
3.7.17
Non-agricultural secondary activities which cannot be separated from agricultural
activities are included in output of NACE 01.
3.7.18
Milk products from sheep and goat milk are estimated on the average milk yield per
sheep and goat, obtained from the Survey on Sheep and Goats (Milk production in Malta)
2004/2005, carried out by the Agriculture and Environment Unit at the NSO (TAPAS
Project), and on the number of sheep and goats in the Maltese Islands.
3.7.19
Wine is extrapolated using data received from the Viticulture and Oenology Unit
within the MSDEC and on the amount of grapes the passes through organised markets.
Output for own final use (P.12) – Non-financial corporations (S.11) and households (S.14)
3.7.20
Estimates for own consumption comprise products consumed by the farmers’
households which produce them and products stemming from the Agriculture and
89
Gross National Income Inventory
Environment Statistics Unit (holding) and used for the payment in kind in the form of
remuneration paid to holding workers or exchanged for other goods.
3.7.21
Own consumption of agricultural produce is estimated by the Agriculture and
Environment Statistics Unit using coefficients obtained from the following TAPAS Projects:
a) Survey on Direct Sales of Fruit and Vegetable Production 2004;
b) Kitchen Garden Survey 2004; and
c) Survey on Sheep and Goats (Milk production in Malta) 2004/2005.
Intermediate consumption (P.2) – Non-financial corporations (S.11) and households (S.14)
3.7.22
Intermediate consumption in the EAA is derived by applying the change in input
agricultural price indices to previous year estimates.
3.7.23
The main categories of intermediate consumption include:
a) Animal feed;
b) Energy and lubricants: mainly electricity, gas and all other solid and liquid fuels and
propellants;
c) Seeds and planting stock;
d) Maintenance expenses;
e) Fertilisers and soil improvers;
f)
Veterinary expenses; and
g) Plant protection products and pesticides.
General government sector (S.13)
3.7.24
Output (P.1) and intermediate consumption (P.2) of general government are
compiled from the departmental accounting system (DAS), the Treasury Department accruals
templates and from financial statement of extra-budgetary units (EBUs) and local councils.
Preliminary estimates for EBUs are derived from the Financial Data Reporting System
(FDRS) and later adjusted with audited financial statements when available. Output (P.1) of
general government is measured using the cost approach. Non-market output (P.13) is
90
The production approach
calculated as a residual after deducting market output (P.11) and output for own final use
(P.12).
NACE 02
3.7.25
Forestry and logging
In Malta, no enterprises operate in this activity.
NACE 03 Fishing and aquaculture
3.7.26
NACE 03 contributed 0.4 per cent to Malta’s GVA during 2010 and 21.8 per cent to
the GVA of NACE A. Table 3.7.2 shows that at 76.5 per cent, non-financial corporations
(S11) were the largest contributors to the GVA of NACE 03 during 2010.
General
government (S.13) contributed 16.6 per cent and households (S.14) 7.0 per cent.
3.7.27
The main data sources for the compilation of the production account of NACE 03
are:
a) Department of Fisheries (DOF);
b) Trade data;
c) Census of Fisheries 2006 (includes economic data 2005);
d) Aquaculture Census 2010; and
e) Government finance statistics.
3.7.28
Preliminary GVA estimates of open sea fishing are based on the value of fish
landings and on ratios from the latest Census of Fisheries. Estimates are also adjusted for
Exhaustiveness. Preliminary GVA estimates of farmed fish are based on exports of farmed
fish and on ratios from Aquaculture Censuses. Preliminary estimates are revised when
census results are available.
Market output (P.11) – Non-financial corporations (S.11) and households (S.14)
3.7.29
Estimates for open sea fishing are based on the value of exported fish derived from
trade data and on the wholesale value of fish landings, compiled by the DOF from daily
returns submitted by middlemen at the fish market.
91
Gross National Income Inventory
3.7.30
Market output of open sea fishing is estimated by applying the output to sales ratio
derived from the Census of Fisheries 2006 to total sales of wild fish for the year. The
resulting estimate is further adjusted for Exhaustiveness. This adjustment is equal to the
difference between market output extrapolated on the Census of Fisheries 2006 and a
separate estimate using the commodity flow model (CFM).
3.7.31
Market output of farmed fish is taken from the Census of Aquaculture 2010, which
is a yearly survey available with a time lag of about a year.
Output for own final use (P.12) – Non-financial corporations (S.11) and households (S.14)
3.7.32
Output for own final use of open sea fishing is derived by applying the ratio of
output for own final use to market output resulting from Census of Fisheries 2006, after
adjusting for exhaustiveness.
Intermediate consumption (P.2) – Non-financial corporations (S.11) and households (S.14)
3.7.33
Intermediate consumption for open sea fishing is derived by applying the
intermediate consumption to output ratio derived from the Census of Fisheries 2006.
Intermediate consumption of farmed fish is taken from the Census of Aquaculture 2010.
General government sector (S.13)
3.7.34
Output (P.1) and intermediate consumption (P.2) of general government are
compiled from the DAS, the Treasury Department accruals templates and from financial
statement of EBUs and local councils. Preliminary estimates for EBUs are derived from the
FDRS and later adjusted with audited financial statements when available. Output of general
government is measured using the cost approach. Non-market output (P.13) is calculated as a
residual after deducting market output (P.11) and output for own final use (P.12).
92
The production approach
3.8
3.8.1
Mining and quarrying (NACE Rev. 2 Section B)
Section B is defined by group of producer units and covers the following industries:
a)
NACE12 05: Mining of coal and lignite;
b)
NACE 06: Extraction of crude petroleum and natural gas;
c)
NACE 07: Mining of metal ores;
d)
NACE 08: Other mining and quarrying; and
e)
NACE 09: Mining support services activities.
3.8.2
In practice no companies operate in NACE 05 to 07. Mineral exploration is a one-
off event and is taken into consideration for gross fixed capital formation (GFCF) purposes
when it occurs. This section will provide information on NACE divisions 08 and 09.
Table 3.8.1: Contribution of Section B to total economy, 2010
B.1g as a percentage of:
NACE Division
A*64
05-09
c
Description
Mining and
quarrying
P.1
c
P.2
B.1g
Million Euro
c
c
Section B
%
B.1g Total
economy
%
GDP
(B.1*g)
Total
economy
%
c
c
c
GNI
(B.5*5)
Total
economy
%
c
Confidential
3.8.3
Two institutional sectors are involved in Mining and quarrying. Table 3.8.2 shows
that at 88.6 per cent non-financial corporations were the largest contributors to the gross
value added (GVA), followed by households at 11.4 per cent.
12
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
93
Gross National Income Inventory
Table 3.8.2: Section B (NACEs 05-09) by institutional sector for 2010
Output (Million Euro)
NACE
B
05-09
Intermediate consumption (Million Euro)
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
Gross value added (Million Euro)
NACE
B
05-09
c
Gross value added (Percentage)
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
c
c
c
c
c
c
c
c
c
c
c
c
88.6%
0.0%
0.0%
11.4%
0.0%
100.0%
88.6%
0.0%
0.0%
11.4%
0.0%
100.0%
Confidential
Process tables
3.8.4
Annual accounts and financial statements classified as an administrative source and
the Structural Business Statistics (SBS) survey classified under Surveys and Censuses are the
main sources used. The Conceptual Adjustments were discussed in Sections 3.2 and 3.4.
Table 3.8.3: Extract of process tables 2010 for Section B in millions of Euro
Basis for national accounts figures
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Other
Total (Sources)
c
c
c
c
c
c
c
c
c
c
c
P.2
c
c
c
c
c
c
c
c
c
c
c
c
B.1g
c
c
c
c
c
c
c
c
c
c
c
c
c
Confidential
94
Extrap+Models
Comb. Data
c
Total
Adm. Rec.
P.1
Section B
Surv. and Cens.
Extrapolations and Models
The production approach
Table 3.8.3: Extract of process tables 2010 for Section B in millions of Euro (cont...)
Adjustments
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
P.1
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
P.2
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
B.1g
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
Section B
Allocation of FISIM
Exhaustiveness
Data Validation
Conceptual
c
Confidential
3.8.5
Estimates for total output, intermediate consumption and value added for Other
mining and quarrying (NACE 08) is mainly derived from SBS survey and Mining support
services activities (NACE 09) are mainly obtained from annual audited financial accounts for
the larger two establishments. The rest of the economic activity entities are then covered by
the SBS survey.
3.9
Manufacturing (NACE Rev.2 Section C)
3.9.1
Activities in Section C are now distinguished in 24 divisions within 19, A*6413
headings. Dissemination at A*8814 is not possible due to confidentiality issues with respect
to a number of industries. Confidentiality is assessed on a yearly basis and thus NACE15
divisions flagged as confidential in 2010 may change across years.
3.9.2
Manufacturing is one of the key players in the Maltese economy with a contribution
of 12.9 per cent to value added gross in 2010. The share of gross value added (GVA) as a
percentage of output (P.1) stood at 30.2 per cent for activities in Section C in 2010 which is
very close to a national ratio of 32.9 per cent.
13
Refer to Table 9.1.1.
Refer to Table 9.1.1.
15
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
14
95
Gross National Income Inventory
Table 3.9.1: Contribution of Section C to total economy, 2010
B.1g as a percentage of:
GDP (B.1*g)
NACE Division
P.1
A*64
c
P.2
B.1g
Million Euro
B.1g Total
Total
GNI (B.5*5)
Section C
economy
economy
Total economy
%
%
%
%
10-12
c
c
c
c
c
c
c
13-15
c
c
c
c
c
c
c
16
16.2
10.2
5.9
0.8%
0.1%
0.1%
0.1%
17
c
c
c
c
c
c
c
18
c
c
c
c
c
c
c
19
c
c
c
c
c
c
c
20
c
c
c
c
c
c
c
21
c
c
c
c
c
c
c
22
c
c
c
c
c
c
c
23
101.8
75.0
26.8
3.6%
0.5%
0.4%
0.4%
24
2.5
0.5
1.9
0.3%
0.0%
0.0%
0.0%
25
84.7
55.2
29.5
3.9%
0.5%
0.4%
0.5%
26
c
c
c
c
c
c
c
27
c
c
c
c
c
c
c
28
c
c
c
c
c
c
c
29
c
c
c
c
c
c
c
30
c
c
c
c
c
c
c
31-32
c
c
c
c
c
c
c
33
107.7
75.6
32.1
4.3%
0.6%
0.5%
0.5%
Total of Section C
2,480.9
1,731.3
749.7
100.0%
12.9%
11.4%
11.9%
Confidential
3.9.3
Four institutional sectors are involved in manufacturing. Table 3.9.2 shows that at
94.1 per cent, non-financial corporations were the largest contributors to the GVA, followed
by households at 4.2 per cent and the general government (S.13) at 1.7 per cent. The
contribution of non-profit institutions serving households (NPISHs) is negligible.
96
The production approach
Table 3.9.2: Section C (NACEs 10-33) by institutional sector for 2010
Output (Million Euro)
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
C
2,369.7
-
27.2
83.9
0.0
2,480.9
1,664.4
-
14.1
52.7
0.0
1,731.2
10-12
c
c
c
c
c
c
c
c
c
c
c
c
13-15
c
c
c
c
c
c
c
c
c
c
c
c
16
10.7
-
-
5.4
-
16.2
6.8
-
-
3.4
-
10.2
17
c
c
c
c
c
c
c
c
c
c
c
c
18
c
c
c
c
c
c
c
c
c
c
c
c
19
c
c
c
c
c
c
c
c
c
c
c
c
20
c
c
c
c
c
c
c
c
c
c
c
c
21
c
c
c
c
c
c
c
c
c
c
c
c
22
c
c
c
c
c
c
c
c
c
c
c
c
23
96.0
-
-
5.8
-
101.8
70.8
-
-
4.2
-
75.0
24
1.8
-
-
0.7
-
2.5
0.4
-
-
0.1
-
0.5
25
72.0
-
-
12.7
-
84.7
46.9
-
-
8.3
-
55.2
26
c
c
c
c
c
c
c
c
c
c
c
c
27
c
c
c
c
c
c
c
c
c
c
c
c
28
c
c
c
c
c
c
c
c
c
c
c
c
29
c
c
c
c
c
c
c
c
c
c
c
c
30
c
c
c
c
c
c
c
c
c
c
c
c
31-32
c
c
c
c
c
c
c
c
c
c
c
c
33
91.0
-
14.9
1.8
-
107.7
62.3
-
12.1
1.2
-
75.6
NACE
c
Intermediate consumption (Million Euro)
Confidential
97
Gross National Income Inventory
Table 3.9.2: Section C (NACEs 10-33) by institutional sector for 2010 (cont...)
Gross value added (Million Euro)
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
C
705.3
-
13.1
31.3
-
749.7
94.1%
0.0%
1.7%
4.2%
0.0%
100.0%
10-12
c
c
c
c
c
c
93.3%
0.0%
0.0%
6.7%
0.0%
100.0%
13-15
c
c
c
c
c
c
97.4%
0.0%
0.0%
2.6%
0.0%
100.0%
16
3.9
-
-
2.0
-
5.9
66.4%
0.0%
0.0%
33.6%
0.0%
100.0%
17
c
c
c
c
c
c
97.4%
0.0%
0.0%
2.6%
0.0%
100.0%
18
c
c
c
c
c
c
94.7%
0.0%
2.6%
2.7%
0.0%
100.0%
19
c
c
c
c
c
c
100.0%
0.0%
0.0%
0.0%
0.0%
100.0%
20
c
c
c
c
c
c
99.3%
0.0%
0.0%
0.7%
0.0%
100.0%
21
c
c
c
c
c
c
100.0%
0.0%
0.0%
0.0%
0.0%
100.0%
22
c
c
c
c
c
c
99.8%
0.0%
0.0%
0.2%
0.0%
100.0%
23
25.3
-
-
1.5
-
26.8
94.4%
0.0%
0.0%
5.6%
0.0%
100.0%
24
1.4
-
-
0.5
-
1.9
71.8%
0.0%
0.0%
28.2%
0.0%
100.0%
25
25.1
-
-
4.4
-
29.5
85.1%
0.0%
0.0%
14.9%
0.0%
100.0%
26
c
c
c
c
c
c
99.9%
0.0%
0.0%
0.1%
0.0%
100.0%
27
c
c
c
c
c
c
98.2%
0.0%
0.0%
1.8%
0.0%
100.0%
28
c
c
c
c
c
c
98.5%
0.0%
0.0%
1.5%
0.0%
100.0%
29
c
c
c
c
c
c
99.9%
0.0%
0.0%
0.1%
0.0%
100.0%
NACE
c
Gross value added (Percentage)
30
c
c
c
c
c
c
76.5%
0.0%
0.0%
23.5%
0.0%
100.0%
31-32
c
c
c
c
c
c
79.0%
0.0%
8.7%
12.4%
0.0%
100.0%
33
28.7
-
2.9
0.6
-
32.1
89.3%
0.0%
8.9%
1.7%
0.0%
100.0%
Confidential
Process tables
3.9.4
An excerpt of the process table for manufacturing is presented in Table 3.9.3. Annual
accounts and financial statements classified as an administrative source are the most
important data source for manufacturing followed by the Structural Business Statistics (SBS)
survey classified under Surveys and Censuses.
The data classified under Other
Extrapolations and Models refers to the NPISHs data for Manufacturing of chemical and
chemical products (NACE 20). Data Validation refers to calendar year adjustment made to
the output, intermediate consumption and the GVA for a particular company whose year end
in the business accounts is April. Exhaustiveness Adjustments for Manufacturing of furniture
(NACE 31) are reported in both N1 (adjustment implemented for the ‘producers failing to
register’) and N6 (adjustment implemented for producers deliberately misreporting).
Conceptual Adjustments were discussed in Sections 3.2 and 3.4.
98
The production approach
Table 3.9.3: Extract of process tables 2010 for Section C in millions of Euro
Basis for national accounts figures
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total
Extrap+Models
Other
Total (Sources)
P.1
558.1
1,905.5
-
-
-
0.1
-
-
0.0
0.1
-
2,463.7
P.2
343.8
1,360.3
-
-
-
0.0
-
-
0.0
0.0
-
1,704.1
B.1g
214.3
545.1
-
-
-
0.1
-
-
-0.0
0.1
-
759.5
Allocation of FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total Exhaustiveness
-
18.2
18.2
1.0
-
-
-
-
6.3
0.2
7.5
-
17.3
2,480.9
Final Estimate
Data Validation
- 8.5
Section C
P.1
Total (Adjustments)
Adjustments
Exhaustiveness
Conceptual
Balancing
Section C
Surv. and Cens.
Extrapolations and Models
P.2
- 6.0
39.7
-7.0
32.7
0.5
-
-
-
-
-
0.0
0.5
-
27.1
1,731.2
B.1g
- 2.5
- 39.7
25.3
-14.4
0.5
-
-
-
-
6.3
0.2
7.1
-
- 9.8
749.7
Data sources
3.9.5 The main data sources include:
a) the Business Register (BR) which is utilised to identify the largest companies at the
A*8816 level, for which the full financial statements are downloaded from the Malta
Financial Services Authority (MFSA) website;
b) the annual reports and financial statements, which are used to cover large enterprises
and to update the intermediate consumption to output ratio prior finalisation with the
SBS;
c) the Structural Business Statistics (SBS) survey had a target population for the
manufacturing survey of about 2,475 businesses in 2010 and a sample of 763
businesses with a coverage rate of 30.8 per cent. Table 3.9.4 illustrates the number of
sampled companies by the Structural Business Statistics Unit at division level;
16
Refer to Table 9.1.1.
99
Gross National Income Inventory
Table 3.9.4: Section C: The number of sampled enterprises by the Structural Business Statistics Unit for
the year 2010 and the number of enterprises in the population for the year 2010
c
NACE
Sample
Population
Coverage rate
10
c
c
c
11
c
c
c
12
c
c
c
13
c
c
c
14
c
c
c
15
c
c
c
16
38
112
33.9%
17
c
c
c
18
c
c
c
19
c
c
c
20
c
c
c
21
c
c
c
22
c
c
c
23
88
180
48.9%
24
9
14
64.3%
25
103
408
25.2%
26
c
c
c
27
c
c
c
28
c
c
c
29
c
c
c
30
c
c
c
31
c
c
c
32
c
c
c
33
49
100
49.0%
Confidential
d) the Employment and Training Corporation (ETC) database which is used to derive
employment data for the years prior SBS is finalised and also to subdivide annual data
by quarter once annual data are finalised. It is an important indicator for NACE
divisions: Manufacturing of tobacco products (NACE 12), Manufacturing of coke and
refined petroleum products (NACE 19), Manufacturing of basic metals (NACE 24),
Manufacturing of computer, electronic and optical products (NACE 26),
Manufacturing of electrical equipment (NACE 27) and Repair and installation of
machinery and equipment (NACE 33).
Generally, Short-Term Statistics (STS)
indices are used to extrapolate other NACE divisions in absence of the finalised SBS
data. However, STS indices cannot be used for these divisions and thus employment
statistics play a major role in the extrapolation process;
100
The production approach
e) the Short-Term Statistics Unit provides STS indices on a quarterly basis at division
level and is used to extrapolate turnover and compensation of employees in absence
of finalised SBS data. Actual data for turnover, compensation of employees and
employment are used for the compilation of NACE divisions 12, 19, 24, 26, 27 and 33
in absence of finalised SBS data. The STS survey covered about 356 companies for
the year 2010; and
f)
3.9.6
the government financial statistics.
Table 3.9.5 indicates source data at NACE division level for 2010.
Table 3.9.5: Data sources used in terms of GVA at basic price during the year 2010 for activities in
Section C (for S.11 and S.14)
NACE
SBS data and/or other sources
Annual reports and financial statements
10
38%
62%
11
8%
92%
12
100%
0%
13
2%
98%
14
100%
0%
15
100%
0%
16
100%
0%
17
77%
23%
18
41%
59%
19
100%
0%
20
70%
30%
21
4%
96%
22
29%
71%
23
81%
19%
24
100%
0%
25
80%
20%
26
99%
1%
27
41%
59%
28
42%
58%
29
0.50%
99.5%
30
100%
0%
31
100%
0%
32
7%
93%
33
34%
66%
101
Gross National Income Inventory
Output for non-financial corporations (S.11) and households (S.14)
3.9.7
Large enterprises are covered by annual reports and financial statements. Each
transaction in the annual reports and financial statements was reclassified according to ESA
2010 definitions. Output at basic prices (P.1) is therefore calculated as follows:
Output =
Turnover
-
Cost of goods bought for resale beginning inventory
-
Opening stock of finished goods and work-in-progress beginning inventory
-
Finished goods beginning inventory
+
Cost of goods bought for resale ending inventory
+
Cost of goods bought for resale ending inventory
+
Cost of goods bought for resale ending inventory
+
Selected items of other income
3.9.8
Output at basic prices for the medium to small enterprises is generally derived from
the SBS. The starting point is the production value provided by the Structural Business
Statistics Unit which is derived as follows:
Production value =
Turnover
+/+
+/-
Change in stocks of finished products and work-in progress
Work-in progress manufactured by the unit
Change in stocks of goods and services purchased for resale in the same condition as received
-
Total purchases of goods and services purchased for resale.
+
Capitalised production
+
Operating income
It is then adjusted by the National Accounts Unit for taxes and subsides on products in order
to derive output at basic prices as follow:
Output at basic prices (P.1) =
Production value
102
-
Other taxes and duties linked to products
+
Government subsidies on products
The production approach
3.9.9
Quarterly STS indices at division level were used to extrapolate output in absence of
finalised SBS data. These indices were applied to the total output in the benchmark year i.e.
the values derived from annual accounts and financial statements plus those derived from
SBS using the following formula:
Output (P.1) at basic prices = Total output at division level in the benchmark year
multiplied by the STS index of the variable 120 (Turnover)
Intermediate consumption for non-financial corporations (S.11) and households (S.14)
3.9.10
Large enterprises are covered by annual reports and financial statements. Some
companies, in addition to the full set of accounts, also submit detailed notes to the accounts,
such that a list of costs is available for each main headings found in the income statement, i.e.
for the cost of sales, the administrative costs, the selling and distribution costs and the other
operating expenses. In this case, each item is classified according to the classification of
transactions and other flows which are listed in ESA 2010. Consequently, in this case,
identifying the intermediate consumption is deemed to be relatively straightforward.
3.9.11
However, enterprises often do not list the costs separately for each of the main
headings. In this case, the intermediate consumption is computed by using the cash flow
statement and the notes to the accounts, using the following equation:
103
Gross National Income Inventory
Intermediate consumption
Cost of sales
+
Administrative costs
+
Selling and distribution costs
+
Operating costs
+
Other operating expenses
+
Finance charges (excluding interest paid to banks)
-
Compensation of employees
-
Directors’ remuneration
+
Audit fees
-
Employee benefit expenses
-
Depreciation
+/+/+/-
(Increase)/decrease in provisions for impairment of debtors
Bad debts
Profit/(loss) on exchange differences
Impairment change
Profit/(loss) on sale of fixed assets
-
Government grants
-
Write-offs
-
Opening stock of finished goods and work-in-progress
-
Goods held for resale goods beginning inventory
+
Closing stock of finished goods and work-in-progress
+
Goods held for resale goods ending inventory
3.9.12 The intermediate consumption (P.2) for the medium to small enterprises is generally
derived from the SBS data. Intermediate consumption is not readily available in SBS, but is
the residual of output at basic prices derived in para. 3.9.8 and value added at basic prices
which is a computed field in the SBS dataset. Intermediate consumption is derived as
follows:
Intermediate consumption = Output at basic prices as derived in para. 3.9.8
less Value added at basic prices
104
The production approach
3.9.13
The value added at basic prices compiled by the Structural Business Statistics Unit is
derived as follows:
Value added at basic prices =
Production
+
Subsidies on products
-
Total purchases of goods and services
+
Total purchases of goods and services for resale
+/-
3.9.14
Change in stocks of raw materials and consumables
Taxes on products
The intermediate consumption derived from SBS survey is adjusted to exclude rent
on land.
3.9.15
In absence of finalised SBS data, intermediate consumption is based on information
derived from annual accounts and financial statements. Short-term statistics do not provide
data on intermediate consumption.
Thus, when company accounts are available, the
intermediate consumption to output ratio at NACE division level of the benchmark year is
updated to take into account any developments in the costs of production. The intermediate
consumption for each subsequent year following the benchmark year is derived based on the
increase or decrease in the said ratio at NACE division level.
This new intermediate
consumption to output ratio is then applied to output which is derived using STS indices.
General government sector (S.13)
3.9.16
Details on the derivation of output and intermediate consumption are available in
Section 3.21. Two government departments were involved in manufacturing in 2010, these
being Printing and reproduction of recorded media (NACE 18) and Other manufacturing
(NACE 32). An extra-budgetary unit (EBU) was classified in Repair and installations of
machinery and equipment (NACE 33) up till 2010.
105
Gross National Income Inventory
Non-profit institutions serving households (NPISHs) (S.15)
3.9.17
Total output of NACE 20 is calculated as the sum of costs:
Operating surplus – Subsidies on production + Taxes on production + Compensation of
employees = Value added net + Consumption of fixed capital (CFC) = Value added gross +
Intermediate consumption = Total output
3.9.18
Non-market output for this activity is calculated as a residual between total output
and market output.
3.9.19
Intermediate consumption (P.2) for Manufacturing of chemicals and chemical
products (NACE 20) as follows:
P.2 = (RPI QiYt / RPI QiYt-1) * P.2 QiYt-1
where Q stands for quarter and i = 1,2,3 and 4;
Yt stands for the current year; and
Yt-1 stands for the previous year.
3.9.20
P.2 is calculated as the product of the retail price index (RPI) growth for the
respective quarter and P.2 of same quarter of the previous year.
Exhaustiveness
3.9.21
Manufacturing of furniture (NACE 31) is adjusted for Exhaustiveness.
One
adjustment was implemented for the misreporting (N6) and another adjustment was
implemented for the producers failing to register (N1). It is believed that enterprises in the
range of 0-5 employees operating in this NACE category are likely to underreport their
output. National Statistics Office (NSO) estimates that these enterprises underreport their
output by 40 per cent, whilst another estimated 10 per cent of the output is produced by
unregistered entrepreneurs. The latter percentage is much smaller than the former due to the
fact that in Malta it is very difficult to operate a business without some form of license or
permit. The Exhaustiveness Adjustments in 2010 stood at 24.6 per cent in terms of value
added for NACE 31.
106
The production approach
Table 3.9.6: Exhaustiveness adjustments in NACE 31, data in thousands of Euro, for the year 2010
Variable
Total NACE 31
Exhaustiveness
Exhaustiveness in percentage
Output
51,061
7,521
14.7%
Intermediate consumption
22,385
471
2.1%
Gross value added
28,676
7,050
24.6%
3.10 Electricity, gas, steam and air conditioning supply (NACE Rev. 2
Section D)
3.10.1
The activities of Section D are distinguished in one industry within the two A*6417
NACE18 Rev. 2 divisions. There is no gas, steam or air conditioning supply in Malta. Nonfinancial corporations (S.11) were the only contributors to this activity.
Table 3.10.1: Contribution of Section D to total economy, 2010
NACE Division
A*64
c
Million Euro
Description
B.1g as a percentage of:
P.1
P.2
B.1g
B.1g
Section D
B.1g
Total
economy
GDP (B.1*g)
Total
economy
GNI (B.5*5)
Total
economy
35
Electricity, gas, steam and airconditioning supply
c
c
c
c
c
c
c
D
Electricity, gas, steam and
air-conditioning supply
c
c
c
c
c
c
c
Confidential
Table 3.10.2: Section D (NACE 35) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
D
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
c
c
c
c
c
c
c
c
c
c
c
c
35
c
c
c
c
c
c
c
c
c
c
c
c
Gross value added (Million Euro)
NACE
D
S.11
S.12
S.13
c
c
c
c
35
c
c
c
c
c
S.14
S.15
Gross value added (Percentage)
Total
S.11
S.12
S.13
S.14
S.15
Total
c
c
100.0%
0.0%
0.0%
0.0%
0.0%
100.0%
c
c
100.0%
0.0%
0.0%
0.0%
0.0%
100.0%
Confidential
17
Refer to Table 9.1.1.
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
18
107
Gross National Income Inventory
Table 3.10.3: Extract of process tables 2010 for Section D in millions of Euro
Basis for national accounts figures
c
Section D
Surveys and Censuses
Administrative Records
Combined Data
Benchmark
Extrapolations
CFM
CFC
Dwellings
FISIM
Other E&M
Total Extrapolation
and Models
Other
Total (Sources)
Extrapolations and Models
P.1
c
c
c
c
c
c
c
c
c
c
c
c
P.2
c
c
c
c
c
c
c
c
c
c
c
c
B.1g
c
c
c
c
c
c
c
c
c
c
c
c
Confidential
Adjustments
c
Data Validation
Allocation of FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
Exhaustiveness
Section D
Conceptual
P.1
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
P.2
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
B.1g
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
Confidential
3.10.2
The main sources used are audited annual financial statements and quarterly
questionnaires.
3.10.3
Audited financial statements include data on turnover, other operating income,
government subvention, capitalised staff costs, operating and other expenses.
These
statements are available with a time lag of about a year.
3.10.4
Preliminary GVA estimates are compiled from quarterly returns received from the
electricity corporation.
These estimates are eventually revised when audited financial
statements are published. Quarterly returns include data on turnover, other operating income,
108
The production approach
government subvention, wages and salaries, capitalised wages, recurrent expenditure, and
European Union (EU) electricity directive adjustments.
3.10.5
In 2010 the Maltese national electricity grid was an isolated one and was not
connected to any other electrical network. All the electrical energy required in the Maltese
Islands was generated in Malta through two power stations and several other small-scale
renewable energy installations. The Malta-Sicily interconnector, inaugurated in April 2015,
aims to contribute to the achievement of a diversified mix of energy sources by providing the
country with access to electricity generated through sources located in Sicily and other
regions in mainland Europe.
3.10.6
Stocks of electricity are not identifiable. Electricity, once generated, is distributed or
transmitted through the grid.
3.10.7
During 2010 the electricity corporation also acted as an agent for petroleum and gas
products, importing petroleum and distributing it through petrol stations, and bottling gas for
distribution by its authorised distributors. The corporation prepared separate accounts for the
three divisions. It was therefore possible to identify data relating only to electricity, which is
shown under Electricity, gas, steam and air conditioning supply (NACE 35), whilst data of
the other two divisions are included under Wholesale trade, except of motor vehicles and
motorcycles (NACE 46).
Market output (P.11)
3.10.8
Market output is calculated by adding turnover and other operating income
consisting mainly of electricity-related services and installations provided by the electricity
corporation. Subsidies on products are included in market output. Insurance claims and gain
on disposal of property, plant and equipment as well as exchange gains are excluded.
Adjustments related to EU electricity directives are added.
3.10.9
Since Malta joined the EU in 2004, the electricity corporation has been applying the
EU electricity directive and the generation of electricity has been unbundled from the
transmission and distribution and from the supply of electricity in terms of accounting.
Initially, this exercise included the unbundling of the generation of electricity from the
109
Gross National Income Inventory
transmission and distribution and supply of electricity. This resulted in additional turnover in
the generation division, which was compensated by an identical amount in the cost of sales of
the transmission and distribution division (which in 2004 incorporated the supply division),
with GVA remaining unchanged.
3.10.10 During the corporation’s financial year ending 30 September 2006, this exercise was
widened and the transmission and distribution division was unbundled from the supply of
electricity. This resulted in additional turnover in the transmission and distribution division,
compensated by an identical amount in the cost of sales of the supply division, with value
added for NACE 35 remaining unchanged. Moreover, during this financial year a charge for
ancillary services was introduced by the corporation, resulting in additional turnover for the
generation division and increased cost of sales for the transmission and distribution division,
again with no effect on GVA.
3.10.11 In order to show a consistent time series, an adjustment was made to include all
three interdivisional entries described in para. 3.10.9 and 3.10.10 for the whole time series.
3.10.12 Data Validation adjustments shown in Table 3.10.3 include the EU electricity
directive adjustment and a one-off adjustment to exclude income generated in previous years
but reported in the corporation’s financial statements 2010.
Output for own final use (P.12)
3.10.13 Staff costs that are capitalised within property, plant and equipment are shown as
output for own final use. No other further costs are included since own account investment
relates only to the wages payable in connection with the installation of equipment bought by
the corporation.
Intermediate consumption (P.2)
3.10.14 Intermediate consumption includes the total cost of generation, transmission and
distribution costs, and administrative expenses. It excludes wages and salaries, directors’
emoluments, provision for depreciation, impairment charges, operating licenses, loss on
exchange, loss or gain on derivative instruments, gain related to emission rights, fines,
donations, provisions for bad and doubtful debts and bad debts written off.
110
The production approach
3.10.15 As stated in para. 3.10.11, intermediate consumption includes all three
interdivisional entries related to the EU electricity directive.
3.11 Water supply; sewerage, waste management and remediation
activities (NACE Rev. 2 Section E)
3.11.1
The activities of Section E are distinguished in two industries within the two A*6419
NACE20 Rev. 2 divisions.
Table 3.11.1: Contribution of Section E to total economy, 2010
NACE Division
A*64
36
37-39
E
c
Description
Water collection, treatment and
supply
Sewerage; waste collection,
treatment and disposal activities;
materials recovery; remediation
activities and other waste
management services
Water supply; sewerage, waste
management and remediation
activities
Million Euro
B.1g as a percentage of:
GDP
B.1g
(B.1*g)
B.1g
Total
Total
Section E
economy
economy
GNI
(B.5*5)
Total
economy
P.1
P.2
B.1g
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
Confidential
3.11.2
Table 3.11.2 shows that at 86.9 per cent non-financial corporations (S.11) were the
largest contributors towards the GVA of Section E, followed by general government (S.13) at
11.4 per cent and households (S.14) at 1.7 per cent.
19
Refer to Table 9.1.1.
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
20
111
Gross National Income Inventory
Table 3.11.2: Section E (NACEs 36-39) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
E
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
c
c
c
c
c
c
c
c
c
c
c
c
36
c
c
c
c
c
c
c
c
c
c
c
c
37-39
c
c
c
c
c
c
c
c
c
c
c
c
c
Confidential
Gross value added (Million Euro)
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
c
c
c
c
c
c
86.9%
0.0%
11.4%
1.7%
0.0%
100.0%
36
c
c
c
c
c
c
99.0%
0.0%
0.0%
1.0%
0.0%
100.0%
37-39
c
c
c
c
c
c
71.2%
0.0%
26.3%
2.5%
0.0%
100.0%
NACE
E
c
Gross value added (Percentage)
S.11
Confidential
Table 3.11.3: Extract of process tables 2010 for Section E in millions of Euro
Basis for national accounts figures
Other
Total (Sources)
c
c
c
c
c
c
c
c
c
c
P.2
c
c
c
c
c
c
c
c
c
c
c
c
B.1g
c
c
c
c
c
c
c
c
c
c
c
c
c
FISIM
CFC
CFM
Total Extrapolation
and Models
Combined Data
c
Other E&M
Administrative Records
c
Dwellings
Surveys and Censuses
P.1
Benchmark
Extrapolations
Section E
Extrapolations and Models
Confidential
Adjustments
Data Validation
Allocation of FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
P.1
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
P.2
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
B.1g
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
112
Exhaustiveness
Section E
Conceptual
Confidential
The production approach
NACE 36 Water collection treatment and supply
3.11.3
Table 3.11.2 shows that at 99.0 per cent non-financial corporations (S.11) were the
main contributors to the GVA of NACE 36 followed by households (S.14) at only 1.0 per
cent.
3.11.4
The main data sources are:
a) Audited annual financial statements;
b) Financial Data Reporting System (FDRS);
c) Quarterly returns; and
d) Water Bowser Census 2010.
3.11.5
Water in Malta is produced at three reverse osmosis plants and from boreholes and
pumping stations.
In October 2003, the government passed over the operational
responsibility and assets of the Drainage Directorate, now known as the Wastewater Section,
to the corporation responsible for the production and distribution of potable water in the
Maltese Islands. The financial responsibility was taken over by the corporation on January 1,
2004, thus becoming wholly responsible for the complete water cycle from production to its
safe disposal.
3.11.6
The corporation has separate accounts for the two divisions and it is therefore
possible to identify data relating to the production and distribution of water. The Wastewater
Section is included under Sewerage (NACE 37).
3.11.7
Audited financial statements of the corporation include data on turnover, other
operating income, government subvention, capitalised staff costs, operating and other
expenses. These statements are available with a time lag of about a year.
3.11.8
Preliminary GVA estimates are compiled from the FDRS at the Ministry of
Finance and from quarterly returns received from the corporation relating to wastewater.
These estimates are eventually revised when audited financial statements are published.
Quarterly returns include data on turnover, other operating income, government subvention,
wages and salaries, capitalised wages and recurrent expenditure.
113
Gross National Income Inventory
3.11.9
Water is treated as a flow and is not classified as a finished good or work-in
progress.
3.11.10 The value added of groundwater abstraction through private boreholes which is then
distributed by trucks is also included under Water collection, treatment and supply (NACE
36).
Market output (P.11)
3.11.11 Data from audited financial statements are extensively used.
Market output is
derived by adding revenue from sale of water, ancillary services and related income, and
recharged expenses and management fees.
3.11.12 Market output for water distributed by trucks is derived from the Census of Water
Bowsers 2010.
Output for own final use (P.12)
3.11.13 Capitalised staff costs including an estimate for related intermediate consumption
and consumption of fixed capital are shown as output for own final use. The estimate is
based on the number of employees assigned to capital projects and the cost per full time
equivalent employee of the corporation. There was no output for own final use in 2010.
Intermediate consumption (P.2)
3.11.14 Intermediate consumption of the corporation is arrived at by deducting, from
production, distribution and administration costs, the total wages and salaries, directors’
remuneration, provision for depreciation, exchange differences, loss on disposal of property,
plant and equipment, bad debts written off and any provisions for bad debts or for mains and
pipes.
3.11.15 Intermediate consumption of water bowser operators is derived from the Census of
Water Bowsers 2010 and includes fuel costs, repairs and maintenance of water bowser,
telecommunication expenses, electricity costs and rent on building.
114
The production approach
NACEs 37-39 Sewerage; Waste collection, treatment and disposal activities; materials
recovery; Remediation activities and other waste management services
3.11.16
During 2010, 71.2 per cent non-financial corporations (S.11) were the main
contributors to the GVA of NACEs 37-39 followed by general government (S.13) at 26.3 per
cent and by households (S.14) at 2.5 per cent (Table 3.11.2).
3.11.17
The main data sources are:
a)
Structural Business Statistics (SBS) survey 2010;
b)
Audited annual financial statements; and
c)
Government Finance Statistics 2010.
3.11.18
The SBS survey is conducted on a yearly basis by the Structural Business Statistics
Unit at National Statistics Office (NSO). The SBS survey includes data on turnover, change
in stocks, capitalised production, other operating income, taxes and subsidies, intermediate
consumption and consumption of fixed capital (CFC). The 2010 SBS survey is available at
4-digit level in NACE Rev. 2. As from 2011 SBS is being conducted at 2-digit level.
3.11.19
SBS data are provided at micro level. The National Accounts Unit conducts
checks to identify any possible mistakes. Checks include the analysis of ratios such as output
per capita, gross capital formation per capita and intermediate consumption to output ratio.
Outliers are identified and validated with the Structural Business Statistics Unit. For large
companies with outlier ratios or growth rates, the financial statements are downloaded from
the Malta Financial Services Authority (MFSA) website, and are used to validate the
company’s reply. Any discrepancies are identified and the Structural Business Statistics Unit
is informed accordingly in an effort to arrive at the final corrected version that is agreed upon
by both units. Corrections to SBS data are shown as Data Validation adjustments in Table
3.11.3.
3.11.20
Audited financial statements used for some companies operating in NACE 38,
include data on turnover, other operating income, operating and other expenses. These
statements are available with a time lag of about year. Data derived from audited financial
115
Gross National Income Inventory
statements is matched with data shown in the SBS survey. The SBS survey is adjusted to
bring in line with audited financial statements where necessary.
3.11.21
Government Finance Statistics are compiled by the Public Finance Unit at NSO,
from the Departmental Accounting System (DAS), the Treasury Department accruals
template and from financial statements of extra-budgetary units (EBUs) and local councils.
Preliminary estimates for EBUs are derived from the FDRS and later adjusted with audited
financial statements when available. Output of general government is measured using the
cost approach. Non-market output (P.13) is calculated as a residual after deducting market
output (P.11) and output for own final use (P.12).
3.11.22
Preliminary GVA estimates for NACEs 37 to 39 are partly derived from
Government Finance Statistics and partly extrapolated on the latest SBS survey, taking into
account the change in gainfully occupied and retail price index (RPI). These estimates are
eventually revised when the SBS and audited financial statements become available.
Output for non-financial corporations (S.11) and households (S.14)
3.11.23
Output is compiled from the SBS survey by adding the production value to
subsidies on products and deducting taxes on products. Audited financial statements of two
cooperatives operating within Waste collection, treatment and disposal activities; materials
recovery (NACE 38) complement the SBS.
Intermediate consumption for non-financial corporations (S.11) and households (S.14)
3.11.24
Intermediate consumption is compiled from the SBS survey by deducting the GVA
at basic prices and rent on land from output.
Audited financial statements of two
cooperatives operating within NACE 38 complement the SBS survey.
General government (S.13)
3.11.25
One EBU operates in NACE 38. It is responsible for organising, managing and
operating integrated systems for waste management including integrated systems for
minimisation, collection, transport, sorting, reuse, utilisation, recycling, treatment and
disposal of solid and hazardous waste. It also operates integrated systems for export of waste
to destinations outside the Maltese islands. More details are provided in Section 3.11.21.
116
The production approach
3.12 Construction (NACE Rev. 2 Section F)
3.12.1
The activities of Section F are presented at A*6421: Construction of buildings
(NACE22 41), Civil engineering (NACE 42) and Specialised construction activities (NACE
43). Section F contributed 4.7 per cent to total gross value added (GVA) in 2010.
Table 3.12.1: Contribution of Section F to total economy, 2010
B.1g as a percentage of:
NACE Division
A*64 Description
41-43
P.1
P.2
B.1g
Million Euro
Construction
F
3.12.2
Section
F
%
B.1g Total
economy
%
GDP (B.1*g)
Total economy
%
GNI (B.5*5)
Total
economy
%
792.5
522.2
270.3
100.0%
4.7%
4.1%
4.3%
792.5
522.2
270.3
100.0%
4.7%
4.1%
4.3%
Table 3.12.2 shows that at 75.7 per cent non-financial corporations were the main
contributors to the GVA for Section F, followed by households 14.1 per cent and the general
government sector at 10.2 per cent. The general government sector is included in NACE 41.
Non-profit institutions servicing households (NPISHs) are not involved in construction.
Table 3.12.2: Section F (NACEs 41-43) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
F
658.5
-
33.6
100.4
-
792.5
453.8
-
6.0
62.3
-
522.2
41-13
658.5
-
33.6
100.4
-
792.5
453.8
-
6.0
62.3
-
522.2
Gross value added (Million Euro)
Gross value added (Percentage)
NACE
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
F
204.7
-
27.5
38.1
-
270.3
75.7%
0.0%
10.2%
14.1%
0.0%
100.0%
41-13
204.7
-
27.5
38.1
-
270.3
75.7%
0.0%
10.2%
14.1%
0.0%
100.0%
Process tables
3.12.3
An excerpt from the process tables for Construction (Section F) is presented in Table
3.12.3.
The Structural Business Statistics (SBS) survey classified under Surveys and
21
Refer to Table 9.1.1.
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
22
117
Gross National Income Inventory
Censuses is the most important data source for construction followed by the annual accounts
and financial statements classified as an Administrative Records.
An Exhaustiveness
Adjustment to cater for own account construction of dwellings by households is reported in
N3. Conceptual Adjustments were discussed in Sections 3.2 and 3.4.
Table 3.12.3: Extract of process tables 2010 for Section F in millions of Euro
Basis for national accounts figures
Section F
Surv. and Cens.
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total
Extrap+Models
Other
Total (Sources)
Extrapolations and Models
P.1
546.4
231.1
-
-
-
9.4
-
-
-
9.4
-
786.9
P.2
361.7
152.8
-
-
-
0
-
-
-
0
-
514.5
B.1g
184.8
78.3
-
-
-
9.4
-
-
-
9.4
-
272.4
Adjustments
Data Validation
Allocation of FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
Exhaustiveness
Section F
Conceptual
P.1
-
0
1.1
1.1
-
-
4.5
-
-
-
-
4.5
-
5.5
792.5
P.2
-
-4.6
7.7
-
-
0
-
-
-
-
0
-
7.7
522.2
B.1g
-
12.2
12.2
5.6
-6.6
-
-
4.5
-
-
-
-
4.5
-
-2.1
270.3
Data sources
3.12.4
The main data sources include:
a) the Structural Business Statistics (SBS) survey which had a target population of
4,034 enterprises within Section F in 2010 and a sample of 468 with a coverage rate
of 11.60 per cent. Table 3.12.4 illustrates the number of sampled companies by the
Structural Business Statistics Unit at division level;
b) the annual reports and financial statements, which are used to cover large
enterprises;
118
The production approach
Table 3.12.4: Section F: The number of sampled enterprises by the Structural Business Statistics Unit for
the year 2010 and the number of enterprises in the population for the year 2010
NACE
Sample
Population
Coverage rate
41
126
1,331
9.47%
42
32
77
41.56%
43
310
2,626
11.81%
F
468
4,034
11.60%
c) the Employment and Training Corporation (ETC) database which is used to derive
employment data for the years prior SBS survey is finalised and to subdivide annual
data by quarter once annual data are finalised. It is an important indicator for the
construction industry as the Short-Term Statistics (STS) indices cannot be used for
these divisions and thus employment statistics play a major role in the extrapolation
process. STS indices only provide data for compensation of employees, hours
worked and persons employed. Moreover, indices fluctuate considerably and thus
they are not presently used for national accounts purposes;
d) the government financial statistics;
e) the value added tax (VAT) data are used in NACE 41 to estimate the market output
for the years prior SBS is finalised; and
f)
the Household Budgetary Survey (HBS) for the exhaustiveness adjustment with
respect to own-account construction of dwellings by households.
3.12.5
Table 3.12.5 indicates source data at NACE division level for 2010.
Table 3.12.5: Data sources used in terms of GVA at basic price during the year 2010 for activities in
Section F (for S.11 and S.14)
NACE
SBS data and/or other sources
Annual reports and financial statements
41
57.5%
36.5%
42
74.1%
25.9%
43
85.1%
14.9%
F
67.8%
28.7%
119
Gross National Income Inventory
Output and intermediate consumption for non-financial corporations (S.11) and households
(S.14)
3.12.6
Large enterprises are covered by annual reports and financial statements. Each
transaction in the annual reports and financial statements was reclassified according to ESA
2010 definitions. Medium to small enterprises are not obliged to publish and submit a full set
of accounts to the local financial regulatory body and thus, SBS data are used to derive the
production and generation of income accounts.
Output is derived according to the
explanations provided in para. 3.9.6 and 3.9.7 and intermediate consumption according to
para. 3.9.9 - 3.9.11.
3.12.7
Not all the recommendations of the Gross National Product (GNP) Committee Task
Force on Construction (CPNB 202) related to exhaustiveness have been applied yet. Some of
the recommendations which are included in our methodology are:
a) R3. Member States should survey construction units based on a unified business
register;
b) R4. Variables listed under recommendation 4 are collected by production statistics;
these include the number of employees and working proprietors, gross output, gross
wages and salaries, intermediate consumption of total goods and services,
subcontracting and foreign trade in construction;
c) R5. Survey estimates of value added should be based upon the application of a
grossing methodology which gives reliable estimates for both gross output and
intermediate consumption;
d) R7. Annual surveys of construction businesses should collect estimates of total
revenue from subcontracting activities and total expenditure on subcontracting
within the construction sector in order to estimate revenue from subcontractors who
are not on the register;
e) R8. Member States should investigate the potential for using the supply and demand
of building materials such as bricks or cement to validate construction output and
adjust for any under coverage of register based surveys.
Results of such
investigations are being presented in para. 3.12.9;
f)
R9. Member States should collect data on repairs and improvements to dwellings
from households in order to complement production based estimates;
120
The production approach
g) R10. Sample surveys should be designed so that the lowest stratum covers the
smallest producer units on the register (e.g. those with zero employees);
h) R12. Where feasible, Member States should use information from fiscal authorities
(e.g. fiscal audits) on the income from construction as a check on production
statistics;
i)
R13. To derive estimates of foreign trade from production statistics, Member States
should include questions on surveys to units which separately identify exports; and
j)
R 14. Member States should ensure that estimates of foreign trade in construction are
consistent in production statistics and balance of payments23.
3.12.8
In the future other recommendations relating to the price and quantity method will
be investigated.
3.12.9
A further possible source of data that could serve as a form of validation was the
amount of cement imported into the domestic economy. However, after careful valuation of
the data it was found to be highly erratic and therefore unreliable with no discernible
direction or motivation in the data’s variances. Therefore it was decided not to avail of this
source of data due to its incongruencies.
General government (S.13)
3.12.10 Details on the derivation of output and intermediate consumption for the general
government sector are available in Section 3.21.
Exhaustiveness
3.12.11 The value of own account construction by households, which generally relates to
major repairs, renovation and extensions of existing dwellings has been added to the output
for own final use in Specialised construction activities (NACE 43) in the output approach.
This has a direct impact on output and gross domestic product (GDP) in the production
approach, the gross operating surplus and mixed income in the income approach and on gross
23
This point will need to be revisited, in the light of ongoing discussions and developments on balance of
payments data at the National Accounts Working Party and in other fora.
121
Gross National Income Inventory
fixed capital formation (GFCF) in the expenditure approach.
This Exhaustiveness
Adjustment is included in N3.
3.12.12 The estimate for own account construction by households covers the value of
materials, the value of labour costs and the value of operating surplus as required by ESA
2010 Section 3.45 which specifies that output for own final use to be valued at basic prices.
Costs of materials for minor and major repairs used were obtained from the HBS carried out
by National Statistics Office (NSO). This expenditure is shown in Table 3.12.6 below.
Table 3.12.6: Costs of materials for major and minor used for own-account construction of dwellings
Code
Description
Amount in Euro
3108
Windows and their frames, doors and their frames and thresholds, of wood
35,687
3202
Plastic paints
674,512
3401
Wall ceramic tiles
164,618
3402
Floor ceramic tiles
454,340
3503
Plaster
307,515
3510
Marble and granit stones for steps, window sills, etc.
746,619
3542
Wash-basins, baths and other sanitary ware, of metal
111,580
3611
Electrical wiring and fitting work in residential buildings
443,098
3652
Cement rendering
288,071
4072
Parts of furniture (except seats, doors and windows) (e.g. shelves, drawers, chest of drawers,
bookshelves)
Total
1,030,812
4,256,851
Source: HBS 2008 (Worksheet: HBS 2008)
3.12.13 Total repairs and maintenance declared in the HBS amounted to 67 million Euro
(Table 3.12.7). Repairs and maintenance was requested for both the main and secondary
dwellings in question H1 and H2. Households were requested to indicate if the works
completed were done for the first time i.e. when a dwelling is initially bought or to replace or
maintain an old structure. This distinction was necessary in order to help NSO distinguish
between major and minor repairs when analysing expenditure items by product e.g.
plastering, bathroom tiling, etc. Households were also requested to specify if the work was
sub-contracted or not. Following each HBS the expenditure on repairs and maintenance is
analysed and sub-divided into minor and major repairs.
The value of 4,256,851 Euro
includes materials used for minor repairs and others for major repairs.
3.12.14 Only the intermediate consumption relating to major repairs is being included in the
calculation of own account construction of dwellings. Consequently, this ratio of 6.3 per cent
122
The production approach
was applied only to the expenditure identified as GFCF. According to HBS 2008, only 6.3
per cent (4,256,851 Euro (Table 3.12.6) divided by 67,680,987 Euro (Table 3.12.7)) of the
total repairs and maintenance is done by households and thus without sub-contracting
services to third parties.
Table 3.12.7: Repairs and maintenance in main (H1) and secondary (H2) dwellings
First time
To replace
Total
Euro
Euro
Euro
Rented
1,001,756
6,007,820
7,009,577
Owner occupied
22,706,317
37,965,093
60,671,410
Grand total
23,708,073
43,972,914
67,680,987
Rented or owner occupied
Source: HBS 2008 (Worksheet: H1_H2_TOTAL)
3.12.15 The labour input and operating surplus was derived from the 2008 SBS survey of
NACE 43.
From the SBS survey, firms classified in S.14 employing 0 to 5 full-time
gainfully occupied workers were chosen. The intermediate consumption of these small
companies has been used to benchmark the repairs and maintenance spent by households to
derive the labour input and the operating surplus, both of which have been added to the
repairs and maintenance costs actually done by households without sub-contracting. Two
ratios derived were as follows from the SBS 2008 and are shown in Table 3.12.8:
Labour input ratio:
Compensation of employees as a percentage of
intermediate consumption
Operating surplus ratio:
Operating surplus as a percentage of intermediate
consumption
Table 3.12.8: Labour input and operating surplus ratio
in Euro
NACE 41
P.1
P.2
D.1
Operating surplus
28,167,550
16,807,598
2,165,744
9,194,208
No sole traders and partnerships
NACE 42
NACE 43
27,060,121
11,681,531
1,105,440
14,273,150
Section F 0-5 Gainfully occupied
55,227,671
28,489,129
3,271,184
23,467,358
D.1 and Operating surplus as a % of P.2
11%
82%
Source: SBS 2008 (Worksheet: Summary SBS 2008)
123
Gross National Income Inventory
3.12.16 Output for own final use is derived as follows:
6.3% [T.6] multiplied by Repairs and maintenance identified as GFCF
+
Labour input = 11% [T.7] multiplied by 6.3% multiplied by Repairs and maintenance
identified as GFCF
+
Operating surplus = 82% [T.7] multiplied by 6.3% multiplied by Repairs and maintenance
identified as GFCF
Output for own final use = 6.3% multiplied by Repairs and maintenance identified as GFCF
multiplied by (1+0.11+0.82)
3.13 Wholesale and retail trade; repair of motor vehicles and motorcycles
(NACE Rev. 2 Section G)
3.13.1
In 2010, the value added of the Wholesale and retail trade; repair of motor vehicles
and motorcycles (Section G) amounted to 618.3 million Euro. It contributed to 10.7 per cent
of total gross value added at basic prices and is calculated separately for the economic
activities shown in Table 3.13.1.
124
The production approach
Table 3.13.1: Contribution of Section G to total economy, 2010
NACE
A*64
45
46
47
G
3.13.2
P.1
P.2
Description
B.1g
Section
G
%
Million Euro
Wholesale and
retail trade and
repair of motor
vehicles and
motorcycles
Wholesale
trade, except of
motor vehicles
and motorcycles
Retail trade,
except of motor
vehicles and
motorcycles
Wholesale and
retail trade;
repair of
motor vehicles
and
motorcycles
B.1g as a percentage of:
B.1g
GDP (B.1g)
GNI (B.5g)
Total
Total
Total
economy
economy
economy
%
%
%
97.4
45.7
51.6
8.4%
0.9%
0.8%
0.8%
518.1
213.1
305.0
49.3%
5.3%
4.6%
4.8%
431.1
169.4
261.7
42.3%
4.5%
4.0%
4.1%
1,046.5
428.2
618.3
100.0%
10.7%
9.4%
9.8%
The services were provided by two institutional sectors: non-financial sector (S.11)
(509.2 million Euro) and households sector (S.14) (109.1 million Euro).
Table 3.13.2: Section G (NACEs 45-47) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
G
862.7
0.0
0.0
183.8
0.0
1,046.5
353.5
0.0
0.0
45
79.2
0.0
0.0
18.1
0.0
97.4
37.2
0.0
46
488.8
0.0
0.0
29.3
0.0
518.1
201.1
47
294.7
0.0
0.0
136.4
0.0
431.1
115.2
Gross value added (Million Euro)
NACE Division
S.11
S.12
S.13
S.14
S.15
G
509.2
0.0
0.0
109.1
0.0
45
42.0
0.0
0.0
9.6
46
287.7
0.0
0.0
47
179.5
0.0
0.0
Total
S.14
S.15
Total
74.8
0.0
428.2
0.0
8.5
0.0
45.7
0.0
0.0
12.0
0.0
213.1
0.0
0.0
54.2
0.0
169.4
Gross value added (Percentage)
S.11
S.12
S.13
S.14
S.15
Total
618.3
82.4%
0.0%
0.0%
17.6%
0.0%
100%
0.0
51.6
81.4%
0.0%
0.0%
18.6%
0.0%
100%
17.3
0.0
305.0
94.3%
0.0%
0.0%
5.7%
0.0%
100%
82.2
0.0
261.7
68.6%
0.0%
0.0%
31.4%
0.0%
100%
125
Gross National Income Inventory
3.13.3
The wholesale and retail trade activities are measured using the business statistics
approach. The sample is derived from the Business Register (BR), to ensure consistent
classification of trade as a primary activity. Enterprises with trade as secondary activities are
excluded from Section G estimates.
3.13.4
The trade margin by product approach recommended by the Gross National Product
(GNP) Committee on distribution is not applied. The last available complete set of data on
trade margins by product is available for 2009. As from 2010 data by product is being
collected only for large enterprises.
available at NACE
24
difficult to extract.
Moreover, as from 2011 the SBS sample is only
division level, thus information on trade margins by product is more
Detailed information on trade margins will again be collected for
reference year 2015. An evaluation of distribution channels has never been done.
Process tables
3.13.5
The table below explains the data which was used for the compilation of the process
tables and provides a classification of the various sources used and adjustments that were
carried out.
a) Surveys and Censuses: Annual data are provided by the Structural Business
Statistics (SBS) survey.
b) Administrative Records: Annual data are derived from financial statements provided
by the Malta Financial Services Authority (MFSA) and the fiscal data.
c) Data Validation of the SBS consists of the following: detailed checking of the
individual companies with their financial accounts, exclusion of companies covered
by separate estimate based on the financial accounts, verifying special purpose entity
(SPE) status and supply and use balancing adjustments.
d) Exhaustiveness Adjustments include Activities of producers that avoid registration
entirely (N2) and Activities which are misreported by the producer (N6).
N2
consists of illegal sales of narcotics in Wholesale trade, except of motor vehicles and
motorcycles (NACE 46).
The estimate is incorporated as from 1995 and is
equivalent to the margin between estimate of consumers’ consumption and imports
24
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
126
The production approach
registered in the balance of payments (BOP) data. In 2010 output from the sales of
narcotics was estimated at 10.4 million Euro. N6 contains adjustment which covers
sales of cars omitted in SBS data (annual indicator) and in the trade data (indicator
of the quarterly estimate). N6 adjustments are explained in detail in Section 3.13.12.
Table 3.13.3: Extract of process tables 2010 for Section G in millions of Euro
Total (Sources)
59.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1,113.5
P.2
462.5
28.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
490.6
B.1g
591.4
31.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
622.9
FISIM
CFC
CFM
Other E&M
1,053.9
Benchmark
Extrapolations
P.1
Section G
Other
Total Extrapolation
and Models
Dwellings Stratification Method
Extrapolations and Models
Combined Data
Surveys and Censuses
Administrative Records
Basis for national accounts figures
Adjustments
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
8.3
0.0
10.4
0.0
0.0
0.0
11.8
0.0
22.1
0.0
-66.9
1,046.5
P.2
- 69.9
16.9
- 12.6
4.2
0.0
0.0
0.0
0.0
0.0
3.3
0.0
3.3
0.0
-62.4
428.2
B.1g
- 27.5
- 16.9
21.0
4.1
0.0
10.4
0.0
0.0
0.0
8.5
0.0
18.8
0.0
-4.6
618.3
Total Conceptual
8.3
Other Conceptual
0.0
Allocation of FISIM
- 97.4
Data Validation
P.1
Section G
N2
Exhaustiveness
N1
Conceptual
Calculation of output: Benchmark years
3.13.6
The main data sources for benchmark national income estimates in the wholesale
and retail trade industry are the SBS survey and annual accounts financial statements of
enterprises. The SBS survey for Section G was compiled for the first time for the reference
year 1999 in the form of a census up to 2002, and based on a sample survey from 2003
onwards. The SBS survey was not compiled for years 2006-2007.
127
Gross National Income Inventory
3.13.7
Up to 2010 the enterprises were surveyed at the NACE class level (4-digit). From
2011 onwards the SBS sample is drawn at NACE division level (2-digit). The enterprises are
presented with detailed questionnaires requesting itemised information on turnover,
purchases and changes in inventories. Information on wages and salaries and employers’
social contributions paid, employment, gross fixed capital formation and capital stock, rent
on land and buildings and taxes are also collected.
3.13.8
The production and generation of income accounts for Section G are calculated
directly from the SBS survey. Data collected from the SBS survey is provided at micro level
and checked by the National Accounts Unit. Checking involves the analysis of ratios such as
production value per capita, gross value added per capita, production value to total turnover,
intermediate consumption to production value, and compensation of employees per capita.
This process also includes analysis of growth rates in the major variables calculated for each
unit. These ratios are studied for groups of companies that fell within the same employment
size class and economic activity. Outliers are identified by comparison with companies
within the same employment size class and economic activity, or within the time series
available, and validated with the staff working in the Structural Business Statistics Unit. For
the larger companies with outlier ratios or growth rates, financial data are downloaded from
the MFSA or fiscal data, and if enough detail on the major variables are available, these are
used to validate the company’s reply to the Structural Business Statistics Unit.
Any
discrepancies are identified and the Structural Business Statistics Unit informed accordingly
in an effort to arrive to a final corrected version that is agreed upon by both the National
Accounts Unit and the Structural Business Statistics Unit.
3.13.9
The output of Section G is defined as the trade margin plus all other income from
productive activities other than wholesale or retail activities. The trade margin is defined as
follows:
Trade margin = Turnover from the sale of goods for resale less Purchases of
goods for resale add Change in inventories of goods for resale
3.13.10 The output in national accounts is valued in basic prices, i.e. subsidies on products
are included, but not other taxes on products.
Output at basic price = Trade margin less Other taxes on products add Subsidies
on products.
128
The production approach
3.13.11 The SBS questionnaire is structured to allow for the separation of turnover data,
purchases data and changes in inventories data into that which is to be used in the calculation
of trade margins, i.e. pertaining solely to transactions in goods for resale.
Exhaustiveness Adjustment
3.13.12 Adjustments are made for the under-coverage of sales of second hands cars. In 2009
the registration tax on imported second hands cars was reduced, which resulted in 114 per
cent increase of the newly licensed used cars. Used cars were imported directly on the name
of the buyer omitting registration in the Intrastat. In 2009 the increase of 114 per cent in
licensed used motor vehicles was applied to output of dealers engaged in sales of used cars.
Their output in 2009 was revised from the original 13.6 million to 25.7 million. Total output
in Sale of motor vehicles (NACE 45.1) was revised from 36.6 to 48.7 million. In 2010, 10
per cent drop in licensed used motor vehicles were applied to the adjusted 2009 output of
dealers engaged in sales of used cars. The output in 2010 was revised from the original 11.3
million to 23.1 million. The total output in NACE 45.1 was revised from 37.0 to 48.8
million.
Extrapolation procedures
3.13.13 The extrapolation procedures outlined below refer to the years for which SBS data
was not available, i.e. prior to 1999 and during the time periods in which the SBS data have
not yet been provided to the National Accounts Unit.
3.13.14 For the years prior to the reference year 1999, the output of Section G was
extrapolated using output per capita ratios at NACE 3-digit level multiplied by employment.
The benchmark employment from the SBS survey was extrapolated by using the growth rates
in employment extracted from the Employment and Training Corporation (ETC) database.
The ETC provides detailed quarterly information about employment in individual companies
which is collected from registration forms completed upon the start and termination of
employment.
3.13.15 SBS for years 1999-2002 was collected as a census. Years 2003-2004 for SBS as a
sample resulted in break in series for the NACEs 46 and 47. Previous annual result for years
1995-2002 was revised upwards in line with the sampled result for output, intermediate
129
Gross National Income Inventory
consumption, consumption of fixed capital (CFC) and compensation of employees. The
revised series were published in the news release pertaining to Q2-2011 (years 2000-2002)
and news release pertaining to Q3-2012 (years back to 1995).
Wholesale and retail trade and repair of motor vehicles and motorcycles (NACE 45)
3.13.16 The Short-Term Statistics (STS) turnover index of NACE 2-digit 45, is applied to
extrapolate forward the output of enterprises classified in NACE 45.
3.13.17 Table 3.13.4 shows the extrapolation model used for economic activities NACE 45.
Output of the latest benchmark year is extrapolated in line with the STS index of NACE 45.
The part of the output which represents sales of second hands cars is additionally adjusted
with the growth rates of newly licences used motor vehicles.
Table 3.13.4: Extrapolation model of output for NACE 45, in millions of Euro
Benchmark
estimate
Variable
Source
Volume index:
Output
Original SBS benchmark
SBS data
Exhaustivity Adjustments
National accounts estimate
Newly licensed used motor
vehicles
Turnover STS index
2010
2011
2012
2013
97,291
117,163
108,701*
106,766*
85,525
102,798
97,953*
95,732*
11,766
14,365
10,748*
11,034*
NSO Transport Statistics
Annual growth
rate
95.29
97.73
NSO Short-Term Statistics
Annual growth
rate
78.54
104.71
*Indicates estimates until benchmark data are available
Wholesale trade, except of motor vehicles and motorcycles (NACE 46)
3.13.18 Table 3.13.5 provides a numerical example of how the total production value of
NACE 46 is extrapolated for those years in which a benchmark estimate is not available from
SBS survey.
130
The production approach
Table 3.13.5: Extrapolation model of output for NACE 46, in millions of Euro
Growth
rate
Benchmark estimate
Variable
Source
Total production value
Total sales (for resale and from secondary
production)
SBS data
SBS data
Ratio: Sales to cost of sales
Cost of sales (Purchases of goods for resale)
Ratio: Cost of sales to purchases of goods for
resale
SBS data
Purchases of goods for resale
SBS data
Imports by importers in NACE 46
Trade data
2010
2011
2012
447,266
440,018
111.4*
490,153*
2,147,834
2,296,668
2,558,351*
126
124
124*
1,700,568
1,856,651
2,068,197*
123
99
99*
1,381,352
1,876,765
2,090,604*
755,657
819,295
111.4
912,646
* Indicates estimates until benchmark data are available
3.13.19 Purchases of goods for resale in the benchmark year are extrapolated using a volume
index based on the growth rate in imports of goods by importers classified as NACE 46. This
information is obtained from the International Trade and Transport Statistics Unit within the
National Statistics Office (NSO) and is collected from Intrastat and Extrastat forms. This
data are classified using the Harmonised System (HS) product codes and is provided to the
National Accounts Unit at the lowest level of import product detail and with data on the
importers buying these products, classified according to NACE.
3.13.20 For the benchmark year, the ratio of cost of sales to purchases of goods for resale is
calculated from the SBS and applied to the estimated purchases of goods for resale in the
following years. Also, for the benchmark year, the ratio of total sales (which is the sum of
sales of goods for resale and turnover from the provision of secondary output) to total cost of
sales is calculated and applied to the estimated total cost of sales in the following years.
3.13.21 The model allows for these two ratios to be adjusted for changing trends, in the
event that such information was available. Finally, total production value of NACE 46
(except for some companies estimated according to the financial accounts, including
Enemalta Gas and Petroleum divisions) is considered as the difference between total
estimated sales and total estimated cost of sales as described above.
131
Gross National Income Inventory
Retail trade, except of motor vehicles and motorcycles (NACE 47)
3.13.22 Table 3.13.6 provides a numerical example of how the extrapolation of the total
production value of NACE 47 for those years in which a benchmark estimate is not available
from SBS survey.
Table 3.13.6: Extrapolation model of output for NACE 47, in millions of Euro
Benchmark estimate
Variable
Source
2010
Growth
rate
2011
2012
Total production value
SBS data
405,277
440,098
Total turnover (for resale and other services)
SBS data
1,598,191
1,865,021
134
131
131*
SBS data
1,192,915
1,424,923
1,484,115*
163
100
100*
730,348
1,427,951
1,487,269*
1,366,541
1,344,572
340,597
340,380
337,249
22,723
31,528
31,744
517,962
530,077
571,290
Ratio: Sales to cost of sales
Cost of sales (Purchases of goods for resale)
Ratio: Cost of sales to purchases of goods for
resale
Purchases of goods for resale
SBS data
Index of purchases by retailers in NACE 47
104.2*
458,380*
1,942,495*
104.2
1,400,460
Imports by importers in NACE 47
Intrastat form
Adjustment for imports not recorded in
trade data
Estimate
Selected imports by importers in NACE 46
Intrastat form
Consumer goods, food and beverages
Intrastat form
43,652
39,808
35,968
Consumer goods, food and beverages
Intrastat form
225,785
240,636
267,412
Consumer goods, non-industrial transport
equipment
Intrastat form
301
295
205
Consumer goods, durables
Intrastat form
40,751
40,055
41,087
Consumer goods, semi-durable
Intrastat form
57,000
54,957
52,167
Consumer goods, non-durable
Intrastat form
150,473
154,327
174,450
Selected manufacturing sales (excluding
NACE 31-35)
NSO Manufacturing
report
390,841
351,628
371,617
Local non-manufacturing sales
NSO Agriculture
reports
94,417
90,958
88,561
Wild fish (wholesale value and exports)
5,086
4,953
4,934
Farmed fish
1,797
1,028
1,225
Meat
17,918
16,942
15,423
Rabbits
19,327
19,502
19,783
Poultry
8,011
7,727
7,794
42,278
40,806
39,402
Fruit and vegetables
*Indicates estimates until benchmark data are available
3.13.23 For the years other than the benchmark, the output of NACE 47 is extrapolated on
the basis of an index for purchases of resale. This index of purchases for resale is made up
of:
132
The production approach
a) Total imports by importers classified as NACE 47 obtained from the International
Trade and Transport Statistics Unit.
The National Accounts Unit adjusts this
information with an estimate of the amount of imports that are not yet captured by
the Intrastat forms to anticipate average revisions in the data. An adjustment is also
carried out by the National Accounts Unit to estimate the amount of imports
purchased directly from countries such as Sicily, that are not being captured in
Intrastat.
b) Imports of consumer goods by enterprises classified as NACE 46: this data are
obtained from the International Trade and Transport Statistics Unit and the
definition of imports of consumer goods is based on the Broad Economic Category
(BEC) import classification.
c) Domestic sales of manufacturing companies: this data are obtained from the
manufacturing survey carried out by the Short-Term Statistics Unit. 2014 local
manufacturing data was not comparable with 2013 due to a new sample, therefore is
excluded from the Index of Purchases starting from quarter 1 of 2014. Accordingly,
the Index of Purchases of 2013 is adjusted for the local manufacturing data to arrive
at a comparable data set and as a result, to obtain consistent growth rates.
d) Domestic sales of non-manufacturing companies obtained from the Agriculture and
Environment Statistics Unit. Assumptions are made on the proportions of these
domestic sales that actually pass through retail outlets, and are not sold directly to
the consumer by manufacturing and non-manufacturing enterprises.
Breakdown of output by product
3.13.24 The output of Section G consists of trade margins and other secondary output. All
trade margins, calculated as described above, were classified under the product codes 45, 46
and 47 accordingly. The secondary output of enterprises operating within these economic
activities has been classified on the basis of the Classification of Products by Activity (CPA)
product detail specified in the SBS survey.
133
Gross National Income Inventory
Method of calculation of intermediate consumption
Benchmark years
3.13.25 Intermediate consumption is calculated directly from data collected within the SBS
survey. It is defined as the difference between value-added at basic prices and output at basic
prices. Intermediate consumption is recorded in purchases’ prices:
Intermediate consumption in purchases’ price = Output at basic price less
Value added at basic price less Rent on land
3.13.26 Value added at basic prices is defined as follows:
Value added at basic prices = Output less Total purchases of goods and services
(excluding purchases for resale) add Inventories of raw materials and
consumables
3.13.27 Note: Rent on land is added back to value added at basic prices as the National
Accounts Unit classifies rent on land as D.45 Rents and not as P.2 Intermediate consumption.
Extrapolation procedures
3.13.28 Intermediate consumption is extrapolated using the constant technology assumption
for those years in which SBS surveys are not available. When information on major changes
in the cost structure of these entities is identified, adjustments are made accordingly. These
estimates are revised with data from the SBS survey once this is made available to the
National Accounts Unit.
Breakdown of by product
3.13.29 The SBS survey also provides product detail at CPA 6-digit level on intermediate
consumption. The product distribution coefficients within the SBS survey are then used to
allocate total intermediate consumption of enterprises within this economic activity by
product categories.
134
The production approach
3.14 Transportation and Storage (NACE Rev. 2 Section H)
3.14.1
In the National Accounts Unit, the activities of Section H consist of the following 5
main industries:
a) Land transport and transport via pipelines (NACE25 49);
b) Water transport (NACE 50);
c) Air transport (NACE 51);
d) Warehousing and support activities for transportation (NACE 52); and
e) Postal and courier activities (NACE 53).
Dissemination is restricted for Air transport, and Postal and courier activities, due to two
dominant companies which operate in these activities. Land transport and transport via
pipelines, is flagged as secondary confidential and is thus not disseminated.
3.14.2
In 2010, the gross value added at basic prices (B.1g) of Section H amounted to 346.2
million Euro or 6.0 per cent of the total gross value added (GVA) (Table 3.14.1).
Table 3.14.1: Contribution of Section H to total economy, 2010
B.1g as a percentage of:
NACE Division
P.1
A*64
P.2
B.1g
Million Euro
49
50
83.0
62.1
20.9
c
%
%
%
%
0.4%
0.3%
0.3%
3.8%
3.4%
3.5%
6.0%
5.2%
5.5%
6.0%
c
478.3
256.4
221.9
53
Total of Section H
GNI (B.5*5)
Total
economy
c
51
52
Section H
B.1g Total
economy
GDP
(B.1*g)
Total
economy
64.1%
c
980.7
634.5
346.2
100.0%
Confidential
25
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
135
Gross National Income Inventory
3.14.3
Table 3.14.2 shows that the GVA of the Transportation and storage activities
(Section H) is generated by two main institutional sectors, namely the non-financial
corporations (S.11) and households (S.14).
Table 3.14.2: Section H (NACEs 49-53) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
Division
S.11
H
915.4
49
c
50
82.2
-
-
51
c
c
c
c
52
456.2
-
-
53
c
c
c
c
S.12
S.13
S.14
S.15
Total
S.11
-
-
c
c
65.3
-
980.7
608.2
-
-
26.3
-
634.5
c
c
c
c
c
c
c
c
c
-
83.0
61.5
-
-
0.6
-
62.1
c
c
c
c
c
c
c
c
22.1
-
478.3
255.0
-
-
1.4
-
256.4
c
c
c
c
c
c
c
c
c
0.8
S.12
S.13
S.14
S.15
Total
Confidential
Gross value added (Million Euro)
Gross value added (Percentage)
NACE
c
Division
S.11
Total
S.11
S.12
S.13
S.14
S.15
Total
H
307.2
S.12
-
S.13
-
39.0
S.14
S.15
-
346.2
88.7%
0.0%
0.0%
11.3%
0.0%
100.0%
49
c
c
c
c
c
c
63.2%
0.0%
0.0%
36.8%
0.0%
100.0%
50
20.7
-
-
0.2
-
20.9
99.0%
0.0%
0.0%
1.0%
0.0%
100.0%
51
c
c
c
c
c
c
100.0%
0.0%
0.0%
0.0%
0.0%
100.0%
52
201.2
-
-
20.7
-
221.9
90.7%
0.0%
0.0%
9.3%
0.0%
100.0%
53
c
c
c
c
c
c
99.5%
0.0%
0.0%
0.5%
0.0%
100.0%
Confidential
Process tables
3.14.4
An excerpt from the process tables for Transportation and storage (Section H) is
presented in Table 3.14.3. Surveys and Censuses include data from the Structural Business
Statistics (SBS) survey and up till 2010, a national accounts census covering minibus and
coach services. Administrative Records refer to the companies’ financial statements, fiscal
data and data obtained from the Malta Communications Authority (MCA).
Other
Extrapolation and Models refer to Benchmark Extrapolation which was used to estimate the
output and intermediate consumption for taxis and horse drawn cabs, which were both
extrapolated on a quarterly basis. Conceptual Adjustments are inclusive of an adjustment for
goods for resale to ensure that output is expressed in terms of margins Other transportation
and support services (NACE 52.29), and inclusive of subsides on products to ensure that
output and GVA are at basic prices.
136
The production approach
Table 3.14.3: Extract of process tables 2010 for Section H in millions of Euro
Basis for national accounts figures
0.0
0.0
0.0
0.0
8.8
0.0
1,032.6
0.2
0.0
0.0
0.0
0.0
0.7
0.0
689.7
B.1g
140.8
194.1
0.0
6.5
1.6
0.0
0.0
0.0
-0.0
8.1
0.0
343.0
Other
Other E&M
CFC
Benchmark
Extrapolations
Total (Sources)
1.8
0.5
Total Extrap+Models
7.0
0.0
FISIM
0.0
465.3
Dwellings Stratification Method
659.4
223.7
CFM
364.4
P.2
Combined Data
Administrative Records
P.1
Section H
Surveys and Censuses
Extrapolations and Models
Adjustments
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
P.1
0.0
0.0
-52.0
-52.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-52.0
980.7
P.2
0.0
15.8
-71.5
-55.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-55.2
634.5
B.1g
0.0
-15.8
19.0
3.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3.2
346.2
Allocation of
FISIM
Section H
Data Validation
Total Conceptual
Exhaustiveness
Other Conceptual
Conceptual
NACE 49 - Land transport and transport via pipelines
3.14.5
Activities in Malta are limited to Other passenger land transport (NACE 49.3), and
Freight transport by road and removal services (NACE 49.4).
3.14.6
Up till 2011, Other passenger land transport (NACE 49.3) was compiled at NACE
class level. In 2010, the contribution to total GVA of Urban and suburban passenger land
transport (NACE 49.31) amounted to 18.6 per cent, Other passenger land transport n.e.c.
(NACE 49.39) amounted to 18.9 per cent and Taxi operation (NACE 49.32) amounted to
11.6 per cent.
3.14.7
Up till 2011, the National Accounts Unit used to conduct a yearly census to cover
public transport (NACE 49.31).
This activity was characterised by a large number of
unincorporated enterprises. Data submitted included information on output, intermediate
consumption and capital formation. Following the public transport reform in 2012, one
137
Gross National Income Inventory
operator took over the industry which data are obtained from annual reports and financial
statements.
3.14.8
Up till 2011, Benchmark Extrapolations based on turnover figures available from the
Tax Compliance Unit for 2000 were made for Taxi operation. For subsequent years, this
turnover figure was related to the number of days stayed (nights spent) by tourists.
Intermediate consumption for 1999 is based on experts’ advice and this intermediate
consumption to turnover ratio is applied for all the other subsequent years. The level of selfemployed persons is estimated to be equal to the number of licensed taxis. The licensed
stock of vehicles is available every quarter from Transport Malta. Given that the coverage of
SBS survey is satisfactory, the National Accounts Unit is no longer conducting such surveys
and as from 2012, SBS data are used for benchmark years.
3.14.9
Up till 2011, the National Accounts Unit used to conduct a yearly census to cover
Other passenger land transport n.e.c. (NACE 49.39). This activity was characterised by a
large number of small non-financial corporations and unincorporated enterprises.
Data
submitted included information on output, intermediate consumption and capital formation.
Given that the coverage of SBS survey is satisfactory, the National Accounts Unit is no
longer conducting such surveys and as from 2012, SBS data are used for benchmark years.
3.14.10 Freight transport by road and removal services (NACE 49.4) represents the
remaining 51.3 per cent of total GVA. All the data for this subsector is compiled using the
SBS survey, where the output is equal to the weighted value of production less taxes on
products plus subsidies on products, while the intermediate consumption is equal to the
weighted value added at basic prices less output less insurance less rent on land.
3.14.11 For non-benchmark years, the extrapolation of Land transport activities is based on
Short-Term Statistics (STS) indices.
NACE 50 – Water transport
3.14.12 Activities in Malta are limited to Sea and coastal passenger water transport (NACE
50.1), and Sea and coastal freight water transport (NACE 50.2). Administrative Records
account for 29.1 per cent of total GVA and data are mainly derived from annual accounts and
138
The production approach
financial statements and fiscal data. Small enterprises contribute 74.2 per cent of the total
GVA of NACE 50 and are covered by SBS survey.
3.14.13 For non-benchmark years, all the companies covered by Administrative Records are
surveyed by the National Accounts Unit on a quarterly basis while the employment data are
used to extrapolate enterprises covered by SBS survey in benchmark years.
NACE 51 – Air transport
3.14.14 Activities in Malta are limited to Passenger air transport (NACE 51.1). Data are
mainly derived from annual accounts and financial statements. Output is equivalent to total
revenue and other operating income, while intermediate consumption is equal to cost of sales,
selling and distribution costs and administrative expenses less compensation of employees,
depreciation and other write-backs, write-offs and provisions. Small enterprises are covered
with SBS survey.
3.14.15 For non-benchmark years, all the companies covered by Administrative Records are
surveyed by the National Accounts Unit or the Short-Term Statistics Unit on a quarterly basis
while the employment data are used to extrapolate enterprises covered by SBS survey in
benchmark years.
NACE 52 – Warehousing and support activities for transportation
3.14.16 Administrative Records account for 57.1 per cent of total GVA and data are mainly
derived from annual accounts and financial statements and fiscal data, while 33.8 per cent is
derived from SBS survey. Other transportation support activities (NACE 52.29), which is
derived from SBS survey, is adjusted to deduct any goods purchased for resale from output
and intermediate consumption.
This adjustment is presented in the process table as a
Conceptual Adjustments. As from 2012, this adjustment is based on 2011 data given that
SBS survey is no longer available at NACE class level.
3.14.17 The extrapolation of the companies which annually rely on Administrative Records,
are covered by national quarterly questionnaires.
Imports and exports of goods and
employment are also used for extrapolation purposes in absence of annual data.
139
Gross National Income Inventory
NACE 53 – Postal and courier activities
3.14.18 Postal and courier activities are mainly derived from annual accounts and financial
statements.
Output is equivalent to total revenue and other operating income, while
intermediate consumption is equal to cost of sales, selling and distribution costs and
administrative expenses less compensation of employees, depreciation and other write-backs,
write-offs and provisions. Small enterprises are covered by quarterly statistics obtained from
MCA and SBS data.
3.14.19 For non-benchmark years, all the companies covered by Administrative Records are
covered by quarterly statistics obtained from MCA, the Structural Business Statistics Unit
and STS indices.
3.15 Accommodation and food service activities (NACE Rev. 2 Section I)
3.15.1
The activities of NACE26 Section I are grouped together within the A*6427 level.
These activities carry a key role in the tourism sector and during 2010 contributed 4.7 per
cent of the value added in the economy.
Table 3.15.1: Contribution of Section I to total economy, 2010
NACE Division
A*64
I
55-56
3.15.2
Million Euro
Description
Accomodation
and food service
activities
Accomodation and
food service
activities
B.1g as a percentage of:
GDP
GNI
B.1g
B.1g Total (B.1*g)
(B.5*5)
Section I economy
Total
Total
economy
economy
P.1
P.2
B.1g
708.0
435.6
272.4
100.0%
4.7%
4.1%
4.3%
708.0
435.6
272.4
100.0%
4.7%
4.1%
4.3%
Two institutional sectors are involved in both accommodation and food service
activities: the non-financial corporations sector (S.11) and the households sector (S.14).
26
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
27
Refer to Table 9.1.1.
140
The production approach
Table 3.15.2: Section I (NACEs 55-56) by institutional sector for 2010
NACE
S.11
Output (Million Euro)
S.12
S.13
S.14
S.15
Total
Intermediate consumption (Million Euro)
S.11
S.12
S.13
S.14
S.15
Total
I
577.7
-
-
130.3
-
708.0
351.3
55-56
577.7
-
-
130.3
-
708.0
351.3
NACE
Gross value added (Million Euro)
S.11
S.12
S.13
S.14
S.15
Total
S.11
-
-
84.3
-
435.6
-
-
84.3
-
435.6
Gross value added (Percentage)
S.12
S.13
S.14
S.15
Total
I
226.5
-
-
46.0
-
272.4
83.1%
-
-
16.9%
-
100.0%
55-56
226.5
-
-
46.0
-
272.4
83.1%
-
-
16.9%
-
100.0%
3.15.3
Hotels and similar accommodation (NACE 55.1) represents the activities of hotels
and other similar accommodation services (including small units such as guest houses,
aparthotels, tourist villages) irrespective of being accompanied by a restaurant or not. The
compilation of NACE 55.1 is based on supply-side sources in national accounts, while the
activities of NACEs 55.2 to 55.9 are covered using expenditure based sources. Holiday and
other short-stay accommodation (NACE 55.2) represent the activities of other
accommodation services including short-stay accommodation in apartments and similar units
by local residents and tourists. Camping grounds, recreational vehicle parks and trailer parks
(NACE 55.3) are negligible in Malta, while Other accommodation (NACE 55.9) comprise of
accommodation establishments catering for slightly longer stay periods such as dormitories
and shared rooms catered for seasonal migrant workers and students.
3.15.4
Restaurants and mobile food service authorities (NACE 56.1) consists of all
restaurant service activities, inclusive of mobile food service activities, while Beverage
serving activities (NACE 56.3) comprises of beverage service activities including bars and
discotheques. These two activities are covered by expenditure based sources. NACE 56.2
represents all event catering and other food services activities for individual events or for a
specified period of time and are estimated using supply based sources.
Main sources
3.15.5
The main sources used to calculate the production and generation of income
accounts for NACE Section I are the following:
a)
Household Budgetary Survey (HBS) - The latest household budgetary survey was
conducted in 2008. The HBS of 2015 will be available approximately in 2017.
141
Gross National Income Inventory
b)
Traveller Expenditure Survey – This survey is conducted annually by the Malta
Tourism Authority (MTA), representing all quarters of the calendar year and
provides a detailed breakdown of expenditure made by tourists. Expenditure ratios
from this survey are used in conjunction with the Tourstat survey result to estimate
tourists’ expenditure in bars, restaurants, take-away, bars, pubs and places of
entertainment.
c)
Structural Business Statistics (SBS) survey was integrated in national accounts as
from 2005. Prior to this the National Accounts Unit used to conduct a census
covering all operators in NACE Group 55.1.
d)
Employment and Training Corporation (ETC) database is a quarterly employment
database.
e)
Tourstat (International Tourism Survey) - This survey is conducted monthly by the
Population and Tourism Statistics Unit as from 2001 to collect relevant data on
inbound and outbound tourism – number of tourists, expenditure, purpose of visit
and others. Most importantly, this survey monitors 4 main expenditure aggregates
being made by tourists.
f)
Accomstat (Accomodation Statistics Census) - The Accomstat is a supply side
census covering all active collective accommodation establishments in Malta and
Gozo. This census gathers monthly data related to number of visitor by type
(resident or non-resident), number of nights by visitor type, number of room nights
sold by visitor type and capacity statistics such as number of bedrooms and bedplaces.
The mechanism for the calculation of national accounts variables involves the use of a
selection of the above sources of information to be used during the estimation process for
each NACE division. The process flow for NACE Section I is summarised in Table 3.15.3.
142
The production approach
0.0
0.0
0.0
0.0
0.0
0.0
3.3
0.0
3.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Total (Sources)
Other
Total
Extrapolation
and Models
Other E&M
FISIM
Dwellings
CFC
CFM
Benchmark
Extrapolations
0.0
0.0
0.0
3.3
0.0
3.3
0.0
0.0
0.0
657.8
396.5
261.3
Total Conceptual
N1
N2
N3
N4
0.4
5.3
-4.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0 26.5 26.5 2.8
0.0 15.9 17.9 0.0
0.0 10.5 8.6 2.8
55.8
33.9
21.9
0.0
0.0
0.0
50.3
39.1
11.2
Final Estimate
Other Conceptual
0.4
-5.9
6.3
N7
Allocation of FISIM
0.0
11.1
-11.1
N6
Data Validation
-5.9
0.0
-5.9
N5
Section I
P.1
P.2
B.1g
Total (Adjustments)
Adjustments
Exhaustiveness
Conceptual
Balancing
654.4
396.5
258.0
Basis for national accounts figures
Extrapolations and Models
Total Exhaustiveness
P.1
P.2
B.1g
Combined Data
Administrative
Records
Surveys and
Censuses
Section I
Table 3.15.3: Extract of process tables 2010 for Section I in millions of Euro
708.0
435.6
272.4
Output
NACE 55 Accommodation
NACE 55.1 Hotels and similar accommodation
3.15.6
Hotels, aparthotels, tourist villages, holiday complexes, guesthouses and hostels are
all type of establishments which form part of NACE 55.1. Types of accommodation other
than hotels are included as part of NACE 55.1 as their function is very similar to that of
hotels, typically including daily cleaning and bed-making services. Aparthotels are presently
being included as hotels due to a change in the licence structure of tourism accommodation
establishments in 201228, which explicitly specified that apart-hotels should be treated as
hotels. The SBS survey for this category was considered accurate and reliable as the sample
size provided enough coverage. Thus, this survey was used to measure output; supplemented
with other sources for further validation and exhaustiveness.
28
Refer to legal notice 351, 2012
143
Gross National Income Inventory
3.15.7
The output of Hotel and similar accommodation (NACE 55.1) consists of revenue
from accommodation; bars and restaurants within hotels; catering services; rent received and
other ancillary services. This disaggregation of output is derived from the SBS survey during
the compilation of supply and use tables (SUTs). An Exhaustiveness Adjustment of type N7
is also added in order to cater for the tips distributed to employees in restaurants. The
supplement of tips to output is independent of the SBS survey.29
Table 3.15.4: Breakdown of the output for NACE 55.1 for 2010
Output Origin
Output millions of Euro
%
203.4
62.8%
80.4
24.8%
4.7
1.4%
Other income (including rent)
34.7
10.7%
Tips at restaurants within hotels
0.8
0.2%
324.0
100%
Revenue from accomodation
SECTION I - Revenue from bars and restaurants
NACE 55.1 Revenue from catering services
Total
3.15.8
Accommodation revenue from hotels is split between tourist expenditure and
resident expenditure. This expenditure distribution is carried out through an ad-hoc estimate
using Accomstat results and price statistics. The amounts of nights spent by residents are
paired with the corresponding prices of the type of accommodation30 and of the relevant
quarter of the calendar year. The same process is carried out for non-resident nights in order
to derive expenditure shares based on the type of accommodation stayed by residents and
non-residents.
This is mainly carried out to reflect the higher expenditure incurred by
residents as their consumption is typically inclined towards more expensive accommodation
classes. The non-resident accommodation expenditure figure features in the Classification of
Individual Consumption by Purpose (Coicop) 11.231 as exports of services.
NACE 55.2 to 55.9 - Holiday and other short stay accommodation and other accommodation
3.15.9
A different approach is taken for the calculation of output in NACEs 55.2 to 55.932
in an attempt to provide exhaustive estimates and account also for all unrecorded
transactions. The Business Registers Unit and consequently the Structural Business Statistics
29
Refer to Chapter 7 for more details on the calculation of tips within hotels and restaurants
The types of collective accommodation establishments recorded in the Accomstat are: 5-star hotels; 4-star
hotels; 3-star hotels; 2-star hotels; Guesthouse and Tourist villages; and Hostels.
31
Coicop 11.2 refers to Accommodation services.
32
For NACE Description refer to Table 9.1.1.
30
144
The production approach
Unit do not cover all the accommodation establishments licensed by the MTA and thus, an
expenditure approach is adopted.
The output is unconventionally measured from the
available expenditure data which fit the description of ‘other short stay accommodation’
rather than from recorded market output of producers.
3.15.10 Output generated by tourists up till 2008 was estimated on the number of days
stayed by tourists in private and other accommodation and a set of rack rates supplied every
quarter by the Price Statistics Unit within the National Statistics Office (NSO). Following a
change in methodology vis-à-vis the rack rates collected by the Price Statistics Unit, the
National Accounts Unit decided to use the growth rate in tourist accommodation expenditure
derived from Tourstat as an indicator for 2009 onwards.
3.15.11 Output generated by local residents is derived from the HBS of 2000 and 2008.
Data are extrapolated for subsequent years using indicators related to tourist expenditure.
However, as from 2015 a national tourism questionnaire will be in place. The questionnaire
will tackle domestic and outbound tourism by local residents and thus national accounts data
will be revamped using this new information.
3.15.12 The discrepancy between business statistics and expenditure side estimates
generated jointly by NACEs 55.2 to 55.9 during 2010 amounted to 26.5 million Euro, or 7.3
per cent of the total output of NACE Division 55 and 10.5 million Euro or 6.5 per cent in
gross value added. This is being reported in Table 3.15.3 under N5.
NACE 56 - Food and beverage service activities
3.15.13 The output of bars and restaurants is estimated using expenditure data from the HBS,
the traveller expenditure survey and the Tourstat survey.
3.15.14 The ‘best practice’ recommendation by the Gross National Income (GNI)
Committee Task Force (CPNB 205) referring to estimates for food and beverage service
activities based on business statistics is not viable for Malta due to potential under-reporting
of production (N6), and due to the large margin of error of the business statistics approach in
the bottom strata of bars and restaurants - which accounts for nearly half the population of
bars and restaurants.
The discrepancy between business statistics and expenditure side
145
Gross National Income Inventory
estimates generated jointly by NACEs 56.1 and 56.333 during 2010 amounted to 26.5 million
Euro, or 7.6 per cent of the total output of NACE Division 56 and 8.6 million Euro or 7.7 per
cent in gross value added. This is being reported in Table 3.15.3 under N6.
3.15.15 Output of this sub-sector is made up of expenditure made by tourists and residents
on meals out in restaurants, cafés and take away, bars, etc.
Since output is based on
expenditure figures of the households sector and tourists rather than from supply side sources
(turnover of bars and restaurants), a further adjustment is made to include expenditure on
business lunches.
3.15.16 The two main sources used to calculate tourists’ expenditure on bars and restaurants
are the Tourstat survey (managed by the Population and Tourism Statistics Unit within the
NSO) and the Traveller Expenditure Survey (carried out by the MTA). The Tourstat survey
collects an aggregated form of expenditure grouped as Other expenditure. This expenditure
category typically contains all expenditure elements excluding air fares, accommodation
expenditure and package tour expenditure. As a result, expenditure in restaurants, bars, takeaway, etc. are implicitly included as Other expenditure.
3.15.17 The MTA expenditure survey is a diary-based survey distributed at the arrivals
lounge of the Malta International Airport to a sample of tourists coming from a number of
main markets. In 2010, the main markets analysed were: United Kingdom, Nordic countries,
France, Italy and Germany.
In this survey respondents are asked to state their daily
expenditure whilst in Malta, according to the different categories, as follows:
a) on accommodation (not included in the travel arrangements they made prior to their
departure);
b) on food and drinks (in accommodation establishments, in catering establishments,
take-away, bars and groceries);
c) on transportation (ferry crossings, by vehicle hire, public transport and taxis);
d) on recreation (cultural activities, popular entertainment and other recreation);
e) on shopping (basic necessities, souvenirs/gifts/duty-free items); and
f)
33
any other expenditure (including newspapers, medicines etc).
For NACE Description refer to Table 9.1.1.
146
The production approach
Survey participants are also asked to state their expenditure on travel arrangements made for
their visit in Malta i.e. package price for flight, accommodation and others.
3.15.18 Since the Tourstat survey does not provide a detailed breakdown of the ‘other
expenditure’ item from package and non-package tourists, the expenditure items used from
the MTA expenditure survey to derive values associated with NACEs 56.1 and 56.3 are the
following:
a) Food and drinks in restaurants;
b) Food and drinks in take-away etc.; and
c) Food and drink in bars/pubs/places of entertainment.
3.15.19 The expenditure ratios of these three components as part of other expenditure are
derived from Table 3.15.5. The respective ratios are derived in order to subdivide the gross
other expenditure figure from the Tourstat into a multitude of different commodities.
147
Gross National Income Inventory
Table 3.15.5: Breakdown categories of tourism expenditure from the Tourism Expenditure Survey
Expenditure prior to departure
Expenditure during stay
Expenditure on accommodation (Non-package)
Total expenditure on food and drinks
Food and drinks in accommodation establishments
Food and drinks in restaurants
Food and drinks in take-away etc.
Food and drink in bars/pubs/places of entertainment
Food and drink from groceries
Total expenditure on transport
Ferry crossings
Vehicle hire
Taxis
Public transport
Total expenditure on recreation
Organised tours/excursions
Boat trips
Attraction/site visits
Event tickets
Popular entertainment (e.g. cinema, clubs)
Sports
Total expenditure on shopping
Basic necessities
Souvenirs
Clothing
Maps/postcards/guidebooks
Other
Other expenditure
Vehicle fuel
Parking fees
Tobacco products
Internet access
Other
148
The production approach
3.15.20 According to ESA 2010, output must be recorded exclusive of any indirect taxes;
thus, further adjustments are carried out to deduct value added tax (VAT) from the derived
expenditure figure in order to derive output at basic prices.
3.15.21 Expenditure data of Maltese residents on meals in restaurants, cafes, take-away,
bars, etc. is extracted from the HBS. A distinction between expenditure on meals and drinks
consumed in hotels’ bars and restaurants and other establishments is made in the HBS. This
ensures that no double counting is reported when extracting data for food and beverage
service activities from expenditure surveys. The latest available HBS is that of 2008, and this
is considered to be the benchmark year for local residents’ expenditure on bars and
restaurants.
3.15.22 As from 2009 onwards expenditure by local residents is extrapolated using the
growth rate of specific price indices (P) related to various expenditure categories of total
expenditure by local residents on meals and drinks from the HBS.
Local residents’ expenditure on meals and drinks [t+1] = Expenditure [t] * P[t+1]/[t]* Q
where: t = [2008 ……………….]; t+1 = [2009 onwards]
3.15.23 An adjustment for tips is applied to the expenditure in restaurants, excluding bars
and take-aways. This top-up of 1 per cent is carried out to cover for any income earned from
tips. Such adjustment is also added to the compensation of employees of this category.
Adjustments for tips are included under N7 in Table 3.15.3.
3.15.24 The output of restaurant and mobile food service activities and beverage service
activities (NACEs 56.1 and 56.3) is broken down into specific product groups on an annual
basis. In 2010, the output was mainly generated by serving food and beverages (96.3 per
cent).
Other output shares were generated from discotheques, trade margins, tips to
employees and other income (such as rent). This breakdown is derived from SBS and SUT
and is presented in Table 3.15.6.
149
Gross National Income Inventory
Table 3.15.6: Breakdown of output of NACEs 56.1 and 56.3 for 2010, in millions of Euro
Bars and restaurants (NACE 56.1 & 56.3)
Millions of Euro
Total output of bars and restaurants
Food & beverages
Tips to employees
Other income
Trade margin
Income from entrance fees in discoteques
Share
292.1
281.3
2.0
0.7
2.7
5.5
100%
96.3%
0.7%
0.2%
0.9%
1.9%
3.15.25 The output generated from food and beverages service activities within these two
groups of NACE Division 56 are further broken down to distinguish between expenditure in
restaurants, take-aways and expenditure by tourists, resident households, and resident
businesses. Using this mechanism, the output of restaurants can be singled out and this
provides the possibility of carrying out an adjustment for tips based only to that particular
output, as it is assumed that tips handed out at bars and takeaways are minimal or simply
absent.
Table 3.15.7: Breakdown of food and beverages within NACEs 56.1 and 56.3, 2010
Bars and restaurants (NACE 56.1 & 56.3)
Total output from food and beverages
Tourist expenditure
Expenditure in restaurants
Expenditure in take-aways
Resident expenditure
Expenditure on food
Expenditure on beverages
Resident business lunches (Imputed adjustment)
Millions of Euro
Share
281.3
137.6
100%
48.9%
125.0
12.6
136.9
48.7%
108.7
28.2
6.8
2.4%
3.15.26 The output of Event catering and other food service activities (NACE 56.2) is
measured using the SBS survey.
Intermediate consumption
NACE 55 - Accommodation
3.15.27 Intermediate consumption of Hotels and similar accommodation (NACE 55.1) is
extracted directly from the SBS survey from which rent on land is deducted.
3.15.28 The intermediate consumption of other accommodation – NACEs 55.2 to 55.9 is
based on the SBS survey. The intermediate consumption to output ratio is derived from the
150
The production approach
sample covering a portion of the population and applied to the exhaustive output derived with
the expenditure approach described in para. 3.15.9. It is assumed that the main components
which constitute the intermediate consumption of these units are similar to both registered
and unregistered units.
NACE 56 - Food and beverage service activities
3.15.29 The intermediate consumption for NACEs 56.1 and 56.3 is calculated using an
intermediate consumption to output ratio derived from the SBS survey. This ratio is applied
to the demand-based output derived for these activities.
In 2010, the intermediate
consumption to output ratio for these establishments stood at 68 per cent. This ratio is
applied to the exhaustive output of NACEs 56.1 and 56.3 with the premise that the
intermediate costs of restaurants represented in the SBS sample are reliable.
3.15.30 The intermediate consumption value of event catering and other food services
activities is extracted from the SBS survey from which rent on land is deducted. The
intermediate consumption to output ratio for this subsector in 2010 was of 72 per cent.
3.16 Information and Communication (NACE Rev. 2 Section J)
3.16.1
Section J comprises of NACE34 Divisions 58 to 63, representing:
a)
Publishing activities (NACE 58);
b)
Motion picture, video and television programme production, sound recording and
music publishing activities (NACE 59);
c)
Programming and broadcasting activities (NACE 60);
d)
Telecommunications (NACE 61);
e)
Computer programming, consultancy and related activities (NACE 62); and
f)
Information service activities (NACE 63).
34
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
151
Gross National Income Inventory
These activities are demarcated in 4 different groups at A*6435 level as shown in Table
3.16.1. In 2010, Information and communication activities made up 5.5 per cent of value
added in the total economy.
Table 3.16.1: Contribution of Section J to total economy, 2010
NACE Division
A*64
Million Euro
Description
P.2
B.1g
J
Information and
communication
736.8
417.0
319.7
100%
5.5%
4.8%
5.1%
58
Publishing activities
44.1
19.8
24.3
7.6%
0.4%
0.4%
0.4%
2.2%
2.0%
2.0%
59-60
Audiovisual and
broadcasting activities
c
61
Telecommunications
IT and other information
62-63
services
c
P.1
B.1g as a percentage of:
GDP
GNI
B.1g
B.1g Total (B.1*g)
(B.5*5)
Section J economy
Total
Total
economy
economy
270.7
141.1
129.5
40.5%
c
Confidential
3.16.2
The output of these activities was predominantly produced by the non-financial
sector (S.11) with an output share of 702.7 million Euro. The government sector (S.13) and
the non-profit institutions serving households (NPISHs) (S.15) contributed 23.6 and 0.7
million Euro respectively, while the households sector (S.14) produced the remaining output
(9.8 million Euro). Table 3.16.2 summarises the institutional sectors allocation of NACE J.
Table 3.16.2: Section J (NACEs 58-63) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
Division
S.11
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
702.7
-
23.6
9.8
0.7
736.8
398.2
-
12.8
5.7
0.4
417.0
58
42.9
-
-
0.6
0.5
44.1
19.2
-
-
0.3
0.3
19.8
59-60
c
c
c
c
c
c
c
61
270.4
62-63
c
35
S.12
J
c
Confidential
Refer to Table 9.1.1.
152
c
c
c
-
c
c
-
0.2
c
c
270.7
c
141.1
-
-
0.1
c
c
c
c
c
c
-
c
141.1
c
The production approach
Table 3.16.2: Section J (NACEs 58-63) by institutional sector for 2010 (cont...)
Gross value added (Million Euro)
Gross value added (Percentage)
NACE
Division
S.11
S.12
-
J
304.5
58
23.7
-
59-60
c
c
61
c
S.14
10.8
c
-
0.3
c
-
c
S.15
4.0
c
-
129.4
62-63
S.13
S.12
S.13
S.14
S.15
Total
319.7
95.2%
-
3.4%
1.3%
0.1%
100.0%
0.2
24.3
97.6%
-
-
1.4%
1.0%
7.6%
c
90.7%
-
-
8.1%
1.2%
3.5%
99.9%
-
-
0.1%
-
40.5%
91.3%
-
7.0%
1.7%
-
48.4%
c
c
S.11
0.4
-
0.2
c
Total
129.5
c
c
Confidential
Process tables
3.16.3
The majority of the data used for NACE J in 2010 was derived from audited
financial statements of individual companies. These are typically the largest players in the
industry and account for 73.6 per cent of output or 69.2 per cent of gross value added (GVA).
The rest of the enterprises were derived from the Structural Business Statistics (SBS) survey.
Data Validation refers to adjustments to the SBS result following analysis by the National
Accounts Unit. Conceptual Adjustments were discussed in Sections 3.2 and 3.4.
130.2
68.6
61.6
576.6
342.8
233.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.9
0.0
0.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.9
0.0
0.9
Adjustments
Exhaustiveness
Data Validation
Allocation of FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
0.0
0.0
0.0
Section J
Conceptual
Total (Sources)
Other
Total
Extrapolation
and Models
Other E&M
FISIM
Dwellings
CFC
CFM
Benchmark
Extrapolations
Basis for national accounts figures
Extrapolations and Models
P.1
P.2
B.1g
6.0
0.2
5.9
0.0
11.6
-11.6
23.0
-6.1
29.2
23.0
5.4
17.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
29.1
5.6
23.5
707.7
411.4
296.3
Final Estimate
P.1
P.2
B.1g
Combined Data
Administrative
Records
Surveys and
Censuses
Section J
Table 3.16.3: Extract of process tables 2010 for Section J in millions of Euro
736.8
417.0
319.8
153
Gross National Income Inventory
3.16.4
Publishing activities (NACE 58) and Audio visual and broadcasting activities
(NACEs 59-60) are characteristically generated by very small companies and thus are
generally based on SBS survey. Non-benchmark years are extrapolated using Short-Term
Statistics (STS) indices.
3.16.5
Telecommunications (NACE 61) account for 40.5 per cent of GVA in Section J. It
is predominantly covered by annual accounts and financial statements, and only small
enterprises are covered by SBS survey. Non-benchmark years are covered by quarterly data
provided by the Malta Communications Authority (MCA) or national accounts
questionnaires.
3.16.6
Computer programming, consultancy and related activities account for 41.7 per cent
of GVA in Section J. Included in this NACE division are a number of Class 4 licensed
companies with the Malta Gaming Authority (MGA) which are separately disclosed and are
covered fully by audited financial statements. These companies offer services to remote
gaming companies classified in Gambling and betting activities (NACE 92). In 2010, Class 4
companies accounted for 17 per cent of the GVA of NACE 62. Similarly other large
companies are covered by audited financial statements. The largest fifteen software
development companies accounted for 52 per cent of the total GVA of NACE 62.
Non-profit institutions serving households (NPISHs) (S.15)
3.16.7
The NPISHs unit classified in Publishing activities (NACE 58) is considered to be a
market producer. While the benchmark year is 2004, non-benchmark years are derived using
STS indices. Intermediate consumption is derived by taking the product of intermediate
consumption to output ratio (equal to 2004 ratio) and market output (derived by taking the
product of the growth rate of total sales from the STS indices and market output with the
latter being latest available for 2005 which used to be extracted from the STS). Only two
NPISHs are involved in Motion picture, video and television programme production, sound
recording and music publishing activities (NACE 59). These are calculated with the sum of
costs approach. Only one entity is classified as a NPISH in Programming and broadcasting
activities (NACE 60) and its output is derived using the sum of costs approach.
154
The production approach
General government sector (S.13)
3.16.8
Output generated by general government units consists of one entity of particular
dominance in NACE 63. Output generated from such entity is calculated using the sum of
costs approach. Non-market output for this activity is derived as a residual between total
output and market output. Reference should be made to Section 3.21 for more details on the
extra-budgetary units (EBUs).
3.17 Financial and insurance activities (NACE Rev. 2 Section K)
3.17.1
Activities of Section K are sub-divided into three main activities:
a) Financial service activities, except insurance and pension funding (NACE36 64);
b) Insurance, reinsurance and pension funding, except compulsory social security
(NACE 65); and
c) Activities auxiliary to financial services and insurance activities (NACE 66).
Table 3.17.1: Contribution of Section K to total economy, 2010
NACE Division
A*64
P.1
P.2
Million Euro
B.1g
Section
K
%
B.1g as a percentage of:
GDP
B.1g
(B.1*g)
Total
Total
economy
economy
%
%
GNI
(B.5*5)
Total
economy
%
64
4,724.21
4,393.05
331.15
73.27%
5.72%
5.02%
5.24%
65
129.45
62.77
66.68
14.75%
1.15%
1.01%
1.05%
66
186.98
132.81
54.16
11.98%
0.94%
0.82%
0.86%
Total of Section K
5,040.63
4,588.64
451.99
100.00%
7.81%
6.85%
7.15%
3.17.2
When analysed by sector, the gross value added (GVA) from Financial and
insurance activities is all generated by financial corporations (S.12).
36
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
155
Gross National Income Inventory
Table 3.17.2: Section K (NACEs 64-66) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
K
-
5,040.6
-
-
-
5,040.6
-
4,588.6
-
-
-
4,588.6
64
-
4,724.2
-
-
-
4,724.2
-
4,393.1
-
-
-
4,393.1
65
-
129.4
-
-
-
129.4
-
62.8
-
-
-
62.8
66
-
187.0
-
-
-
187.0
-
132.8
-
-
-
132.8
Gross value added (Million Euro)
Gross value added (Percentage)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
K
-
452.0
-
-
-
452.0
-
100%
-
-
-
100%
64
-
331.2
-
-
-
331.2
-
100%
-
-
-
100%
65
-
66.7
-
-
-
66.7
-
100%
-
-
-
100%
66
-
54.2
-
-
-
54.2
-
100%
-
-
-
100%
Process tables
3.17.3
An excerpt from the process table for the Financial and insurance activities (Section
K) is presented in Table 3.17.3. Administrative Records include the data provided by the
Central Bank of Malta (CBM), annual accounts and financial statements, and fiscal data.
Combined sources include data provided by the CBM joined with Exhaustiveness
Adjustments for missing captives and investment funds data. The Conceptual Adjustments
were discussed in Sections 3.2 and 3.4.
Table 3.17.3: Extract of process tables 2010 for Section K in millions of Euro
Basis for national accounts figures
Total (Sources)
Other
Total Extrap+Models
Other E&M
FISIM
Dwellings - Stratification
Method
CFC
CFM
Benchmark Extrapolations
Combined Data
Administrative Records
Surveys and Censuses
Section K
Extrapolations and Models
P.1
0.0
4,656.5
105.8
0.0
0.0
0.0
0.0
273.9
0.0
273.9
0.0
5,036.3
P.2
0.0
4,488.6
71.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4,559.9
B.1g
0.0
168.0
34.5
0.0
0.0
0.0
0.0
273.9
0.0
273.9
0.0
476.4
156
The production approach
Table 3.17.3: Extract of process tables 2010 for Section K in millions of Euro (cont...)
Adjustments
Final Estimate
Total (Adjustments)
Balancing
Total Exhaustiveness
N7
N6
N5
N4
N3
N2
N1
Exhaustiveness
Total Conceptual
Other Conceptual
Allocation of FISIM
Data Validation
Section K
Conceptual
P.1
0.0
0.0
4.4
4.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.4
5,040.6
P.2
0.0
33.0
-4.3
28.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
28.7
4,588.6
B.1g
0.0
-33.0
0.0
-24.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-24.4
452.0
NACE 64 - Financial service activities, except insurance and pension funding
3.17.4
The financial service activities sector consists of the following sub-sectors:
a) The Central Bank of Malta (S.121);
b) Core and non-core banking institutions (S.122);
c) International banking institutions (S.122);
d) Investment funds (S.124);
e) Other financial intermediaries (S.125); and
f)
3.17.5
Captive financial institutions (S.127).
The CBM distinguishes between core, non-core and international banking
institutions. The category ‘core domestic banks’ consists of a set of banks which have strong
links with the domestic economy, and are thus more systemically relevant. These banks have
a widespread branch network, provide a full spectrum of banking services and are core
providers of credit and deposit services in Malta. The ‘non-core domestic banks’ play a more
restricted role in the economy, as the volume of operations and the banking services they
offer to residents are somewhat limited. In turn, ‘international banks’ have virtually no links
with the domestic economy.37
3.17.6
The GVA at basic prices of financial service activities, except insurance and pension
funding is estimated at 331 million Euro or 5.7 per cent of total GVA at basic prices.
37
Financial Stability Report 2011, Central Bank of Malta, 2012
157
Gross National Income Inventory
Table 3.17.4: Gross value added at basic prices of NACE 64
NACE 64 - Financial service activities, except insurance and pension funding
2010 (Million Euro)
Output at basic prices
4,724
of which FISIM
273.9
Intermediate consumption at purchasers' prices
4,393
Gross value added at basic prices
331
Central Bank of Malta (CBM)
3.17.7
The CBM provides a profit and loss statement on a quarterly basis.
3.17.8
The output of the central bank is measured using the sum of costs approach. The
calculation method is equivalent to the sum of P.2 (intermediate consumption), K.1 (CFC)
and D.1 (compensation of employees). The annual figure is the summation of the four
quarters.
3.17.9
The output of the central bank is then allocated to the intermediate consumption of
core and non-core banking institutions only as sub-sector S.125 is almost negligible.
3.17.10 The intermediate consumption consist mainly of rent, maintenance expenses,
telecommunication expenses, transport expenses, currency issue expenses, fees and
commissions, expenses on commercial paper, other corporate expenses, other staff expenses,
other general expenses and other miscellaneous expenditure.
The annual figure is the
summation of the four quarters.
Core and non-core banking institutions
3.17.11 The main data sources used are the aggregated profit and loss statements and
balance sheets provided by the CBM on a quarterly basis.
3.17.12 Market output of banking institutions can be subdivided into financial intermediation
services indirectly measured (FISIM) and other output. The compensation for financial
intermediation is not directly charged to the customers, but is implicitly calculated in the
interest income and expenses, referred to as FISIM. Other banks charges, fees, commissions,
158
The production approach
and other non-interest income are also included in output while holding gains and losses are
excluded.
3.17.13 Intermediate consumption includes rents, fees and commissions payable, other
administrative expenses and other operating expenses. The intermediate consumption also
includes the output of the CBM less any commissions and fees invoiced by the central bank.
FISIM
3.17.14 FISIM is the term used to describe the services that banks provide to their customers
but which are not invoiced.
For bank depositors, these services generally include the
management of current accounts, the sending out of bank statements and fund transfers
between accounts. Instead of directly invoicing these services, the banks reduce the interest
paid to depositors.
For bank borrowers, these services include the monitoring of their
creditworthiness, financial advice, the smoothing over time of repayments and the recording
of these repayments for accounting purposes. The cost of these services is an inseparable part
of the interest rate that the bank charges to these borrowers.
3.17.15 FISIM is based on the principle that there is a pure rate of interest, which in theory is
free of payment for services and risk, referred to as the reference interest rate. The reference
interest rate is the same for borrowers and depositors. However, borrowers actually pay a
higher rate of interest than the reference rate and depositors receive a lower rate of interest.
The difference between the reference rate and the rate actually paid to depositors and charged
to borrowers is FISIM. The total FISIM is the sum of the two implicit fees paid by the
borrower and the depositor, which gives the banks output in terms of credit transactions.
3.17.16 The main data sources are:
a) An aggregated profit and loss account of domestic monetary financial institutions,
compiled by the CBM and available on a quarterly basis;
b) An aggregated statement of assets and liabilities of domestic monetary financial
institutions, compiled by the CBM. Data are broken down by user sectors and is
available on a monthly basis;
159
Gross National Income Inventory
c) Interbank market rates published by the European Central Bank (ECB); including
the 3 month Europe interbank offered rate (EURIBOR); and
d) United Kingdom Bank Rate published by the Bank of England.
The calculation of FISIM output for core and non-core banks in the domestic market
3.17.17 FISIM output for core and non-core banks is the sum of FISIM on loans and FISIM
on deposits, with each calculated by user sector, i.e. for non-financial corporations; financial
auxiliaries, insurance corporations and pension funds; general government; households and
non-profit institutions serving households (NPISHs).
3.17.18 FISIM output for core and non-core banks is equal to:
[Accrued interest1 – (Stock of loans x Internal reference rate)]
+ [(Stocks of deposits x Internal reference rate) – Accrued interest2]
where
a) Accrued interest1 is equal to the interest received by resident core and non-core
banks for loans granted to residents;
b) the stock of loans is the balance of the volume of loans granted by resident core
and non-core banks to residents;
c) Accrued interest2 is equal to the interest paid by core and non-core banks for
deposits by residents; and
d) the stock of deposits is the balance of the volume of deposits held by residents in
local core and non-core banks.
Interest income receivable and payable
3.17.19 Up to 2014 interest receivable on loans included interest receivable on loans from
the following resident user sectors:
a) Head office, overseas branches, subsidiary, parent and other related credit
institutions;
b) Other credit institutions;
c) Money market funds;
160
The production approach
d) General government; and
e) Other remaining sectors.
3.17.20 As from 2015 interest receivable on loans included interest receivable on loans from
the following resident user sectors:
a) CBM;
b) Government;
c) Insurance;
d) Pension funds;
e) Non-MMF38 investment funds;
f)
Other financial intermediaries, auxiliaries and captives financial institutions;
g) Non-financial companies;
h) NPISHs; and
i)
Households.
3.17.21 Since interest income receivable and payable are not provided with the necessary
breakdown, the stocks of loans and deposits by user sectors are used as weights to estimate
the counterpart sector breakdown. As from 2016, the National Accounts Unit will be able to
derive the actual accrued interest by sector as listed in para. 3.17.20.
3.17.22 The total interest receivable on loans from resident users is equal to the following
items extracted from the income statement provided by the CBM on a quarterly basis as
shown in Table 3.17.5.
a) Interest receivable and similar income on loans - Claims on monetary financial
institutions (MFIs): Items 1.3.1.1.1 + 1.3.1.2.1 + 1.3.2.1.1 + 1.3.2.2.1 + 1.3.3.1.1 +
1.3.3.2.1.
b) Interest receivable and similar income on loans - Claims on general government:
Items 1.4.1.3 + 1.4.2.3.
38
MMF stands for money market fund.
161
Gross National Income Inventory
c) Interest receivable and similar income on loans - Claims on other remaining
sectors: Items 1.5.1.2 + 1.5.2.2.
3.17.23 From the above mentioned items, the interest receivable on loans from non-residents
is deducted from the above. Interest receivable from non-residents is a memorandum item of
the income statement.
162
The production approach
Table 3.17.5: Extract from the income statement for core and non-core banks
INTEREST RECEIVABLE AND SIMILAR INCOME ON:
Item codes
Claims on the Central Bank of Malta (CBM)
1.1
Funds placed under reserve requirements
1.1.1
Loans
1.1.2
Other deposits
1.1.3
Purchase/resale agreements
1.1.4
Securities other than shares
1.1.5
Claims on the Euro-system and other central banks
1.2
Claims on MFIs
1.3
Head office, overseas branches, subsidiary, parent and other related credit institutions
1.3.1
In Euro
1.3.1.1
Loans
1.3.1.1.1
Deposits
1.3.1.1.2
Purchase/resale agreements
1.3.1.1.3
Securities other than shares
1.3.1.1.4
Others
1.3.1.1.5
In foreign currency
1.3.1.2
Loans
1.3.1.2.1
Deposits
1.3.1.2.2
Purchase/resale agreements
1.3.1.2.3
Securities other than shares
1.3.1.2.4
Others
1.3.1.2.5
Other credit institutions
1.3.2
In Euro
1.3.2.1
Loans
1.3.2.1.1
Deposits
1.3.2.1.2
Purchase/resale agreements
1.3.2.1.3
Securities other than shares
1.3.2.1.4
Others
1.3.2.1.5
In foreign currency
1.3.2.2
Loans
1.3.2.2.1
Deposits
1.3.2.2.2
Purchase/resale agreements
1.3.2.2.3
Securities other than shares
1.3.2.2.4
Others
1.3.2.2.5
163
Gross National Income Inventory
Table 3.17.5: Extract from the income statement for core and non-core banks (cont...)
Money market funds
1.3.3
In Euro
1.3.3.1
Loans
1.3.3.1.1
Others
1.3.3.1.2
In foreign currency
1.3.3.2
Loans
1.3.3.2.1
Others
1.3.3.2.2
Claims on general government (including public non-market units)
1.4
In Euro
1.4.1
Treasury bills
1.4.1.1
Other government securities
1.4.1.2
Loans
1.4.1.3
Others
1.4.1.4
In foreign currency
1.4.2
Treasury bills
1.4.2.1
Other government securities
1.4.2.2
Loans
1.4.2.3
Others
1.4.2.4
Claims on other remaining sectors
1.5
In Euro
1.5.1
Securities other than shares
1.5.1.1
Loans
1.5.1.2
Others
1.5.1.3
In foreign currency
1.5.2
Securities other than shares
1.5.2.1
Loans
1.5.2.2
Others
1.5.2.3
3.17.24
The total interest payable on deposits is equal to the items below (shown in Table
3.17.6)
a) Interest payable on deposits with MFIs: items 2.3.1.1.1. + 2.3.1.2.1 + 2.3.2.1.1. +
2.3.2.2.1.
b) Interest payable on deposits with general government: items 2.4.1.1 + 2.4.2.1.
c) Interest payable on deposits with other remaining sectors: items 2.5.1.1 + 2.5.2.1.
164
The production approach
3.17.25 The total interest payable refers interest paid by resident banks to both resident and
non-resident clients. Since FISIM has to be calculated separately for the domestic market
and exports, accrued interest is adjusted to exclude interest paid to non-resident.
Table 3.17.6: Extract from the income statement for core and non-core banks
INTEREST EXPENSE PAYABLE ON:
2
Borrowings from Central Bank of Malta (CBM)
2.1
Deposits
2.1.1
Loans
2.1.2
Sale/repurchase agreements
2.1.3
Borrowings from other central banks
2.2
Liabilities with MFI's
2.3
Head office, overseas branches, subsidiary, parent and other related credit institutions
2.3.1
In Euro
2.3.1.1
Deposits
2.3.1.1.1
Loans
2.3.1.1.2
Sale/repurchase agreements
2.3.1.1.3
Debt securities issued
2.3.1.1.4
Others
2.3.1.1.5
In foreign currency
2.3.1.2
Deposits
2.3.1.2.1
Loans
2.3.1.2.2
Sale/repurchase agreements
2.3.1.2.3
Debt securities issued
2.3.1.2.4
Others
2.3.1.2.5
Other credit institutions
2.3.2
In Euro
2.3.2.1
Deposits
2.3.2.1.1
Loans
2.3.2.1.2
Sale/repurchase agreements
2.3.2.1.3
Debt securities issued
2.3.2.1.4
Others
2.3.2.1.5
165
Gross National Income Inventory
Table 3.17.6: Extract from the income statement for core and non-core banks (cont...)
166
In foreign currency
2.3.2.2
Deposits
2.3.2.2.1
Loans
2.3.2.2.2
Sale/repurchase agreements
2.3.2.2.3
Debt securities issued
2.3.2.2.4
Others
2.3.2.2.5
Money market funds
2.3.3
In Euro
2.3.3.1
In foreign currency
2.3.3.2
Liabilities with general government
2.4
In Euro
2.4.1
Deposits
2.4.1.1
Loans
2.4.1.2
Sale/repurchase agreements
2.4.1.3
Debt securities issued
2.4.1.4
Others
2.4.1.5
In foreign currency
2.4.2
Deposits
2.4.2.1
Loans
2.4.2.2
Sale/repurchase agreements
2.4.2.3
Debt securities issued
2.4.2.4
Others
2.4.2.5
Liabilities with other remaining sectors
2.5
In Euro
2.5.1
Deposits
2.5.1.1
Loans
2.5.1.2
Sale/repurchase agreements
2.5.1.3
Debt securities issued
2.5.1.4
Others
2.5.1.5
In foreign currency
2.5.2
Deposits
2.5.2.1
Loans
2.5.2.2
Sale/repurchase agreements
2.5.2.3
Debt securities issued
2.5.2.4
Others
2.5.2.5
The production approach
Internal reference rate
3.17.26 ESA 2010, para. 14.09 states that the internal reference rate (IRR) should be
calculated as the ratio of interest receivable on loans within and between subsectors S.122
and S.125 to stocks of loans within and between S.122 (deposit-taking corporations, except
the central bank) and S.125 (other financial intermediaries, except insurance corporations and
pension funds). When the deposits data are more reliable, the IRR should be calculated on
interbank deposits as the ratio of interest payable on deposits within between subsectors
S.122 and S.125 to stocks of deposits within and between S.122 and S.125.
3.17.27 Up till 2014, data regarding the stock of loans with other resident deposit-taking
corporations except the central bank was available, however, ‘Other financial intermediaries,
except insurance corporations and pension funds’ are not separately available. In addition,
interest receivable on loans from credit institutions is not separately available for resident and
non-residents. Interest receivable on loans for S.125 is not separately available.
3.17.28 Since 2015, the income statement and balance sheet formats have changed, however,
the necessary information to calculate the IRR is still not fully adaptable as the stock of loans
of ‘Other financial intermediaries except insurance corporations and pension funds’ is still
not separately available. Interest receivable on loans from ‘Other financial intermediaries,
except insurance corporations and pension funds’ are also not separately available.
3.17.29 Therefore, currently the official interbank interest rates are used as the internal
reference rate. The internal reference rate is equivalent to the average of the Euro overnight
index average (EONIA) and EURIBOR for 1 week, 1 month and 3 month fixed deposits
rates.
3.17.30 The derivation of the IRR will be reviewed during 2016 in order to align the
methodology with ESA 2010, para. 14.09.
Stock of loans and deposits
3.17.31 Stock of loans for resident FISIM is equal to the following:
a) Stock of loans with resident central government and other general government;
167
Gross National Income Inventory
b) Stock of loans with resident insurance companies and pension funds;
c) Stock of loans with financial auxiliaries resident in Malta;
d) Stock of loans with non-financial companies resident in Malta; and
e) Stock of loans with households and non-profit institutions resident in Malta.
3.17.32 The stock of loans with other monetary institutions and the Central Bank are not
considered in the calculation of FISIM.
This specific treatment for monetary financial
institutions and the Central Bank is stipulated in ESA 2010, para. 14.06.
Table 3.17.7: Extract from the balance sheet for core and non-core banks
Stock of loans
Residents of Malta
Central Bank
Other monetary financial institutions
of which credit institutions
of which money market funds
Central government
Central government
Public non-market units
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
of which purchase/resale agreements with CCPs
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
Consumer credit
Lending for house purchases
Sole proprietors
Other residual (lending)
3.1
3.1.1
3.1.2
3.1.2.1
3.1.2.2
3.1.3
3.1.3.1
3.1.3.2
3.1.4
3.1.5
3.1.6
3.1.6.1
3.1.7
3.1.8
3.1.9
3.1.9.1
3.1.9.2
3.1.9.3
3.1.9.4
3.17.33 Deposits included in broad money includes demand deposits (both transferable and
non-transferable), savings – withdrawable on demand (both transferable and nontransferable), savings – redeemable at notice (up to 3 months) and time deposits (up to 2
years). The CBM collects the stock of deposits included in broad money for the sectors listed
below:
a) Other general government;
b) Insurance companies and pension funds;
c) Other financial auxiliaries;
d) Non-financial companies; and
168
The production approach
e) Households and non-profit institutions.
Table 3.17.8: Extract from the balance sheet for core and non-core banks
Deposits included in broad money
Residents of Malta
Denominated in Euro
Demand deposits
of which transferable deposits
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
Savings - withdrawable on demand
of which transferable deposits
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
Savings - redeemable at notice (up to 3 months)
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
Time deposits (up to 2 years)
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
of which Financial vehicle corporations
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
Denominated in other currencies
Demand deposits
of which transferable deposits
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
Savings - withdrawable on demand
of which transferable deposits
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
1
1.1
1.1.1
1.1.1.1
1.1.1.1.a
1.1.1.1.1
1.1.1.1.2
1.1.1.1.3
1.1.1.1.4
1.1.1.1.5
1.1.1.1.6
1.1.1.2
1.1.1.1.a
1.1.1.2.1
1.1.1.2.2
1.1.1.2.3
1.1.1.2.4
1.1.1.2.5
1.1.1.2.6
1.1.1.3
1.1.1.3.1
1.1.1.3.2
1.1.1.3.3
1.1.1.3.4
1.1.1.3.5
1.1.1.3.6
1.1.1.4
1.1.1.4.1
1.1.1.4.2
1.1.1.4.3
1.1.1.4.3.1
1.1.1.4.4
1.1.1.4.5
1.1.1.4.6
1.1.2
1.1.2.1
1.1.2.1.a
1.1.2.1.1
1.1.2.1.2
1.1.2.1.3
1.1.2.1.4
1.1.2.1.5
1.1.2.1.6
1.1.2.2
1.1.2.2.a
1.1.2.2.1
1.1.2.2.2
1.1.2.2.3
1.1.2.2.4
1.1.2.2.5
1.1.2.2.6
169
Gross National Income Inventory
Table 3.17.8: Extract from the balance sheet for core and non-core banks (cont...)
Savings - redeemable at notice (up to 3 months)
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
Time deposits (up to 2 years)
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
of which financial vehicle corporations
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
1.1.2.3
1.1.2.3.1
1.1.2.3.2
1.1.2.3.3
1.1.2.3.4
1.1.2.3.5
1.1.2.3.6
1.1.2.4
1.1.2.4.1
1.1.2.4.2
1.1.2.4.3
1.1.2.4.3.1
1.1.2.4.4
1.1.2.4.5
1.1.2.4.6
3.17.34 Deposits excluded from broad money includes demand deposits (both transferable
and non-transferable), savings – withdrawable on demand (both transferable and nontransferable), savings – redeemable at notice and time deposits, for the following sectors
resident in Malta:
a)
Central government;
b) Other general government;
c)
Insurance companies and pension funds;
d) Other financial auxiliaries;
e)
Non-financial companies; and
f)
Households and non-profit institutions.
3.17.35 For the calculation of FISIM which is domestically produced and consumed in
Malta, deposits (excluded from broad money) by monetary financial institutions resident in
Malta are excluded.
170
The production approach
Table 3.17.9: Extract from the balance sheet for core and non-core banks
Deposits excluded from broad money
Residents of Malta
Demand deposits
of which transferable deposits
Monetary financial institutions
Central government (including pnmu)
Savings - withdrawable on demand
of which transferable deposits
Monetary financial institutions
Central government (including pnmu)
Savings - redeemable at notice
Monetary financial institutions
Central government (including pnmu)
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
Time deposits
Monetary financial institutions
Central government (including pnmu)
Other general government
Insurance companies and pension funds
Other financial intermediaries and financial auxiliaries
of which financial vehicle corporations
Public non-financial companies
Private non-financial companies
Households and non-profit institutions
2
2.1
2.1.1
2.1.1.a
2.1.1.1
2.1.1.2
2.1.2
2.1.2.a
2.1.2.1
2.1.2.2
2.1.3
2.1.3.1
2.1.3.2
2.1.3.3
2.1.3.4
2.1.3.5
2.1.3.6
2.1.3.7
2.1.3.8
2.1.4
2.1.4.1
2.1.4.2
2.1.4.3
2.1.4.4
2.1.4.5
2.1.4.5.1
2.1.4.6
2.1.4.7
2.1.4.8
FISIM imports and exports
3.17.36 FISIM exports is equal to:
[Accrued interest1 – (Stock of loans x External reference rate)]
+ [(Stocks of deposits x External reference rate) – Accrued interest2]
where
i.
Accrued interest1 is equal to the interest received by local core and non-core banks
on loans granted to non-residents non-financial intermediaries;
ii.
the stock of loans is the amount of loans granted by local core and non-core banks
to non-residents;
iii.
Accrued interest2 is equal to the interest paid by core and non-core banks on
deposits by non-residents; and
171
Gross National Income Inventory
iv.
The stock of deposits is the amount of deposits held by non-residents with resident
core and non-core banks.
3.17.37 Data on the stock of loans and deposits is broken down by institutional sector at
source. The accrued interest expense payable on deposits by non-residents and the accrued
interest income receivable on loans granted to non-residents are then split by institutional
sector based on loans to and deposits by non-residents.
3.17.38 The reference rate for external trade is the rate applied to transactions between
resident and non-resident financial intermediaries.
The regulation specifies that the
calculation of the external reference rate (ERR) should follow a similar approach using
interest flows and the comparable stock for business with non-resident banks. However in
the case of Malta not all required data are available. Hence Malta calculates the external
reference rate using the weighted average of the 3-month deposit rate (EURIBOR), the
money market interest rate of the United States and the Bank of England Bank rate. Each of
the mentioned interest rates is weighted according to the proportion of stock of loans and
deposits in the Euro Area, USA and UK respectively. The derivation of the ERR will be
reviewed during 2016 in order to align the methodology with ESA 2010, para. 14.10.
3.17.39 Imports of FISIM are broken down by institutional sector. However, data was
available for only the financial and the government sectors (S.12 and S.13) as data on the
other sectors is very limited. Imports of FISIM is equal to the difference between the interest
rates supplied to residents by foreign banks and the ‘pure’ interest rate (herein referred to as
the ERR) applied to the balance of loans and deposits granted to residents by non-resident
financial intermediaries.
Allocating FISIM among users
3.17.40 Allocating FISIM among user industries is based on the output of each industry.
Total intermediate consumption of FISIM attributable to the non-financial corporations
sector, households and NPISHs is allocated to industries by the proportion of their output
prior to the allocation of FISIM. That is, the output share of an industry is multiplied with
total FISIM to arrive at each industry’s FISIM.
172
The production approach
3.17.41 FISIM consumed by the financial sector is allocated to NACEs 65 and 66 on the
basis of their stock of loans and deposits. It is assumed that the consumption of FISIM by
companies involved in Financial service activities, except insurance and pension funding
(NACE 64) other than financial intermediaries is negligible.
3.17.42 The general government sector’s share of FISIM consumption is allocated across the
industries based on the share of output by NACE.
3.17.43 Currently the breakdown FISIM allocated to the households sector is subdivided
into:
a) 40 per cent as intermediate consumption of households in their capacity as owners
of dwellings and as owners of unincorporated enterprises; and
b) 60 per cent as final consumption of households.
3.17.44 In the next benchmark revision, data available in the balance sheets will be used to
update the ratios indicated in para. 3.17.43 using the breakdown available from the new
balance sheet and profit and loss formats. The households sector will be broken down as
follows:
a) Consumer credit;
b) Lending for house purchases;
c) Sole proprietors; and
d) Other (residual) lending.
International banking institutions
3.17.45 The international banking institutions (IBIs) registered in Malta are subsidiaries of
non-resident banks. The bank branches located in Malta are considered to be administrative
offices which serve the interests of their foreign parents. These banks do not generally accept
deposits or grant loans from local residents and their transactions are mostly carried out with
the non-resident parent. These banks hardly have any transactions with Maltese residents and
this implies that the impact of their activities on the Maltese economy is very limited. Such
transactions are considered as business that has to be consolidated with the parent-banks
abroad.
173
Gross National Income Inventory
3.17.46 The main data sources used to calculate the output of IBIs are the aggregated profit
and loss provided by the CBM on a quarterly basis.
3.17.47 The output of the IBIs is calculated using the sum of costs approach where:
Compensation of employees = Value added (net)
Value added (net) + Consumption of fixed capital (CFC) = Value added (gross)
Value added (gross) + Intermediate consumption = Output
3.17.48 Net operating surplus is assumed to be zero.
3.17.49 Intermediate consumption comprises rents, fees and commissions payable, other
administrative expenses, and other operating expenses.
Investment funds (IFs)
3.17.50 Investment funds (IFs) are collective investment undertakings through which
investors pool funds for investment in financial and/or non-financial assets. IFs are also
called mutual funds, unit trusts, investment trusts, and undertakings for collective investments
in transferable securities; they may be open-ended, semi-open or closed-end funds.
3.17.51 A statement of assets and liabilities for the 95 per cent and 5 per cent category is
provided in an aggregated form on a quarterly basis by the CBM. The income statement is
only available for the 95 per cent category on a quarterly basis. IFs which fall in the 5 per
cent category in terms of total assets, need not report the full set of returns on a quarterly
basis. Given that the income statement covers only those companies within the 95 per cent
category, a grossing up procedure is carried out using the IFs’ share or units of the 5 per cent
category derived from the balance sheet.
174
The production approach
Table 3.17.10: Production account for the 95 per cent category and 5 per cent category of resident
investment funds
Investment funds (95% of assets)
2010 Q1
2010 Q2
2010 Q3
2010 Q4
Annual
2010
€ '000
€ '000
€ '000
€ '000
€ '000
Market output
4,998
3,993
5,371
4,006
18,368
Intermediate consumption
4,899
3,927
5,316
3,930
18,072
99
66
55
76
296
2010 Q1
2010 Q2
2010 Q3
2010 Q4
Annual
2010
Gross value added
Investment funds (5% of assets)
€ '000
€ '000
€ '000
€ '000
€ '000
Market output
284
230
327
259
1,100
Intermediate consumption
279
226
324
254
1,082
6
4
3
5
18
Gross value added
3.17.52 The output of investment funds is calculated using the sum of costs approach,
assuming that the net operating surplus is zero. Output is therefore the sum of compensation
of employees, consumption of fixed capital and intermediate consumption. Intermediate
consumption includes the following:
a) Accounting, auditing, tax consultancy services, market research, business and
management consultancy;
b) Communication, computer and information services;
c) Custodian and trustee fees;
d) Investment advice fees;
e) Management fees and general administrative costs;
f)
Legal and other professional fees; and
g) Other expenses.
Other financial intermediaries
3.17.53 This category comprises three private companies of which one provides all types of
factoring services, another transacting in lending activities and issuing of guarantees and
another in the provision of short term loans over the internet.
175
Gross National Income Inventory
3.17.54 Two of the companies output is calculated using the normal output approach, while
one of the companies’ output is calculated using the sum of costs approach. Data for these
three companies is obtained from the financial statements collected by the Malta Financial
Services Authority (MFSA).
Captive financial institutions
3.17.55 This category includes trusts, activities of holding companies and SPEs.
Trusts
3.17.56 Data for Trusts, funds and similar financial entities (NACE 64.3) is obtained from
fiscal data.
Holding companies
3.17.57 Similarly, data for Activities of holding companies (NACE 64.2) is initially drawn
out from fiscal data. The intrinsic nature of holding companies is such that the only activity
that should be carried out is specifically reserved to holding the assets (including equity) of a
group or subsidiary. In this manner, the income of such companies is typically made up of
financial income rather than any market output and even if a particular holding unit records a
market output; this would generally be an outcome of secondary activities carried out during
that particular year. Due to this circumstance, accountants often input financial income
mistakenly as other income or sales of goods and services. Since the latter is considered
market output in national accounting terms, financial income would erroneously be translated
to market output if such values were to be incorporated directly from fiscal data to national
accounts. The procedure used to overcome this flaw in data reporting is by checking and
comparing the variables published in the accounts and the figures recorded in the tax data.
Misplaced variables are adequately relocated in cases of observed errors. This procedure is
generally carried out for the units whose recorded output or intermediate consumption
exceeds the 1 million Euro mark.
176
The production approach
Special purpose entities (SPEs)
3.17.58 Entities with little or no physical presence or special purpose entities (SPEs) were
included in national statistics for the first time in the ESA 2010 time series for the period
1995 to date.
3.17.59 SPEs are legal entities which are registered in Malta, but which have little or no
physical presence in the economic territory. SPEs are created by the non-resident parents to
serve as a financing vehicle, raise funds and hold assets/liabilities. In general, these are being
registered in Malta due to tax incentives offered by the local legislation. The majority of
these companies do not have any links to other resident legal units and thus are not engaged
in local production activity, and have no real economic relation with the domestic economy.
These foreign-controlled entities, though small in terms of employment and structure, have
significant cross-border flows and positions which mainly pertain to the financial sector.
Most SPEs form part of multinational groups and engage in intra-group transactions;
irrespective of their output.
3.17.60 The SPEs identified in Malta include: holding companies, captive leasing
companies, factoring and invoicing companies, captive insurance companies and investment
funds.
3.17.61 Holding companies, captive leasing companies, factoring and invoicing companies
are covered with fiscal data.
3.17.62 Captive insurances and investments funds are both covered by a statement of assets
and liabilities and an income statement provided on a quarterly basis by the CBM. Captive or
affiliated insurance companies are registered in Malta but established by a non-resident
parent company with the specific objective of insuring the risks of the parent group. Maltese
captives may also write risks originating from associated or group companies, individuals or
other entities having a majority ownership or controlling interest in the captive, and members
of trade, industry or profession associations including risks related to the particular trade,
industry or profession.
177
Gross National Income Inventory
3.17.63 Investment funds dealing solely with non-residents are classified as SPEs. Their
disclosure is similar to that described in para. 3.17.50 to 3.17.52 for investment funds which
deal with residents.
3.17.64 Other data sources include data with respect to wages and salaries paid in Malta,
income tax data, both of which provided by a government department and the number of
SPEs in the business register. The number of SPEs has been used to extrapolate data
backwards for the period 1995 to 2002.
3.17.65 Adjustments similar to those carried out for holding companies (Section 3.17.57)
were necessary in case of any reporting errors in the income statement derived from fiscal
data.
The latter was not specifically designed for statistical purposes and the IT39
infrastructure was designed to bridge between the pristine administrative data and national
accounts. Administrative records of the income statement have been assigned an ESA 2010
code. The balance of payments (BOP) code was assigned by the Balance of Payments Unit
for both income statement and balance sheet. The National Accounts Unit was able to derive
the full sequence of non-financial accounts from the three main data sources.
3.17.66 Data for those captive insurances which fall within the 95 per cent bracket are
provided on a quarterly basis, while data for captives which fall within the 5 per cent bracket
are provided on an annual basis. Captive insurances which fall within the 5 per cent brackets
refer to the smallest captive insurance companies in terms of their total gross premiums
written.
3.17.67 The sum of costs approach suggested by the ‘Task Force on the recording of certain
activities of multinationals in national accounts’ for financial sector was applied.
It is
assumed that the net operating surplus is zero. Output is therefore the sum of compensation
of employees, consumption of fixed capital (CFC) and intermediate consumption. Data on
compensation of employees paid in Malta by SPEs to employees representing them are
derived from data provided a government department in case of companies sourced from
fiscal data.
39
IT refers to Information Technology.
178
The production approach
3.17.68 Captive insurances output is derived using the cost approach, that is equal to the
total compensation of employees, CFC and intermediate consumption. The latter is equal to
‘Other Expenditure’ item provided in the income statement.
3.17.69 The National Accounts Unit developed extrapolation methods for the period 1995 to
2002 and 2013 onwards, given that fiscal data are not available for these years. Backward
extrapolations were made with respect to captives for the period 2005 to 2008 and in case of
SICAVs (Investment company with variable capital)40 for 2002 to 2008. Moreover, the fiscal is
only available on an annual basis.
NACE 65
Insurance and pension funding, except compulsory social security
3.17.70 The main data sources used to calculate the insurance industry are annual accounts
and financial statements which are made available by the MFSA. Quarterly data are obtained
from the CBM which provides only a limited number of variables. In 2010, there were eight
insurance principals in Malta licensed by the MFSA.
3.17.71 Two companies offered both life and non-life insurance during the reference year
whilst the others focused their business activities in only one category of insurance. Three
insurance principles offered life insurance services, while three other insurance principles
offered non-life insurance services. The output figures of the two companies which are
involved in both life and non-life insurance, were split between life and non-life output using
premiums written of the two separate categories.
Table 3.17.11: Insurance output distribution
2010
Gross premiums written
Non-life insurance
Life insurance
Million Euro
326.3
110.4
216.0
%
100%
33.8%
66.2%
100.5
67.6
33.0
100%
67.2%
32.8%
Insurance service charge
Non-life insurance
Life insurance
Service charge as a percentage of premiums written
Non-life insurance
Life insurance
40
31%
61%
15%
SICAV is an acronym for “société d'investissement à capital variable”.
179
Gross National Income Inventory
3.17.72 The basic formula used to derive the output of insurance principles starts with gross
premiums earned which is added by ‘premium supplements’. The summed up figure is
subtracted by ‘adjusted claims incurred’ and the result illustrates the insurance output. The
insurance sector’s output mainly represents the insurance service charge. Nonetheless, output
may include any other income e.g. rent receivable.
Formula: Insurance principals’ output
Insurance service charge (Output) = Gross premiums earned + Premium supplements – Adjusted claims
3.17.73 ESA 2010, para. 16.22 defines premiums as “the proportion of premiums written
that have been earned during the accounting period. Premiums written cover the period
contracted in the insurance policy. The difference between premiums written and premiums
earned are amounts set aside, and included in the reserves for unearned premium” and is
calculated as premiums written, plus the reserves for unearned premiums at the beginning of
the accounting year less the reserves for unearned premiums at the end of the accounting year
(ESA 2010, para. 16.24).
3.17.74 Premium supplements are defined in ESA 2010, para. 16.27 as “the income earned
from the investment of the insurance technical reserves of the insurers, which represent
liabilities towards the policyholder.” Provisions or reserves are a pool of cash set aside to
account for future liabilities for which the date of the actual payment and/or the amount are
not known. For every asset, there has to be a counter balance entry either as own capital or as
a liability. As a national accounts concept, ‘insurance technical reserves’ are treated as
property of the policy holders and is thus a liability of the insurance enterprise to the policy
holders. Consequently, the income from the investment of these insurance technical reserves
is termed ‘investment income attributable to insurance policy holders’ and is treated as an
addition to the premiums actually paid, in the form of a ‘premium supplement’.
3.17.75 Adjusted claims incurred refer to total benefits (on claims) provided to policy
holders either in the form of payments to the policy holder or otherwise in the form of an
addition to the provision for claims. These claims (paid or improvised) are netted by total
holding gains (or losses).
180
The production approach
3.17.76 Claims management expenses were often subject to different interpretations
regarding its proper treatment. Eurostat has established that claims management costs should
be excluded from the calculation of claims incurred and are instead placed as intermediate
costs; effectively increasing the output of the insurance sector but bearing no impact on the
GVA. Part of claims management expenses may also be distributed as compensation of
employees and treated accordingly as part of the wage bill.
3.17.77 The CBM quarterly questionnaire on resident insurance principals is used as the
source to calculate the share of claims management expenses from the claims incurred. Since
such data is not typically obtainable from audited accounts and financial statements, most
entities do not report such variable in this specific CBM questionnaire. For this reason,
estimates reported by entities relating to the ratio of claims management expenses to claims
incurred, are applied to the insurance principal units which have the related gap in data.
3.17.78 Deferred acquisition costs refer to the practice of improvising the cost of acquiring a
new customer over the duration of the insurance contract. Insurance companies face large
upfront costs while pursuing new business. These costs are often not reflected in the initial
premiums paid and consequently, the insurance company virtually owns a claim against the
policy holder. In business accounting these claims are explicitly shown, but in national
accounts the treatment for such phenomenon is carried out as a ‘negative technical reserve’,
thus reducing claims by the policy holders against the insurance company.
181
Gross National Income Inventory
Table 3.17.12: The derivation of the three main variables used for the calculation of insurance service
charge
Gross premiums earned
Gross premiums written
less Provision for unearned premiums
Premium supplements
Property income from financial and non-financial assets
less Interest expenses
add Rental income
Technical provisions
Balance sheet total
Ratio of technical provisions to balance sheet total (%)
Property income multiplied by the ratio of technical provisions attributable to policy holders
equals Investment income attributable to policy holders = premium supplements
Adjusted claims
Claims paid
Change in provisions for claims
Change in technical provisions (only for life insurance entities)
less Holding gains (or losses)
Non-life insurance
3.17.79 The calculation of output for non-life insurance is carried out as follows:
Gross premiums written
add
Increases (less decreases) in the gross provision for unearned
premiums
add
Investment income attributable to insurance policy holders i.e. Net
investment return * (technical provisions / balance sheet total)
182
less
Gross claims paid
less
Increases (plus decreases) in the gross provision for claims
less
Increases (plus decreases) in technical provisions - gross
less
Technical provisions for linked insurance contracts
less
Bonuses and rebates
less
Change in the equalisation provision
less
Change in deferred acquisition costs
add
Holding gains
less
Holding losses
add
Other income
The production approach
where ‘net investment return’ is equal to the following:
Property income received excluding holding gains and losses
less
Interest expenses and charges
add
Rental income
3.17.80 The total property income received does not include holding gains and losses.
Investment income which may be included in the property income may include the following:

Interest receivable or income from financial assets at fair value through profit and
loss;

Increase in fair value of investments;

Policyholder’s unit-linked investment income;

Dividend income; and

Interest income from deposits, other bank deposits or from treasury bills.
3.17.81 Holding gains or losses may include the following:

Exchange differences;

Gains or loss on realisation of investments;

Other comprehensive income;

Income from financial assets at fair value through profit and loss – net fair value
gains/(loss);

Change in present value of in-force business;

Investment contract benefits;

Net fair value gains/(loss) on investment property;

Gain/(loss) on re-measurement of assets;

Gain/(loss) on re-measurement of unit-linked assets or investment; and

Impairment of intangible assets – realised and unrealised.
183
Gross National Income Inventory
Life insurance
3.17.82 The calculation of output for life insurance is as follows:
Gross premiums written
add
Increases (less decreases) in the gross provision for unearned
premiums
add
Investment income attributable to insurance policy holders i.e. Net
investment return * (technical provisions / balance sheet total)
less
Gross claims paid
less
Increases (plus decreases) in the gross provision for claims
less
Increase (less decrease) in the gross long term technical provisions
less
Increase (less decrease) in technical provisions for linked insurance
contracts
less
Bonuses and rebates
less
Change in the equalisation provision
less
Change in deferred acquisition costs
add
Holding gains
less
Holding losses
add
Other income (including Investment contracts fee income, rent on
buildings, salaries of staff seconded to group/parent company, intercompany payroll charge)
where ‘net investment return’ is equal to the following:
Property income received excluding holding gains and losses
less
Interest expenses and charges
add
Rental income
3.17.83 The subsequent ‘net investment return’ computed for both life and non-life
insurance is applied a ratio of technical reserves to total assets. This is carried out in order to
derive the portion of net investment return attributable to insurance policy holders i.e.
premium supplements.
184
The production approach
Intermediate consumption
3.17.84 Intermediate consumption for the insurance sector is for the most part worked out
conventionally from the annual accounts and financial statements, with one particular
distinctive feature: Passive reinsurance business. Passive reinsurance business refers to the
intermediate cost of insurance principles to re-insure their business. In the case of Malta
during 2010, all re-insurance transactions were imported as no operative reinsurance
companies are in-place. Passive reinsurance business is derived as outward reinsurance
premiums, net of reinsurance’s share of: claims; change in provisions for claims; change in
provision for unearned premiums; change in technical provisions and reinsurance
commission earned.
Table 3.17.13: Calculation of passive reinsurance business, 2010, in millions of Euro
=
Outward reinsurance business
Reinsurance share of unearned premiums
Reinsurance share of claims paid
Reinsurance share of change in provisions for claims
Reinsurance share of change in technical provisions
Reinsurance commissions earned
Passive reinsurance business
39.8
1.0
11.9
12.2
3.8
11.6
-0.7
Distribution of non-life insurances services
3.17.85 The use of non-life insurance services must be distributed between intermediate and
final consumption. Industries consume insurance service charge as an intermediate cost
along their respective production process while households consume insurance service charge
as final consumption. Data related to the proportion of premiums paid by households was
derived from the Household Budgetary Survey (HBS) of the year 2008 while data related to
the proportion of insurance premiums paid by activity (industry) was obtained from
administrative records.
3.17.86 In order to arrive to the total non-life insurance service charge, net imports were
added to the insurance service charge and allocated in the same manner as described in
3.17.85.
The insurance service charge has been broken down between household
consumption and intermediate consumption using insurance premiums as an indicator. This
has been explained in detail in Section 3.2.
185
Gross National Income Inventory
NACE 66 Activities auxiliary to financial intermediation
3.17.87 This NACE division includes insurance agents, exchange bureaus, investment
service providers and administrators of financial markets. Annual data are generally derived
from annual reports and financial statements and administrative records. Extrapolation is
based on quarterly questionnaires, employment indicators and in case of insurance agents; the
insurance premiums of principal in insurance companies are collectively used as a single
indicator.
3.18 Real estate activities (NACE Rev. 2 Section L)
3.18.1
In 2010, the gross value added (GVA) of real estate activities amounted to 347.1
million Euro, contributing to 6.0 per cent of total GVA at basic prices and 5.3 per cent of
total gross domestic product (GDP) at market prices. This category is subdivided into for
Buying and selling of own real estate (NACE41 68.10), Renting and operating of own or
leased real estate, (NACE 68.20), Real estate agencies (NACE 68.31) and Management of
real estate on a fee or contract basis (NACE 68.32).
Table 3.18.1: Contribution of Section L to total economy, 2010, in millions of Euro
B.1g as a percentage of:
NACE Division
A*88
68
Description
Real estate
activities
Section L
3.18.2
P.1
P.2
B.1g
Million Euro
Section
L
B.1g Total
economy
GDP (B.1*g)
Total
economy
GNI (B.5*5)
Total
economy
%
%
%
%
461.0
113.9
347.1
100.0%
6.0%
5.3%
5.5%
461.0
113.9
347.1
100.0%
6.0%
5.3%
5.5%
The GVA of real estate activities is generated in the large part (85 per cent) by the
households sector (S.14) as shown in Table 3.18.2. The GVA generated by the households
sector is in the greater part through the imputation of a rental value for dwellings that are
owned and occupied as a main residence and also for holiday homes.
41
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
186
The production approach
Table 3.18.2: Section L (NACE 68) by institutional sector for 2010
Output (Million Euro)
NACE
L
S.11
95.5
95.5
68
S.12
-
S.13
-
S.14
365.5
365.5
Intermediate consumption (Million Euro)
S.15
-
Total
461.0
461.0
S.11
43.7
43.7
Gross value added (Million Euro)
NACE
L
S.11
51.8
51.8
68
3.18.3
S.12
-
S.13
-
S.14
295.3
295.3
S.15
-
S.12
-
S.13
-
S.14
70.2
70.2
S.15
-
Total
113.9
113.9
Gross value added (Percentage)
Total
347.1
347.1
S.11
15%
15%
S.12
0%
0%
S.13
0%
0%
S.14
85%
85%
S.15
0%
0%
Total
100%
100%
The sources and methods used to compile GVA of Real estate activities are
presented in Table 3.18.3. Extrapolations amount to 79.9 per cent of total gross value added
generated by real estate activities in 2010. This is due to the fact that the main source used is
the Census of Population and Housing (CPH) which was carried out in 2011. Structural
Business Statistics (SBS) survey results of 2010 contribute to 9.6 per cent of total GVA
generated by Real estate activities.
Table 3.18.3: Extract of process tables 2010 for Section L in millions of Euro
Basis for national accounts figures
Dwellings Stratification Method
FISIM
Other E&M
Total Extrap+Models
36.2
0
0
0
0
314.4
350.6
0
424.8
P.2
40.3
0
0
11.7
0
0
0
0
56.8
68.5
0
108.8
B.1g
33.9
0
0
24.5
0
0
0
0
257.6
282.1
0
316.0
Total (Sources)
CFC
0
Other
CFM
0
Benchmark
Extrapolations
Combined Data
74.2
Surveys and Censuses
P.1
Section L
Administrative Records
Extrapolations and Models
187
Gross National Income Inventory
Table 3.18.3: Extract of process tables 2010 for Section L in millions of Euro (cont...)
Adjustments
N6
N7
Total (Adjustments)
Final Estimate
0
0
0
0
0
48.4
2.3
0
50.7
0
36.1
461.0
P.2
-10.7
7.4
-1.8
5.7
0
0
0
0
8.7
1.4
0
10.1
0
5.1
113.9
-3.8
-7.4
1.8
-5.7
0
0
0
0
39.6
0.9
0
40.5
0
31.0
347.1
B.1g
3.18.4
N1
Total Conceptual
Other Conceptual
Balancing
N5
0
Total Exhaustiveness
N4
0
Allocation of FISIM
-14.5
Data Validation
P.1
Section L
N3
Exhaustiveness
N2
Conceptual
Buying and selling of own real estate (NACE 68.10), Real estate agencies (NACE
68.31) and Management of real estate on a fee or contract basis (NACE 68.32) are compiled
directly from the SBS survey. For the benchmark year 2010, the enterprises are surveyed at
4-digit level in the NACE nomenclature and are presented with detailed questionnaires
requesting itemised information on turnover, purchases and changes in stocks. Information
on wages and salaries, employers’ social security contributions paid, employment, gross fixed
capital formation (GFCF) and capital stock (CS), rent on land and buildings and indirect
taxes are collected. The process tables for Section L indicate the extent of data validation,
amounting to -1.1 per cent of the total GVA of this economic activity. Data Validation here
presents the deviation in national accounts from the original SBS results due to the
recalculation of SBS at 4-digit NACE Rev. 2 level from a sample designed to cater for 2-digit
aggregation. During the data validation process, information from financial statements and
fiscal data is used to impute values for output and intermediate consumption in the population
of each strata at 4-digit level, such that results are representative at this level. A 4-digit level
of disaggregation is required in Section L since different sources are used to build the total
GVA generated by this economic activity, as SBS may not always be representative (para.
3.18.8).
3.18.5
For real estate agents, an Exhaustiveness Adjustment of type N6 (Misreporting) to
cover middlemen (sensara) involved in the purchase/sale of premises (Section 7.1 para.
7.1.3.59). This was made by assuming that they earn 2 per cent of the stamp duty paid on the
exchange of dwellings. No adjustment for intermediate consumption has been made, as such
expenses are assumed to be negligible for these agents.
188
The production approach
3.18.6
GVA generated from rental income (NACE 68.20) is calculated separately for the
following activities:
a) Actual rents earned on letting of residential dwellings and garages;
b) Actual rents earned on letting of commercial premises; and
c) Imputed rents.
3.18.7
The magnitude of rental income – imputed and actual – earned on dwelling services
is presented in Table 3.18.4, which shows output and intermediate consumption for each of
these rental activities by type of dwelling for 2011, which is the year in which the CPH was
carried out.
Table 3.18.4: Total dwelling stock, output and intermediate consumption by type of dwelling, 2011, in
millions of Euro
Number of dwellings
Output
Intermediate
consumption
Apartments
Owner occupied
38.6
63.0
9.5
Rented
15.7
30.6
Not available
Owner occupied
94.7
257.3
52.9
Rented
16.2
15.2
Not available
165.2
356.2
63.7
133.3
321.7
56.2
31.9
41.7
7.5
Houses
Total main dwellings
Owner occupied
Rented
Actual rents
3.18.8
Actual rents paid on residential dwellings and garages are obtained from the CPH
2011. The total residential rents paid in the economy are included in Real estate activities
(NACE 68) after deducting any residential rents received by the general government, which
is obtained from the government’s annual financial report.
The letting of immovable
property for dwelling purposes, for periods over thirty days and which are not licensed in
virtue of the Malta Travel and Tourism Act, are exempt without credit according to the Value
Added Tax Act (VAT CAP406: Fifth Schedule Part Two Exemptions without Credit). This
leads to a difficulty in capturing the number of units involved in rental activities of dwelling
units in the Business Register (BR), such that the SBS does not capture this activity very
189
Gross National Income Inventory
well. As a result, calculations are derived from the CPH as an Exhaustiveness Adjustment of
type N5 – where the registered entrepreneurs may not be included in the statistics for many
reasons (Section 7.1, para. 7.1.3.66).
3.18.9
Rentals paid on residential dwellings are extrapolated using the estimated change in
the number of dwellings put on the rental market each year to capture the volume change.
The number of rented dwellings for 2010 is calculated by allocating the difference between
rented dwellings in CPH 2005 and CPH 2011 across the years in between, in line with the
development in estimated dwelling completions from Malta Environment and Planning
Authority (MEPA) permits for construction and discards (see para. 3.18.35). The price
component is obtained from developments in the harmonised index of consumer prices
(HICP) for rentals paid for residential dwelling services.
3.18.10 Intermediate consumption of landlords, consisting of expenditure on repairs and
maintenance, financial intermediation services indirectly measured (FISIM), bank charges
and insurance service charge on the structure of the dwelling is calculated by assuming that
private landlords incur the same intermediate consumption to output ratio as owner-occupiers
(see para. 3.18.18 to 3.18.23).
3.18.11 Actual rents earned on commercial premises (NACE 68.20) are compiled from SBS
2009. In 2009, enterprises classified as NACE 68 were asked to report income earned from
commercial rents separately to that earned from residential rents. Separate data for income
earned from commercial rents to that earned from residential rents was not collected in
subsequent SBS surveys. This information was extrapolated to 2010, using the growth rates
in the variables C_6220 Rental paid and C_6221 Property rental paid from the administrative
records. Intermediate consumption is estimated using the intermediate consumption to output
ratio of total NACE 68.20 from the SBS survey.
3.18.12 An Exhaustiveness Adjustment of type N6 (Misreporting) to cover middlemen
(sensara) involved in the purchase/sale of premises (Section 7.1, para. 7.1.3.59). This was
made by assuming that they earn 2 per cent of the stamp duty paid on the exchange of
dwellings. No adjustment for intermediate consumption has been made, as such expenses are
assumed to be negligible for these agents.
190
The production approach
Imputed rents
3.18.13 Imputed rents are computed using the user cost method, rather than the stratification
method as set out in the Commission Regulation 1722/2005 on dwelling services. This is due
to the specific characteristics of the Maltese Islands’ rental market that makes it
unrepresentative of the total owner occupied dwelling stock. The Commission Regulation
1722/2005 states that the user cost method is accepted if:
a) The number of privately owned dwellings represent less than 10 per cent of the
total number of dwellings; and
b) The disparity between private and other paid rentals exceeds a factor of three.
3.18.14 The Maltese rental market has been subject to several rent controls until 1995,
resulting in a situation where most of the rents observed are too low compared to the costs
incurred in providing dwelling services. Furthermore, the Maltese rental market is relatively
small compared to the Maltese owner-occupied sector, standing at 19.2 per cent of the
occupied dwelling stock as captured in the CPH 2011. Only 9.6 per cent of the occupied
(main and rented) dwelling stock is considered to be rented out at market prices, of which
only 5.3 per cent are rented out unfurnished at market prices. This is shown in Table 3.18.5
which shows the number of occupied dwellings by type, and period of rent contract. It is
important to note that in the CPH, households are asked to specify if the rental contract was a
pre or a post-1995 contract. Pre-1995 contracts represent those dwellings rented out at
regulated and below market rental values; post-1995 and no fixed contracts are taken to
represent rental values at market rates.
191
Gross National Income Inventory
Rented unfurnished
No fixed
contract
Grand total
Terraced house/Townhouse
Semi-detached house
Semi-/Fully-detached farmhouse
Others
5,858
84
4,859
121
225
94
3,864
333
7
219
4
-
3
155
721
Rented unfurnished
3,167
58
1,425
116
30
65
802
5,663
Rented furnished
4,470
61
1,029
26
-
82
340
6,008
Rented unfurnished
927
18
1,077
79
59
24
837
3,021
Rented furnished
867
10
270
10
-
12
96
1,265
15,622
238
356
314
280
6,094
31,783
Rented furnished
Post1995
Fully-detached house
Tenancy
Maisonette/Ground floor tenement
Period
of rent
contract
Pre1995
Flat/Apartment/Penthouse
Table 3.18.5: Rented dwellings by type of dwelling, tenancy and type of rental contract, Census of
Population and Housing, National Statistics Office, 2011
15,105
Grand total
8,879
Total occupied dwellings, 2011
165,220
Total rented unfurnished dwellings as percentage of
total occupied dwellings
5.3%
3.18.15 The structure of the rentals market in Malta is such that a disparity factor of 4 exists
between the ratio of the average rent for post-1995 and no fixed contract rentals to pre-1995
contracts. This is shown in more detail in Table 3.18.6, which is in turn compiled from
information on how much rent is paid by households on an annual basis as collected in the
CPH. Specifically, it shows the average rent paid per type of dwelling, and by type of rental
contract.
192
The production approach
0.2
1.6
7.5
0.7
2.0
1.3
6.7
0.8
0.6
4.3
14.7
3.4
1.4
Grand total
0.2
Terraced house/Townhouse
0.5
Semi-detached house
0.3
0.1
not
applicable
0.4
0.2
0.3
0.9
0.5
1.1
0.1
not
applicable
5.8
0.8
1.1
10.7
3.8
4.3
4
4
Semi-/Fully-detached
farmhouse
Others
Post-1995
and no fixed
contract
Maisonette/Ground floor
tenement
Pre-1995
Tenancy
Rented
unfurnished
Rented
furnished
Rented
unfurnished
Rented
furnished
Fully-detached house
Period of
rent
contract
Flat/Apartment/Penthouse
Table 3.18.6: Average rent paid by type of dwelling and rental contract, Census of Population and
Housing 2011, in thousands of Euro
Post-1995 and no fixed contract rented unfurnished to pre-1995 unfurnished ratio
Disparity
factor
5
15
3
3
1
15
3.18.16 The user cost method consists of adding up the various cost components incurred
and profit earned in the production of dwelling services. It aims to impute a rental for owneroccupied dwellings that is consistent with the rent paid for the right to use an unfurnished
privately-owned dwelling excluding charges for heating, water and electricity. Separate
calculations are carried out for holiday homes based on the user cost method. The full costs
incurred in the upkeep of a summer residence are used as an estimate of the imputed rent for
a summer residence. A rental is also imputed for rent-free dwellings – dwellings that are
owned by households but made available to other households or family members free of
charge. These type of dwellings amount to 2.7 per cent of the total occupied dwelling stock.
3.18.17 Specifically, output is calculated as the sum of the following components:
a) Intermediate consumption;
b) Consumption of fixed capital (CFC);
c) Net taxes on dwelling services;
d) Net operating surplus on the structure of the dwelling; and
e) Net operating surplus on the value of the underlying land.
An adjustment is made to total output of dwelling services for owner-occupiers derived to
avoid double counting of income earned by these households from spare-room lodgers,
193
Gross National Income Inventory
already classified elsewhere in the system of national accounts. The magnitude of each
component in the calculations for 2010 is presented in Table 3.18.7. Imputed rent calculated
using this method, yields a monthly rent per dwelling of 203 Euro for main dwellings and
150 Euro for summer residences in 2010.
Table 3.18.7: User cost components for 2010 in millions of Euro and in per cent
Million Euro
Percentage
Intermediate consumption
56.8
18%
Consumption of fixed capital
95.6
30%
Net taxes on dwelling services
0%
Net operating surplus on the value of the building
91.0
29%
Net operating surplus on the value of the underlying Land
71.0
23%
3.18.18 Intermediate consumption for owner occupiers is the sum of expenditures on
maintenance and repair incurred by the owner-occupier as a landlord, bank charges, FISIM
and the insurance service charge on the structure of the dwelling. Note that charges for
heating, water and electricity are excluded both from intermediate consumption and the
output in dwelling services.
3.18.19 The amount of repairs and maintenance incurred by owner occupiers is collected
directly from the Household Budgetary Survey (HBS). Table 3.18.8 shows the distribution of
the kinds of expenditure typically made by the tenant (rented) and the owner (owner
occupied) from HBS 2008 carried out by National Statistics Office (NSO).
Data on
expenditure on repairs and maintenance by households was collected via the main
questionnaire and also the diaries. Respondents were asked to distinguish whether this
expenditure was carried out for the first time and/or was major, and expenditure that was
carried out to simply maintain the dwelling in a good condition.
3.18.20 The expenditure in the diaries was assumed to follow the same breakdown between
major and minor expenditure as in the main questionnaire data collected in Sections H1 and
H2.
The resulting breakdown by major and minor expenditure, for tenants and owner
occupiers separately, is shown in Table 3.18.8.
194
The production approach
Table 3.18.8: Distribution of major and minor repairs and maintenance by households as per HBS 2008,
as a percentage
Code
3108
3202
3401
3402
3404
3503
3510
3542
3611
3611
3615
3621
3623
3631
3643
3651
3652
3652
3660
3660
3671
3672
3673
3674
3674
3675
3676
3692
3693
3694
4043
4072
4080
4190
4410
4515
4517
4880
TOTAL
HBS Code details
Windows and their frames, doors and their frames and
thresholds, of wood
Plastic paints
Wall ceramic tiles
Floor ceramic tiles
Other sanitary ceramic fixtures except sinks (e.g. bidet,
ceramic bathroom accessories, toilets etc.)
Plaster
Marble and granite stones for steps, window sills, etc.
Wash-basins, baths and other sanitary ware, of metal
Electrical wiring and fitting work in residential
buildings
Electrical wiring and fitting work in residential
buildings
Electrical installation work of other electrical
equipment of buildings
Water plumbing
Drain laying work
Thermal insulation work
Other installation work n.e.c.
Plastering work
Cement rendering
Cement rendering
Installation of door and window frames; other
metal/non-metal joinery work
Installation of door and window frames; other
metal/non-metal joinery work
Exterior floor and wall tiling work
Interior floor and wall tiling work
Exterior wall and floor covering work (e.g. membrane)
Interior fitting decoration work
Interior fitting decoration work
Wall covering and wall papering work
Painting work on building interiors
Building of personal swimming pools
Interior speciality design services related to
construction works
Interior fitting decoration work
Chandeliers and other electric ceiling or wall lighting
fittings
Parts of furniture (except seats, doors and windows)
(e.g. shelves, drawers, chest of drawers, bookshelves)
Blinds, curtain runners, screens, folding partitions and
other furnishings of wood
Restoration services of works of art
Armoured or reinforced safes, strong-tables and doors,
of base metal
Repair services of air conditioning
Repair services of other household non electric
appliances
Hire of do-it-yourself equipment
Major repairs and
maintenance
Owner
Rented
occupied
Minor repairs and
maintenance
Owner
Rented
occupied
5%
7%
3%
1%
1%
5%
9%
3%
13%
3%
5%
4%
11%
5%
7%
14%
0%
0%
2%
0%
1%
7%
1%
5%
0%
2%
3%
0%
1%
4%
0%
2%
3%
10%
2%
4%
0%
0%
0%
0%
2%
2%
3%
1%
1%
0%
0%
5%
6%
0%
8%
5%
0%
0%
0%
8%
2%
1%
3%
0%
0%
1%
13%
0%
5%
3%
0%
0%
0%
7%
1%
1%
0%
0%
0%
0%
7%
5%
7%
1%
1%
8%
1%
1%
3%
0%
5%
0%
0%
7%
4%
0%
8%
0%
5%
0%
1%
13%
1%
1%
1%
1%
17%
0%
0%
8%
2%
0%
1%
0%
11%
0%
2%
1%
1%
0%
1%
0%
1%
0%
8%
0%
0%
0%
4%
9%
0%
1%
0%
0%
0%
25%
0%
0%
0%
0%
1%
0%
0%
1%
2%
0%
0%
0%
2%
0%
0%
0%
0%
100%
0%
100%
0%
100%
0%
100%
3.18.21 Major expenditure for both owner occupiers and tenants is classified as GFCF;
minor repairs and maintenance of owner occupiers is split into part that is household final
195
Gross National Income Inventory
consumption expenditure (HFCE) and part that is intermediate consumption; and the minor
repairs and maintenance incurred by tenants is classified entirely as HFCE. The resulting
intermediate consumption per dwelling ratio is then multiplied by the owner-occupied
dwelling stock – both for main dwellings and for summer residences. Table 3.18.9 shows the
resulting distribution of repairs and maintenance for each category of expenditure reported in
HBS 2008 across types of use by type of ownership.
Table 3.18.9: Distribution of repairs and maintenance by type of ownership and type of expenditure, HBS
2008, as a percentage
Code
3108
3202
3401
3402
3404
3503
3510
3542
3611
3611
3615
3621
3623
3631
3643
3651
3652
3652
3660
3660
3671
3672
3673
3674
3674
3675
3676
3692
3693
3694
4043
4072
4080
4190
4410
4515
4517
4880
196
HBS Code details
Windows and their frames, doors and their frames
and thresholds, of wood
Plastic paints
Wall ceramic tiles
Floor ceramic tiles
Other sanitary ceramic fixtures except sinks (e.g.
bidet, ceramic bathroom accessories, toilets etc.)
Plaster
Marble and granite stones for steps, window sills, etc.
Wash-basins, baths and other sanitary ware, of metal
Electrical wiring and fitting work in residential
buildings
Electrical wiring and fitting work in residential
buildings
Electrical installation work of other electrical
equipment of buildings
Water plumbing
Drain laying work
Thermal insulation work
Other installation work n.e.c.
Plastering work
Cement rendering
Cement rendering
Installation of door and window frames; other
metal/non-metal joinery work
Installation of door and window frames; other
metal/non-metal joinery work
Exterior floor and wall tiling work
Interior floor and wall tiling work
Exterior wall and floor covering work (e.g.
membrane)
Interior fitting decoration work
Interior fitting decoration work
Wall covering and wall papering work
Painting work on building interiors
Building of personal swimming pools
Interior speciality design services related to
construction works
Interior fitting decoration work
Chandeliers and other electric ceiling or wall lighting
fittings
Parts of furniture (except seats, doors and windows)
(e.g. shelves, drawers, chest of drawers, bookshelves)
Blinds, curtain runners, screens, folding partitions
and other furnishings of wood
Restoration services of works of art
Armoured or reinforced safes, strong-tables and
doors, of base metal
Repair services of air conditioning
Repair services of other household non electric
appliances
Hire of do-it-yourself equipment
Owner
occupied
GFCF
Rented
GFCF
Owner
occupied
P2
Owner
occupied
HCFE
Rented
HCFE
TOTAL
48%
15%
34%
31%
3%
1%
4%
0%
42%
61%
41%
48%
5%
7%
5%
5%
3%
16%
17%
15%
100%
100%
100%
100%
0%
18%
95%
26%
0%
3%
0%
3%
90%
57%
4%
45%
10%
6%
0%
5%
0%
16%
0%
21%
100%
100%
100%
100%
43%
5%
32%
4%
16%
100%
20%
0%
72%
8%
0%
100%
30%
21%
14%
100%
86%
23%
24%
50%
1%
3%
0%
0%
0%
1%
8%
0%
56%
58%
48%
0%
12%
61%
34%
42%
6%
6%
5%
0%
1%
7%
4%
5%
7%
12%
33%
0%
0%
8%
31%
3%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
100%
40%
57%
27%
1%
0%
1%
50%
36%
57%
6%
4%
6%
3%
3%
9%
100%
100%
100%
41%
56%
61%
4%
15%
0%
5%
0%
6%
0%
1%
0%
34%
39%
25%
86%
66%
90%
4%
4%
3%
10%
7%
10%
16%
1%
5%
0%
11%
0%
100%
100%
100%
100%
100%
100%
51%
55%
1%
0%
43%
38%
5%
4%
0%
2%
100%
100%
100%
0%
0%
0%
0%
100%
83%
6%
8%
1%
3%
100%
0%
0%
0%
0%
0%
90%
0%
10%
100%
0%
100%
100%
65%
100%
0%
0%
0%
0%
0%
0%
35%
0%
100%
100%
100%
0%
0%
0%
0%
90%
0%
10%
0%
0%
100%
100%
The production approach
3.18.22 The insurance service charge related to the structure of the dwelling is calculated
using the distribution of insurance premiums by type from HBS 2008. That proportion of
premiums from total non-life premiums reported in HBS 2008 that pertains to the dwelling is
applied to the total non-life insurance service charge in a given reference year. Only the
service charge related to the structure of the dwelling should be included as intermediate
consumption of the owner-occupiers, and not that related to the contents of the house.
Therefore, the resulting calculation for the insurance service charge related to the dwelling is
split into that component related to the contents and that related to the structure using
assumptions. The former is classified as HFCE and the latter as intermediate consumption of
owner occupiers.
3.18.23 Bank charges are calculated using the ratio of total non-interest income earned by
banks to total loans and applying it to total house loans to estimate that proportion that is
related to intermediate consumption of owner occupiers.
FISIM allocated to dwelling
services is derived from the production approach.
3.18.24 CFC is computed for the owner-occupied dwellings stock by using the straight-line
depreciation model. This model assumes that a dwelling depreciates by the same amount
each year over the service life of that dwelling, which was assumed to be equal to the
Organisation for Economic Cooperation and Development (OECD) average of 85 years. The
value of the dwellings stock is determined at gross current replacement cost, which is the
actual cost of replacing existing dwellings with identical new ones.
3.18.25 Valuation is directly related to the size, type and state of repair of a dwelling. Data
on the quantity of dwellings with details on their distribution by (a) tenancy, (b) number of
rooms, (c) type of dwelling and (d) state of repair was derived from the CPH carried out in
2005 and in 2011. The size of the dwelling is determined by the number of rooms since the
CPH does not provide the necessary information by square metres. Therefore, for both the
benchmark years 2005 and 2011, information about the size of houses and flats by number of
rooms, with a distinction for owner-occupied dwellings and rented dwellings in terms of
square meters, available from the 2002 Living Space Survey, was combined with data from
the CPH to translate the total number of dwellings by tenancy, type and number of rooms into
total square metres for corresponding strata.
197
Gross National Income Inventory
3.18.26 For each stratum the distribution of total square metres is translated into
construction costs using data on construction cost per square metre. Data on construction
costs per square metre and per number of rooms were collected by specific requests to
qualified architects, with for both houses and apartments of different sizes. Construction
costs refer to both the structure and finishing costs. The definition of a room follows that
provided in the CPH: a space that is enclosed by walls reaching from the floor to the ceiling
or roof coverings, or at least to a height of 2 metres above the ground, of a size large enough
to hold a bed for an adult (4 square metres at least), and at least 2 metres high over the major
area of the ceiling.
3.18.27 Definition of square metres is defined as floor space measured inside the outer walls
minus the wall thickness of internal walls and door and window recesses. It excludes stairs,
balconies and terraces, non-habitable cellars and attics and, in multi-dwelling houses, all
common spaces. These construction and finishing costs were supplemented by additional
costs such as the excavation of a plot, payments for sewage infrastructure, architect fees
pertaining to the preparation of land for construction, the construction of the dwelling itself,
and the development permit fees paid to the MEPA.
3.18.28 In the calculation of the value of owner occupied secondary residences, no
information on the size of these dwellings is available from the CPH. The size structure in
respect of number of rooms of summer residences is based on the assumption that they follow
the same size structure as that of owner occupied dwellings. A number of holiday homes are
in effect one-roomed ‘boathouses’ that are not used for boats but as summer residences in
certain seaside areas of Malta. A one-off field survey was undertaken by National Statistics
Office (NSO) in March 2005 establishing the number of such ‘boathouses’ which are treated
separately. The remaining summer residences are distributed on the results of the size
structure of summer residences derived from the Living Space Survey carried out in 2002.
The quality of summer residences was determined on the basis of an indicative question
placed in the census describing the state of repair in which the vacant dwelling is. The same
gross replacement cost valuation procedure applied for owner occupied main dwellings is
applied for holiday homes.
198
The production approach
3.18.29 The net operating surplus on the value of the building is computed using the real rate
of return equal to 2.5 per cent42 multiplied by the net (depreciated) value of the dwelling
stock. The net (depreciated) stock of capital, used in the computation of the net operating
surplus on the structure of the dwelling, is determined from the gross capital stock in the
following manner:
((L-a)/L)*C
where ‘L’ denotes the average total lifetime of dwellings, assumed to be equal to the
OECD43 average of 85 years; ‘a’ denotes the average age of dwellings in stratum x;
and ‘C’ represents the gross current replacement cost of the total dwellings stock.
3.18.30 The average age is based on the state of repair of the dwelling as the first step. NSO
has details on the state of repair of all dwellings in Malta. Dwellings which are in a good
state of repair are, on average, considered to be 12 years old; those needing minor repairs are
estimated to be 32 years old; those needing moderate repairs 55 years old; those needing
serious repairs 65 years old; and dilapidated dwellings 75 years old. These assumptions were
made considering the Maltese scenario where dwellings are built from globigerina limestone
and hollow concrete blocks, which are extremely durable.
3.18.31 The net operating surplus on the value of land is computed by multiplying a 2.5 per
cent rate of return by the estimated value of land on which owner-occupied dwellings are
constructed. For the benchmark year 2011, the value of land under owner occupied main
dwellings and summer residences was calculated by using the distribution of the owner
occupied dwelling stock by locality and by type from the CPH of 2011. This data was
translated into total plot area by using the average size (in square metres) by type of
dwellings for the total stock, and multiplied by each cell.
3.18.32 Data on the price per square metre of airspace in eight major localities (Birkirkara,
Mosta, Qormi, Rabat, Sliema, St Paul’s Bay, Zabbar and Zejtun) was obtained from a leading
real estate agency and used to translate the estimated plot area in each locality in the total
value of owner occupied land in that locality. The sum yields the total value of land, which
serves as an input in the calculation for the net operating surplus on land.
42
This rate was established following an experts’ meeting as part of the Phare 2000 Project on the Measurement
of Dwelling Services.
43
OECD refers to Organisation for Economic Cooperation and Development.
199
Gross National Income Inventory
3.18.33 No net taxes are levied on the imputed value of dwelling services in the Maltese
Islands.
3.18.34 The user cost components for empty dwellings is not included in the benchmark
output value, as by definition empty dwellings are not producing any dwelling services and
their output is equal to zero. Empty dwellings are defined as those that are unfurnished,
whilst dwellings that are furnished can be considered as ready to produce dwelling services.
The CPH collects the total number of vacant dwellings but does not indicate whether these
are furnished or not.
Given that the number of vacant dwellings that are furnished is
considered negligible, it was assumed that all vacant dwellings – apart from holiday flats and
summer residences – are actually empty dwellings.
Although the output of empty
(unfurnished) dwellings is by definition zero, costs are still incurred in their upkeep.
Therefore, CFC, expenditure on repairs and maintenance and service charge on insurance
premiums connected with the dwellings with respect to this category are netted against the
total output of imputed dwelling services.
3.18.35 For years other than the benchmark year – which is always that when the CPH is
carried out – imputed rents are extrapolated on the basis of the HICP for rentals and the
increase in the number of dwellings by tenancy estimated on the basis of the number of
permits. The number of units added to and discarded from the dwelling stock is estimated on
the basis of the units for which a permit was issued by the MEPA. An adjustment is made to
account for those permits that are never taken up. This adjustment is based on the ratio of the
total number of permits granted between CPH 2005 and CPH 2011 to the actual net additions
to the dwelling stock recorded between CPH benchmark years. In the intermediate years
between the census benchmark year and the CPH of the year 2005, the total dwelling stock is
calculated on the basis of these estimated additions and discards.
3.18.36 Intermediate consumption for imputed rentals is extrapolated for the repairs and
maintenance component using the HICP for house maintenance cost and the estimated net
additions to the owner occupied dwelling stock. The development of the insurance service
charge on the structure of the dwelling follows that of the non-life insurance service charge
component that goes to final consumption. FISIM is derived from the production approach
and bank charges are based on the development in house loans.
200
The production approach
3.19 Professional, scientific and technical activities (NACE Rev. 2 Section
M)
3.19.1
This section is sub-divided in the following NACE44 classes: Legal and accounting
activities (NACE 69), Activities of head offices; management consultancy activities (NACE
70), Architectural and engineering activities; technical testing and analysis (NACE 71),
Scientific research and development (NACE 72), Advertising and market research (NACE
73), Other professional, scientific and technical activities (NACE 74), Veterinary activities
(NACE 75). The contribution in terms of gross value added (GVA) to the total economy in
2010 stood at 5.5 per cent.
Table 3.19.1: Contribution of Section M to total economy, 2010
B.1g as a percentage of:
NACE
P.1
P.2
A*64
B.1g
Million Euro
Section M
B.1g Total
economy
GDP
(B.1*g)
Total
economy
%
%
%
GNI
(B.5*5)
Total
economy
%
69-70
305.0
102.3
202.6
63.1%
3.5%
3.1%
3.2%
71
135.1
73.6
61.5
19.1%
1.1%
0.9%
1.0%
72
3.0
0.6
2.4
0.7%
0.0%
0.0%
0.0%
73
169.4
128.0
41.4
12.9%
0.7%
0.6%
0.7%
74-75
33.7
20.4
13.3
4.1%
0.2%
0.2%
0.2%
646.2
324.9
321.2
100.0%
5.5%
4.9%
5.1%
3.19.2
Three institutional sectors are involved in Professional, scientific and technical
activities. Table 3.19.2 shows that at 81.5 per cent non-financial corporations were the
largest contributors to the GVA followed by households at 17.2 per cent and the general
government (S.13) at 1.3 per cent.
44
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
201
Gross National Income Inventory
Table 3.19.2: Section M (NACEs 69-75) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
M
546.3
-
5.0
94.9
-
646.2
284.5
-
0.8
39.7
-
324.9
69-70
247.0
-
3.5
54.4
-
305.0
85.9
-
0.3
16.2
-
102.3
71
106.9
-
1.5
26.8
-
135.1
58.4
-
0.5
14.7
-
73.6
72
2.9
-
-
0.0
-
3.0
0.6
-
-
0.0
-
0.6
73
164.8
-
-
4.6
-
169.4
124.6
-
-
3.4
-
128.0
74-75
24.6
-
-
9.1
-
33.7
15.0
-
-
5.4
-
20.4
Gross value added (Million Euro)
Gross value added (Percentage)
NACE
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
M
261.8
-
4.3
55.2
-
321.2
81.5%
0.0%
1.3%
17.2%
0.0%
100.0%
69-70
161.2
-
3.3
38.2
-
202.6
79.5%
0.0%
1.6%
18.8%
0.0%
100.0%
71
48.4
-
1.0
12.1
-
61.5
78.8%
0.0%
1.6%
19.7%
0.0%
100.0%
72
2.4
-
-
0.0
-
2.4
99.5%
0.0%
0.0%
0.5%
0.0%
100.0%
73
40.2
-
-
1.2
-
41.4
97.1%
0.0%
0.0%
2.9%
0.0%
100.0%
74-75
9.6
-
-
3.7
-
13.3
72.0%
0.0%
0.0%
28.0%
0.0%
100.0%
Process tables
3.19.3
An excerpt from the process tables for Section M is presented in Table 3.19.3. The
Structural Business Statistics (SBS) survey classified under Surveys and Censuses is the most
important data source for Section M followed by the annual accounts and financial statements
classified as Administrative Records. Data Validation refers adjustments made to SBS data
due to underestimations with respect to companies in particular size classes when compared
to fiscal data. An Exhaustiveness Adjustment is made for Veterinary activities (NACE 75)
due to underestimations in SBS survey when compared to source data for Agriculture and
fishing.
202
The production approach
Table 3.19.3: Extract of process tables 2010 for Section M in millions of Euro
Basis for national accounts figures
Section M
Surv. and Cens.
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total
Extrap+Models
Other
Total (Sources)
Extrapolations and Models
P.1
383.5
167.0
-
-
-
2.2
-
-
-
2.2
-
552.6
P.2
190.3
90.6
-
-
-
0.0
-
-
-
0.0
-
280.9
B.1g
193.2
76.4
-
-
-
2.2
-
-
-
2.2
-
271.8
Adjustments
Data Validation
Allocation of
FISIM
Other
Conceptual
Total
Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
Exhaustiveness
Section M
Conceptual
P.1
86.3
0.0
5.7
5.7
-
-
-
-
-
1.4
-
1.4
-
93.5
646.2
P.2
39.9
10.4
-6.9
3.4
-
-
-
-
-
0.7
-
0.7
-
44.1
324.9
B.1g
46.4
- 10.4
12.7
2.3
-
-
-
-
-
0.7
-
0.7
-
49.4
321.2
Non-financial corporations (S.11) and households (S.14) sectors
3.19.4
In benchmark years, activities in Section M are generally based on SBS survey (71.1
per cent) and to a lesser extent from Administrative Records (28.1 per cent).
3.19.5
Non-benchmark years are extrapolated using benchmark per capita ratios and
employment statistics derived from the Employment and Training Corporation (ETC) or
Short-Term Statistics (STS) indices in case of Architectural and engineering activities;
technical testing and analysis. In case of Legal and accounting activities some of the largest
entities are partnerships and thus are not obliged to file annual accounts and financial
statements. In non-benchmark years transparency reports were used to update the value of
output. These transparency reports are available at time t+12 months and were thus available
prior to SBS results. These reports only provide information on output, compensation of
employees and employment. Information derived from the transparency reports was used in
benchmark and non-benchmark years. The intermediate consumption to output ratio derived
from SBS survey is used for non-benchmark years given that intermediate consumption is not
reported in the transparency reports. As from 2013, the transparency reports are not being
used since SBS survey is being provided at time t+18 months and data in SBS survey is
203
Gross National Income Inventory
considered to be of a superior nature compared to transparency reports which provide only
turnover figures.
3.19.6
As for recommendations of the Task Force on the Capitalisation of R&D in National
Accounts (DMES 2012/11/08) and recommendations from the GNP Committee on Software
Measurement (CPNB/313 and GNI015-Rev. 1) will be treated in detail in Section 5.10.3.6.
General government sector (S.13)
3.19.7
Output (P.1) and intermediate consumption (P.2) of general government are
compiled by the financial statement of two extra-budgetary units (EBUs) which operate in
Activities of head offices; management consultancy activities and Architectural and
engineering activities; technical testing and analysis.
Exhaustiveness
3.19.8
SBS survey results for veterinary activities are considered to be underestimated
when one considers the results derived from the Economic Accounts for Agriculture (EAA)
and household final consumption expenditure (HFCE). For this reason, an Exhaustiveness
Adjustment was carried in order to account for that output being produced in this activity
with regards to services offered for the treatment of farm animals and the like. This was done
through the incorporation of the EAA, where output is simply a summation of the SBS survey
result with that present within the EAA. Intermediate consumption is extrapolated by the
application of the intermediate consumption to output ratio present within the SBS survey for
this particular industry in this particular year.
Output/Consumption
€ ’000
SBS 2010
1,665
EAA
1,440
Household consumption
204
1,900 (including VAT)
The production approach
3.20 Administrative and support services activities (NACE Rev. 2 Section
N)
3.20.1
This section includes a variety of activities that support business operations, which
can be distinguished from Professional, scientific and technical services (Section M) in that
their primary purpose is not the transfer of specialised knowledge. Administrative and
support services (Section N) is subdivided into the following six NACE45 divisions:
a) Rental and leasing of motor vehicles, personal and household goods, machinery and
equipment, and intellectual property (NACE 77);
b) Employment activities including recruitment and personnel selection services, as
well as job placement services (NACE 78);
c) Travel agency, tour operator, reservation services and related activities (NACE 79);
d) Security and investigation activities, including the transportation of valuables
(NACE 80);
e) Services to buildings and landscape activities including combined facilities support
and cleaning services (NACE 81); and
f)
Office administrative, office support and other business support activities, including
call centres and the organisation of trade shows (NACE 82).
3.20.2
The following table presents output (P.1), intermediate consumption (P.2) and gross
value added (GVA (B.1g)) of the six NACE divisions of administrative and support services
(Section N).
3.20.3
Out of a total GVA of 215.3 million Euro, 37.8 per cent was generated by NACE
divisions 80 to 82. The same argument applies for the rest. Out of 5,790.8 million Euro, 3.7
per cent of the GVA of the total economy was contributed by Section N. 3.3 per cent
represents the percentage GVA of this activity (Section N) when compared to the gross
domestic product (GDP) of the total economy. Section N contributes 3.4 per cent to the gross
national income (GNI) of the total economy.
45
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
205
Gross National Income Inventory
Table 3.20.1: Contribution of Section N to total economy, 2010
B.1g as a percentage of:
NACE
A*64
P.1
P.2
B.1g
Million Euro
Section N
%
B.1g Total
economy
%
GDP (B.1*g)
Total economy
%
GNI (B.5*5)
Total economy
%
77
120.1
75.8
44.3
20.6%
0.8%
0.7%
0.7%
78
57.2
11.9
45.3
21.1%
0.8%
0.7%
0.7%
79
143.6
99.4
44.2
20.5%
0.8%
0.7%
0.7%
80-82
122.1
40.7
81.4
37.8%
1.4%
1.2%
1.3%
Total
443.0
227.7
215.3
100.0%
3.7%
3.3%
3.4%
3.20.4
Four institutional sectors are involved in Administrative and support service
activities (Section N). Table 3.20.2 shows that at 81.3 per cent non-financial corporations
(S.11) were the largest contributors to the GVA, followed by general government (S.13) at
15.0 per cent and the households (S.14) at 3.6 per cent. The contribution of non-profit
institutions serving households (NPISHs) is negligible at 0.1 per cent.
Table 3.20.2: Section N (NACEs 77-82) by institutional sector for 2010
Output (Million Euro)
206
Intermediate consumption (Million Euro)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
N
388.9
0.0
36.0
17.6
0.6
443.0
213.8
0.0
3.7
9.9
0.3
227.7
77
108.0
0.0
6.4
5.7
0.0
120.1
71.9
0.0
0.0
3.8
0.0
75.8
78
38.8
0.0
18.4
0.0
0.0
57.2
9.1
0.0
2.8
0.0
0.0
11.9
79
138.5
0.0
0.0
5.1
0.0
143.6
95.8
0.0
0.0
3.6
0.0
99.4
80-82
103.6
0.0
11.2
6.8
0.6
122.1
37.0
0.0
0.9
2.5
0.3
40.7
Gross value added (Million Euro)
Gross value added (Percentage)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
N
175.1
0.0
32.3
7.7
0.2
215.3
81.3%
0.0%
15.0%
3.6%
0.1%
100.0%
77
36.1
0.0
6.4
1.9
0.0
44.3
81.3%
0.0%
14.4%
4.3%
0.0%
100.0%
78
29.7
0.0
15.6
0.0
0.0
45.3
65.5%
0.0%
34.5%
0.0%
0.0%
100.0%
79
42.7
0.0
0.0
1.6
0.0
44.2
96.4%
0.0%
0.0%
3.6%
0.0%
100.0%
80-82
66.7
0.0
10.3
4.3
0.2
81.4
81.9%
0.0%
12.6%
5.2%
0.3%
100.0%
The production approach
Process tables
3.20.5
Surveys and Censuses: The data under this category refers to the survey-based
production statistics. Structural Business Statistics (SBS) survey was implemented in all the
NACEs of Section N following the changeover to NACE Rev. 2 in 2008.
3.20.6
Administrative Records: The data under this category refers to the accounts-based
production statistics.
Financial statements were used for specific companies and for
government data in NACEs 77, 78, 81 and 82.
3.20.7
Consumption of fixed capital (CFC): The data under this category refers to the
consumption of fixed capital that is included in output and final consumption expenditure of
non-market producers in NACEs 77, 78, 81 and 82.
3.20.8
Data Validation: Data Validation refers to the adjustments made by National
Accounts Unit to data relating to mainly output, intermediate consumption, compensation of
employees and number of employees of the SBS survey based on financial statements
published by the Malta Financial Services Authority (MFSA) or fiscal data.
3.20.9
Allocation of financial intermediation services indirectly measured (FISIM): The
data under this category refers to data of the Allocation of FISIM of Section N.
3.20.10 Other Conceptual:
The data under this category refers to a national accounts
adjustment made in NACE 79. The output of travel agency services is measured as the value
of service charges of agencies and not by the full expenditures made by travellers to the travel
agency, including charges for transport by third parties (ESA 2010, para. 3.60). Given that
such adjustment is not available at source i.e. in SBS data, an adjustment is done in national
accounts for Travel agency activities (NACE 79.11) and Other reservation services and
related activities (NACE 79.9). This adjustment introduces of 'margins' as per ESA 2010,
para. 3.60 to 3.62 for NACE 79.11 and NACE 79.9, while Tour operator activities (NACE
79.12) is measured by the full expenditure made by travellers to the tour operator. The
purchases by products of agents is analysed in order to identify goods bought for resale such
as hotel accommodation, airline tickets, transport costs and the like. This adjustment has no
impact on value added, but it has an impact on the level of output and intermediate
207
Gross National Income Inventory
consumption. This resulted in a downward adjustment in both output and intermediate
consumption of 140.3 million Euro. Other Conceptual Adjustments in Table 3.20.3 includes
some other minor adjustments.
Table 3.20.3 Extract of process tables 2010 for Section N in millions of Euro
Basis for national accounts figures
Section N
Surv. and Cens.
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total
Extrap+Models
Other
Total (Sources)
Extrapolations and Models
P.1
565.4
48.2
0.0
0.0
0.0
7.7
0.0
0.0
0.0
7.7
0.0
621.3
P.2
344.4
22.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
366.8
B.1g
221.0
25.8
0.0
0.0
0.0
7.7
0.0
0.0
0.0
7.7
0.0
254.5
Adjustments
Allocation of FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total Exhaustiveness
Balancing
Total (Adjustments)
P.1
-39.8
0.0
-138.4
-138.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-178.2
443.0
P.2
-1.9
6.4
-143.6
-137.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-139.1
227.7
B.1g
-37.9
-6.4
5.2
-1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-39.2
215.3
Final Estimate
Data Validation
Exhaustiveness
Section N
Conceptual
Non-financial corporations (S.11) and households (S.14) sectors
3.20.11 In 2010, activities in Section N are generally based on SBS survey (86.8 per cent)
and to a lesser extent from Administrative Records (10.1 per cent).
3.20.12 For years prior to and following the years fixed with the SBS survey, per capita
ratios derived from previous SBS survey were used to extrapolate quarterly results. The past
series of NACE 80 is based on the SBS data in NACE Rev. 1.1. Otherwise, for nonbenchmark years, the employment provided by the Employment and Training Corporation
(ETC) for NACEs 80, 82, 81, 78 and 77 is used as an indicator for the quarterly results.
Expenditure on package tours is used to extrapolate quarterly results for both production and
generation of income accounts in industry 79. The number of self-drive passenger cars, the
208
The production approach
number of leased passenger cars of licensed motor vehicles and the number of nights spent by
tourists in Malta are used to extrapolate quarterly results for both production and generation
of income accounts in industries 77.1 and 77.34. The market of output of the construction
activity is used to extrapolate quarterly results for both production and generation of income
accounts in industry 77.39.
3.20.13 As mentioned in para. 3.20.10, the output of travel agency services is measured as
the value of service charges of agencies and not by the full expenditures made by travellers to
the travel agency, including charges for transport by third parties (ESA 2010, para. 3.60).
Given that such adjustment is not available at source i.e. in SBS data, an adjustment is done
in national accounts for Travel agency activities (NACE 79.11) and Other reservation
services and related activities (NACE 79.9). This adjustment introduces of 'margins' as per
ESA 2010, para. 3.60 to 3.62 for NACE 79.11 and NACE 79.9, while Tour operator activities
(NACE 79.12) is measured by the full expenditure made by travellers to the tour operator.
The purchases by products of agents is analysed in order to identify goods bought for resale
such as hotel accommodation, airline tickets, transport costs and the like. This adjustment
has no impact on value added, but it has an impact on the level of output and intermediate
consumption.
3.20.14 As regards to operational leasing which is classified under NACE 77 is identified as
a service and is measured by the value of the rental paid. In national accounts operating
leasing is distinguished from financial leasing, which refers to the financing of an acquisition
of a fixed asset through a loan. Revenue made from operational leasing is treated as output of
services and operational leasing expenditure is treated as intermediate consumption in
Section N.
General government sector (S.13)
3.20.15 For the government sector, calculations are based largely on administrative records
(Departmental Accounting System (DAS) system and Treasury Department accruals
templates) as regards to the budgetary central government (BCG) and partially on the
Financial Data Reporting System (FDRS) as regards to the extra-budgetary units (EBUs).
209
Gross National Income Inventory
Non-profit institutions serving households (NPISHs) (S.15)
3.20.16 Only one operator is included in Office administrative, office support and other
business support activities (NACE 82). Their contribution towards the GVA of NACE N is
negligible. Annual data is derived from audited financial statements. Quarterly data is
extrapolated using per capita information from the latest available annual audited financial
statements adjusted for employment and the overall retail price index (RPI).
3.20.17 Output is calculated as the sum of costs as shown below while non-market output is
derived as a residual between total output and market output.
Operating surplus – Subsidies on production + Taxes on production + Compensation of
employees = Value added net + Consumption of fixed capital = Value added gross +
Intermediate consumption = Total output
3.21 Public administration and defence; compulsory social security
(NACE Rev. 2 Section O)
3.21.1
The general government sector (S.13) in Malta is made up of central government
(S.1311), consisting of budgetary central government (BCG), 52 extra-budgetary units
(EBUs), and the local government (S.1313) (68 local councils, 5 regional committees and the
Local Councils Association). In 2010, the general government sector was classified into 21
NACE Rev. 2 categories, the largest output being by Public Administration (O) at 35.5 per
cent. For a broader explanation on how the general government sector’s output is calculated
refer to Section 5.9.
210
The production approach
Table 3.21.1: Contribution of Section O to total economy, 2010
P.1
20,302
3,690
2,013
10,256
14,937
19,780
33,562
23,569
3,546
1,473
6,417
18,377
11,176
559,732
257,200
297,771
78,925
17,075
5,941
10,184
3,799
1,399,726
Million Euro
P.2
3,149
216
622
1,456
12,064
12,637
6,033
12,758
251
517
45
2,756
909
205,279
24,123
84,671
19,187
6,056
3,068
2,945
1,703
400,445
17,598,885
11,808,125
NACE
01
03
18
32
33
38
41
63
70
71
77
78
81
84
85
86
87
88
90
91
93
B.1g
17,153
3,474
1,392
8,800
2,873
7,143
27,529
10,811
3,295
957
6,372
15,622
10,267
354,452
233,077
213,100
59,738
11,019
2,873
7,239
2,096
999,280
5,790,768
as a percentage of S.13
P.1
P.2
B.1g
1.5%
0.8%
1.7%
0.3%
0.1%
0.3%
0.1%
0.2%
0.1%
0.7%
0.4%
0.9%
1.1%
3.0%
0.3%
1.4%
3.2%
0.7%
2.4%
1.5%
2.8%
1.7%
3.2%
1.1%
0.3%
0.1%
0.3%
0.1%
0.1%
0.1%
0.5%
0.0%
0.6%
1.3%
0.7%
1.6%
0.8%
0.2%
1.0%
40.0%
51.3%
35.5%
18.4%
6.0%
23.3%
21.3%
21.1%
21.3%
5.6%
4.8%
6.0%
1.2%
1.5%
1.1%
0.4%
0.8%
0.3%
0.7%
0.7%
0.7%
0.3%
0.4%
0.2%
100.0%
100.0%
100.0%
S.13 as a % of total economy
8.0%
3.4%
17.3%
Process tables
An excerpt of the process tables for Section O is presented in Table 3.21.2:
Table 3.21.2: Extract of process tables 2010 for Section O in millions of Euro
Basis for national accounts figures
Surv. and Cens.
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total
Extrap+Models
Other
Total (Sources)
Extrapolation and Models
Section O
3.21.2
P.1
0.0
503.9
0.0
0.0
0.0
55.0
0.0
0.0
0.0
55.0
0.0
558.9
P.2
0.0
203.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
203.9
B.1g
0.0
299.9
0.0
0.0
0.0
55.0
0.0
0.0
0.0
0.0
0.0
354.9
211
Gross National Income Inventory
Table 3.21.2: Extract of process tables 2010 for Section O in millions of Euro (cont...)
Adjustments
Data Validation
Allocation of
FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
Exhaustiveness
Section O
Conceptual
P.1
0.0
0.0
0.8
0.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.8
559.6
P.2
0.0
1.2
0.0
1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.2
205.2
B.1g
0.0
-1.2
0.8
-0.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-0.5
354.5
3.21.3
All government transactions have been ESA coded by an ad-hoc committee. The
relevant (coded) items are extracted from the Departmental Accounting System (DAS), such
as, for example P.2, D.11, D.121. As the DAS is cash-based, the data are enhanced with an
accruals adjustment. In addition to these items, there are the consumption of fixed capital
(CFC) and employer’s imputed social contributions.
Both items are not derived from
Treasury statements but calculated by the National Statistics Office (NSO). The sum of these
items derives the output. When output for own final use (P.12) and market output (P.11) are
deducted, the result is the non-market output. The employers’ imputed social contributions
are based on the pensions paid by government to former government employees who are
entitled to a non-contributory pension.
3.22 Education (NACE Rev. 2 Section P)
3.22.1
Section P includes education at any level and is composed of a specific breakdown
which can be observed in the following table. On the left, a detailed breakdown of the
section according to NACE46 Rev. 2 is made available while on the right, it is explained in
terms of the breakdown as applied to the Maltese context:
46
NACE is the acronym for “Nomenclature statistique des Activités économiques dans la Communauté
Européenne”.
212
The production approach
Table 3.22.1: Detailed breakdown with description of Section P (NACE 85)47
NACE 85 Education
NACE Rev. 2 breakdown
Maltese context breakdown
85.1 Pre-primary education
85.10 Pre-primary education
85.2 Primary education
85.20 Primary education
85.3 Secondary education
85.31 General secondary education
85.32 Technical and vocational secondary
education
85.10-85.42 Private schools (pre-primary;
primary; secondary; post-secondary general;
post-secondary vocational)
85.32 Technical and vocational training
85.4 Higher education
85.41 Post-secondary non-tertiary education
85.42 Tertiary education
85.5 Other education
85.51 Sports and recreation education
85.52 Cultural education
85.53 Driving school activities
85.59 Other education n.e.c
85.51 Sports and recreation
85.52 Performing arts (dance, drama, music,
musical theatre)
85.53 Driving lessons
85.59 English language schools
85.59 Private tuition
85.6 Educational support activities
85.60 Educational support activities
3.22.2
85.60 Educational support activities
Education services are provided by the government sector (S.13), the private sector,
which includes non-financial corporations (S.11) and households (S.14), and the non-profit
institutions serving households (NPISHs) sector (S.15). Education as an industry in the
Maltese economy contributed to 5.8 per cent to gross value added (GVA) (B.1g) in 2010.
47
NACE Rev. 2 Statistical classification of economic activities in the European Community, Eurostat, European
Commission, 2008.
213
Gross National Income Inventory
Table 3.22.2: Contribution of Section P to total economy, 2010
B.1g as a percentage of:
NACE
P.1
P.2
B.1g
Million Euro
Section P
%
B.1g Total
economy
%
GDP (B.1*g)
Total
economy
%
GNI (B.5*5)
Total
economy
%
A*64
85
399.1
63.0
336.1
100.0%
5.8%
5.1%
5.3%
P
399.1
63.0
336.1
100.0%
5.8%
5.1%
5.3%
3.22.3
As shown in Table 3.22.3, general government was the main provider of education
services in the Maltese economy, generating around 69.3 per cent of the total GVA created
by this industry, followed by NPISHs at 13.1 per cent and non-financial corporations at 11.7
per cent.
Table 3.22.3: Section P (NACE 85) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
P
69.7
0.0
257.2
25.8
46.5
399.1
30.3
0.0
24.1
6.3
2.3
63.0
85
69.7
0.0
257.2
25.8
46.5
399.1
30.3
0.0
24.1
6.3
2.3
63.0
Gross value added (Million Euro)
Gross value added (Percentage)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
P
39.4
0.0
233.1
19.5
44.1
336.1
11.7%
0.0%
69.3%
5.8%
13.1%
100.0%
85
39.4
0.0
233.1
19.5
44.1
336.1
11.7%
0.0%
69.3%
5.8%
13.1%
100.0%
Section P process table: detailed explanation of the basis and adjustments for the
compilation of national accounts figures
3.22.4
The following paragraphs provide a detailed explanation of the data which was used
in 2010 for the compilation of the process tables and a classification of the various sources
used and adjustments that were carried out. These are illustrated in Table 3.22.4 where it
shows the various adjustments that are added to produce final balanced figures and reflect
their relative importance.
214
The production approach
Table 3.22.4: Extract of process tables 2010 for Section P in millions of Euro
Basis for national accounts figures
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total
Extrap+Models
30.9
7.5
23.4
308.5
44.9
263.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
13.5
0.0
13.5
0.0
0.0
0.0
0.0
0.0
0.0
23.0
10.6
12.4
36.4
10.6
25.9
Total (Sources)
Surv. and Cens.
P.1
P.2
B.1g
Other
Section P
Extrapolations and Models
0.0
0.0
0.0
375.9
63.0
312.9
Adjustments
Data Validation
Allocation of FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
Exhaustiveness
Section P
Conceptual
P.1
0.0
-1.4
13.2
11.9
0.0
0.0
0.0
0.0
0.0
11.4
0.0
11.4
0.0
23.2
399.1
P.2
0.0
2.8
-2.9
-0.1
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.1
0.0
0.0
63.0
B.1g
0.0
-4.2
16.2
12.0
0.0
0.0
0.0
0.0
0.0
11.3
0.0
11.3
0.0
23.2
336.1
3.22.5
Surveys and Censuses: The data classified under this category refers to the survey-
based production statistics and is explained below. There are mainly three surveys which are
used to compile part of Section P: the annual private schools survey which is compiled by the
Education and Information Society Statistics Unit; dance schools survey data which is
derived from News Release: ‘Dance Schools / Teaching of Performing Arts’ compiled by the
Living Conditions and Culture Statistics Unit; and the English Language Schools (ELS)
survey which covers all the English language schools that were operating in 2010 across
Malta and Gozo and is compiled by the National Accounts Unit. Numerical information is
provided in Table 3.22.4.
3.22.6
Administrative Records: The data classified under this category refers to the data
obtained from administrative sources such as data for the general government sector,
financial statements derived from the Malta Financial Services Authority (MFSA), and the
fiscal data. The latter two sources are used to cover church schools, technical and vocational
training, sports and recreation activities, English language schools, educational support
activities and other education n.e.c. Refer to Table 3.22.4 for an illustration of figures.
215
Gross National Income Inventory
3.22.7
Consumption of fixed capital (CFC) perpetual inventory method (PIM) as part of
Extrapolation and Models: This data refers to estimates for CFC that are included in output of
non-market producers, in this case for S.13 government and S.15 NPISHs.
3.22.8
Other Extrapolations and Models: This covers all kind of estimates based on
calculation and fixed percentages of data from surveys, censuses, or administrative sources.
As regards the non-financial corporations (S.11) and households (S.14) sectors, an estimate
for non-response and for those companies that did not have their accounts available is done
using the Employment and Training Corporation (ETC) employment data. This applies for
English language schools, technical and vocational training, sports and recreation. In other
areas such as dance schools, driving lessons, the Household Budgetary Survey (HBS) of 2008
was extrapolated using the most appropriate ratios, together with the harmonised index of
consumer prices (HICP) items and population figures. With regard to the NPISHs sector,
growth rate of the retail price index (RPI) and full-time equivalent (FTE) employment figures
were used. Refer to Table 3.22.4 for numerical data reference.
3.22.9
The Conceptual Adjustments were discussed in Sections 3.2 and 3.4.
3.22.10 N6 which refers to ‘producers deliberately misreporting’ as part of the
Exhaustiveness Adjustments: Data for private lessons are derived by extrapolating HBS 2008
figures, taking the HICP weighted growth rates of private primary and secondary tuition, and
percentage of the population aged 5 to 24 years old out of the total population.
The
intermediate consumption is then derived by using the intermediate consumption to output
ratio which is equal to ratio of 2002.
Distinction between market output, for own final use and other non-market output at
institutional units for Section P
3.22.11 The following section was prepared so as to address point 3.22 of the ESA 2010
Gross National Income (GNI) Inventory Guide (GNIC/280) where it specifically requested a
demonstration of the distinction between market and non-market output of Section P NACE
85. Table 3.22.5 shows the distinction between market output, output for own final use and
other non-market output at institutional unit level for Section P.
216
The production approach
3.22.12 According to ESA 2010, which is fully consistent with the world-wide guidelines on
national accounting the System of National Accounts (SNA), private producers are found in
all institutional sectors except for in the government sector while public producers are only
found in the non-financial corporations sector, the financial corporations sector, and the
general government sector. As regards private producers, a distinction is made between
private non-profit institutions and other private producers. A private non-profit institution
(NPI) is defined as a legal or social entity acting for the purpose of producing goods and
services whose status does not permit them to be a source of income, profit or other financial
gains for the units that establish, control or finance them. A private NPI is classified to the
non-financial corporations and financial corporations sectors if it is a market producer
whereas if it is classified to the NPISHs sector, it is considered as a non-market producer.
For further information as regards the institutional units in terms of the distinction between
the various types of output, refer to ESA 2010, para. 3.27 to 3.41 and para. 20.05 to 20.55.
Table 3.22.5: Output breakdown by institutional sector of Section P (NACE 85) for 201048
NACE 85 – Education
S.11
S.12
S.13
S.14
S.15
S.11
S.12
S.13
S.15
Financial producers
Market and nonmarket public
producers
Private producers
Non-market private
NPIs
Total
Market private
producers
Financial producers
Market and nonmarket public
producers
Private producers
Non-market private
NPIs
Total
%
Market private
producers
Million Euro
S.14
P.1
Output
69.7
0.0
257.2
25.8
46.5
399.1
17.5%
0.0%
64.4%
6.5%
11.7%
100.0%
P.11
Market output
68.9
0.0
8.8
25.6
0.0
103.3
66.7%
0.0%
8.5%
24.8%
0.0%
100.0%
P.12a
Software for own
final use
0.8
0.0
1.5
0.2
0.1
2.6
30.8%
0.0%
57.7%
7.7%
3.8%
100.0%
P.12b
Output for own
final use
0.0
0.0
0.1
0.0
0.0
0.1
0.0%
0.0%
100.0%
0.0%
0.0%
100.0%
P.12c
R&D for own final
use
0.0
0.0
10.6
0.0
0.0
10.6
0.0%
0.0%
100.0%
0.0%
0.0%
100.0%
P.131
Payments for nonmarket output
0.0
0.0
0.0
0.0
0.0
0.0
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%
P.132
Other non-market
output
0.0
0.0
236.2
0.0
46.3
282.5
0.0%
0.0%
83.6%
0.0%
16.4%
100.0%
48
Figures presented are in line with News Release: Non-financial Accounts by Institutional Sector: 2005-2013
(229/2014).
217
Gross National Income Inventory
Output and intermediate consumption of the non-financial (S.11) and households (S.14)
sectors for Section P
3.22.13 Education services produced by the non-financial corporations sector (S.11) and the
households sector (S.14) accounted for 11.7 per cent and 5.8 per cent of the GVA,
respectively. The production account for private education services is compiled from various
sources as summarised in Table 3.22.6 and is compiled separately for the following types of
activity: private schools, English language schools, private tuition, driving lessons, sports and
recreation activities, technical and vocational training, dance schools, and educational support
activities.
Table 3.22.6: Main data sources used to calculate S.11 and S.14 of Section P (NACE 85)
218
Breakdown of the Education categories
Source/s
Private schools
-Survey by Education and Information Society
Statistics Unit, NSO;
-HICP from the Price Statistics Unit, NSO; and
-Quarterly ETC data.
English language schools
-Survey by National Accounts Unit, NSO ;
-MFSA annual reports;
-fiscal data;
-Quarterly ETC data;
-News Release: ‘Teaching English as a Foreign
Language’ by the Education and Information Society
Statistics Unit, NSO; and
-News Release: ‘Inbound Tourism’ by Population and
Tourism Statistics Unit, NSO.
Private tuition
-HBS from the Methodology and Research Unit,
NSO;
-HICP from the Price Statistics Unit, NSO; and
-Quarterly population from the Population and
Tourism Statistics Unit, NSO.
Driving lessons
-HBS from the Methodology and Research Unit,
NSO;
-HICP from the Price Statistics Unit, NSO; and
-Number of driving tests (Transport Malta).
Sports and recreation activities
- fiscal data;
-MFSA annual reports; and
-Quarterly ETC data.
Technical and vocational training
- fiscal data;
-MFSA annual reports; and
-Quarterly ETC data.
Dance schools
-News Release: ‘Teaching of Performing Arts’ by the
Living Conditions and Culture Statistics Unit, NSO;
- HICP from the Price Statistics Unit, NSO; and
-Quarterly ETC data.
Educational support activities
-MFSA annual report; and
-Quarterly ETC data.
The production approach
3.22.14 The market output of private schools is calculated from an annual survey compiled
by the Education and Information Society Statistics Unit that covers all private schools
providing pre-primary, primary, lower secondary, upper secondary and post-secondary
education. The list of private schools is provided to the mentioned unit by the official entity
responsible for the education sector. Data are collected on turnover, recurrent expenditure,
capital expenditure, compensation paid to employees, number of teaching, non-teaching staff
and number of pupils attending private schools. The list of schools is updated every year on
the basis of the list of licensed private schools compiled by the official entity responsible for
the education sector. Intermediate consumption of private schools is derived directly from
the annual survey compiled by the Education and Information Society Statistics Unit that
covers all private schools providing pre-primary, primary, lower secondary, upper secondary
and post-secondary education.
3.22.15 Total output produced by English language schools is in part calculated directly
from questionnaires which are compiled by the National Accounts Unit – an internal survey –
and from fiscal and MFSA data. Those companies which are not covered through the
mentioned sources are estimated using ETC data and number of students. Information about
the total number of students is obtained from a survey compiled by the Education and
Information Society Statistics Unit that collects annual information on the total number of
students attending these schools. The official list of licensed English language schools is
provided to the mentioned unit by the English as foreign language (EFL) Monitoring Board
within the Education Department. Data on students are published according to the tourism
seasonal calendar in the News Release: ‘Teaching English as a Foreign Language’.
Intermediate consumption of English language schools covered by the national accounts
questionnaire or by financial statements is calculated directly from the information at hand.
In the case of companies that submit a full set of financial statements to MFSA, intermediate
consumption is derived from the accounts.
3.22.16 For those schools for which no direct information is available, the intermediate
consumption to output ratio of schools for which direct information is available was used.
Direct estimation from survey and/or financial statements covers around 80 per cent of total
output. The remaining 20 per cent is estimated by grossing up per capita ratios derived from
received questionnaires, fiscal, and MFSA annual reports and then estimating figures for the
219
Gross National Income Inventory
rest of the companies using ETC employment data, and the total number of students attending
these schools.
3.22.17 Output for driving lessons is derived by extrapolating HBS 2008 output figures
using the output per driving tests ratio. The number of driving tests ratio is calculated by
distributing yearly driving tests quarterly, working out quarterly ETC employment figures of
car driving tutors and deriving HICP growth rate of fuel and lubricants for personal transport
equipment and driving test growth rate over the previous year or same quarter of previous
year.
The intermediate costs of driving schools are derived by using the intermediate
consumption to output ratio which is same as 2008 being the last year when HBS was carried
out.
3.22.18 Market output of private tutors (included in N6) is derived by extrapolating HBS
2008 figures, taking the HICP weighted growth rates of private primary and secondary
tuition, and development in the percentage of the population aged 5 to 24 years old out of the
total population. The intermediate consumption of private tutors is then derived by using the
intermediate consumption to output ratio which is equal to ratio of 2002. Intermediate costs
incurred by private tutors are very small in relation to their output and were subsequently
estimated as equal to 1 per cent of their total market output.
3.22.19 Market output of dance schools is derived from the News Release: ‘Teaching of
Performing Arts’ published by the Living Conditions and Culture Statistics Unit.
An
estimate is calculated for the other performing arts by extrapolating HBS 2008 figures using
dance schools growth rates. HBS items that were included refer to music schools and music
instructors’ services, fine arts schools and arts instruction services, and other cultural
educational services. Expenditure of dance schools is derived from the previously mentioned
news release. Information in this news release was obtained through a survey among tutors
of performing arts across Malta and Gozo. For drama and music categories, the survey
covered persons registered with the National Commission for Further and Higher Education
(NCFHE).
3.22.20 Market output for sports and recreation services is derived from the fiscal data and if
available, downloading the annual reports from the MFSA. Estimate for those companies
that have no published data available is derived by taking ETC employment data. This
220
The production approach
extrapolation is done so as to cover the companies that did not have available their data in the
MFSA and fiscal data but have their employment data available. Intermediate consumption
for sports and recreation services is derived by grossing up companies falling under this
section from the fiscal data and if available, downloading the annual reports from the MFSA.
Estimate for those companies that have no published data available is derived by taking ETC
employment data. This extrapolation is done so as to cover the companies that did not have
available their data in the MFSA and fiscal data but have their employment data available.
3.22.21 Market output for technical and vocational training services is derived from the
fiscal data and if available, downloading the annual reports from the MFSA. Estimate for
those companies that have no published data available is derived by taking ETC employment
data. This extrapolation is done so as to cover the companies that did not have available their
data in the MFSA and fiscal data but have their employment data available. Intermediate
consumption for technical and vocational training services is derived by grossing up
companies falling under this section from the fiscal data and if available, downloading the
annual reports from the MFSA. Estimate for those companies that have no published data
available is derived by taking ETC employment data. This extrapolation is done so as to
cover the companies that did not have available their data in the MFSA and fiscal data but
have their employment data available.
3.22.22 Market output and intermediate consumption for educational support activities are
derived from the financial statements available on the MFSA website.
Output and intermediate consumption of the government (S.13) and NPISHs (S.15) sectors
for Section P
3.22.23 In 2010, the largest generator in terms of its contribution to gross value added of
NACE 85 was the government sector, with 69.3 per cent, while the NPISHs sector
contributed to 13.1 per cent. Total output of both the government and the NPISHs sectors for
all NACEs of Sections P to S is calculated as sum of costs of production:
Operating surplus – Subsidies on production + Taxes on production + Compensation of
employees = Value added net + Consumption of fixed capital = Value added gross +
Intermediate consumption = Total output
221
Gross National Income Inventory
3.22.24 Non-market output for education services of the general government (S.13) and the
NPISHs (S.15) sectors is calculated as total output less market output and output for own
final use. The market output of the government sector for education services is composed of
fees paid for courses offered by the Malta College of Arts, Science and Technology
(MCAST), the University of Malta (UoM) and other government educational institutions, and
of books fees and examination fees paid by students. The market output of the NPISHs
sector for education services is mainly tuition fees paid by households to church schools. The
NPISHs sector does not have any output for own final use.
3.22.25 The main data source for the compilation of the production accounts of the
government sector (S.13) is the government’s detailed revenue and expenditure records, i.e.
the Departmental Accounting System (DAS) and the Treasury Department accruals
templates. Data from the DAS system is available on real time as the Public Finance Unit has
a direct read-only access to this system.
3.22.26 The NPISHs sector (S.15) consists of non-profit institutions which are separate legal
entities, which serve households and which are private other non-market producers. Their
principal resource, apart from those derived from occasional sales, are derived from voluntary
contributions in cash or in kind from households in their capacity as consumers, from
payments made by general governments and from property income.
3.22.27 The main sources used to calculate total output of education services for the NPISHs
sector include the Education survey; Sports Organisations (SPO) survey; Youth
Organisations Survey (YOS); Non-Governmental Organisations (NGOs) survey; financial
statements; ETC employment data; HICP and RPI.
3.22.28 Education services provided by the NPISHs (S.15) sector are covered mainly by
financial statistics and data which are provided to us by the Education and Information
Society Statistics Unit within the National Statistics Office (NSO). This unit collects annual
information on number of teaching, non-teaching staff, pupils and financial data of Church
Schools. This information is supplemented with data collected from the financial statements
of the Archdiocese of Malta, which is the centralised body in charge of church institutions
together with data of Major and Minor Sacred Heart Seminary of Gozo. A set of estimates is
222
The production approach
applied for those organisations without any information available, assuming that market
output is zero or negligible.
3.22.29 The section on direct information from surveys is updated with the SPOs, Youth
Organisations and NGOs surveys and includes sports and recreation education, cultural
education as well as religious instruction (catechism) in other education. Since these surveys
were not carried out for 2010, latest available survey data was extrapolated forward by
multiplying basic wage rate per FTE of previous year with the FTE employment figures of
current year and applying RPI growth rate. For the section entitled as ‘Other NACE 85’,
growth rates of RPI were applied.
3.23 Human health and social work activities (NACE Rev. 2 Section Q)
3.23.1
Section Q refers to the provision of services related to health and social work
activities. It includes a wide range of activities, from health care provided by trained medical
professionals in hospitals and other facilities, to residential care activities. The activities of
Section Q - Human health and social work activities are distinguished into two industries
within the A*6449 classification: 86, 87-88. They are composed of a specific breakdown
which can be observed in the following table. On the left, a detailed breakdown of the
section according to NACE50 Rev. 2 is made available while on the right, this breakdown is
explained in terms of the sections as applied to the Maltese context:
49
Refer to Table 9.1.1.
NACE is the acronym for “Nomenclature statistique des Activités économiques dans la Communauté
Européenne”.
50
223
Gross National Income Inventory
Table 3.23.1: Detailed breakdown with description of Section Q (NACEs 86, 87-88)
NACE 86 Human health activities; NACE 87 Residential care activities; NACE 88 Social work activities
without accommodation
NACE Rev. 2 breakdown
Maltese context breakdown
86.1 Hospital activities
86.10 Hospital activities
86.10 Main private hospitals
86.2 Medical and dental practice activities
86.21 General medical practice activities
86.21-86.22 General and specialist medical practice
86.22 Specialist medical practice activities
activities
86.23 Dental practice activities
86.23 Dental practice activities
86.9 Other human health activities
86.90 Other human health activities
86.90 Other human health activities
87.1 Residential nursing care activities
87.10 Residential nursing care activities
87.2 Residential care activities for mental retardation,
mental health and substance abuse
87.20 Residential care activities for mental
87.10 Main residential nursing care homes
retardation, mental health and substance abuse
87.3 Residential care activities for the elderly and
87.10-87.90 Residential nursing care activities
disabled
87.30 Residential care activities for the elderly
and disabled
87.9 Other residential care activities
87.90 Other residential care activities
88.1 Social work activities without accommodation for the elderly and disabled
88.10 Social work activities without
accommodation for the elderly and disabled
88.10-88.99 Social work activities without
accommodation
88.9 Other social work activities without accommodation
88.91 Child day-care activities
88.91 Child day-care activities
88.99 Other social work activities without
accommodation n.e.c.
3.23.2
The health and social work industry contributed to 6.4 per cent to the gross value
added (GVA) (B.1g) of the Maltese economy in 2010.
224
The production approach
Table 3.23.2: Contribution of Section Q to total economy, 2010
B.1g as a percentage of:
3.23.3
P.2
B.1g
Million Euro
Section
Q
%
B.1g
Total
economy
%
GDP
(B.1*g)
Total
economy
%
GNI
(B.5*5)
Total
economy
%
NACE
A*64
P.1
86
377.1
108.8
268.3
72.3%
4.6%
4.1%
4.2%
87-88
142.0
39.1
102.9
27.7%
1.8%
1.6%
1.6%
Q
519.1
148.0
371.2
100.0%
6.4%
5.6%
5.9%
Tables 3.23.3 indicates the contribution of the four institutional units towards
Human health and social work activities output and value added during 2010. At 76.5 per
cent, the general government sector (S.13) was the largest contributor towards health and
social work GVA followed by the non-financial sector (S.11) at 11.2 per cent, the households
sector (S.14) with 7.9 per cent and the non-profit institutions serving households (NPISHs)
sector (S.15) at 4.4 per cent.
Table 3.23.3: Section Q (NACEs 86-88) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
Q
62.9
0.0
393.7
40.0
22.5
519.1
21.3
0.0
109.8
10.5
6.3
148.0
86
41.3
0.0
297.7
36.9
1.5
377.3
14.1
0.0
84.6
9.9
0.2
108.8
87-88
21.7
0.0
96.0
3.1
21.1
141.9
7.3
0.0
25.2
0.6
6.1
39.1
Gross value added (Million Euro)
Gross value added (Percentage)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
Q
41.6
0.0
283.9
29.5
16.2
371.2
11.2%
0.0%
76.5%
7.9%
4.4%
100.0%
86
27.2
0.0
213.1
26.9
1.2
268.4
10.1%
0.0%
79.4%
10.0%
0.5%
100.0%
87-88
14.4
0.0
70.8
2.6
15.0
102.7
14.0%
0.0%
68.9%
2.5%
14.6%
100.0%
Section Q process table: detailed explanation of the basis and adjustments for the
compilation of national accounts figures
3.23.4
The following paragraphs provide a description of the data which was used for the
process tables and a classification of the various sources used and adjustments that were
carried out. These are shown in Table 3.23.4 so as to reflect the final picture with all
balanced figures.
225
Gross National Income Inventory
Table 3.23.4: Extract of process tables 2010 for Section Q in millions of Euro
Basis for national accounts figures
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total Extrap+Models
0.0
0.0
0.0
379.6
123.4
256.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
54.0
0.0
54.0
0.0
0.0
0.0
0.0
0.0
0.0
23.0
9.0
13.9
77.0
9.0
67.9
Total (Sources)
Surv. and Cens.
P.1
P.2
B.1g
Other
Section Q
Extrapolations and Models
0.0
0.0
0.0
456.6
132.5
324.1
Adjustments
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total Exhaustiveness
-0.7
2.9
-3.5
0.7
-1.8
2.5
0.0
1.1
-1.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
62.5
14.5
48.1
0.0
0.0
0.0
0.0
0.0
0.0
62.5
14.5
48.1
3.23.5
Final Estimate
Other Conceptual
0.0
0.0
0.0
Total (Adjustments)
Allocation of FISIM
P.1
P.2
B.1g
Balancing
Data Validation
Exhaustiveness
Section Q
Conceptual
0.0
0.0
0.0
62.6
15.5
47.0
519.1
148.0
371.2
Administrative Records: The data classified under this category includes general
government data for NACEs 86-88 and Malta Financial Services Authority (MFSA) financial
statements derived from the MFSA and fiscal data for S.11 and S.14. These cover the main
companies related to the referred NACEs where from time to time fiscal data is checked in
light of new companies. Financial statements from the Cooperatives Board are also used.
3.23.6
Consumption of fixed capital (CFC) perpetual inventory method (PIM) as part of
Extrapolation and Models: This data refers to estimates for CFC that is included in output of
non-market producers, in this case for S.13 government and S.15 NPISHs.
3.23.7
Other Extrapolations and Models: This covers all kind of estimates based on
calculation and fixed percentages of data from surveys, censuses, or administrative sources.
As regards S.11 and S.14 for NACEs 86 and 87, an estimate for those companies that did not
have their accounts available is done using the Employment and Training Corporation (ETC)
employment data, output per full-time equivalent (FTE) employment and intermediate
226
The production approach
consumption to output ratios as well as the harmonised index of consumer prices (HICP)
growth rate of particular items specific to the NACE. For the NPISHs sector, data had to the
extrapolated forward using the growth in the overall retail price index (RPI), ratios of
intermediate consumption per FTE employment, number of organisations and members
respectively. This also applied when NPISHs subsectors referred to the Non-Governmental
Organisations (NGOs) survey. For more detail in terms of figures, refer to Table 3.23.4.
3.23.8
Conceptual Adjustments were discussed in Sections 3.2 and 3.4.
3.23.9
N5 which covers the ‘registered entrepreneurs not surveyed’ as part of the
Exhaustiveness Adjustments: This refers to NACEs 86-88 where registered entrepreneurs
including doctors, dentists, specialists, occupational therapists, chiropractics are not surveyed.
The main reason is that the statistical office does not conduct a survey of registered
entrepreneurs. Consequently, S.11 and S.14 for NACEs 86-88, which are mostly based on
Household Budgetary Survey (HBS) figures are extrapolated forward using population
figures and percentages, HICP item indices that correspond to the respective health subsector
as well as output per FTE employment and intermediate consumption to output ratios.
Distinction between market output, for own final use and other non-market output at
institutional units for Section Q
3.23.10 The following section was prepared so as to address point 3.23 of the ESA 2010
Gross National Income (GNI) Inventory Guide (GNIC/280) where it specifically presented a
query on Section Q NACEs 86-88 on the distinction between market and non-market output.
Table 3.23.5 shows the distinction between market output, for own final use and other nonmarket output at institutional units for Section Q.
3.23.11 According to ESA 2010, private producers are found in all institutional sectors
except for in government sector while public producers are only found in the non-financial
corporations sector, the financial corporations sector, and the general government sector. As
regards private producers, a distinction is made between private non-profit institutions (NPIs)
and other private producers. A private NPI is defined as a legal or social entity acting for the
purpose of producing goods and services whose status does not permit them to be a source of
income, profit or other financial gains for the units that establish, control or finance them. A
227
Gross National Income Inventory
private NPI is classified to the non-financial corporations and financial corporations sectors,
if it is a market producer whereas if it is classified to the NPISHs sector, it is considered as a
non-market producer. For further information as regards the institutional units in terms of the
distinction between the various types of output, refer to ESA 2010, para. 3.27 to 3.41 and
para. 20.05 to 20.55.
Table 3.23.5: Output breakdown by institutional sector of Section Q for 2010
S.11
S.12
S.13
S.14
S.15
S.11
S.12
S.13
S.15
Market and nonmarket public
producers
Private producers
Non-market
private NPIs
Total
Market private
producers
Financial
producers
Market and nonmarket public
producers
Private producers
Non-market
private NPIs
Total
%
Financial
producers
Million Euro
S.14
Market private
producers
NACEs 86 to 88 – Human
health and social work
activities
P.1
Output
62.9
0.0
393.7
40.0
22.5
519.1
12.1%
0.0%
75.8%
7.7%
4.3%
100.0%
P.11
Market output
62.6
0.0
2.0
40.0
9.1
113.7
55.1%
0.0%
1.8%
35.2%
8.0%
100.0%
P.12a
Software for own
final use
0.3
0.0
0.2
0.1
0.1
0.7
42.9%
0.0%
28.6%
14.3%
14.3%
100.0%
P.12b
Output for own
final use
0.0
0.0
0.1
0.0
0.0
0.1
0.0%
0.0%
100.0%
0.0%
0.0%
100.0%
P.12c
R&D for own final
use
0.0
0.0
0.0
0.0
0.0
0.0
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%
P.131
Payments for nonmarket output
0.0
0.0
0.0
0.0
0.0
0.0
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%
P.132
Other non-market
output
0.0
0.0
391.5
0.0
13.2
404.7
0.0%
0.0%
96.7%
0.0%
3.3%
100.0%
Output and intermediate consumption of the non-financial (S.11) and households (S.14)
sectors for Section Q
3.23.12 These two sectors cover Hospital activity (NACE 86.10), General medical practice
activities (NACE 86.21), Specialist medical activities (NACE 86.22), Dental practice
activities (NACE 86.23), Other human health activities (NACE 86.90), Residential care
activities (NACE 87), and Social work activities without accommodation (NACE 88).
228
The production approach
Table 3.23.6: Main data sources used to calculate S.11 and S.14 of Section Q
Breakdown of the Health and social work
categories
Source/s
86.10 Hospital activities
-MFSA annual reports;
-fiscal data;
-HICP from the Price Statistics Unit, NSO; and
-Quarterly ETC data.
-HICP from the Price Statistics Unit, NSO;
-Quarterly ETC data;
86.21-86.22 General and specialist medical practice -HBS from the Methodology and Research Unit,
NSO; and
activities
-Quarterly population from the Population and
Tourism Statistics Unit, NSO.
86.23 Dental practice activities
-HICP from the Price Statistics Unit, NSO;
-Quarterly ETC data;
-HBS from the Methodology and Research Unit,
NSO; and
-Quarterly population from the Population and
Tourism Statistics Unit, NSO.
86.90 Other human health activities
-HICP from the Price Statistics Unit, NSO;
-Quarterly ETC data; and
-HBS from the Methodology and Research Unit,
NSO.
87.10-87.90 Residential care activities
-MFSA annual reports;
- fiscal data;
-HICP from the Price Statistics Unit, NSO;
-Quarterly ETC data; and
-Ratios derived from actual financial data, NSO.
88.10-88.99 Social work activities without
accommodation (excluding NACE 88.91)
-HICP from the Price Statistics Unit, NSO;
-Quarterly ETC data;
-HBS from the Methodology and Research Unit,
NSO; and
-Ratios derived from actual financial data.
88.91 Child day-care activities
-HICP from the Price Statistics Unit, NSO;
-Quarterly ETC data; and
-Cooperative annual reports from the Cooperatives
Board.
3.23.13 Hospital activities (NACE 86.10) comprise the activities of the main private
hospitals in Malta. Output and intermediate consumption of these entities are computed from
the financial statements presented to the MFSA, except for one hospital which as from 2010
onwards, output is calculated as the product of the ratio of market output per total FTE
employment of previous year and FTE employment of 2010 adjusted with the HICP growth
rate of hospital services. Intermediate consumption is calculated by applying ratio of cost of
sales per FTE of 2009 multiplied by the FTE employment of 2010.
3.23.14 Since general medical, specialist medical and dental practices activities are mostly
performed by self-employed workers, output is calculated from the expenditure side using the
HBS.
229
Gross National Income Inventory
3.23.15 For the following years, market output for NACEs 86.21, 86.22 and 86.23 is
estimated as follows:
Market output (Mot) = Fee per visit * Number of visits each year
3.23.16 The fee per visitor of the benchmark year for each health category is extrapolated
forward using the HICP items that correspond to the respective health activity. The number
of visitors in each health activity is estimated using the total population together with the
percentage of visitors both males and females that encounter either a private general
practitioner at home or at clinic, or visit a private specialist and a dentist.
3.23.17 For NACE 86.21 and 86.22, the estimated number of visitors is split into three
categories:

Estimated number of visitors who consult a general practitioner through a home
visit (15 per cent males; 19 per cent females);

Estimated number of visitors who consult a general practitioner through a clinic visit
(44 per cent males; 48 per cent females); and

Estimated number of visitors who consult a specialist (23 per cent males; 32 per cent
females).
3.23.18 The HICP items which are used include specialist's clinic examination and
consultation and treatment by general practitioner at home.
3.23.19 Output of medical practice activities includes expenditure by visitors on consultation
and treatment by general practitioners at home, consultation and treatment by other medical
and surgical specialists at home, consultation and treatment by general practitioners at clinic,
ultrasound diagnosis, x-rays and other radiotherapy and consultation and treatment by other
medical and surgical specialists at clinic.
3.23.20 As regards to NACE 86.23, the estimated number of visitors is split according to the
services provided by a dentist. For NACE 86.23 not all the population is taken to estimate
the number of visitors, but sections from the population with 34 per cent being considered as
males and 38 per cent being considered as females:
230
The production approach

Orthodontic activities – population (5–40 years);

Tooth filling – population (15+ years);

Tooth extraction – population (5+ years); and

Oral hygienists and other dental services – population (10+ years).
3.23.21 These percentages are taken from a health survey that was conducted by the Health
Department in 2003. This survey also provides data regarding the average number of visits
per year for specialists (1.3 visits), general practitioners (6.5 visits) and dentists (1.3 visits).
Until further information about the amount of health visits will be available, it is assumed that
on average each year the same percentage of visitors/patients use private health care. The
HICP item used is dental services.
3.23.22 Output of dental activities consists of expenditure by visitors on orthodontic
services, tooth filling, tooth extraction, oral hygiene and other dental services. For dental
activities the number of visitors is not estimated using the total population but different age
categories taken from the total population for every dental activity.
3.23.23 Intermediate consumption for medical and dental practice activities is estimated
using intermediate consumption to output ratio computed from administrative records for the
period between 1999 and 2004, with 17 per cent for medical practices and 36 per cent for
dental practices.
3.23.24 Output of other human health activities comprises expenditure by households on
services provided by nurses, services provided by physiotherapists and other paramedical
persons, blood tests, other services provided by medical laboratories, residential health
facilities and other human health activities. HBS 2000 and 2008 are used for benchmark
years. For the following years, output of this category is calculated as the product of market
output per total FTE employment and the FTE employment of each year adjusted with the
HICP growth rate of consultation and treatment by general practitioner at the clinic.
3.23.25 Intermediate consumption for other human health activities is estimated at 22 per
cent, using intermediate consumption to output ratio computed from administrative records
for the period between 1999 and 2004.
231
Gross National Income Inventory
3.23.26 The main sources used to calculate production and generation of income accounts of
residential homes include financial statements derived from the MFSA and fiscal data.
3.23.27 When annual information for specific years is not available, estimates are done
individually using previous years` information and developments of HICP for retirement
homes for elderly persons. Output is derived by multiplying FTE employment of current
year by output per FTE of previous year and adjusted with the HICP growth rate of
retirement homes for the elderly. Intermediate consumption is derived by taking output
multiplied by ratio of intermediate consumption to output of 2005 i.e. year referring to last
available actual financial data.
3.23.28 Those residential homes where only employment data are available, their production
and generation of income account is estimated using average ratios of the main components
derived from financial information of the mentioned residential homes. In this case, output is
derived using ratio of output per FTE of all residential homes which have available financial
data multiplied by FTE employment of those other homes which only have their employment
available and adjust it with the HICP growth rate of retirement homes for elderly persons.
Intermediate consumption is derived using ratio of intermediate consumption to output of all
residential homes which have available financial data multiplied by the market output
estimate of those other homes.
3.23.29 The main sources used to calculate the production and generation of income account
for NACE 88.91 include financial statements from the Cooperatives Board, and HBS data.
3.23.30 Only one childcare centre has financial information available. For those childcare
centres having only employment data available, financial information of this particular
childcare centre is used to estimate the production and generation of income accounts for
these childcare centres.
3.23.31 For the rest of the entities which are part of NACE 88, production and generation of
income account is estimated using HBS data. The rest of the components are estimated using
ratios from NACE 87. Employment data are derived from the quarterly production and
generation of income account of NACE 88.
232
The production approach
3.23.32 In absences of annual information, quarterly output is estimated using previous
year’s quarterly output per FTE employment together with the quarterly FTE employment.
Previous years’ quarterly output per FTE is adjusted using the HICP quarterly developments
of childminding facilities. Intermediate consumption and CFC ratios are taken the same as at
latest data.
3.23.33 For the rest of NACE 88, HBS 2008 is taken as a benchmark year and for the
following years quarterly output is estimated by extrapolating it forward using HICP.
However the rest of the components are estimated using previous years’ information.
Output and intermediate consumption of the government (S.13) and NPISHs (S.15) sectors
for Section Q
3.23.34 For Ministries and Departments, the Departmental Accounting System (DAS) is
used for cash data whereas the Treasury Department accruals templates are used to convert
cash data to accruals data. For extra-budgetary units (EBUs), preliminary estimates based on
data derived from the Financial Data Reporting System (FDRS) as well as estimates adjusted
with audited financial statements when available are used.
3.23.35 The main sources used to calculate the value added of health and social work
activities as regards the NPISHs sector include the NGOs survey which refers to 2007,
financial statements, ETC employment data and RPI. With regard to financial statements,
they are obtained annually from the Office of the Commissioner for Voluntary Organisations.
These statements are used to calculate the main components of the production and generation
of income accounts.
3.23.36 Total output is calculated using the cost approach method by summing up
intermediate consumption, consumption of fixed capital (CFC) and compensation of
employees. Non-market output is estimated as a residual after deducting any market output.
For those units without any financial information market output is assumed to be zero, as
there is no indication whether these units offer any market output. Output for own final use
for the NPISHs sector is assumed to be zero.
233
Gross National Income Inventory
3.23.37 Human health and social work activities (NACE 86) covers about eight
organisations – of which six are covered by the NGOs survey and the rest are covered by an
estimate. Since the reference year when the NGOs survey was last carried out was 2007,
NPISHs data for NACE 86 had to be extrapolated forward by taking number of members per
intermediate consumption of previous year multiplied by growth rate of RPI development.
This applied for the section on NGOs survey while for the section estimates for NACE 86.90
without employment, data was derived by taking intermediate consumption per organisation
of previous year multiplied by growth rate of RPI development.
3.23.38 Total output of most organisations of NACE 87 is estimated using the latest data of
NGOs survey and any information from financial statements. Market output for residential
care activities consists of income from residents, other services provided and other income.
For those organisations without any financial information about the market output and
intermediate consumption, but having only data on the number of residents using
accommodation facilities, these components are estimated using direct information from
financial statements and/or the NGOs survey together with the number of residents.
However, in absence of NGOs survey and financial data, output and intermediate
consumption are estimated using the overall price index growth rate, the ratio of intermediate
consumption per resident of previous year multiplied by number of residents equal to
previous year.
3.23.39 As regards to social work activities without accommodation (NACE 88) both
components – market output and intermediate consumption are estimated using the same
sources – financial statements and the NGOs survey. Those organisations having only
employment information available, market output is equal to zero, non-market output is
calculated as a residual and intermediate consumption is estimated on the basis of the FTE
employees.
3.23.40 Data for NACE 87 without employment was derived by taking and applying overall
price index growth rate, number of residents multiplied by ratio of intermediate consumption
per residents of previous year plus number of organisations multiplied by ratio of
intermediate consumption per organisations of previous year. Data for NACE 88 without
employment was derived by taking number of organisations multiplied by ratio of
intermediate consumption per organisation of previous year and applying overall price index
234
The production approach
growth rate. Section NACE 88 with employment was derived by taking P.2 per FTE ratio of
previous year raised by overall RPI growth rate and multiplied by the FTE of current year.
3.23.41 The government sector (S.13) covers public health entities in Malta and Gozo
including general hospitals, elderly and special needs services such as elderly homes, institute
of healthcare services, government pharmaceutical services, EBUs – Sedqa and Appogg
agencies, Zammit Clapp and Mount Carmel Hospitals. The government’s detailed revenue
and expenditure records are derived from the DAS and the Treasury Department accruals
templates. Moreover, preliminary estimates which are based on data derived from the FDRS
as well as estimates adjusted with audited financial statements when available are used to
calculate output, intermediate consumption of government entities. The 50 per cent criterion
has been applied to distinguish between market and non-market output. The cost approach
method is used to estimate total output and non-market output, and government operating
surplus is assumed to be equal to zero. The output of the government sector for health
services is mainly hospital fees, certificates, sale of medicines etc.
3.24 Arts, entertainment and recreation (NACE Rev. 2 Section R)
3.24.1
This section focuses specifically on activities that meet varied cultural,
entertainment and recreational interests of the general public, including live performances,
operation of museum and historical sites, gambling, betting, sports and recreation activities.
The activities of Arts, entertainment and recreation (Section R) are distinguished into two
industries within the A*6451 classification: 90-92, 93, defined in Table 3.24.1. They are
composed of a specific breakdown which can be observed in the following table. On the left,
a detailed breakdown of the section according to NACE52 Rev. 2 is made available while on
the right, this breakdown is explained in terms of the sections as applied to the Maltese
context:
51
Refer to Table 9.1.1.
NACE is the acronym for “Nomenclature statistique des Activités économiques dans la Communauté
Européenne”.
52
235
Gross National Income Inventory
Table 3.24.1: Detailed breakdown with description of Section R
NACE 90 Creative, arts and entertainment activities; NACE 91 Libraries, archives, museums and other
cultural activities; NACE 92 Gambling and betting activities; NACE 93 Sports activities and amusement
and recreation activities
NACE Rev. 2 breakdown
Maltese context breakdown
90.0 Creative, arts and entertainment activities
90.01 Performing arts
90.02 Support activities to performing arts
90.01-90.04 Creative, arts and entertainment
90.03 Artistic creation
activities
90.04 Operation of arts facilities
91.0 Libraries, archives, museums and other cultural activities
91.01 Library and archives activities
91.02 Museums activities
91.03 Operation of historical sites and buildings
and similar visitor attractions
91.01-91.04 Libraries, archives, museums and other
cultural activities
91.04 Botanical and zoological gardens and
nature reserves activities
92.00 Gaming parlours
92.00 Casinos
92.00 Gambling and betting activities
92.00 Internet betting
92.00 Other gaming
92.00 Lotto receivers
93.1 Sports activities
93.11-93.19
93.11 Operation of sports facilities
93.12 Activities of sports clubs
93.12 Main sports association
93.13 Fitness facilities
93.13 Fitness facilities
93.19 Other sports activities
93.2 Amusement and recreation activities
93.24-93.29 excluding marinas
93.24 Activities of amusement parks and theme
parks
93.29 Other amusement and recreation activities
3.24.2
93.29 Marinas
As shown in Table 3.24.2, the gross value added (GVA) for arts, entertainment and
recreation in 2010 amounted to 496.5 million Euro that is 8.6 per cent of the total GVA of the
Maltese economy.
236
The production approach
Table 3.24.2: Contribution of Section R to total economy, 2010
B.1g as a percentage of:
NACE
A*64
90-92
93
R
3.24.3
P.1
P.2
Million Euro
1,587.3
1,105.6
40.4
25.6
1,627.7
1,131.2
B.1g
B.1g Total
economy
%
8.3%
0.3%
8.6%
Section R
%
97.0%
3.0%
100.0%
481.6
14.8
496.5
GDP (B.1*g)
Total
economy
%
7.3%
0.2%
7.5%
GNI (B.5*5)
Total
economy
%
7.6%
0.2%
7.9%
As shown in Tables 3.24.3, Section R is made up of four institutional sectors that is
the government sector (2.5 per cent), the private sector (96.4 per cent), which includes nonfinancial corporations (S.11) and households (S.14), and the non-profit institutions serving
households (NPISHs) sector (1.1 per cent), with the non-financial corporations sector as
contributing mostly to the GVA of Section R with 94.5 per cent.
Table 3.24.3: Section R (NACEs 90-93) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
R
1,580.5
0.0
19.9
17.9
9.4
1,627.7
1,111.3
0.0
7.7
8.3
3.9
1,131.2
90-92
1,552.9
0.0
16.1
17.9
0.4
1,587.3
1,091.1
0.0
6.0
8.3
0.2
1,105.6
93
27.6
0.0
3.8
0.0
9.0
40.4
20.2
0.0
1.7
0.0
3.7
25.6
Gross value added (Million Euro)
Gross value added (Percentage)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
R
469.2
0.0
12.2
9.6
5.5
496.5
94.5%
0.0%
2.5%
1.9%
1.1%
100.0%
90-92
461.8
0.0
10.1
9.6
0.2
481.6
95.9%
0.0%
2.1%
2.0%
0.0%
100.0%
93
7.4
0.0
2.1
0.0
5.3
14.8
49.9%
0.0%
14.1%
0.0%
35.9%
100.0%
Section R process table: detailed explanation of the basis and adjustments for the
compilation of national accounts figures
3.24.4
The subsequent sections provide an overall explanation of the data which was used
for the compilation of the process tables together with a classification of the Extrapolations
and Models, Conceptual and Exhaustiveness Adjustments that were carried out. These are
illustrated in Tables 3.24.4 so as to provide numerical evidence that structure the description
given in the Gross National Income (GNI) Inventory.
237
Gross National Income Inventory
Table 3.24.4: Extract of process tables 2010 for Section R in millions of Euro
Basis for national accounts figures
Surv. and Cens.
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Other
Total (Sources)
P.1
1.3
1,625.0
0.0
0.0
0.0
2.1
0.0
0.0
72.4
74.5
0.0
1,700.8
P.2
0.6
1,124.1
0.0
0.0
0.0
0.0
0.0
0.0
40.8
40.8
0.0
1,165.4
B.1g
0.8
501.0
0.0
0.0
0.0
2.1
0.0
0.0
31.6
33.7
0.0
535.4
Total
Extrap+Models
Section R
Extrapolations and Models
Adjustments
Data Validation
Allocation of FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
Exhaustiveness
Section R
Conceptual
P.1
-81.8
-0.3
8.2
7.9
0.0
0.8
0.0
0.0
0.0
0.0
0.0
0.8
0.0
-73.1
1,627.7
P.2
-58.3
26.1
-2.0
24.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-34.2
1,131.2
B.1g
-23.6
-26.4
10.2
-16.1
0.0
0.7
0.0
0.0
0.0
0.0
0.0
0.7
0.0
-39.0
496.5
3.24.5
Surveys and Censuses: The data classified under this category refers to the survey-
based production statistics. There is one survey which is used to compile part of Section R:
the Museums and Historical Sites survey which is compiled by the Living Conditions and
Culture Statistics Unit and is integrated in the libraries and museums section for S.11, S.14
and S.15 of NACE 91. Data are taken from News Release: ‘Museums and Historical Sites’.
3.24.6
Administrative Records: The data classified under this category refers to the data
obtained from administrative sources.
The Remote Gambling Companies’ accounts are
integrated into the national accounts in NACE 92 after being provided collectively by the
Balance of Payments Unit. Government data for NACEs 90, 91, and 93 is provided by the
Public Finance Unit. Two of the main sources for S.11 and S.14 include financial statements
derived from the Malta Financial Services Authority (MFSA) and fiscal data. These cover
the main companies related to the NACEs 90, 92 and 93 where from time to time fiscal data
is checked in light of new companies. Numerical evidence is available in Table 3.24.4.
238
The production approach
3.24.7
Consumption of fixed capital (CFC) perpetual inventory method (PIM) as part of
Extrapolation and Models: This data refers to estimates for CFC that are included in output of
non-market producers, in this case for S.13 government and S.15 NPISHs.
3.24.8
Other Extrapolations and Models: This covers all kind of estimates based on
calculation and fixed percentages of data from surveys, censuses, or administrative sources.
As regards NACE 90, an estimate for Maltese artists is carried out together with data derived
from concerts that are carried out on the Maltese Islands. Furthermore, an adjustment for
total expenditure on films that are shot in Malta and Gozo of which data are provided by the
Malta Film Commission (MFC) is done so as to estimate how much is spent on creative, arts
and entertainment activities connected to the film industry.
3.24.9
When data are not available from the fiscal data or MFSA for NACE 93, estimates
are made on the basis of the Employment and Training Corporation (ETC) employment data
and ratios derived from those companies with financial data. This extrapolation is done so as
to cover the companies that did not have available their data in the MFSA and fiscal data but
had their employment data available. Output of subsections Fitness facilities of NACE 93,
Lotto receivers and Casinos of NACE 92 is derived by applying P.1 per full-time equivalent
(FTE), intermediate consumption to output ratios, harmonised index of consumer prices
(HICP) growth rates of specific items, and ETC data. These referred to all the extrapolations
that were carried out for the private sector.
3.24.10 As regards the NPISHs sector for NACEs 90, 91, and 93, Non-Governmental
Organisations (NGOs) survey and Youth Organisations Survey (YOS) data are extrapolated
forward by applying ratios of P.2 per FTE or per number of organisations and adjusting
figures with the overall retail price index (RPI) growth rate. Refer to Table 3.24.4 for figures.
3.24.11 Data Validation as part of the Adjustments: Companies classified in Computer
programming, consultancy and related activities (NACE 62) in the Business Register (BR)
which hold a Class 4 licence from the Malta Gaming Authority (MGA) are deducted from the
remote gambling companies which are integrated in Gambling and betting activities (NACE
92) if these software companies result as being present amongst the internet betting accounts
which are collected by the Balance of Payments Unit. This is carried out so that to avoid
239
Gross National Income Inventory
double counting and to make sure that Class 4 companies as classified by the MGA are
excluded from NACE 92 but are being covered in NACE 62.
3.24.12 The Conceptual Adjustments were discussed in Sections 3.2 and 3.4.
3.24.13 N2 which covers activities of producers that avoid registration entirely as part of the
Exhaustiveness Adjustments. As regards NACE 92 which is composed of the private sector,
two adjustments are included for underground activities related to gambling. An adjustment
is added to output and GVA for underground 'tombola' and lottery tickets (prima estratta) by
unregistered establishments. For more information, refer to para. 3.24.31 and 3.24.32.
Output and intermediate consumption of the non-financial (S.11) and households (S.14)
sectors for Section R
3.24.14 Production accounts of households and non-financial corporations are calculated
separately for each of the activities listed in Table 3.24.5, which summarises the major
sources used for each activity.
240
The production approach
Table 3.24.5: Main data sources used to calculate S.11 and S.14 of Section R
Breakdown of the Arts, entertainment and recreation
categories
Source/s
90.01-90.04 Creative, arts and entertainment activities
-Film industry data from the Malta Film Commission
(MFC);
-Concert activities data from the National Account Unit,
NSO;
-MFSA annual reports;
-HICP from the Price Statistics Unit, NSO; and
-Quarterly ETC data.
91.01-91.04 Libraries, archives, museums and other
cultural activities
-Museums and Historical Sites survey conducted by the
Living Conditions and Culture Statistics Unit, NSO;
-HICP from the Price Statistics Unit, NSO; and
-Quarterly ETC data.
92.00 Gambling and betting activities
-HICP from the Price Statistics Unit, NSO.
92.00 Gaming parlours
-MFSA annual reports;
- fiscal data;
-Quarterly ETC data; and
-Number of gaming parlours from the Malta Gaming
Authority (MGA).
92.00 Casinos
-MFSA annual reports;
-Quarterly ETC data; and
-Gaming Duties from the MGA.
92.00 Internet betting
-Gaming Licences from the MGA;
-Remote Gambling Companies’ accounts from the
Balance of Payment Unit, NSO;
-NACE 62 financial data from National Accounts Unit,
NSO; and
-Quarterly ETC data.
92.00 Other gaming
-MFSA annual reports;
-Gaming Duties from the MGA; and
-Quarterly ETC data.
92.00 Lotto receivers
-Quarterly ETC data; and
-Data derived from actual financial data.
93.11-93.19 Sports activities
-MFSA annual reports;
- fiscal data;
-HICP from the Price Statistics Unit, NSO; and
-Quarterly ETC data.
93.12 Main sports association
-Annual report from the association;
-HICP from the Price Statistics Unit, NSO; and
-Quarterly ETC data.
93.13 Fitness facilities
-HICP from the Price Statistics Unit, NSO; and
-Quarterly ETC data.
93.21-93.29 Amusement and recreation activities
-MFSA annual reports;
- fiscal data;
-HICP from the Price Statistics Unit, NSO; and
-Quarterly ETC data.
93.29 Marinas
-MFSA annual reports;
- fiscal data; and
-Quarterly ETC data.
241
Gross National Income Inventory
NACE 90 Creative, arts and entertainment
3.24.15 ESA 2010, para. 3.86 states that the production of books, recordings, films etc. is a
two-stage process and is measured accordingly:
‘The output from the production of originals – an intellectual property product – is
measured by the price paid if sold, or, if not sold, by the basic price paid for similar
originals, its production costs (...) or the discounted value of future receipts expected
from using it in production.
The owner of this asset may use it directly or to produce copies in subsequent periods
(...) However, the sale of original is negative fixed capital formation’.
3.24.16 Artistic creation mainly refers to the activities of individual artists such as sculptors,
painters, writers and restoring of works of art. When looking at the Maltese context, it can be
observed that this industry experiences a lot of challenges and most of the time does not
allow artists to work on full-time basis. In fact, the majority of artists are part-timers. Only
as from year 2014 literature authors will start receiving royalty payments from public
libraries53.
3.24.17 Creative, arts and entertainment refers to an estimate of Maltese artists (individual
artists such as sculptors, painters, writers and restoring of works of art), output from concert
activities and film production with the latter referring to the films that were shot in Malta of
which data are provided by the MFC and adjusted for national accounts purposes.
3.24.18 Enterprises and individuals engaged in arts such as sculptors, painters, writers and
restoring of works of art activities are largely small operators. The latest data for NACE 90
was derived from Structural Business Statistics (SBS) survey of 2005. Output as measured in
SBS survey is inclusive of production of originals and fees, commissions, royalties etc. from
such activities. From this year onwards, ratios of 2005 were used to derive figures for
following years having ETC employment data as a source and adjusting the output with the
HICP growth rate of theatre fees. As from 2014 royalty payments from public libraries paid
to authors started to be included in output.
53
http://www.timesofmalta.com/articles/view/20141031/local/authors-to-be-paid-for-library-lending.542004
http://www.timesofmalta.com/articles/view/20150121/local/10-000-library-books-still-to-be-catalogued.552732
242
The production approach
3.24.19 Concert activities are also included. Estimates for output are derived from online
sources. Intermediate consumption is adjusted with that of concerts, which is estimated to be
about 50 per cent of the concerts’ turnover. Intermediate consumption is derived by applying
intermediate consumption to output ratio of 2005 and including intermediate consumption of
concerts.
3.24.20 Information regarding film production in Malta is provided by the MFC to the
National Accounts Unit on a quarterly basis. In national accounts, the expenditure incurred
by non-resident film makers on activities of resident artists, musicians, sculptors, painters,
stage-set designers is included. Expenditure by film makers on these activities is classified as
the output (and GVA) of these individuals. Not all film-makers provide detailed expenditure
spent in Malta regarding film production. However, where detailed expenditure is available,
a percentage ratio of expenditure on activities of resident artists, musicians, etc. and support
activities to performing arts are calculated and applied on total quarterly expenditure on filmproduction. Up to 2009 the ratio was about 15 per cent, whereas as from 2010 onwards this
ratio was adjusted to 18.8 per cent - an average derived from three main films which were
shot on the Maltese Islands. No intermediate consumption is calculated for film production.
3.24.21 Furthermore, the MFC which is responsible for the promotion of the film industry is
giving more support to local filmmakers through the launching of the ‘Malta Film Fund’ in
April 2015 for the development and production of Maltese qualifying productions (i.e. feature
films, short films, creative documentaries, high quality international TV drama series), to
encourage new and emerging talent. The fund is open to new and established filmmakers that
aim to promote Maltese storytelling, Maltese stories and Maltese cinema. However, Maltese
artists have a very restricted and limited budget to produce films that can compete with
foreign productions and in fact, most of the film productions are foreign-based which reflect
one of the main objectives of the commission that is position Malta as a global competitive
film destination. Since 2001 seventeen films were locally produced out of which five were
totally produced by Maltese film production houses, with the other twelve being produced in
close collaboration with other foreign film production companies.
Those films were
classified in Motion picture, video and television programme activities. Output is thus
covered through SBS survey data in Section J.
243
Gross National Income Inventory
NACE 91 Libraries, archives, museums and other cultural activities
3.24.22 The production account of Libraries, archives, museums and other cultural activities
(NACE 91) is calculated from a survey on museums conducted by the Living Conditions and
Culture Statistics Unit at the National Statistics Office (NSO). Services of libraries and
archives are provided by the government sector (S.13), the NPISHs (S.15), the households
sector (S.14) and the non-financial sector (S.11). In absence of annual information quarterly
output is estimated as the product of output per FTE employment of previous quarter of
previous year and FTE employment of the respective quarter and adjusted by the quarterly
HICP development of museums and historical sites. Intermediate consumption is estimated
using previous years ratio.
NACE 92 Gambling and betting activities
3.24.23 Gambling and betting activities (NACE 92) is made up of the following:

Gaming parlours;

Casinos;

Remote gambling operators;

Other gaming; and

Lotto receivers.
3.24.24 During the year 2010, gaming parlours were not operating due to regulatory issues.
However, the method used to calculate the output and intermediate consumption of parlours
includes taking the financial data of the company which covers more than half of the gaming
parlours. The other parlours are covered through fiscal data.
3.24.25 As regards casinos, it is important to note that turnover of these companies is
calculated as total bets placed less wins paid plus any other income earned. Turnover should
be net of gaming duty – gaming duty is found separately in financial statements of casinos.
Ratios of last actual financial data of a particular racing club were used to derive figures for
following years together with ETC employment data which was the only source data that was
available.
244
Output per FTE and employment were used to derive output while ratio
The production approach
intermediate consumption to output which was estimated at 28 per cent of output was used to
derive the intermediate consumption.
3.24.26 In absence of annual information, output for casinos is estimated by applying the
ratio of output of casinos per casino charges paid to the government of previous quarter of
previous year multiplied by the quarterly casino charges paid to the government of the current
quarter.
Intermediate consumption is estimated using previous years’ intermediate
consumption to output ratio.
3.24.27 Data regarding output and intermediate consumption incurred by internet betting
companies is obtained from the Balance of Payments Unit within the NSO. Output of remote
gambling companies is equal to bets less wins plus any other income.
3.24.28 An adjustment as part of Data Validation is carried out for remote gambling (NACE
92) where the software companies which belong to Computer programming, consultancy and
related activities (NACE 62) are deducted if these companies would be present in the data
collected on remote gambling companies by the Balance of Payments Unit. This is carried
out so that to avoid double counting and to make sure that Class 4 companies as classified by
the MGA are excluded from NACE 92 and are included in NACE 62.
3.24.29 The output and intermediate consumption of other gaming are derived from the
financial report available on the MFSA website where care is taken to adjust business
accounting concepts to national accounting concepts.
3.24.30 Information on the commission paid to lotto receivers used to be obtained from the
Department of Public Lotto (DPL), the former stated owned market producer of gambling
activities which is now privatised. Since no information was available from 2004 onwards, in
absence of actual data on lotto receivers, the output growth rate of privatised market producer
is used so as to derive the output of lotto receivers. The intermediate consumption to output
ratio is used to estimate the intermediate consumption and is assumed to be 10 per cent.
3.24.31 An Exhaustiveness Adjustment for producers deliberately not registering (type N2 Activities of producers that avoid registration entirely) has been made. Specifically, this
covers the sale of bingo tickets (tombolas) and lottery tickets (prima estratta) by unregistered
245
Gross National Income Inventory
establishments. The estimate of the sale of bingo tickets is based on the number of tombola
licence holders (286 in 2000; 343 in 1999), derived from the annual report of the former
DPL. The registered number of tombola licence holders was raised by an expert estimate to
cover all sellers of tombola tickets that are not registered with the DPL, and multiplied by an
average turnover per seller to yield total turnover. Finally, only 50 per cent of this estimate
was taken into consideration, as part of this turnover is covered by other institutional sectors,
namely NPISHs in fund-raising activities.
Intermediate consumption of these units is
estimated at 1 per cent of market output annually. The amount of licence fees actually paid,
have been added to this estimate of intermediate consumption, as reported within the annual
report of the DPL.
3.24.32 The estimate of the sale of prima estratta tickets was calculated by multiplying the
total number of unregistered sellers of such tickets, by the average price per ticket sold and
the average number of tickets sold in a given year. These variables were estimated by expert
assessment. From this total estimated turnover, an estimate of the winnings paid out was
deducted, as the market output of gambling and betting activities should be recorded net of
winnings paid out. Only 50 per cent of this estimate was taken into consideration, as part of
this turnover is covered by other institutional sectors. Intermediate consumption is estimated
at 5 per cent of total turnover (not output net of winnings). This is also based on expert
assessment.
NACE 93 Sports activities and amusement and recreation activities
3.24.33 Sports activities and amusement and recreation activities (NACE 93) includes the
provision of recreational, amusement and sports activities. NACEs 93.11 to 93.1954 are
based on fiscal data as the main source data, with those companies that do not have their
financial data in administrative records being worked as estimates based on ETC employment
so that all the industry would be covered. This ensures more coverage as regards actual data.
Output and intermediate consumption are derived after doing all the necessary calculations.
3.24.34 Fitness facilities (NACE 93.13) is based on the SPOs survey 2004. In absence of
survey data, output is derived by applying P.1 per FTE of previous year raised by HICP
growth rate of fitness centres and gymnasia services and multiplied by the FTE gainfully
54
Refer to Table 3.24.1 for NACE Description.
246
The production approach
occupied of 2010 which is available through ETC data. After deriving output, it is used to
derive an estimate for intermediate consumption by multiplying it by intermediate
consumption to output ratio which is equal to ratio derived from last Sport Organisations
(SPOs) survey that was carried out in 2004.
3.24.35 NACEs 93.21 to 93.2955 except for Marinas are based on administrative data as the
main source data, with those companies that do not have their financial data in administrative
data being worked as estimates based on ETC employment so that all the industry would be
covered. This ensures more coverage as regards actual data.
3.24.36 Marinas are worked out separately using the financial statements available on the
MFSA website. It refers to Other amusement and recreation activities (NACE 93.29) which
specifically includes operation of recreational transport facilities. For 2010, only one marina
had actual data available; for this reason an estimate for the other marinas was derived by
taking the ratio of output per FTE of this particular marina multiplied by the FTE of other
marinas whereas for the intermediate consumption, the ratio of intermediate consumption per
output was applied. The main sports association that forms part of NACE 93 is worked out
with actual data which is made available in the financial report which is published by the
association on an annual basis where detailed accounts are available.
Output and intermediate consumption of the general government (S.13) and NPISHs (S.15)
sectors for Section R
3.24.37 Government production accounts (output and intermediate consumption) for NACEs
90, 91, and 93 are compiled from the detailed revenue and expenditure reports of central
government.
For extra-budgetary units (EBUs) providing recreational, cultural and/or
sporting activities that are not part of central government, data are derived from preliminary
estimates which are based on data derived from the Financial Data Reporting System (FDRS)
and from estimates which are adjusted with audited financial statements when available.
3.24.38 Where NPISHs data for NACE 90 is not available through the NGOs survey or
YOS, ratio of cost of sales per FTE of previous year is adjusted with the overall RPI growth
rate and multiplied by the FTE employment of 2010. This applies for sections NGOs survey,
55
Refer to Table 3.24.1 for NACE Description.
247
Gross National Income Inventory
YOS, and NACE 90 with employment. For NACE 90 without employment, figures are
derived by taking ratio of cost of sales per organisation of previous year adjusted with the
overall RPI growth rate and multiplied by the number of organisations of that specific year.
3.24.39 As regards NACE 91, part of the NPISHs output and intermediate consumption data
that is the section on direct information is worked out through the Museums and Historical
Sites survey which is compiled by the Living Conditions and Culture Statistics Unit and is
integrated in the libraries and museums section. For NACE 91 without employment, figures
are derived by taking ratio of cost of sales per organisation of previous year adjusted by the
overall RPI growth rate and multiplied by the number of organisations of 2010.
3.24.40 NACE 93 NPISHs data for annual reports had to be extrapolated forward by taking
number of members per intermediate consumption of previous year multiplied by growth rate
of RPI development. Since the reference year when the NGOs survey was last carried out
was 2008, NPISHs data had to be extrapolated forward for section NGOs survey by
multiplying intermediate consumption of NGOs survey by overall growth rate of RPI. Data
for sections NACE 93 with employment and SPOs survey were derived by taking ratio of
intermediate consumption per FTE of previous year raised by overall RPI growth rate and
multiplied by the FTE of 2010. NPISHs data for football clubs’ estimate and NACE 93
without employment had to be extrapolated forward by taking number of organisations per
intermediate consumption of previous year multiplied by growth rate of RPI development.
3.25 Other service activities (NACE Rev. 2 Section S)
3.25.1
This section includes the activities of membership organisations, the repair of
computers and personal and household goods and a variety of personal service activities not
covered elsewhere in the classification. The activities of Other service activities (Section S)
are distinguished into three industries within the A*6456 classification: 94, 95, 96. NACE
Description is defined in Table 3.25.1. They are composed of a specific breakdown which
can be observed in the following table. On the left, a detailed breakdown of the section
56
Refer to Table 9.1.1.
248
The production approach
according to NACE57 Rev. 2 is made available while on the right, this breakdown is
explained in terms of the sections as applied to the Maltese context:
Table 3.25.1: Detailed breakdown with description of Section S (NACEs 94-96)
NACE 94 Activities of membership organisations; NACE 95 Repair of computers and personal and
household goods; NACE 96 Other personal service activities
NACE Rev. 2 breakdown
Maltese context breakdown
94.1 Activities of business, employers and professional membership organisations
94.11 Activities of business and employers
94.11 Activities of business and employers membership
membership organisations
organisations
94.12 Activities of professional membership
organisations
94.2 Activities of trade unions
94.20 Activities of trade unions
94.20 Activities of trade unions
94.9 Activities of other membership organisations
94.91 Activities of religious organisations
94.91 Activities of religious organisations
94.92 Activities of political organisations
94.92 Activities of political organisations
94.99 Activities of other membership
94.99 Activities of other membership organisations
organisations n.e.c.
n.e.c.
95.1 Repair of computers and communication
equipment
95.11 Repair of computers and peripheral
equipment
95.12 Repair of communication equipment
95.2 Repair of personal and household goods
95.21 Repair of consumer electronics
95.22 Repair of household appliances and home
95.11-95.29 Repair of computers and personal and
household goods
and garden equipment
95.23 Repair of footwear and leather goods
95.24 Repair of furniture and home furnishings
95.25 Repair of watches clocks and jewellery
95.29 Repair of other personal and household
goods
96.0 Other personal service activities
96.01 Washing and (dry-) cleaning of textile and
fur products
96.01 Washing and (dry-) cleaning of textile and fur
products
96.02 Hairdressing and other beauty treatment
96.02 Hairdressing and other beauty treatment
96.03 Funeral and related activities
96.03 Funeral and related activities
96.04 Physical well-being activities
96.04 Physical well-being activities
96.09 Other personal service activities n.e.c.
96.09 Other personal service activities n.e.c.
57
NACE is the acronym for “Nomenclature statistique des Activités économiques dans la Communauté
Européenne”.
249
Gross National Income Inventory
3.25.2
In 2010, Section S contributed to 1.1 per cent of total gross value added (GVA) of
the Maltese economy.
Table 3.25.2: Contribution of Section S to total economy, 2010
B.1g as a percentage of:
GDP (B.1*g)
Total
economy
%
GNI (B.5*5)
Total
economy
%
NACE
A*64
P.1
P.2
Million Euro
B.1g
Section S
%
B.1g Total
economy
%
94
36.0
14.4
21.6
34.5%
0.4%
0.3%
0.3%
95
7.9
3.6
4.3
6.9%
0.1%
0.1%
0.1%
96
73.9
37.2
36.7
58.6%
0.6%
0.6%
0.6%
S
117.8
55.2
62.6
100.0%
1.1%
0.9%
1.0%
3.25.3
Three institutional sectors contribute principally to the other service activities
section: the non-financial corporations sector (S.11), the households sector (S.14) and the
non-profit institutions serving households (NPISHs) sector (S15). The private sector (S.11
and S.14) accounted for 67.8 per cent while the NPISHs sector (S.15) amounted to 32.2 per
cent of other service activities (NACEs 94 to 96) (see Table 3.25.3).
Table 3.25.3: Section S (NACEs 94-96) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
S
19.5
0.0
0.0
65.9
32.4
117.8
10.5
0.0
0.0
32.4
12.3
55.2
94
3.6
0.0
0.0
0.0
32.4
36.0
2.1
0.0
0.0
0.0
12.3
14.4
95
2.3
0.0
0.0
5.5
0.0
7.9
1.0
0.0
0.0
2.5
0.0
3.6
96
13.6
0.0
0.0
60.3
0.0
73.9
7.4
0.0
0.0
29.8
0.0
37.2
Gross value added (Million Euro)
250
Gross value added (Percentage)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
S
9.0
0.0
0.0
33.5
20.1
62.6
14.3%
0.0%
0.0%
53.5%
32.2%
100.0%
94
1.5
0.0
0.0
0.0
20.1
21.6
6.8%
0.0%
0.0%
0.0%
93.2%
100.0%
95
1.3
0.0
0.0
3.0
0.0
4.3
30.0%
0.0%
0.0%
70.0%
0.0%
100.0%
96
6.2
0.0
0.0
30.5
0.0
36.7
16.9%
0.0%
0.0%
83.1%
0.0%
100.0%
The production approach
Section S process table: detailed explanation of the basis and adjustments for the compilation
of national accounts figures
3.25.4
The following paragraphs provide an explanation of the data which was used for the
compilation of the process tables. This information is translated into figures in Table 3.25.4
where it shows the various sources, extrapolations and adjustments that are added together to
produce final balanced figures.
Table 3.25.4: Extract of process tables 2010 for Section S in millions of Euro
Basis for national accounts figures
Section S
Surv. and Cens.
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total
Extrap+Models
Other
Total (Sources)
Extrapolations and Models
P.1
7.8
20.1
0.0
0.0
0.0
4.1
0.0
0.0
28.9
32.9
0.0
60.9
P.2
3.7
8.7
0.0
0.0
0.0
0.0
0.0
0.0
17.3
17.3
0.0
29.7
B.1g
4.1
11.5
0.0
0.0
0.0
4.1
0.0
0.0
11.6
15.7
0.0
31.2
Adjustments
Data Validation
Allocation of FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
Exhaustiveness
Section S
Conceptual
P.1
0.0
-0.9
0.6
-0.3
0.0
9.3
0.0
0.0
48.0
0.0
0.0
57.2
0.0
56.9
117.8
P.2
0.0
1.9
-2.1
-0.2
0.0
1.1
0.0
0.0
24.5
0.0
0.0
25.6
0.0
25.5
55.2
B.1g
0.0
-2.8
2.7
-0.2
0.0
8.1
0.0
0.0
23.5
0.0
0.0
31.6
0.0
31.5
62.6
3.25.5
Surveys and Censuses: The data classified under this category refers to the survey-
based production statistics. Figures are provided in Table 3.25.4. This mainly refers to
Repair of computers and personal and household goods (NACE 95) which is worked out
through SBS survey.
3.25.6
Administrative Records: The data classified under this category refers to the data
obtained from administrative sources. The main source which is used to derive data for
employers’ associations (NACE 94.11, S.11) and trade unions (NACE 94.20, S.15) is
251
Gross National Income Inventory
financial data which is made available after we would request the data to the Department for
Industrial and Employment Relations (DIER). NACE 94.91 (S.15) on churches is mainly
derived from financial accounts which are available after requesting them to the Archdiocese
of Malta. Two of the main sources for Other personal services activities (NACE 96) include
Malta Financial Services Authority (MFSA) financial statements and fiscal data. These cover
the main companies related to the referred NACEs where from time to time fiscal data is
checked in light of new companies. Another source is the Cooperatives Board which gives us
financial reports of cooperatives. Figures are available in Table 3.25.4.
Table 3.25.5: Main data sources used to calculate S.11 and S.14 of Section S (NACEs 94-96)
Breakdown of the Other service activities categories
94.11 Activities of business and employers membership
organisations
95.11-95.29 Repair of computers and personal and household
goods
96.01 Washing and (dry-) cleaning of textile and fur products
96.02-96.04 Hairdressing and other beauty treatment / Physical
well-being activities
96.03 Funeral and related activities
96.09 Other personal service activities n.e.c.
3.25.7
Source/s
-Annual reports from the Department of Industrial
and Employment Relations (DIER);
-Financial data from private companies;
-Registrar of Trade Unions and Employers’
Association from the government gazette; and
-Quarterly ETC data.
-SBS survey; and
-Quarterly ETC data.
-MFSA annual reports;
-fiscal data;
-HICP from the Price Statistics Unit, NSO; and
-Quarterly ETC data.
-Expenditure by tourists on hairdressing from the
National Accounts Unit, NSO;
-HICP from the Price Statistics Unit, NSO;
-Quarterly ETC data; and
-Quarterly population data from the Population and
Tourism Statistics Unit, NSO.
-HICP from the Price Statistics Unit, NSO;
-Quarterly ETC data; and
-Quarterly deaths data.
-HICP from the Price Statistics Unit, NSO;
-Quarterly ETC data; and
-Yearly population data from the Population and
Tourism Statistics Unit, NSO.
Consumption of fixed capital (CFC) perpetual inventory method (PIM) as part of
Extrapolation and Models: This data refers to estimates for CFC that are included in output of
non-market producers, in this case for S.15 NPISHs.
3.25.8
Other Extrapolations and Models: This covers all kind of estimates based on
calculation and fixed percentages of data from surveys, censuses, or administrative sources.
The NPISHs sector (S.15) which refers to the NACE subdivisions (94.12, 94.20, 94.91, 94.92
252
The production approach
and 94.99)58 consists of subsections which depend on annual reports and surveys. In absence
of such information for 2010, data had to be adjusted with the overall retail price index (RPI)
growth rate, and extrapolated forward using intermediate consumption per full-time
equivalent (FTE), member, student, and/or organisation ratios, population estimates together
with the Employment and Training Corporation (ETC) employment data where applicable.
Examples of these subsections include amongst others political clubs, Youth Organisations
Survey (YOS), convents, monasteries, and other religious organisations.
3.25.9
Conceptual Adjustments were discussed in Sections 3.2 and 3.4.
3.25.10 N2 which covers activities of producers that avoid registration entirely as part of the
Exhaustiveness Adjustments: This refers to prostitution as an illegal activity, part of Other
personal service activities n.e.c. (NACE 96.09). For more information, refer to para. 3.25.26
to 3.25.28.
3.25.11 N5 which covers the registered entrepreneurs not surveyed as part of the
Exhaustiveness Adjustments: This refers to Hairdressing and other beauty treatment (NACE
96.02) and Physical well-being activities (NACE 96.04). The output of hairdressing, beauty
salons and physical well-being activities is based the Household Budgetary Survey (HBS)
data, tourist expenditure and is extrapolated using population statistics in case of resident
expenditure and the harmonised index of consumer prices (HICP). Tourist expenditure data
are available on a quarterly basis.
Output and intermediate consumption of the non-financial (S.11) and households (S.14)
sectors for Section S
NACE 94 Activities of business and employers membership organisations
3.25.12 The main sources used to measure output and intermediate consumption for
Activities of business and employers membership organisations are financial statements of
the respective employers’ organisations and other professional organisations.
3.25.13 Output and intermediate consumption of the largest employers` associations (which
in 2010 covered 89.2 per cent of the subscribed members) are calculated using information
58
For NACE Description refer to Table 3.25.1.
253
Gross National Income Inventory
from their financial statements, which are provided to the National Accounts Unit by the
DIER. Output of the rest of the employers’ associations is estimated as the product of the
market output per member (financial statements) and the number of members (without
financial information):
Market output (P.1) = Market output per member * Number of members
and as the product of the market output per FTE (financial statements) and FTE employment,
depending whether the number of members or the FTE employment is available for those
organisations which an estimate is needed:
Market output (P.1) = Market output per FTE * FTE employment
3.25.14 The number of members is taken from the Registrar of Trade Unions and
Employers’ Association which is available online with the publication of the government
gazette. Intermediate consumption is estimated using the ratio of intermediate consumption
to output from these financial statements.
3.25.15 Output and intermediate consumption of various private organisations are covered
by financial statements while those organisations such as other foreign chamber of
commerce, other business and employers’ associations without any financial reports available
are estimated by taking the product of market output per FTE (financial returns) and their
FTE employment and for those without available employment are estimated by taking the
product of the market output per member (financial statements) and the number of members
(without financial information). Intermediate consumption is estimated by taking the ratio of
intermediate consumption to output from the information already available and the output
derived from previous estimates.
NACE 95 Repair of computers and personal and household goods
3.25.16 Output and intermediate consumption for Repair of computers and personal and
household goods (NACE 95) are derived directly from the Structural Business Statistics
(SBS) survey.
254
The production approach
3.25.17 Following the recommendations of the GNP Committee Task Force on Distribution
(CPNB/205) which was held in Luxembourg in 1996, the HBS results for repair of computers
and personal and household goods were analysed so as to observe the effect of using the
expenditure data sources over the production data sources, with the latter being the current
method used by integrating SBS survey data. This was also analysed in order to address
point 3.25 of the ESA 2010 Gross National Income (GNI) Inventory Guide (GNIC/280)
where it specifically asked whether in Section S the repairs of household goods (NACE 95)
are estimated on the basis of or validated against expenditure.
3.25.18 One of the recommendations made by the GNP Committee was to compare HBS
data against alternative sources for the purpose of validating and reconciling HBS and nonHBS based national accounts estimates. This was carried out for Repair of personal and
household goods (NACE 95). When taking into consideration the items derived from the
HBS, they covered all subsectors of NACE 95 and thus a comparison could be made with
SBS survey data.
3.25.19 As at 2008, the HBS results indicated that the expenditure repair of computers and
personal and household goods amounted to 16.2 million Euro. On the other hand SBS
Survey results for 2008 indicate an output of 7.8 million Euro for NACE 95. However,
repairs are also reported as secondary output of enterprises operating mainly in Wholesale
and retail trade (19 per cent) and Telecommunications (20 per cent). Supply and use table
(SUT) results indicate the supply in the total economy in 2008 amounted to 15.7 million
Euro. This implies that expenditure based sources may only be used for cross-checking as in
such case it may give rise to double counting given that the secondary output generated by
other industries may be substantial.
255
Gross National Income Inventory
Table 3.25.6: Analysis of HBS 2008 results with SBS survey 2008 results for Section S (NACE 95)
HBS 2008 for NACE 95
HBS 2008 data at item level for NACE 95
Maintenance and repair services of office and accounting machinery
Total expenditure
(in Euro)
6,464
Maintenance and repair services of computing machinery
2,678,768
Maintenance and repair services of professional radio, television, sound and video equipment
5,843,491
Repair of garments (darning, mending, etc.)
82,767
Repair and hire services of footwear
355,422
Repair services of furnishing
433,214
Repair services of garment and household textile articles
1,386,953
Repair services of small electrical household goods
930,979
Repair services of fridges and freezers
915,610
Repair services of electric cookers
244,699
Repair services of washing machines
3,109,743
Repair services of air conditioning
637,419
Repair services of gas cookers
363,177
Repair services of other household non electric appliances
568,784
Repair services of household non electric utensils
23,247
Repair services of garden tractors, lawn mowers and other major tools
243,255
Repair services of bicycles
46,407
Repair services of audio-visual equipment
344,749
Repair services of photographic equipment
132,310
Repair services of musical instruments
85,961
Repair services of other articles of sport and camping
1,711
Repair services of electric appliances for personnel care
257,723
Repair services of watches, clocks
246,456
Repair services of jewellery
131,371
Repair services of leather and travel articles
13,044
Total (including VAT)
19,083,724
Total (excluding VAT)
16,172,647
SBS survey 2008 data for NACE 95
Output at basic prices
7,880,186
NACE 96 Other personal service activities
3.25.20 Production and generation of income accounts have been estimated for the following
economic activities under the industry NACE 96:
a) NACE 96.01 Washing and (dry-) cleaning of textile and fur products;
256
The production approach
b) NACE 96.02 and NACE 96.04 Hairdressing and other beauty treatment; Physical
well-being activities;
c) NACE 96.03 Funeral and related activities; and
d) NACE 96.09 Other personal service activities n.e.c.
3.25.21 The market output and intermediate consumption of dry cleaning services (NACE
96.01) is partly calculated by financial statements. For those enterprises for which no direct
information is available, output is grossed up on the basis of ratios from financial statements
multiplied by employment from the ETC database. Thus, where financial statements are not
available for the rest of the companies, output is estimated using the employment data. Total
employment for this activity is obtained from the ETC database.
3.25.22 The output of hairdressing, beauty salons and physical well-being activities
(included in N5) is based on HBS data, tourist expenditure and is extrapolated using
population statistics in case of resident expenditure and the HICP. Tourist expenditure data
are available on a quarterly basis.
3.25.23 Intermediate consumption is estimated using the ratios from the financial statement
of a particular company for year 2003. It also incorporates NACE 96.04 which refers to
services such as Turkish baths, sauna and steam baths, solarium, reducing and slimming
salons, massage salons.
3.25.24 The main source for NACE 96.03 is the adjusted HBS data. This adjustment was
derived as the product of the number of deaths in a given year by an estimated average cost of
a funeral and was necessary due to under representativeness in HBS results. Output is
extrapolated as the product of cost per funeral adjusted with the overall HICP and the number
of death persons each year. For establishments providing funeral services, intermediate
consumption is estimated by a guess estimate of 32.5 per cent to total output of this activity.
3.25.25 Estimates for output and intermediate consumption of NACE 96.09 are derived from
SBS surveys 2004 and 2005, with the latter figures extrapolated forward using ETC
employment data and growth rate of HICP of Other services n.e.c.
257
Gross National Income Inventory
3.25.26 An Exhaustiveness Adjustment of type N2 which covers activities of producers that
avoid registration entirely is included in NACE 96. Malta estimates prostitution from the
supply-side. In the case of the Maltese context, data sources are very limited and do not fit
national accounts purposes. For this reason, it was not possible to make a separate estimate
for different types of prostitution (e.g. street, brothel, apartment, club) as requested by the
GNIC/230 on illegal activities in national accounts. The same situation applies for the share
consumed by resident and non-resident prostitutes.
3.25.27 Output estimates for prostitution are derived from calculations which were based on
population figures, the average number of prostitutes and statistics of other European
countries. An estimate was included for the production costs, such as the purchases of
clothes, cosmetics, and other expenses of prostitutes and these costs of this activity were
estimated to be about 20 per cent of the total output earned by prostitutes and were reported
as intermediate consumption.
3.25.28 The European Network for HIV/STD Prevention in Prostitution provides data at
country level. This information was used to derive estimates for Malta based on the average
number of prostitutes in these countries due to lack of information from local sources.
According to this information it was estimated that 0.11 per cent of the population may be
engaged in prostitution. This ratio was applied to the Maltese population in order to derive
the number of prostitutes in Malta and their likely earnings.
258
The production approach
Table 3.25.7: Scale of prostitution in Europe
Country
Population
Population
Austria (Vienna)
million
8 (2 )
unknown (6,000)
(5,400)
Belgium
million
10
12,000
5,500
Denmark
million
5
6,000
2,000
France
million
59
Finland
million
6
4,000
1,800
Germany
million
80
300,000
150,000
Greece
million
11
10,500 –15,000
6,000 –10,000
Holland
million
16
25,000
17,000
Ireland
million
4
Italy
million
58
60,000
40,000
450,000
300
300
3,000
600
Luxembourg
Number of prostitutes
Of which migrants
(Norway)
million
4.5
Portugal
million
10.5
Spain
million
40
Sweden
million
8.5
2,500
700
UK
million
60
80,000
20,000
Blank cells indicate the figure is unknown, or an accurate estimate has not been arrived at.
Source: http://people.exeter.ac.uk/watupman/undergrad/aac/scale.htm
Output and intermediate consumption of the NPISHs (S.15) sector for Section S (no
benchmark years mentioned)
3.25.29 The NPISHs sector (S.15) accounts for 93.2 per cent of the gross value added of
NACE 94. This sector covers Activities of professional membership organisations (NACE
94.12), Activities of trade unions (NACE 94.20), Activities of religious organisations (NACE
94.91), Activities of political organisations (NACE 94.92) and Activities of other
membership organisations n.e.c. (NACE 94.99). Total output is derived using the sum of
costs approach. Non-market output is estimated as a residual after deducting market output
from total output.
3.25.30 Output and intermediate consumption of the professional organisations are partly
based on annual accounts and partly on the Non-Governmental Organisations (NGOs)
survey. In absence of annual data, extrapolations are based on the number of members,
employment data and the overall growth in the RPI.
259
Gross National Income Inventory
3.25.31 Activities of trade unions covers around 32 employee trade unions, where output,
intermediate consumption of the major five trade unions (which cover 94.8 per cent of the
subscribed members) are calculated using information from their financial statements filed at
the Registrar of Trade Unions within the DIER. The per capita (members) information is
used to derive estimates for other trade unions for which no financial information is available.
Market output (P.1) for other trade unions for which no financial information is available, is
estimated as the product of the market output per member (financial statements) and the
number of members belonging to trade unions with no financial data available, whereas
intermediate consumption (P.2) is estimated as the product of the intermediate consumption
per member (financial statements) and the number of members within the trade unions
without financial information available.
3.25.32 Activities of religious organisations comprise convents, monasteries, churches and
religious organisations are mainly covered by the financial statements.
In absence of
financial statements and surveys, an estimate is done to calculate the total output and
intermediate consumption for other religious organisations using employment as an indicator.
Market output is assumed to be zero as there is no indication about what type of market
output it is produced by these organisations and is considered to be negligible. Non-market
output is calculated as a residual after deducting market output.
3.25.33 Activities of political organisations (NACE 94.92) includes headquarters of the two
major political parties and their branches around Malta and Gozo.
Output of political
organisations is estimated by applying a set of estimates for costs of production based on a
benchmark year.
3.25.34 In absence of NGOs surveys, Youth Organisations Survey (YOS) and financial
statements, output and intermediate consumption of other membership organisations (NACE
94.99), are extrapolated forward using FTE employment and the intermediate consumption
per FTE adjusted with overall RPI growth rate.
260
The production approach
3.26 Activities of households as employers; undifferentiated goods - and
services - producing activities of households for own use (NACE Rev.
2 Section T)
3.26.1. This section includes the activities of households as employers of domestic
personnel and the undifferentiated subsistence goods-producing and services-producing
activities of households. The activities of Section T are distinguished into one industry
within the A*6459 classification: NACEs60 97-98 where NACE 97 refers to Activities of
households as employers of domestic personnel and NACE 98 refers to Undifferentiated
goods- and services-producing activities of private households for own use.
Table 3.26.1: Contribution of Section T to total economy, 2010
B.1g as a percentage of:
NACE
A*64
P.1
P.2
B.1g
Million Euro
GDP (B.1*g)
Total
economy
%
B.1g Total
economy
%
Section T
%
GNI (B.5*5)
Total
economy
%
97-98
18.0
0.3
17.7
100.0%
0.3%
0.3%
0.3%
T
18.0
0.3
17.7
100.0%
0.3%
0.3%
0.3%
3.26.2. This section is made up of the households sector (S.14) only which in terms of its
contribution to total gross value added (GVA) of the Maltese economy represents 0.3 per cent
(see Table 3.26.1).
Table 3.26.2: Section T (NACEs 97-98) by institutional sector for 2010
Output (Million Euro)
Intermediate consumption (Million Euro)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
T
0.0
0.0
0.0
18.0
0.0
18.0
0.0
0.0
0.0
0.3
0.0
0.3
97-98
0.0
0.0
0.0
18.0
0.0
18.0
0.0
0.0
0.0
0.3
0.0
0.3
Gross value added (Million Euro)
Gross value added (Percentage)
NACE
Division
S.11
S.12
S.13
S.14
S.15
Total
S.11
S.12
S.13
S.14
S.15
Total
T
0.0
0.0
0.0
17.7
0.0
17.7
0.0%
0.0%
0.0%
100.0%
0.0%
100.0%
97-98
0.0
0.0
0.0
17.7
0.0
17.7
0.0%
0.0%
0.0%
100.0%
0.0%
100.0%
59
Refer to Table 9.1.1.
NACE is the acronym for “Nomenclature statistique des Activités économiques dans la Communauté
Européenne”.
60
261
Gross National Income Inventory
Section T process table: detailed explanation of the basis and adjustments for the compilation
of national accounts figures
3.26.3. The following information provides an explanation of the data which was used for
the compilation of the process tables. This information is translated into figures in Table
3.26.3 where it mainly shows the various adjustments that are added together to produce final
balanced figures.
Table 3.26.3: Extract of process tables 2010 for Section T in millions of Euro
Basis for national accounts figures
Section T
Surv. and Cens.
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total
Extrap+Models
Other
Total (Sources)
Extrapolations and Models
P.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
P.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
B.1g
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Adjustments
Data Validation
Allocation of
FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
Exhaustiveness
Section T
Conceptual
P.1
0.0
0.0
0.0
0.0
18.0
0.0
0.0
0.0
0.0
0.0
0.0
18.0
0.0
18.0
18.0
P.2
0.0
0.3
0.0
0.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.3
0.3
B.1g
0.0
-0.3
0.0
-0.3
18.0
0.0
0.0
0.0
0.0
0.0
0.0
18.0
0.0
17.7
17.7
3.26.4. Allocation of financial intermediation services indirectly measured (FISIM) as part
of the Adjustments: Conceptual Adjustments are (regular) adjustments to bring basic data
into line with ESA 2010 definitions.
3.26.5. Conceptual Adjustments were discussed in Sections 3.2 and 3.4.
3.26.6. N1 which covers activities of producers who fail to register in order to avoid tax and
social security obligations as part of the Exhaustiveness Adjustments. These are often small
producers with turnovers which exceed the thresholds above which they should register their
262
The production approach
income. This refers to Activities of households as employers of domestic personnel (NACE
97).
Output and intermediate consumption of the households (S.14) sector for Section T
3.26.7. Supply-side sources are not available.
Even the Employment and Training
Corporation (ETC) employment database is not considered reliable for this activity. It is a
known fact that there are several self-employed workers who provide services related to this
activity but who fail to register. These include mainly maids, who offer their services to
households and are paid per hour. These are normally employed for a few hours a week. It is
assumed that workers in this section are all self-employed. Therefore all the expenditure by
households on domestic help is the income earned by all these workers.
3.26.8. Estimates are based on expenditure sources these being the Household Budgetary
Surveys (HBS) of 2000 and 2008. From the HBS the following items were taken into
consideration:
 Supply services of domestic help personnel (e.g. butlers, babysitting);
 Employed persons for domestic help (maid, cooks, governesses); and
 Gardening services not in connection with co-proprietor charges.
Table 3.26.4: Main data sources used to calculate S.11 and S.14 of Section T
Breakdown of the Activities of households as employers of
domestic personnel categories
Source/s
97.00 Activities of households as employers of domestic
personnel
-HBS from the Methodology and Research Unit; and
-HICP from the Price Statistics Unit.
3.26.9. For the following years figures were derived by taking the harmonised index of
consumer prices (HICP) growth rate of domestic services and household services and taking
2008 as fixed since latest HBS refers to 2008. A mark-up of 5 per cent was included to
account for the increased use of such service since more persons are making use of domestic
personnel.
3.26.10. Intermediate consumption for these types of activities is assumed to be negligible
since all the cleaning equipment and materials are generally provided by the household
263
Gross National Income Inventory
employing the person. Since cleaning equipment is assumed to be supplied by households,
no estimate for consumption of fixed capital (CFC) is required.
3.27 Activities of extraterritorial organisations and bodies (NACE Rev. 2
Section U)
3.27.1
In the assessment of a nation's gross domestic product, extraterritorial organisations
are irrelevant because, by definition, they are not part of the economic territory of that nation
(ESA 2010, para. 2.06). In contrast, the compensation of employees earned by residents from
employment at extraterritorial organisations is recorded in gross national income.
3.28 Taxes on products, including VAT
3.28.1
The main data sources for the taxes on products are the:

Departmental Accounting System (DAS) for the cash data;

Treasury Department accruals templates; and

Audited accounts of the extra-budgetary units (EBUs) that generate taxes.
3.28.2
All types of taxes have been classified under different categories, each coded by the
National Statistics Office (NSO) following the ESA 2010 standard coding:
Value added tax (VAT)
Import duties
Taxes on imports excluding VAT and duties
Taxes on products except VAT and import duties
3.28.3
D.211
D.2121
D.2122
D.214
Taxes on products (D.21) for 2010 totalled 827.7 million Euro; of which 477.1
million Euro were proceeds from VAT (D.211), 339.0 million Euro from ‘taxes on products
except VAT and import taxes’ (D.214) and 11.6 million Euro from ‘import duties’. ‘Other
taxes on production’ (D.29) added up to 37.7 million Euro. Other taxes on production and
imports will be explained further in Section 4.8.
264
The production approach
Table 3.28.1: National tax list for taxes on products for 2010, in thousands of Euro
Taxes on products
ESA
Value added tax
D211
43
Departmental Accounting System (DAS)
Customs and excise tax
D211
33
Departmental Accounting System (DAS)
Value added tax
D211
482,462
Departmental Accounting System (DAS)
Refund of VAT
D211
-1,398
Departmental Accounting System (DAS)
Accruals adjustment
D211
-4,078
Time adjusted cash method (+1 month)
Total value added type taxes
D211
477,062
AD VAL - Import duty
D2121
11,575
D2121
11,575
D2122
0
D2122
0
Total import duties
Levy on imported goods
Total taxes on imports excluding VAT and duties
TOTAL
Data Source
Departmental Accounting System (DAS)
Not applicable
Excise levies - Machine made cigarettes
D214
68,204
Departmental Accounting System (DAS)
Excise levies - Beer
D214
1,164
Departmental Accounting System (DAS)
Excise levies - Spirits
D214
8,730
Departmental Accounting System (DAS)
Excise levies - Petroleum
D214
91,708
Departmental Accounting System (DAS)
Excise levies - Tobacco
D214
1,807
Departmental Accounting System (DAS)
Excise levies - Mobile telephony services
D214
2,509
Departmental Accounting System (DAS)
Excise duties - Electricity
D214
1,788
Departmental Accounting System (DAS)
Excise duties - Cement
D214
254
Departmental Accounting System (DAS)
Motor vehicle registration tax
D214
37,603
Departmental Accounting System (DAS)
Duty on documents - Immoveables
D214
45,886
Departmental Accounting System (DAS)
Duty on documents - Shares
D214
1,526
Departmental Accounting System (DAS)
Duty on documents - Emphy grants
D214
3,159
Departmental Accounting System (DAS)
Duty on documents - Documents
D214
239
Departmental Accounting System (DAS)
Duty on documents - Part and exchange
D214
615
Departmental Accounting System (DAS)
Duty on documents - Insurance policy
D214
13,212
Departmental Accounting System (DAS)
Duty on documents - Penalties on VAT
D214
0
Departmental Accounting System (DAS)
Sale of number plates - Government
D214
5
Departmental Accounting System (DAS)
Sale of number plates - Households
D214
899
Departmental Accounting System (DAS)
Administration charge - Test motor vehicles
D214
97
Departmental Accounting System (DAS)
Gaming taxes
D214
45,184
Departmental Accounting System (DAS)
Eco-contribution
D214
10,192
Departmental Accounting System (DAS)
Good causes fund
D214
1,020
Departmental Accounting System (DAS)
Refund of entertainment duty, stamp duty, etc.
D214
-352
Departmental Accounting System (DAS)
Refund of licences at licences and testing
department
D214
-471
Departmental Accounting System (DAS)
Lotteries and Gaming Authority
D214
1,874
Financial Data Reporting System (FDRS)
Accruals adjustment
D214
2,171
Treasury Department accruals templates
D214
339,023
Total taxes on products
265
Gross National Income Inventory
D.211 Value-added tax (VAT)
3.28.4
VAT is a tax on products, which producers are required to charge on the goods and
services they sell. Intra-community acquisitions of goods by small undertakings, wholly
exempt businesses and non-taxable legal persons in principle are not chargeable to tax, as
long as the total amount of acquisitions during a calendar year does not exceed the threshold
of 10,000 Euro.
3.28.5
The main method for recording the VAT receipts is the time-adjusted cash. The
time adjusted cash method is applied for VAT (D.211), Income tax (D.51) and Social security
contributions (D.61).
These cover around 80.2 per cent of the total taxes received by
government. The other taxes are recorded on a cash basis and are adjusted for accruals using
the Treasury’s accruals template, which are based on the realisable debtors’ balances as
recorded on the books of the tax authorities.
3.28.6
The Public Finance Unit has implemented the revision necessary for the adoption of
Council Regulation 2516/2000 (recording of taxes and social contributions) in 2008.
Following a thorough exercise, Eurostat approved the time-adjustment of time t+1 month for
VAT. The 1-month period is an average time difference between the activity and the cash
receipt.
3.28.7
The unit obtains the data from the Departmental Accounting System (DAS), checks
it through a comparison with previous years and with the economic scenario, and then
compiles the time-adjusted cash. The time adjusted cash method has been applied starting
from 1995.
3.28.8
The changes in the time adjusted cash are:
VAT is adjusted by time t+1 month:
Q1: removing January and including April
Q2: removing April and including July
Q3: removing July and including October
Q4: removing October and including January
Annual for year t-1: difference between January t-1 and January t+1
266
The production approach
3.28.9
Motor vehicle registration tax is recorded under ‘Taxes on products except VAT and
import taxes’ (D.214). Cash data for this tax is obtained from the DAS and adjusted with the
figures reported in Treasury Department accruals templates.
3.29 Subsidies on products
3.29.1
Subsidies on products are divided into two components:

import subsidies (D.311); and

other subsidies on products (D.319).
3.29.2
In Malta there are no import subsidies, whilst subsidies on products totalled 18.9
million Euro in 2010. All subsidies are obtained from government accounts and financial
statements. For 2010, the major beneficiaries of these subsidies were the local cost airlines,
and the agricultural sector.
Table 3.29.1: Beneficiaries of subsidies on products for 2010, in thousands of Euro
Classification
D.31
Subsidies on products
D.311
Import subsidies
D.319
Other subsidies on products
Gozo - Malta Transport of Agricultural Products
Data source
18,921
0
18,921
70
Departmental Accounting System (DAS)
Subsidy to low cost airlines
12,693
Agriculture support scheme
5,428
Departmental Accounting System (DAS)
730
Departmental Accounting System (DAS)
Food subsidies
3.29.3
TOTAL
Malta Tourism Authority (MTA)
In the government's budget for 2011, it was announced that the government will be
providing a grant to incentivise the public to buy a new, more environment-friendly car for
their personal use and at the same time reduce the number of old cars from the road. Data for
the car scrap scheme is incorporated into ‘Programmes and Initiatives’ account number 5404,
related with a group of expenditure reporting schemes. Since account 5404 is recorded under
ESA D.75 and the car scrap scheme should be recorded under ESA D.31, the officer at the
Ministry of Finance Corporate Services Directorate, provides us with a breakdown of this
item in order to be able to extract the amount relating to the car scrap scheme. This treatment
follows the recommendation of the Gross National Income (GNI) Committee on the
Treatment of Car Scrap Schemes (GNIC/232).
267
Gross National Income Inventory
3.29.4
For the budgetary central government (BCG), the recording of subsidies is
supplemented by any accruals reported in the treasury accrual templates. For extra-budgetary
units (EBUs), data are reported as accrual-based.
268
CHAPTER 4
The income approach
4.0
4.0.1
Gross domestic product according to the income approach
The income approach provides estimates of gross domestic product (GDP) and its
‘income’ component parts at current market prices. This approach does not provide an
independent estimate of GDP, since operating surplus is derived as a residual.
4.1
4.1.1
The reference framework
The reference framework for GDP according to the income approach is the
calculation of gross value added from the summation of all income earned by resident
individuals or corporations from the production of goods and services in a given time period.
These income components are presented by institutional sector in Table 4.1.1 below and are
compensation of employees (D.1), taxes on production and imports (D.2) less subsidies on
production and imports (D.3) and gross operating surplus (B.2g) and mixed income (B.3g).
Gross operating surplus in turn is broken down into net operating surplus (B.2n+B.3n) and
consumption of fixed capital (K.1).
Table 4.1.1: Gross domestic product, income approach components, 2010, in millions of Euro
ESA 2010 Code
Transaction
S.11
S.12
S.13
S.14
S.15
Total
D.1
Compensation of employees
1,555.8
225.9
855.1
133.1
75.4
2,845.3
B.2g
Gross operating surplus
1,913.8
225.5
144.2
257.6
11.3
2,552.4
B.3g
Mixed income
-
-
-
-
-
409.1
D.2
Taxes on production and imports
-
-
-
-
-
865.4
D.3
Subsidies
-
-
-
-
-
72.6
B.1g
Gross domestic product
-
-
-
-
-
6,599.5
4.1.2
Compensation of employees (D.1) is the total remuneration in cash or in kind,
payable by an employer to an employee, in return for work done during the accounting
269
Gross National Income Inventory
period. It has two main components, which are (i) wages and salaries payable in cash or in
kind, and (ii) employers’ social contributions. The calculation of compensation of employees
is described in detail in Section 4.7.
4.1.3
Taxes on production and imports (D.2) are taxes levied by general government or by
institutions of the European Union (EU) relating to the production and import of goods and
services, the employment of labour, the ownership or use of land, buildings or other assets
used in production. These are described in Section 4.8.
4.1.4
Subsidies on production (D.3) are current unrequited payments that the Maltese
government, or institutions of the EU, make to resident producers. These are subsidies given
independent of the quantity or value of the goods and services produced or sold. These are
described in Section 4.9.
4.1.5
Gross operating surplus (B.2g) is the balancing item in the generation of income
account and is described in Section 4.10. It represents the income which the units obtain
from their own use of their production facilities and is measured as value added less
compensation of employees less taxes on production payable plus subsidies receivable on
production. For non-market production, gross operating surplus is equal to the consumption
of fixed capital. Mixed income (B.3g) is the term used for the generation of income by
unincorporated enterprises (sole traders) owned by members of households and in which the
owner also works without receiving a wage or salary.
4.1.6
The target is to measure the addition to current economic activity as defined by gross
value added (GVA). Therefore, unrequited payments to households such as unemployment
benefits, children’s allowances, or government pensions are not included. Although such
transfer payments provide residents with money to spend, the source of such income is not
the production of goods and services, but, for example, taxes and national insurance
contributions, transfer payments redistribute existing incomes and do not represent any
addition to current economic activity.
4.1.7
For Malta, the income approach does not provide an estimate of GDP that is
independent from the output and expenditure approaches measures.
Compensation of
employees, net taxes on production and consumption of fixed capital are all calculated
270
The income approach
directly from source data. However, net operating surplus is derived as a residual after
deducting compensation of employees, taxes on production and imports and consumption of
fixed capital and adding subsidies from GDP as derived in the output approach.
The
distribution of these variables by NACE61 (refer to Chapter 9, para. 9.1.1) section level is
shown in Table 4.1.2.
Table 4.1.2: Income approach components of GVA by NACE Section, 2010, in millions of Euro
c
NACE Section
D.1
D.29
D.39
B.2g
A
28.4
2.3
28.0
93.4
B
c
c
c
c
C
361.0
2.0
0.8
387.4
D
c
c
c
c
E
c
c
c
c
F
122.1
3.2
0.1
145.1
G
294.5
6.8
0.2
317.1
H
181.4
1.4
17.7
181.1
I
160.4
2.7
0.0
109.4
J
123.1
4.3
4.7
197.1
K
225.9
0.6
0.0
225.5
L
5.6
1.5
2.1
342.0
M
135.2
3.5
0.1
182.5
N
139.1
1.9
0.0
74.4
O
299.5
0.0
0.0
55.0
P
300.2
1.8
0.0
34.2
Q
273.8
0.9
0.0
96.4
R
98.7
1.4
0.0
396.4
S
31.2
1.9
0.0
29.6
T
0.0
0.0
0.0
17.7
Total
2,845.3
37.7
53.7
2,961.5
Confidential
4.1.8
Table 4.5.1 shows that overall for all the income approach variables and institutional
sectors, the most important sources are Administrative Records. From this table, it is clear
that the income approach is not an independent one, as gross operating surplus is derived as a
residual and classified as a balancing item in the process tables for this approach.
Consumption of fixed capital (CFC), which is a component of gross operating surplus is
measured independently and is described further below in Section 4.12.
61
Statistical classification of economic activities in the European Community.
271
Gross National Income Inventory
4.1.9
Table 4.7.1 presents greater detail on the main independently collected variable of
the income approach – compensation of employees. For the non-financial institutional sector
(S.11) and households sector (S.14) the predominant source for compensation of employees
(D.1) are Surveys and Censuses, of which the Structural Business Statistics (SBS) survey
(Chapter 10, para. 10.1.2) provides 50 per cent of the coverage. The remaining 4.7 per cent
covered by Surveys and Census include the 2010 Census of Aquaculture (para. 10.1.7) for
Fishing and aquaculture (NACE 03), Water Bowser Census 2010, Transport Census 2010,
Secular School survey 2010 for Education (NACE 85), Teaching of Performing Arts survey
2010 for NACE 85, English Language Schools (ELS) survey 2010 (para. 10.1.10) for NACE
85, and Museums and Historical Sites survey 2010 for Libraries, archives, museums and
other cultural activities (NACE 91). These surveys are all available on an annual basis and
are described in further detail below unless already covered in Chapter 3 and Chapter 10 in
which corresponding reference shall be made.
4.1.10
The next most important sources for D.1 incurred by S.11 and S.14 are
Administrative Records from financial statements of the larger companies filed with the
Malta Financial Services Authority (MFSA) and fiscal data. For the small proportion (3.9 per
cent) of D.1 that is not covered by direct sources, Employment Training Corporation (ETC)
employment data are used. Employment figures are multiplied by data on basic wages (D.11)
and employers’ social security contributions (D.12) from various benchmark sources. The
structure of the information forthcoming from ETC is described in detail in Chapter 10, para.
10.1.14. The sources used in Extrapolations and Models are elaborated further in Section 4.3
below.
4.1.11
The main source for compensation of employees incurred by the financial
institutional sector (S.12) is collected from the income statements received from the Central
Bank of Malta (CBM) on a quarterly basis. These income statements cover domestic banks,
international banks, insurance principals, captive insurance companies; resident investment
funds and non-resident investment funds (see para. 10.1.19 and 10.1.20).
Financial
statements are used for some companies and data for holding companies are collected from
fiscal data.
4.1.12
Compensation of employees paid by the government institutional sector (S.13) is
collected from administrative sources, the most important one being the Departmental
272
The income approach
Accounting System (DAS) for central government.
This is supplemented by financial
statements for extra-budgetary units (EBUs) and local councils. Calculations of imputed
social contributions are derived based on the pensions paid by government to former
government employees who are entitled to a non-contributory pension.
4.1.13
Table 4.7.3 shows that 61 per cent of D.1 for the non-profit institutions serving
households (NPISH) institutional sector is derived mainly from Administrative Records in
the form of financial statements. The largest NPISHs in terms of D.1 paid are church schools
and the church both of which are covered by direct information. The remaining 39 per cent
of D.1 in cash are covered using Extrapolations and Models since very few surveys are
available on this component. The ones that are available were not compiled for the reference
year of 2010 but used to extrapolate basic wages and information on social security
contributions from the benchmark year in which they were compiled. Amongst these surveys
the main ones are the 2004 Sports Organisations (SPOs) survey, 2008 Non-Governmental
Organisations (NGOs) survey, and 2008 Youth Organisations Survey (YOS). Besides these
surveys, the Museums and Historical Sites and Band Clubs surveys are available on an
annual basis.
For those entities for which direct information is not available, D.1 is
extrapolated and grossed up on the basis of employment in this institutional sector and the
closest information available on D.11 and D.12 for these entities. Total employment for
NPISHs is obtained from various sources as described in Chapter 5, para. 5.8.24 and 5.8.25.
4.1.14
The calculation of consumption of fixed capital (CFC) is based on two approaches.
The direct method was applied in the case of dwellings (refer to Chapter 3, para. 3.18.23),
whilst the perpetual inventory method (PIM) model was applied for all the remaining assets.
Calculations are treated in detail in Section 4.10.
4.1.15
Data on taxes on production (D.29) and subsidies on production is derived from
government accounts and financial statements.
This information is distributed across
industries using data on the number of enterprises registered in the Business Register (BR) in
each economic activity, after taking into account any direct information available on the
actual amounts paid in a particular industry. This process is described in further detail in
Section 4.8.
273
Gross National Income Inventory
4.2
4.2.1
Borderline cases
In calculating wages and salaries in kind, ESA 2010 specifies that they should not
include expenditure by employers necessary for the employers’ production process (ESA
2010, para. 4.07). Section 5.2.1, para. 5.2.1.3 and Section 7.2.3 para. 7.2.3.5 to 7.2.3.11,
describes the calculation of total wages and salaries in kind from the Labour Cost Survey
(LCS) which includes only company products (D.11141), staff housing (D.11142), company
cars (D.11143), stock options and share purchase schemes (D.11144) and other (D.11145).
Wages in kind are deducted from intermediate consumption.
4.2.2
Taxes on production and imports do not include payments by households to the
general government for services rendered. Each revenue item in the government financial
records is checked to determine whether it is in fact a payment for a service or an unrequited
transfer, in which case it is classified either as market output or taxes on production
respectively.
4.3
4.3.1
Valuation
All the income components are calculated using the accruals principle, which
ensures that the timing is in line with the period in which the corresponding work is carried
out. Wages and salaries paid in cash are based on business accounting principles and are
therefore accruals adjusted. For variables collected through SBS survey, wages and salaries
include remuneration to all persons on payroll only, include bonuses, ex-gratia payments, tips
and commissions, and taxes and may include payments that employer pays in the event of
illness, occupational accident and maternity leave excludes social security contributions
payable by the employer excludes sub-contracting; employers’ social security contributions
and social contributions paid by employers for maternity, sickness. Only wages and salaries
in cash paid by the general government sector is the source cash-based.
An accruals
adjustment using the Treasury Accounts accruals template (see para. 3.28.5) is carried out.
4.3.2
Wages and salaries in kind should be valued at basic prices when produced by the
employer, and at purchasers' prices when purchased by the employer. When provided free,
the whole value of the wages and salaries in kind is calculated according to the basic prices
274
The income approach
(or purchasers' prices of the employer when purchased by the employer) of the goods and
services in question. This value is reduced by the amount paid by the employee when the
goods and services are given at reduced prices rather than free of charge (ESA 2010, para.
4.06).
4.3.3
Total wages and salaries in kind are collected from the Labour Cost Survey (LCS)
and follow the valuation principles laid down in the Labour Cost Survey Guidelines of 2012.
For company products provided to employees for free, the net price to the enterprise is
recorded, where the net price refers to the cost of the products supplied to staff free of charge
or the difference between the cost and the price at which the products are sold to the staff.
This valuation principle is in line with the valuation at basic prices required by ESA 2010
when the wages in kind are produced by the employer.
4.3.4
For company cars provided to employees the cost to the enterprise, including the net
running costs in incurred by the enterprise such as the annual cost of leasing or depreciation,
insurance, maintenance and repairs, and parking. The amount provided does not include the
capital expenditure involved in purchasing the vehicles, any income derived from their resale,
or the proportion of the costs attributable to work-related use.
4.3.5
Share purchase schemes and stock options offered to employees for free or at
reduced prices refer to all forms of fringe benefits linked to share-based compensation. Share
purchase schemes and stock options are typical financial instruments which fall under this
category. A typical feature of such instruments is that they transfer equity instruments from
the enterprise to the employee. For example, in the case of share purchase schemes, this
refers to the transfer of shares from the enterprise to the employee. In this case, the transfer
takes place in the present and is based on a price below today’s market price, known as the
strike price. The cost to the employer is the difference between the market price and the
strike price. On the other hand, stock option schemes typically transfer the right to buy the
enterprise’s shares not before a well defined point of time in the future to a favourable strike
price already fixed in the present. Employees will make the use of this right only if the
market price exceeds the strike price. When this happens, the cost to the enterprise is the
product of the number of shares and the difference between the strike price and the market
price.
275
Gross National Income Inventory
4.3.6
Payment for bills, membership fees and non-cash gifts to employees working within
the enterprise includes payments by employers on behalf of their employees such as
telephone, mobile and internet as well as utility bills and membership fees. Payments which
the enterprise incurs to buy gifts (non-cash payments) for special occasions for its employees
such as wedding gifts or mementos to employees who have rendered service to the company
for a number of years are also included here.
4.3.7
Other payments in kind covers in particular that part of expenditure covering indirect
benefits which are chargeable to the employer such as (a) canteen and meal vouchers; (b)
cultural, sporting and leisure facilities and services; (c) kindergartens and day nurseries; (d)
staff shops; (e) transport costs for journeys between home and the usual place of work; (f)
payments into trade union funds and costs of work committees (g) staff housing; and (h)
subsidised parking. As regards staff housing, all such expenditure includes depreciation,
small repairs and regular maintenance of dedicated buildings and installations.
4.3.8
Consumption of fixed capital (CFC) is estimated on the basis of the stock of fixed
assets and the expected average economic life of the different categories of those goods (ESA
2010, para. 3.14.1). Calculations are in conformity with this requirement as the calculation of
the capital stock (CS) and CFC is based on the PIM model, for all assets except dwellings, in
which case the direct method is applied.
4.4
Transition from private accounting and administrative concepts to
ESA 2010 national accounts concepts
4.4.1
Private accounting and administrative sources provide the basis for the income
approach. In a number of instances, the concepts used by these sources to measure the
variables differ from those presented in ESA 2010, by which national accounting must abide.
Most of the Conceptual Adjustments impact the compilation of intermediate consumption
and as a direct result the calculation of operating surplus. Since, for Malta, net operating
surplus is calculated as a residual, these Conceptual Adjustments shall not be elaborated here
as they are treated in detail in Chapter 3, Sections 3.2 and 3.4.
276
The income approach
4.5
The roles of direct and indirect estimation methods and of
benchmarks and extrapolations
4.5.1
The role of direct estimation methods stood at 53 per cent of total GDP in 2010, and
1.7 per cent result from Extrapolations and Models. More detail on these calculations is
presented in Section 4.7 on this variable.
Total (Sources)
Data Validation
Total (Adjustments)
Final Estimate
32.5
99.8
2,826.3
-22.5
41.6
19.1
2,845.3
Non-financial
corporations
845.1
649.7
0.1
55.9
1,550.7
-21.9
26.9
5.1
1,555.8
1.6
188.4
855.1
21.6
45.9
32.4
3.6
3.6
14.6
29.3
222.4
855.1
122.7
75.4
11.1
10.4
225.9
855.1
133.1
75.4
Financial corporations
General government
Households
NPISHs
86.5
0.1
-0.6
Balancing
Benchmark Extrapolations
1,760.7
Total Exhaustiveness
Combined Data
933.3
Total Conceptual
Administrative Records
Compensation of
employees
Other
Surveys and Censuses
Table 4.5.1: Components of income approach by type of source and institutional sector, 2010, in millions
of Euro
Gross operating
surplus (1)
2,552.4
2,552.4
2,552.4
Non-financial
corporations
1,913.8
1,913.8
1,913.8
225.5
144.2
257.6
11.3
225.5
144.2
257.6
11.3
225.5
144.2
409.1
409.1
409.1
Financial corporations
General government
Households
NPISHs
Mixed income
257.6
11.3
Taxes on production and
imports
865.4
865.4
865.4
Subsidies
72.6
72.6
72.6
GDP from the income
approach
4.6
4.6.1
933.3
2,553.4
32.5
99.8
0
3,619.0
-22.5
0
41.6
2,961.5
2,980.5
6,599.5
The main approaches taken with respect to exhaustiveness
The Exhaustiveness Adjustments to compensation of employees in the income
approach amount to 0.6 per cent of GDP in 2010. These relate specifically to N5 ‘Registered
entrepreneurs not surveyed’ may not be included in the statistics for many reasons, and tips
277
Gross National Income Inventory
and wages in kind in N7. The calculation of wages in kind has been treated in detail in
Section 4.3 and Section 7.2.3.
Table 4.6.1: Exhaustiveness adjustments to D.1 by institutional sector, 2010, in millions of Euro
N1
N2
Compensation of employees
Non-financial corporations
Financial corporations
General government
Households
NPISHs
4.7
4.7.1
N3
N4
N5
N6
17.1
7.9
9.1
-
N7
Total Exhaustiveness
24.5
19.0
3.6
1.9
-
41.6
26.9
3.6
11.1
-
Compensation of employees
Each institutional sector and source used for the reference year 2010 will be
explained further below, keeping in view the fact that the main sources used for the
measurement of compensation of employees are in the greater part the same used in the
production approach and have already been discussed extensively in Chapter 3.
The
following section will provide details in cases where sources differ from those used in the
production approach; otherwise reference will be made to Chapter 3 accordingly.
4.7.2
Table 4.7.1 describes the contribution of each institutional sector to the payment of
total D.1 in the economy. Of the total, 54.7 per cent is paid by the non-financial institutional
sector (S.11), 30.1 per cent by the general government sector (S.13), 7.9 per cent by the
financial sector (S.12), 4.7 per cent by the households sector and 2.6 per cent by the nonprofit institutions serving households (NPISHs) (S.15). This table also shows the method
underlying the measurement of D.1 by institutional sector. It is clear that the most important
sources are Administrative Records, accounting for 61.9 per cent of the calculation of D.1,
followed by Surveys and Censuses at 32.8 per cent. Only 3.5 per cent are estimated from
Other Extrapolations and Models and a net adjustment of 0.7 per cent after taking into
consideration Data Validation and Exhaustiveness Adjustments.
278
The income approach
Table 4.7.1: Compensation of employees by source and institutional sector, 2010
Surveys and Censuses
Administrative Records
Combined Data
Extrapolations and Models
Data Validation
Conceptual Adjustments
Exhaustiveness Adjustments
Balancing
Final Estimate
S.11
845.1
649.7
0.1
55.9
- 21.9
0
26.9
0
1,555.8
S.12
1.6
188.4
32.4
0
0
0
3.6
0
225.9
Million Euro
S.13
S.14
86.5
855.1
21.6
0
0
0
14.6
0
- 0.6
0
0
0
11.1
0
0
855.1
133.1
S.15
0.1
45.9
0
29.3
0
0
0
0
75.4
Total
933.3
1,760.7
32.5
99.8
- 22.5
0
41.6
0
2,845.3
Surveys and Censuses
Administrative Records
Combined Data
Extrapolations and Models
Data Validation
Conceptual Adjustments
Exhaustiveness Adjustments
Balancing
Final Estimate
S.11
54.3%
41.8%
0.0%
3.6%
-1.4%
0.0%
1.7%
0.0%
100%
S.12
0.7%
83.4%
14.3%
0.0%
0.0%
0.0%
1.6%
0.0%
100%
Percentage
S.13
S.14
0.0%
64.9%
100.0%
16.2%
0.0%
0.0%
0.0%
11.0%
0.0%
-0.5%
0.0%
0.0%
0.0%
8.3%
0.0%
0.0%
100%
100%
S.15
0.2%
60.9%
0.0%
38.9%
0.0%
0.0%
0.0%
0.0%
100%
Total
32.8%
61.9%
1.1%
3.5%
-0.8%
0.0%
1.5%
0.0%
100%
4.7.3
Compensation of employees in cash for non-financial corporations (S.11) and
households (S.14) operating in activities within NACE62 Sections: Mining and quarrying
(Section B), Manufacturing (Section C), Water supply; sewerage, waste management and
remediation activities (Section E) (except Water collection, treatment and supply (NACE
36)), Construction (Section F), Wholesale and retail trade; repair of motor vehicles and
motorcycles (Section G), Transportation and storage (Section H), Accommodation and food
service activities (Section I), Real estate activities (Section L), Professional, scientific and
technical activities (Section M) (except Veterinary Activities (NACE 75)), Administrative
and support service activities (Section N) and Other service activities (Section S) are
calculated directly using the Structural Business Statistics (SBS) survey for 2010, and is
calculated as the sum of total wages and salaries, payments to outworkers and social security
costs. This survey is described in detail in Chapter 10, para. 10.1.2. Direct information from
the SBS survey accounts for around 54.3 per cent of the compensation of employees in cash
paid by S.11. For Sections B, C, E, F, I, Information and communication (Section J) and L,
this information is supplemented by direct information from financial statements for larger
companies and fiscal data in some cases.
62
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
279
Gross National Income Inventory
Table 4.7.2: Compensation of employees by institutional sector and NACE, 2010, in millions of Euro
NACE
Section
A
S.11
S.11
% of
Total
S.12
S.12
% of
Total
S.13
S.13
% of
Total
S.14
S.14
% of
Total
S.15
S.15
% of
Total
Total
Economy
1,555.8
54.7%
225.9
7.9%
855.1
30.1%
133.1
4.7%
75.4
2.6%
2,845.3
5.2
0.2%
-
19.3
0.7%
3.9
0.1%
-
28.4
14.1
0.5%
-
361.1
11.6
0.4%
-
122.1
B
C
c
334.0
11.7%
-
13.0
D
c
E
c
0.5%
c
F
92.3
3.2%
-
18.2
G
257.0
9.0%
-
-
37.6
1.3%
-
294.6
H
178.2
6.3%
-
-
3.2
0.1%
-
181.4
I
147.8
5.2%
-
-
12.6
0.4%
-
160.5
J
112.1
3.9%
-
10.0
0.7
0.0%
0.3
K
-
L
5.6
0.2%
M
112.6
4.0%
-
2.1
0.1%
20.5
0.7%
-
N
112.0
3.9%
-
24.7
0.9%
2.2
0.1%
0.2
O
-
-
299.5
10.5%
-
P
31.1
1.1%
-
222.9
7.8%
5.3
0.2%
40.8
1.4%
300.2
Q
20.8
0.7%
-
232.4
8.2%
7.2
0.3%
13.5
0.5%
273.8
R
78.6
2.8%
-
11.1
0.4%
4.5
0.2%
4.5
0.2%
98.7
S
6.0
0.2%
-
-
9.1
0.3%
16.0
0.6%
31.2
T
-
-
-
-
-
-
U
-
-
-
-
-
-
225.9
-
7.9%
0.6%
0.4%
-
-
-
0.1
0.0%
0.0%
123.1
-
226.0
-
5.6
135.3
0.0%
-
139.1
299.6
Confidential
4.7.4
The SBS survey, annual reports and financial statements and administrative records
are available with a time lag of two years. Until the results become available compensation
of employees are extrapolated using compensation of employees per capita adjusted with
changes in cost of living adjustment (COLA) for each NACE division and employment data.
Employment in the non-benchmark years is extrapolated at NACE division level using
growth rates at NACE division level derived from employment data obtained from the
Employment and Training Corporation (ETC). These estimates are revised with data from
the SBS survey, annual reports and financial statements and fiscal data, once these are
available to the national accounts. Quarterly Short-Term Statistics (STS) indices are also
used extensively to extrapolate data in non-benchmark years.
280
The income approach
4.7.5
The following paragraphs will provide some information on the sources and
methods with respect to industries which are not dependent on the SBS survey, annual reports
and financial statements and fiscal data.
4.7.6
In Agriculture, forestry and fishing (Section A), direct information for 2010 is
collected from the annual Census of Aquaculture for compensation of employees in cash paid
by fish farms. For open sea fishing the basic wage from the Census of Fisheries of 2006 is
adjusted for COLA and multiplied by employment data obtained from the ETC and
transformed into full-time equivalent (FTE) employment using data and assumptions on the
ratio of full-time to part-time hours worked.
4.7.7
In NACE Section C, a calendar year adjustment was applied to the compensation of
employees paid by a specific company operating in Manufacture of motor vehicles, trailers
and semi-trailers (NACE 29), and for which data was collected from financial statements.
The rest of the economic activities in NACE Section C are based on SBS.
4.7.8
Compensation of employees paid in Electricity, gas, steam and air conditioning
supply (Section D) and Section E (except NACE 37 to 39: Sewerage; Waste collection,
treatment and disposal activities; materials recovery; Remediation activities and other waste
management services) are collected through the financial statements of the main operator
(para. 3.10.2 to 3.10.4 and 3.11.4 to 3.11.8).
NACE Section E is supplemented with
information from the Water Bowser Census carried out in 2010.
4.7.9
In Section H, information on minibuses, buses and privates for the reference year
2010 is compiled using the annual Transport Census (para. 3.14.7) carried out by the National
Accounts Unit. This survey has now been replaced by the financial statements of the major
operator and supplemented with information from the SBS survey.
4.7.10
In Financial and insurance activities (Section K), data on compensation of
employees is derived directly from aggregated income statements are provided by the Central
Bank of Malta (CBM) on a quarterly basis for the CBM, core, non-core and international
banks, captive insurance companies, investment funds (para. 10.1.17 and 10.1.18). Financial
statements are used for some companies and data for holding companies and insurance
principals while trusts are covered by fiscal data.
281
Gross National Income Inventory
4.7.11
In Education (Section P), compensation of employees is collected from various
sources. Para. 3.22.14 to 3.22.22 provide detail on each of the sources used to calculate
production, which are also applicable to compensation of employees.
Just as with the
production account, compensation of employees is calculated separately for the following
types of activity: secular schools, English language schools, private tuition, driving lessons,
sports and recreation activities, technical and vocational training, dance schools, and
educational support activities.
4.7.12
The annual secular school survey provides information on compensation of
employees paid in private schools (para. 3.22.14); the English Language Schools (ELS)
survey provides most of data on compensation of employees paid by English language
schools and is supplemented by information from financial statements and fiscal data in case
of non-response (para. 3.22.15 and 3.22.16). Driving tutors’ compensation of employees is
based on employment data from ETC FTE employment for car driving tutors obtained from
Transport Malta, and a compensation of employees per capita dating back to 2000 adjusted
for cost of living increases (para. 3.22.17). Dance schools payment of compensation of
employees is captured through an annual Dance Schools Survey.
Compensation of
employees paid in the other performing arts is captured by the basic wage from this survey
multiplied by the total ETC FTE employment in this activity (para. 3.22.19).
For the
remaining entities that provide services classified as ‘Technical and Vocational Training’,
‘Sports and Recreation Activities’ and ‘Educational Support Activities’, direct information is
collected from Malta Financial Services Authority (MFSA) and fiscal data. When this data is
not forthcoming, estimates are calculated using ETC employment multiplied by the average
wage from the latest available accounts or fiscal data adjusted for cost of living increases
(para. 3.22.20 to 3.22.22).
4.7.13
Human health and social work activities (Section Q) is not covered by the SBS
survey. Compensation of employees in cash for entities in this economic activity is collected
by combining data from MFSA, fiscal data and ETC employment, with the latter also used in
cases where such direct information is not forthcoming. In cases where fiscal data and
financial statements do not exist for the reference year, compensation of employees is
estimated using the previous years’ wage per FTE employment for which direct information
is available and social security contribution to compensation of employees ratio, adjusted for
COLA and government bonuses and allowances. For hospitals, calculations of compensation
282
The income approach
of employees are linked to information from MFSA, fiscal data and ETC as well. For childcare centres, the compensation of employees per FTE ratio of a childcare centre which has its
accounts available is used to derive the total compensation of employees of all other childcare
centres which have their ETC employment available, the total of which is based on the
licensed child-care centres which represent the units operating in this sector (para. 3.23.13 to
3.23.33).
4.7.14
The largest component of compensation of employees in Arts, entertainment and
recreation (Section R) is that paid in Gambling and betting activities (NACE 92). These are
mainly covered by financial statements from MFSA, fiscal data and grossed up to the total
employment population on the basis of ETC employment by NACE. The survey used in the
calculation of compensation of employees paid by units operating in Section R refers to the
annual Museums and Historical Sites survey. The rest of the section is covered using
compensation of employees per FTE employment from financial statements filed with MFSA
and from fiscal data of some of these units, and grossed up to the total ETC employment
category in that economic activity (para. 3.24.18 to 3.24.36).
4.7.15
Compensation of employees incurred by the general government sector is in the
larger part obtained for central government (S.1311) which is available from the
Departmental Accounting System (DAS) at quarterly intervals. The personal emoluments
category is available in a disaggregated level, including holders of political office, staff –
wages and salaries, bonus, income supplement, social security contributions, allowances and
overtime. In addition the wages and salaries and actual social contributions paid from the
capital expenditure are included in D.11 and D.121 respectively.
Imputed social
contributions are paid by the government, as an employer. These pensions and cost of living
bonuses are granted to ex-civil servants and retired policemen, armed forces pensioners,
widows and orphans and retired members of parliament. The allocation of imputed social
contributions is based on D.11. As far as extra-budgetary units (EBUs) are concerned
information on wages and salaries and on actual social contributions has been taken from the
quarterly surveys or their annual financial statements while for local councils this data was
captured from their individual financial statements.
4.7.16
The sources used to compile compensation of employees for NPISHs are shown in
Table 4.7.3. Education is by far the largest contributor to compensation of employees at 54.2
283
Gross National Income Inventory
per cent of the total compensation of employees paid by NPISHs, with the largest component
of compensation of employees in cash being covered by financial accounts of the
Archdiocese of Malta being paid by the Church. Compensation of employees for libraries,
archives, museums and other cultural activities are covered using the annual Museums and
Historical Sites survey (para. 3.24.39). Activities of membership organisations operating as
employers’ associations and trade unions are covered by financial data from the Department
for Industrial and Employment Relations (DIER). The remaining NPISHs for which no
direct source is available are calculated using last available benchmark data or using the
closest direct information available for entities within a given economic category on D.1,
adjusted for COLA, bonuses and allowances and multiplied by ETC employment in that
economic category. Total employment of NPISHs is determined as the sum of various
sources including the Business Register (BR), ETC employment data and information from
the Office of the Commissioner for Voluntary Organisations as described in Chapter 5 (see
para. 5.8.23 to 5.8.25).
Total
Exhaustiveness
Conceptual
Data Validation
0.0
0.0
49
-
-
58
0.2
0.2
59
0.0
0.0
60
0.1
0.1
82
0.2
0.0
0.2
85
40.8
0.0
40.8
86
1.1
1.1
87
9.1
9.1
88
3.2
3.2
90
0.0
0.0
0.0
0.1
4.3
4.3
11.1
16.0
0.1
93
94
284
Total (Sources)
20
91
Total
Other
Total
Extrap+Models
Combined
Data
Administrative
Records
Surveys and
Censuses
Table 4.7.3: Compensation of employees paid by NPISHs, by NACE and source, 2010, in millions of Euro
4.9
0.1
45.9
-
29.1
-
75.4
The income approach
4.7.17
In the future the aim is to obtain data from administrative sources for both wages
and salaries in cash and social security contributions to cross-check the current calculation of
these variables. Compensation of employees received from non-residents companies are
recorded in the transition from gross domestic product (GDP) to gross national income (GNI)
and are obtained from the Balance of Payments Unit.
4.7.1 Wages and salaries
4.7.1.1 Sources and methods relating to wages and salaries have been treated in Section 4.7.
4.7.1.2 Wages and salaries in kind earned by households are based on three benchmark
years. Data for 2000 is available in two parts: an estimate based on a ‘Salaries and Benefits’
report carried out by Misco for 2000 and the other on a survey on fringe benefits covering
government agencies. As from 2004, the Labour Cost Survey (LCS) has been used for the
compilation of wages in kind. The LCS is available every four years and the results of 2004
and 2008 have been integrated in national accounts. The wages and salaries in cash are used
as indicator to generate estimates in between benchmark years.
4.7.1.3 The Misco ‘Salaries and Benefits Report 2000’ surveys a sample of 2,066
remuneration packages and is compiled over an 8-month period – January to August 2000.
The categories of personnel covered include management, executive, clerical, technical and
non-manual personnel in various private, foreign-owned and government controlled service
and manufacturing companies. The following categories of fringe benefits were identified:
 Health insurance;
 Company car;
 Life insurance;
 Personal accident insurance;
 Petrol allowance;
 Car maintenance;
 Telephone bill; and
 Club membership.
285
Gross National Income Inventory
4.7.1.4 The sample of 2,066 employees must be raised to cover the total employees in each
category. Data for the private sector is grossed up using the employees registered in the
Business Register (BR) as the total population.
4.7.1.5 The Misco survey is restricted only to private enterprises. A separate survey was
carried out gathering information about the fringe benefits paid to government employees.
The following wages in kind were identified:
 Provision of free meals/drinks;
 Provision of clothing;
 Purchase of vehicles for employees;
 Cost of servicing of vehicles used by employees;
 Cost of fuel consumed by vehicles used by employees;
 Payment of employees’ domestic telephone and cellular bills;
 Payment of premiums in respect of health/life insurance;
 Cost of transportation facilities for employees to/from work; and
 Other benefits in kind.
4.7.1.6 Only that proportion estimated as used for private household consumption was
included in the household final consumption expenditure (HFCE) estimates. This subdivision
was based on a working day to non-working day ratio for the use of company cars, cost of
vehicles servicing, clothing and telephone bills both for the Misco and the survey covering
enterprises partly or wholly owned by government.
4.7.1.7 Data derived from the LCS (Chapter 10, para. 10.2.2) includes:
D.11141 Company products
D.11142 Staff housing
D.11143 Company cars
D.11144 Stock options and share purchase schemes
D.11145 Other
286
The income approach
4.7.2
Employers’ social contributions
4.7.2.1 All sources and methods relating to wages and salaries have been treated in Section
4.7 above.
4.8
4.8.1
Taxes on production and imports
Taxes on production are defined as taxes that enterprises incur as a result of
engaging in production, independent of the quantity or value of the goods and services
produced and sold. All information is provided to the National Accounts Unit by the Public
Finance Unit after it would have derived the data from government accounts and financial
statements. In 2010, the annual circulation tax made up 29.3 per cent of the total. Moreover,
11.8 per cent of these taxes were collected by extra-budgetary units (EBUs).
Table 4.8.1: National tax list for taxes on production, 2010, in millions of Euro
National tax list
ESA
code
Million
Euro
Source
Wines and spirits
D.29
0.9
Departmental Accounting System (DAS)
Trading licences
D.29
1.6
Departmental Accounting System (DAS)
Hotel and catering establishment
D.29
1.0
Departmental Accounting System (DAS)
Bonded stores licences
Operating licence – Malta International Airport
(MIA)
D.29
0.2
Departmental Accounting System (DAS)
D.29
0.2
Departmental Accounting System (DAS)
Gaming taxes
D.29
0.0
Departmental Accounting System (DAS)
Miscellaneous licences
D.29
0.8
Departmental Accounting System (DAS)
Motor vehicle licenses - Business
D.29
11.1
Departmental Accounting System (DAS)
Sale of number plates - Business
D.29
0.3
Departmental Accounting System (DAS)
Oil rental licences
D.29
1.8
Departmental Accounting System (DAS)
Television licence fees - Business
D.29
1.9
Departmental Accounting System (DAS)
Fees for right of use - Business
D.29
4.3
Departmental Accounting System (DAS)
Concession fees
Malta Communications Authority (MCA) administration charges
Malta Resources Authority (MRA) - administration
charges
Malta Environment and Planning Authority
(MEPA) - disposal of waste at sea
D.29
3.5
Departmental Accounting System (DAS)
D.29
3.2
Financial Data Reporting System (FDRS)
D.29
1.3
Financial Data Reporting System (FDRS)
D.29
0.0
Financial Data Reporting System (FDRS)
Accruals adjustment
D.29
5.6
Treasury Department accruals templates
Total - Other taxes on production
D.29
37.7
4.8.2
Each revenue item in the government financial records is checked to determine
whether it is in fact a payment for a service or an unrequited transfer, in which case it is
287
Gross National Income Inventory
classified either as market output or taxes on production respectively. A central adjustment
to remove payments to government recorded in intermediate consumption, but which are in
fact taxes on production is carried out.
4.8.3
Where a particular licence was easily identified to fall under a particular industry,
this was directly allocated to its respective NACE63 category. Out of the total taxes on
production, 18.4 per cent were directly allocated to a particular NACE category.
4.8.4
The remaining 81.6 per cent were distributed among the NACE categories based on
the number of enterprises registered in the Business Register (BR) in each NACE category.
The number of enterprises in the BR was calculated after excluding any inactive, dormant or
‘dead’ units.
4.8.5
In using this allocation procedure, the National Statistics Office (NSO) tries to use
any direct information available, whilst at the same time allocating the remaining taxes
among economic sectors proportionally to the number of enterprises.
Table 4.8.2: Other taxes on production (D.29) at A*11, 2010, in millions of Euro
NACE
Division
Million
Euro
Agriculture, forestry and fishing
01 to 03
2.3
Mining and quarrying; Manufacturing; Electricity, gas, steam and air conditioning
supply; Water supply; sewerage, waste management and remediation activities
05 to 39
3.5
Manufacturing
10 to 33
2.0
Construction
41 to 43
3.2
Wholesale and retail trade; repair of motor vehicles and motorcycles; Transportation
and storage; Accommodation and food service activities
45 to 56
13.5
J
Information and communication
58 to 63
4.3
K
Financial and insurance activities
64 to 66
0.6
L
Real estate activities
68
1.5
NACE Section NACE Description
A
B-E
of which C
F
G-I
M-N
Professional, scientific and technical activities; Administrative and support service
activities
69 to 82
5.5
O-Q
Public administration and defense; compulsory social security; Education; Human
health and social work activities
84 to 88
0
R-U
Arts, entertainment and recreation, Repair of household goods and Other services
90 to 99
3.3
Total - Other taxes on production
63
NACE is the acronym for “Nomenclature statistique des Activités économiques dans la Communauté
Européenne”.
288
37.7
The income approach
4.9
4.9.1
Subsidies
Subsidies on production have been identified from government accounts and
financial statements. Most of the subsidies are given to public corporations and therefore
they can be easily allocated to a particular NACE64 category. In 2010, total subsidies on
production amounted to 53.7 million Euro of which 28.0 million Euro were allocated to the
agriculture and fisheries sector, and 17.7 million Euro were allocated to the transport sector.
Table 4.9.1: Other subsidies on production (D.39), 2010, in millions of Euro
National tax list
Agricultural subsidies on production
Assistance to co-operatives, farmers, fishermen and relocation
of farms - Subvention
Million
Euro
Data source
19.8
Agriculture and Rural Payments Agency
0.0
Departmental Accounting System (DAS)
0.1
Departmental Accounting System (DAS)
Assistance to farmers and fishermen
European Agricultural Guidance and Guarantee Fund
(EAGGF)
0.0
Departmental Accounting System (DAS)
EU Agricultural Fund for Rural Development
1.5
Departmental Accounting System (DAS)
Agriculture Support Scheme
5.4
Departmental Accounting System (DAS)
Interest subsidy on house loans
Guaranteed Earnings Agreement - Public Transport
Association
0.0
Departmental Accounting System (DAS)
8.3
Departmental Accounting System (DAS)
Technician Apprenticeship Scheme
0.7
Departmental Accounting System (DAS)
EU Fisheries Fund - Permanent Cessation - Aid Schemes
0.7
Departmental Accounting System (DAS)
Public Service Obligation – Public Broadcasting Services
(PBS) Ltd
Public Service Obligation - Inter Island Transport – Gozo
Channel
2.7
Departmental Accounting System (DAS)
2.0
Departmental Accounting System (DAS)
Public Service Obligation - Maritime Transportation
0.2
Departmental Accounting System (DAS)
Social security contribution refunds including maternity
0.1
Departmental Accounting System (DAS)
Malta Air Traffic Services
0.7
Departmental Accounting System (DAS)
Restructuring of PBS Ltd
0.4
Departmental Accounting System (DAS)
Film Industry Incentives
2.0
Departmental Accounting System (DAS)
Subsidy to Malta International Airport (through put charge)
1.5
Departmental Accounting System (DAS)
Recovery Scheme - Agriculture
ETC - Training Aid Framework (European Social Fund ESF)
0.5
Departmental Accounting System (DAS)
0.0
Departmental Accounting System (DAS)
ETC - Employment Aid Programme (ESF)
0.0
Departmental Accounting System (DAS)
ETC - Employability Programme (ESF)
0.5
Departmental Accounting System (DAS)
Accruals adjustment – formerly the Ministry of
Infrastructure, Transport and Communications (MITC)
accrued expenditure towards the Public Transport Association
Accruals adjustment - formerly the MITC accrued expenditure
and creditors towards the PSO Gozo Channel
2.0
Treasury Department accruals templates
4.5
Treasury Department accruals templates
Total - Other subsidies on production
53.7
64
NACE is the acronym for “Nomenclature statistique des Activités économiques dans la Communauté
Européenne”.
289
Gross National Income Inventory
4.9.2
Security
However, there were various types of other subsidies on production namely ‘Social
Contribution
Refunds
including
Maternity’,
‘Training
Aid
Framework’,
‘Employment Aid Programme’, and ‘Employability Programme’ which cannot be attributed
directly to one particular NACE category. As a result, these were distributed among all
NACEs in proportion to the number of enterprises.
Furthermore, other subsidies on
production such as ‘Technician Apprenticeship Scheme’, ‘Extended Skills Training Scheme’,
and ‘Malta Enterprise’ were distributed amongst the manufacturing sectors (Section C except
for Repair and installation of machinery and equipment (NACE 33)), which are the most
likely to benefit from training grants for industry. The allocation among these sectors was
also based on the number of enterprises registered in the Business Register (BR) in each
sector.
The number of enterprises for Sections O-Q and Activities of extraterritorial
organisations and bodies (NACE 99) were not included as part of the allocation of these
subsidies since these are mainly composed of government entities.
4.9.3
Section A which refers to agriculture and fishing was allocated various subsidies on
production amongst which assistance to co-operatives, farmers, fishermen and relocation of
farms, assistance to farmers and fishermen, and the agriculture support scheme. In addition,
subsidies from the paying agency which included items such as restructuring of vineyards,
apiculture programme, potatoes aid and so forth were provided by the Agriculture and
Environment Statistics Unit and were integrated with the other subsidies on production as
provided by the Public Finance Unit.
290
The income approach
Table 4.9.2: Other subsidies (D.29) on production at A*11, 2010, in millions of Euro
NACE
Section
A
B-E
NACE Description
NACE
Division
Million
Euro
Agriculture, forestry and fishing
01 to 03
28.0
Mining and quarrying; Manufacturing; Electricity, gas, steam and air conditioning
05 to 39
supply; Water supply; sewerage, waste management and remediation activities
0.8
of
Manufacturing
which C
10 to 33
0.8
Construction
41 to 43
0.1
Wholesale and retail trade; repair of motor vehicles and motorcycles;
Transportation and storage; Accommodation and food service activities
45 to 56
17.9
J
Information and communication
58 to 63
6.6
K
Financial and insurance activities
64 to 66
0.0
L
Real estate activities
68
0.1
F
G-I
M-N
Professional, scientific and technical activities; Administrative and support
service activities
69 to 82
0.1
O-Q
Public administration and defense; compulsory social security; Education; Human
health and social work activities
84 to 88
0.0
R-U
Arts, entertainment and recreation, Repair of household goods and Other services
90 to 99
0.1
Total - Other subsidies on production
53.7
4.10 Gross operating surplus
4.10.1
This aggregate is calculated as a residual. It is the balance that is arrived at after
subtracting compensation of employees and other taxes on production, and adding other
subsidies on production, from the net value added.
4.11 Mixed income
4.11.1
In case of unincorporated enterprises in the households sector, the balancing item of
the generation of income account implicitly contains an element corresponding to
remuneration for work carried out by the owner or members of the family. This income from
self-employment has characteristics of wages and salaries, and characteristics of profit due to
work carried out as an entrepreneur. This income, neither strictly wages nor profits alone, is
referred to as mixed income. Mixed income does not include operating surplus derived from
own account production of housing services by owner-occupier households.
291
Gross National Income Inventory
4.12 Consumption of fixed capital
4.12.1
The calculation of capital stock (CS) and consumption of fixed capital (CFC) is
based on two approaches. The direct method was applied in the case of dwellings (refer to
Chapter 3, para. 3.18.24), whilst the perpetual inventory method (PIM) model was applied for
all the remaining assets.
4.12.2
The PIM model is recommended by ESA 1995 for estimating gross capital stock
(GCS) if GCS cannot be calculated from direct observation of the capital assets. Given that
ESA 2010 prescribes that the CFC must be estimated on the basis of the GCS, the PIM model
is also applied to calculate CFC.
4.12.3
The PIM model estimates GCS as the sum of fixed capital ‘surviving’ in the current
period from earlier gross fixed capital formation (GFCF), i.e. which are still in use in the
current period. The following core data are essential in order to estimate the GCS and
subsequently CFC using PIM:

historic series of data relating to GFCF; and

information about service life of capital assets and how the retirements of those
capital assets relate to the average service live (i.e. the survival function).
4.12.4
Both the historic capital formation series and service lives applied will be discussed
below. This will be followed by a general explanation of the estimation of GCS and CFC
using PIM.
Historic series of GFCF - General government (S.13)
4.12.5
During the Phare 2000 project on CS and CFC, National Statistics Office (NSO) has
been advised to collect data dating back to 1900 for buildings and structures and back to 1955
with respect to machinery and equipment, in order to improve the previous estimate made for
non-market producers. Data for general government dating back to 1919 has been collected
from administrative records achieved at the National Library.
292
The income approach
4.12.6
Data going back to 1919 is available at a very high level of detail at the National
Library, the main sources being the Government Department Reports and the Government
Statements of Expenditure. The data collected from the National Library cover the years
1919 to 1975. The years 1977 to 1994 were covered using the Government Financial Report,
available at the NSO. Data from 1995 onwards were forwarded to the National Accounts
Unit by the Public Finance Unit.
Government transfer of fixed assets and/or non-produced non-financial assets to public
corporations
4.12.7
Adjustments had to be made to account for a number of government transfers of
fixed assets and/or non-produced non-financial assets to public corporations.
These
adjustments were not included in the previous estimate of CFC, and thus CFC of the general
government sector was being overestimated. The data collected from the above mentioned
sources (para. 4.12.6) have been supplemented by further information derived from annual
reports and financial statements of various corporations and from the Financial Reports
issued by Government of Malta and The Treasury. Below is a list of such transfers, and
treatment in national accounts.
a) Air Malta plc – 2004 – Transfer of an emphyteutical concession on property to Air
Malta plc by the government amounting to Lm21,298,000 with respect to property,
plant and equipment and Lm3,066,000 with respect to investment properties. The
cost of the concession was met through an increase in the company’s issued share
capital65. The increase in share capital is also accounted for in the Financial Report
2004 issued by the Treasury in appendix H, Statement of investments as at 31
December 2004. With respect to GCF, this transfer was treated as per Chapter
II.3.2, para. 2b in the ESA 1995 Manual on Government Deficit and Debt.
However, following an expert advice, CFC was charged to the Non-financial
Corporations given that the assets are now owned by Air Malta plc. Consequently
CFC for the general government will in future be lower.
b) Enemalta Corporation – 2004 – Transfer of temporary leasehold of land and
property to Enemalta Corporation by the government amounting to Lm53.5 million,
65
Source: Air Malta plc - Annual Report and Consolidated Financial Statements for the year ended 31 July
2004.
293
Gross National Income Inventory
of which Lm11 million was land and Lm42.5 million was buildings. The cost of the
concession was met through an increase in the company’s issued share capital,
referred to as Government Interests in the annual report and financial statement for
the year ended 30 September 2004. This increase in share capital is shown both in
the Statement of changes in equity and the Balance Sheet of the Enemalta
Corporation. With respect to GCF, this transfer was treated as per Chapter II.3.2,
para. 2b in the ESA 1995 manual on government deficit and debt.
However,
following an expert advice, CFC was charged to the non-financial corporations
given that the assets are now owned by Enemalta Corporation. Consequently CFC
for the general government will in future be lower.
c) Malta International Airport plc (MIA) – 1992 – By virtue of a public deed
registered on 7 February 1992 the company acquired title to the MIA from the
Government of Malta. During the year, the company acquired the air terminal from
the main shareholder for a total price of Lm15.1 million which was not paid in cash.
The cost of the concession was met through an increase in the company’s issued
share capital and a shareholder’s loan. The issued share capital amounted to of
Lm8.7 million, of which Lm8.2 million were shares issued for a non-cash
consideration, and the shareholder’s loan amounted to Lm7.2 million66.
The
increase in share capital is also accounted for in the Financial Report 2004 issued by
The Treasury in Appendix H, Statement of investments as at 31 December 1992.
The shareholder’s loan represents the assignment of all obligations relating to a
foreign currency loan originally granted by the European Investment Bank to the
Government of Malta in connection with the completion of the new air terminal.
CFC was charged to the non-financial corporations given that the assets are now
owned by MIA. Consequently CFC for the general government will in future be
lower.
d) Water Services Corporation – 1993 – The Water Services Corporation was
established on 20 January 1992.
The Corporation took over the assets and
undertakings owned by the Government of Malta which amounted to Lm45.6
million. A permanent debenture bearing an interest of 6 per cent per annum has
66
Source: Malta International Airport plc - Annual Report and Consolidated Financial Statements for the year
ended 30 September 1992.
294
The income approach
been issued to cover the costs of the assets taken over. This debenture is referred to
in the annual report and financial statement for the year ended 30 September 1993 of
the Water Services Corporation as Government Interests. CFC was charged to the
non-financial corporations’ institutional sector given that the assets are now owned
by Water Services Corporation. Consequently CFC for the general government will
in future be lower.
e) Enemalta Corporation – 1978 – Enemalta Corporation was established on the 1
October 1977 and acquired as at that date all the assets and liabilities which vested
in or belonged to the Government of Malta. The fixed assets acquired amounted to
Lm10.1 million. CFC was charged to the non-financial corporations’ institutional
sector given that the assets are now owned by Enemalta Corporation. Consequently
CFC for the general government will in future be lower.
f)
Telemalta Corporation – 1976 – Telemalta Corporation (now GO plc) was
established on 1 January 1975. The fixed assets acquired amounted to Lm7.5
million. CFC was charged to the non-financial corporations’ institutional sector
given that the assets are now owned by Telemalta Corporation. Consequently CFC
for the general government will in future be lower.
Historic series of GFCF - Financial corporations (S.12), non-financial corporations (S.11)
and households (S.14), NPISHs (S.15)
4.12.8
GFCF in Malta has been compiled by the National Accounts Unit since 1954. In the
old approach, based on System of National Accounts (SNA) 1953, data compilation was
neither by activity and sector nor by product. As part of the Phare 2000 project on gross
capital formation, considerable work has been done by National Statistics Office (NSO) to
collect GFCF data by industry at 2-digit NACE67 Rev. 1.1, by sector, and at 2-digit
Classification of Products by Activity (CPA) 2002 from 1995 to 2003 in line with ESA 1995.
4.12.9
During the benchmark revision of 2011 the data were reclassified according to
NACE Rev. 2 and CPA 2008 (Chapter 9, para. 9.1.4). All fixed assets (except cultivated
67
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
295
Gross National Income Inventory
assets) are covered including intellectual property products. With the introduction of ESA
2010 research and development has also been integrated in the PIM.
4.12.10 It has been observed that the previous GFCF figures were overestimated by an
average of 1.7 per cent. The averaged years in question were 1995 to 2003 for which a new
method in line with ESA 2010 was applied. Following this exercise, the old GFCF figures
were revised downwards by 1.7 per cent for the years 1954 to 1994.
Table 4.12.1: New versus old GFCF
GFCF68 ESA 1995
GFCF69 SNA 53
New versus old
Lm’000
Lm’000
%
1995
288,320
365,175
79.0
1996
306,092
345,265
88.7
1997
305,470
326,443
93.6
1998
338,670
333,561
101.5
1999
346,599
339,975
102.0
2000
391,252
409,475
95.6
2001
357,447
379,506
94.2
2002
298,512
350,648
85.1
2003
369,762
419,242
88.2
Year
Average
92.0
4.12.11 GFCF by the general government sector (S.13) was deducted from the new
backdated GFCF series (1954 to 1994), since data for S.13 was available direct from the
sources explained above. The residual, was then sub-divided into:

NPISHs sector (2 per cent);

Financial corporations sector (2 per cent);

Non-financial corporations sector (63 per cent); and

Households sector (33 per cent).
4.12.12 Total GFCF for NPISHs (S.15), financial corporations (S.12), households (S.14) and
non-financial corporations (S.11) was further subdivided by asset. For each sector, the
corresponding asset breakdown available in 1995 has been applied. In case of aircraft and
68
69
Data as per News Release 96/2007.
Data as per News Release 58/2004.
296
The income approach
spacecraft (CPA 35.3), an adjustment was made taking into account that the national air
carrier was set up in 1973. Thus, by definition, there were no such assets owned by residents
before this year in the Maltese economy. Moreover, a further adjustment had to be made due
to the large additions and disposals of aircraft made between 1973 and 1995 which were not
fully captured during the extrapolation exercise.
Service lives
4.12.13 The second component required in order to estimate the GCS using PIM is the
average service life of the capital assets in the various industries. The average service life of
a capital asset indicates the average time span after which a capital asset is retired. Moreover,
the necessary length of the time series on GFCF for calculating CS by applying the PIM
depends on the service life assumptions and the starting year for which CS estimates have to
be done.
4.12.14 Following the Phare 2000 project on the measurement of dwelling services for the
Maltese Islands, the service life for dwellings suggested by the Organisation for Economic
Cooperation and Development (OECD) manual on CS and CFC has been applied – 75 years.
4.12.15 In case of plant and machinery and other buildings and structures (excluding
dwellings), tax service lives have been applied at first. However, our expert pointed out that
tax service lives tend to be too short and that experience shows that firms use assets for a
longer time period. Thus, it was decided that a mix of different sources will be used. This
still includes tax service lives; however, further reference was made to the OECD manual and
to the expert’s suggestions.
4.12.16 Tax service lives in Malta were first introduced in 1965. These were never updated
until 2001. Amendments did not only concern the time period over which assets had to be
depreciated but also new assets had been introduced with respect to machinery and
equipment such as computers, lifts and escalators and air conditioners, which when these
rules came into effect in 1965, were not contemplated. During the Phare 2000 project on CS
and CFC it was established that whenever tax lives are updated, such changes will be very
close to reality.
297
Gross National Income Inventory
4.12.17 These tax service lives were compared to the OECD average of eight other European
countries and with the expert’s suggestions.
Table 4.12.2: Service lives
29.00
5
29.11
6
29.23
6
29.52
6
30.00
4
5
12
32.00
6
10
20
15
17
33.00
6
15
20
15
34.00
5
9
35.10
10
35.30
12
36.00
10
45.00
50
45.21
20
45.21
20
72.00
4
13
21
20
15
17
18
15
22
25
23
26
20
15
17
18
15
22
25
23
26
20
15
17
18
15
22
25
23
26
20
15
17
18
15
22
25
23
26
8
14
18
15
22
25
23
26
17
18
15
22
25
23
26
7
4
10
15
9
7
10
10
9
14
21
11
10
22
23
37
13
15
10
16
10
14
15
15
10
54
38
45
36
56
58
66
71
60
23
16
66
(5)
4.12.18 The most relevant service lives to our country were hence applied.
70
OECD (December 1992), “Methods used by OECD countries to measure stocks of fixed capital”
298
UK
Sweden
Norway
Iceland
Germany
France
Finland
Belgium
Average
Germany
2002
Average service lives derived from OECD paper70
Average
Malta
CPA
The income approach
Table 4.12.3: Service lives applied in the PIM model
Maximum
service life (M)
Average service life
Machinery and equipment n.e.c.
26
13
Equipment mainly designed or used for the production of water and electricity
26
13
Catering equipment
26
13
Equipment used for construction of buildings and excavation
26
13
Computer and electronic equipment
8
4
Communication and broadcasting equipment
12
6
Medical equipment
30
15
Motor vehicles
18
9
Ships and vessels
42
21
Aircraft and spacecraft
24
12
Furniture, fixtures, fittings and soft furnishings
20
10
Construction work
100
50
Cable infrastructure
40
20
Pipeline infrastructure
40
20
Computer software
8
4
Other machinery / plant
26
13
Research and development
20
10
CPA Description
4.12.19 Due to the fact that no relevant information on service lives is available by industry,
the PIM model was applied across sectors. Industry breakdown was subsequently done in
proportion to the old estimate which was more based on company accounts.
4.12.20 NSO implemented ESA 1995 as from calendar year 1995; therefore, starting values
for CS and CFC are needed as from 1995. Given that the highest average service life is equal
to 50 years and the discard function applied in the PIM model is assumed to be symmetric,
then the time series of GFCF data should go back to the year 1895.
4.12.21 In case of the government sector for which GFCF figures are available as from 1919,
data had to be extrapolated backwards for the period 1845 to 1918. This was done by
applying a correction factor of 0.5. In case of all other sectors, data had to be extrapolated
backwards for the period 1845 to 1953. This was done by applying a correction factor of 0.5
for the period 1941 to 1953, whilst a correction factor of 0.4 was used for the years prior to
1941. Given the average service lives listed in Table 4.12.3, the extrapolated figures (i.e.
prior to 1954 in case of all sectors except S.13 and prior 1919 for S.13) will only have an
effect on ‘Construction Work’ which has a maximum service live of 100 years.
299
Gross National Income Inventory
Price indices (base year 2000)
4.12.22 The GFCF deflator is made up of two broad components: a machinery deflator and a
construction deflator. In turn, the machinery deflator is broken down into a number of
deflators, based on the importation of machinery (unit value indices). These deflators were
introduced in 1995, when a new base year was introduced in the National Accounts Unit and
when the whole system of deflators was reviewed.
This review brought about a new
deflation system, whereby aggregates started being deflated at the lowest level of detail
possible. Previously, such level of detail was not available.
4.12.23 The deflator for construction is based on the inputs of construction such as stone,
bricks, fuel, etc and also a wage element.
This split is available from 1995 onwards.
Therefore, in the deflation of GCF we cannot use detailed deflators prior to 1995 simply
because this data are not available in the level of detail that it is available now. So we would
have to stick to the overall machinery and construction deflators to go back to 1895.
4.12.24 Thus, the GFCF deflator for machinery was applied for the following assets:
CPA Description
Machinery and equipment n.e.c.
Equipment mainly designed or used for the production of water and electricity
Catering equipment
Equipment used for construction of buildings and excavation
Computer and electronic equipment
Communication and broadcasting equipment
Medical equipment
Motor vehicles
Ships and vessels
Aircraft and spacecraft
Furniture, fixtures, fittings and soft furnishings
Computer software
Other machinery / plant
300
The income approach
and, the GFCF deflator for construction was applied for the following assets:
CPA Description
Construction work
Cable infrastructure
Pipeline infrastructure
The perpetual inventory method (PIM) model
4.12.25 The PIM model for the estimation of CS and CFC was prepared during the
Transition Facility 2004 Capital Stock and Consumption of Fixed Capital Project. The four
main functions applied in this model are the following:
where:
M maximum service life of a vintage of an asset (i.e. 2 * the average service life)
c steepness of the mortality function (assumed to have the value of 3)
p skewness of the mortality function (assumed to have the value of 0.5)
k remaining years of service of a piece of a vintage of investment
i age of a capital asset (the actual service life of a piece of a vintage of an investment)
t year
4.12.26 Apart from the basic core data mentioned earlier (i.e. historic series of data relating
to GFCF and service life assumptions), the PIM model requires additional assumptions about
the spread of the retirements of the capital assets around the average service life. These
assumptions can be represented by a density function which is called the mortality function.
A mortality function h(i) indicates what proportion of a vintage of capital assets are retired in
a given period. A bell-shaped mortality function is usually used to describe the pattern of
retirements. A quasi-logistic function is being applied in Malta. This is a function which can
be either symmetrical or skewed to the left or right, depending on the values assigned to
301
Gross National Income Inventory
particular parameters. In Malta, a symmetrical mortality function is being used for all
sectors.
4.12.27 The survival function g(i) indicates the proportion of the vintage of capital assets
acquired over the period (t-i) that is still in use in period t (i.e. after i periods). In other
words, if one wants to know what proportion of a vintage of capital assets are still in use over
a given period, one has to add up all the retirements from the preceding periods.
In other words the GCS at the beginning of year t may be calculated as follows:
M
GCSt = ∑ I t-i g(i)
(5)
i=1
where:
I t-i = GFCF in year t-i
CFC is equivalent to the difference between the GCS and the net capital stock (NCS)
4.12.28 The calculation of the net capital stock (NCS) is similar to that of the GCS, with the
difference that an additional variable is incorporated which describes the consumption of
fixed capital. The formula for the NCS at the beginning of year t is as follows:
M
NCSt = ∑ I t-i g(i)net
i=1
(6)
where
g(i)net, the net value function shows the proportion of capital assets purchased over the period
t-i and not yet depreciated at time t (i.e. after i periods).
4.12.29 In the model the net value function g(i)net is equivalent to:
g(i)net = g(i-1)net – h(i-1)net
(7)
i.e. the net value function when the age of an asset is i-1 less the depreciation function when
the age of an asset is i-1.
302
The income approach
4.12.30 In the model the depreciation function h(i)net is assumed to be linear. This means
that depreciation is equally distributed according to the service life i of an individual piece
(H_I) of a vintage t of GFCF. This individual piece of GFCF is given by the mortality
function h(i), derived from the survival function. No age efficiency schedules have been
assumed. This implies that every piece of investment of a certain vintage will have the same
efficiency over its service life. The depreciation function is equivalent to:
h(i)net = [(g(i) – g(i+1) – 0)/i] + h(i+1)net
(8)
i.e. the survival function when the age of an asset is i less the survival function when the age
of an asset is i+1 less salvage value71 of the asset which is assumed to be equivalent to 0
divided by age of a capital asset i (the actual service life of a piece of a vintage of an
investment) add the deprecation function when the age of an asset i+1.
4.12.31 In the model CFC at time t is calculated as follows:
CFCt = NCSt – NCSt+1 + It
(9)
where:
NCSt+1 – NCSt = It net
Then, CFCt = (-ve)It net + I t
where:
It net = net fixed capital formation at time t
Assuming t = 2003
Then the CFC for 2003 is equivalent to:
the NCS at the beginning of 2003 (i.e. closing NCS at end of 2002) less the NCS at beginning
of 2004 (i.e. closing NCS at end of 2003) which is equivalent to the net fixed capital
formation for 2003 (i.e. GFCF less depreciation) add GFCF for 2003.
71
Cash received upon disposal.
303
Gross National Income Inventory
304
CHAPTER 5
The expenditure approach
5.0
5.0.1
GDP according to the expenditure approach
The expenditure approach measures total expenditure on final goods and services
produced in the domestic territory, or, alternatively, the sum of final uses of goods and
services by resident institutional units plus exports less imports of goods and services.
5.0.2
The total is obtained from the sum of final consumption expenditure of households,
non-profit institutions serving households (NPISHs) and government on goods and services;
gross capital formation (GCF) which is further sub-divided into gross fixed capital formation
(GFCF), changes in inventories and acquisitions less disposals of valuables; and net exports
of goods and services.
5.0.3
In Malta the expenditure approach of gross domestic product (GDP) is obtained by
the following calculation.
Table 5.0.1: Main components of the expenditure approach, in thousands of Euro
Main components
2010
(Thousand Euro)
Household final consumption expenditure (HFCE) (Section 5.7)
Add
5,101,337
NPISHs final consumption expenditure (Section 5.8)
Add
97,011
Government final consumption expenditure (Section 5.9)
Add
1,286,441
Gross fixed capital formation (Section 5.10)
Add
1,411,637
Changes in inventories (Section 5.11)
Add
164,511
Acquisitions less disposals of valuables (Section 5.12)
Add
-17,917
Exports of goods and services (Sections 5.13 – 5.14)
Add
10,114,105
Imports of goods and services (Sections 5.15 – 5.16)
Less
10,174,165
GDP from the expenditure approach
6,599,507
305
Gross National Income Inventory
5.1
5.1.1
The reference framework
The basic data sources used for the expenditure approach are outlined below for
each of the main components.
5.1.2
Household final consumption expenditure (HFCE) in the domestic market consists
of expenditure in Malta by residents and non-residents. Expenditure by resident consumers is
mainly based on the Household Budgetary Survey (HBS) for the benchmark years 2000 and
2008. The HBS is covered extensively in Section 5.7.2. Expenditure by non-residents in
Malta and expenditure by Maltese abroad is covered by Tourstat (Chapter 10, para. 10.1.13).
The national concept presented in para. 5.0.3 is arrived at after adding expenditure abroad by
residents and deducting expenditure by tourists in Malta.
The interpolation between
benchmark years for household final consumption expenditure in the domestic market and the
extrapolation thereafter is based on locally produced consumer goods, imported consumer
goods and services rendered to consumers. The commodity flow method is generally used in
case of manufactured goods while services are covered extensively through ad-hoc
questionnaires or supply-side sources. HFCE is classified by Classification of Individual
Consumption by Purpose (Coicop) (Chapter 9, Table 9.3.2).
5.1.3
NPISHs final consumption expenditure has been calculated for the first time in 1995
and classified using the Classification of the Purposes of Non-Profit Institutions Serving
Households (COPNI) (refer to Chapter 9, Table 9.3.3).
In 2010 the NPISHs final
consumption expenditure is estimated as 97.0 million Euro or 1.5 per cent of the GDP at
market prices.
5.1.4
Detailed statements of the government’s recurrent expenditure are obtained on a
quarterly basis from the Treasury Department and classified. Extra-budgetary units (EBUs)
are surveyed also on a quarterly basis. Detailed information on local councils’ expenditure is
available from the quarterly accounts. Government recurrent expenditure is classified by the
Classification of the Functions of Government (COFOG) (refer to Chapter 9, Table 9.3.4).
5.1.5
GFCF is classified is classified by non-financial assets (AN) Code (refer to Chapter
9, Table 9.3.5).
306
Data sources for ‘other buildings and structures’, and ‘machinery and
The expenditure approach
equipment’ are mainly annual reports and financial statements obtained from Malta Financial
Services Authority (MFSA), the Structural Business Statistics (SBS) survey, and government
statistics. The product breakdown for ‘machinery and equipment’ is mainly based on import
data. ‘Dwellings’ are based on permits which are provided by Malta Environment and
Planning Authority (MEPA) and construction costs which are updated every two years by a
construction company. Repairs and maintenance of dwellings are based on HBS, while a
large component of costs of ownership transfers in case of dwellings is based on
administrative data sources. Computer software and databases and research and development
(R&D) is based on the commodity flow approach which relies heavily on supply-side
sources. Thus, SBS survey and imports and exports data are extensively used to derive
estimates for computer software and databases while R&D relies heavily on the Frascati
surveys.
5.1.6
The main sources used for the annual calculation of changes in inventories are
annual reports and financial statements and the SBS survey. Inventories are split in the four
recommended categories in ESA 2010: materials and supplies, work-in-progress, finished
goods and goods for resale. However this breakdown is not explicitly shown in the national
accounts publications. For each category, a detailed product breakdown by the Classification
of Products by Activity (CPA) (refer to Chapter 9, Table 9.1.2) is available for changes in
inventories on an annual basis with a time lag of approximately three years.
5.1.7
Acquisitions less disposals of valuables are calculated using the commodity flow
method and relies on supply based sources such as domestic production, imports, exports
margins for dealers and HFCE.
5.1.8
Exports and imports of goods and services are derived from balance of payments
statistics. Goods are derived from international trade and transport statistics and adjusted for
by the Balance of Payments Unit in order to meet the requirements of the Balance of
Payments and International Investment Position Manual sixth edition (BMP6).
307
Gross National Income Inventory
5.2
The borderline cases
5.2.1 The borderline cases for HFCE
5.2.1.1 Some data sources used for the estimation of HFCE need to be adjusted so as to
follow the concepts laid out in ESA 2010.
5.2.1.2 Dwelling services produced by owner-occupiers have been estimated using the user
cost method, and the results reviewed within the context of the Phare 2000 Project on
Dwelling Services. Full details are available in Chapter 3, Section 3.18.
5.2.1.3 Wages and salaries in kind earned by households are based on three benchmark
years. Data for 2000 is available in two parts: an estimate based on a ‘Salaries and Benefits’
report carried out by Misco for 2000 and the other on a survey on fringe benefits covering
government agencies. As from 2004, the Labour Cost Survey (LCS) has been used for the
compilation of wages in kind. The LCS is available every four years and the results of 2004
and 2008 have been integrated in national accounts. The wages and salaries in cash are used
as indicator to generate estimates in between benchmark years. Details are available in
Chapter 4, Section 4.7.1.1.
5.2.1.4 Own consumption of agricultural produce by households is estimated by the
Agriculture and Environment Statistics Unit at the National Statistics Office (NSO).
Estimates for own consumption of fruit and vegetables, wine, animal and animal products,
such as milk and eggs, are based on coefficients obtained from the following Technical
Action Plan for the Improvement of Agriculture Statistics (TAPAS) Projects:
 Survey on Direct Sales of Fruit and Vegetable Production 2004;
 Kitchen Garden Survey 2004; and
 Survey on Sheep and Goats (Milk production in Malta) 2004/2005.
5.2.1.5 Consumption of wild fish catches by households is based on data received from the
Department of Fisheries which provides statistics regarding the amount of fish landings at the
central fish market along with values for exports of wild fish. Own consumption of wild fish
308
The expenditure approach
catches is derived by applying the ratio of output for own final use to market output from the
Census of Fisheries 2006, after adjusting for exhaustiveness.
5.2.1.6 The HBS requires households to provide data on goods purchased under hirepurchase agreement and thus such goods are included in HFCE.
5.2.1.7 Allocation of financial intermediation services indirectly measured (FISIM):
Stocks of loans and deposits of consumer households were included in the FISIM calculation
and its allocation into HFCE. The FISIM calculation allocated into HFCE is shown in the
following table.
More details on calculation and allocation of FISIM are described in
Chapter 3, Section 3.17.
Table 5.2.1.1: FISIM calculation for household final consumption expenditure, 2010, in thousands of
Euro
Loans
Accrued interest
Average loans*IRR
FISIM from loans
3,643,993
168,493
20,855
147,638
Deposits
Accrued interest
6,432,671
Average deposits*IRR
95,256
FISIM from deposits
36,815
TOTAL FISIM
58,441
5.2.1.8 The insurance service charge of life insurance services is fully allocated to HFCE.
The allocation of non-life insurance service charge is explained in Chapter 3, Section 3.2.
5.2.1.9 Direct payments from the insurers to repairers are included on the supply side
however this data are not used for the compilation of HFCE. Direct payments from the
insurers to other service providers especially health is fully covered given that data for the
expenditure approach is derived from supply side sources.
5.2.1.10 Car registration taxes classified as taxes on products and payments paid by
households for licences, permits, etc. which are regarded as purchases of services are
obtained directly from public finance statistics.
309
Gross National Income Inventory
5.2.1.11 HFCE excludes transfers in kind, payments by households made with respect of
‘Other current taxes’ (D.59). It also excludes subscriptions, contribution and dues paid by
households to NPISHs; voluntary transfers of cash or in kind by households to charities as
these are classified as ‘Miscellaneous current transfers’ (D.75).
5.2.1.12 The expenditure that owner occupiers incur on decoration or maintenance and repair
of the dwelling, that is not typically carried out by tenants and the purchase of materials for
the self-construction of dwellings or other buildings have been removed from HFCE. Coicop
codes Materials for the maintenance and repair of the dwelling (Coicop 04.3.1) and Services
for the maintenance and repair of the dwelling (Coicop 04.3.2) were investigated item by
item. A large proportion of expenditure on GFCF can be easily singled out via specific
questions on major repairs and maintenance in a detailed questionnaire requesting
information about households’ expenditure over the previous 12 months accompanying the
HBS 2000/2008 diaries.
Therefore the problem of singling out expenditure on self-
construction is restricted to the HBS 2000/2008 diaries. The expenditure recorded in these
diaries further includes an element of expenditure on repairs and maintenance that is to be
classified as intermediate consumption for the owner-occupier and not as HFCE.
5.2.1.13 Therefore, to single out repairs and maintenance classified as intermediate
consumption incurred by owner-occupiers, the following steps were undertaken:
Each item classified as expenditure on repair and maintenance in the HBS 2000
diaries was investigated and a coefficient indicating that proportion to be allocated
as GFCF was estimated by expert assessment, case by case. This was done both for
owner-occupiers and renters, although the ESA clearly specified that maintenance
and repairs usually carried out by tenants should be treated as HFCE. The rationale
underlying this separation of costs into HFCE and GFCF also for tenants living in
rented dwellings in spite of the ESA 1995 definition, is the fact that due to the very
low rents charged for pre-1995 contracts, landlords refuse to carry out major repairs
and maintenance themselves. Subsequently, the tenants tend to incur such major
expenditure.
The remaining expenditure for owner-occupiers was separated into intermediate
consumption and HFCE. This was done on the basis of the knowledge that whilst
310
The expenditure approach
expenditure on repairs and maintenance (excluding GFCF) by owner-occupiers is a
composite of intermediate consumption and HFCE, that of renters (excluding GFCF)
is entirely HFCE. Therefore, by assuming that HFCE per dwelling for owneroccupiers was equal to that by renters, it was possible to single out intermediate
consumption per dwelling for owner-occupiers.
The resulting estimated
intermediate consumption per dwelling ratio is then multiplied by the owneroccupied dwelling stock – including summer residences and empty dwellings owned
by households.
5.2.1.14 Licences and fees paid by households to government that are not classified as taxes
have been included in HFCE. This treatment is consistent with ESA 2010, para. 4.79 and
4.80. Hence items such as television licences, driving licences and driving test fees, fees for
Visas etc. These licences are paid to the government in return for a service, and were
therefore in the HFCE estimates, and classified under the appropriate Coicop classification of
that service. On the other hand, car registration taxes and stamp duties have been classified
as taxes in accordance with the definitions presented in ESA 2010, para. 4.79 and 4.80. The
identification of such licenses, fees and taxes is provided by the Public Finance Unit.
5.2.1.15 The recording of expenditure on goods under hire purchase has been valued at the
time the good was delivered even if no legal change of ownership took place at that particular
point in time. This is in accordance with ESA 2010, para. 3.111 in the HBS raw data.
5.2.2 The borderline cases for GFCF
5.2.2.1 The ESA, in addition to traditional material goods, specifies expenditures which do
not take material form but which are not consumed in the production during a year. The new
ESA 2010 regulation confirmed those already identified and introduced new concepts,
extending the assets recognised as GFCF.
a) One of the main changes introduced by ESA 2010 regulation was recognition of
research and development as intangible assets. The new estimate followed the
Eurostat R&D task force recommendations and the guidelines provided in the
Manual on measuring R&D in ESA 2010.
Full details are presented in para.
5.10.3.6, AN.1171 Research and Development.
311
Gross National Income Inventory
b) Structures and equipment used by the military, light weapons and armoured vehicles
used by non-military units are not recorded in Malta (refer to para. 5.10.3.4, AN.114
Weapon system).
c) Mineral exploration and evaluation (AN. 1172) occurs quite rarely in Malta, and in
the eventuality this will be recorded as GFCF. These assets were not recorded in
Malta in year 2010.
d) Computer software and databases - details are presented in para. 5.10.3.6, AN.11731
and AN.11732.
e) Entertainment, literary or artistic originals - details are presented in para. 5.10.3.6,
AN.1174.
f)
Changes in livestock used in production year after year - details are presented in
para. 5.10.3.5, AN.115.
g) Changes in trees that are cultivated year after year - details are presented in para.
5.10.3.5, AN.115.
5.2.2.2 The main sources to compile annual and quarterly GFCF are from the demand side.
They provide data on the structure, activity and performance of businesses. The main sources
include SBS survey, short-term statistics, financial statements and the annual reports. The
inclusion of the items below in GFCF is ascertained by the direct source of business accounts
adjusted to national accounts rules.
a) Significant improvements to existing fixed assets beyond ordinary maintenance and
repairs are recorded as acquisitions of tangible fixed assets in the schedule of fixed
assets. In case of dwellings, details are presented in para. 5.10.3.2, AN.111.
b) The acquisition of fixed assets by financial leasing are recorded in the lessee’s
schedule of fixed assets of the accounts and the SBS questionnaire.
c) Terminal costs, i.e. considerable cost which are associated and which are considered
as one-off occurrences which are recorded once in GFCF. Such cost relate to main
companies of the Maltese economy which provide detailed data on a quarterly basis.
d) The amount of car registration taxes as part of the taxes on products are recorded as
acquisitions of tangible fixed assets in the schedule of fixed assets of the financial
statements.
312
The expenditure approach
5.2.2.3 Following the demand side estimation method and the business accounting rules, the
borderline assets below are excluded from GFCF:
a) Transaction like small tools, ordinary maintenance and repair and the acquisition of
fixed assets to be used under an operational leasing contract are recorded in the
companies’ profit and loss expenditure classified in national accounts as
intermediate consumption.
b) ‘Machinery and equipment’ acquired by households for the purposes of final
consumption are eliminated from GFCF by the estimation method. The annual
estimate based on the SBS survey and financial statements represent unincorporated
enterprises ensuring the distinction from HFCE.
5.3
5.3.1
Valuation
The valuation of individual component of use of GDP corresponds in principal with
ESA 2010, namely prices of products and services and the time of recording.
5.3.2
HFCE and GFCF are valued at purchaser’s prices which are the prices the purchaser
pays for products including taxes less subsidies on products, transport charges paid separately
by the purchaser and deductions for any discounts for bulk or off-peak-purchases from
standard prices or charges. Purchaser’s prices exclude interest or services charges added
under credit arrangements and extra charges incurred as a result of late payment.
5.3.3
Source data with respect to HFCE at benchmark years derived from HBS are
generally available at purchaser’s prices. The extrapolation of HFCE which is based on
import data and local production is adjusted to include taxes less subsidies on products. In
business accounting GFCF is valued at cost which includes all costs necessary to bring the
asset to working condition for its intended use. This would include not only its original
purchase price but also costs of site preparation, delivery and handling, installation, related
professional fees for architects and engineers, and the estimated cost of dismantling the asset
and restoring the site.
This implies that GFCF as provided in surveys, censuses and
administrative sources follows ESA 2010 valuation principals.
313
Gross National Income Inventory
5.3.4
Imputed rents are valued according to the user cost method; user cost consist of
intermediate consumption, fixed capital consumption, net other taxes on production (D.29)
and net operating surplus (B.2n) calculated as 2.5 per cent of replacement value of dwellings
and of market price of associated land.
5.3.5
Goods and services supplied as employee compensation in kind are valued at basic
prices when produced by the employer and at the purchasers’ prices of the employer when
bought in by the employer.
5.3.6
Retained goods or services for own consumption are valued at basic prices.
5.3.7
GFCF on own account is being valued at the basic prices with respect to software,
research and development, services of owner occupied dwellings generating net operating
surplus and, own-account construction of dwellings (including major repairs, renovation and
extensions of existing dwellings) by households included in the output measure own-account
major repairs and maintenance by owner occupiers. The application of a mark-up to arrive to
basic prices still needs to be implemented in case of individual companies which report
capitalised production or capitalized wages in annual audited accounts or in SBS survey.
5.3.8
a)
Acquisitions of intellectual property products are valued in different ways:
for mineral exploration: by the costs of actual test drillings and borings, and the costs
incurred to make it possible to carry out tests, such as aerial or other surveys;
b)
for computer software: by purchasers’ prices when purchased on the market, or at its
estimated basic price, or if no basic price is available, at its costs of production plus a
mark-up for net operating surplus (except for non-market producers) when
developed in-house; and
c)
for entertainment, literary or artistic originals: valued at the price paid by the
purchaser when it is sold, or if not sold, the following methods of estimation are
acceptable:
i.
314
at the basic price paid for similar originals;
The expenditure approach
ii.
the sum of its production costs plus a mark-up (except for non-market
producers) for net operating surplus; or
iii.
5.3.9
the discounted value of expected receipts.
Final consumption expenditure (P.3) by general government or NPISHs is equal to
the sum of their output (P.1), plus the expenditure on products supplied to households via
market producers, part of social transfers in kind (D.632), minus the payments by other units,
market output (P.11) and payments for non-market output (P.131), minus own-account capital
formation (P.12). Final consumption expenditures by general government or NPISHs on
products produced by themselves are recorded at the time they are produced, which is also
the time of delivery of such services by government or NPISHs. For the final consumption
expenditure on goods and services supplied via market producers, the time of delivery is the
time of recording.
5.3.10
Changes in inventories are obtained from statistical surveys and administrative
sources and are valued in according to principals of business bookkeeping. Revaluation of
book value data on inventories will be integrated in national accounts with the next
benchmark revision. A description of the work carried out during 2015 will be provided in
Section 5.11.
5.3.11
Imports and exports of goods are to be valued free on board (fob) at the border of the
exporting country. This value is:
a) the value of the goods at basic prices;
b) plus the related transport and distributive services up to that point of the border,
including the cost of loading on to a carrier for onward transportation; and
c) plus any taxes less subsidies on the goods exported; for intra-European Union (EU)
deliveries this includes value added tax (VAT) and other taxes on the goods paid in
the exporting country.
5.3.12
There are broadly two approaches, closely linked with customs procedures, used for
the measurement of international trade in goods. These are the general trade system and the
special trade system.
The general trade system recorded aggregates include all goods
315
Gross National Income Inventory
entering or leaving the economic territory of a country with the exception of simple transit
trade. In particular, all goods which are received into customs warehouses are recorded as
imports at that stage whether or not they subsequently go into free circulation in the member
state of receipt. Similarly, outgoing goods from customs warehouses are included in the
general trade aggregates at the time they leave the member state. The special trade system,
on the other hand, is a narrower concept. Goods from a foreign country which are received
into customs warehouses are not recorded in the special trade aggregates unless they
subsequently go into free circulation in the country of receipt (or are placed under the
customs procedures for inward processing or processing under customs control). Similarly,
outgoing goods from customs warehouses are not recorded as exports. Data are generally
provided using the general trade system; however, in special cases such as tobacco the special
trade system is preferred.
5.3.13
Imports of services are valued at purchasers’ price and exports of services at basic
prices.
5.3.14
Flows are recorded on an accrual basis; that is, when economic value is created,
transformed or extinguished, or when claims and obligations arise, and transformed or are
cancelled.
5.4
Transition from private accounting and administrative concepts to
ESA 2010 national accounts concepts
5.4.1
A number of important conceptual additions and adjustments relating to the final use
aggregate of GDP. Adjustments are not limited to those shown in Table 5.4.1.
316
The expenditure approach
Table 5.4.1: Conceptual adjustments in the expenditure approach, 2010, in millions of Euro
GDP EXPENDITURE APPROACH
Total final consumption expenditure
Total
Conceptual
53.3
92.7
145.9
Household final consumption expenditure
53.5
92.7
146.2
NPISHs final consumption expenditure
-3.3
0.0
-3.3
3.0
0.0
3.0
0.0
0.0
0.0
GFCF
0.0
0.0
0.0
Changes in inventories
0.0
0.0
0.0
materials and supplies
0.0
0.0
0.0
work-in-progress
0.0
0.0
0.0
finished goods
0.0
0.0
0.0
goods for resale
0.0
0.0
0.0
0.0
0.0
0.0
36.0
-202.0
-166.0
0.0
-202.0
-202.0
36.0
0.0
36.0
31.2
-520.4
-489.3
0.0
-520.4
-520.4
31.2
0.0
31.2
58.1
411.1
469.3
General government final consumption expenditure
GCF
Acquisitions less disposals of valuables
Exports of goods and services
goods
services
Imports of goods and services
goods
services
Gross domestic product
5.4.2
Allocation of
FISIM
Conceptual
Other
Conceptual
HFCE is first derived using the ‘domestic concept’. In order to arrive to the HFCE,
expenditure of resident households abroad has to be added while expenditure of non-resident
households in Malta has to be deducted. This adjustment results in HFCE for residents.
However, this adjustment is not shown as a Conceptual Adjustment but under Surveys and
Censuses. Other Adjustments made to HFCE include assumed rents for owner occupied
dwellings, the insurance service charge instead of the insurance premiums paid and FISIM.
Imputed rents are included under Other Extrapolations and Models given that Malta uses the
user cost method and not the stratification method.
317
Gross National Income Inventory
5.4.3
Income in kind, tips and gratuities are included in HFCE under N7. More details are
provided in Section 5.2.
5.4.4
GFCF derived from surveys, censuses and administrative sources follow ESA 2010
valuation principals especially in case of acquisitions. Disposals of existing fixed assets by
sale should be valued at basic prices, deducting any cost incurred by the seller. Respondents
often value disposals at cost rather than basic prices. Adjustments with respect to valuation
adjustments for disposals are included as Data Validation. The commodity flow method is
used to derive estimates for computer software and databases and R&D given that demand
based sources do not satisfy ESA 2010 requirements. Similarly entertainment, literary and
artistic originals are worked out independently from private accounting and administrative
concepts. Own-account fixed capital formation is valued at basic prices whenever possible
thus deviating from private accounting and administrative concepts. Detailed explanations
are provided in Section 5.10.
5.4.5
Changes in inventories are obtained from statistical surveys and administrative
sources and are valued in according to principals of business bookkeeping. Revaluation of
book value data on inventories will be integrated in national accounts with the next
benchmark revision. Consequently, this adjustment is not being shown in Table 5.4.1.
5.4.6
Values for imports and exports of goods and services relate to the transition between
international trade statistics and balance of payment statistics. The Allocation of FISIM is
being shown separately.
5.5
The roles of direct and indirect estimation methods and of
benchmarks and extrapolations
5.5.1
Malta’s national accounts figures in the expenditure measure are heavily reliant on
Extrapolations and Models. The contribution of this component stood at 61.5 per cent of
total GDP. The commodity flow model (CFM) contributed 26.9 per cent to GDP and Other
Extrapolations and Models 32.3 per cent to GDP. Reliance on Surveys and Censuses is
moderate at 17.2 per cent of total GDP, while reliance on Combined Data and Administrative
Records stood at 7.9 per cent and 4.1 per cent of total GDP respectively.
318
The expenditure approach
5.5.2
The use of Other Extrapolations and Models is concentrated in HFCE. The HBS is
not carried out annually but with a time lag of approximately eight years. National accounts
data are now based on the results of HBS 2008 and the HBS 2015 may be integrated
approximately in 2018. Hence, most of the Coicop expenditure items are derived using the
CFM based and thus based on the production measure and imports. Coicop expenditure
items which rely on fixed percentages of data from surveys, censuses or administrative
sources were classified as Other Extrapolations and Models.
5.5.3
Surveys and Censuses in the expenditure approach are attributable mainly to exports
and imports of services which are covered by a Balance of Payments (BOP) survey, the
Tourstat survey which is an on-going frontier survey and the SBS survey which covers GFCF
and changes in inventories is available with a time lag of 3 years.
5.5.4
Combined Data contribute 7.9 per cent to GDP.
In HFCE, expenditure on
restaurants and hotels (Coicop 11) is the result of a combination of sources such as Tourstat
and the Malta Tourism Authority (MTA) expenditure survey for tourists. In GFCF annual
financial statements are combined with import data.
5.5.5
Administrative Records for imports and exports of goods and services are based on
Extrastat and Intrastat statistics for goods for services.
statements are used to compile GFCF.
Annual reports and financial
In case of HFCE administrative data from the
Departmental Accounting System (DAS) is used to derive taxes, and other fees charged to
consumers by the general government sector. Other sources for HFCE include official fruit
and vegetable markets, the civil abattoir and other slaughterhouses.
319
Gross National Income Inventory
Table 5.5.1: Basis for national accounts figures in the expenditure approach, 2010, in millions of Euro
Basis for national accounts figures
Combined Data
Benchmark Extrapolations
CFM
CFC
Dwellings - Stratification
Method
FISIM
Other E&M
Total Extrap+Models
1,398.7
323.9
0.0
1,598.4
155.3
0.0
0.0
1,916.9
3,670.5
0.0
4,905.7
-487.6
211.7
323.9
0.0
1,598.4
0.0
0.0
0.0
1,875.6
3,474.0
0.0
3,521.9
0.2
47.8
0.0
0.0
0.0
11.1
0.0
0.0
41.2
52.3
0.0
100.3
0.0
1,139.2
0.0
0.0
0.0
144.2
0.0
0.0
0.0
144.2
0.0
1,283.4
497.3
361.1
199.8
0.0
175.9
0.0
0.0
0.0
224.8
400.7
0.0
1,458.9
436.1
352.2
199.8
0.0
193.8
0.0
0.0
0.0
224.8
418.6
0.0
1,406.7
61.2
8.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
70.1
Materials and supplies
-2.0
8.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
6.9
Work-in-progress
38.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
38.2
Finished goods
-19.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-19.2
Goods for resale
44.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
44.2
Acquisitions less
disposals of valuables
0.0
0.0
0.0
0.0
-17.9
0.0
0.0
0.0
0.0
-17.9
0.0
-17.9
Exports of goods and
services
3,239.7
7,040.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
10,280.1
0.0
2,809.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
2,809.0
3,239.7
4,231.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
7,471.1
Total final
consumption
expenditure
Household final
consumption
expenditure
NPISH final
consumption
expenditure
General government
final consumption
expenditure
Gross capital
formation
Gross fixed capital
formation
Changes in inventories
Goods
Services
Imports of goods and
services
Goods
Services
Gross domestic
product
5.6
5.6.1
Total (Sources)
Administrative Records
-487.4
GDP EXPENDITURE
APPROACH
Other
Surveys and Censuses
Extrapolations and Models
2,115.7
8,527.7
0.0
0.0
0.0
0.0
0.0
0.0
11.3
11.3
0.0
10,654.7
0.0
4,314.4
0.0
0.0
0.0
0.0
0.0
0.0
11.3
11.3
0.0
4,325.7
2,115.7
4,213.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
6,329.0
1,133.9
272.4
523.6
0.0
1,774.3
155.3
0.0
0.1
2,130.3
4,059.9
0.0
5,989.9
The main approaches taken with respect to exhaustiveness
As with all the three approaches to measuring GDP, the National Accounts Unit
makes significant efforts to ensure exhaustiveness in the expenditure approach.
In the
expenditure approach, Exhaustiveness Adjustments had an impact of 2.4 per cent of GDP.
320
The expenditure approach
5.6.2
Exhaustiveness Adjustments are most prominent in HFCE. Included under N2
which covers activities of producers that avoid registration entirely, are illegal activities such
as, illegal gambling, narcotics and prostitution. Exhaustiveness Adjustments included under
N7a which refers to data that is incomplete, not collected or not directly collectable mainly
relates to output for own final use by market producers and data under category N7b which
refers to data that is incorrectly handled, processed or compiled by statisticians includes
estimates for wages in kind, undeclared expenditure abroad and tips.
Table 5.6.1: Exhaustiveness adjustments in HFCE, 2010, in thousands of Euro
Coicop
Code
Coicop Description
01
1.1
01.1.1
01.1.2
01.1.3
01.1.4
01.1.6
01.1.7
01.1.8
01.1.9
1.2
01.2.1
01.2.2
FOOD AND NON-ALCOHOLIC BEVERAGES
Food
Bread and cereals
Meat
Fish
Milk, cheese and eggs
Fruit
Vegetables
Sugar, jam, honey, chocolate and confectionery
Food products n.e.c.
Non-alcoholic beverages
Coffee, tea and cocoa
Mineral waters, soft drinks, fruit and vegetable juices
02
2.1
02.1.1
02.1.2
02.1.3
2.2
02.2.1
2.3
02.3.1
03
03.1.0
03.1.1
03.1.2
03.1.3
03.2.0
ALCOHOLIC BEVERAGES, TOBACCO AND
NARCOTICS
Alcoholic beverages
Spirits
Wine
Beer
Tobacco
Tobacco
Narcotics
Narcotics
CLOTHING AND FOOTWEAR
Clothing
Clothing materials
Garments
Other articles of clothing and clothing accessories
Footwear
N2
N7a
N7b
Total
Exhaustiveness
-
5,076
5,076
1,968
684
502
493
1,428
-
11,416
8,531
11
4,260
4,260
2,885
1,421
1,464
16,491
13,606
11
1,968
684
502
493
1,428
4,260
4,260
2,885
1,421
1,464
19,108
1,971
11,675
32,754
19,108
19,108
-
1,971
1,971
-
8,835
2,856
2,840
3,140
2,840
2,840
5,959
5,927
246
2,840
2,840
32
10,806
2,856
4,810
3,140
2,840
2,840
19,108
19,108
5,959
5,927
246
2,840
2,840
32
321
Gross National Income Inventory
Table 5.6.1: Exhaustiveness adjustments in HFCE, 2010, in thousands of Euro (cont...)
Coicop
Code
Coicop Description
03.2.1
07
07.1.0
07.1.1
07.2.0
Shoes and other footwear
TRANSPORT
Purchase of vehicles
Motor cars
Operation of personal transport equipment
Fuels and lubricants for personal transport
07.2.2
equipment
Maintenance and repair of personal transport
07.2.3
equipment
07.3.0
Transport services
07.3.2
Passenger transport by road
07.3.4
Passenger transport by sea and inland waterway
08
COMMUNICATION
08.3.0
Telephone and telefax services
08.3.1
Telephone and telefax services
09
RECREATION AND CULTURE
09.4.0
Recreational and cultural services
09.4.3
Games of chance
11
RESTAURANTS AND HOTELS
11.1.0
Catering services
11.1.1
Restaurants, cafés and the like
11.2.0
Accommodation services
11.2.1
Accommodation services
MISCELLANEOUS GOODS AND
12
SERVICES
12.1.0
Personal care
Hairdressing salons and personal grooming
12.1.1
establishments
12.2.0
Prostitution
12.2.1
Prostitution
Total exhaustiveness
5.6.3
N2
N7a
N7b
Total
Exhaustiveness
-
-
32
57,140
50,624
50,624
5,665
32
57,140
50,624
50,624
5,665
-
-
4,327
4,327
782
782
782
-
-
1,338
851
722
128
738
738
738
1,990
1,915
1,915
75
75
1,338
851
722
128
738
738
738
782
782
782
1,990
1,915
1,915
75
75
9,254
-
-
1,930
1,930
11,184
1,930
9,254
9,254
29,144
7,046
1,930
90,848
1,930
9,254
9,254
127,039
For GFCF, only an exhaustiveness adjustment for individual housing construction,
including reconstructions (classified under N3) was carried out, which amounted to 37.0
million Euro in 2010.
5.6.4
To ensure exhaustiveness in this field exports and imports for narcotics which
amounted to 8.7 million Euro in 2010. Imports of goods relating to internet shopping has be
classified as Other Extrapolations and Models in the process tables even if sometimes this is
referred to as an Exhaustiveness Adjustment.
322
The expenditure approach
5.7
Household final consumption expenditure (HFCE)
5.7.1 Overview
5.7.1.1 The final consumption of households represents 56.3 per cent out of the gross
domestic product (GDP) in the expenditure approach. The consumption of households is a
primary indicator of living standards; this is because wealth and income are available to
support consumption. A person with a higher level of consumption is considered as having a
higher level of economic well-being than someone with a lower level of consumption. The
Classification of Individual Consumption by Purpose (Coicop) code list is used for the
product classification of household final consumption expenditure (HFCE) as referred in
ESA 2010. ESA 2010 defines HFCE as the expenditure incurred by resident institutional
units on goods and services that are used for the direct satisfaction of individual needs or
wants.
5.7.1.2 HFCE in the national concept is equivalent to:
HFCE = Consumption on the Maltese territory (Private final consumption
expenditure in the domestic market) less Tourist expenditure in Malta add
Expenditure by Maltese abroad
where the calculation of the HFCE in the domestic market varies across Coicops. The
commodity flow approach is used in a corresponding Coicop when goods are both locally
produced and imported, for instance food is mainly derived by the commodity flow model
(CFM). The methods implemented for each Coicop for the calculation of private final
consumption expenditure in the domestic market are depicted in Table 5.7.1.1.
5.7.1.3 The transition to the national concept (NC), which is a component of the total
household consumption in the national concept, is equivalent to;
NC = Expenditure by Maltese abroad less Consumption by tourists in the
Maltese territory
323
Gross National Income Inventory
5.7.1.4 Table 5.7.1.1 is an extract of the process table of household consumption by Coicop
items, the national accounts results, the main sources used and the estimation method used in
year 2010. A description of each component found in the process table will be provided in
the following paragraphs.
Table 5.7.1.1: Extract of the process table 2010 for HFCE in millions of Euro
Surv. and Cens.
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total
Extrap+Models
Other
Total (Sources)
Basis for NA Figures in millions of Euro
Extrapolations and Models
HFCE
-487.6
211.7
323.9
0.0
1,598.4
0.0
0.0
0.0
1,875.6
3,474.0
0.0
3,521.9
1
2
3
4
5
6
7
8
9
10
11
12
NC
1.8
0.0
0.0
0.0
0.0
0.0
37.2
0.0
48.2
35.6
0.0
0.0
-610.4
7.3
70.0
0.0
0.0
0.0
18.8
0.0
0.0
76.9
0.8
0.0
37.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
323.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
637.0
39.1
117.7
0.0
281.5
15.6
23.1
0.0
113.8
0.0
329.2
41.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
30.2
85.2
539.6
26.8
146.5
407.2
162.8
198.1
22.7
47.5
222.5
-13.4
637.0
69.3
202.9
539.6
308.4
162.1
430.2
162.8
311.9
22.7
376.7
263.9
-13.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
646.1
139.3
202.9
539.6
308.4
180.8
467.4
162.8
437.0
59.1
700.5
301.8
-623.8
324
Allocation of
FISIM
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
HFCE
1
2
3
4
5
6
7
8
9
10
11
12
NC
Adjustments in millions of Euro
Exhaustiveness
Data Validation
Conceptual
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
53.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
53.5
0.0
92.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
92.7
0.0
146.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
146.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
29.1
0.0
19.1
0.0
0.0
0.0
0.0
0.0
0.0
0.8
0.0
0.0
9.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
97.9
16.5
13.6
6.0
0.0
0.0
0.0
57.1
0.7
0.0
0.0
2.0
1.9
0.0
127.0
16.5
32.8
6.0
0.0
0.0
0.0
57.1
0.7
0.8
0.0
2.0
11.2
0.0
-77.3
-77.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
195.9
-60.8
32.8
6.0
0.0
0.0
0.0
57.1
0.7
0.8
0.0
2.0
157.4
0.0
3,717.9
585.2
172.1
208.9
539.6
308.4
180.8
524.6
163.6
437.8
59.1
702.5
459.2
-623.8
The expenditure approach
Surveys and Censuses
5.7.1.5 For Coicop categories: 01.1.3, 07.3.2, 07.3.4, 09.3.5, 09.4.2, 09.6.1, 10.1.1, 10.2.1,
10.3.1 and 10.5.1 (refer to Chapter 9, Table 9.3.2 for Coicop description) Surveys and
Censuses were used in year 2010 to arrive at the total figure of private final consumption
expenditure in the domestic market.
5.7.1.6 A substantial part of the total ‘NC’ was allocated to this category. The term ‘NC’
refers to the transition from the domestic to the national concept. This is because, the
expenditure of tourists (those coming by air and by sea) in the Maltese territory and the
expenditure of Maltese travellers abroad are all derived from a specific survey called Tourstat
survey.
Administrative Records
5.7.1.7 For Coicop categories: 01.1.3, 02.2.1, 06.3.1, 09.4.3, 10.3.1, 12.4.1 and 12.7.1 (refer
to Chapter 9, Table 9.3.2 for Coicop description) financial statements were used in year 2010
to arrive at the total figure of private final consumption expenditure in the domestic market.
Combined Data
5.7.1.8 The data under this category refers to data coming from multiple sources. Multiple
sources were used for expenditure in Restaurants, cafés and the like (Coicop 11.1.1) to arrive
to the total figure of private final consumption expenditure in the domestic market. Multiple
sources for this Coicop for year 2010 consisted of: the fiscal data, the 2010 Structural
Business Statistics (SBS) survey and other surveys.
Commodity flow model (CFM)
5.7.1.9 The CFM was used for the Coicop items: 01.1.1, 01.1.2, 01.1.3, 01.1.4, 01.1.5,
01.1.6, 01.1.7, 01.1.8, 01.1.9, 01.2.1, 01.2.2, 02.1.1, 02.1.2, 02.1.3, 03.1.1, 03.1.2, 03.1.3,
05.1.1, 05.1.2, 05.2.1, 05.3.1, 05.3.2, 05.4.1, 05.5.1, 05.5.2, 05.6.1, 06.1.2, 06.1.3, 07.2.1,
09.2.1, 09.2.2, 09.3.1, 09.3.2, 09.3.3, 09.3.4, 09.5.1, 09.5.2, 09.5.3, 09.5.4, 11.1.1, 11.2.1,
12.3.1 and 12.3.2 (refer to Chapter 9, Table 9.3.2 for Coicop description) to arrive at the total
final consumption expenditure in the domestic market, where the summation of both local
production and imports is worked out.
325
Gross National Income Inventory
Other Extrapolations and Models
5.7.1.10 Data in this category refers to data based on various calculations and all kinds of
estimates. All kinds of estimations, for Coicop items: 02.2.1, 03.1.1, 03.1.2, 03.1.4, 03.2.1,
03.2.2, 04.1.1, 04.1.2, 04.2.1, 04.2.2, 04.3.1, 04.3.2, 04.4.1, 04.4.2, 04.4.3, 04.4.4, 04.5.1,
04.5.2, 04.5.3, 04.5.4, 04.5.5, 05.1.1, 05.1.2, 05.1.3, 05.2.1, 05.3.1, 05.3.2, 05.3.3, 05.4.1,
05.5.1, 05.5.2, 05.6.1, 05.6.2, 06.1.1, 06.2.1, 06.2.2, 06.2.3, 07.1.1, 07.1.2, 07.1.3, 07.1.4,
07.2.1, 07.2.2, 07.2.3, 07.2.4, 07.3.2, 07.3.3, 07.3.4, 07.3.6, 08.1.1, 08.2.1, 08.3.1, 09.1.1,
09.1.2, 09.1.3, 09.1.4, 09.1.5, 09.2.1, 09.2.3, 09.3.1, 09.3.2, 09.3.5, 09.4.1, 09.4.2, 09.4.3,
09.5.1, 09.5.2, 09.6.1, 10.1.1, 10.2.1, 10.3.1, 10.4.1, 11.1.1, 11.1.2, 12.1.1, 12.1.2, 12.1.3,
12.6.2 and 12.7.1 (refer to Chapter 9, Table 9.3.2 for Coicop description) were used to arrive
to the total private final consumption expenditure in the domestic market.
Allocation of FISIM
5.7.1.11 Data under this category refers to financial intermediation services indirectly
measured, which are classified under Coicop 12.6.1 (refer to Chapter 9, Table 9.3.2 for
Coicop description).
Other Conceptual
5.7.1.12 Data in this category refers to insurance and to the Conceptual Adjustments designed
to bring basic data into line with ESA 2010 definitions.
Exhaustiveness Adjustment - N2
5.7.1.13 N2 covers activities of producers that avoid registration entirely, such as narcotics,
prostitution and illegal gambling. Data in this category covers data classified under Coicops:
02.3.1, 09.4.3 and 12.2.1 (refer to Chapter 9, Table 9.3.2 for Coicop description).
Exhaustiveness Adjustment – N7
5.7.1.14 Exhaustiveness Adjustments are sub-divided between N7a and N7b. N7a refers to
data that is incomplete, not collected or not directly collectable, and N7b refers to data that is
incorrectly handled, processed or compiled by statisticians. Data under category N7a refers
to the output for own final use by market producers and data under category N7b consists of
wages in kind, undeclared expenditure abroad and tips (refer to Table 5.6.1).
326
The expenditure approach
Balancing Adjustments
5.7.1.15 Balancing Adjustments are those adjustments made for no specific reasons and to
satisfy national accounting identities. Data under this category represents the adjustments
which were made to Meat (Coicop 01.1.2), Milk, cheese and eggs (Coicop 01.1.4) and Fruit
(Coicop 01.1.6) to get the total private final consumption expenditure in domestic market in
line with the supply and use of year 2010.
5.7.2 Main data sources and their conversion to national accounts results
5.7.2.1 HFCE is mainly derived from Surveys and Censuses, Administrative Records, the
CFM (inclusive of value added tax (VAT)), and Other Extrapolations and Models.
5.7.2.2 A number of Coicop categories are covered by surveys, censuses and administrative
records. This is particularly relevant in Malta due to a small number of large operators in
particular industries such as passenger transport, distributors of fuel, electricity and water
supply, and telecommunications. In such cases the Household Budgetary Survey (HBS) is
used to determine the values attributable to HFCE.
5.7.2.3 The CFM combines import data and local manufacturing data. This is considered to
be the main approach with respect to goods. Data on retail sales is not used in Malta and
instead imports are regarded the best substitute given that most of the goods consumed in
Malta are imported. The HBS is used to determine the values attributable to HFCE and thus
items intended for the intermediate consumption, government consumption, fixed capital
formation and changes in inventories are excluded.
5.7.2.4 Other Extrapolations and Models are generally applicable to services and goods for
which no local production is available. The benchmark is established by the HBS and
extrapolations are based on indicators pertaining to each corresponding Coicop categories.
5.7.2.5 Table 5.7.2.1 lists the main data sources for quarterly and annual estimation of the
final consumption expenditure of households, classified by Coicop.
327
Gross National Income Inventory
Table 5.7.2.1: Data sources by Coicop 1-digit level
Coicop 1-digit level
01-Food and non-alcoholic
beverages
02-Alcoholic beverages,
tobacco and narcotics
03-Clothing and footwear
04-Housing, water,
electricity, gas and other
fuels
05-Furnishings, household
equipment and routine
household maintenance
06-Health
07- Transport
08-Communication
09-Recreation and culture
10-Education
11-Restaurants and hotels
12-Miscellaneuos goods and
services
328
Data sources/Indicators
Import quarterly data
HBS 2008
Manufacturing survey (for years 1995-2012)
(Short-Terms Statistics) STS indices (for years 2013 onwards)
Economic accounts of agriculture (EAA)
Quarterly results of the output approach
News releases as regards to this Coicop item
Supply and use tables (SUTs)
Import quarterly data
HBS 2008
Manufacturing survey (for years 1995-2012)
STS indices (for years 2013 onwards)
Excise duties (further details refer to para. 3.28, Taxes on products, including VAT)
Economic accounts of agriculture (EAA)
Quarterly results of the Output approach
Import quarterly data
HBS 2008
Manufacturing survey (for years 1995-2012)
STS indices (for years 2013 onwards)
Quarterly results of the Output approach
HBS 2008
Quarterly results of the Output approach
Quarterly data on Fuel Market shares
Import quarterly data
HBS 2008
Manufacturing survey (for years 1995-2012)
STS indices (for years 2013 onwards)
Quarterly results of the Output approach
Import quarterly data
HBS 2008
Manufacturing survey (for years 1995-2012)
STS indices (for years 2013 onwards)
Quarterly results of the Output approach
Import quarterly data
HBS 2008, quarterly surveys and the SBS surveys
Supply and use tables (SUTs)
Manufacturing survey (for years 1995-2012)
STS indices (for years 2013 onwards)
Quarterly results of the Output approach
News releases as regards to this Coicop item
Quarterly data on Fuel Market shares
Motor Vehicle registration tax (further details refer to para. 3.28, Taxes on products, including VAT)
Harmonised index of consumer prices (HICP)
Quarterly data regarding population and tourism statistics
Import quarterly data
HBS 2008 and quarterly surveys
Financial Statements
News releases as regards to this Coicop item
Quarterly results of the Output approach
Import quarterly data
HBS 2008
Manufacturing survey (for years 1995-2012)
STS indices (for years 2013 onwards)
Economic accounts of agriculture (EAA)
Quarterly results of the Output approach
News releases as regards to this Coicop item
Television Licenses (further details refer to para. 3.28, Taxes on products, including VAT)
HBS 2008
Quarterly results of the Output approach
Financial Data Reporting System (FDRS)
Harmonised Index of consumer prices (HICP)
Supply and use tables (SUTs)
Quarterly results of the Output approach
Import quarterly data
HBS 2008 and SBS survey
Manufacturing survey (for years 1995-2012)
STS indices (for years 2013 onwards)
Quarterly results of the Output approach
Registry fees on various items and other fees paid by households (further details refer to para. 3.28, Taxes on products,
including VAT)
The expenditure approach
5.7.2.6 The main data sources used in the compilation of HFCE include:
a) Household Budgetary Survey (HBS);
b) International Trade Statistics;
c) Balance of payments report on tourist expenditure and expenditure of residents
abroad;
d) Annual survey of tourist expenditure by product provided by the Malta Tourism
Authority (MTA);
e) Local sales derived from a survey of manufacturing companies for the years 19952012 and the Short-Term Statistics (STS) index thereafter; and
f)
National accounts questionnaires and other ad-hoc surveys.
Household Budgetary Survey (HBS)
5.7.2.7 The HBS, which is a national inquiry, provides a wealthy source of information on a
wide range of social and economic variables. The scope of the survey is to provide users
with the household consumption expenditures as totals and distributed among different types
of goods and services.
The survey also aims to determine the changes in patterns of
consumer expenditure by Maltese households over a number of years for different socioeconomic groups. This is possible because the HBS also collects socio-demographic and
other information on all household members.
5.7.2.8 HBS 2008 collected information on consumption expenditure according to the
Coicop 2003, where household consumption expenditures are recorded at the price actually
paid, including indirect taxes - VAT and excise duties. The HBS is normally carried out
approximately every eight years with the last ones being done in the years 2000 and 2008,
whilst HBS 2015 is still in the process. The targeted population in 2008 consisted of all
private households and corresponding members, where each statistical unit corresponds to a
private household and its household members.
The survey covered private households
resident in Malta. Since the survey is harmonised within the European Union (EU) with
regard to its concepts, definitions classifications, results are comparable at EU level. The
HBS is used one of the main data sources for national accounts and for the basket of goods
used for harmonised index of consumer prices (HICP).
329
Gross National Income Inventory
5.7.2.9 The HBS 2008 was based on a gross sample of 6,965 households. The gross sample
was selected using a systematic random approach from the population register maintained by
the National Statistics Office (NSO). A net sample of 3,232 units was achieved. Human
errors, such as non-response, the inability or unwillingness of respondents to provide accurate
and complete particulars, errors and inconsistencies by interviewers and office personnel etc.,
were also present in the survey but were difficult to quantify. The final results of the HBS
2008 were published in 2010 and integrated in national accounts in 2011.
5.7.2.10 The general methodology (target population, sampling strategy, coverage,
definitions, etc.) of the HBS 2008 is practically identical to that used in the previous national
HBS held in 2000. However some changes in the definitions and collection modes were
made, particularly in consumption expenditure classifications and income and therefore a
direct comparison between the two sources is not always 100 per cent efficient. In HBS 2008
new items were introduced and the HBS 2008 report was in line with Eurostat HBS
recommendations and Coicop definitions for final consumption expenditure.
5.7.2.11 During the compilation of the HBS 2008, the Methodology and Research Unit
prepared a set of three different weights:
a) The first set aligned and grossed up sample estimates with the benchmark
population distribution in terms of individuals' gender, age and district of
residence;
b) The second set took into consideration seasonal variation like the case of daily
purchases, bills and holidays (using the sum of consumption units analysed over
the entire period); and
c) The third set of weights was constructed using the basic set of weights and
systematically adjusting them to project all monthly and daily purchases over the
whole calendar year.
5.7.2.12 The second set involved a calibration exercise so that the total sum of consumption
units observed in the sample is smoothened across the entire data collection period in such a
way for consumption not to be influenced by non-response bias. Prior dissemination these
three different weights were combined.
330
The expenditure approach
5.7.2.13 Moreover, in 2008, HBS data was adjusted for seasonal effects, different time
periods (due to different data collection modes) and weights.
5.7.2.14 Cross directorate meetings were held for the design of the HBS 2015 in order to
ensure that user requirements are all met.
5.7.2.15 The following tables will provide a breakdown of the conversion from HBS 2008 to
national accounts results for the Coicop items for which the HBS was used. The following
two tables correspond to Table 1 and Table 1A developed in the context of the Phare
Program. Only the Coicops in which the HBS 2008 was used are presented in Tables 5.7.2.2
and 5.7.2.3.
3
0.0
0.0
0.0
0.0
0.0
0.5
0.7
0.3
0.2
0.0
0.1
0.0
0.0
0.0
6=1+2+3+4+5
116.2
175.3
32.3
89.0
18.2
46.9
73.0
32.1
21.9
15.7
59.9
9.2
21.3
7.9
7
1.3
1.9
0.5
1.3
0.2
0.7
1.0
2.2
0.2
0.2
0.8
1.4
2.5
1.6
8
6.9
8.0
2.1
5.4
1.0
3.0
4.1
10.0
0.9
1.0
3.2
6.6
11.8
7.8
HFCE dom. Conc. - after
all adjustments (before
reconciliation)
Non-residents expenditure
on the economic territory
5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Residents Households
Expenditure in the Rest
Of the World
4
0.0
1.9
0.5
0.6
0.0
0.6
1.8
0.0
0.0
0.0
0.0
0.0
2.7
0.0
HFCE nat. Concept - after
all adjustments (before
reconciliation)
Consumption - nat. conc. of illegally produced (or
imported) goods and
services
2
0.9
-38.5
0.3
0.7
-0.2
6.2
-4.3
-1.5
-0.8
0.0
0.1
-5.1
-7.7
-1.7
Adjustments for
definitions and concepts
(see Table 1A)
1
115.3
211.9
31.5
87.7
18.3
39.7
74.8
33.3
22.5
15.6
59.7
14.2
26.2
9.5
Population adjustments
Adjustments for
differential non-response
A
01.1.1
01.1.2
01.1.3
01.1.4
01.1.5
01.1.6
01.1.7
01.1.8
01.1.9
01.2.1
01.2.2
02.1.1
02.1.2
02.1.3
Purchases of goods and
services - HBS raw data,
grossed up (incl. Exp. By
residents abroad)
Coicop
Table 5.7.2.2: Conversion of HBS data for national accounts purposes (by Coicop divisions), 2008, in
millions of Euro - Table 1 of the Phare program
9=6-7+8
121.8
181.4
33.9
93.1
19.0
49.2
76.1
40.0
22.6
16.5
62.4
14.4
30.7
14.0
331
Gross National Income Inventory
332
Consumption - nat. conc. - of
illegally produced (or
imported) goods and services
1
2
3
4
5
6=1+2+3+4+5
7
8
9=6-7+8
0.9
0.0
0.0
0.1
0.0
1.0
0.0
0.0
1.0
03.1.2
140.1
0.8
1.6
0.0
0.0
142.6
1.4
7.4
148.6
03.1.3
5.5
0.1
0.1
0.0
0.0
5.6
0.0
0.2
5.8
03.2.1
50.5
0.7
0.4
0.0
0.0
51.6
0.5
2.5
53.6
03.2.2
0.4
0.0
0.0
0.0
0.0
0.4
0.0
0.0
0.4
04.4.2
0.2
0.0
0.0
0.0
0.0
0.2
0.0
0.0
0.2
04.4.3
0.3
0.0
0.0
0.0
0.0
0.3
0.0
0.0
0.3
04.4.4
0.8
-0.1
0.0
0.0
0.0
0.8
0.0
0.0
0.8
04.5.3
0.5
0.0
0.0
0.0
0.0
0.5
0.0
0.0
0.5
04.5.4
0.2
0.0
0.0
0.0
0.0
0.2
0.0
0.0
0.2
04.5.5
0.1
0.0
0.0
0.0
0.0
0.1
0.0
0.0
0.1
05.1.1
152.3
-41.2
1.0
0.0
0.0
112.1
0.0
0.0
112.1
05.1.2
6.9
-1.0
0.1
0.0
0.0
5.9
0.0
0.0
5.9
05.1.3
0.6
0.0
0.0
0.0
0.0
0.5
0.0
0.0
0.5
05.2.1
17.5
-0.1
0.0
0.0
0.0
17.4
0.0
0.0
17.4
05.3.1
63.2
-11.6
0.4
0.0
0.0
52.0
0.0
0.0
52.0
05.3.2
25.8
-10.3
0.1
0.0
0.0
15.6
0.0
0.0
15.6
05.3.3
4.2
2.6
0.1
0.0
0.0
6.8
0.0
0.0
6.8
05.4.1
12.6
-0.8
0.0
0.0
0.0
11.8
0.9
4.1
15.1
05.5.1
2.4
-0.2
0.0
0.0
0.0
2.2
0.0
0.0
2.2
05.5.2
17.4
-0.2
0.0
0.0
0.0
17.2
0.0
0.0
17.2
05.6.1
53.3
0.4
0.6
0.0
0.0
54.4
0.0
0.0
54.4
05.6.2
17.0
-0.3
0.2
0.0
0.0
16.8
0.0
0.0
16.8
06.1.1
74.2
0.4
0.1
0.0
0.0
74.7
0.3
2.2
76.6
06.1.2
-0.7
1.7
0.0
0.0
0.0
1.0
0.0
0.1
1.1
06.1.3
-2.0
17.6
0.0
0.0
0.0
15.6
0.1
0.7
16.2
06.2.1
12.8
15.1
0.3
0.0
0.0
28.2
0.2
1.1
29.1
06.2.2
12.9
0.9
0.2
0.0
0.0
14.0
0.1
0.3
14.3
06.2.3
14.7
-2.0
0.1
0.0
0.0
12.8
0.0
0.2
13.0
HFCE dom. Conc. - after all
adjustments (before
reconciliation)
Adjustments for definitions
and concepts (see Table 1A)
Non-residents expenditure on
the economic territory
Adjustments for differential
non-response
Residents Households
Expenditure in the Rest Of the
World
Purchases of goods and
services - HBS raw data,
grossed up (incl. Exp. By
residents abroad)
A
03.1.1
Population adjustments
Coicop
HFCE nat. Concept - after all
adjustments (before
reconciliation)
Table 5.7.2.2: Conversion of HBS data for national accounts purposes (by Coicop divisions), 2008, in
millions of Euro - Table 1 of the Phare program (cont...)
The expenditure approach
A
HFCE dom. Conc. - after all
adjustments (before reconciliation)
Non-residents expenditure on the
economic territory
Residents Households Expenditure in
the Rest Of the World
HFCE nat. Concept - after all
adjustments (before reconciliation)
Consumption - nat. conc. - of illegally
produced (or imported) goods and
services
Adjustments for definitions and
concepts (see Table 1A)
Population adjustments
Adjustments for differential nonresponse
Purchases of goods and services - HBS
raw data, grossed up (incl. Exp. By
residents abroad)
Coicop
Table 5.7.2.2: Conversion of HBS data for national accounts purposes (by Coicop divisions), 2008, in
millions of Euro - Table 1 of the Phare program (cont...)
1
2
3
4
5
6=1+2+3+4+5
7
8
9=6-7+8
07.1.2
4.7
-0.8
0.0
0.0
0.0
3.9
0.0
0.0
3.9
07.1.3
0.9
0.0
0.0
0.0
0.0
0.8
0.0
0.0
0.8
07.1.4
-0.4
0.5
0.0
0.0
0.0
0.1
0.1
0.5
0.5
07.2.1
34.7
-1.2
0.0
0.0
0.0
33.4
0.0
0.0
33.4
07.2.3
48.5
-2.6
0.0
4.3
0.0
50.2
0.0
0.0
50.2
07.2.4
34.2
-10.3
0.0
0.4
0.0
24.3
9.0
27.2
42.5
07.3.3
22.5
0.6
0.0
0.0
0.0
23.1
0.0
1.8
25.0
07.3.6
1.7
-0.3
0.0
0.0
0.0
1.4
0.4
0.0
1.1
08.1.1
2.8
-0.2
0.0
0.0
0.0
2.7
0.2
1.2
3.7
08.2.1
43.9
-17.1
0.0
0.0
0.0
26.7
0.0
0.0
26.7
08.3.1
222.9
-61.3
1.7
20.1
0.0
183.4
0.6
3.7
186.5
09.1.1
48.8
-18.4
0.1
0.0
0.0
30.5
0.0
0.0
30.5
09.1.2
3.2
0.0
0.0
0.0
0.0
3.2
0.0
0.0
3.2
09.1.3
22.0
-0.1
0.1
0.0
0.0
22.0
0.0
0.0
22.0
09.1.4
4.7
-1.0
0.0
0.0
0.0
3.7
1.0
5.1
7.8
09.1.5
3.1
0.1
0.0
0.0
0.0
3.2
0.0
0.0
3.2
09.2.1
6.8
0.5
0.0
0.0
0.0
7.3
0.0
0.0
7.3
09.2.2
0.9
0.0
0.0
0.0
0.0
1.0
0.0
0.0
1.0
09.2.3
2.7
-0.6
0.0
0.0
0.0
2.2
0.0
0.0
2.2
09.3.1
13.5
-1.3
0.2
0.0
2.1
14.5
1.7
8.3
21.0
09.3.2
3.3
0.2
0.0
0.0
0.0
3.5
0.0
0.0
3.5
09.3.3
8.3
-0.6
0.0
0.0
0.0
7.7
0.0
0.0
7.7
09.3.4
26.5
-1.2
0.0
0.0
0.0
25.3
0.0
0.0
25.3
09.4.1
76.8
-33.6
0.1
0.0
0.0
43.3
2.1
9.0
50.2
09.4.2
112.8
-36.6
0.1
2.4
0.8
79.5
10.5
42.6
111.6
09.5.1
29.5
-8.3
0.3
0.0
0.0
21.5
0.1
0.5
21.9
09.5.2
17.8
-3.7
0.2
0.0
0.0
14.2
0.1
0.5
14.6
09.5.3
4.9
-0.2
0.1
0.0
0.0
4.8
0.2
1.0
5.6
333
Gross National Income Inventory
A
HFCE dom. Conc. - after all
adjustments (before reconciliation)
Non-residents expenditure on the
economic territory
Residents Households Expenditure in
the Rest Of the World
HFCE nat. Concept - after all
adjustments (before reconciliation)
Consumption - nat. conc. - of illegally
produced (or imported) goods and
services
Adjustments for definitions and
concepts (see Table 1A)
Population adjustments
Adjustments for differential nonresponse
Coicop
Purchases of goods and services - HBS
raw data, grossed up (incl. Exp. By
residents abroad)
Table 5.7.2.2: Conversion of HBS data for national accounts purposes (by Coicop divisions), 2008, in
millions of Euro - Table 1 of the Phare program (cont...)
1
2
3
4
5
6=1+2+3+4+5
7
8
9=6-7+8
09.5.4
6.5
0.4
0.1
0.0
0.0
7.0
0.0
0.0
7.0
09.6.1
44.8
-0.4
0.0
0.0
0.0
44.3
0.0
0.0
44.3
10.4.1
8.7
-0.5
0.0
0.0
0.0
8.2
0.0
0.0
8.2
12.1.2
1.0
0.0
0.0
0.0
0.0
1.0
0.0
0.0
1.0
12.1.3
89.2
-5.1
0.6
0.0
0.0
84.7
6.0
29.3
107.9
12.3.1
18.3
0.3
0.0
0.0
0.0
18.6
0.2
1.0
19.4
12.3.2
18.0
-1.1
0.0
0.0
0.0
17.0
0.2
1.2
18.0
12.7.1
17.3
-0.9
0.2
2.9
0.0
19.4
0.0
0.0
19.4
5.7.2.16 Table 5.7.2.2 is explained below:
Column 1: Represents the raw HBS results grossed up for to the total population
living in households (in general, this is the average expenditure per household and
year multiplied by the number of households).
This column does not include
consumption of own produced goods or wages and salaries in kind and includes
expenditure by residents households in the rest of the world (S.2).
Column 2: This column represents the adjustments made to the figures in column 1
because of differential non-response.
Column 3: The purpose of this column is to make adjustments for the expenditure of
those persons who live in institutions, rather than in households.
important groups of persons living in institutions (para. 5.7.2.17) are:
334

those living in residential and nursing homes;

students accommodated in ‘halls of residence’;

longer term residents in hotels, hostels and boarding houses;
The most
The expenditure approach

military personnel occupying houses on military bases;

those living in religious orders (e.g. monasteries, convents);

long stay hospital patients; and

those living in prisons.
Column 4: This column represents the differences in treatment between the HBS and
the national accounts. This column shows the total of the relevant adjustments
made. Table 1A of the Phare program or Table 5.7.2.3 will show these adjustments
in detail.
Column 5: This column shows the separate adjustments made for Coicops 09.3.1
and 09.4.2 for the consumption of illegal goods and services.
Column 6: This column shows the final HBS based figures including all national
accounts’ adjustments including exhaustiveness adjustments to reach the ESA 1995
requirements.
Column 7 and 8: The inclusion or exclusion of resident and non-resident
expenditures is relevant for national accounts purposes depending on whether the
domestic or national concept is used.
Column 9: HFCE in the domestic market is the HFCE in the national concept
(column 6) which includes expenditure of non-residents expenditure on the
economic territory and excludes residents households expenditure in the rest of the
world.
5.7.2.17 HBS is adjusted to include expenditure by persons living in institutions. The
following categories of such persons have been identified:
 Persons living in retirement homes;
 Prison inmates;
 Monks and nuns living in monasteries and convents;
 Others including homeless persons, orphans, refugees, disabled etc.
335
Gross National Income Inventory
5.7.2.18 For persons living in retirement homes an estimate was made in the following
manner: the average pension earned per person was calculated by the total amount paid out in
pensions by the government, as reported in the government financial report in relation to the
total number of pensioners. The average pension paid out was multiplied by the number of
residents in retirement homes obtained by a survey carried out on retirement homes to
estimate the total income from pensions of such residents. An estimate of the ‘disposable’
income of these residents was obtained by deducting from the total value of pensions they
receive, the expenditure on accommodation together with an estimate of gifts they give to
their families. The latter was derived as the 50 per cent of the remaining pension income
after deducting fees paid for accommodation. The residual – estimated at 50.3 Euro per
resident – is assumed to be entirely consumed i.e. none is saved.
5.7.2.19 For prison inmates, it was assumed that all income earned from gratuities and
payments for productive work, is entirely consumed. The source for this data is the
government financial report.
5.7.2.20 For monks and nuns living in convents, no information is available with respect to
their expenditure. An expert estimate of 1,641 Euro annually was made for monks and nuns
respectively. These were multiplied by the total number of monks and nuns as reported by
the Archdiocese – the central body that collects information about religious organisations in
the Maltese Islands. It was suggested that given the absolute lack of information about the
expenditure patterns by this category of persons living in institutions, a small survey could
possibly be carried out to validate the estimated distribution of this expenditure component.
This could be included as a long-term plan. However, it was agreed that the impact of such
estimates on total HFCE are minimal.
5.7.2.21 The expenditure of an estimated 2,608 refugees, 727 homeless/orphans/disabled
persons is assumed to be equal to 200 Euro per individual, reflecting as closely as possible
the average expenditure by these types of persons. This was investigated, in cooperation with
the person in charge of the compilation of the estimates of the NPISHs, the number of this
type of persons living in institutions. It is also necessary to note the following differential
treatment of these two types of transaction: orphanage or other social services provided by
government or NPISHs are not to be included in HFCE, but as government consumption or
336
The expenditure approach
NPISHs consumption of own production respectively. Only expenditure carried out by
residents on their own behalf has been included under HFCE.
5.7.2.22 The distribution of the estimated consumption of persons living in institutions was
estimated on the basis of the HBS 2008 distribution for households. Adjustments were made
to cater for the fact that such persons do not consume selected Coicop codes, e.g. less is
consumed on food and furniture.
337
Gross National Income Inventory
A
01.1.1
01.1.2
01.1.3
01.1.4
01.1.5
01.1.6
01.1.7
01.1.8
01.1.9
01.2.1
01.2.2
02.1.1
02.1.2
02.1.3
03.1.1
03.1.2
03.1.3
03.2.1
03.2.2
04.4.2
04.4.3
04.4.4
04.5.3
04.5.4
04.5.5
05.1.1
05.1.2
05.1.3
05.2.1
05.3.1
05.3.2
05.3.3
05.4.1
05.5.1
05.5.2
05.6.1
05.6.2
06.1.1
06.1.2
06.1.3
06.2.1
06.2.2
338
1=2+3+4
0.0
1.9
0.5
0.6
0.0
0.6
1.8
0.0
0.0
0.0
0.0
0.0
2.7
0.0
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
2
0.0
1.9
0.5
0.6
0.0
0.6
1.8
0.0
0.0
0.0
0.0
0.0
2.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4=5+6+7+8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Others
Licenses and fees
Imputed rents, insurance
serv., clothing and food in
the armed forces
5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Gifts and transfers in kind
from abroad (net)
of which
Other adjustments for national
accounts concepts
Consumption of households
own production
Goods and services received as
wages and salaries in kind by
employees
of which
Adjustments to HBS based data
for definitions and concepts, total
Coicop
Table 5.7.2.3: Conversion of HBS data for national accounts purposes (by Coicop divisions), adjustments
for definitions and concepts (national concept), 2008, in millions of Euro - Table 1A of the Phare program
8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
The expenditure approach
A
of which
Others
Licenses and fees
Gifts and transfers in
kind from abroad
(net)
Imputed rents,
insurance serv.,
clothing and food in
the armed forces
Other adjustments for
national accounts
concepts
Goods and services
received as wages and
salaries in kind by
employees
of which
Consumption of
households own
production
Adjustments to HBS based
data for definitions and
concepts, total
Coicop
Table 5.7.2.3: Conversion of HBS data for national accounts purposes (by Coicop divisions), adjustments
for definitions and concepts (national concept), 2008, in millions of Euro - Table 1A of the Phare program
(cont...)
1=2+3+4
2
3
4=5+6+7+8
5
6
7
8
06.2.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
07.1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
07.1.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
07.1.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
07.2.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
07.2.3
4.3
0.0
0.5
3.8
0.0
0.0
0.0
3.8
07.2.4
0.4
0.0
0.0
0.4
0.0
0.0
0.4
0.0
07.3.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
07.3.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
08.1.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
08.2.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
08.3.1
20.1
0.0
0.3
19.8
0.0
0.0
0.0
19.8
09.1.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.1.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.1.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.1.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.2.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.2.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.2.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.3.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.3.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.3.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.3.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.4.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.4.2
2.4
0.0
0.0
2.4
0.0
0.0
2.4
0.0
09.5.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.5.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.5.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.5.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
09.6.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
10.4.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.1.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.3.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.3.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.7.1
2.9
0.0
0.0
2.9
0.0
0.0
0.5
2.4
339
Gross National Income Inventory
5.7.2.23 Table 5.7.2.3 is explained below:
Column 1: This column shows the total adjustments made to HBS data in line with
definitions and national accounts concepts. This column is transferred to Column 4
of Table 1 of the Phare program.
Column 2: The production of households own production includes agricultural and
food products produced for own consumption by farmers and also the production in
private gardens. Other goods produced by households for their own consumption is
also included if this type of production is significant. Finally, it includes any other
consumption of own produced goods by unincorporated units.
Column 3: This column represents all goods and services received as wages and
salaries in kind by employees.
Column 4: This column shows the total of all other adjustments made for
compliance with national accounts rules given in detail in Columns 5 to 8.
Column 5: This is foreseen for special adjustments such as imputed rents and
insurance services. No adjustment has been made for meals and drinks provided by
the army, as this is irrelevant for Malta. The HBS records only the premiums paid
by households on non-life insurances and does not record that paid on life
insurances. Therefore an adjustment had to be made to include (a) life insurances,
and (b) to record only the net service charge on all types of insurances. These
adjustments are derived from the supply based estimates described in Section 3.18.
Imputed rents are a national accounting concept which is not measurable through
HBS. Imputed rents are described in detail in Section 3.18. Lottery services should
be recorded net of winnings received by households in the HFCE estimates. Lottery
services include gambling at casinos, the national lottery system and betting on
horse races.
The information is collected from financial statements and direct
questionnaires and is not derived from HBS. These adjustments are not inserted in
Table 1A given that these products are derived from other sources and HBS is not
used.
340
The expenditure approach
Column 6: This column represents the items destined to be gifts (and not including
financial transfers in expenditure). No adjustment has been made for charity and
gifts from abroad in the HFCE estimates as these are assumed to be negligible.
Column 7: This column defines the amount of licenses and fees paid by households
to the government. Refer to Section 3.28, Taxes on products, including VAT.
Column 8: Adjustments made by the National Accounts Section after expert advice
was taken into consideration. Coicop 12.7.1 was underrepresented in HBS 2008,
thus an expert estimate was done to cater for this problem. As regards to Coicop
08.3.1 the financial statements of the main providers for communication services
were used instead of the raw data of HBS 2008.
5.7.2.24 As regards to some Coicop items a discrepancy still exists between the final adjusted
total domestic consumption household expenditure derived from the 2008 HBS and the
present estimate of the total domestic consumption household expenditure of year 2008.
These are presented in the following table.
Table 5.7.2.4: The discrepancies which exist between HBS 2008 estimates versus HFCE in the domestic
concept of year 2008, in millions of Euro
Coicop
Item Description
HBS 2008
HFCE in the domestic market 2008
Difference
181.4
114.9
-66.5
01.1.2
Meat
01.1.4
Milk, cheese and eggs
93.1
53.4
-39.7
01.1.6
Fruit
49.2
37.7
-11.5
05.6.2
Domestic services and household services
16.8
17.2
0.4
07.1.3
Bicycles
0.8
0.4
-0.5
08.2.1
Telephone and telefax equipment
26.7
20.9
-5.8
08.3.1
Telephone and telefax services
186.5
132.9
-53.6
09.4.2
Cultural services
111.6
65.7
-46.0
12.7.1
Other services n.e.c.
19.4
22.1
2.6
5.7.2.25 Coicop 01.1.2 - The adjustment of a reduction of 19.4 per cent in the total domestic
expenditure in the final estimate derived from HBS 2008 was based on the supply and use
table (SUT) of 2010 calculations. This adjustment was implemented with the; benchmark
revision of September 2014 and the ESA 2010.
341
Gross National Income Inventory
5.7.2.26 Coicop 01.1.4 - The adjustment of a reduction of 42.6 per cent in the total domestic
expenditure in the final estimate derived from HBS 2008 was based on SUT 2010
calculations. This adjustment was implemented with the benchmark revision of September
2014 and the ESA 2010.
5.7.2.27 Coicop 01.1.6 - The adjustment of a reduction of 23.3 per cent in the total domestic
expenditure in the final estimate derived from HBS 2008 was based on SUT 2010
calculations. This adjustment was implemented with the benchmark revision of September
2014 and the ESA 2010.
5.7.2.28 Coicop 05.6.2, Coicop 08.3.1, Coicop 09.4.2 and Coicop 12.7.1 - Other sources
apart from the HBS 2008 are used for these Coicop items.
5.7.2.29 Coicop 07.1.3 - Only ratios (based on HBS 2008) were used to calculate total
domestic expenditure.
5.7.2.30 Coicop 08.2.1 - With the implementation of the benchmark revision and the ESA
2010 a misclassification in the HBS 2008 was corrected.
International trade in goods statistics
5.7.2.31 International trade in goods statistics are mainly provided by the traders on the basis
of customs (extra-EU) and Intrastat (intra-EU) declarations. Imports/Arrivals are valued on
cost, insurance and freight (cif) basis. Total exports/dispatches are valued on a free on board
(fob) basis.
5.7.2.32 The value of the imported consumer goods is obtained from the International Trade
and Transport Statistics Unit by Harmonised System (HS) product codes, by Coicop and by
Classification of Products by Activity (CPA) using the ‘general trade’ principal. Product
taxes, transport costs and trade margins are added to the original import value to arrive at the
purchaser’s price, as stated in the ESA 2010. Consumer imports are normally revised with
international trade data up to one year after the reference year.
342
The expenditure approach
5.7.2.33 The HBS is used to derive the share of consumer imports by Coicop (Table 5.7.2.5).
International trade data are further adjusted on a quarterly basis in order to remove Fish
(Coicop 01.1.3) which is imported by fish farms as an intermediate good and classified as
consumer imports by the International Trade and Transport Statistics Unit. Similarly, yachts
are generally classified in Coicop 09.2.1 by the International Trade and Transport Statistics
Unit even if imported by companies owned by non-residents for lease back purposes. In
conjunction with the Balance of Payments Unit and the compilation of gross fixed capital
formation (GFCF) such imports are excluded.
5.7.2.34 Total net imports of tobacco products are provided using the special trade system so
as to exclude any outright re-exports from the warehouse. These are allocated to HFCE
assuming that little is kept as inventories and that there is no intermediate consumption of this
product.
343
Gross National Income Inventory
Table 5.7.2.5: HBS 2008 ratios used for consumer imports
344
Coicop
Coicop Description
01.1.1
01.1.2
01.1.3
01.1.4
01.1.5
01.1.6
01.1.7
01.1.8
01.1.9
01.2.1
01.2.2
02.1.1
02.1.2
02.1.3
03.1.1
03.1.2
03.1.3
03.2.1
05.1.1
05.1.2
05.2.1
05.3.1
05.3.2
05.4.1
05.5.1
05.5.2
05.6.1
06.1.1
06.1.2
06.1.3
07.1.1
07.1.2
07.1.3
07.2.1
08.2.1
09.1.1
09.1.2
09.1.3
09.1.4
09.2.1
09.2.2
09.3.1
09.3.2
09.3.3
09.3.4
09.5.1
09.5.2
09.5.3
09.5.4
12.1.2
12.1.3
12.3.1
12.3.2
Bread and cereals
Meat
Fish
Milk, cheese and eggs
Oils and fats
Fruit
Vegetables
Sugar, jam, honey and chocolate
Food Products
Coffee, tea and cocoa
Mineral waters, soft drinks, fruit and vegetable juices
Spirits
Wine
Beer
Clothing materials
Garments
Other articles of clothing and clothing accessories
Shoes and other footwear
Furniture and furnishings
Carpets and other floor coverings
Household textiles
Major household appliances whether electric or not
Small electric appliances
Glassware, tableware and household utensils
Major tools and equipment
Small tools and miscellaneous accessories
Non-durable household goods
Pharmaceutical products
Other medical products
Therapeutical appliances and equipment
Motor vehicles
Motor cycles
Bicycles
Spare parts and accessories for personal transport equipment
Telephone and telefax equipment
Equipment for the reception, recording and reproduction of sound and pictures
Photographic and cinematographic equipment and optical instruments
Information and processing equipment
Recording media
Major durables for outdoor recreation
Musical instruments and major durables for indoor recreation
Games, toys and hobbies
Equipment for sport, camping and open-air creation
Garden, plants and flowers
Pets and related products
Books
Newspapers and periodicals
Miscellaneous printed matter
Stationary and drawing materials
Electric appliances for personal care
Other appliances, articles and products for personal care
Jewellery, clocks and watches
other personal effects
Consumers
Business
%
57.0
88.0
87.3
99.0
76.0
94.0
71.8
64.0
98.0
78.0
95.0
78.0
55.0
80.0
30.0
96.4
39.0
95.0
78.9
82.0
98.0
80.0
65.0
50.3
25.0
56.0
98.0
74.0
33.0
70.0
65.0
98.0
98.0
55.0
80.0
90.0
30.0
30.0
53.0
84.3
55.0
90.0
42.0
82.0
90.0
95.0
10.0
30.0
44.0
95.0
98.0
83.0
95.0
%
43.0
12.0
12.7
1.0
24.0
6.0
28.2
36.0
2.0
22.0
5.0
22.0
45.0
20.0
70.0
3.6
61.0
5.0
21.1
18.0
2.0
20.0
35.0
49.7
75.0
44.0
2.0
26.0
67.0
30.0
35.0
2.0
2.0
45.0
20.0
10.0
70.0
70.0
47.0
15.7
45.0
10.0
58.0
18.0
10.0
5.0
90.0
70.0
56.0
5.0
2.0
17.0
5.0
The expenditure approach
Balance of payments report on tourist expenditure and expenditure of residents abroad and
annual survey of tourist expenditure by product provided by the Malta Tourism Authority
(MTA)
5.7.2.35 Tourist expenditure in Malta and expenditure by Maltese travellers abroad are
provided by the Balance of Payments Unit in the following breakdown: by air, by sea and by
cruise.
5.7.2.36 Tourist expenditure in Malta and expenditure by Maltese travellers abroad arriving
by air is based on information extracted from the Tourstat survey. The main aim of the
Tourstat survey is to collect monthly information on tourism demand, for both inbound and
outbound trips. A distinction is made between consumer expenditure and expenses incurred
by business travellers. The latter is excluded from consumer expenditure.
5.7.2.37 The breakdown at Coicop level is based on ratios derived Traveller Expenditure
survey. This survey compiled by means of an expenditure diary handed out randomly to
tourists is compiled by the MTA and targets 80 per cent of tourists visiting Malta. This
survey filled out by the tourists, who are compensated upon handing back the diary to the
MTA prior to their departure. Prior to departure expenditure is broken down into package
and non-package expenditure. The expenditure during stay is classified into 32 items mainly
expenditure on: accommodation; food and drink; transport; recreation; shopping and other
expenditure (refer to Section 3.15).
Local sales of locally produced goods
5.7.2.38 Local sales of locally produced goods used to be derived from a monthly survey of
manufacturing companies between 1995 and 2012. STS indices at NACE72 division level
(refer to Chapter 9, para. 9.1.1) and the corresponding Coicop categories are being used as
from 2013.
5.7.2.39 Table 5.7.2.6 is showing the figures from the sources and the types of methods used
for the Coicop items for which both the HBS and trade data are not used.
72
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
345
Gross National Income Inventory
Table 5.7.2.6: Coicop items for which other sources are used, 2010, in millions of Euro
346
Total (Sources)
Other
Total
Extrap+Models
Other E&M
FISIM
Dwellings
CFC
CFM
Extrapolations and Models
Bench. Extra.
Combined Data
Adm. Rec.
Surv. and Cens.
Level of Details
Basis for national accounts figures
02.3.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
03.1.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
2.4
2.4
0.0
2.4
04.1.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
48.6
48.6
0.0
48.6
04.1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.8
0.8
0.0
0.8
04.2.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
292.3
292.3
0.0
292.3
04.2.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
22.1
22.1
0.0
22.1
04.3.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
6.9
6.9
0.0
6.9
04.3.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
8.5
8.5
0.0
8.5
04.4.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
29.8
29.8
0.0
29.8
04.5.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
119.7
119.7
0.0
119.7
04.5.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
9.1
9.1
0.0
9.1
06.3.1
0.0
18.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
18.8
07.2.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
174.1
174.1
0.0
174.1
07.3.2
18.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
29.4
29.4
0.0
47.8
07.3.4
18.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
8.8
8.8
0.0
27.5
09.3.5
1.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.3
0.3
0.0
2.0
09.4.3
0.0
76.9
0.0
0.0
0.0
0.0
0.0
0.0
0.9
0.9
0.0
77.8
10.1.1
8.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.8
4.8
0.0
13.7
10.2.1
6.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
5.9
5.9
0.0
12.6
10.3.1
0.4
0.8
0.0
0.0
0.0
0.0
0.0
0.0
1.9
1.9
0.0
3.0
10.5.1
19.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
19.6
11.1.1
0.0
0.0
323.9
0.0
90.2
0.0
0.0
0.0
43.6
133.7
0.0
457.6
11.1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3.9
3.9
0.0
3.9
11.2.1
0.0
0.0
0.0
0.0
239.0
0.0
0.0
0.0
0.0
239.0
0.0
239.0
12.1.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
55.0
55.0
0.0
55.0
12.2.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.4.1
0.0
28.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
28.5
12.5.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.5.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.5.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.5.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.5.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.6.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.6.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
39.1
39.1
0.0
39.1
The expenditure approach
Table 5.7.2.6: Coicop items for which other sources are used, 2010, in millions of Euro (cont...)
N1
N2
N3
N4
N5
N6
N7b
Total
Exhaustiveness
Balancing
Final Estimate
Total
Conceptual
02.3.1
0.0
0.0
0.0
0.0
19.1
0.0
0.0
0.0
0.0
0.0
19.1
0.0
19.1
19.1
03.1.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
2.4
04.1.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
48.6
04.1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.8
04.2.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
292.3
04.2.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
22.1
04.3.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
6.9
04.3.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
8.5
04.4.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
29.8
04.5.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
119.7
04.5.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
9.1
06.3.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
18.8
07.2.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.3
4.3
0.0
4.3
178.5
07.3.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.7
0.7
0.0
0.7
48.5
07.3.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.1
0.0
0.1
27.7
09.3.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
2.0
09.4.3
0.0
0.0
0.0
0.0
0.8
0.0
0.0
0.0
0.0
0.0
0.8
0.0
0.8
78.6
10.1.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
13.7
10.2.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.6
10.3.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3.0
10.5.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
19.6
11.1.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.9
1.9
0.0
1.9
459.5
11.1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3.9
11.2.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.1
0.0
0.1
239.1
12.1.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.9
1.9
0.0
1.9
56.9
12.2.1
0.0
0.0
0.0
0.0
9.3
0.0
0.0
0.0
0.0
0.0
9.3
0.0
9.3
9.3
12.4.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
28.5
12.5.1
0.0
0.0
33.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
33.0
33.0
12.5.2
0.0
0.0
6.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
6.1
6.1
12.5.3
0.0
0.0
11.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
11.4
11.4
12.5.4
0.0
0.0
35.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
35.2
35.2
12.5.5
0.0
0.0
7.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
7.0
7.0
12.6.1
0.0
53.5
53.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
53.5
53.5
12.6.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
39.1
Total
(Adjustments)
Allocation of
FISIM
Exhaustiveness
Data Validation
Level of Details
Adjustments
Conceptual
347
Gross National Income Inventory
Internet purchases
5.7.2.40 Internet purchases are partly covered by international trade statistics and HBS 2008
data. Goods arriving by post are provided by International Trade and Transport Statistics
Unit and are automatically captured in HFCE. Beyond a certain threshold foreign companies
are obliged to declare imports in Malta. Similarly consumer purchases bought from third
countries need to pass through customs and are thus also captured in trade statistics.
Similarly HBS 2008 data are inclusive of internet purchases given that households were
obliged to report all their purchases when surveyed.
5.7.2.41 However, since 2008, this phenomenon increased substantially. Thus NSO decided
to conduct a specific computer assisted telephone interview (CATI) survey on online
purchases in 2014 prior the ESA 2010 implementation. Results for 2014 were extrapolated
backwards using credit card transaction data obtained from commercial banks. The product
breakdown is based on data obtained from the Malta Communication Authority (MCA).
5.7.3 Detailed calculations by Coicop items
5.7.3.1 This section will give a description by Coicop of the calculations and methods used
to arrive to the total private household consumption in the domestic concept.
5.7.3.2 In this section, a detailed description is given of the individual items of household
consumption. Items will be described in the context of domestic household consumption as
the methods applied in each Coicop are in line with this concept. Consumption on goods and
services received by households as in-kind income are incorporated in consumption
expenditure. These include output for own final use and wages in kind. Households own
consumption of some Coicop items is derived from the Economic Accounts for Agriculture
(EAA). The undeclared expenditure, which is estimated based on the number of persons
travelling to Sicily by catamaran derived from the Population and Tourism Statistics Unit and
an estimated average expenditure per person, refers to the goods imported individually from
abroad and sold within the Maltese territory. The VAT and a mark-up are generally added to
local production to arrive at the purchaser’s price, as stated in the ESA 2010.
348
The expenditure approach
Table 5.7.3.1: Household final consumption, 2010, in millions of Euro
Coicop
01
01.1
01.1.1
01.1.2
01.1.3
01.1.4
01.1.5
01.1.6
01.1.7
01.1.8
01.1.9
01.2
01.2.1
01.2.2
02
02.1
02.1.1
02.1.2
02.1.3
02.2
02.2.1
02.3
02.3.1
03
03.1
03.1.1
03.1.2
03.1.3
03.1.4
03.2
03.2.1
03.2.2
04
04.1
04.1.1
04.1.2
04.2
04.2.1
04.2.2
04.3
04.3.1
04.3.2
04.4
04.4.1
04.4.2
04.4.3
04.4.4
04.5
04.5.1
04.5.2
04.5.3
04.5.4
04.5.5
05
05.1
05.1.1
05.1.2
05.1.3
05.2
05.2.1
05.3
05.3.1
05.3.2
05.3.3
05.4
05.4.1
05.5
05.5.1
05.5.2
05.6
05.6.1
05.6.2
06
06.1
Item Description
TOTAL
FOOD AND NON-ALCOHOLIC BEVERAGES
Food
Bread and cereals
Meat
Fish
Milk, cheese and eggs
Oils and fats
Fruit
Vegetables
Sugar, jam, honey, chocolate and confectionery
Food products n.e.c.
Non-alcoholic beverages
Coffee, tea and cocoa
Mineral waters, soft drinks, fruit and vegetable juices
ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS
Alcoholic beverages
Spirits
Wine
Beer
Tobacco
Tobacco
Narcotics
Narcotics
CLOTHING AND FOOTWEAR
Clothing
Clothing materials
Garments
Other articles of clothing and clothing accessories
Cleaning, repair and hire of clothing
Footwear
Shoes and other footwear
Repair and hire of footwear
HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS
Actual rentals for housing
Actual rentals paid by tenants
Other actual rentals
Imputed rentals for housing
Imputed rentals of owner-occupiers
Other imputed rentals
Maintenance and repair of the dwelling
Materials for the maintenance and repair of the dwelling
Services for the maintenance and repair of the dwelling
Water supply and miscellaneous services relating to the dwelling
Water supply
Refuse collection
Sewerage collection
Other services relating to the dwelling n.e.c.
Electricity, gas and other fuels
Electricity
Gas
Liquid fuels
Solid fuels
Heat energy
FURNISHINGS, HOUSEHOLD EQUIPMENT AND ROUTINE MAINTENANCE OF THE HOUSE
Furniture and furnishings, carpets and other floor coverings
Furniture and furnishings
Carpets and other floor coverings
Repair of furniture, furnishings and floor coverings
Household textiles
Household textiles
Household appliances
Major household appliances whether electric or not
Small electric household appliances
Repair of household appliances
Glassware, tableware and household utensils
Glassware, tableware and household utensils
Tools and equipment for house and garden
Major tools and equipment
Small tools and miscellaneous accessories
Goods and services for routine household maintenance
Non-durable household goods
Domestic services and household services
HEALTH
Medical products, appliances and equipment
Millions of Euro
3,717.9
548.7
473.7
103.2
104.5
33.3
45.3
15.9
41.5
69.9
40.1
20.0
75.0
12.7
62.3
148.3
31.9
9.9
17.6
4.5
97.2
97.2
19.1
19.1
176.9
124.2
1.3
113.3
7.2
2.4
52.8
52.4
0.4
539.6
49.4
48.6
0.8
314.4
292.3
22.1
15.4
6.9
8.5
31.1
29.8
0.2
0.3
0.8
129.3
119.7
9.1
0.2
0.2
0.1
306.4
127.8
120.5
6.6
0.6
13.7
13.7
55.0
36.4
11.2
7.4
14.2
14.2
19.2
2.5
16.7
76.5
57.8
18.7
179.9
100.2
% of Total
100.0%
14.8%
12.7%
2.8%
2.8%
0.9%
1.2%
0.4%
1.1%
1.9%
1.1%
0.5%
2.0%
0.3%
1.7%
4.0%
0.9%
0.3%
0.5%
0.1%
2.6%
2.6%
0.5%
0.5%
4.8%
3.3%
0.0%
3.0%
0.2%
0.1%
1.4%
1.4%
0.0%
14.5%
1.3%
1.3%
0.0%
8.5%
7.9%
0.6%
0.4%
0.2%
0.2%
0.8%
0.8%
0.0%
0.0%
0.0%
3.5%
3.2%
0.2%
0.0%
0.0%
0.0%
8.2%
3.4%
3.2%
0.2%
0.0%
0.4%
0.4%
1.5%
1.0%
0.3%
0.2%
0.4%
0.4%
0.5%
0.1%
0.4%
2.1%
1.6%
0.5%
4.8%
2.7%
349
Gross National Income Inventory
Table 5.7.3.1: Household final consumption, 2010, in millions of Euro (cont...)
Coicop
06.1.1
06.1.2
06.1.3
06.2
06.2.1
06.2.2
06.2.3
06.3
06.3.1
07
07.1
07.1.1
07.1.2
07.1.3
07.1.4
07.2
07.2.1
07.2.2
07.2.3
07.2.4
07.3
07.3.1
07.3.2
07.3.3
07.3.4
07.3.5
07.3.6
08
08.1
08.1.1
08.2
08.2.1
08.3
08.3.1
09
09.1
09.1.1
09..12
09.1.3
09.1.4
09.1.5
09.2
09.2.1
09.2.2
09.2.3
09.3
09.3.1
09.3.2
09.3.3
09.3.4
09.3.5
09.4
09.4.1
09.4.2
09.4.3
09.5
09.5.1
09.5.2
09.5.3
09.5.4
09.6
09.6.1
10
10.1
10.1.1
10.2
10.2.1
10.3
10.3.1
10.4
10.4.1
10.5
10.5.1
11
11.1
350
Item Description
Pharmaceutical products
Other medical products
Therapeutical appliances and equipment
Out-patient services
Medical Services
Dental services
Paramedical services
Hospital services
Hospital services
TRANSPORT
Purchase of vehicles
Motor cars
Motor cycles
Bicycles
Animal drawn vehicles
Operation of personal transport equipment
Spare parts and accessories for personal transport equipment
Fuels and lubricants for personal transport equipment
Maintenance and repair of personal transport equipment
Other services in respect of personal transport equipment
Transport services
Passenger transport by railway
Passenger transport by road
Passenger transport by air
Passenger transport by sea and inland waterway
Combined passenger transport
Other purchased transport services
COMMUNICATION
Postal services
Postal services
Telephone and telefax equipment
Telephone and telefax equipment
Telephone and telefax services
Telephone and telefax services
RECREATION AND CULTURE
Audio-visual, photographic and information processing equipment
Equipment for the reception, recording and reproduction of sound and pictures
Photographic and cinematographic equipment and optical instruments
Information processing equipment
Recording media
Repair of audio-visual, photographic and information processing equipment
Other major durables for recreation and culture
Major durables for outdoor recreation
Musical instruments and major durables for indoor recreation
Maintenance and repair of other major durables for recreation and culture
Other recreational items and equipment, gardens and pets
Games, toys and hobbies
Equipment for sport, camping and open-air recreation
Gardens, plants and flowers
Pets and related products
Veterinary and other services for pets
Recreational and cultural services
Recreational and sporting services
Cultural services
Games of chance
Newspapers, books and stationery
Books
Newspapers and periodicals
Miscellaneous printed matter
Stationery and drawing materials
Package holidays
Package holidays
EDUCATION
Pre-primary and primary education
Pre-primary and primary education
Secondary education
Secondary education
Post-secondary non-tertiary education
Post-secondary non-tertiary education
Tertiary education
Tertiary education
Education not definable by level
Education not definable by level
RESTAURANTS AND HOTELS
Catering services
Millions of Euro
84.8
0.9
14.5
61.0
32.5
16.0
12.5
18.7
18.7
493.4
118.0
115.4
2.2
0.3
0.1
292.0
31.0
172.5
52.0
36.5
83.3
12.5
36.3
18.4
14.7
0.0
1.5
162.3
3.5
3.5
24.4
24.4
134.5
134.5
363.5
60.0
32.0
5.6
13.0
6.1
3.2
12.0
8.8
1.0
2.2
49.5
14.2
5.1
6.2
22.0
2.0
148.9
46.4
27.9
74.6
49.7
20.9
16.8
5.1
6.9
43.4
43.4
39.5
13.7
13.7
12.6
12.6
3.0
3.0
10.1
10.1
0.0
0.0
315.7
255.4
% of Total
2.3%
0.0%
0.4%
1.6%
0.9%
0.4%
0.3%
0.5%
0.5%
13.3%
3.2%
3.1%
0.1%
0.0%
0.0%
7.9%
0.8%
4.6%
1.4%
1.0%
2.2%
0.3%
1.0%
0.5%
0.4%
0.0%
0.0%
4.4%
0.1%
0.1%
0.7%
0.7%
3.6%
3.6%
9.8%
1.6%
0.9%
0.2%
0.4%
0.2%
0.1%
0.3%
0.2%
0.0%
0.1%
1.3%
0.4%
0.1%
0.2%
0.6%
0.1%
4.0%
1.2%
0.7%
2.0%
1.3%
0.6%
0.5%
0.1%
0.2%
1.2%
1.2%
1.1%
0.4%
0.4%
0.3%
0.3%
0.1%
0.1%
0.3%
0.3%
0.0%
0.0%
8.5%
6.9%
The expenditure approach
Table 5.7.3.1: Household final consumption, 2010, in millions of Euro (cont...)
Coicop
11.1.1
11.1.2
11.2
11.2.1
12
12.1
12.1.1
12.1.2
12.1.3
12.2
12.2.1
12.3
12.3.1
12.3.2
12.4
12.4.1
12.5
12.5.1
12.5.2
12.5.3
12.5.4
12.5.5
12.6
12.6.1
12.6.2
12.7
12.7.1
Item Description
Restaurants, cafés and the like
Canteens
Accommodation services
Accommodation services
MISCELLANEOUS GOODS AND SERVICES
Personal care
Hairdressing salons and personal grooming establishments
Electric appliances for personal care
Other appliances, articles and products for personal care
Prostitution
Prostitution
Personal effects n.e.c.
Jewellery, clocks and watches
Other personal effects
Social protection
Social protection
Insurance
Life insurance
Insurance connected with the dwelling
Insurance connected with health
Insurance connected with transport
Other insurance
Financial services n.e.c.
FISIM
Other financial services n.e.c.
Other services n.e.c.
Other services n.e.c.
Millions of Euro
251.5
3.9
60.3
60.3
443.9
160.0
56.1
0.9
103.0
9.3
9.3
41.0
26.0
15.1
28.5
28.5
92.7
33.0
6.1
11.4
35.2
7.0
89.3
53.5
35.8
23.1
23.1
% of Total
6.8%
0.1%
1.6%
1.6%
11.9%
4.3%
1.5%
0.0%
2.8%
0.2%
0.2%
1.1%
0.7%
0.4%
0.8%
0.8%
2.5%
0.9%
0.2%
0.3%
0.9%
0.2%
2.4%
1.4%
1.0%
0.6%
0.6%
Food and non-alcoholic beverages (Coicop 01)
5.7.3.3 The food products classified here are those purchased for consumption at home. The
group excludes: food products sold for immediate consumption away from the home by
hotels, restaurants, cafés, bars, kiosks, street vendors, automatic vending machines, etc.
(Coicop 11.1.1); cooked dishes prepared by restaurants for consumption off their premises
(Coicop 11.1.1); cooked dishes prepared by catering contractors whether collected by the
customer or delivered to the customer's home (Coicop 11.1.1); and products sold specifically
as pet foods (Coicop 09.3.4).
5.7.3.4 The commodity flow model (CFM) which combines import data, local
manufacturing data and information which is obtained directly from producers was used to
derive estimates for this particular Coicop group.
Direct information include statistics
regarding slaughtering obtained from the civil abattoir, the value of fish caught and passed
through the market, dairy products obtained from Malta’s main producer and wholesale
values are gathered from the organised fruit and vegetable market.
5.7.3.5 An Exhaustiveness Adjustment for own account production is done for Bread and
cereals (Coicop 01.1.1), Milk, cheese and eggs (Coicop 01.1.4), Meat (Coicop 01.1.2), Fruit
(Coicop 01.1.6), and Vegetable (Coicop 01.1.7). An Exhaustiveness Adjustment is included
351
Gross National Income Inventory
in case of Sugar, jam, honey, chocolate and confectionary (Coicop 01.1.8) products so as to
cover shuttle trade by residents arriving by sea.
Alcoholic beverages, tobacco and narcotics (Coicop 02)
5.7.3.6 The commodity flow model (CFM) which combines import data and local
manufacturing data are used for Alcoholic beverages (Coicop 02.1) and Tobacco (Coicop
02.2) products. Excise duties are added explicitly in case of Spirits (Coicop 02.1.1) and
Tobacco (Coicop 02.2.1) products. An Exhaustiveness Adjustment is included in case of
alcohol so as to cover shuttle trade by residents arriving by sea.
An Exhaustiveness
Adjustment for own account production is done for wine.
5.7.3.7 The Gross National Product (GNP) Committee on the use of HBS for national
accounts (CPNB/204) recommends that purchases of certain items like tobacco are habitually
understated in the HBS. With the implementation of ESA 2010 a new independent estimate
based on the total net imports of Tobacco products are provided using the special trade
system which excludes outright re-exports from the warehouse was made.
These are
allocated to HFCE assuming that little is kept as inventories and that there is no intermediate
consumption of this product. Excise duties and VAT are added to net imports. Local
production used to be added up till 2008.
5.7.3.8 Narcotics (Coicop 02.3.1) will be covered in detail in Chapter 7.
Clothing and footwear (Coicop 03)
5.7.3.9 The CFM which combines import data and local manufacturing data are used for
Clothing materials (Coicop 03.1.1), Garments (Coicop 03.1.2), Other articles of clothing and
clothing accessories (Coicop 03.1.3). Internet purchases are included in case of Clothing
materials.
There is no local production for Shoes and other footwear (Coicop 03.2.1)
products and thus estimates are extrapolated through imports of goods and internet purchases.
Exhaustiveness Adjustments were added to:
352

Clothing materials: wages in kind, and shuttle trade;

Garments: shuttle trade;

Other articles of clothing and clothing accessories: shuttle trade; and
The expenditure approach

Shoes and other footwear: wages in kind.
5.7.3.10 The HBS is used to establish the level of Cleaning, repair and hire of clothing
(Coicop 03.1.4) and Repair and hire of footwear (Coicop 03.2.2) in the benchmark year.
Other Extrapolations and Models are based on population and HICP statistics.
Housing, water, electricity, gas and other fuels (Coicop 04)
5.7.3.11 This Coicop division is sub-divided in five Coicop groups. Actual rentals (Coicop
04.1) and Imputed rents (Coicop 04.2) for housing include payment for the use of the land on
which the property stands, the dwelling occupied, the fixtures and fittings for heating,
plumbing, lighting, etc., and, in the case of a dwelling let furnished, the furniture. Rentals
also include payment for the use of a garage to provide parking in connection with the
dwelling. The garage does not have to be physically contiguous to the dwelling; nor does it
have to be leased from the same landlord. Rentals do not include payment for the use of
garages or parking spaces not providing parking in connection with the dwelling (Coicop
07.2.4). Nor do they include charges for Water supply (Coicop 04.4.1), Refuse collection
(Coicop 04.4.2) and Sewage collection (Coicop 04.4.3); co-proprietor charges for caretaking,
gardening, stairwell cleaning, heating and lighting, maintenance of lifts and refuse disposal
chutes, etc. in multi-occupied buildings (Coicop 04.4.4); charges for Electricity (Coicop
04.5.1) and Gas (Coicop 04.5.2); charges for heating and hot water supplied by district
heating plants (Coicop 04.5.5). Maintenance and repair of dwellings are distinguished by two
features: first, they are activities that have to be undertaken regularly in order to maintain the
dwelling in good working order; second, they do not change the dwelling's performance,
capacity or expected service life.
There are two types of maintenance and repair of
dwellings: those which are minor, such as interior decoration and repairs to fittings, and
which are commonly carried out by both tenants and owners; and those which are major, such
as re-plastering walls or repairing roofs, and which are carried out by owners only. Only
expenditures which tenants and owner-occupiers incur on materials and services for minor
maintenance and repair are part of individual consumption expenditure of households.
Expenditures which owner-occupiers incur on materials and services for major maintenance
and repair are not part of individual consumption expenditure of households. Purchases of
materials made by tenants or owner-occupiers with the intention of undertaking the
maintenance or repair themselves should be shown under Coicop 04.3.1. If tenants or owner-
353
Gross National Income Inventory
occupiers pay an enterprise to carry out the maintenance or repair, the total value of the
service, including the costs of the materials used, should be shown under Coicop 04.3.2.
5.7.3.12 Actual rents are based on the census of population and housing.
The latest
benchmark year is 2011. Details with respect to the interpolation between benchmark years
are available in Chapter 3, Section 3.18. Imputed rents are derived with the user cost method.
Details are available in Chapter 3, Section 3.18. Similarly information on Maintenance and
repair of dwellings is available in Chapter 3, Section 3.18.
5.7.3.13 There is only one public utility company supplying water in Malta. Annual data for
Water supply is derived from financial statements which are available with a time lag of two
years, with the latest years being covered by quarterly questionnaires.
In 2008 it was
established that 54 per cent of total turnover is attributable to HFCE. This ratio is currently
being verified against new information on turnover.
5.7.3.14 Refuse collection, Sewerage collection and Other services relating to the dwelling
n.e.c. (Coicop 04.4.4) are negligible in Malta and are based on HBS 2008 and are
extrapolated thereafter.
5.7.3.15 Up till 2014 there was only one public utility company supplying electricity in
Malta. Annual data for Electricity supply is derived from financial statements which are
available with a time lag of two years, with non-benchmark years being covered by quarterly
questionnaires. In 2008 it was established that 37 per cent of total turnover is attributable to
HFCE. This ratio is currently being verified against new information on turnover.
5.7.3.16 Gas distribution in Malta was liberalised in 2009. Data are obtained from quarterly
questionnaires and if necessary grossed up using administrative data on market shares. Total
supply is adjusted by deducting use of gas for intermediate using fixed percentages.
5.7.3.17 Domestic use of Liquid fuels (Coicop 04.5.3), Solid fuels (Coicop 04.5.4) and Heat
energy (Coicop 04.5.5) are negligible in Malta.
extrapolated thereafter.
354
Data are based on HBS 2008 and
The expenditure approach
Furnishings, household equipment and routine maintenance of the house (Coicop 05)
5.7.3.18 The CFM which combines import data and local manufacturing data are used for all
sub-classes with the exception of Domestic services and household services (Coicop 05.6.2)
and repair of furniture, furnishings and floor coverings (Coicop 05.3.1). Similarly, internet
purchases are added to these sub-classes.
5.7.3.19 The HBS is used to establish the level of Domestic services and household services
and repair of furniture, furnishings and floor coverings (Coicop 05.3.1) in the benchmark year
which are extrapolated thereafter.
Health (Coicop 06)
5.7.3.20 Local sales of domestically produced Pharmaceutical products (Coicop 06.1.1) are
negligible and are thus covered by imports less government consumption of such products.
The commodity flow model which combines import data and local manufacturing data are
used for sub-classes Other medical products (Coicop 06.1.2) and Therapeutical appliances
and equipment (Coicop 06.1.3).
5.7.3.21 Services of medical practitioners, dental and paramedical services (Coicop 06.2) are
based on HBS 2008 which are thereafter extrapolated using population and HICP statistics.
Data on Hospital services (Coicop 06.3) are derived from supply side sources i.e. annual
financial statements which are fully inclusive of direct payments by insurance companies.
Transport (Coicop 07)
5.7.3.22 Purchase of vehicles (Coicop 07.1) is based on the imported values using 2003 as a
benchmark, this being the year before Malta became member of the EU and thus all imports
were still being comprehensively recorded in the international trade statistics, and
extrapolating thereafter using the growth rate in the number of newly licensed motor vehicles
and the HICP. This method caters for imports made by households who are not obliged to
register any arrivals/imports with customs. The difference between the value of imports
provided by International Trade Statistics and the estimates derived in national accounts are
disclosed as Exhaustiveness in the process tables. Another significant proportion of domestic
household consumption is covered by wages in kind, which is a type of an Exhaustiveness
355
Gross National Income Inventory
Adjustment. Values for motor cycles, bicycles and animal drawn vehicles are negligible and
estimates are derived from import data.
5.7.3.23 The CFM which combines import data and local manufacturing data are used for
Spare parts and accessories for personal transport equipment (Coicop 07.2.1).
5.7.3.24 Fuels and lubricants for personal transport equipment (Coicop 07.2.2) includes
petrol and other fuels such as diesel, liquid petroleum gas, lubricants and the like. Data are
obtained from the main distributer of fuels and lubricants in Malta. Following the market
liberalisation in 2008 the fuel market shares at company level started to be collected from the
Malta Resources Authority (MRA). This information is used to gross up the data obtained
from the main distributer on a quarterly basis. It is estimated that consumers purchase 89.7
per cent of petrol sold through stations whilst that of diesel is estimated at 45.3 per cent.
5.7.3.25 Maintenance and repair of personal transport equipment (Coicop 07.2.3) is
extrapolated from the year 2000 based on the stock of licensed motor vehicles and motor
cycles. In the benchmark year 2000, an adjustment for motor vehicle repairs carried out by
consumers but financed by insurance companies, was made by making use of:
Total domestic premiums for motor insurance
multiplied by
the proportion of total premiums accounted for by claims
multiplied by
the proportion of total claims accounted for by vehicle repairs/replacement
multiplied by
the proportion accounted for by repairs
5.7.3.26 Supply side sources on for hire of personal transport equipment without drivers and
driving lessons are used to cover Other services in respect of personal transport equipment
(Coicop 07.2.4). HBS is the benchmark for driving tests and driving licences, hire of garages
or parking spaces not providing parking in connection with the dwelling and roadworthiness
tests. Extrapolation is based on administrative sources on stock of motor vehicles.
356
The expenditure approach
5.7.3.27 Passenger transport by road (Coicop 07.3.2) and by sea and inland waterway
(Coicop 07.3.4) are based on supplied side sources namely SBS and the main operators on
the islands.
Passenger transport by air (Coicop 07.3.3) is based on HBS 2008 and is
extrapolated using the News Release ‘Outbound Tourism’ and HICP.
Communications (Coicop 08)
5.7.3.28 Direct information from enterprises providing Postal services (Coicop 08.1.1),
Telephone and telefax services (Coicop 08.3.1) is used for estimates of household
expenditure on such services. From HBS 2008, it was established that 24 per cent of the
output of postal services is allocated to consumer expenditure. Similarly, 55 per cent of total
sales of fixed telephony and 39 per cent of total sales is allocated to consumer expenditure.
Expenditure on internet services is based on HBS 2008 and extrapolated using information on
the number of internet subscriptions. Estimation of telephone and fax equipment is based on
HBS 2008 and extrapolated using import data.
Recreation and culture (Coicop 09)
5.7.3.29 The CFM which combines import data and local manufacturing data are used for
goods in sub-groups Other major durables for recreation and culture (Coicop 09.2), Other
recreational items and equipment, gardens and pets (Coicop 09.3) and Newspapers, books
and stationery (Coicop 09.5). Expenditure on Audio-visual, photographic and information
processing equipment (Coicop 09.1) is based on HBS 2008 and extrapolated using import
data.
Repair services included in these sub-divisions are based on HBS 2008 and
extrapolated thereafter. Veterinary and other services for pets included in division Coicop
09.3.5 is derived from supply based estimates mainly SBS data.
5.7.3.30 Recreational and sporting services (Coicop 09.4.1) include sports stadiums, horseracing courses, golf courses, gymnasia, fitness centres, fairgrounds and amusement parks,
hire of equipment and accessories for sport and recreation. Data are derived from HBS 2008
and extrapolated thereafter.
5.7.3.31 Cultural services (Coicop 09.4.2)
include expenditure provided by; cinemas,
theatres, opera houses, concert halls, museums, libraries, historic monuments, hire of
357
Gross National Income Inventory
equipment and accessories for culture, such as television sets, video cassettes, television and
radio broadcasting, in particular licence fees for television equipment and subscriptions to
television networks, services of photographers such as film developing, print processing,
enlarging, portrait photography, wedding photography, services of musicians, clowns and
performers for private entertainments. Sources vary and include a number of news releases
published by NSO on cinemas, theatres, museums, supply based estimates for subscriptions
to television networks, etc. Data on licence fees are derived from public finance statistics.
The HBS 2008 is often used as a benchmark and data are extrapolated thereafter.
5.7.3.32 Games of chance (Coicop 09.4.3)
is measured by way of service charges for
lotteries, bookmakers, totalizators, casinos and other gambling establishments, gaming
machines, bingo halls, scratch cards, sweepstakes, etc. The service charge is defined as the
difference between the amounts paid for lottery tickets or placed in bets and the amounts paid
out to winners. Supply based sources are used to derive consumption expenditure on games
of chance given that the small number of operators is exhaustively covered by administrative
sources in the production approach.
5.7.3.33 Package holidays (Coicop 09.6) are based on the expenditure by outbound tourists
on package tours collected on a monthly basis.
Education (Coicop 10)
5.7.3.34 School fees with respect to Pre-primary and primary education (Coicop 10.1),
Secondary education (Coicop 10.2) and Post-secondary non-tertiary education (Coicop 10.3)
are obtained directly from non-secular schools through questionnaires. Education services
provided by government and church schools are free of charge.
Donations paid by
households to church schools are classified as ‘current transfers’ (D.75). Examination fees
for secondary and post-secondary education are obtained from administrative sources namely
the Financial Data Reporting System (FDRS). Examination fees re-subdivided between
secondary and post-secondary fees according to HBS 2008.
5.7.3.35 Tertiary education (Coicop 10.4) at the University of Malta (UoM) is generally free
of charge for full-time students. However, in case of tertiary education, students may opt to
undertake courses through distance learning and for which fees are paid and thus estimates
358
The expenditure approach
for tertiary education is dependent on HBS data. Thus, tuition fees and examination fees
provided by the UoM may not be exhaustive in case of tertiary education. The average
expenditure per student was derived as at 2008 and thereafter the extrapolation is based on
HICP and the number of students undertaking tertiary education on a part-time basis.
5.7.3.36 Included under the heading Education not definable by level (Coicop 10.5) is mainly
expenditure by tourists on English language schools which is covered by an annual national
accounts questionnaires (English Language Schools (ELS) survey).
Restaurants and hotels (Coicop 11)
5.7.3.37 Household consumption expenditure in the domestic market on Restaurant, cafés
and the like (Coicop 11.1.1) includes also expenditure in such establishments operating in
hotels. Sources include HBS 2008 and the Tourstat survey. Restaurant, cafés and the like
operating from hotels are based on SBS data which provides a detailed turnover breakdown
such that Restaurant, cafés and the like can be identified. Data for catering establishments is
derived from supply based sources, namely SBS. Given that canteens are included in Event
catering and other food service activities (NACE73 56.2), estimates are based on ratios
derived from NACE Rev. 1.1 where the distinction between catering and canteens was
available. Adjustments are made to exclude business expenditure on each category and tips
are added to ensure exhaustiveness.
5.7.3.38 Accommodation services (Coicop 11.2) are mainly derived from supply based
sources for Hotels and similar accommodation (NACE 55.1). Expenditure on Holiday and
other short-stay accommodation (NACE 55.2), Camping grounds, recreational vehicle parks
and trailer parks (NACE 55.3) and Other accommodation (NACE 55.9) are based on HBS
2008 and the Tourstat survey.
Miscellaneous goods and services (Coicop 12)
5.7.3.39 Services of Hairdressing salons and personal grooming establishments (Coicop
12.1.1) are based HBS data, tourist expenditure and are extrapolated using population
73
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
359
Gross National Income Inventory
statistics in case of resident expenditure and the HICP. Tourist expenditure data are available
on a quarterly basis.
5.7.3.40 Data on Electrical appliances for personal care (Coicop 12.1.2), Other appliances,
articles and products for personal care (non-durable (ND)) (12.1.3) and personal effects n.e.c.
(Coicop 12.3) is based on HBS 2008 and extrapolated thereafter using import data.
5.7.3.41 Prostitution (Coicop 12.2) is covered in detail in Section 3.25 and Chapter 7.
5.7.3.42 Household consumption expenditure in the domestic market on residential care
activities is derived supply based sources, mainly annual accounts, financial statements and
fiscal data.
Expenditure on other social work activities (excluding accommodation) is
derived mainly from HBS 2008 and is based on estimates derived for Social work activities
without accommodation (NACE 88) described in Section 3.23.
5.7.3.43 Household expenditure on insurance and FISIM is discussed in more detail in
Chapter 3 Section 3.17. Other financial services n.e.c. are based on data derived from
Financial service activities, except insurance and pension funding (NACE 64) excluding
banks and holding companies and Activities auxiliary to financial services and insurance
activities (NACE 66).
5.7.3.44 Other services n.e.c. (Coicop 12.7) includes fees for legal services, employment
agencies, charges for undertaking and other funeral services, payment for the services of
estate agents, housing agents, auctioneers, salesroom operators and other intermediaries,
payment for photocopies and other reproductions of documents; fees for the issue of birth,
marriage and death certificates and other administrative documents; payment for newspaper
notices and advertisements; payment for the services of graphologists, astrologers, private
detectives, bodyguards, matrimonial agencies and marriage guidance counsellors, public
writers, and miscellaneous concessions (seats, toilets, cloakrooms). Sources vary and are
generally supply based sources related to the market output from Public Finance Statistics,
and data derived from Legal and accounting activities (NACE 69), Security and investigation
activities (NACE 80) and Other personal service activities (NACE 96).
360
The expenditure approach
5.8
NPISHs final consumption expenditure
5.8.1
According to ESA 2010, para. 3.97, final consumption expenditure of non-profit
institutions serving households (NPISHs) includes two separate categories:
a)
The value of goods and services produced by NPISHs other than own-account
capital formation and other than expenditure made by households and other units;
and
b)
Expenditure by NPISHs on goods and services produced by market producers that
are supplied – without any transformation – to households for their consumption as
social transfers in kind.
5.8.2
NPISH final consumption expenditure is available from 1995 onwards and classified
using the Classification of the Purposes of Non-Profit Institutions Serving Households
(COPNI). In 2010 the NPISH final consumption expenditure is estimated at 97.0 million
Euro or 1.5 per cent of the gross domestic product (GDP) at market prices.
A brief
explanation on each COPNI is given in the following paragraphs.
5.8.3
The COPNI classification as applied to the Maltese context is divided into various
categories as shown in the following table:
Table 5.8.1: NPISH final consumption expenditure by COPNI as a ratio to GDP of 2010
COPNI
Details
€ '000s
% of GDP
02
Health
1,613
0.02%
03
Recreation and culture
11,897
0.18%
04
Education
40,158
0.61%
05
Social protection
16,458
0.25%
06
Religion
21,493
0.33%
07
Political parties, labour and professional organisations
4,568
0.07%
08
Environmental protection
676
0.01%
09
Services n.e.c.
148
0.00%
97,011
1.47%
Total
GDP at market prices
6,599,507
361
Gross National Income Inventory
5.8.4
Health (COPNI 02) includes amongst others volunteer organisations, relief societies
that promote health and welfare programs, lifesaving organisations, rehabilitation centres,
and organisations supporting community and educational facilities.
5.8.5
Recreation and culture (COPNI 03) covers recreational, amusement, creative, arts,
entertainment, sporting services as well as cultural services. The former type of services
mainly refer to supporters’ clubs, social clubs, football clubs, youth clubs, associations
related to various hobbies, and clubs for playing indoor or outdoor sports. Cultural services
include libraries, museums, art galleries, historical, literary, humanistic and philosophical
societies amongst others.
It also includes pyrotechnics which is the manufacturing of
fireworks for village feasts and other annual activities, organisations that promote cultural
heritage through exhibitions, museums and publications, radio broadcasting, film production,
sports, recreation and cultural education.
5.8.6
Education (COPNI 04) mainly refers to church schools at pre-primary to post-
secondary level, but also includes technical and vocational education, religious instruction
(catechism), other education and organisations furthering a public cause or issue by means of
public education, fund-raising, etc.
5.8.7
Social protection (COPNI 05) covers assistance and support services provided to
families and children, homes for elderly persons, residences for disabled persons,
organisations that provide cash assistance, food, clothing, shelter and other services to
persons who are refugees, immigrants, destitute and low-income earners and many others.
5.8.8
Religion (COPNI 06) mainly refers to activities of religious organisations and
associations.
However, it also includes publishing activities such as the publication of
newspapers, leaflets, and booklets, social action movements.
5.8.9
Political parties, labour and professional organisations (COPNI 07) refers to
activities of professional membership organisations, activities of trade unions, and activities
of political organisations.
Thus, it covers political parties and clubs, trade unions,
organisations whose members’ interests centre chiefly on a particular scholarly discipline,
professional practice or technical field such as accounting associations, and activities of
362
The expenditure approach
associations of specialists engaged in scientific, academic or cultural activities such as
journalists, writers, and painters.
5.8.10
Environmental protection (COPNI 08) refers to environmental and ecological
movements set up to prevent or remedy damage to the environment and to environmental
protection.
5.8.11
Services n.e.c. (COPNI 09) covers those organisations providing services that cannot
be assigned to Divisions 01 to 08 which would not be directly affiliated to a political party.
5.8.12
The value of total output (P.1) of NPISHs is calculated as the sum of total
production costs, i.e. the sum of the compensation of employees (D.1), intermediate
consumption (P.2), the consumption of fixed capital (K.1) and other taxes on production less
other subsidies on production (D.29 – D.39). This applies for all NACEs74 which include
NPISHs as an institutional sector except for Publishing activities (NACE 58) which is
calculated as a market producer using the top-down method as there was no information
available about the non-profit organisations that fall under this NACE.
The final
consumption expenditure of NPISHs that is the other non-market output (P.13) is the
difference between their output and their market sales.
5.8.13
The market output for NPISHs refers to those items that in terms of the System of
National Accounts (SNA 2008, para. 6.99), are intended for sale at economically significant
prices. It mainly includes advertisements, income from services to other organisations, rents
received, other services provided, other income and admission fees, with the latter
specifically related to museums and historical sites. Income from donations, government
grants, fund raising activities and income from membership fees are considered as part of
miscellaneous transfers and not as part of output.
5.8.14
The non-market goods and services that are produced and provided to households by
religious organisations, churches, homes for the elderly, social work activities, respite centres
for those people who are differentially able, aid organisations are separately identified in the
accounts.
74
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
363
Gross National Income Inventory
5.8.15
The intermediate consumption for NPISHs is calculated as the sum of administrative
expenses, other staff expenses, other services and expenses, maintenance on buildings and
machinery, water, electricity and telephone expenditure, legal and professional fees, other
subcontracting fees, travel expenditure, course fees and musical programmes, with the latter
applying for band clubs. Any donations paid to households or any assistance in kind given to
other organisations or households are not considered as part of intermediate consumption –
this applies mainly to fundraising organisations.
5.8.16
As regards how consumption of fixed capital (CFC) is estimated and how complete
coverage of CFC is ensured, reference should be made to Chapter 4, Section 4.12.
5.8.17
The final consumption expenditure of the NPISHs, which by convention is
considered individual, includes both the value of the goods and services produced by
themselves, which constitute neither formation of capital for own use nor expenditure of
households and of other units, and the expenditure on goods and services produced by market
producers which are supplied to households to be consumed there in the form of social
transfers in kind. However, the statistical information currently available does not make it
possible to distinguish whether or not a particular good or service acquired by a NPISH has
been used as intermediate consumption of the entity or has been supplied to the households,
without any transformation for its consumption.
5.8.18
The income obtained from the sale of their other non-market output at economically
insignificant prices is recorded together with the income from the market output in this type
of output, since it is very difficult to distinguish between them. Therefore, in the accounts of
the NPISHs sector, within the national accounts of Malta, the transactions final consumption
expenditure (P.3) and other non-market output (P.13) are of identical value.
5.8.19
A more detailed explanation on the sources and methods used to derive all the
variables for NPISHs is provided in Chapter 3 where detailed information is given as regards
the NPISHs (S.15) sector. This applies for: Section C NACE 20; Section J NACEs 58, 59,
60; Section N NACE 82; Section P NACE 85; Section Q NACEs 86, 87, 88; Section R
NACEs 90, 91, 93; and Section S NACE 94.
364
The expenditure approach
5.8.20
The percentages that were applied for each COPNI of the NPISH final consumption
expenditure derived from year 2000. They were based on accounts and financial information
gathered from the Non-Governmental Organisations (NGOs) survey and other sources
available which would be then worked out at NACE level. The following table refers to the
NACEs that were included in each COPNI. These percentages were then applied for the
following years on the non-market output of the NPISHs sector so as to distribute it at
COPNI level.
Table 5.8.2: NPISH final consumption expenditure by NACE at 4-digit level as at 2000
COPNI
Details
NACEs at 4-digit level as at 2000
02
Health
03
Recreation and culture
04
Education
05
Social protection
06
Religion
07
Political parties, labour and professional
organisations
08
Environmental protection
94.99
09
Services n.e.c.
94.99
5.8.21
86.90, 88.99, 94.99
20.51, 59.14, 60.10, 82.30, 85.51, 85.52, 90.01, 91.01, 91.02,
91.03, 93.11, 93.12, 93.19, 94.99
85.00,85.10,85.20,85.31,85.32,85.41,85.42,85.59, 94.99
32.99, 49.39,87.00, 87.20, 87.30, 87.90, 88.10, 88.91, 88.99
58.11,58.14, 88.99, 94.91
94.12, 91.20, 94.92
The process table of the NPISH final consumption expenditure showing figures for
Administrative Records, Surveys and Censuses, and Extrapolations and Models was derived
by first checking to which COPNI each NACE at 4-digit level belonged to and then taking
their percentage out of the NACE total output so that it is then distributed in accordance with
the percentage out of the total non-market output of each COPNI that was initially derived
from surveys and accounts as at year 2000.
5.8.22
The following table illustrates an excerpt from the process tables showing the values
derived from the NPISH final consumption expenditure by COPNI indicating values of
Surveys and Censuses, Extrapolations and Models, Conceptual, Exhaustiveness Adjustments
and Total Adjustments.
365
Gross National Income Inventory
Table 5.8.3: Process table 2010 of NPISH final consumption expenditure by COPNI in millions of Euro
Basis for national accounts figures
Total (Sources)
Other
Total
Extrap+Models
Other E&M
FISIM
Dwellings
CFC
CFM
Bench. Extra.
Comb. Data
Adm. Rec.
Surv. and Cens.
Extrapolations and Models
COPNI 02 Health
0.0
0.0
0.0
0.0
0.0
0.2
0.0
0.0
1.5
1.7
0.0
1.7
COPNI 03 Recreation
and culture
0.2
0.4
0.0
0.0
0.0
1.4
0.0
0.0
10.3
11.7
0.0
12.3
COPNI 04 Education
0.0
36.7
0.0
0.0
0.0
4.6
0.0
0.0
0.2
4.8
0.0
41.5
COPNI 05 Social
protection
0.0
0.0
0.0
0.0
0.0
1.9
0.0
0.0
15.1
17.0
0.0
17.0
0.0
8.6
0.0
0.0
0.0
2.5
0.0
0.0
11.2
13.6
0.0
22.2
0.0
2.1
0.0
0.0
0.0
0.5
0.0
0.0
2.1
2.6
0.0
4.7
COPNI 08
Environmental
protection services
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.0
0.6
0.7
0.0
0.7
COPNI 09 Services
n.e.c
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.2
0.0
0.2
COPNI 06 Religion
COPNI 07 Political
parties, labour and
professional
organisations
Adjustments
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
Balancing
Total (Adjustments)
Final Estimate
0.0
-0.1
0.0
-0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
1.6
0.0
-0.4
0.0
-0.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.4
11.9
0.0
-1.4
0.0
-1.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.4
40.2
0.0
-0.6
0.0
-0.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.6
16.5
0.0
-0.7
0.0
-0.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.7
21.5
0.0
-0.2
0.0
-0.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.2
4.6
COPNI 08
Environmental
protection services
0.0
-0.0
0.0
-0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.7
COPNI 09 Services
n.e.c
0.0
-0.0
0.0
-0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
Data Validation
Other Conceptual
Exhaustiveness
Allocation of FISIM
Conceptual
COPNI 02 Health
COPNI 03
Recreation and
culture
COPNI 04
Education
COPNI 05 Social
protection
COPNI 06 Religion
COPNI 07 Political
parties, labour and
professional
organisations
366
The expenditure approach
5.8.23
Although NPISHs units are included in the Business Register (BR), most of them do
not deliver financial accounts to the tax authorities. For this reason, accounts are either sent
directly by the organisations upon request, downloaded from their official websites, given by
the department in charge or collected by the Office of the Commissioner for Voluntary
Organisations, the latter’s mission mainly being to give more visibility to the voluntary sector
but at the same time guarantee transparency and accountability of the organisations that
compose it in carrying out their work.
5.8.24
Due to the considerable amount of registered voluntary organisations, a NGOs
survey used to be carried out by the office so as to have a better coverage of this sector.
However, since this systematic survey was carried out in 2008, and given the varied nature of
the organisations making up this sector, estimates had to be built-up using a diverse range of
other sources amongst which the retail price index (RPI), Employment and Training
Corporation (ETC) employment data, the harmonised index of consumer prices (HICP),
population figures, number of members and / or students. This procedure also applied when
other surveys such as the Youth Organisations Survey (YOS) and the Sports Organisations
(SPOs) survey were not carried out.
5.8.25
Efforts will be made in the future so as to replace estimates with actual information.
It is too early to say whether this effort will be successful. The avenues to be exploited are
accounting data and developments in relation to the BR and the Office of the Commissioner
for Voluntary Organisations.
Presently, there are circa 1,100 voluntary organisations
registered with the mentioned office which include amongst other sports organisations,
unions, band clubs, health associations and religious organisations.
5.9
5.9.1
Government final consumption expenditure
The general government sector is made up of two sub-sectors – the central
government and the local government. There are no social security funds within the local
context because this function is taken over within the central government operations.
5.9.2
The general government sector includes institutional units, which are other non-
market producers, or producers for own final use that are mainly financed and/or controlled
367
Gross National Income Inventory
by general government. There are units within general government, which are organised as
companies limited by shares but are nevertheless classified as other non-market producers
because they are mainly controlled and/or financed by general government. Similarly there
may be units which are similar to companies, such as authorities, regulators, entities that do
not have the legal form of a company but they were enacted through a Parliament Act. These
are treated as institutional units as they are characterised both by the fact that they keep a full
set of accounts and they are managed as though they were companies.
5.9.3
The final consumption expenditure of the general government is calculated by the
value of the goods and services produced by public bodies; which is obtained from the sum of
costs being; intermediate consumption, compensation of employees, consumption of fixed
capital (CFC) and other taxes on production less other subsidies received by government.
Sales by public bodies and output for own final use are deducted from the output total, while
the purchases by general government of goods and services produced by market producers
that are supplied to household – without any transformation – as part of social transfers in
kind are added.
5.9.4
The Classification of the Functions of Government (COFOG) is used for classifying
the general government consumption expenditure. The COFOG is a detailed classification of
the functions, or socio-economic objectives, that general government units aim to achieve
through various kinds of outlays. Public services may either be provided simultaneously to
all members of the community, i.e. collective consumption expenditure, or to specific
households to satisfy their needs, i.e. individual consumption expenditure.
Therefore
classification in accordance with COFOG offers the possibility of distinguishing between
individual and collective services. Further details on this classification are available at the
end of this section.
5.9.5
a)
The central government is primarily made up of:
Budgetary central government (BCG) consisting of ministries and government
departments. These are traditionally accounted for within the consolidated fund of
the government’s budget. Each Ministry, is further split into departments and cost
centres, is allocated a budget vote (revenue and expenditure) by Parliament. The
expenditure categories in each vote consist of the following: Personal emoluments,
368
The expenditure approach
Operations and maintenance expenditure, Programmes and initiatives (around 430
expenditure lines), Contributions to government entities (around 90 units) and
Capital expenditure (over 450 items).
The list of government ministries and
departments, including cost centres and new expenditure items in the different
expenditure categories, is updated at the beginning of each year in conformity with
the Government’s Financial Estimates.
b)
Extra-budgetary units (EBUs) complement this sub-sector. These institutional units
are non-market producers, owned and supported financially by the government.
These EBUs are established by various Acts of Parliament. They are independent,
they have their own set of accounts, have only limited supervision, and only their
operational budgets need to be approved by Parliament. These have been classified
as forming part of the general government sector (S.13) based on a delineation
exercise on the criteria set out in the ESA 2010 Manual on Government Deficit and
Debt described further in Section 5.9.5.
The local government sub-sector was introduced in Malta in 1993/1994 through the Local
Councils Act. This sector includes 68 local councils, five Regional Committees as well as
the Local Councils Association. By law, local councils are not allowed to introduce local
taxes but they may charge fees for specific services offered after a relative bye-law has been
approved by the council and endorsed by the Minister. The amount of funding received from
general government is worked out according to a complex formula, which takes into account
a number of considerations, the main two being the number of residences and the area. A
large proportion of these funds assigned must necessarily be spent on the collection of refuse,
cleaning of streets and maintenance of roads, pavements and public gardens. The sources for
the data in the table are described in more detail in Section 5.9.6.
Table 5.9.1: Final consumption expenditure by sub-sectors for 2010
Budgetary central
government
Extra-budgetary unit
Local government
Thousand Euro
2010
5.9.6
1,032,060
221,379
33,002
The first step in the compilation of data for EBUs is the formation of the institutional
unit within the general government sector. The main criterion for the sector delimitation is
369
Gross National Income Inventory
the quantitative test of the 50 per cent rule (i.e. total sales (market output) cover less than 50
per cent of costs (consisting of: compensation of employees, intermediate consumption, CFC,
taxes on production)). With the implementation of the ESA 2010, the net interest charge was
added to the productions costs.
Sales < 50% of production costs – Classified within the general government sector
Sales > 50% of production costs – Classified outside the general government sector
5.9.7
The delimitation exercise is conducted twice a year, prior to each excessive deficit
procedure (EDP) notification with the first delimitation exercise conducted in January.
5.9.8
The EBUs data for the delimitation exercise for the April EDP Notification is
obtained from the Financial Data Reporting System (FDRS). To compile the non-financial
accounts data for the EBUs, the FDRS templates are used; income statement and other data.
Where necessary, backward data are revised in line with the latest data available, be it either
audited accounts or from FDRS templates.
5.9.9
Any borderline cases are revisited regularly and, following consultation in the
Government Finance Committee, appropriate decisions are taken as necessary. The criterion
has to be satisfied for three successive years before any decision on the reclassification of a
unit is taken.
5.9.10
Qualitative aspects are also taken in consideration for the sector/subsector
classification. Apart from the 50 per cent rule, National Statistics Office (NSO)’s decision is
based also on the level of government’s input in the entity’s decision-making, the concept of
the economically significant prices and if output is sold only to government.
5.9.11
Several entities although fully owned by government are not included in this sector
(S.13) because their market output covers more than 50 per cent of their total costs.
Sources
5.9.12
The data for the consolidated fund, which consists of the expenditure of government
ministries and departments, is recorded in the central government accounting system, known
370
The expenditure approach
as Departmental Accounting System (DAS). The Treasury owns and manages the DAS and
the NSO has online read-only access to this accounting system.
A corporate chart of
accounts (COA) permits a standardised range of budget line items to be used across the
board. All accounts in the COA were coded in accordance with the requirements of ESA
2010, as well as in accordance with the International Monetary Fund (IMF) manual on
Government Finance Statistics. A series of specialised reports are used in which all the
expenditure and revenue transactions for central government are extracted according to the
ESA 2010 methodology. Moreover the COFOG category for each transaction is specified.
These reports are available on a monthly basis.
5.9.13
As the DAS is cash based, the data was enhanced with an accruals adjustment
compiled by the Treasury Department. On a quarterly basis, the Treasury collects accruals
data for the budgetary central government (covering all the government ministries and
departments). Data are requested for the stock position of the accrued expenditure, accrued
income, debtors, creditors, deferred income and prepayments. This information is monitored
by the Accounting Methodology and Compliance Unit at the Treasury. These data are used
to supplement the cash data. The templates are saved on a shared server which is accessible
to the NSO.
5.9.14
Launched in 2010 by the Ministry for Finance, the FDRS is geared towards attaining
real time financial data pertaining to government entities (EBUs and major public
corporations). It facilitates the surveillance of budget implementation and the formulation of
budget policy governing the administration of public funds as part of government's ongoing
fiscal consolidation process. The templates are to be submitted within 22 calendar days
following the end of the respective period. The Public Finance Unit has online (read-only)
access to this system. This system caters for the quarterly and annual financial and nonfinancial data of the EBUs and the major public corporations. Given that the FDRS deadline
for the EBUs to send their template is 22 working days after the reference period, until the
actual data are available, the unit populates the database with forecast data for year t-1
obtained also from the FDRS templates. In absence of forecast data for particular EBUs, the
Public Finance Unit makes use of the latest data available being the actual data for year t-2.
Data from the FDRS is replaced by actual data once the audited accounts are received.
371
Gross National Income Inventory
5.9.15
The data for local councils is primarily sourced from their audited financial
statements. These are prepared annually, with a financial year ending 31 December. Due to
the accounting period the NSO adjusts the data by dividing the totals into four quarters. This
method assumes no seasonal or other variations between the quarters. In the absence of the
audited financial statements, the data for the local government sector, are estimated on the
basis of the previous year (t-2) audited financial statements.
Valuation
5.9.16
Final consumption expenditure by general government results from the specific
recording of government output. Only a small part of government output is actually sold
(market output). The larger part of government output is paid out of public funds and
provided free of charge to all sectors (non-market output).
Because the allocation of
government output to different users will encounter large problems, the government is by
convention considered to be the consumer of its own output.
The final consumption
expenditure is calculated as in Table 5.9.2.
Table 5.9.2: Government final consumption expenditure for 2010, in thousands of Euro
ESA 2010 variable
Intermediate consumption
400,187
+
Compensation of employees
855,105
+
Consumption of fixed capital
144,175
+
Other taxes on production
0
-
Other subsidies on production
0
Output (at basic prices)
1,399,467
-
Market output
-
Output for own final use
22,151
+
Social benefits in kind via market prices
40,417
Government final consumption expenditure
372
2010 in € ’000
131,292
1,286,441
The expenditure approach
Detail of economic aggregates
5.9.17
This section describes the method of estimating the various components making up
the final consumption expenditure for the government.
Intermediate consumption
5.9.18
Intermediate consumption of the BCG is made up of all the operations and
maintenance expenses for all the Government Ministries and Departments. This includes
expenditure on utilities, materials and supplies, repairs and upkeep, rent, international
memberships, office services, transport, travel, information services, contractual services
professional services, training, hospitality and incidental expenses; after eliminating certain
expenditure (e.g. rent on land, international memberships with United Nations (UN) and
European Union (EU) Organisations, benefits in kind, etc) which according to the ESA 2010
methodology should not be classified as intermediate consumption.
The intermediate
consumption element of the following categories is also taken in consideration: programmes
and initiatives, contribution to government entities, capital expenditure and the Treasury
accruals templates.
5.9.19
Data for the calculation of the budgetary central government’s intermediate
consumption are obtained from the DAS. For the EBUs and the local councils the annual
audited financial statements were referred.
5.9.20
Another adjustment is the inclusion of the financial intermediation services
indirectly measured (FISIM) allocation to the general government sector. The FISIM was
apportioned to the 12 NACE75 categories, forming part of general government, based on their
output without FISIM.
Individual and collective consumption
5.9.21
Government services can benefit the community ether individually or collectively.
The classification of expenditure according to COFOG is also used to distinguish between the
individual and collective services provided by general government. The COFOG functions
75
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
373
Gross National Income Inventory
are pre-defined so that they represent individual or collective consumption, but not both.
COFOG is made up of the following divisions:

General public services;

Defence;

Public order and safety;

Economic affairs;

Environmental protection;

Housing and community amenities;

Health;

Recreation, culture and religion;

Education; and

Social protection.
5.9.22
The first 6 divisions are by convention all to be considered collective expenditure.
The other 4 divisions are in the main individual consumption expenditure, with the exception
of the general administrative costs, which are still classified as collective expenditure.
5.9.23
The general government expenditure is reported by cost centre, and therefore the
outlays on general administrative functions (including ministerial, and permanent secretary’s
office) are adequately identifiable.
Table 5.9.3: Individual/Collective consumption expenditure for 2010, in thousands of Euro
Individual Consumption
Expenditure
Collective Consumption
Expenditure
Final consumption
Expenditure for General
Government
€ ’000s
2010
374
683,298
603,143
1,286,441
The expenditure approach
Table 5.9.4: Final consumption expenditure by COFOG for 2010, in thousands of Euro
2010
€ ’000s
General public service
Defence
43,079
Public order and safety
83,980
Economic affairs
173,391
Environmental protection
77,810
Housing and community amenities
15,797
Health
Recreation, culture and religion
366,402
22,001
Education
262,596
Social protection
108,349
General government final consumption expenditure
5.9.24
133,036
1,286,441
An adjustment is made where items of a recurrent nature were originally classified
as capital expenditure. These were removed from gross fixed capital formation (GFCF) and
placed in intermediate consumption, like hire of vehicles, certain building materials and other
small recurrent expenditures.
5.9.25
The government pays no taxes on production and receives no subsidies on
production.
Market output
5.9.26
Ministries and departments may engage in market activities and generate revenue;
with the main activities being rent of buildings, admissions to various buildings, court,
passport, and public registry fees as well as hospital fees charged to non-residents. The
information for these market activities of the central government is obtained from the DAS
system and from the Financial Report (Treasury Department) and Budget Reports (Ministry
of Finance). When coding a revenue transaction in line with the ESA 2010 methodology
consideration is made to distinguish revenue from taxes (D.2) and from sale of services
(P.11). For this purpose, it was determined that when the fee charged reflected the actual
service provided, this would be a P.11 transaction.
On the other hand taxes reflected
revenues out of proportion to the service rendered.
375
Gross National Income Inventory
5.9.27
The market output of local councils consists of income raised under council bye-
laws for the use of facilities, advertising on street furniture, tender documents and hire of
skips. Revenue is collected also from cultural activities, publications, fees from courses,
media charges and other general income. Data was captured from their respective financial
statements.
5.9.28
For the EBUs their market output is captured from their financial statements and
consists mainly of sale of new vacant premises from the Housing Authority, development
permit fees from the Malta Environment and Planning Authority (MEPA) and examination
and registration fees from the University of Malta (UoM).
Own-account capital formation
5.9.29
The output for own final use consists of goods and services retained either for final
consumption or for GFCF.
With the ESA 2010, research and development (R&D)
expenditure is being capitalised. For own-account and non-market R&D, where sales cannot
be observed, R&D output is valued as the sum of costs of production, and recorded as output
for own final use.
Social benefits in kind via market producers
5.9.30
These are purchases by general government of goods and services produced by
market producers that are supplied to households as social transfers in kind. This implies that
general government just pays for goods and services that the producers provide to
households.
5.9.31
The following are Malta’s social benefits in kind being; the incontinence service,
direct provision of pharmaceutical products, school transport to primary and secondary
schools, meals on wheels, residential home for disabled persons, homes for the elderly,
specialised prosthetic and orthotic service, and government health expenditure on contract
with the private sector.
Consumption of fixed capital (CFC)
5.9.32
Consumption of fixed capital (P.51c) is the reduction in value, which a fixed asset
undergoes because its economic life is limited. The method used for the general government
376
The expenditure approach
sector is the perpetual inventory method (PIM). CFC for the general government sector data
are obtained from the National Accounts Unit, refer to Chapter 4, Section 4.12. This data are
apportioned to the 21 NACEs (and COFOG) categories using estimations based on timeseries of GFCF (P.51) by NACE classification (and COFOG) for each sub-sector of general
government. P.51c is then calculated by applying the average structure of GFCF by NACE
(and COFOG) on total CFC of sub-sectors.
5.10 Acquisitions less disposals of produced fixed assets
5.10.1
Overview
5.10.1.1 Gross fixed capital formation (GFCF) (P.51) consists of resident producers’
acquisitions, less disposals, of fixed assets during a given period plus certain additions to the
value of non-produced assets realised by the productive activity of producer or institutional
units.
GFCF is recorded when the ownership of the fixed assets is transferred to the
institutional unit that intends to utilise them in production. Acquisitions (also referred to as
additions) consists of new or existing fixed assets purchased, acquired through barter,
received as capital transfers in kind or acquired by the user under a financial lease and of
fixed assets produced and kept for the producers’ own use. On the other hand, disposals refer
to existing fixed assets which are sold, surrendered in barter or surrendered as capital
transfers in kind.
5.10.1.2 GFCF is available by the type of fixed asset (Table 5.10.1 and Table 5.10.2) and by
institutional sectors (Table 5.10.3). The activity and product breakdown used for GFCF are
generally based on those used in the production approach which is slightly more detailed than
the official 88 divisions in NACE76 and Classification of Products by Activity (CPA)
(Chapter 9, para. 9.1.1 and 9.1.4 respectively).
5.10.1.3 GFCF is sub-divided by the type of producer, i.e. market (S.11) or non-market
producers (S.14), the local government (S.13) where it is being further sub-divided into
central government (S.13111), local government (S.1313), financial-producers (S.12) and
76
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
377
Gross National Income Inventory
non-profit institutions serving households (NPISHs) (S.15). For a detailed description of
acquisitions less disposals by institutional sector refer to Table 5.10.3.
5.10.1.4 All this information is presented in an investment matrix which allows various
cross-classifications such as activities by products, activities by type of asset, type of
producer by type of asset, type of producer by type of product, and activities by type of
producer. Investment matrices are compiled on an annual basis for the years 1995 to 2013.
The benchmark year (currently 2013) is eventually then utilised for quarterly estimates for
GFCF for those subsequent years where the investment matrix is not yet finalised.
5.10.1.5 Table 5.10.1 shows that the majority of the total acquisitions less disposals of fixed
assets consist of asset ‘machinery and equipment’ ((AN77.113) (39.8 per cent)), closely
followed by the asset ‘other buildings and structures’ ((AN.112) (30.3 per cent)). Moreover,
the ‘intellectual property products’ (AN.117) consist of 13.7 per cent of the total acquisitions
less disposals for the year 2010. It is important to note that Table 5.10.1 is only an indication
of the distribution by type of assets, since from year to year GFCF can vary a lot.
77
AN refers to non-financial assets.
378
The expenditure approach
Table 5.10.1: The acquisitions less disposals of fixed assets by NACE sections (A*21) and types of assets
for the year 2010, in thousands of Euro
Type of Asset
AN.111
A*21
Level
Dwellings
A
-
AN.112
Other
buildings and
structures
14,054
AN.113
AN.114
AN.115
Machinery and
equipment
Weapons
system
Cultivated biological
resources
11,052
-
B
C
AN.117
Intellectual
property
products
Total
1,032
3,469
29,607
-
-
50,983
212,467
c
-
33,515
127,969
D
c
E
c
F
-
26,276
25,622
-
-
2,378
54,276
G
-
40,168
51,084
-
-
19,036
110,288
H
-
12,248
98,589
-
-
2,483
113,319
I
-
10,124
18,732
-
-
2,311
31,167
J
-
9,914
34,148
-
-
28,743
72,805
K
-
3,217
12,896
-
-
7,486
23,599
L
227,390
-
-
-
-
-
227,390
M
-
11,325
15,642
-
-
9,224
36,191
N
-
3,399
11,841
-
-
2,993
18,233
O
15
44,074
- 5,237
-
1
14,190
53,044
P
-
12,644
19,860
-
-
15,005
47,509
Q
-
8,256
16,193
-
-
4,237
28,686
R
-
5,975
16,115
-
140
28,670
50,901
S
-
8,235
13,891
-
-
719
22,845
T
-
-
-
-
-
-
-
U
-
-
-
-
-
-
-
Total
227,404
427,053
562,237
-
1,173
193,770
1,411,637
%
16.1%
30.3%
39.8%
0.0%
0.1%
13.7%
100.0%
5.10.1.6 Table 5.10.2 shows that nearly in all sections (Sections B-C, G-K, M-N, P-Q and
S) the majority of acquisitions less disposals consisting of the asset ‘machinery and
equipment’ (AN.113). On the other hand, the majority of the acquisitions less disposals of
Sections A, D-F and O, consist of the asset ‘other buildings and structures’ (AN.112).
Moreover, Section L consists only in the acquisitions less disposals of the asset ‘dwellings’
(AN.111). Furthermore, the majority of the acquisitions less disposals of Section R consist of
the asset ‘intellectual property products’ (AN.117).
379
Gross National Income Inventory
Table 5.10.2: The percentages of acquisitions less disposals of fixed assets by NACE sections (A*21) and
types of assets for the year 2010, as a percentage
Type of Asset
AN.111
A*21
Level
Dwellings
AN.112
Other
buildings and
structures
AN.113
Machinery
and
equipment
AN.114
Weapons
system
AN.115
Cultivated
biological
resources
AN.117
Intellectual
property
products
A
0.0%
47.5%
37.3%
0.0%
3.5%
11.7%
100.0%
B
0.0%
0.5%
96.4%
0.0%
0.0%
3.2%
100.0%
C
0.0%
15.8%
60.2%
0.0%
0.0%
24.0%
100.0%
D
0.0%
56.1%
43.7%
0.0%
0.0%
0.2%
100.0%
E
0.0%
86.6%
11.9%
0.0%
0.0%
1.5%
100.0%
F
0.0%
48.4%
47.2%
0.0%
0.0%
4.4%
100.0%
G
0.0%
36.4%
46.3%
0.0%
0.0%
17.3%
100.0%
H
0.0%
10.8%
87.0%
0.0%
0.0%
2.2%
100.0%
I
0.0%
32.5%
60.1%
0.0%
0.0%
7.4%
100.0%
J
0.0%
13.6%
46.9%
0.0%
0.0%
39.5%
100.0%
K
0.0%
13.6%
54.6%
0.0%
0.0%
31.7%
100.0%
L
100.0%
0.0%
0.0%
0.0%
0.0%
0%
100.0%
M
0.0%
31.3%
43.2%
0.0%
0.0%
25.5%
100.0%
N
0.0%
18.6%
64.9%
0.0%
0.0%
16.4%
100.0%
O
0.0%
83.1%
-9.9%
0.0%
0.0%
26.8%
100.0%
P
0.0%
26.6%
41.8%
0.0%
0.0%
31.6%
100.0%
Q
0.0%
28.8%
56.4%
0.0%
0.0%
14.8%
100.0%
R
0.0%
11.7%
31.7%
0.0%
0.3%
56.3%
100.0%
S
0.0%
36.0%
60.8%
0.0%
0.0%
3.1%
100.0%
T
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
U
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
%
16.1%
30.3%
39.8%
0.0%
0.1%
13.7%
100.0%
Total
5.10.1.7 As shown in Table 5.10.3, for the year 2010, the majority of the assets, ‘other
building and structures’ (AN.112), ‘machinery and equipment’ (AN.113) and ‘intellectual
property products’ (AN.117) are classified under market producers (S.11). Moreover, the
majority of ‘cultivated biological resources’ (AN.115) is classified under non-market
producers (S.14). Additionally, the entire asset ‘dwellings’ (AN.111) is classified under nonmarket producers (S.14). As regards, the government GFCF (S.13), the majority of the
acquisitions less disposals are classified either under the asset ‘other building and structures’
(AN.112) or under the asset ‘intellectual property products’ (AN.117).
380
The expenditure approach
Table 5.10.3: The acquisitions less disposals of fixed assets by institutional sectors (S.11-S.15) and by type
of assets for the year 2010
GFCF by asset and by institutional sector
GFCF in thousands of Euro
S.11
S.12
S.13
S.14
S.15
Total
-
-
15
227,390
-
227,404
AN.111
Dwellings
AN.112
Other buildings and structures
315,461
3,217
86,943
12,141
9,291
427,053
AN.113
Machinery and equipment
478,919
12,896
23,196
42,877
4,350
562,237
AN.114
Weapons system
-
-
-
-
-
0.0
AN.115
Cultivated biological resources
282
-
3
888
-
1,173
AN.117
Intellectual property products
142,898
7,486
33,106
9,573
707
193,770
Total GFCF
937,560
23,599
143,263
292,869
14,348
1,411,637
GFCF by asset and by institutional sector
GFCF in percentage
S.11
S.12
S.13
S.14
S.15
Total
AN.111
Dwellings
0.0%
0.0%
0.0%
100.0%
0.0%
100%
AN.112
Other buildings and structures
73.9%
0.8%
20.4%
2.8%
2.2%
100%
AN.113
Machinery and equipment
85.2%
2.3%
4.1%
7.6%
0.8%
100%
AN.114
Weapons system
0.0%
0.0%
0.0%
0.0%
0.0%
100%
AN.115
Cultivated biological resources
24.0%
0.0%
0.3%
75.7%
0.0%
100%
AN.117
Intellectual property products
73.7%
3.9%
17.1%
4.9%
0.4%
100%
Total GFCF
66.4%
1.7%
10.1%
20.7%
1.0%
100%
5.10.1.8 Moreover, Table 5.10.3 also shows that the market producers (S.11) cover 66.4 per
cent of the total acquisitions less disposals for the year 2010, the non-market producers (S.14)
cover 20.7 per cent of the total acquisitions less disposals for the year 2010, the local
government covers 10.1 per cent of the total acquisitions less disposals for the year 2010, the
financial producers (S.12) cover only 1.7 per cent of the total acquisitions less disposals for
the year 2010 and the NPISHs (S.15) covers only 1.0 per cent of the total acquisitions less
disposals for the year 2010.
Excerpt from process tables
5.10.1.9 Table 5.10.4 illustrates the process tables for the total GFCF (including both
tangible and intangible assets) for the year 2010.
381
Gross National Income Inventory
Table 5.10.4: Extract of process table 2010 for GFCF in thousands of Euro
Basis for national accounts figures
GFCF
Surv. and Cens.
Adm. Rec.
Comb. Data
Bench. Extra.
CFM
CFC
Dwellings
FISIM
Other E&M
Total
Extrap+Models
Other
Total (Sources)
Extrapolations and Models
Total
436,094
352,195
199,795
-
193,770
-
-
-
224,817
418,587
-
1,406,672
AN.111
-
15
-
-
-
-
-
-
190,340
190,340
-
190,355
AN.112
159,240
198,659
104,737
-
-
-
-
-
10,390
10,391
-
473,028
AN.113
276,854
153,367
95,058
-
-
-
-
-
23,068
23,068
-
548,346
AN.114
-
-
-
-
-
-
-
-
-
-
-
-
AN.115
-
155
-
-
-
-
-
-
1,018
1,018
-
1,173
AN.117
-
-
-
-
193,770
-
-
-
-
193,770
-
193,770
Adjustments
GFCF
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total Exhaustiveness
Balancing
Total (Adjustments)
Total
-32,084
-
-
-
-
-
37,050
-
-
-
-
37,050
-
4,966
1,411,637
AN.111
-
-
-
-
-
-
37,050
-
-
-
-
37,050
-
37,050
227,404
AN.112
-45,975
-
-
-
-
-
-
-
-
-
-
-
-
-45,975
427,053
AN.113
13,891
-
-
-
-
-
-
-
-
-
-
-
-
13,891
562,237
AN.114
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
AN.115
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,173
AN.117
-
-
-
-
-
-
-
-
-
-
-
-
-
-
193,770
Final Estimate
Allocation of FISIM
Exhaustiveness
Data Validation
Conceptual
Explanatory notes to the process table of GFCF shown in Table 5.10.4
5.10.1.10 Surveys and Censuses: This category refers to the data which is directly obtained
from the Structural Business Statistics (SBS) survey worked out by the Structural Business
Statistics Unit. This data are incorporated in the following activities: NACE Divisions 8-33,
38-39, 41-43, 45-47, 49-56, 58-63, 69-75, 77-82 and 95 (refer to Chapter 9, Table 9.1.1 for
NACE Descriptions).
5.10.1.11 Administrative Records: This category refers to data which is directly taken from
the financial statements or the annual reports obtained from the Malta Financial Services
Authority (MFSA) and data provided by various institutions. This includes particularly data
382
The expenditure approach
for the central government, local councils and extra-budgetary units (EBUs) and international
trade and transport data.
The general government sector is involved in the following
activities: NACE 01, NACE 03, NACE 18, NACE 33, NACE 38, NACE 41, NACE 71,
NACEs 77-78, NACEs 84-88, NACEs 90-91 and NACE 93, thus values are reported under
Administrative Records. Moreover, NACE 50 includes data of a particular company which is
directly obtained from trade data.
The following activities are obtained directly from
financial statements: NACE 03, NACEs 36-37, NACE 51, NACE 52, NACE 61, NACEs 6466, NACEs 85-88, NACEs 90-93 and NACE 96. Other data sources which are classified
under Administrative Records include the FADN utilised for NACE 01 (refer to Chapter 9,
Table 9.1.1 for NACE Descriptions).
5.10.1.12 Combined Data: This category refers to data which combines together different
kinds of data classified under different categories. The following NACEs have data classified
under this category: NACE 19 (Survey and Censuses and Administrative Records), NACE 35
(Administrative Records and Other Extrapolations and Models), NACE 46 (Administrative
Records and Other Extrapolations and Models) and NACE 92 (Administrative Records and
Other Extrapolations and Models) (refer to Chapter 9, Table 9.1.1 for NACE Descriptions).
5.10.1.13 Data Validation: This category refers to the data which was directly obtained from
various sources and which was adjusted by the National Accounts Unit. The following
NACEs have data which is classified under this category: NACEs 10-11, NACE 18, NACE
22, NACE 26, NACE 32, NACE 41, NACE 43, NACEs 45-47, NACE 50, NACE 52,
NACEs 55-56, NACEs 60-61, NACEs 70-71, NACE 71, NACE 77 and NACE 80 (refer to
Chapter 9, Table 9.1.1 for NACE Descriptions). The majority of the data classified under
this category involves adjustments done by the National Accounts Unit on the SBS data.
Most of these adjustments relate to the incorrect disclosure of disposals in SBS survey
whereby the original cost of the disposal is reported rather than the market value of the asset
upon disposal. Other adjustments involve the weighting structure and the identification of
non-residents in SBS survey.
5.10.1.14 Other Extrapolations and Models: This category refers to the data which is
estimated or extrapolated by the National Accounts Unit. The following NACEs have data
classified under this category: NACE 01, NACE 03, NACE 66, NACE 68, NACEs 85-87,
383
Gross National Income Inventory
NACE 91, NACEs 93-94 and NACE 96 (refer to Chapter 9, Table 9.1.1 for NACE
Descriptions).
Other Extrapolations and Models for Crop and animal production, hunting and related
service activities (NACE 01)
5.10.1.15 The Other Extrapolations and Models existing in Crop and animal production,
hunting and related service activities (NACE 01) includes the estimation of the acquisitions
less disposals for livestock, orchards and vineyards.
The acquisitions less disposals of
livestock are based on the change in stock in the number of heads multiplied by the value of
the asset. The values for trees, crops and plant resources yielding repeated products are based
on an administrative source and is then sub-divided into orchards and the vineyards using
ratios calculated in a one-off exercise for the years (1995-2003). By means of this ratio, the
number of permanent crops can be divided into the number of orchards (3.4 per cent) and the
number of vineyards (96.6 per cent). For more details on the calculation of these cultivate
biological resources of crops refer to Section 5.10.3.5.
Other Extrapolations and Models for Fishery and aquaculture (NACE 03)
5.10.1.16 The acquisitions less disposals of vessels, engines, electronic equipment, deck
equipment, fishing gear and nets are based on the figures of the fishing census which was last
done in 2005. The number of vessels of different types of fishing boats for the year 2005 is
also taken from this Fishing Census of the year 2005. The following years are based on the
number of fishing boats and the number of estimated active vessels directly taken from the
Agriculture and Fisheries Publication of each corresponding year multiplied by the
replacement value per vessel for the respective year which is adjusted by the prices of that
particular year.
Up till 2011, extrapolations were necessary in case of fish-farming
companies which failed to submit accounts. The estimation is derived by using the data of
previous years and the employment of the corresponding fish-farming companies obtained
from Employment and Training Corporation (ETC).
384
The expenditure approach
Other Extrapolations and Models for Insurance, reinsurance and pension funding, except
compulsory social security (NACE 65), for Activities auxiliary to financial activities and
insurance activities (NACE 66), for Real estate activities (NACE 68) and for Education
(NACE 85)
5.10.1.17 Extrapolations were necessary in case of Activities auxiliary to financial services
and insurance activities (NACE 66) given that not all companies are covered by accounts and
other data sources are not available. Thus, estimates are necessary for companies not covered
by accounts and the employment obtained from ETC is then used for raising.
5.10.1.18 GFCF in ‘dwellings’ classified in Real estate activities (NACE 68) includes
estimating the GFCF based on the user cost method which has been classified as Other
Extrapolations and Models.
5.10.1.19 In case of Education (NACE 85), the estimates of the acquisitions less disposals of
driving schools is derived by taking into consideration the number of driving the instructors’
permits obtained directly from the Malta Transport Authority and the average price of a car.
The GFCF of driving schools for 2010 is therefore calculated as follows:
GFCF of driving schools of the year 2010 = ((Number of driving instructors’ permits of the year
2010) less (Number of driving instructors’ permits of the year 2009)) * the average price of a car.
Other Extrapolations and Models for Residential care activities (NACE 87) and Social work
activities without accommodation (NACE 88)
5.10.1.20 The data classified under this category for NACEs 87-88 includes the estimation of
the GFCF based on the data which is directly obtained from the financial statements and then
raised by the corresponding employment to cover the entire population. The extrapolations
of GFCF for NPISHs in NACEs 87-88 is based on the Non-Governmental Organisations
(NGOs) survey of 2007 using output as a grossing up factor.
385
Gross National Income Inventory
Other Extrapolations and Models for Libraries, archives, museums and other cultural
activities (NACE 91), for Sports activities, amusement and recreation activities (NACE 93),
for Activities of membership organisations (NACE 94) and for Other personal service
activities (NACE 96)
5.10.1.21 Other Extrapolations and Models in NACE 91 and NACE 96 refers to the
estimation of the acquisitions less disposals which are directly obtained from the financial
statements and then raised by corresponding employment obtained from ETC to cover the
entire population.
Additionally, the Other Extrapolations and Models involved in the
acquisitions less disposals of NPISHs of NACE 91 is based on the estimation on the output of
NACE 91 and on the ratios obtained from the Museums and Historical Sites survey. This
survey included GFCF figures only for 2007. Consequently, the data for the acquisitions less
disposals for the year (2007 onwards) is based on the data of the year 2007.
5.10.1.22 In case of NACE 93, the estimation of the acquisitions less disposals is based on
the GFCF data which is directly obtained from the financial statements and then raised by
corresponding employment obtained from ETC to cover the entire population.
5.10.1.23 In case of NACE 94, GFCF is based on the NGO survey which was last updated in
2007. From 2007 onwards, the estimates which are derived based on output and the asset
breakdown which was reported in 2007.
5.10.2
Main data sources and their conversion to national accounts result
5.10.2.1 As already mentioned, the main data sources for the annual GFCF are the financial
statements and annual reports obtained from MFSA, the SBS survey, the government data
obtained from the Public Finance Unit within the NSO, the Short-Term Statistics (STS)
quarterly data and other sources.
5.10.2.2 None of the above-mentioned data sources provide a distinction amongst the new
and the existing produced fixed assets.
386
The expenditure approach
5.10.2.3 The additions less disposals follow the ‘one year rule’ in line with ESA 2010. The
‘one year rule’ states that the fixed assets consist of the produced assets which are utilised in
production for more than one year.
5.10.2.4 Acquisitions less disposals of small tools for production purposes are excluded from
GFCF following ESA 2010, para. 3.130a(1). In fact, expenditures on durable, inexpensive
and assets utilised to perform relatively simple operations may be treated as intermediate
consumption when such expenditures are regularly made and are very small when compared
with other acquisitions. Such goods include hand tools like saws, spades, knives, axes,
screwdrivers amongst others. Such tools are included in intermediate consumption.
Financial statements and annual reports
5.10.2.5 Annual reports and financial statements are directly obtained from MFSA. Annual
reports and financial statements supply the following information in the schedule of fixed
assets and the cash-flow statement:
a) Stock of capital at the beginning of the year both at book value and at net book value
(taken from the schedule of fixed assets);
b) Acquisitions of tangible fixed assets (taken from the schedule of fixed assets); and
c) Disposals of fixed assets (taken from the cash-flow statements).
5.10.2.6 Notwithstanding the fact that some companies might submit abridged accounts,
these also contain a full ‘Balance Sheet’ and a ‘Schedule of Fixed Assets’.
However,
sometimes, in case of abridged accounts, no detail about the assets is available in the
‘Schedule of Fixed Assets’, and only the totals are listed. In this case, the total value of
additions is taken by the National Accounts Unit and then broken down into asset detail by
means of ratios. The breakdown of the acquisitions less disposals of those companies having
abridged accounts is derived by applying the ratios obtained from the breakdown of additions
of another similar company and on the corresponding employment obtained from ETC of the
two involved companies.
387
Gross National Income Inventory
5.10.2.7 The asset detail published in the accounts varies between companies and industries
however, the main headings generally include the following items which are displayed in
Table 5.10.5.
Table 5.10.5: The detail of the assets with the corresponding CPA (2008) (2-digit) which is usually and
commonly published in the financial statements
CPA 2008
(2-digit)
Assets
CPA 2008
(2-digit)
Assets
26
Computer equipment
28
Tools and equipment
26
Radar equipment
29
Motor vehicles
26
Computer equipment
30
Aircraft
27
Electrical installations and equipment
30
Boats or ships
28
Radio and vision equipment
31
Office furniture
28
Technical equipment
31
Furniture and fittings
28
Air-condition
41
Land and building
28
Lifts
41
Office buildings
28
Insulation
41
Improvement to premises
28
Plant and machinery
41
Leasehold improvements
28
Jigs, moulds and dies
41
Improvement to premises
28
Office equipment
62
Computer software
SBS survey data for GFCF
5.10.2.8 SBS data covers the following NACE categories:

08 to 43 are available since 1995 in NACE Rev. 2 and by ISIC back to the 1950s;

45 to 47 are available since 1999 in NACE Rev. 2;

55 to 63 are available since 2000 in NACE Rev. 2; and

68 to 82 are available since 2001 in NACE Rev. 2.
However, the SBS survey is not used for all the above-mentioned NACE categories. The
asset breakdown of the SBS survey is as shown in Table 5.10.6:
388
The expenditure approach
Table 5.10.6: The detail of the assets’ breakdown existing in SBS
Assets
Land
Existing buildings and structures
Construction and alterations
Machinery and equipment
(This variable covers machinery (office machinery etc.), special
vehicles used on the premises, other machinery and equipment,
all vehicles and boats used off the premises, i.e. motor cars,
commercial vehicles and lorries as well as special vehicles of all
types, boats, railway wagons, etc. acquired new or second hand
during the reference period).
Intangible fixed assets
(This variable covers concessions, patents, licences and
trademarks and similar rights).
Of which
Investment in equipment and plant for
pollution control and special anti-pollution
accessories (mainly end-of-pipe equipment)
Investment in equipment and plant linked to
cleaner technology (integrated technology).
5.10.2.9 Up till 2002 GFCF variables derived from the SBS survey were adjusted to cover
non-response by the National Accounts Unit. The GFCF per full-time equivalent gainfully
occupied used to be derived for every 2-digit NACE category, for each of the abovementioned assets. Grossing up was based on the full-time equivalent gainfully occupied used
in the production approach for every 2-digit NACE category. As from 2003 onwards, such
adjustments were not necessary, and thus GFCF in principal is taken directly from the SBS
survey.
Government data
5.10.2.10 The Departmental Accounting System (DAS) is the main data source used in the
compilation of the central government sector (S.1311) and local government (S.1313) by the
Public Finance Unit. All government transactions available in the DAS have been coded
according to the classification of transaction and other flows in line with ESA 2010. Data
extracted from the DAS are available at the A*8878 level of detail. However, expenditure
items are not coded by the CPA (2008). The coding of the CPA classification (CPA (2008))
is done by the Public Finance Unit within National Statistics Office (NSO) by using the
available description for each expenditure item in the annual ‘Financial Estimates’ published
by the Ministry of Finance. Data for S.1311 is exhaustive and no estimates are therefore
needed.
78
Refer to Table 9.1.1.
389
Gross National Income Inventory
STS data for GFCF
5.10.2.11 The STS data of acquisitions less disposals of NACEs 10-33 is utilised as an
estimate for annual GFCF only if the SBS is not yet finalised. GFCF surveyed by the ShortTerm Statistics Unit include the ‘investment in plant and machinery’ and the ‘investment in
buildings’. The STS survey is considered to be a very important data source due to its
timeliness. At present, the STS data are being used to estimate the acquisitions less disposals
for the Manufacturing Sector C (NACEs 10-33) for the years (2014 onwards) since,
presently, the investment matrix for the year 2013 is finalised. Then this data taken from the
STS is sub-divided by the employment size class and grossed up by the National Accounts
Unit. The value of the plant and machinery derived from the STS is further sub-divided at 2digit CPA (which is based on previous year estimates). Subsequently, this STS data are then
replaced by the SBS data, once the SBS data are finalised for that particular year.
Other data sources
5.10.2.12 Other data sources used for the compilation of GFCF include various Surveys and
Censuses which are done on a regular basis by NSO in the field of agriculture and fisheries,
English Language Schools (ELS) survey, and other less frequent surveys such as the NGOs
or sport surveys. Administrative Records are also used when calculating the GFCF of
Agriculture, forestry and fishing (Section A).
5.10.3
Detailed estimation methods used by AN code
5.10.3.1 Non-financial assets (AN) consist of non-financial items over which ownership
rights are enforced by institutional units, individually or collectively and from which
economic benefits may be derived by their owners by holding, using or allowing others to use
them over a period of time. It consists of fixed assets, inventories, valuables, constructs of
society and intellectual property products. Produced non-financial assets (AN.1) consist of
non-financial assets that are outputs from production processes. It consists of fixed assets,
inventories and valuables. Fixed assets (AN.11) refer to produced non-financial assets that
are used repeatedly or continuously in the production processes for more than one year.
390
The expenditure approach
AN.111 Dwellings
5.10.3.2 ‘Dwellings’ are inclusive of repairs and maintenance and transfer costs. The main
data sources are:

the number of permits granted yearly by the Malta Environment and Planning
Authority (MEPA);

the ‘Census of Population and Housing’ (CPH);

Architect’s construction costs; and

the ‘Household Budgetary Survey’ (HBS).
5.10.3.3 For years other than the benchmark year – which is always that when the CPH is
carried out – the number of units added to and discarded from the dwelling stock is estimated
on the basis of the units for which a permit was issued by the MEPA. An adjustment is made
to account for those permits that are never taken up. This adjustment is based on the ratio of
the total number of permits granted between CPH 2005 and CPH 2011 to the actual net
additions to the dwelling stock recorded between CPH benchmark years.
5.10.3.4 Valuation is directly related to the size, type and state of repair of a dwelling. Data
on the quantity of dwellings with details on their distribution by (a) tenancy, (b) number of
rooms, (c) type of dwelling and (d) state of repair was derived from the CPH carried out in
2005 and in 2011. The size of the dwelling is determined by the number of rooms since the
CPH does not provide the necessary information by square metres. Therefore, for both the
benchmark years 2005 and 2011, information about the size of houses and flats by number of
rooms, with a distinction for owner-occupied dwellings and rented dwellings in terms of
square meters, available from the 2002 Living Space Survey, was combined with data from
the CPH to translate the total number of dwellings by tenancy, type and number of rooms into
total square metres for corresponding strata.
5.10.3.5 For each stratum the distribution of total square metres is translated into construction
costs using data on construction cost per square metre. Data on construction costs per square
metre and per number of rooms were collected by specific requests to qualified architects, for
both houses and apartments of different sizes. Construction costs refer to both the structure
and finishing costs. The definition of a room follows that provided in the CPH: a space that
391
Gross National Income Inventory
is enclosed by walls reaching from the floor to the ceiling or roof coverings, or at least to a
height of 2 metres above the ground, of a size large enough to hold a bed for an adult (4
square metres at least), and at least 2 metres high over the major area of the ceiling.
5.10.3.6 Definition of square metres is defined as floor space measured inside the outer walls
minus the wall thickness of internal walls and door and window recesses. It excludes stairs,
balconies and terraces, non-habitable cellars and attics and, in multi-dwelling houses, all
common spaces. These construction and finishing costs were supplemented by additional
costs such as the excavation of a plot, payments for sewage infrastructure, architect fees
pertaining to the preparation of land for construction, the construction of the dwelling itself,
and the development permit fees paid to the MEPA.
Repairs and maintenance
5.10.3.7 The amount of repairs and maintenance incurred by owner occupiers is collected
directly from the HBS. Table 5.10.7 shows the distribution of the kinds of expenditure
typically made by the tenant (rented) and the owner (owner occupied) from HBS 2008 carried
out by NSO. Data on expenditure on repairs and maintenance by households was collected
via the main questionnaire and also the diaries. Respondents were asked to distinguish
whether this expenditure was carried out for the first time and/or was major, and expenditure
that was carried out to simply maintain the dwelling in a good condition.
5.10.3.8 The expenditure in the diaries was assumed to follow the same breakdown between
major and minor expenditure as in the main questionnaire data collected in Sections H1 and
H2.
The resulting breakdown by major and minor expenditure, for tenants and owner
occupiers separately, is shown in Table 5.10.7.
392
The expenditure approach
Table 5.10.7: Distribution of major and minor repairs and maintenance by households as per HBS 2008,
as a percentage
Code
3108
3202
3401
3402
3404
3503
3510
3542
3611
3611
3615
3621
3623
3631
3643
3651
3652
3652
3660
3660
3671
3672
3673
3674
3674
3675
3676
3692
3693
3694
4043
4072
4080
4190
4410
4515
4517
4880
TOTAL
HBS Code details
Windows and their frames, doors and their frames
and thresholds, of wood
Plastic paints
Wall ceramic tiles
Floor ceramic tiles
Other sanitary ceramic fixtures except sinks (e.g.
bidet, ceramic bathroom accessories, toilets etc.)
Plaster
Marble and granit stones for steps, window sills, etc.
Wash-basins, baths and other sanitary ware, of metal
Electrical wiring and fitting work in residential
buildings
Electrical wiring and fitting work in residential
buildings
Electrical installation work of other electrical
equipment of buildings
Water plumbing
Drain laying work
Thermal insulation work
Other installation work n.e.c.
Plastering work
Cement rendering
Cement rendering
Installation of door and window frames; other
metal/non-metal joinery work
Installation of door and window frames; other
metal/non-metal joinery work
Exterior floor and wall tiling work
Interior floor and wall tiling work
Exterior wall and floor covering work (e.g.
membrane)
Interior fitting decoration work
Interior fitting decoration work
Wall covering and wall papering work
Painting work on building interiors
Building of personal swimming pools
Interior speciality design services related to
construction works
Interior fitting decoration work
Chandeliers and other electric ceiling or wall lighting
fittings
Parts of furniture (except seats, doors and windows)
(e.g. shelves, drawers, chest of drawers, bookshelves)
Blinds, curtain runners, screens, folding partitions
and other furnishings of wood
Restoration services of works of art
Armoured or reinforced safes, strong-tables and
doors, of base metal
Repair services of air conditioning
Repair services of other household non electric
appliances
Hire of do-it-yourself equipment
Major repairs and
maintenance
Owner
Rented
occupied
Minor repairs and
maintenance
Owner
Rented
occupied
5%
7%
3%
1%
1%
5%
9%
3%
13%
3%
5%
4%
11%
5%
7%
14%
0%
0%
2%
0%
1%
7%
1%
5%
0%
2%
3%
0%
1%
4%
0%
2%
3%
10%
2%
4%
0%
0%
0%
0%
2%
2%
3%
1%
1%
0%
0%
5%
6%
0%
8%
5%
0%
0%
0%
8%
2%
1%
3%
0%
0%
1%
13%
0%
5%
3%
0%
0%
0%
7%
1%
1%
0%
0%
0%
0%
7%
5%
7%
1%
1%
8%
0%
7%
1%
13%
0%
8%
1%
4%
1%
2%
1%
3%
0%
5%
0%
0%
8%
0%
5%
0%
1%
1%
1%
17%
0%
0%
1%
0%
11%
0%
2%
1%
1%
0%
1%
0%
1%
0%
8%
0%
0%
0%
4%
9%
0%
1%
0%
0%
0%
25%
0%
0%
0%
0%
1%
0%
0%
1%
2%
0%
0%
0%
2%
0%
0%
0%
0%
100%
0%
100%
0%
100%
0%
100%
393
Gross National Income Inventory
5.10.3.9 Major expenditure for both owner occupiers and tenants is classified as GFCF.
Table 5.10.8 shows the resulting distribution of repairs and maintenance for each category of
expenditure reported in HBS 2008 across types of use by type of ownership.
Transfer costs
5.10.3.10 On a yearly basis the Inland Revenue Department (IRD) provides data on the
number and value of property transfers and the duties paid by type of property and by type of
buyer. Property transfers relate to new and existing buildings. This information is used to
calculate transfer costs which are added to the construction costs previously mentioned.
Transfer costs paid by individuals include duties, notary fees at 1 per cent of the total transfer
value for the year and real estate agent fees at 5 per cent of the total transfer value. It is
assumed that only half the transfers are handled by real estate agents. Other transfer costs
incurred are already included in the construction costs mentioned before.
394
The expenditure approach
Table 5.10.8: Distribution of repairs and maintenance by type of ownership and type of expenditure, HBS
2008, as a percentage
Code
3108
3202
3401
3402
3404
3503
3510
3542
3611
3611
3615
3621
3623
3631
3643
3651
3652
3652
3660
3660
3671
3672
3673
3674
3674
3675
3676
3692
3693
3694
4043
4072
4080
4190
4410
4515
4517
4880
HBS Code details
Windows and their frames, doors and their
frames and thresholds, of wood
Plastic paints
Wall ceramic tiles
Floor ceramic tiles
Other sanitary ceramic fixtures except sinks
(e.g. bidet, ceramic bathroom accessories,
toilets etc.)
Plaster
Marble and granite stones for steps, window
sills, etc.
Wash-basins, baths and other sanitary ware,
of metal
Electrical wiring and fitting work in
residential buildings
Electrical wiring and fitting work in
residential buildings
Electrical installation work of other electrical
equipment of buildings
Water plumbing
Drain laying work
Thermal insulation work
Other installation work n.e.c.
Plastering work
Cement rendering
Cement rendering
Installation of door and window frames;
other metal/non-metal joinery work
Installation of door and window frames;
other metal/non-metal joinery work
Exterior floor and wall tiling work
Interior floor and wall tiling work
Exterior wall and floor covering work (e.g.
membrane)
Interior fitting decoration work
Interior fitting decoration work
Wall covering and wall papering work
Painting work on building interiors
Building of personal swimming pools
Interior speciality design services related to
construction works
Interior fitting decoration work
Chandeliers and other electric ceiling or wall
lighting fittings
Parts of furniture (except seats, doors and
windows) (e.g. shelves, drawers, chest of
drawers, bookshelves)
Blinds, curtain runners, screens, folding
partitions and other furnishings of wood
Restoration services of works of art
Armoured or reinforced safes, strong-tables
and doors, of base metal
Repair services of air conditioning
Repair services of other household non
electric appliances
Hire of do-it-yourself equipment
Owner
occupied
Rented
Owner
occupied
Owner
occupied
Rented
GFCF
GFCF
P2
HCFE
HCFE
TOTAL
48%
15%
34%
31%
3%
1%
4%
0%
42%
61%
41%
48%
5%
7%
5%
5%
3%
16%
17%
15%
100%
100%
100%
100%
0%
18%
0%
3%
90%
57%
10%
6%
0%
16%
100%
100%
95%
0%
4%
0%
0%
100%
26%
3%
45%
5%
21%
100%
43%
5%
32%
4%
16%
100%
20%
0%
72%
8%
0%
100%
30%
21%
14%
100%
86%
23%
24%
50%
1%
3%
0%
0%
0%
1%
8%
0%
56%
58%
48%
0%
12%
61%
34%
42%
6%
6%
5%
0%
1%
7%
4%
5%
7%
12%
33%
0%
0%
8%
31%
3%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
100%
40%
57%
27%
1%
0%
1%
50%
36%
57%
6%
4%
6%
3%
3%
9%
100%
100%
100%
41%
56%
61%
4%
15%
0%
5%
0%
6%
0%
1%
0%
34%
39%
25%
86%
66%
90%
4%
4%
3%
10%
7%
10%
16%
1%
5%
0%
11%
0%
100%
100%
100%
100%
100%
100%
51%
55%
1%
0%
43%
38%
5%
4%
0%
2%
100%
100%
100%
0%
0%
0%
0%
100%
83%
6%
8%
1%
3%
100%
0%
0%
0%
0%
0%
90%
0%
10%
100%
0%
100%
100%
65%
100%
0%
0%
0%
0%
0%
0%
35%
0%
100%
100%
100%
0%
0%
0%
0%
90%
0%
10%
0%
0%
100%
100%
395
Gross National Income Inventory
AN.112 Other buildings and structures
5.10.3.11 The ‘other buildings and structures’ (AN.112) consists of buildings other than
dwellings and other structures and land improvements. Uncompleted buildings and structures
are included to the extent that the ultimate user is deemed to have taken ownership, either
because the construction is for own use or as evidence by the existence of a contract of
sale/purchase. The value of other buildings and structures is net of value of land underlying
them, which is included in ‘land’ (AN.211) if separately classified.
5.10.3.12 ‘Buildings other than dwellings’ (AN.1121) include fixtures, facilities and
equipment that are integral parts of the associated structures and costs of site clearance and
preparation (ESA 2010). Under these assets, public monuments which are identified as
primarily as non-residential buildings are also included.
5.10.3.13 ‘Other structures’ (AN.1122) include structures other than residential structures,
including the costs of the streets, sewers, site clearance and preparation (ESA 2010). Also
included are public monuments which are not classified as dwellings or buildings other than
dwellings, shafts, tunnels and other structures associated with mining mineral and energy
reserves, and the construction of sea-walls, dykes and flood barriers intended to improve land
adjacent but not integral to them.
5.10.3.14 ‘Land improvement’ (AN.1123) generally refers to reclamation of land from sea to
building quays, wharves and jetties in the other supporting water transport activities (ESA
2010). However, data available refer to the construction of these quays, wharves and jetties
and the cost of land reclamation is not separately disclosed.
5.10.3.15 As shown in Table 5.10.1, the ‘other buildings and structures’ asset (AN.112) is
30.3 per cent of the total GFCF of the year 2010.
5.10.3.16 Moreover, from Table 5.10.3, it is clear that the majority of the ‘other buildings
and structures’ (AN.112) were classified under S.11 (73.9 per cent), 20.4 per cent of the asset
(AN.112) of 2010 was classified under S.13, 2.8 per cent of the asset (AN.112) of 2010 was
classified under S.14, 0.8 per cent of the asset (AN.112) of 2010 was classified under S.12
and only 2.2 per cent of the asset (AN.112) of 2010 was classified under S.15.
396
The expenditure approach
5.10.3.17 Furthermore, from Table 5.10.4, it is evident that the majority of the asset of ‘other
buildings and structures’ (AN.112) were classified under Administrative Records, Surveys
and Census and Combined Data.
AN.113 Machinery and equipment
5.10.3.18 ‘Machinery and equipment’ (AN.113) includes transport equipment, information
and communication technologies (ICT) equipment, and other machinery and equipment,
other than that acquired by households for final consumption. As already mentioned, tools
that are relatively inexpensive and purchased at a relatively steady rate, such as hand tools,
may be excluded. Moreover, machinery and equipment integral to buildings, which are
included in dwellings and non-residential buildings are also excluded.
Additionally,
uncompleted machinery and equipment is also excluded, unless it was produced for own use,
because the ultimate user is deemed to take ownership only on delivery of the asset.
5.10.3.19 Machinery and equipment other than weapon systems acquired for military
purposes are also included.
Additionally, machinery and equipment such as vehicles,
furniture, kitchen equipment, computers, communications equipment, etc., that are acquired
by households for final consumption are not treated as an asset.
5.10.3.20 ‘Machinery and equipment’ (AN.113) consists of three types of assets: ‘transport
equipment’ (AN.1131), ‘ICT Equipment’ (AN.1132) and ‘other machinery and equipment’
(AN.1139).
5.10.3.21 ‘Transport equipment’ (AN.1131) refers to equipment for moving people and
objects. It includes motor vehicles, trailers and semi-trailers (CPA 29) and other transport
equipment (CPA 30).
5.10.3.22 At the moment, the ‘machinery and equipment ICT equipment’ (AN.1132) is not
being separately disclosed.
‘ICT equipment’ (AN.1132) and ‘other machinery and
equipment’ (AN.1139) are only at 2-digit CPA and is available generally classified in the
following divisions; fabricated metal products, except machinery and equipment (CPA 25),
computer, electronic and optical products (CPA 26), electrical equipment (CPA 27),
machinery and equipment n.e.c. (CPA 28), furniture (CPA 31) and other manufactured goods
397
Gross National Income Inventory
(CPA 32). ‘Transport equipment’ is separately disclosed under CPA 29 and CPA 30. In the
near future, trade data will be used to extract ‘ICT equipment’ separately.
5.10.3.23 As shown in Table 5.10.1, ‘machinery and equipment’ accounted for 39.8 per cent
of the total GFCF in 2010.
5.10.3.24 Investment in ‘machinery and equipment’ pertains mainly to non-financial
corporations at 85.2 per cent in 2010, followed by households at 7.6 per cent, the general
government sector at 4.1 per cent, the financial sector at 2.3 per cent and 0.8 per cent for
NPISHs (Table 5.10.3).
5.10.3.25 ‘Machinery and equipment’ is mainly covered through Administrative Records at
27.3 per cent, mainly annual accounts and financial statements, Surveys and Censuses at 49.2
per cent, mainly SBS survey, and Combined Data at 16.9 per cent. Only 4.1 per cent is
covered through Other Extrapolations and Models and 2.5 per cent is Data Validation (Table
5.10.4).
5.10.3.26 ‘Machinery and equipment’ derived from SBS and some other minor surveys do
not provide the necessary product breakdown. Trade data are used to sub-divide machinery
and equipment at 2-digit CPA.
This is possible due to the fact that ‘machinery and
equipment’ in Malta is generally imported. The National Accounts Unit has full access to
trade data at company level, at NACE class level, 10-digit Harmonised System (HS) Code, 8digit CPA and by Broad Economic Category (BEC). The BEC allows for the identification
of capital goods. This allows for ‘machinery and equipment’ to be subdivided by CPA for
each activity especially in case of assets which are directly imported by the owner.
5.10.3.27 A number of products such as Motor vehicles, trailers and semi-trailers (CPA 29),
computers and peripheral equipment (CPA 26.2) and Furniture (CPA 31) are imported
through wholesalers and retailers and thus using trade data to derive this information is not
always possible. Annual accounts and financial statements of the largest companies are used
to derive investment by product for each industry. This information is to derive estimates for
such products in each industry.
398
The expenditure approach
AN.114 Weapons systems
5.10.3.28 ‘Weapons systems’ (AN.114) refers to vehicles and other equipment such as
warships, sub-marines, military aircraft, tanks, missile carriers and launchers amongst others.
No such assets are available in Malta.
AN.115 Cultivated biological resources
5.10.3.29 ‘Cultivated biological resources’ (AN.115) are defined as the livestock for
breeding, dairy, draught amongst others and of vineyards, orchards and other plantations of
trees yielding repeat products that are under the direct control, responsibility and
management of institutional units. The immature cultivated assets are excluded unless they
are produced for own use.
5.10.3.30 ‘Cultivated biological resources’ are divided into two types of products:

‘Animal resources yielding repeat products’ (AN.1151), which refers to the
animals whose natural growth and regeneration are under the direct control,
responsibility and management of institutional units. It includes breeding stocks
such as poultry, dairy cattle, and sheep; and

‘Tree, crop, and plant resources yielding repeat products’ (AN.1152), which
refers to trees (including vines and shrubs) cultivated for products they yield year
after year, including those cultivated for fruits and nuts, for sap and resin and for
bark and leaf products, whose natural growth and regeneration are under the
direct control, responsibility and management of institutional units.
5.10.3.31 GFCF in ‘cultivated biological resources’ amounted to 1,173 million Euro in 2010
(Table 5.10.4), of which 75.6 per cent is owned by households and 24 per cent by nonfinancial corporations (Table 5.10.3).
5.10.3.32 ‘Cultivated biological resources’ are derived from Administrative Records at 13.2
per cent and 86.8 per cent from Other Extrapolations and Models (Table 5.10.4). Moreover,
‘cultivated biological resources’ are related mainly to Agriculture, forestry and fishing
(Section A) (Table 5.10.1).
399
Gross National Income Inventory
5.10.3.33 Table 5.10.9 below shows that the ‘cultivated biological resources’ of NACE 3
involve the ‘animal resources yielding repeat products’ (AN.1151) and ‘tree, crops and plant
resources yielding repeat products’ (AN.1152) which are in line with the manual on
Economic Accounts for Agriculture (EAA) NACE Rev. 2.
Table 5.10.9: The ‘cultivated biological assets’ (AN.115) in the Agriculture, forestry and fishing (Section
A), 2010
AN code
CPA
Description
Market
Non-market
2010
2010
Euro
Euro
AN.1152
01
Orchards
3,270
AN.1152
01
Vineyards
92,903
AN.1151
01
Cattle
812,555
AN.1151
01
Pigs
-55,031
AN.1151
01
Sheep
64,780
AN.1151
01
Goats
-16,217
AN.1151
01
Poultry
127,667
AN.1151
01
Fish and other fishing products; aquaculture
products; support services to fishing
Total of fixed asset (AN.1151)
1,641
1,029,927
1,641
AN.1151 Animal resources yielding repeat products
5.10.3.34 The main data sources for AN.1151 are the Census of Agriculture 2010 and
various NSO News Releases namely: ‘Pig Census’ of the year 2010, ‘Sheep Census’ of the
year 2010, ‘Goats Census’ of the year 2010, ‘Cattle Census’ of the year 2010 and the number
of dairy cows for slaughtering for the year 2010 which are all obtained from the Agricultural
and Environment Statistics Unit within NSO. Administrative Records like Farm Accounting
Data Network (FADN) resources are obtained from a Government Department.
Table 5.10.10: The different types of sources for asset (AN.1151) in Crop and animal production, hunting
and related service activities (NACE 01), 2010
400
Amount in Euro
Source
Type of source data
1,641
Public Finance Unit
Administrative Records
96,173
FADN resources
Administrative Records
933,753
Various news releases published by the
Agriculture and Environment Statistics Unit
Other Extrapolations and
Models
1,031,567
Total
The expenditure approach
5.10.3.35 As it is observed in Table 5.10.10 above, the majority of the ‘cultivated biological
resources’ are listed under Other Extrapolations and Models as shown in para. 5.10.1.15. In
this case, the main data are obtained and then extrapolated, on the data found in various NSO
news releases which are published by the Agriculture and Environment Statistics Unit within
the NSO. The corresponding raw data consists of the number of pigs, the number of cows,
the number of goats, the number of sheep, the number of laying hens and the number of dairy
cows for slaughtering. As already explained in para. 5.10.1.15, a quantity x price approach is
utilised to work out the acquisitions less disposals of animals.
5.10.3.36 As regards data relating to animal resources yielding repeat products of the nonmarket companies, the corresponding data are directly obtained from the Public Finance Unit
within NSO. This data are derived from the DAS, which is elaborated in Section 5.9.
5.10.3.37 Occasionally, other ‘cultivated biological resources’ can be found in some specific
NACEs. For the year 2010, the other ‘cultivated biological resources’ occurred in Sections O
and R.
AN.1152 Calculation of tree, crop, and plant resources yielding repeat products
5.10.3.38 Separate estimates are made for the ‘tree, crop and plant resources yielding repeat
products’ asset (AN.1152).
For Malta, the ‘cultivated biological resources’ which are
classified under asset (AN.1152) involved the vineyards’ and orchards’ resources yielding
repeat products.
5.10.3.39 The number of permanent crops is obtained directly from the FADN resources.
The number of permanent crops is split into orchards (3.4 per cent) and vineyards (96.6 per
cent) according to the ratio obtained from a one-off exercise performed by the National
Accounts Unit for the years (1995-2003). The corresponding data compilation for the years
(1995-2003), includes the number of vines and root stock together with the area in hectares
under vines in case of the vineyards and the area in hectares (by type of fruit) for the case of
orchards. The information on the price for the vineyards and that for the orchards was
originally obtained from the Ministry of Agriculture and Fisheries. In both cases, ‘the tree,
crop and plant resources yielding repeat products’ (AN.1152) is calculated as follows:
Number of vines or number of orchard trees multiplied by the price per tree
401
Gross National Income Inventory
AN.117 Intellectual property products
5.10.3.40 Estimates on intangible fixed assets relate to computer software and entertainment,
literary or artistic originals. Mineral exploration occurs quite rarely in Malta, and in the
eventuality this will be recorded as GFCF.
AN.1171 Research and development
5.10.3.41 ‘Research and development’ (R&D) has been one of the major changes of the
updates in ESA 2010. R&D has the characteristics of investment and is recorded as fixed
capital formation in the national accounts.
Data sources for R&D
5.10.3.42 The main data sources for the national accounts’ estimate are R&D expenditure
presented in the Frascati tables. R&D expenditures are classified in four sectors: Government
Sector (GovERD), Business Enterprise Sector (BERD), Higher Education Sector (HERD)
and Private non-profit Sector (PNP).
The data are compiled in line with the Frascati
79
Manual by Public Finance Unit and Business Registers Unit and published annually.
R&D compilation for 2010
5.10.3.43 To ensure consistency between Frascati table and national accounts concepts,
Eurostat recommended the use of the following tables in order to derive output and GFCF of
R&D. This section provides a detailed description of the compilation of R&D for 2010.
Details are provided in line with the numbering in Table 5.10.11 and Table 5.10.17, the
output and GFCF tables.
79
Frascati Manual, Proposed standard practice for surveys on Research and Experimental Development, OECD 2002.
402
The expenditure approach
Table 5.10.11: R&D output table, in thousands of Euro
2010
Market
producers
S.13
S.13
Non-market
producers
Thousand Euro
BERD
GOVERD
HERD
1
Frascati Manual Intramural expenditure on R&D
26,157
1,758
14,292
2
Subtract payments for licences to use intellectual
products (principally R&D assets, such as patents)
that should be recorded as GFCF
3
Subtract expenditure on own-account production of
software
4
Add payments to postgraduate students not
included in Frascati Manual data
5
Subtract capital expenditures
6
Add other taxes on production not included in
Frascati Manual data
-
7
Subtract other subsidies on production
-
8
Add extramural purchases of R&D that should be
recorded as intermediate consumption. Applies
only to R&D industry
-
Total
GERD
16,050
42,206
-
231
4,921
5,152
-
1,470
285
19,766
1,473
3,408
10,884
3,693
12,126
5,163
31,891
9
Sub-total (1 to 8): current expenditures
10
Add estimate of consumption of fixed capital plus a
return to capital (for non-market producers only
consumption of fixed capital):
11
- Option 1: As percentage of current expenditures
(line 8) or compensation of employees
12
- Option 2: As cost of capital services measured
with a perpetual inventory method (PIM)
-
13
Adjustment for exhaustiveness
-
14
Other adjustments
-
15
Balance: Output of R&D
R&D exported
16
Own final use of R&D final in Production
Account
5,803
645
25,568
1,473
10,884
6,448
12,771
38,339
359
985
1,344
25,209
11,786
36,995
Row 1: Frascati Manual Intramural expenditures on R&D
Intramural expenditures on R&D is derived from the Frascati tables which is available in
the following breakdown.
Table 5.10.12: GERD by sector of performance, in thousands of Euro
Thousand Euro
Total BERD
Total GOVERD
2010
2011
2012
26,157
31,520
36,194
1,758
2,474
5,388
Total HERD
14,292
14,236
20,807
Total GERD
42,207
48,232
62,389
Source: Frascati table C.E.3.
403
Gross National Income Inventory
Row 2: Payments for licences to use intellectual products (principally R&D assets, such as
patents) that should be recorded as GFCF
No sufficient data are available on payments for the acquisition of the outright ownership
of R&D products.
Row 3: Expenditure on own-account production of software
Own account estimates of software in national accounts exceed considerably the Frascati
survey data for the years 2009-2012. Thus, data on R&D expenditure which relates to
software production was based on the same source i.e. the Frascati table C.E.8.2 Business
enterprise R&D by product. However, the data available in this table includes both ownaccount production of software and capital expenditure of software. In order to derive the
value of own-account production of software the data provided in Frascati table C.E.11 is
used.
This table provides a breakdown of BERD between current and capital
expenditure. The share of current expenditure in total BERD by the software industry is
derived as a proxy to calculate the value of current costs from Frascati table C.E.8.2.
Table 5.10.13: Current costs as a percentage of total BERD for NACE 62
Business enterprise R&D by Industry and type of cost in €'000
ISIC Rev. 4
62
01-99
NACE Rev. 2
62
01-99
2010
Labour
costs
Computer programming,
consultancy and related
activities
BERD by type of costs from
sheet CE3
Current costs as a % of total BERD for NACE 62
Other
current
costs
Sub-total
Current
costs
Sub-total
Capital
expenditure
TOTAL
BERD
2,894
507
3,401
167.6
3,569
17,562
7,125
24,687
1,470
26,157
95%
5%
100%
Source: Frascati table C.E.11.
The ratio of 95 per cent derived for 2010 is used to derive the value of own-account
software and is applied on the expenditure on products relating to Computer
programming, consultancy and related activities (NACE 62) provided in Frascati table
C.E.8.2 [4,921= 5,164*95%]. This method was used to derive the estimate for ownaccount software for market producers.
404
The expenditure approach
Table 5.10.14: Business enterprise R&D by product, in thousands of Euro
Thousand Euro
Frascati table C.E.8.2
2010
Computer programming, consultancy and related
activities
Current cost in total BERD
To output table
5,164
95%
Own account production of software
4,921
2011
2012
11,694
13,444
97%
95%
11,357
12,707
An estimate for S.13 was derived using current estimates of output for own final use
calculated by National Accounts Unit for GFCF purposes. It is estimated that S.13
invests about 9 per cent in own account software when compared to market producers.
The ratio was derived for the period 2005 to date and used accordingly.
Software reported as capital expenditure is deducted in the output table as part of total
capital expenditure (line 5 in the output table 5.10.11).
Row 4: Payments to postgraduate students not included in Frascati Manual data
This refers to the R&D performers paid by external funds i.e. research scholarships as
they are not included in the labour cost. Data are assumed to be negligible for Malta.
Row 5: Capital expenditure is provided in the Frascati table C.E.3, GERD by sector of
performance and type of cost.
Table 5.10.15: Capital expenditure by sector of performance, in thousands of Euro
Thousand Euro
2010
2011
2012
1,470
1,240
4,593
285
994
3,816
Higher education sector
3,408
1,441
4,939
Total capital expenditure
5,163
3,675
13,348
Business enterprise sector
Government sector
Row 6: Other taxes on production are not included in the Frascati tables. No taxes were
identified in case of Malta
Row 7: Other subsidies on production: No subsidies on R&D are identified in case of Malta.
Government funds on R&D products are classified as current transfers.
405
Gross National Income Inventory
Row 8: Extramural purchases of R&D that should be recorded as intermediate consumption.
The estimate of output is the net recording i.e. subcontracted R&D is omitted in both
Output and GFCF estimates for the consistency principle. The R&D Manual Section 5
specifies that "all such extramural purchases should be recorded as intermediate
consumption, on the assumption of them being embedded in the final product". The
second R&D Task Force gave countries the possibilities of recording the output net or
gross of subcontracted R&D. Frascati data are net of subcontracted work. Extramural
expenditure reported in the NSO Innovation survey is negligible for Malta. Furthermore,
Scientific research and development (NACE 72) in the SUT 2008 does not confirm any
use of R&D products.
Row 11: Estimate of consumption of fixed capital (CFC) plus a return to capital
CFC in the output table refers to various assets used in the production of R&D including a
mark-up for market producers. The capital expenditure reported by Frascati tables does
not provide sufficient breakdown and the time series available is relatively short. This
creates difficulties when it comes to the perpetual inventory method (PIM) which is
currently in use in National Accounts Unit to estimate consumption of fixed capital. Also
considering the small percentage of final R&D in total GDP and the time necessary to
perform such estimate, the best option for the CFC adjustment was a fixed ratio. Two
versions of such ratios were derived; one based on the R&D industry (NACE 72) and one
based on the R&D performers (companies which replied to the R&D questionnaires).
The ratio based on the R&D performers gave the best result.
Table 5.10.16: CFC ratio
2010
2011
2012
CFC ratio applied to market producers
29%
32%
31%
CFC ratio applied to non-market producers
5%
8%
9%
Final ratios applied:
406

Market producers - Gross operating surplus to output, and

Non-market producers - CFC to output
The expenditure approach
Row 15: The final result of the output table is used to derive GFCF of R&D.
Row 16: Own-account production of R&D is derived after deducting exports.
Table 5.10.17 illustrates the steps needed to derive GFCF for 2010.
Table 5.10.17: GFCF table, in thousands of Euro
Thousand Euro
2010
S.11
S.13
Total
1
R&D output
25,568
12,771
38,339
2
Add Imports of R&D
1,200
487
1,687
3
Add Trade margins
0
4
Add Taxes on products
0
5
Less Subsidies on products
0
6
Less Extramural purchases of R&D that should be
recorded as intermediate consumption. Applies only to
R&D industry
0
7
Less Acquisitions of R&D not expected to provide a
benefit
0
8
Less Changes in inventories of finished R&D
0
9
Less Exports of R&D
10
Add Net purchases of R&D between domestic sectors
12
Balance: Total GFCF of R&D
13
Add/Less Capital transfers of R&D assets between
sectors in capital account
359
985
1,344
0
26,409
12,273
38,682
5.10.3.44 R&D output derived in Table 5.10.11 is the starting point in the derivation of
GFCF and is shown in row 1. Imports are added to locally produced output in row 2 while
exports are deducted in row 9. Data on imports and exports is derived from Balance of
Payments Unit which provides data at company level and thus imports and exports of R&D
may also be distinguished between market and non-market producers as shown in Table
5.10.17. No trade margins were identified in case of Malta (row 3). Taxes on products (row
4) in principle should be added while subsidies on products (row 5) should be deducted.
However, these two items have been dropped according to the R&D manual. In row 6,
extramural purchases of R&D that should be recorded as intermediate consumption should be
deducted. However, in Malta where the R&D industry is very small, no subcontracted R&D
407
Gross National Income Inventory
has been identified. In row 7, the acquisitions of R&D that is not expected to provide a
benefit should be deducted. Such detailed information is not readily available. Moreover,
the R&D Manual identifies this item as redundant thus it is not being estimated. In row 8
changes in inventories of finished R&D should be deducted. However, none have been
identified in Malta. Moreover the manual assumes that R&D output is acquired as a capital
asset as it is produced, thus no estimate is made for this line item. In row 10 net purchases of
R&D between domestic sectors should be added.
However, for now none have been
identified in case of Malta. GFCF is derived in row 12. R&D imports shown in row 2 have
been deducted from intermediate consumption as these have now been capitalised with the
introduction of ESA 2010.
R&D allocation by NACE
5.10.3.45 All the sources provide data in the NACE 2-digit level: Frascati expenditure for
market (BERD) and non-market producers (GovERD / HERD), Balance of Payments import
data which cater for R&D allocation by NACE.
R&D time series compilation
5.10.3.46 R&D expenditure, in line with the Frascati Manual80, are available for years 20052012. For the market producers the R&D Output to GDP ratio was derived in 2005 and
applied backwards to 1995. Similarly, the GFCF in R&D to total GFCF ratio was derived to
extrapolate the GFCF on R&D.
5.10.3.47 Backcasting for non-market producers was constructed combining GovERD and
HERD Frascati expenditure and University of Malta (UoM) financial accounts. Data of UoM
were applied to extrapolate backward Frascati expenditure of non-market producers. R&D
output of non-market producers was extrapolated backwards as a percentage of the estimated
Frascati expenditure. GFCF on R&D as a percentage of output of R&D was applied to
extrapolate GFCF of non-market producers.
Both ratios applied for the back casting
constitute the average of ratios between years 2005-2012.
5.10.3.48 Extrapolation forward (years 2013-2014) of the R&D output and GFCF is based on
the average annual growth rates of the latest years for both market and non-market producers.
80
Frascati Manual, Proposed standard practice for surveys on Research and Experimental Development, OECD, 2002.
408
The expenditure approach
Table 5.10.18: Back casting of R&D Output for own final use and GFCF, in thousands of Euro
2000
2001
2002
2003
2004
2005
R&D Output total
19,361
20,673
21,729
22,345
22,768
23,576
R&D GFCF total
21,363
21,170
22,407
23,329
23,613
25,852
R&D Output market producers
13,840
14,169
14,887
15,467
15,636
16,584
R&D GFCF market producers
15,629
14,415
15,300
16,186
16,205
18,650
R&D Output non-market producers
5,521
6,504
6,842
6,878
7,132
6,992
R&D GFCF non-market producers
5,734
6,755
7,106
7,143
7,407
7,202
Thousand Euro
Stock levels and consumption of fixed capital (CFC); time series 1995-2013
5.10.3.49 An existing PIM model with a linear depreciation function is applied to estimate
stocks levels and CFC of R&D products. A single service life of 10 years is used in the
model following the recommendation of the R&D Manual. The PIM model uses 1995-2013
time series of GFCF by institutional sector and CPA product breakdown extended with the
new R&D assets. Assuming 10 years service life, GFCF of R&D time series 1975-1994 were
estimated using an assets breakdown in the 1995 investment matrix by institutional sector.
Table 5.10.19: Consumption of fixed capital of R&D assets in thousands of Euro
Thousand Euro
Market producers
Non-market producers
Total
2010
2011
2012
17,762
19,133
20,198
8,274
9,037
10,004
26,036
28,170
30,202
AN.1172 Mineral explorations and evaluation
AN.11731 and AN11732 Computer software and databases
5.10.3.50 Separate estimates are derived for purchased software and own-account software.
For purchased software, the method uses sales data, and derives a figure for purchased GFCF
as a residual in a commodity flow approach. For own-account software (absent by definition
from sales statistics), the method is based on a macro-estimate of labour costs, plus a markup. Purchased computer software is allocated across industries according to the level of
409
Gross National Income Inventory
investment in office machinery and computers (CPA 26). Reliable demand side information
is available for the general government sector (S.13). Own-account produced software is
allocated according to the industries employing the computer specialists.
Purchased software
5.10.3.51 The value of purchased computer software is being calculated by using the
commodity flow method as follows:
Table 5.10.20: Commodity flow model (CFM)
Step 1
Value of sales of capitalisable software services (SIC 73.71 + SIC 73.72; CPA
72.20.2 + 72.20.32 + 72.20.33 + 72.20.34), including royalties and license fees,
including games
A
Step 2
Inclusion of imports (including royalties and license fees and games)
B
Step 3
Inclusion of trade margins and taxes on domestic supply and imports
C
Step 4
Exclusion of software embedded by hardware industry, treated as intermediate
consumption
D
Step 5
Exclusion of sub-contracting flows between “software companies”
E
Step 6
Exclusion of household consumption in games and other pre-packaged software
F
Step 7
Exclusion of exports (including royalties and license fees and games)
G
Step 8
Exclusion of maintenance (CPA 72.20.34)
H
Step 9
Total GFCF in purchased software
A+B+CD-E-FG-H
Source: Report of the OECD Task Force on Software Measurement in National Accounts STD/NA (2002)2.
5.10.3.52 The departure point in the commodity flow method to derive a figure for GFCF is
thus sales (Step 1). SBS data at 6-digit CPA was used to distinguish between capitalisable
software services and intermediate consumption using the concordance as shown in Table
5.10.21. It is estimated that 34 per cent of the total output of Computer programming,
consultancy and related activities (NACE 62) may be considered as capitalisable software
services. Secondary output of software produced by industries other than those in NACE 62
and sold to third parties is also being included in the estimation of domestic production.
410
The expenditure approach
5.10.3.53 Imports and exports of goods (Steps 2 and 7) are easily identified using the HS
code and added to domestic production in case of imports and deducted in case of exports.
5.10.3.54 Imports and exports of services are obtained from the Balance of Payments Unit
which provides data in the following breakdown; computer services, information services and
royalties and licence fees.
Not all transaction classified as Computer and information
services relate to software and GFCF. Services may include hardware consultancy, software
implementation, information services (data processing, database, news agency), and
maintenance and repair of computers and related equipment. After an analysis of the type of
companies involved in imports and exports of such services, it was decided to add only 80
per cent of the imports and deduct 90 per cent of the exports. In case of royalties and licence
fees data are analysed at company level given that not all royalties and licence fees relate to
software.
5.10.3.55 Sales and imports are adjusted of trade margins and indirect tax (in particular value
added tax (VAT) for household consumption).
Only after this adjustment, can the
commodity-flow method (that is at the basis of the supply approach) function correctly (Step
3).
5.10.3.56 In an attempt to avoid double counting, flows corresponding to sub-contracts are
excluded. Data on sub-contracted work by Computer programming, consultancy and related
activities (NACE 62) was derived from SBS and deducted in Step 4.
5.10.3.57 This adjustment is not being done given that maintenance is already being
excluded in Step 1.
5.10.3.58 An estimate for household consumption expenditure is derived from HBS items:
Systems, applications, tools and similar software and game software (on CD Rom), cassette
electronic games. These two items are included in Coicop 9.1.3 and 9.3.1 in the household
final consumption expenditure.
411
Gross National Income Inventory
Table 5.10.21: CPA concordance table (NACE Rev. 1.1)
Purchases of software
CPA Code
Product Description
72.1
Hardware consultancy services
72.2
72.20.1
Software supply services and other related services
Recorded data bearing media etc.
This category originates from the Harmonised System and is intended to cover the exports and
imports of software "goods", i.e. the physical carriers of software such as diskettes and CDROMs as they are registered by customs’ authorities. These carriers can contain any kind of
information, such as data, databases, software, pictures, etc. It is recommended that any items
recorded within this category are transferred to the appropriate CPA category below.
Programming services of packaged software products.
Our understanding is that this category includes purchases of originals (including games) and
reproduced software (on-the-shelf software, whatever the media). This includes licenses to use
and licenses to reproduce and rentals.
Original software – (purchases of pre-existing software originals)
Other reproduced purchased, rented, leased or licensed software expected to be used in
production for more than one year. Including payments for "multiple-copy" licenses.
(Payment can include, royalties, commissions, fees etc).
Other reproduced purchased, rented, leased or licensed software, expected to be used in
production for less than one year. (Payment can include, royalties, commissions, fees etc).
When purchased for bundling/embedding into products for subsequent sale (whether the
products are hardware, other equipment (chips on planes, cars, boats etc) or other software
products or just sold-on.
72.20.2
Payments for licenses-to-reproduce software for subsequent sale.
72.20.3
72.20.31
72.20.32
72.20.33
72.20.34
72.20.35
72.4
Software consultancy and other supply services
Systems and technical consulting services
(includes advice and assistance on technical matters, (equivalent to Stage 1 of the production
process)
Custom software development services
(Includes development (analysis, design and programming) of software for, and to meet the
requirements of, a specific client (including self) and – modification of packaged software).
Software expected to be used in production for more than one year.
(including -embedding in an own-account ’original’)
Software expected to be used in production for less than one year,
(This includes "customised" software purchased to be sold-on to another
user/client.)
Systems analysis and programming services
(Includes provision of systems analysts' and/or programmers' services on a per diem basis to
participate in one of the phases of the development of a system. The client supervises and
retains the right to their work.)
Software expected to be used in production for more than one year
(For inclusion/embedding in an own-account ’original’ – the value of own-account
production should not include these costs if they are directly capitalised.
If the software is purchased by a final-user for inclusion in an own-account
"original" the expenditure may also be treated as intermediate consumption as long
as its value is included in own-account production
Software expected to be used in production for less than one year.
(This includes "customised" software purchased to be sold-on to another
user/client.)
Systems maintenance services
(Includes provision of assistance to keep computer systems (software) in good working
condition. The maintenance may be corrective or preventive).
Other professional computer-related services
Databases and database services
Where exclusive ownership rights are transferred
All other database services, including data sales etc
72.5
Maintenance and repair services of office, accounting and computing machinery
72.6
Other computer related services
Intermediate
or investment
Intermediate
consumption
Ignore
GFCF
GFCF
excluding
games
Intermediate
consumption
Intermediate
consumption
Intermediate
consumption
Intermediate
consumption
GFCF
Intermediate
consumption
GFCF
Intermediate
consumption
Intermediate
consumption
Intermediate
consumption
GFCF
Intermediate
consumption
Intermediate
consumption
Intermediate
consumption
Source: Report of the OECD Task Force on Software Measurement in National Accounts STD/NA (2002)2.
412
The expenditure approach
Own-account software
5.10.3.59 The estimate of own-account GFCF of computer software is calculated using the
cost approach as suggested by the Gross National Income (GNI) Committee
(Eurostat/C1/GNIC/015–Rev. 1. Own-account software is defined and estimated as follows:
Total number of employees working on own-account software production
multiplied by
Average remuneration
multiplied by
Proportion of time spent on own-account development
add
Other intermediate costs used in own-account production
add
Notional operating surplus related to own-account production
5.10.3.60 An estimate of total labour costs is derived by multiplying staff numbers by the
average wages. The Labour Force Survey (LFS) provides data on the number of persons
employed and the average wage by International Standard Classification of Occupations
(ISCO) and by industry. Thus, own-account GFCF of computer software is equivalent to the
total wages paid to persons employed as computer specialist i.e. in ISCO 213 across all
industries with the exception of NACE 62. Given that the data on average wages for ISCO
213 is available by industry, NSO does not use the average wage of the computers specialists
employed in NACE 62; instead the average wage of the computers specialists employed in
each specific industry is used. Only 50 per cent of the total wages paid to persons employed
as computer specialist i.e. in ISCO 213 are taken into consideration when calculating ownaccount GFCF of computer software. It is assumed that computer specialists do not work all
the time on software development thus an adjustment factor needs to be applied to the wages
paid. It is necessary to estimate what needs to be added to employment costs in the form of
other inputs and profit to give the required basic price valuation of own-account GFCF of
software, thus a mark-up is added to wages to reflect other production costs based on
information derived for NACE 62.
413
Gross National Income Inventory
Table 5.10.22: GFCF on computer software, 2010, in thousands of Euro
Thousand Euro
Production for own use
52,968
Purchased software
88,959
Total computer software investment
Total GFCF
141,926
1,411,637
Computer software as a percentage of total GFCF
AN.1174
10.05%
Entertainment, literary or artistic originals
5.10.3.61 ‘Entertainment, literary or artistic originals’ consist of original films, sound
recordings, manuscripts, tapes amongst others, on which drama performances, radio and
television programmes, musical performances, sporting events, literary and artistic outputs
amongst others are recorded or embodied. It also includes works produced on own.
5.10.3.62 ‘Entertainment, literary or artistic originals’ includes estimates for:

Motion picture and videos and includes fiction, drama, documentaries, history
and education programmes;

Television and radio programmes and includes fiction, drama, documentaries,
history and education programmes;

Royalties; and

Literary originals as from 2014.
Table 5.10.23: ‘Entertainment, literary and artistic originals’, 2010, in thousands of Euro
2010
Thousand Euro
Motion picture and videos
Television and radio products
Royalties
Government originals
‘Entertainment, literary and artistic originals’
GFCF
As a percentage of GFCF
10,538
1,922
55
429
12,945
1,411,637
0.92%
5.10.3.63 The estimate for motion pictures and videos (NACE Rev. 1.1 – 92.11) is based on
the turnover of the industry which was obtained from the business register in 2006, and which
414
The expenditure approach
is extrapolated thereafter. Motion picture and videos are valued at the price paid by the
purchaser when sold given that the source is turnover from the Business Register (BR).
5.10.3.64 In Malta there are three television stations which may be involved in the creation
of originals, the most important of which being the Public Broadcasting Services (PBS).
There are some other television stations which are generally involved in teleshopping and
thus do not produce originals. For television productions, the estimate is equal to the costs
incurred to produce programmes for repeated use and is derived from the financial statements
of PBS. Actual data are available up to 2002 and data are extrapolated thereafter. At present,
production costs are not being adjusted to include a mark-up for net operating surplus given
that generally this is a loss making industry in Malta. Thus, the calculation of a mark-up as
suggested by the task force recommendations was not deemed feasible and it has been
confirmed by Eurostat that applying a negative mark-up is not considered an option.
5.10.3.65 No estimates were being made for literary originals up till 2013 as these are
considered to be negligible in case of Malta. Most often in Malta, literary authors prefer to
sell their copyrights to publishers and printers. However, none of these companies include
such rights as intangible fixed assets in the annual reports and financial statements and the
SBS (intangibles started to be first surveyed by the SBS as from 2003). This indicates that
the rights acquired do not meet the requirements set by International Accounting Standard
(IAS) 3881. As from 2014, a new scheme is in place whereby local authors will start
receiving royalty payments from public libraries.82
5.10.3.66 The value of literature and the value of music originals are measured by modelling
the royalty flows. The royalty flow for the music originals are taken from the royalties paid
obtained from administrative sources, whilst the royalty flow for the literacy originals are
taken directly from the Ministry of Education.
81
IAS 38 requires an enterprise to recognise an intangible asset, whether purchased or self-created (at cost) if,
and only if it is probable that the future economic benefits that are attributable to the asset will flow to the
enterprise, and only if the cost of the asset can be measured.
82
Source: http://www.timesofmalta.com/articles/view/20150121/local/10-000-library-books-still-to-be-catalogu
ed.552732
415
Gross National Income Inventory
5.10.3.67 In order to estimate the value of literature and originals, the following equation
which was illustrated in the recommendations of the GNIC/022 report, is being utilised:
Wj = Hj * (1+rj - ij)
where Wj consists of the present value of the expected future royalty flows of the new
produced originals in year j, Hj consist of the total of royalties paid in year j, rj consists of the
growth rate of the total royalties in year j and ij consists of the interest rate utilised for
discounting.
5.10.3.68 For the literary works, Hj consist of the total royalties paid in year j which are
obtained from the Ministry of Education, rj consists of the growth rate of the total royalties in
year j and ij consists of the interest rate utilised for discounting which is obtained from the
Central Bank of Malta (CBM). Newspapers and magazines are excluded from the asset
(AN.1174) since their life is less than one year.
5.10.3.69 On the other hand, the value of musical works, Hj consist of the total of royalties
paid in year j which are obtained from an administrative source, rj consists of the growth rate
of the total royalties in year j and ij consists of the interest rate utilised for discounting which
is also obtained from the CBM. It is assumed that only 1 per cent of the royalty payments on
music pertain to Maltese artists.
5.11 Changes in inventories
5.11.1
The main data sources for the four suggested categories in ESA 2010 are:

Annual accounts and financial statements (for annual estimates);

Structural Business Statistics (SBS) survey data (for annual estimates);

Aquaculture Survey (for annual estimates); and

Up till 2012 a quarterly survey on inventories used to be carried out by the ShortTerm Statistics Unit; however, this was discontinued.
416
The expenditure approach
5.11.2
Changes in inventories are split in the four suggested categories in ESA 2010, i.e.
materials and supplies, work-in-progress, finished goods and goods for resale. However, this
breakdown is not explicitly shown in the published national accounts data. The published
figure also includes a statistical discrepancy. The level of gross domestic product (GDP) is
determined from the output side, and thus the statistical discrepancy represents the difference
between the output and the expenditure approach. This is shown in the process table under
‘balancing’.
Excerpt from process tables
5.11.3
Table 5.11.1 illustrates the process tables for the changes in inventories for the year
2010.
Table 5.11.1: The process table of changes in inventories, 2010, in millions of Euro
Basis for national accounts figures
Changes in inventories
Other
Total (Sources)
-
-
-
-
-
-
-
-
70.1
8.9
-
-
-
-
-
-
-
-
6.9
Work-in-progress
38.2
0.0
-
-
-
-
-
-
-
-
38.2
Finished goods
19.2
0.0
-
-
-
-
-
-
-
-
-19.2
Goods for resale
44.2
0.0
-
-
-
-
-
-
-
-
44.2
Other E&M
FISIM
CFM
Bench. Extra.
Total
Extrap+Models
8.9
-2.0
Dwellings
61.2
Materials and supplies
CFC
Adm. Rec.
Total
Comb. Data
Surv. and Cens.
Extrapolations and Models
Adjustments
Changes in inventories
Other Conceptual
Total Conceptual
N1
N2
N3
N4
N5
N6
N7
Total Exhaustiveness
Balancing
Total (Adjustments)
Total
-1.0
-
-
-
-
-
-
-
-
-
-
-
95.5
94.4
164.5
Materials and supplies
-1.0
-
-
-
-
-
-
-
-
-
-
-
0.0
-1.0
5.9
Work-in-progress
0.0
-
-
-
-
-
-
-
-
-
-
-
0.0
0.0
38.2
Finished goods
0.0
-
-
-
-
-
-
-
-
-
-
-
0.0
0.0
-19.2
Goods for resale
0.0
-
-
-
-
-
-
-
-
-
-
-
0.0
0.0
44.2
Final Estimate
Allocation of FISIM
Exhaustiveness
Data Validation
Conceptual
417
Gross National Income Inventory
5.11.4
As can be observed from the process tables the exclusion of holding gains and losses
from changes in inventories are still not integrated in the ESA 2010 series as published on 17
October 2015. This will be implemented in the next benchmark revision. Data for 2004 to
2014 has been compiled in 2015 and the methodology applied will be described in the
following paragraphs.
Stock levels
5.11.5
Adjustments for holding gains is estimated from annual bookkeeping data on
opening and closing stocks derived mainly from the SBS survey and the Aquaculture Survey.
Quarterly data on stocks is not available. Bookkeeping data on opening and closing stocks
are available at NACE83 2-digit level and by Classification of Products by Activity (CPA) for
three types of inventories:

Goods for resale;

Finished goods and work-in-progress; and

Raw materials.
5.11.6
The accounting methods generally applied in Malta is the first-in first-out method
and sometimes the average cost method. The first-in first-out method means that the oldest
inventory items are recorded as sold. The average cost method will take the total cost of
goods still available for sale and divide it by the total sum of product from the beginning
inventory and purchases.
Price indices
5.11.7
83
The following price indices are used to measure holding gains and losses:

Industrial producer prices indices (PPI);

Agricultural price indices – output (agri_pi);

Construction producer price index (CPPI); and

Harmonised indices of consumer prices (HICP).
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
418
The expenditure approach
5.11.8
The industrial PPI measures the gross monthly change in the trading price of
industrial products.
The PPI measures price changes from the point of view of the
producers/manufacturers of a product. The index reflects basic prices, which exclude value
added tax (VAT) and similar deductible taxes directly linked to turnover. By contrast, any
subsidies on products received by the producer should be added. The industrial producer
price index monitors the changes in selling prices of all leading products within a sample of
83 large enterprises which account for over 80 per cent of the total industrial turnover.
5.11.9
The index of producer prices of agricultural products (output index) is based on the
sales of the agricultural products, and the input index is based on the purchases of the means
of agricultural production by the agricultural producers (farm gate prices). The purpose of
the price indices is to provide information on trends in producer prices of agricultural
products and purchase prices of the means of agricultural production. This index is available
on a quarterly basis.
5.11.10 The CPPI (sometimes also referred to as “construction output price index”) is an
indicator showing the trend in the prices for new residential buildings. The current ShortTerm Statistics (STS) Regulation 1165/98 calls for quarterly indices on construction costs for
new residential buildings (excluding residences for communities).
5.11.11 HICPs are economic indicators that measure the change over time of the prices of
consumer goods and services acquired by households. The HICPs are classified according to
the 4-digit categories and sub-categories of the Classification of Individual Consumption by
Purpose (Coicop)/HICP. For National Accounts purposes a Coicop to CPA bridge table is
used. Quarterly indices are being used.
Methodology - Indices
5.11.12 The related industrial producer prices indices which are calculated from the
products’ prices for finished goods and work-in-progress were used for NACE Rev. 2
branches 08 to 36. For branches 41 to 43 and 68, the construction producer price index is
used. Finished goods and work-in-progress appeared even in other services activities. In
absence of adequate price indices the current price data for the other service activities are
deflated by the weighted average price indices of branches where producer price indices are
419
Gross National Income Inventory
available (NACEs 08 to 36, 41 to 43)84. The average stocks of inventories are used as
weights.
5.11.13 For goods for resale weighted indices were derived for Section G separately using
HICP and the construction producer price index for branches 41 to 43 and 68. The weights
for branches 45 to 47 are based on the product breakdown of inventories as derived from the
supply and use tables (SUTs). In absence of adequate price indices, the current price data for
the other industries, a weighted deflator was derived from branches 45, 46 and 47.
5.11.14 For raw materials weighted indices were derived for each NACE division. The
weights are based on the product breakdown of inventories as derived from the supply and
use tables (SUTs).
Methodology - Stock holding periods
5.11.15 Stock holding periods (SHP) in months for each type of inventory was calculated
for the total economy for the year 2010 and 2012. The results were fairly constant. SHP
were derived as follows:
Raw materials SHP = (((stock at beginning of period + stock at end of period)/2) /
materials purchased) *12
Work-in-progress/finished goods SHP = (((stock at beginning of period + stock at end of
period)/2) / turnover) *12
Goods for resale SHP = (((stock at beginning of period + stock at end of period)/2) /
turnover from resale) *12
Table 5.11.2: Stock holding periods
84
In months
Raw materials
Goods for resale
Finished goods and
work-in-progress
2010
3.8
1.9
0.7
2012
4.4
1.7
0.7
For NACE Description refer to Table 9.1.1.
420
The expenditure approach
5.11.16 The stock holding period of Raw materials is of approximately 4 months and that of
Goods for resale of approximately 2 months. The stock holding period for Work-in-progress
and Finished goods is of zero months which means that companies operate a just in time
system.
5.11.17 The procedure of calculation is as follows:
a) Opening and closing stocks of inventories established from books were converted
into current prices as at 1 January and 31 December, respectively, and into average
prices of the year.
b) In order to convert book values into current prices as of 1 January and 31 December,
monthly or quarterly indices (base year 2010) were used.
c) The actual calculation into current prices as of 1 January and 31 December,
respectively, and into average prices can be expressed as follows:
i.
Conversion of opening stock of inventors (book values) into average prices of
the year:
a1 = a * i1
ap = a1 * i2
where:
a = opening stock of inventories at book value
a1= opening stock of inventories at 1 January 2004 or 31 December 2003
prices
ap= opening stock of inventories at average prices of 2004
i1= price index for the period of acquisition of inventory to 1 January 2004
i2= average price index of the year 2004 related to December 2003 prices
ii.
Conversion of closing stock of inventors (book values) into average prices of
the year:
b1 = b * i3
bp = b1 / i4
where:
b = closing stock of inventories at book value
421
Gross National Income Inventory
b1= closing stock of inventories at 31 December 2004 prices
bp= closing stock of inventories at average prices of 2004
i3= price index for the period of acquisition of inventory to 31 December 2004
i4= average price index of December 2004 related average prices of 2004
d) In case of work-in-progress and finished goods the first step of the above calculation
i.e. the derivation of the opening stock at 1 January 2004 or 31 December 2003 was
not necessary given that the stock holding period is of 0 months. Similarly, in case
of goods for resale the HICP was derived at quarterly intervals and thus the 2 month
stock holding period falls within the fourth quarter and thus the first step was not
necessary.
e) In case of raw materials whose stock holding period of 4 months the opening stock
was first derived at 1 January 2004 or 31 December 2003 prices and then derived at
the average prices of 2004. Similarly the closing stock was first derived as at 31
December 2004 prices and then converted to the average price of 2004.
f)
The holding gains/loss was calculated as the difference between the changes in
inventories at book value less the changes in inventories at average prices of the
year.
Results
5.11.18 A summary of the results is being presented in Table 5.11.3, however the data are
also available at A*8885 and can thus be allocated appropriately across industries. Output is
derived after adding changes in inventories of goods for resale, finished goods and work-inprogress, while intermediate consumption is derived after adding changes in inventories of
raw materials (rows 4, 5). Positive values in rows 1 to 3 imply that the change in inventory at
book value is greater than the estimated change in inventory at average prices of the year.
Consequently, positive values will have a negative impact on P.1 and P.2. The impact on
gross value added (GVA) is shown in row 8.
85
Refer to Table 9.1.1.
422
The expenditure approach
Table 5.11.3: Holding gains/losses by type of inventory in millions of Euro
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Holding gains/losses: Change in stock at book value less Change in stock at current
prices
Row
1
Goods for resale
ESA Code
P.1
14
16
-4
0
18
-12
10
19
22
14
15
2
Finished goods and work-in-progress (WIP)
P.1
0
8
2
3
17
-16
1
12
4
4
4
3
Raw materials
P.2
0
8
-4
-2
12
-8
-11
24
7
8
9
4
Impact on:
P.1
15
25
-2
2
35
-28
11
31
26
18
19
5
Impact on:
P.2
0
8
-4
-2
12
-8
-11
24
7
8
9
6
Impact on:
P.1
-15
-25
2
-2
-35
28
-11
-31
-26
-18
-19
7
Impact on:
P.2
0
-8
4
2
-12
8
11
-24
-7
-8
-9
8
Impact on:
GVA
-14
-17
-2
-4
-23
20
-21
-7
-19
-10
-10
Source: GNI Quality report 2015
The final impact on GDP and gross national income (GNI) for this reservation is shown in
Table 5.11.4.
Table 5.11.4: Impact on GNI - Changes in inventories net of holding gains and losses in millions of Euro
ESA 2010 Code
16
17
18
19
20
PRODUCTION APPROACH
Output of goods and services (at basic prices)
Intermediate consumption (at purchasers' prices)
Gross value added (at basic prices)
Taxes on products
Subsidies on products
Gross domestic product (ESA 1995)
EXPENDITURE APPROACH
Total final consumption expenditure
Household final consumption expenditure
NPISH final consumption expenditure
General government final consumption expenditure
GCF
GFCF
Changes in inventories
Acquisitions less disposals of valuables
Exports of goods and services
Imports of goods and services
Gross domestic product (ESA 1995)
INCOME APPROACH
Compensation of employees
Gross operating surplus and mixed income
Taxes on production and imports
Subsidies
Gross domestic product (ESA 1995)
21
22
23
24
25
26
27
Compensation of employees received from the rest of the world
Compensation of employees paid to the rest of the world
Taxes on production and imports paid to the institutions of the EU
Subsidies received from the institutions of the EU
Property income received from the rest of the world
Property income paid to the rest of the world
Gross national income (ESA 1995)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
P1
P2
B1G
D21
D31
B1*G
P3
P3
P3
P3
P5
P51
P52
P53
P6
P7
B1*G
D1
B2G+B3G
D2
D3
B1*G
D1
D1
D2
D3
D4
D4
B5*G
2010
-11
11
-21
-21
-21
-21
-21
-21
-21
-21
Source: GNI Quality report 2015
423
Gross National Income Inventory
5.12 Acquisitions less disposals of valuables
5.12.1
Estimates for acquisitions less disposals of valuables were introduced only with the
implementation of ESA 1995. Acquisitions less disposals of valuables are calculated from
the supply side as suggested in the Phare 2000 project on gross fixed capital formation
(GFCF). The method applied is as follows:
Imports less Exports plus Domestic production
less Consumption expenditure plus Margins
5.12.2
The main data sources used are:
a) Imports and exports of Jewellery, bijouterie and related services (Classification of
Products by Activity (CPA) 32.1), Original works of painters, graphical artists and
sculptors (CPA 90.03.13) and Museum collections (CPA 91.02.20);
b) Production account of the Manufacturing of jewellery and related articles (NACE86
32.12);
c) Household Budgetary Survey (HBS) Data;
d) Turnover of auctioneers and antiques shops in Business Register (BR);
e) Turnover of artists, sculptors etc. in BR.
Table 5.12.1: Extract of process tables 2010 for Acquisition less disposal of valuables in millions of Euro
P.53
86
- 17.9
- 17.9
Total (Sources)
Other
Total Extrapolations and Models
Other E&M
FISIM
Dwellings - Stratification method
CFC
CFM
Benchmark Extrapolations
Combined Data
Administrative Records
Extrapolations and Models
Surveys and Censuses
Acquisitions less Disposals of valuables
Basis for national accounts figures
- 17.9
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
424
The expenditure approach
Adjustments
Final Estimate
Total (Adjustments)
Balancing
Total Exhaustiveness
N7
N6
N5
N4
N3
N2
Exhaustiveness
N1
Total Conceptual
Other Conceptual
Allocation of FISIM
Conceptual
Data Validation
Acquisitions less Disposals of
valuables
Table 5.12.1: Extract of process tables 2010 for Acquisition less disposal of valuables in millions of Euro
(cont...)
- 17.9
P.53
5.12.3

Imports less Exports;
Jewellery and related articles (CPA 32.12) data requested from the International
Trade and Transport Statistics Unit included items classified under CPA 32.1 (using
the Combined Nomenclature (CN)-CPA correspondence tables). In order to decide
which items are final goods and which are intermediate goods National Statistics
Office (NSO) consulted with a European Union (EU) expert on the CN, and with the
Gross National Income (GNI) Inventories of other countries. According to the
expert’s advice CN codes 7101 to 7105 and CN 7115 are considered as goods for
further processing. There are excluded from the calculation of valuables.

Data requested from the International Trade and Transport Statistics Unit included
also Original works of painters, graphical artists and sculptors (CPA code 90.03.13)
and Museum collections (CPA 91.02.20).
5.12.4
Domestic production of Manufacture of jewellery and related articles (NACE 32.12)
was estimated from the production approach. From the NACE Rev. 2 benchmark revision
the NACE forms part of other manufacture estimated at 2-digit Other manufacturing
(NACE 32). At 4-digit the NACE is derived with each Structural Business Statistics (SBS)
result and extrapolated forward in line with Short-Term Statistic (STS) index of Other
manufacturing (NACE 32).
5.12.5
Domestic production of artists such as sculptors, painters etc. was derived from the
business register as turnover of Artistic creation (NACE 90.03).
425
Gross National Income Inventory
5.12.6
Auctioneers and antiques dealers’ margins were calculated from BR.
Various
companies deal in antiques, but only few were identified as auctioneers. Their activities fall
under Retail sale of second-hand goods in stores (NACE 47.79). In order to calculate
margins their total turnover was multiplied by an estimated ratio.
5.12.7
Household final consumption expenditure (HFCE) is deducted in the commodity
flow method in order to avoid double counting of the expenditure items already included in
the expenditure approach.
Table 5.12.2: Acquisitions less disposals of valuables, 2010, in thousands of Euro
Summary output
2010
Output of Manufacturers of jewellery and related articles (NACE 32.12)
5,814
Add: Net imports - imports less exports
Add: Turnover - artists such as sculptors, painters etc.
Less: Consumption expenditure (CPA 32.1, 90.03.13 and 90.02.20)
Add: Transfer costs – auctioneers, antiques
Estimate of valuables
5.12.8
-7,428
1,489
18,063
272
-17,917
The production of valuables is valued at basic prices. All other acquisitions of
valuables are valued at the purchasers’ prices paid for them including any agents’ fees of
commission. They also include trade margins when bought from dealers.
5.13 Exports of goods
5.13.1
Exports of goods are extracted from data as reported by International Trade and
Transport Statistics Unit within National Statistics Office (NSO), which in turn compiles it
from Intrastat and Extrastat returns, within the International Merchandise Trade Statistics
(IMTS) framework. These include geographical data from where intra-European Union (EU)
and extra-EU balance of payments figures are extracted. The figures are in turn adjusted for
balance of payments purposes by removing items that are not balance of payments - relevant.
5.13.2
IMTS are usually the main data source for general merchandise in the goods and
services account. The data used as sources for general merchandise include customs data,
426
The expenditure approach
international transactions reporting systems, other administrative data (including value-added
tax systems), surveys of traders, or combinations. Adjustments to source data may be needed
to account for coverage, timing, valuation, and classification that do not meet balance of
payments guidelines.
5.13.3
IMTS cover goods “which add to or subtract from the stock of material resources of
a country by entering (imports) or leaving (exports) its economic territory” (United Nations
(UN) IMTS: Concepts and Definitions 1998, para. 14). This basis differs from the change of
ownership between residents and non-residents required for balance of payments, so
adjustments may be needed.
5.13.4
Because there is a change of ownership of goods between a resident and a non-
resident, the following cases are included in the balance of payments definition of general
merchandise:
a) Banknotes and coins;
b) Electricity, gas, and water;
c) Non-customised packaged software (systems and applications), and video and audio
recordings, on physical media, such as disks and other devices, with a license for
perpetual use are included in general merchandise;
d) Goods procured in ports by carriers;
e) Goods supplied or acquired by carriers away from the territory of residence of the
operator;
f)
Goods supplied or acquired by carriers away from the territory of residence of the
operator;
g) Goods sent abroad without a change of ownership, but later sold;
h) Equipment that is sold while outside the territory of residence of its original owner;
i)
Illegal goods;
j)
Smuggled goods that are otherwise legal;
k) Gifts;
l)
Parcel post where there is a change of ownership;
427
Gross National Income Inventory
m) Goods lost or destroyed after ownership has been acquired by an importer but before
the goods have crossed a frontier;
n) Livestock that changes ownership;
o) Government sales of goods to and purchases of goods from non-residents;
p) Goods where there is no associated payment, such as those financed by grants or
loans;
q) Humanitarian aid in the form of goods;
r)
Goods transferred to or from a buffer stock organisation;
s)
Goods acquired to be processed without passing through the territory of the owner
and goods sold after processing without passing through the territory of the owner;
and
t)
Any other goods where there is a change of ownership that was not identified from
data sources - where goods are sold to non-residents (exported) but they still remain
in the country, adjustments are made to trade data under “adjustments for coverage”.
5.13.5
When a customs system is used as a source of data on goods, there is a need to make
adjustments to include any goods where there is a change of ownership not recorded in
customs data or travel. Cases that sometimes arise include shuttle trade; acquisition of ships,
aircraft, and satellites; trade between free trade zones of an economy and residents of other
economies; goods in bonded warehouses in economies that use the special trade system; and
amounts below customs thresholds.
5.13.6
Imports and exports of goods are valued free on board (fob) at the border of the
exporting country. This value is the value of the goods at basic prices plus the related
transported distributive services up to that point of the border, including the cost of loading
on to a carrier for onward transportation plus any taxes less subsidies on the goods exported;
for intra-EU deliveries this includes value added tax (VAT) and other taxes on the goods paid
in the exporting country. Where shipment data (insurance and freight) is not available
separately, the shipment content of the merchandise import cost-insurance-freight (cif) value
is taken as 10 per cent.
428
The expenditure approach
5.13.7
Because there is no change of ownership of goods between a resident and a non-
resident, or because the goods have no value, the following cases are excluded from general
merchandise:
a) Transit trade - particularly relevant in case of Malta are the adjustments made for
exports and imports of fuel relating to VAT-only registered companies;
b) Migrants’ personal effects;
c) Goods consigned to embassies, military bases, and so forth from their home
authorities and vice versa;
d) Goods sent to an enterprise’s external operations where those operations are not
sufficiently substantial to constitute a branch;
e) Goods temporarily exported or imported without a change of ownership;
f)
Goods for assembly, packing, labelling, or processing by an entity that does not own
the goods concerned - goods sent abroad for processing do not change hands and are
excluded from trade data, and recorded under “adjustments for coverage”;
g) Goods acquired by a lessor under a financial lease;
h) Goods with no positive value (e.g., dangerous goods exported for disposal or
storage);
i)
Returned goods;
j)
Samples of no commercial value;
k) Trade in goods between free trade zones and residents of the same economy; and
l)
Any other goods that have been included in the data source although there was no
change of ownership.
5.13.8
As intra-EU trade statistics stem from Intrastat declarations by the traders, late or
non-response may impact the level of accuracy of intra-EU trade. Intra-EU as well as extraEU trade data accuracy is also affected by specific characteristics of this statistical field, such
as the exemption thresholds applicable in order to reduce the burden on enterprises. Whilst
complete coverage can be achieved with the use of estimates, the NSO is not currently
making any estimates in view of the difficulty of having a clear pattern with reference to
certain movements of goods such as fuel and trade in vessels and aircraft. However, the NSO
429
Gross National Income Inventory
is currently in the process of exploring the introduction of estimates to minimise as much as
possible the differences between the first and final data.
5.13.9
One characteristic of international trade statistics is that they are not compiled on the
balance sheet principle. Consequently, when exports from country A to country B are
compared with imports to country B from country A, these figures may not match due to the
adoption of different trade systems in use, and methodological aspects. Once asymmetries
are identified and measured through mirror analysis, further expert studies and analytical
work are initiated to identify the main causes. Some of the causes may be easy to detect and
correct while for some cases it may be harder to pinpoint. In any case, data corrections
and/or changes in methodologies and practices require the Member States involved to
perform the asymmetry analysis jointly, to agree on the asymmetry causes and on the
corrections/adjustments carried out in their respective data. Such exercises often referred to
as ‘reconciliation exercises’ are conducted from time to time between Member States.
5.14 Exports of services
5.14.1
Exports and imports of services consist of all services rendered to non-residents.
The Balance of Payments Unit derives exports and imports of services from a direct reporting
(DR) survey of enterprises operating in the country. Enterprises are surveyed periodically
(monthly/quarterly/annually depending on significance).
These are collated on a full
geographical basis. Any necessary adjustments are made ad-hoc in conformity with the IMF
Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6).
The DR survey specifically requests respondents to provide figures on an accrual basis which
ensures that exports of services are recorded at the time they are rendered.
5.14.2
The classification is mainly product-based, but is transactor-based for travel,
construction, and government goods and services n.e.c. The classification is according to the
type of service:
a) Manufacturing services on physical inputs owned by others - Fees charged for
processing are requested in the DR survey under item “manufacturing services on
physical inputs owned by others (processing)”;
430
The expenditure approach
b) Maintenance and repair services n.e.c.;
c) Transport - Transportation services are subdivided into three identifiable categories,
namely passenger, freight and other transportation. Data on receipts and payments
for passenger carriage is primarily retrieved from the monthly balance of payment
(BOP) enterprise survey carried out for both shipping and airline companies
(including their representative agencies operating in Malta). Data on revenue from
freight is derived from the same survey. Freight payments are retrieved directly
from Intrastat or customs data. Ninety per cent of shipment payments are allocated
to freight while the remainder are treated as insurance payments (and are included in
the Current Transfers Account). A statistical adjustment is made for freight on
imports carried by domestic carriers. Resident carriers are requested to fill-in a DR
questionnaire wherein they include transportation fees charged to foreign importers.
Transportation of imported goods by resident carriers are borne by resident
importers are therefore excluded from BOP since they are resident to resident
transactions. The DR questionnaire covers all types of exports and imports of
services that are transacted between residents and non-residents;
d) Travel - Gross earnings from tourism and data on gross expenditures by residents
travelling abroad are derived from Tourstat and Cruistat87 surveys conducted by the
Population and Tourism Statistics Unit within National Statistics Office (NSO) are
included in the travel account;
e) Construction - Construction services abroad are requested in the DR survey under
item “Construction services abroad”;
f)
Insurance and pension services - are measured by the Central Bank of Malta (CBM)
which is in charge for compiling data on the financial sector through a DR
questionnaire;
g) Financial services with the exception of financial intermediation services indirectly
measured (FISIM) are measured by the CBM which is in charge for compiling data
on the financial sector through a DR questionnaire;
h) Charges for the use of intellectual property n.e.c.;
i)
87
Telecommunications, computer, and information services;
CRUISTAT refer to the cruise passenger transit survey.
431
Gross National Income Inventory
j)
Other business services;
k) Personal, cultural, and recreational services; and
l)
Government goods and services n.e.c.
5.15 Imports of goods
5.15.1
Reference should be made to Section 5.13.
5.16 Imports of services
5.16.1
432
Reference should be made to Section 5.14.
CHAPTER 6
The balancing or integration procedure, and validating the
estimates
6.1
GDP balancing procedure
6.1.1
The methods of validating gross domestic product (GDP) in Malta can be grouped
into three main processes:
a)
Macro-economic GDP balancing;
b)
Supply and use tables (SUTs) balancing; and
c)
Quality checks during GDP compilation.
6.1.2
Macro-economic GDP balancing takes place on a quarterly basis and refers to the
overall reconciliation between the two main approaches used to compile GDP and the
allocation of the resulting statistical discrepancy. The SUTs framework is used to analyse
and eliminate this discrepancy in greater detail as described further below. Besides these two
balancing procedures, there are also a number of quality checks in place that are carried out
by national accountants on source data, before it is integrated in the preliminary figures of
GDP for a given reference period.
Macro-economic GDP balancing
6.1.3
Specifically, GDP in Malta is calculated using two main approaches: the production
approach and the expenditure approach. The production approach calculates gross value
added at basic prices as the difference between production value at basic prices and
intermediate consumption at purchasers’ prices, and yields GDP at market prices after adding
net taxes on products. The expenditure approach calculates GDP at market prices as the sum
of consumption expenditure, capital formation and the external balance of goods and
services.
6.1.4
Both approaches are in the greater part calculated independently, such that they
provide a cross-check on one another and provide the first step to a provisional balancing
433
Gross National Income Inventory
process before being analysed in much greater detail within the context of the SUTs
framework. The third approach to calculate GDP - the income approach - is calculated as the
sum of compensation of employees, gross operating surplus and mixed income and net taxes
on production and imports, is not calculated independently.
Only compensation of
employees and net taxes on production and imports are measured directly. Gross operating
surplus and mixed income is calculated as a residual from GDP at market prices derived after
the first provisional balancing process, from which compensation of employees and net taxes
on production and imports are deducted.
6.1.5
Macro-economic GDP balancing refers to the reconciliation of the production
approach and the expenditure approach to derive a harmonised GDP figure for a given
reference period. Since the income approach is derived in part as a residual, it is not part of
the balancing process. The process involves the analysis of each time series – output,
intermediate consumption, net taxes on products, final consumption, gross capital formation
and net exports. Revisions over old time series are checked, verified and documented. Final
consumption and gross capital formation is counter-checked with international trade in goods
data. Detailed information on international trade in goods and services by activity is counterchecked with corresponding activity recorded in output or intermediate consumption. Data
on turnover and purchases from value added tax (VAT) data is analyzed at activity level and
compared to the measured economic activity from the source data underlying the production
approach and expenditure approach.
6.1.6
After each series of checks, the GDP on both approaches is iteratively corrected until
an acceptable discrepancy between the two is reached. In general, predominance is given to
the output approach, which is considered to be the more reliable approach between the two.
GDP derived from the output approach is based on surveys, censuses, administrative and
combined sources (86.6 per cent) while the GDP derived from the expenditure approach is
based on Extrapolations and Models (61.5 per cent). The final discrepancy prevailing at this
stage in the balancing procedure is allocated to changes in inventories recorded on the
expenditure side. Changes in inventories are available on an annual basis with a time lag of
36 months.
Thus, initially a distinction between changes in inventories and statistical
discrepancy is not available.
During the macro-economic balancing procedure, the
discrepancy is allocated to changes in inventories which are considered as one of the least
firmly based items. At time t+36 months the statistical discrepancy is subsequently analysed
434
The balancing or integration procedure, and validating the estimates
at detailed product level within the SUTs system, for each industry and institutional sectoral
breakdown between government (S.13), non-profit institutions serving households (NPISHs)
(S.15) and the private sector.
Supply and use tables (SUTs) balancing
6.1.7
SUTs are available for Malta for the reference years 2004, 2008 and 2010 and are
entirely consistent with the requirements for current prices outlined in the ESA of 1995 and
2010. SUTs are not calculated in previous years’ prices yet for Malta. Compilation of the
SUTs for Malta is carried out for 128 products and 64 industries. The products are easily
aggregated into the 2-digit Classification of Products by Activity (CPA) 2008 (refer to
Chapter 9, para. 9.1.4). The industries are analysed separately for central government, extrabudgetary units (EBUs), NPISHs and the private sector. The private sector includes both
corporations and households.
The SUTs balancing process ensures that the following
identities are balanced at purchasers’ prices and at basic prices:
Identities by industry:
Output by industry = Input by industry
Output by industry = Intermediate consumption + Gross value added by industry
Identities by product:
Total supply by product = Total use by product
Output + Imports + Trade margins + Net taxes = Intermediate consumption + Final
consumption + Gross capital formation + Exports
Table 6.1.1: Supply and use framework
SUPPLY TABLE
Industries
Agriculture
Industry
Service activities
Imports
Total
Products
Agricultural products
270
30
50
20
370
Industrial products
10
430
100
50
590
Services
20
40
550
30
640
300
500
700
100
1600
Total
435
Gross National Income Inventory
Table 6.1.1: Supply and use framework (cont...)
USE TABLE
Total
Exports
Gross capital
formation
Final
consumption
Service
activities
Industry
Agriculture
Industries
Products
Agricultural products
34
59
143
81
21
32
370
106
119
77
123
103
62
590
Services
70
112
75
291
61
31
640
Value added
90
210
405
300
500
700
Industrial products
Total
6.1.8
705
495
185
125
The balancing of each identity by industry is carried out for each and every industry
at the institutional sector level described above, whilst balancing by product is carried out for
each product. Balancing can be carried out when total supply and total use are valued using
the same concept. Two valuation concepts are used in the SUTs system – purchasers’ prices
and basic prices. Output is recorded in the supply table at basic prices as collected from the
source data described above. Intermediate consumption, final consumption and gross capital
formation are recorded at purchasers’ prices. Imports of goods by product are valued at cost,
insurance and freight (cif) at the border of the importing country. An overall adjustment to
transform from cif valuation to free on board (fob) is carried out in the SUTs. Exports of
goods are valued fob.
6.1.9
To balance, either the supply at basic prices has to be transformed into purchasers’
prices to match the use at purchaser’s prices or the use side at purchasers’ prices converted
into basic prices to match supply at basic prices. The transformation of supply from basic to
purchasers’ prices is achieved by introducing additional valuation columns in the supply table
which show total trade and transport margins by product, and net taxes on products. The
transformation of use from purchasers’ prices to basic prices involves the construction of
matrices with the same dimensions as the use table, by industry and product for trade and
transport margins and net taxes on products. These matrices would be deducted from the use
matrix at purchasers’ prices to yield a use matrix in basic prices. Calculation of use at basic
prices should be compiled every five years, according to the ESA 2010 data transmission
programme.
436
The balancing or integration procedure, and validating the estimates
6.1.10
Both methods have been calculated for the reference year 2010. For the reference
years 2004 and 2008 balancing took place at purchasers’ prices only. For the reference year
2010, the SUTs were compiled and balanced both at purchasers’ prices and at basic prices for
the first time. To this end the following additional tables were compiled:

Use table at basic prices;

Use table for domestic output at basic prices;

Use table for imports at basic prices;

Table of trade and transport margins; and

Table of taxes less subsidies on products.
6.1.11
For Malta SUTs are not integrated into the annual compilation process as they are
compiled with a time lag greater than the time t+36 months required by Eurostat by
derogation to allow for the lack of resources required to carry out the extensive work related
to the compilation of these tables. Any errors uncovered during the SUTs process were
integrated into the national accounts figures during backward revisions. In particular, the
SUTs of 2010 in ESA 2010 provided substantial input in the finalisation of GDP for 2010
published in the benchmark revision carried out in September 2014 (National Statistics Office
(NSO), News Release 195/2014).
6.1.12
The SUTs bring together all the source data that feeds into the national accounts’
production and expenditure approaches to calculate GDP. Completion of SUTs may be
divided into two steps: (a) the compilation process, (b) the balancing process.
The compilation process
6.1.13
The compilation process revolves around calculating product coefficients from the
sources described in detail below. These coefficients are then applied to the preliminary
variables last published before the compilation process starts. The main sources for the
product breakdown coefficient of each variable entering the SUTs of 2010 are outlined
below.
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Gross National Income Inventory
Output at basic prices and intermediate consumption at purchasers’ prices by industry and
product
6.1.14
The product detail for the non-financial and households sectors for Agriculture and
Fishing activities is derived mainly from the Economic Accounts of Agriculture (EAA) and
the Aquaculture Census.
6.1.15
Product coefficients for NACE88 Rev. 2 Sections B to N and NACE division 95,
sub-divided into four annexes, covering Industry (Sections B-E), Construction (Section F),
Trade (Section G) and Services (Sections H, I, J, L, M, N and NACE division 95 are derived
from the Structural Business Statistics (SBS) survey. This data are made available to the
national accounts at time t+24 months. For the reference year 2010, SBS collected the
product breakdown of the total purchases for large companies defined as units with 10 or
more persons employed or with a turnover of more than 5 million Euro. Further details on
SBS are described in Chapter 10, Section 10.1.2.
6.1.16
Output and intermediate consumption of the Electricity, gas, steam and air
conditioning supply activities (Section D) and Water supply, sewerage, waste management
and remediation activities (Section E) are derived from detailed financial statements of the
major providers of this service and in part from SBS.
6.1.17
Information on product detail for Financial and insurance activities is partially
derived from monetary and banking statistics supplied by the Central Bank of Malta (CBM)
as described in Chapter 10, para. 10.1.17 and 10.1.18. This data are supplemented from
various financial statements of larger companies obtained from the Malta Financial Services
Authority (MFSA) website and the fiscal data. Around 2.1 per cent of total intermediate
consumption including is based on other countries product breakdown.
6.1.18
The product breakdown of intermediate consumption of own production in dwelling
services (part of Section L) is in part derived from the Household Budgetary Survey (HBS)
(refer to Chapter 10, Table 10.3.1).
88
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
438
The balancing or integration procedure, and validating the estimates
6.1.19
The sources underlying the calculation of output and intermediate consumption
generated by Education, Human health and social work activities, Arts, entertainment and
recreation, and Other service activities (Sections P to S) are described in Tables 3.22.6,
3.23.6, 3.24.5 and 3.25.5 respectively.
The product breakdown of these aggregates is
collected from annual reports and financial statements especially as regards the remote
gambling companies, fiscal data and specific surveys such as the English Language Schools
(ELS) survey, Church and Independent Schools Survey and various surveys conducted on
specific cultural activities also provided information on the product composition of output
and intermediate consumption of these activities.
6.1.20
The product breakdown of the general government sector (S.13) is provided by the
Public Finance Unit, separately for central government, extra-budgetary units (EBUs) and
local councils.
The product breakdown for central government is obtained from the
Departmental Accounting System (DAS) and that for EBUs is derived from their annual
reports.
For the NPISHs (S.15) the product composition of output and intermediate
consumption is derived from annual reports of cooperatives and various surveys on cultural
activities conducted by NSO.
6.1.21
The product breakdown for imports and exports of goods is obtained from the
information which is mainly provided by the traders on the basis of Customs, Intrastat and
Extrastat. The Intrastat provides trade data on intra-EU trade; while the Extrastat provides
statistics on trade with non-EU countries (refer to Chapter 10 Table 10.1.14 and Table
10.1.15). Trade in goods are classified according to the Harmonised System (HS Code) of
classification of international trade in goods and Broad Economic Classification (BEC). This
HS Code can easily be aggregated into the 128 product classification used in the SUTs for
Malta. The BEC classification provides enough information to construct an import matrix by
use i.e. intermediate consumption, gross fixed capital formation (GFCF), and household final
consumption expenditure (HFCE).
6.1.22
This is possible for imports purchased directly by the final user. Goods that are
imported to Malta by the Wholesale and retail trade; repair of motor vehicles and motorcycles
(NACEs 45-47 - Section G) industry and any other units engaging in wholesale and retail
trade as part of their secondary activity, need to be allocated to the industry or final user to
439
Gross National Income Inventory
which they are sold in the import matrix. This is achieved by assuming that imports sold by
wholesalers and retailers follow the same proportion as the use of domestic production.
6.1.23
Imports of goods by product are valued at cost including insurance and freight (cif).
An overall row adjustment is carried out in the SUTs to transform the value of imports from
cif to free on board (fob) and ensure that overall valuation in the supply table is at basic
prices. Exports are valued fob.
6.1.24
Imports and exports of services were classified according to the Balance of
Payments Manual 5 classification for the SUTs of 2004, 2008 and 2010. This information
has to be bridged into the SUTs classification, which is in turn consistent with CPA 2008.
This is achieved by analysing the import data at NACE and company level and comparing it
with information on product breakdown from the SBS survey or other relevant sources.
6.1.25
Data on HFCE for resident and non-resident households is classified by
Classification of Individual Consumption by Purpose (Coicop) (refer to Chapter 9, para.
9.3.2). This is transformed into the SUTs product classification using product detail from
HBS 2008 (refer to para. 10.3.1, Table 10.3.1), the product breakdown derived from imports
by HS code (refer to Chapter 9, para. 9.3.6) and the BEC classifications (refer to Chapter 9,
para. 9.3.7) and Tourstat statistics (para. 10.1.6, Table 10.1.5) for that year.
6.1.26
The final consumption expenditure of NPISHs is equal to the non-market output of
NPISHs. It is classified into the product equivalent to the 2-digit NACE in which the
producing NPISHs fits in.
6.1.27
The final consumption expenditure of the general government sector is measured as
the sum of the non-market output of government and social benefits in kind. The non-market
output of government is classified into the product equivalent to the 2-digit NACE in which
the producing government unit fits in. Social benefits in kind are analysed at item level, with
each transaction classified into the corresponding product code in CPA 2008.
6.1.28
GFCF is derived from an investment matrix which is available at time t+24 months.
The investment matrix is available by NACE activity, institutional sector and CPA 2008.
440
The balancing or integration procedure, and validating the estimates
Data is derived from various sources covered in Chapter 5, Section 5.10.
The CPA
breakdown of ‘machinery and equipment’ is mainly based on international trade statistics.
6.1.29
Changes in inventories are initially sub-divided in two components. One part is the
calculation for actual changes in inventories (Chapter 5, Section 5.11).
The product
coefficients for this variable are estimated using the product breakdown of the purchases and
sales of large companies for those activities covered by SBS 2010. NACE activities not
covered by the SBS survey were catered for from the Aquaculture Census and annual reports
of large enterprises such those operating in the in the production and distribution of water and
electricity. For government changes in inventories were available from government statistics.
6.1.30
The second component of changes in inventories is the statistical discrepancy
prevalent in the reference year being analysed within the SUTs after macroeconomic
balancing. At the outset of the SUTs, this is regarded as an unclassified item (product row),
and is reduced during the balancing process when corrections are made during SUTs analysis.
Not all errors can be corrected within the context of one SUTs exercise, as sometimes a given
error would have to be analysed in terms of a time series to ensure that when a decision is
taken to change a national account aggregate, and hence GDP is consistent across the years.
6.1.31
Therefore, at the end of the balancing process, there will always be an element of
statistical discrepancy that has not been allocated to other national accounts aggregates, and
will remain classified as changes in inventories. This stood at around 0.004 per cent of total
use at purchasers’ prices in 2010 and is distributed in the same proportion of the actual
changes in inventories coefficients after some fixed allocations to unresolved product codes
are allocated.
Valuation concepts
6.1.32
To ensure consistency in the valuation between the SUTs, valuation adjustment
vectors and matrices describing net taxes on product and trade and transport margins by use
and product are required. This is described in detail below.
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Gross National Income Inventory
Net taxes on products
6.1.33
Data on net taxes on product are derived from the DAS, Treasury Department
accruals templates data and audited accounts of the EBUs (Chapter 3, Sections 3.28 and
3.29). Product coefficients for taxes on products are calculated separately for VAT, import
duties and levies and other taxes on products. Only non-deductible VAT is recorded in the
SUTs, i.e. only those taxpayers that do not have the right to pass on the tax burden are
included. The method, product breakdown and VAT rates used are entirely consistent with
the calculations compiled for the weighted-average rate of VAT for Malta and used for value
added tax own resources (VOR) purposes.
6.1.34
The institutional sectors and industries that are subject to non-deductible VAT are
general government, including central government, EBUs and local councils, private
NPISHs, households, exempt economic activities and small businesses. Exempt economic
activities are those delineated in Part Two Fifth Schedule of the VAT Act for Malta, which
lists all activities that are exempt from VAT without credit. These are units classified as
NACEs 64, 65 and 66, 85, 86, 87 and 88 (refer to Chapter 9, Table 9.1.1) and units providing
water and postal services. Small businesses are those businesses which are considered as
exempt from VAT as they fall below turnover thresholds specified by VAT legislation.
6.1.35
All expenditure, be it final consumption or gross capital formation, incurred by these
institutional sectors and industries are broken down into further detail than that within the
SUT.
This procedure ensures that such that prevalent VAT rates are applied to each
corresponding product subdivision as closely as possible, yielding a matrix that describes
theoretical VAT.
6.1.36
Pro-rata rates of non-deductibility (PNDs) are applied to these expenditure
categories to account for any expenditure by these units on which they could possibly claim
back value added tax. For those units producing activities that are exempt without credit but
which also engage in activities that are not exempt according to VAT legislation, these units
can claim back part of the VAT paid on their expenditure. Therefore, PNDs are defined in
this exercise as the ratio of non-deductible to deductible expenditure and are calculated from
information on the breakdown of taxable and non-taxable turnover.
442
Actual VAT from
The balancing or integration procedure, and validating the estimates
government statistics is then distributed on the basis of theoretical VAT coefficients by
industry, institutional sector and use.
6.1.37
Total import duties reported in government statistics are broken down by product on
the basis of information on excise duties and levies forthcoming from international trade
statistics. Other taxes on products are allocated to specific products such as excise duties on
cigarettes, alcohol and fuel, motor vehicles, stamp duty on transfer of immovable property, to
cite a few examples. Each tax is classified into the SUTs product classification. After import
duties and other taxes are classified by product they are allocated to intermediate and final
uses to be added to the non-deductible VAT matrix and yield the total taxes by product and
use in the dimension of the use table at purchasers’ prices. Specific taxes are allocated
directly to their tax base, e.g. stamp duty on immovables is allocated to gross capital
formation of buildings and gaming taxes are allocated between intermediate consumption and
final consumption based on direct information. Import levies and excise are directly related
to imports such that they were allocated across uses in proportion to the imports by use. The
initial taxes on product matrix produced at compilation stage is updated with each round of
balancing and feeds back into the SUTs system iteratively.
6.1.38
Subsidies on products are analyzed on a case-by-case basis and allocated to the
relevant product. Some subsidies are available at a higher level of aggregation than that in
the SUTs such as the case of the European Agricultural Guidance and Guarantee Fund
(EAGGF) and food subsidies are broken down on the basis of information obtained from the
Paying Agency of these subsidies.
Trade and transport margins by product
6.1.39
The other building block in transforming the Use matrix from purchasers’ prices to
basic prices is the calculation of trade and transport margins by product and use in the same
dimension as the Use matrix. Trade margins are defined as the difference between the actual
or imputed sale price realised on a good purchased for resale, and the price that would have to
be paid by the distributor to replace the good at the time it is sold or otherwise disposed of
(ESA 2010, para. 3.56).
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Gross National Income Inventory
6.1.40
Transport margins are defined as transportation costs paid separately by the
purchaser and included in the use of products at purchasers' prices but not in the basic prices
of a manufacturers' output or in the trade margins of wholesale or retail traders (ESA 2010,
para. 9.37). For the purposes of SUTs in Malta, these separately invoiced transport costs are
assumed to be negligible to be treated separately and are considered to be part of trade
margins if any.
6.1.41
Trade margins by product are derived from the supply-side, where trade margins at
4-digit NACE level are initially calculated from SBS 2008. SBS 2010 was not used to derive
trade margins by product for this reference year as product details by CPA at 6-digit were
collected only for large companies. As a result SBS 2008 was considered to be more
exhaustive. The trade margin rates calculated at 4-digit NACE level are allocated to each and
every product in the SUT classification that is subject to trade margins. These trade margin
rates by product are then applied to turnover for resale by product to yield total trade margins
by product for 2008. Turnover for resale by product is collected at the 6-digit level but it is
reported in CPAs 45, 46 and 47. These product categories, albeit available at the 6-digit
level, do not give a detailed enough product distribution, contrary to the data by product for
purchases for resale. Therefore, data on turnover for resale by product are combined with
data reported on purchases for resale by product at 6-digit CPA level in SBS to obtain the
most accurate possible picture by comparing both data sets. Data on purchases for resale
were also confronted with detailed imports for resale in NACEs 45 to 47 in cases were not
enough detail was provided by respondents and also as a cross-check by product.
6.1.42
The resulting trade margins by product are applied to the total trade margins
recorded in output for 2010. These trade margins are allocated across uses on the basis of
indirect imports by use.
Indirect imports refer to imports of goods by intermediaries
operating in the wholesale and retail industry (NACEs 45 to 47). The manner in which
indirect imports are allocated to each industry and final user is explained in para. 6.1.22.
Trade margins are only allocated to indirect imports on the basis of the assumption that all
domestic production is sold directly to the ultimate intermediate or final user, such that trade
margins are only earned by importers. This yields the initial trade and transport margin
matrix by product and use, which is updated during the balancing process to reflect any
changes made to the indirect import matrix.
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The balancing or integration procedure, and validating the estimates
6.1.43
After the product coefficients for all the variables are calculated, these are applied to
the initial values of output, intermediate consumption, final consumption, gross capital
formation, net exports, trade margins and net taxes on products resulting in an unbalanced
portrayal of product balances. Before the actual balancing process starts, two other sources
are taken into consideration to improve the initial estimated product breakdown - fiscal data
for companies and international trade in goods and services statistics by product.
6.1.44
Fiscal data on purchases is reclassified into the SUTs classification and uploaded
into the SUTs system. Differences between the initial product coefficients for output derived
as previously explained and intermediate consumption coefficients obtained from fiscal data
are calculated. These differences are analysed, often at company level, and a decision to
improve or otherwise the initial product breakdown on the basis of fiscal data is taken. Fiscal
data is a very important source when it comes to services. In SBS services are often grouped
and are not available at 2-digit CPA.
6.1.45
The same process is undertaken using exports in goods and services data by product,
whereby differences between exports and output by product are calculated, analysed and
improvements to the initial product composition of output are carried out.
Imports by
product and BEC are compared in the same manner with intermediate consumption,
household final consumption expenditure and gross capital formation (GCF), also improving
the initial product breakdown of these variables. This forms the end of the compilation stage.
6.1.46
For goods, there exists quite a lot of detail from both SBS and trade, since Malta is
substantially reliant on imports of goods both for intermediate uses and capital formation.
For services, information is forthcoming from SBS, annual reports and various other sources.
However, the product classification of services, particularly in household final consumption
expenditure and international trade of services tends to be the least detailed, lending itself to
decisions based on expert knowledge on their allocation to particular product codes.
Balancing stage
6.1.47
The second part of the SUTs process is the balancing stage. This stage itself is in
turn divided into four main processes (a) manual balancing of major imbalances, (b) quality
checks and (c) final automatic balancing of acceptable discrepancies and (d) documentation.
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Gross National Income Inventory
Manual balancing of major imbalances
6.1.48
Balancing is carried out centrally. The first step is to analyse the largest product
imbalances first, and after these are resolved to an acceptable extent, each and every product
which is imbalanced is analysed consecutively. Initially, a number of errors are attributable
to problems of classification, and these are the first to be resolved. When these are corrected,
a number of errors are uncovered. These could be conceptual errors or errors of under/over
reporting in source data which emerges after confrontation within the system. At this stage,
the statisticians with expertise in that area are brought together to discuss possible solutions
to correct them.
6.1.49
Depending within which time frame the SUTs are being compiled corrections are
carried out either in benchmark revisions or at the time of compilation of the SUT. As long
as the SUTs are compiled within the cut-off date whereby a reference year is considered as
closed for revision purposes, there are no limits to what can be revised during balancing.
Any errors uncovered during the SUTs process are corrected in any variable entering the
calculations of the production or expenditure approach. It is only when the SUTs process
extends beyond the time frame following which a reference year can be revised, that the
target values for each GDP component are considered as fixed and any errors are allocated to
changes in inventories until a benchmark revision is implemented whereby such errors are
corrected.
6.1.50
After the first round of row balancing is carried out, the next step is to readjust the
column balances to their initial target values or to their new values, depending on whether it
was agreed that a correction is made to the initial figures of output, intermediate
consumption, final consumption, GCF and net exports.
This iterative system of first
analysing row imbalances and then readjusting column imbalances does not necessarily give
predominance to one over the other, but attempts not to have imbalances that are too large
either in the rows or in the columns at any point in time. When the entire system of supply
and use tables is compiled at basic prices, balancing should also take care that the target
values in the import matrix, domestic output matrix, trade and transport matrix and net taxes
on product matrix are maintained and balanced simultaneously.
446
The balancing or integration procedure, and validating the estimates
6.1.51
Conceptually balanced items such as financial intermediation services indirectly
measured (FISIM), insurance and the non-market output of the central bank is balanced
between the production and expenditure approach at the stage of compilation. They are then
treated as fixed target values within the SUTs framework, whereby they are not adjusted
during this detailed balancing process.
Quality checks
6.1.52
After the first and successive rounds of manual balancing have reduced errors to an
acceptable range, the resulting SUTs are compared to previous SUTs for substantial changes
in growth rates by product and also to product composition of both supply and uses. Ratio
analysis of the trade and transport margin ratios, breakdown between use of domestic output
and import matrices are also carried out. Each major change is investigated and corrected if
necessary, or verified and documented. This process tends to uncover a number of errors,
especially in the allocation of unclassified or grey areas – it is ensured that allocation of
information for which not enough information is available is at least consistent across years
until further complete information is available.
Final automatic balancing
6.1.53
Most of the balancing that takes place is manual. This process takes place until the
final imbalances that are to be allocated automatically are very small. The final automatic
balancing procedure takes place in Excel and the process has been automated using Excel
macros. The first imbalances to be eliminated are imbalances in the import matrix. Final
product imbalances in the rows are allocated to the largest user of that product, whereas final
column imbalances are subdivided equally amongst selected rows.
6.1.54
Balanced GDP is not compiled independently from the SUTs system but uses the
preliminary and semi-definitive estimates of GDP as the starting point and through an
iterative process, these estimates are corrected and finalised.
Documentation
6.1.55
The final part of the SUTs process involves drawing up a document with the major
errors uncovered, summary of discussion between experts and solutions proposed,
implemented or shelved for the next benchmark revision.
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Gross National Income Inventory
6.2
6.2.1
Other approaches used to validate GDP
The third part to the balancing process is a series of quality checks during GDP
compilation on an annual and quarterly basis.
6.2.2
Annual sources such as the SBS survey and results of other censuses and surveys are
all analyzed and wherever possible cross-checked against one another. Erratic movements in
the respective time series or ratio analytics are referred back to the source. Extensive use is
made of administrative sources such as fiscal data and annual reports and financial statements
for such checks.
6.2.3
For the computation of GDP on a quarterly basis almost all the other units within
NSO feed data into the National Accounts.
The details requested from each unit are
generally more detailed than what is actually published. This data are typically checked by
comparing it with the figures of the same quarter of the previous years and comparing growth
rates thus establishing trends so as to verify if there are any anomalies. Data are also
compared with the published news releases of the other units. Where possible data at
company level is requested from the different units in order to be able to cross check figures
so as to ensure consistency within NSO.
6.2.4
The main variables of the output and generation of income accounts are grouped
such that a visual analysis of the data for the whole time series being published is clearly
visible. Gross value added (GVA) and compensation of employees are compared to past
releases at 2-digit NACE and by quarter. Any significant revision is verified with source data
and documented. Absolute changes in GVA and compensation of employees of +/- 1 million
Euro is cross checked with the basic data source and documented. A similar procedure is
done for percentage changes in these variables. The intermediate consumption to output ratio
for consecutive quarter and years is analysed at 2-digit NACE. This is typically consistent
across years and thus an increase of +/-2 per cent is generally verified with source data.
6.2.5
The main variables in the expenditure approach computed by the National Accounts
Unit are the household final consumption expenditure (HFCE), NPISHs and GCF. HFCE is
checked at Coicop 4-digit level and any revisions and absolute changes of +/- 2 million Euro
448
The balancing or integration procedure, and validating the estimates
are rechecked. GFCF is particularly volatile thus it is difficult to check. The extrapolation
method used is generally verified and in case of sharp increases or decreases the import data
at company level is checked. Each quarter trade in goods is screened for newly non-resident
locally VAT registered companies. Such companies will not be included in the output
approach so they may contribute to the statistical discrepancy. Given that no automatic tool
is presently available this is being done by analysing exports and imports of goods and
company names which are double checked with the MFSA Registry of companies. Similarly
balance of payments data are requested at company level. This detailed analysis of balance
of payments and international trade statistics is adopted due to the possible impact this data
has on statistical discrepancy. In both cases data at company level is compared to national
accounts data, short-term statistics raw data, published company accounts and quarterly
questionnaires used in the output approach to make sure that any imports or exports reported
in the expenditure approach are coherent in the system of national accounts and across units.
Methodological differences are sometimes detected. These are generally followed up after
the release. The focus of this analysis is generally dictated by the level of the statistical
discrepancy in each particular year.
6.2.6
Additional information is sought from external reports and studies which are
produced by organisations such as the Chamber of Commerce, the Malta Tourism Authority
(MTA), the CBM, the Building Industry Consultative Council, the General Retailers and
Traders Union, the Malta Hotels and Restaurants Association, and others.
These
organisations may sometimes indicate output activity in their respective sectors, sales,
investment, prices and other data that may be used, with caution, to compare patterns
emerging from official statistics.
6.2.7
Further to all the checking procedures described above, there are a number of other
mechanisms in place that serve to check the reliability and exhaustiveness of GDP
calculations. In particular two committees are in place and operate to discuss concepts, time
series movements and ratio analytics of GDP calculations:
a)
Economic Statistics Development Programme (ESDP): The ESDP’s aims at
identifying potential areas for improvement in the national accounts.
The
Committee is chaired by the NSO and includes all the members of the Economic and
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Gross National Income Inventory
Business Statistics Directorates at NSO and also representatives from the CBM and
the Economic Policy Division within the Ministry of Finance; and
b)
Quarterly meetings with the CBM: On a quarterly basis the Central Bank Economic
and Monetary Analysis Department gives feedback on the latest published GDP
figures. Any queries which arise following each publication are sent in writing to
the National Accounts Unit. Replies are provided and a follow up meeting is held
each quarter between CBM representatives, the Director of Economic Statistics and
the National Accounts Unit.
Any issues that are considered relevant to the
improvement of the calculations are taken into consideration.
6.2.8
External validation procedures are in place. Gross National Income (GNI) is subject
to verification procedures as outlined in the Council Regulation 1287/2003.
Eurostat’s
verification of GNI for own resource purposes focuses on the checking of:
a)
The procedures and basic statistics used to calculate GNI: Eurostat checks the GNI
Inventories and process tables using a GNI Inventory Assessment Questionnaire
(GNIAQ) approved by the GNI Committee; and
b)
The data transmitted in the GNI Questionnaires and the Quality Reports: this is
achieved in part via joint GNI information visits to be carried out in Member States
by the Commission's services and representatives from other Member States and aim
to collect additional information that is necessary to identify possible weaknesses of
the GNI Inventory, of the statistical sources and methods used to calculate GNI and
its components. At the end of this analysis, Eurostat provides an assessment on
whether the Member States' figures are appropriate for own resource purposes or
whether further corrections and improvements are necessary.
reports are presented to the GNI Committee for a full discussion.
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The assessment
CHAPTER 7
Overview of the allowances for exhaustiveness
7.0
Introduction
7.0.1 Geographical coverage
7.0.1.1 Commission Regulation (EC) No 109/2005 of 24 January 2005, on the definition of
the economic territory of Member States for the purpose of Council Regulation No
1287/2003 on the harmonisation of gross national income at market prices stipulates that the
term ‘economic territory’ shall have the meaning attributed to it in para. 2.05 and 2.07 of
Annex A to Regulation European Union (EU) No 549/2013.
7.0.1.2 The units which constitute the economy of a country and whose flows and stocks are
recorded in the ESA 2010 are those which are resident. An institutional unit is resident in a
country when it has its centre of predominant economic interest in the economic territory of
that country. Such units are known as resident units, irrespective of nationality, legal form or
presence on the economic territory at the time they carry out a transaction.
7.0.1.3 Economic territory consists of the following:
a) the area (geographic territory) under the effective administration and economic
control of a single government;
b) any free zones, including bonded warehouses and factories under customs control;
c) the national air-space, territorial waters and the continental shelf lying in
international waters, over which the country enjoys exclusive rights;
d) territorial enclaves, these being geographic territories situated in the rest of the world
and used, under international treaties or agreements between states, by general
government agencies of the country (such as embassies, consulates, military bases,
scientific bases, etc.); and
e) deposits of oil, natural gas, etc. in international waters outside the continental shelf
of the country, worked by units resident in the territory as defined in points a) to d).
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Gross National Income Inventory
Fishing boats, other ships, floating platforms and aircraft are treated in the ESA as mobile
equipment, whether owned and/or operated by units resident in the country, or owned by nonresidents and operated by resident units. Transactions involving the ownership (gross fixed
capital formation) and use (renting, insurance, etc.) of mobile equipment are attributed to the
economy of the country of which the owner and/or operator respectively are residents. In
cases of financial leasing, a change of ownership is assumed.
7.0.1.4 Economic territory excludes extraterritorial enclaves. Also excluded are the parts of
the country’s own geographic territory used by the following organisations:
a) general government agencies of other countries;
b) institutions and bodies of the EU; and
c) international organisations under international treaties between states.
7.0.1.5 Centre of predominant economic interest indicates that a location exists within the
economic territory of a country where a unit engages in economic activities and transactions
on a significant scale, either indefinitely or over a finite but long period of time (a year or
more). The ownership of land and buildings within the economic territory is deemed to be
sufficient for the owner to have a centre of predominant economic interest there.
7.0.1.6 Enterprises are almost always connected to only a single economy. Taxation and
other legal requirements tend to result in the use of a separate legal entity for operations in
each legal jurisdiction. In addition, a separate institutional unit is identified for statistical
purposes where a single legal entity has substantial operations in two or more territories (e.g.
for branches, land ownership, and multi-territory enterprises). As a result of splitting such
legal entities, the residence of each of the subsequently identified enterprises is clear. Centre
of predominant economic interest does not mean that entities with substantial operations in
two or more territories should not be split.
7.0.1.7 In the absence of any physical dimension to an enterprise, its residence is determined
according to the economic territory under whose laws the enterprise is incorporated or
registered.
452
Overview of the allowances for exhaustiveness
7.0.1.8 Resident units, irrespective of nationality, legal form or presence on the economic
territory at the time they carry out a transaction are identified by the Business Register (BR)
through various administrative sources. The BR incorporates units which constitute the
economy of a country and whose flows and stocks are recorded in the ESA 2010. There is no
entry threshold (size of activity, revenue or number of employees). The completeness of the
BR ensures exhaustiveness when conducting surveys especially in relation to supply-based
sources in the production approach which depends on sample surveys based on the BR.
7.0.1.9 The BR relies heavily on various administrative sources to identify the population of
active enterprises for a given year. Start-ups referred to as births, the legal units which close
down, referred to as deaths, are obtained on a monthly basis from the Registry of companies
which is regulated by the Malta Financial Services Authority (MFSA) in case of limited
liability companies and government departments in case of sole traders and partnerships.
There are no entry thresholds with respect to limited liability companies and thus
exhaustiveness is ensured. In 2011, administrative records started to exclude units whose
turnover was less than 7,000 Euro. However, this practice ceased to exist in 2015. These
companies although de-registered for administrative purposes have not been delisted from the
BR, thus ensuring exhaustiveness from a statistical point of view.
7.0.1.10 An effort is being done to update the BR with producers which are not obliged to
register. National accounts data relies heavily on expenditure source data in order to ensure
exhaustiveness rather than supply side sources in such cases. Registered entrepreneurs not
surveyed relate to Real estate activities (Section L), Human health and social work activities
(Section Q) and Other service activities (Section S). Similarly, the BR may not be exhaustive
with respect to accommodation services including short-stay accommodation in apartments
and similar units (NACE89 55.2) and Other accommodation (NACE 55.9) which comprise of
accommodation establishments catering for slightly longer stay periods such as dormitories
and shared rooms catered for seasonal migrant workers and students. In the future, all
accommodation establishments licensed by the Malta Tourism Authority (MTA) need to be
integrated in the BR. In the meantime national accounts data are derived using expenditure
based surveys. These producers are classified in N5 given that such producers are obliged to
register but are not exhaustively surveyed by National Statistics Office (NSO).
89
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
453
Gross National Income Inventory
7.0.1.11 Three main sources are used to identify special purpose entities (SPEs). A specific
question (5.5) in the BR questionnaire, which requires companies to state if they have a
physical presence in Malta by way of premises or employees (excluding any legal or financial
representative office/staff in Malta).
However, the information received from this
questionnaire is not a deciding factor on its own. The data are cross-checked with documents
submitted by the companies at the MFSA and data provided by a government department.
This government department was requested to identify a list of variables which are available
at company level that may enable NSO to identify SPEs. In collaboration with the IRD, NSO
designed a filtering system which is presently being used to flag ‘potential SPEs’. The
government department provides this information twice a year. The flag ‘potential SPE’
indicates that further analysis is needed. The final residency status assigned in the BR i.e.
resident versus SPE is ultimately determined following the analysis of documents submitted
by each company with MFSA. The MFSA website provides data on the involved parties and
thus the ownership of each company and the financial statements. Both resident companies
and SPEs are ultimately included in national accounts.
7.0.1.12 Non-profit institutions serving households (NPISHs) are identified from the
Voluntary Organisations Register which is an administrative source and refers to registered
NGOs. The Public Finance Unit identifies non-market producers. Maintaining the list of
extra-budgetary units (EBUs) is the responsibility of the Public Finance Unit.
For
consistency in the coverage of the sectors of the total economy, this list, together with
relevant information, is forwarded to the Business Registers Unit, the unit responsible for the
BR in Malta.
7.0.2 General approach to exhaustiveness
7.0.2.1
In Malta, the production approach is considered to be the main estimation method
for compiling gross domestic product (GDP), as the estimation of production is supported by
the most reliable sources.
7.0.2.2 The estimation of the non-observed economy was attempted the first time in the
second EU Pilot Project in 2002/03 for reference year 2000.
454
The results of this
Overview of the allowances for exhaustiveness
exhaustiveness exercise were fully included in the ESA 1995 and later in the ESA 2010 time
series for the years 1995 to date in the production, income and expenditure approaches.
7.0.2.3 This study of the non-observed economy focused on the basic data sources used in
the compilation of national accounts. Various databases were compared, including the BR,
the Structural Business Statistics (SBS) survey, which at the time was census based rather
than sample based, and the Employment and Training Corporation (ETC) employers’
database. Results of various NSO surveys like SBS were cross-checked with unpublished
official reports compiled by the Tax Compliance Unit which provided an insight on the sales
and profits by type of activity. ‘The Salaries and Benefits Report’, a study carried out by a
private firm, was identified as a source for wages in kind for the private sector. This was
supplemented by a survey on fringe benefits for the general government sector and public
entities where the government is a major shareholder in order to achieve exhaustiveness.
During the first study it was established that national accounts was already inclusive of a
number of adjustments in professions traditionally regarded as potentially understated, e.g.
agriculture, doctors, dentists, lawyers, taxis, teachers holiday flats. Moreover, official labour
figures were already in use in order to ensure exhaustiveness in activities not directly covered
by NSO surveys or administrative sources.
7.0.2.4 With the introduction of NACE90 Rev. 2 in 2011, the SBS was fully integrated in
national accounts. Consequently, a number of service activities (Table 7.0.2.1) which were
previously covered by ad-hoc sources and lacked exhaustiveness are now based on a
structured sampling technique which ensures full coverage of all legal units and entrepreneurs
listed in the BR.
90
Statistical classification of economic activities in the European Community
455
Gross National Income Inventory
Table 7.0.2.1: Services activities covered by SBS since 2011
A*88
NACE Description
37
Sewerage
38
Waste collection, treatment and disposal activities; materials recovery
39
Remediation activities and other waste management services
49
Land transport and transport via pipelines
50
Water transport
51
Air transport
52
Warehousing and support activities for transportation
53
Postal and courier activities
59
Motion picture, video and television programme production, sound recording and music publishing activities
60
Programming and broadcasting activities
75
Veterinary activities
77
Rental and leasing activities
79
Travel agency, tour operator reservation service and related activities
7.0.2.5 Other new data sources include the Labour Cost Survey (LCS) which is now being
used to derive wages in kind.
7.0.2.6 Survey results provided by other units, like SBS, are nowadays cross-checked with
fiscal data which is available at company level.
This information is used to verify
adjustments made for non-response, confirm that the sample was properly weighted at NACE
division level especially with the use of fiscal data for non-financial companies. Fiscal data
are also being used to supplement size class and turnover quartiles which in the opinion of
national accountants are under-represented in SBS survey. Generally any adjustments made
are minor and are included as Data Validation of source data rather than Exhaustiveness
Adjustments.
7.0.2.7 The labour input method is used extensively in activities which are not covered by
NSO surveys or administrative sources. Imputations in the production and generation of
income accounts are based on per capita ratios derived for output, intermediate consumption,
consumption of fixed capital (CFC) and compensation of employees based on available
information in each activity. These ratios are then multiplied by the full-time equivalent
(FTE) gainfully occupied or FTE employees in case of compensation of employees derived
from the ETC employers’ database and to ensure exhaustiveness for the whole activity. This
type of adjustment is particularly relevant for Sections P to S. However, adjustments relating
456
Overview of the allowances for exhaustiveness
to the labour input method are generally reported as part of Extrapolations and Models rather
than Exhaustiveness.
7.0.2.8 The methods used to address Exhaustiveness include:
a) Demand-based methods: The demand-based method was used extensively in case of
Legal persons not surveyed (N4) and Registered entrepreneurs not surveyed (N5) or
in case of where output recorded by producers was found to be much less than that
consumed in the economy. The main source of data used for this approach was the
HBS survey held in 2000 and 2008. Findings were used to correct the output
recorded by producers when this was found to be underreported.
b) Other reconciliation methods involve data confrontation and reconciliation that are
at the core of national accounts compilation.
Confrontation and reconciliation
methods are part of the general national accounts tool and not particular to the quest
for Exhaustiveness. Non-observed activities are precisely the sorts of activities that
give rise to imbalances in the basic data, and conversely, data imbalances provide
evidence of non-observed activities.
c) Expert judgement: Where data was not available to the NSO, in particular for
certain types of illegal activities, estimates were based on data averages and
information obtained from police, non-governmental organisations (NGOs) and
associations. At times data was arrived at after a wide internal discussion within the
NSO.
d) Supplementary, special purpose surveys conducted by the NSO are another tool for
assessing the exhaustiveness of the national accounts. They can take a variety of
forms - surveys of expenditure, income, labour, time use, and opinion. Three special
surveys were carried out in 2004 in order to derive Exhaustiveness Adjustments
incorporated in Economic Accounts of Agriculture (EAA) and to derive estimates
for own final use in Agriculture and internet shopping in 2014. Other special
surveys which are not carried out by NSO but relate mainly to narcotics.
e) Supply-based methods:
This method is mainly utilised for sectors where the
production of goods and services is considered understated. This underreporting of
production can be found by comparing different data sources for production and
457
Gross National Income Inventory
consumption of goods and services. Some of the recent data sources utilised in this
approach are the: Fisheries Census, SBS, and BR.
7.0.2.9 Exhaustiveness Adjustments are integrated in national accounts from time to time
due to exigencies which arise in particular years.
This occurred in 2009 when a new
adjustment was necessary to cover importation of second had cars through dealers. As from
2013, SBS data will no longer cover entrepreneurs with a turnover less than 7,000 Euro.
Consequently, an exhaustiveness adjustment will be introduced across all NACE divisions to
cover these registered entrepreneurs which are no longer surveyed.
During 2015 an
investigation was carried out with respect to the financial sector. The outcome of this
investigation will be integrated in the next benchmark revision.
7.1
Allowances for exhaustiveness in the production approach
7.1.1 Identification of types of non-exhaustiveness (for which adjustments
are needed)
7.1.1.1 Exhaustiveness Adjustments amount to 3.7 per cent of total gross value added
(GVA) at basic prices. National Accounts Unit includes adjustments for:
N1 - Producer deliberately not registering - underground;
N2 - Producers deliberately not registering - illegal;
N3 - Producers not required to register;
N4 - Legal persons not surveyed;
N5 - Registered entrepreneurs not surveyed;
N6 - Producers deliberately misreporting; and
N7 - Other statistical deficiencies.
It is not possible to distinguish Exhaustiveness Adjustments between N4 and N5. The
adjustment relates to industries where it is assumed that it is more likely that registered
entrepreneurs are involved rather than legal persons, consequently all figures are being
presented under the heading N5.
458
Overview of the allowances for exhaustiveness
7.1.1.2 Producer deliberately not registering – underground (N1) relate mainly to producers
which fail to register in order to avoid tax and social security obligations. These are often
small producers with turnovers which exceed the thresholds above which they should register
their income.
The Business Register (BR) does not include producers involved in
underground or illegal activities.
However, these are catered for in national accounts.
Estimates for ‘Producer deliberately not registering’ in N1 relate to furniture production
(Section C – Manufacturing) and domestic help (Section T – Activities of households as
employers).
Identification and adjustments methods used for type N1 include expert
judgment in case of furniture, and demand-based methods in case of domestic and personal
services produced by employing paid domestic staff.
7.1.1.3 Producers deliberately not registering – illegal (N2) relate mainly to producers that
deliberately fail to register as a legal entity or as entrepreneurship because they are involved
in illegal activities. Illegal activities included in national accounts relate to prostitution,
narcotics and illegal gambling. Adjustments for N2 are included in Wholesale and retail
trade; repair of motor vehicles and motorcycles activities (Section G), Arts, entertainment and
recreation activities (Section R) and Other service activities (Section S) respectively.
7.1.1.4 Producers not required to register (N3) relate mainly to producers who are not
required to register because they have no market output and producers which have market
output but on such a small scale that it is below the level at which it is expected to register as
an entrepreneur. Consequently, included in N3 is the production of construction of and
repairs to dwellings by non-market household producers involved in Construction (Section
F). Identification and adjustments methods used for type N3 include demand-based methods
and use is made of expenditure surveys and building permits in the extrapolation.
7.1.1.5 Registered legal persons or entrepreneurs not surveyed (N4/N5) arise when:
a) the
statistical
office
does
not
conduct
a
survey
of
registered
legal
person/entrepreneurs;
b) the registered entrepreneur is not in the list of registered legal person/entrepreneurs
available to the statistical office;
459
Gross National Income Inventory
c) the registered entrepreneur is in a list of registered legal person/entrepreneurs
available to the statistical office but is systematically excluded from any survey of
entrepreneurs; and
d) the entrepreneur is in principle in scope for a survey of entrepreneurs but in practice
is excluded from the survey frame because the classification data (activity code, size
code, geographic code) are incorrect.
An entrepreneur may be registered with an administrative source that is not accessible by the
statistical office, or is accessible but, for some reason, not included in the statistical business
register or other list of producers maintained by the statistical office.
7.1.1.6 This issue is particularly relevant in Malta in relation to accommodation services
including short-stay accommodation in apartments and similar units (NACE91 55.2) and
Other accommodation (NACE 55.9) which comprise of accommodation establishments
catering for slightly longer stay periods such as dormitories and shared rooms catered for
seasonal migrant workers and students. In the future, all accommodation establishments
licensed by the Malta Tourism Authority (MTA) need to be integrated in the BR. Data
obtained from the SBS is relatively low when compared to data obtained from expenditure
surveys.
Consequently, the national accounts data are derived using expenditure based
surveys.
The difference between expenditure based results and the Structural Business
Statistics (SBS) survey is shown in N5. These producers are classified in N5 given that such
producers are obliged to register but are not exhaustively surveyed by National Statistics
Office (NSO).
7.1.1.7 Other activities which are not generally surveyed by NSO include parts of the
Financial and insurance activities (Section K), parts of the Human health and social work
activities (Section Q) and parts of Other service activities (Section S). Even though these
activities are included in the BR, data relating to the production and generation of income
accounts are not collected by NSO. In these activities, data for legal persons not surveyed are
generally covered by annual accounts and financial statements and fiscal data, in which case
data were classified as Administrative Records in the process tables and not included as
Exhaustiveness. Moreover, registered enterprises not surveyed are generally extrapolated
91
NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté
européenne”.
460
Overview of the allowances for exhaustiveness
using per capita ratios derived through administrative sources covering legal persons by type
of activity and employment data derived by activity provided by the Employment and
Training Corporation (ETC) employers’ database. Such estimates have been included as part
of Extrapolations and Models in the process tables.
7.1.1.8 Exhaustiveness Adjustments which have been reported in case of Human health and
social work activities (Section Q) and Other service activities (Section S) are carried out as
legal persons and registered enterprises are not currently surveyed by NSO. Consequently,
national accounts data for registered enterprises such as physicians and the like in Section Q
and for hairdressing and other beauty treatment in Section S are derived from expenditure
based surveys and were included as part of N5.
7.1.1.9 Administrative Records will be used to ensure Exhaustiveness in the Financial and
insurance activities (Section K) mainly through the use of fiscal data. The work on this
financial sector will be incorporated in the next benchmark revision.
7.1.1.10 Producers deliberately misreporting (N6) may under-report gross output and/or overstate intermediate consumption, in order to evade income tax, value added tax (VAT) or other
taxes, or social security contributions. This is done though the maintenance of two sets of
books; payments of envelope salaries, which are recorded as intermediate consumption;
skimming; without bill settlements; and non-payment of VAT.
7.1.1.11 Estimates for Producers deliberately misreporting (N6) is being reported for
furniture production (NACE 31 in Section C), Wholesale and retail trade; repair of motor
vehicles and motorcycles (Section G), Real estate activities (Section L), Food and beverage
service activities (Section I) and Education (Section P) specifically for private tuition.
Identification and adjustments methods used for type N6 include expert judgment in case of
furniture, and demand-based methods in case of Real estate activities (Section L) and
Education (Section P). In case of Food and beverage service activities (Section I) various
data sources are compared in order to derive the estimate for N6. In this case, N6 includes
the difference between the results obtained from the SBS and expenditure based statistics
derived from the Household Budgetary Survey (HBS), the Tourism Expenditure Survey and
the Tourstat survey is reported.
461
Gross National Income Inventory
7.1.1.12 Other statistical deficiencies (N7) covers statistical deficiencies in the data that is
incomplete, not collected or not directly collectable, and data that is incorrectly handled,
processed or compiled by statisticians. Other statistical deficiencies includes estimates for
production for own final use by market producers and tips. Production for own final use by
market producers is spread across various activities while tips are limited to Section I.
7.1.1.13 Estimates for Handling of non-response are not part of N7. National accountants
cross-check survey results with administrative sources in order to make sure that nonresponse was properly tackled at source. Corrections are generally minor and are part of the
Data Validation adjustments in the process tables. Secondary activities are properly covered
in basic sources and thus no such adjustments are included in N7.
7.1.2 Adjustments made for the different types of non-exhaustiveness
7.1.2.1 Table 1A provides an overview of all elements of non-exhaustiveness adjustments
carried out in 2010 in compiling of gross domestic product (GDP) by the output approach.
The adjustments methods used are mainly demand based methods, other reconciliation
methods, expert judgment, supply based methods and special surveys. Table 2A provides
some information on the sources used the identification number enables one to link the rows
in Table 1A and Table 2A.
7.1.2.2 Demand based methods aim at determining production by using indicator data on
specific uses of goods and services. These indicators can be any use of goods and services
that sufficiently describe their production. They could be household final consumption
expenditures of a certain commodity (e.g. health and personal services), uses of major
products as raw materials, exports, or administrative data indicating demand for a product
(e.g. motor vehicle registrations and building permits). After a measure of output has been
obtained, value added estimates can be derived using output/value added ratios, as for supplybased methods.
7.1.2.3 The demand based methods indicated in Table 1A relate mainly to data extracted
from expenditure based surveys like the Household Budgetary Survey (HBS) which is used
for the compilation of Exhaustiveness Adjustments for own production of construction
462
Overview of the allowances for exhaustiveness
relating to repairs to dwellings by non-market household producers involved in Construction
(Section F), Education (Section P), Health and social work activities (Section Q), Other
personal service activities (Section S), and Activities of households as employers (Section T).
The Census of Population and Housing (CPH) is the only data source which provides
information on actual rents paid on residential buildings (Section L).
7.1.2.4 Demand indicators are usually incomplete. Household consumption of personal
services does not cover other uses, such as uses by producers, or exports, but it may include
imports. Therefore, all the possible uses of a given product must be considered. Demandbased methods work best when a product has one major use for which a comprehensive
estimate can be prepared. There are also differences between valuation of uses and output.
All uses are to be valued at purchasers’ prices, while outputs are to be valued at basic or
producers’ prices.
Consequently adjustments are made so as to make sure that the
exhaustiveness measure takes into consideration all other uses (e.g. inclusion of business
lunches)
and
valuation
principals
(e.g.
removing
VAT
in
case
of
tourist
expenditure/hairdressing, etc.) when deriving the output approach from expenditure based
surveys.
7.1.2.5 Other reconciliation methods involve data confrontation and reconciliation that are
at the core of national accounts compilation. Confrontation and reconciliation methods are
part of the general national accounts tool and not particular to the quest for exhaustiveness.
Non-observed activities are precisely the sorts of activities that give rise to imbalances in the
basic data, and conversely, data imbalances provide evidence of non-observed activities.
7.1.2.6 The other reconciliation methods indicated in Table 1A relate mainly to data
extracted from expenditure based surveys like the HBS and the Tourstat (a survey on tourist
expenditure), which are then compared to supply based surveys such as the Structural
Business Statistics (SBS) survey for Accommodation and food services (Section I). The
discrepancy derived between demand and supply has been allocated to N5 in case of
accommodation services and N6 in case of food services. Similarly, in case of second hand
car dealers demand based sources on motor vehicle registrations revealed that as from 2009
there was a deficiency in supply based sources like import data and SBS in Wholesale and
retail trade and repair of motor vehicles and motorcycles. Similarly, in case of Veterinary
activities when SBS results were compared to results obtained from the Economic Accounts
463
Gross National Income Inventory
for Agriculture (EAA) and the HBS, both of which provide an indication from the uses side,
it was revealed that SBS data was too low.
7.1.2.7 Supplementary, special purpose surveys conducted by the National Statistics Office
(NSO) are another tool for assessing the exhaustiveness of the national accounts. They can
take a variety of forms - surveys of expenditure, income, labour, time use, and opinion.
Three special surveys were carried out in 2004 in order to derive Exhaustiveness Adjustments
incorporated in EAA and to derive estimates for own final use in Agriculture. Other special
surveys which are not carried out by National Statistics Office (NSO) relate mainly to
narcotics.
7.1.2.8 When there are no data sources, as a last resort, identification and adjustment can be
based on expert judgement. This method was used in case of Manufacture of furniture
(NACE 31), tips prostitution and illegal gambling.
7.1.2.9 Supply based methods rely on data about the supply of inputs that are used in
producing goods and services. Inputs may include a number of primary raw materials, just
one major raw material, labour, land, fixed capital stock, etc. If data on the supply of one or
several inputs used in a given production activity are available, the total production of the
activity that uses these inputs can be estimated. Supply based methods indicated in Table 1A
relate mainly to data extracted financial statements in order to derive own account production
by market producers and stamp duties which is an indicator used in the compilation of
misreporting by real estate agents.
7.1.2.10 Table 7.1.2.3 illustrates the Exhaustiveness Adjustments for 2010 broken down by:
non-exhaustiveness types (N1 to N7) and by economic activity. This tables summarises the
more detailed data contained in Table 2A and provides information on output, intermediate
consumption and value added.
This table highlights the relative importance of
Exhaustiveness Adjustments for registered entrepreneurs not surveyed.
464
Overview of the allowances for exhaustiveness
Table 7.1.2.1: Table 1A. Elements of non-exhaustiveness: Output approach - for reference year 2010
2
3
4
1
Name
Identification
number (Table
2A)
Needed but not
developed
Detailed breakdown covering all possible elements
of non-exhaustiveness
Insert separate
lines for types
with different
adjustment
methods
Not needed
Table 1A. Elements of non-exhaustiveness: Output approach - for reference year 2010
National accounts components by enterprise
Type of nonAdjustment method
sector, NACE group and size
exhaustiveness
5
6
P1
All units
Section A
N7
Special survey
1
P1
Employment size class 0 to 5
Section C
N1
Expert judgment
2
P2
Employment size class 0 to 5
Section C
N1
Expert judgment
3
P1
Employment size class 0 to 5
Section C
N6
Expert judgment
4
P1
All units
Section C
N7
Supply Based Methods
5
P1
All units
Section D
N7
Supply Based Methods
6
P1
Households
Section F
N3
Demand Based Methods
7
P1
All units
Section G
N6
Other reconciliation methods
8
P2
All units
Section G
N6
Other reconciliation methods
9
P1
All units
Section I
N5
Other reconciliation methods
10
P2
All units
Section I
N5
Other reconciliation methods
11
P1
All units
Section I
N6
Other reconciliation methods
12
P2
All units
Section I
N6
Other reconciliation methods
13
P1
Tips
Section I
N7
Expert judgment
14
P1
All units
Section L
N5
Demand Based Methods
15
P2
All units
Section L
N5
Demand Based Methods
16
P1
All units
Section L
N6
Supply Based Methods
17
P2
All units
Section L
N6
Supply Based Methods
18
P1
All units
Section M
N6
Other reconciliation methods
19
P2
All units
Section M
N6
Other reconciliation methods
20
P1
Unincorporated business
Section P
N6
Demand Based Methods
21
P2
Unincorporated business
Section P
N6
Demand Based Methods
22
P1
Unincorporated business
Section Q
N5
Demand Based Methods
23
P2
Unincorporated business
Section Q
N5
Demand Based Methods
24
P1
Unincorporated business
Section T
N1
Demand Based Methods
25
P1
All units
Section S
N5
Demand Based Methods
26
P2
All units
Section S
N5
Demand Based Methods
27
P1
Illegal – Narcotics
Section G
N2
Special survey
28
P1
Illegal – Prostitution
Section S
N2
Expert judgment
29
P2
Illegal – Prostitution
Section S
N2
Expert judgment
30
P1
Illegal – Gambling
Section R
N2
Expert judgment
31
P2
Illegal – Gambling
Section R
N2
Expert judgment
32
465
Gross National Income Inventory
Table 7.1.2.2: Table 2A. Exhaustiveness adjustment: Output approach - for reference year 2010, in
millions of Euro
466
1
Own account
production
0
OA
1
N7
2
N1
Producer should
have registered
P1
3
N1
Producer should
have registered
P2
4
N6
Producer
deliberately
misreporting
P1
5
N7
6
N7
7
N3
8
N6
9
N6
10
N5
11
N5
12
N6
13
N6
14
N7
15
N5
16
N5
17
N6
18
N6
Own account
production
Own account
production
Own account
production
Producer
deliberately
misreporting
Producer
deliberately
misreporting
Registered
entrepreneurs
not surveyed
Registered
entrepreneurs
not surveyed
Producer
deliberately
misreporting
Producer
deliberately
misreporting
Tips
Registered
entrepreneurs
not surveyed
Registered
Entrepreneurs
not surveyed
Producer
deliberately
misreporting
Producer
deliberately
misreporting
2
P1
P1
P1
P1
3
Section A-All
units
Section CEmployment
size class 0 to
5
Section CEmployment
size class 0 to
5
Section CEmployment
size class 0 to
5
Section C-All
units
Section D-All
units
Section FHouseholds
Relative size
Absolute size
of adjustment
Data sources
NACE code /
type of units
National
accounts
component
Adjustment
name
Type of nonexhaustiveness
Adjustment
identification
number
Table 2A. Exhaustiveness adjustment: Output approach - for reference year 2010, in millions of Euro
% of
component
% of
GDP
5
6
7
8.54
0.0%
0.1%
SBS by size
class
1.01
0.0%
0.0%
SBS by size
class
0.47
0.0%
0.0%
SBS by size
class
6.34
0.0%
0.1%
0.17
0.0%
0.0%
1.31
0.0%
0.0%
HBS
4.46
0.0%
0.1%
4
Special
survey
Financial
statements
Financial
statements
P1
Section G-All
units
Administrat
ive/HICP
11.77
0.1%
0.2%
P2
Section G-All
units
Administrat
ive/HICP
3.31
0.0%
0.1%
P1
Section I-All
units
26.46
0.2%
0.4%
P2
Section I-All
units
15.95
0.1%
0.2%
P1
Section I-All
units
26.50
0.2%
0.4%
P2
Section I-All
units
17.92
0.2%
0.3%
P1
Section I-Tips
2.79
0.0%
0.0%
P1
Section L-All
units
CPH/HICP
48.37
0.3%
0.7%
P2
Section L-All
units
CPH/HICP
8.74
0.1%
0.1%
P1
Section L-All
units
Administrat
ive data
2.28
0.0%
0.0%
P2
Section L-All
units
Administrat
ive data
1.37
0.0%
0.0%
SBS/Expen
diture
surveys
SBS/Expen
diture
surveys
SBS/Expen
diture
surveys
SBS/Expen
diture
surveys
Administrat
ive/HICP
Overview of the allowances for exhaustiveness
Table 7.1.2.2: Table 2A. Exhaustiveness adjustment: Output approach - for reference year 2010, in
millions of Euro (cont...)
1
Producer
deliberately
misreporting
Producer
deliberately
misreporting
0
OA
19
N6
20
N6
21
N6
Producer
deliberately
misreporting
P1
22
N6
Producer
deliberately
misreporting
P2
23
N5
Registered
entrepreneurs not
surveyed
P1
24
N5
Registered
entrepreneurs not
surveyed
P2
25
N1
Producer should
have registered
P1
26
N5
27
N5
28
N2
Illegal - Narcotics
P1
29
N2
Illegal Prostitution
P1
30
N2
Illegal Prostitution
P2
31
N2
Illegal - Gambling
P1
32
N2
Illegal - Gambling
P2
Registered
entrepreneurs not
surveyed
Registered
entrepreneurs not
surveyed
Relative size
Absolute size
of adjustment
Data sources
NACE code /
type of units
National
accounts
component
Adjustment
name
Type of nonexhaustiveness
Adjustment
identification
number
Table 2A. Exhaustiveness adjustment: Output approach - for reference year 2010, in millions of Euro
% of
component
% of
GDP
2
3
4
5
6
7
P1
Section MAll units
SBS vs. EAA
vs. HBS
1.44
0.0%
0.0%
P2
Section MAll units
SBS vs. EAA
vs. HBS
0.72
0.0%
0.0%
HBS/HICP
11.37
0.1%
0.2%
HBS/HICP
0.11
0.0%
0.0%
HBS/HICP
62.53
0.4%
0.9%
HBS/HICP
14.46
0.1%
0.2%
HBS/HICP
17.95
0.1%
0.3%
Section PUnincorpor
ated
business
Section PUnincorpor
ated
business
Section QUnincorpor
ated
business
Section QUnincorpor
ated
business
Section TUnincorpor
ated
business
P1
Section SAll units
HBS/HICP
47.97
0.3%
0.7%
P2
Section SAll units
HBS/HICP
24.50
0.2%
0.4%
Special
survey
10.36
0.1%
0.2%
International
studies
9.25
0.1%
0.1%
International
studies
1.11
0.0%
0.0%
Expert
judgment
0.78
0.0%
0.0%
Expert
judgment
0.04
0.0%
0.0%
Section GIllegal Narcotics
Section SIllegal Prostitution
Section SIllegal Prostitution
Section RIllegal Gambling
Section RIllegal Gambling
467
Gross National Income Inventory
Table 7.1.2.3: Exhaustiveness by activity, 2010, in millions of Euro
Exhaustiveness
P.1
19.0
20.4
4.5
0.0
185.3
59.7
12.8
Total
Exhaustiveness
301.7
P.2
0.5
1.1
0.0
0.0
63.6
23.4
0.0
88.7
B.1g
18.5
19.2
4.5
0.0
121.7
36.3
12.8
213.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
8.5
0.0
8.5
8.5
0.0
8.5
ESA 2010 Code
A*21
N1
N2
N3
N4
N5
N6
N7
A
P.1
P.2
B.1g
B
P.1
P.2
B.1g
c
c
c
C
P.1
P.2
B.1g
1.0
0.5
0.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
6.3
0.0
6.3
0.2
0.0
0.2
7.5
0.5
7.1
D
P.1
P.2
B.1g
c
c
c
E
P.1
P.2
B.1g
c
c
c
F
P.1
P.2
B.1g
0.0
0.0
0.0
0.0
0.0
0.0
4.5
0.0
4.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.5
0.0
4.5
0.0
0.0
0.0
10.4
0.0
10.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
11.8
3.3
8.5
0.0
0.0
0.0
22.1
3.3
18.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
26.5
15.9
10.5
26.5
17.9
8.6
2.8
0.0
2.8
55.8
33.9
21.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
G
P.1
P.2
B.1g
H
P.1
P.2
B.1g
I
P.1
P.2
B.1g
J
P.1
P.2
B.1g
K
P.1
P.2
B.1g
c
Confidential
468
Overview of the allowances for exhaustiveness
Table 7.1.2.3: Exhaustiveness by activity, 2010, in millions of Euro (cont...)
Exhaustiveness
ESA 2010 Code
A*21
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
L
P.1
0.0
0.0
0.0
0.0
48.4
2.3
0.0
50.7
P.2
0.0
0.0
0.0
0.0
8.7
1.4
0.0
10.1
B.1g
0.0
0.0
0.0
0.0
39.6
0.9
0.0
40.5
P.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
P.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
B.1g
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
P.1
0.0
0.0
0.0
0.0
0.0
1.4
0.0
1.4
P.2
0.0
0.0
0.0
0.0
0.0
0.7
0.0
0.7
B.1g
0.0
0.0
0.0
0.0
0.0
0.7
0.0
0.7
P.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
P.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
B.1g
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
P.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
P.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
B.1g
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
P.1
0.0
0.0
0.0
0.0
0.0
11.4
0.0
11.4
P.2
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.1
B.1g
0.0
0.0
0.0
0.0
0.0
11.3
0.0
11.3
P.1
0.0
0.0
0.0
0.0
62.5
0.0
0.0
62.5
P.2
0.0
0.0
0.0
0.0
14.5
0.0
0.0
14.5
B.1g
0.0
0.0
0.0
0.0
48.1
0.0
0.0
48.1
P.1
0.0
0.8
0.0
0.0
0.0
0.0
0.0
0.8
P.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
B.1g
0.0
0.7
0.0
0.0
0.0
0.0
0.0
0.7
P.1
0.0
9.3
0.0
0.0
48.0
0.0
0.0
57.2
P.2
0.0
1.1
0.0
0.0
24.5
0.0
0.0
25.6
B.1g
0.0
8.1
0.0
0.0
23.5
0.0
0.0
31.6
P.1
18.0
0.0
0.0
0.0
0.0
0.0
0.0
18.0
P.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
B.1g
18.0
0.0
0.0
0.0
0.0
0.0
0.0
18.0
_L
M
N
O
P
Q
R
S
T
469
Gross National Income Inventory
Table 7.1.2.3: Exhaustiveness by activity, 2010, in millions of Euro (cont...)
Exhaustiveness
ESA 2010 Code
A*21
N1
N2
N3
N4
N5
N6
N7
Total
Exhaustiveness
D.21
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
D.211
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
D.212
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
D.213
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
D.31
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
B.1*g
18.5
19.2
4.5
0.0
121.7
36.3
12.8
213.0
Contribution to
GDP in %
0.3
0.3
0.1
0.0
1.8
0.5
0.2
3.2
7.1.3 Exhaustiveness methods
7.1.3.1 The following section will provide details of the exhaustiveness methods applied to
address the identified elements and types of non-exhaustiveness.
N1 - Producer deliberately not registering – underground
7.1.3.2 Estimates for ‘Producer deliberately not registering’ in N1 relate to furniture
production (Section C – Manufacturing) and domestic help (Section T – Activities of
households as employers). Identification and adjustments methods used for type N1 include
expert judgment in case of furniture, and demand-based methods in case domestic and
personal services produced by employing paid domestic staff.
Manufacturing
7.1.3.3 As mentioned in para. 3.9.21, it is believed that a number of unregistered
entrepreneurs who operate in the Manufacture of furniture fail to register due to the
occasional nature of the work undertaken. It is very difficult to operate such a business
without some form of license or permit in a residential area. However, an adjustment is done
based on per capita ratios derived from SBS data for the smallest size class i.e. the 0 to 5
employed persons. On an annual basis the SBS result of output for this size class is adjusted
upwards by 10 per cent.
Intermediate consumption is equivalent to the intermediate
consumption to output ratio derived for the same size class in each particular year. The
impact of this exhaustiveness adjustment in 2010 amounted to 0.5 million Euro.
470
Overview of the allowances for exhaustiveness
Activities of households as employers of domestic personnel
7.1.3.4 Supply-side sources for Activities of households as employers of domestic personnel
are not available.
Even the Employment and Training Corporation (ETC) employers’
database is not considered reliable for this activity. It is a known fact that there are several
self-employed workers who provide services related to this activity fail to register. These
include mainly maids, who offer their services to households and are paid an hourly rate.
These are normally employed for a few hours a week. It is assumed that workers in this
section are all self-employed. It is assumed that expenditure by households on domestic help
is equivalent to the output generated by these entrepreneurs.
Estimates are based on
expenditure sources these being the HBS 2000 and HBS 2008. From the HBS the following
items were taken into consideration:

Supply services of domestic help personnel (e.g. butlers, babysitting);

Employed persons for domestic help (maid, cooks, governesses); and

Gardening services not in connection with co-proprietor charges.
7.1.3.5 For the following years figures were derived by taking harmonised index of
consumer prices (HICP) growth rate of domestic services and household services and taking
2008 as fixed since latest HBS refers to 2008. A mark-up of 5 per cent was included to
account for the increased use of such service since more persons are making use of domestic
personnel. Intermediate consumption for this type of activity is assumed to be negligible
since all the cleaning equipment and materials are generally provided by the household
employing the person.
N2 - Producers deliberately not registering - illegal
7.1.3.6 Illegal activities included in national accounts relate to narcotics, illegal gambling,
and prostitution. These are included in Wholesale and retail trade; repair of motor vehicles
and motorcycles activities (Section G), Gambling and betting activities (Section R), and
Other personal service activities (Section S) respectively.
Narcotics
7.1.3.7 The main data sources for the compilation of illegal substances include:
471
Gross National Income Inventory

Licit and illicit drug use in Malta 2001, Korf and Benshop, University of
Amsterdam, Bonger Institute of Criminology, February 2002;

National Report to the European Monitoring Centre for Narcotics and Drug
Addiction, Reitox National Focal Point Malta, National Commission on the Abuse
of Narcotics, Alcohol and Other Dependencies, National Focal Point for Narcotics
and Drug Addiction (various years); and

Lifestyle Survey 2007, NSO, 2009.
7.1.3.8 The illicit drug estimate initiates from the population figure of residents in the age
bracket of 18 to 65 years. This figure is available directly from the Population and Tourism
Statistics Unit. A ratio of 3.2 per cent is extracted from the 2007 NSO lifestyle survey which
represents the last year prevalence rate of residents of Malta aged 18 to 65. This ratio is
applied to this specific population in order to derive the population of residents who made use
of any kind of drug during a calendar year.
7.1.3.9 A breakdown of this figure by drug type is calculated according to the 2001 illicit
drug survey except for Heroin. The 2001 Licit and illicit drug use was used extensively for
the period 1995 to date to determine the amount of drug users with respect to Cannabis,
Cocaine, Amphetamines, Ecstasy and LSD. A new update of this survey became available in
2015.
7.1.3.10 The initial results of this particular survey revealed that the last year prevalence year
of Heroin, Cocaine, Cannabis, Ecstasy, LSD and Amphetamine were 0.1 per cent, 0.3 per
cent, 0.8 per cent, 0.2 per cent, 0.1 per cent and 0.04 per cent respectively (Licit and illicit
drug use in Malta 2001, pg. 50 – 52). The prevalence year for heroin was ignored due to
better sources while the prevalence year of cocaine and cannabis was extrapolated forward
according to the data on trends of treated clients provided by several drug treatment providers
over the years (e.g. National Report 2012, pg. 36).
7.1.3.11 These prevalence rates for Cocaine, Cannabis, Ecstasy, LSD and Amphetamines are
applied to the population figure of 18-65 years old and the result is available in rows 10-14.
472
Overview of the allowances for exhaustiveness
7.1.3.12 The sum of drug users derived from the last year prevalence rates is usually less than
the figure derived from the lifestyle survey ratio. Hence, drug users for all the narcotics
excluding Heroin is topped up.
7.1.3.13 Data on Heroin users is available almost on a yearly basis from the National Report
to the European Monitoring Centre for Drugs and Drug Addiction. The estimate of the total
Heroin users is available directly from the annual report (e.g. National Report 2012, pg. 7))
referred to as ‘problem-drug use’ estimated using capture-recapture sampling, based on data
from Maltese daily opiate users attending treatment service.
7.1.3.14 The total population by type of drug has been adjusted as follows:

drug users undergoing treatment are deducted, however, it is assumed that 2 per cent
of these still buy occasionally from the market;

an amount of one-time yearly users is also deducted; and

drug users are subdivided into occasional and regular users by type of narcotics.
7.1.3.15 An adjustment is made to eliminate the number of one time users who consumed
some kind of drug during that particular year but are neither regular users nor occasional
users. The number of Cocaine users is topped down by 15 per cent, Cannabis users are
topped down by 40 per cent while ecstasy, LSD and Amphetamines are topped down by 10
per cent. There is no adjustment for Heroin as heroin is regarded as a very addictive drug and
there are generally no one time users, nor occasional users. This adjustment is based on data
obtained from ISTAT (Measuring Illegal Activities – Italy).
7.1.3.16 The next step is to distribute these ‘net’ drug users between Regular users and
Occasional users. Heroin users were all placed as regular users due to the nature of the drug
consumed while users of other narcotics were distributed 16 per cent and 84 per cent for
regular users and occasional users, respectively. This adjustment is based on data obtained
from ISTAT (Measuring Illegal Activities – Italy).
7.1.3.17 An adjustment is also done for drug users undergoing treatment as these do not buy
narcotics from the market, however, it is assumed that 2 per cent of these still buy
occasionally from the market. The number of treated clients is extracted from the National
473
Gross National Income Inventory
Report 2012 pg. 36 and these clients are not treated as regular clients as they are generally on
substation treatment (methadone). Hence they do not consume illegal narcotics. A further
adjustment is made to account for those clients who are in substitute treatment but who still
secretly consume (2 per cent). The existence of such clients was confirmed with drug-related
treatment non-governmental organisation (NGOs).
7.1.3.18 The sum of regular users (less clients in treatment, plus clients who secretly
consume) for each drug type was multiplied with the quantities and frequencies in Table
7.1.3.1. Similarly, the sum of occasional users for each drug type was multiplied with the
quantities and frequencies in Table 7.1.3.1.
Table 7.1.3.1: Consumption pattern
Drug
Regular users
Frequencies (days)
Occasional users
Quantity
Frequencies (days)
Quantity
Heroin
251
0.5
0
0
Cocaine
52
2.5
12
2.5
Cannabis
40
1
12
1
Ecstasy
40
1
12
1
LSD
40
1
12
1
Amp.
40
1
12
1
7.1.3.19 The consumption trends used in this assumption were according to the hypothesis by
Mazzager for Heroin, a German study for Cocaine and hypotheses used by ISTAT were
applied for the rest.
These figures were also verified by local NGOs and considered
reasonable.
7.1.3.20 This calculation leads to the total amount of grams and is then multiplied by the
average street prices by type of drug. Prices are obtained from the various editions of the
National Report to the European Monitoring Centre for Narcotics and Drug Addiction. These
street prices are also available in the annual report (e.g. National Report 2012, pg. 11).
Ultimately this provides the total consumption to be included in the private household
consumption expenditure.
7.1.3.21 Law enforcement officers and various agencies confirmed that no actual production
facilities for narcotics exist in Malta. This implies that narcotics are imported.
474
Overview of the allowances for exhaustiveness
7.1.3.22 Table 7.1.3.2 indicates the impact on the three approaches GDP approaches.
Consequently in the production approach the margins are included in output of Section G.
The expenditure approach will include the total value of narcotics consumed in private
household consumption expenditure and the import value at the wholesale price. Indications
with respect to margins will be based on international wholesale prices as against street prices
of southern Mediterranean countries.
7.1.3.23 There is no data available regarding to the profit margin of the importer. Hence the
ratios used by ISTAT were applied to Malta, as it was assumed that due to proximity, the
connections that Maltese drug importers use are the same as those in Italy.
Table 7.1.3.2: Impact on GDP and GNI – Narcotics, 2010, in millions of Euro
ESA 2010 Variable description
ESA 2010 Code
2010
10
PRODUCTION APPROACH
1
Output of goods and services (at basic prices)
P.1
2
Intermediate consumption (at purchasers' prices)
P.2
3
Gross value added (at basic prices)
B.1G
4
Taxes on products
D.21
5
Subsidies on products
D.31
6
Total final consumption expenditure
10
EXPENDITURE APPROACH
P.3
16
16
7
Household final consumption expenditure
P.3
8
NPISH final consumption expenditure
P.3
9
General government final consumption expenditure
P.3
10
Gross capital formation
P.5
11
Gross fixed capital formation
P.51
12
Changes in inventories
P.52
Acquisitions less disposals of valuables
P.53
13
14
Exports of goods and services
P.6
15
Imports of goods and services
P.7
16
Compensation of employees
17
Gross operating surplus and mixed income
5
INCOME APPROACH
D.1
B.2G+B.3G
18
Taxes on production and imports
D.2
19
Subsidies
D.3
20
Gross domestic product
21
22
Transition from GDP to GNI
Compensation of employees received from the rest of the world
Compensation of employees paid to the rest of the world
D.1
D.1
23
Taxes on production and imports paid to the institutions of the EU
D.2
B.1*G
24
Subsidies received from the institutions of the EU
D.3
25
Property income received from the rest of the world
D.4
26
Property income paid to the rest of the world
D.4
27
Gross national income
B.5*G
10
10
10
475
Gross National Income Inventory
Prostitution
7.1.3.24 Malta estimates prostitution from the supply-side.
In the case of the Maltese
context, data sources are very limited and do not fit national accounts purposes. For this
reason, it was not possible to make a separate estimate for different types of prostitution (e.g.
street, brothel, apartment, club) as requested by the GNIC/230 on illegal activities in national
accounts. The same situation applies for the share consumed by resident and non-resident
prostitutes.
7.1.3.25 Output estimates for prostitution are derived from calculations which were based on
population figures, the average number of prostitutes and statistics of other European
countries.
7.1.3.26 The European Network for HIV/STD Prevention in Prostitution provides data on the
number of prostitutes at country level (Table 7.1.3.3).
Table 7.1.3.3: Scale of prostitution in Europe
Country
Population
Austria (Vienna)
million
8 (2)
unknown (6,000)
(5,400)
Belgium
million
10
12,000
5,500
Denmark
million
5
6,000
2,000
France
million
59
Finland
million
6
4,000
1,800
Germany
million
80
300,000
150,000
Greece
million
11
10,500 –15,000
6,000 –10,000
Holland
million
16
25,000
17,000
Ireland
million
4
Italy
million
58
60,000
40,000
450,000
300
300
3,000
600
Luxembourg
Population
Number of prostitutes
(Norway)
million
4.5
Portugal
million
10.5
Spain
million
40
Sweden
million
8.5
2,500
700
UK
million
60
80,000
20,000
Blank cells indicate the figure is unknown, or an accurate estimate has not been arrived at.
Source: http://people.exeter.ac.uk/watupman/undergrad/aac/scale.htm
476
Of which migrant
Overview of the allowances for exhaustiveness
7.1.3.27 This information was used to derive estimates for Malta based on the average
number of prostitutes in these countries. According to this information it was estimated that
0.11 per cent of the population may be engaged in prostitution (Table 7.1.3.4).
Table 7.1.3.4: Number of prostitutes in Malta in thousands
Year
Total population of the Maltese Islands
Number of prostitutes
1995
377.785
0.426
1996
379.998
0.429
1997
382.787
0.432
1998
385.269
0.435
1999
387.485
0.437
2000
389.962
0.440
2001
393.095
0.443
2002
395.933
0.447
2003
398.567
0.450
2004
401.161
0.452
2005
403.797
0.455
2006
405.251
0.457
2007
406.738
0.459
2008
409.375
0.462
2009
412.452
0.465
2010
414.470
0.467
2011
416.272
0.469
2012
419.442
0.473
2013
423.359
0.477
2014
427.425
0.482
7.1.3.28 An estimate on the likely earnings from this activity was estimated accordingly. No
direct information is available with respect to earnings in Malta and thus it was assumed that
the earnings are equivalent to the minimum wage. It was also assumed that procurers earn
double the amount earned by a prostitute.
7.1.3.29 These estimates were included in output approach and the expenditure approach
with the introduction of ESA 2010 in as from September 2014. The overall effect on GDP
and gross national income (GNI) is presented in Table 7.1.3.5.
477
Gross National Income Inventory
Table 7.1.3.5: Impact on GDP and GNI – Prostitution, 2010, in millions of Euro
ESA 2010 Variable description
ESA 2010
Code
2010
P.1
9
PRODUCTION APPROACH
1
Output of goods and services (at basic prices)
2
Intermediate consumption (at purchasers' prices)
3
Gross value added (at basic prices)
B.1G
P.2
4
Taxes on products
D.21
5
Subsidies on products
D.31
9
EXPENDITURE APPROACH
6
Total final consumption expenditure
P.3
9
9
7
Household final consumption expenditure
P.3
8
NPISH final consumption expenditure
P.3
9
General government final consumption expenditure
P.3
10
11
Gross capital formation
P.5
Gross fixed capital formation
P.51
12
Changes in inventories
P.52
13
Acquisitions less disposals of valuables
P.53
14
Exports of goods and services
P.6
15
Imports of goods and services
P.7
INCOME APPROACH
16
Compensation of employees
17
Gross operating surplus and mixed income
D.1
18
Taxes on production and imports
D.2
19
Subsidies
D.3
20
Gross domestic product
B.2G+B.3G
B.1*G
9
9
Transition from GDP to GNI
21
Compensation of employees received from the rest of the world
D.1
22
Compensation of employees paid to the rest of the world
D.1
23
Taxes on production and imports paid to the institutions of the EU
D.2
24
Subsidies received from the institutions of the EU
D.3
25
Property income received from the rest of the world
D.4
26
Property income paid to the rest of the world
D.4
27
Gross national income
B.5*G
9
Gambling
7.1.3.30 Two adjustments are included in relation to Gambling and betting activities (NACE
92). An adjustment is added to output and gross value added for underground 'tombola' and
lottery tickets (prima estratta) by unregistered establishments.
7.1.3.31 The estimate of the sale of bingo tickets is based on the number of tombola licence
holders (286 in 2000; 343 in 1999), derived from the annual report of the former Department
478
Overview of the allowances for exhaustiveness
of Public Lotto (DPL). The registered number of tombola licence holders was raised by an
expert estimate to cover all sellers of tombola tickets that are not registered with the DPL,
and multiplied by an average turnover per seller to yield total turnover. Finally, only 50 per
cent of this estimate was taken into consideration, as part of this turnover is covered by other
institutional sectors, namely non-profit institutions serving households (NPISHs) in fundraising activities. Intermediate consumption of these units is estimated at 1 per cent of
market output annually. The amount of licence fees actually paid, have been added to this
estimate of intermediate consumption, as reported within the annual report of the DPL.
7.1.3.32 The estimate of the sale of ‘prima estratta’ tickets was calculated by multiplying the
total number of unregistered sellers of such tickets, by the average price per ticket sold and
the average number of tickets sold in a given year. These variables were estimated by expert
assessment. From this total estimated turnover, an estimate of the winnings paid out was
deducted, as the market output of gambling and betting activities should be recorded net of
winnings paid out. Only 50 per cent of this estimate was taken into consideration, as part of
this turnover is covered by other institutional sectors. Intermediate consumption is estimated
at 5 per cent of total turnover (not output net of winnings). This is also based on expert
assessment.
Smuggling
7.1.3.33 In 2015 it was established that an exhaustiveness adjustment is not necessary with
respect to smuggling of tobacco and alcoholic products. The following paragraphs will
provide some information on the data source and methodology used to analyse smuggling.
Tobacco
7.1.3.34 The main data sources used to establish the need of an exhaustiveness adjustment is
needed for tobacco include:

Project Sun, A study of the illicit cigarette market in the European Union, 2013
Results 2013, KPMG, Downloaded from:
http://www.pmi.com/eng/media_center/media_kit/documents/sun%20report%2020
13.pdf on February 19, 2015;
479
Gross National Income Inventory

Towards a greater understanding of the illicit tobacco trade in Europe: a review of
the PMI funded ‘Project Star’ report, Anna B Gilmore, Andy Rowell, Silvano
Gallus, Alessandra Lugo, Luk Joossens, Michelle Sims, Downloaded from:
http://tobaccocontrol.bmj.com/
on
February
18,
2015
-
Published
by
group.bmj.com;

EU told to double tax on smoking, Times of Malta 8 May 2012, Downloaded from:
http://www.timesofmalta.com/articles/view/20120508/local/EU-told-to-double-taxon-smoking.418872 on February 19, 2015; and

Non-observed economy in national accounts, Survey of country practices, United
Nations (UN).
7.1.3.35 Following a legal agreement with the EU, Phillip Morris International commissions
a yearly report on European illicit cigarette trade from KPMG, the global accountancy firm
for 2006 to 2013. The country reports provide information on the number of cigarettes which
are legally sold in the domestic market, an estimate of the non-domestic legal flows i.e. and
the estimates of counterfeit and contraband cigarettes.
7.1.3.36 In order to assess the reliability of the study, the first step was to compare the legal
domestic sales with the household final consumption expenditure (HFCE) in the domestic
market. This was done by multiplying number of cigarettes legally sold in the domestic
market derived from the study by the price of a packet of (20) cigarettes in Malta. The
average price for 2012 was obtained from a local newspaper and the HICP was used to derive
the price per packet for the period 2004 to 2014. The deviations may be viewed in Table
7.1.3.6.
Only the estimate for 2006 which was the first year of this report deviates
considerably from the current national accounts calculations. Thus, the NSO decided that
this report will be used to the calculation of smuggling of tobacco.
480
Overview of the allowances for exhaustiveness
Table 7.1.3.6: Legal domestic sales versus HFCE in the domestic market
2006
2007
2008
2009
2010
2011
2012
2013
Legal domestic
sales
Billion
cigarettes
0.535
0.535
0.535
0.539
0.55
0.52
0.505
0.463
Price per packet
according to NSO
Euro
3.41
3.41
3.45
3.63
3.83
4.02
4.20
4.43
KPMG Legal
domestic
consumption
Thousand
Euro
91,326
91,326
92,356
97,944
105,257
104,414
106,050
102,603
HFCE in the
domestic market
Thousand
Euro
109,953
88,651
98,199
99,876
103,041
107,429
114,219
112,534
(18,627)
2,675
(5,844)
(1,931)
2,216
(3,015)
(8,169)
(9,931)
Underestimation
by KPMG
7.1.3.37 The estimate for counterfeit and contraband cigarettes was extracted by multiplying
the number of cigarettes by the price of legally sold cigarettes excluding taxes. Reference
could be made to Table 7.1.3.7. The price of legally sold cigarettes excluding taxes was
derived from a local newspaper and the HICP was used to derive the price per packet for the
period 2004 to 2014. This price was adjusted to remove the official trade margin which in
Malta amounts to around 4 per cent to a higher one to cover smuggled goods.
No
information is available on such margins thus an estimate was derived using information
supplied by Poland in the UN publication (pg. 227) on the non-observed economy. In case of
Poland the official trade margin is of around 9 per cent while that of smuggled goods is of 85
per cent. Given that in Malta the official margin is almost half that of Poland it was decided
to adjust the margin for smuggled goods down to 38 per cent. The ultimate price derived is
slightly higher than half the official prices inclusive of taxes. This was cross-checked with
actual street prices.
7.1.3.38 The impact of smuggling will be shown in final household consumption expenditure
and imports in the expenditure approach and the margins in the output approach. The
estimate which will be recorded in final household consumption expenditure is thus
equivalent to the number of cigarettes smuggled multiplied by the price inclusive of the
margin for smuggled goods. The value of imports is equivalent to the price of cigarettes
excluding taxes and margins (Table 7.1.3.8).
481
Gross National Income Inventory
Table 7.1.3.7: Comparison of data sources for tobacco
Tota l ma nufa c ture d c iga re tte c onsumption: S ourc e :• P roje c t S un, A stud y of the illic it c iga re tte ma rke t
in the Europe a n Union, 2 0 13 Re sults 2 0 13 , KP MG , pg. 2 10
TO TAL MALTA CO NS UMP TIO N
Billion c iga re tte s
Legal domestic sales
Outflows
Le ga l d ome stic c onsumption
Non- domestic legal [ND(L)]
Counterfeit and c ontraband (C&C)
Tota l c onsumption
2004
0.535
- 0.035
0.5
0.003
0.04
0.543
2005
0.535
- 0.035
0.5
0.003
0.04
0.543
2006
0.535
- 0.035
0.5
0.003
0.04
0.543
2007
0.535
- 0.04
0.495
0.007
0.035
0.537
2008
0.535
- 0.052
0.483
0.007
0.034
0.524
20 c igaretees per pac ket
Pric e per pac ket ac c ording to KPMG
KPMG Legal domestic c onsumption
Number
€
€' 000
20
3.25
86,981
20
3.31
88,493
20
3.31
88,499
20
3.31
88,499
20
3.35
89,497
Pric e per pac ket ac c ording to NSO
of whic h Tax per pac ket
KPMG Legal domestic c onsumption
€
€
€' 000
3.36
2.04
89,759
3.41
2.07
91,319
3.41
2.07
91,326
3.41
2.07
91,326
3.45
2.10
92,356
P HC in the dome stic ma rke t
of whic h taxes:
€' 000
€' 000
9 5 , 7 18
96,348
110 , 17 0
98,912
10 9 , 9 5 3
98,256
88,651
74,470
9 8 , 19 9
79,213
Underestimation by KPMG
7%
HICP
235.90
a % of legal domestic c onsumption
Pric e exc l. Tax of C&C
C&C
margin of C&C
34>33]
Consumer expenditure
Imports
Margins
Pric e exc l. Tax of C&C
C&C
margin of C&C
Poland offic ial margin*
Poland smuggling margin*
7%
€' 000
€' 000
€' 000
€' 000
240.00
7%
20%
240.02
7%
- 3%
240.02
7%
6%
242.72
6%
2,636
2,535
3,493
6,711
2,682
2,579
3,553
6,828
2,682
2,579
3,554
6,828
2,347
2,257
3,109
5,975
2,306
2,217
3,055
5,869
3,493
2,535
958
3,553
2,579
974
3,554
2,579
974
3,109
2,257
853
3,055
2,217
838
1.32
1.27
1.75
52%
1.34
1.29
1.78
5