Making the Business Activities Survey even more useful

The RDTL Directorate-General of Statistics (DGS) has published Business Activities Surveys for 2010 and 2011, and the 2012 edition will be released this month.  Two weeks ago, DGS invited users of this data to discuss possible changes for the questionnaire for the 2013 Survey,  which will be conducted in early 2014. After a lively discussion with MoF, ADB, SEPFOPE, ILO, UNFPA, La'o Hamutuk, the Australian Bureau of Statistics and others, DGS invited written suggestions. The rest of this blog is an abridged version of La'o Hamutuk's submission.

Suggestions for revisions to the Business Activities Survey

La’o Hamutuk, as a Timor-Leste civil society organization which tries to understand Timor-Leste’s economy and encourage sustainable, equitable development, is grateful for the invitation from the Directorate-General for Statistics to join the discussion about the Business Activities Survey (BAS). As you know, we often use DGS research and publications, including the BAS, and find them very valuable.

The BAS is essential to a solid understanding of Timor-Leste’s macro- and micro-economy. Enhancing the BAS could provide better information about critical issues here, including:

• Import dependency (we have a 95% trade deficit)
• The effect of public spending (which underlies about half our non-oil GDP)
• The all-important productive, non-oil, non-state-funded, private sector (which is currently very small but needs to grow rapidly)
• How much of Timor-Leste’s wealth stays in the country? (Most of the revenue from our declining petroleum reserves goes out of Timor-Leste.)

Large businesses comprise most of Timor-Leste’s GDP. As small businesses may have difficulty completing a sophisticated questionnaire, we believe that DGS’s current use of separate questionnaires for small and large businesses should continue, and our suggestions are for the longer one.

It would be useful to expand the portion of the economy covered by the BAS to include international agencies, non-profit organizations and public institutions, which are significant portions of Timor-Leste’s employment and economic activity. In addition, a separate survey of the informal sector, which involves more than 2/3 of the working-age population, would be invaluable in understanding how to develop our economy.

The BAS can help confirm or identify discrepancies in other data. Therefore, it is important to collect data independently as much as practical, rather than relying on other sources.

It would be useful to know what percentages of businesses are owned by foreigners and what percentage by Timorese nationals. Can the BAS find out what portion of equity is owned by Timorese entities and by non-Timorese? Since preferential contracting is one of the ways that the Government honors veterans for their service to the nation, it would also be interesting to know how many companies are owned by veterans, how they contribute to various sectors, and if their statistics are significantly different from non-veteran companies.

Some of the "Business Type" categories are too broad and should be disaggregated.

Are people who do unpaid labor (due to family obligations or in exchange for housing, tuition, a commission, etc.) considered as employees? They are a large part of Timor-Leste’s labour force.

At present, Timor-Leste’s non-petroleum export sector is very small, according to Trade Statistics reports (although we worry that some exports may not be counted in these reports). It would be interesting to ask what portion of sales of goods is to customers outside Timor-Leste or who intend to sell the goods overseas. Since expanding TL’s exports is often mentioned as a goal for economic development, this would provide a baseline from which it could be measured, expanding and/or cross-checking the Trade Statistics.

Approximately half of Timor-Leste’s “non-oil” economy is fuelled by public spending (90% of which comes from oil money). It would be useful to know, for each business, how much of their income comes from:

• RDTL Government contracts or purchases
• Other companies implementing RDTL Government contracts (to identify subcontractors)

For labour costs, it would be interesting to disaggregate Timorese and foreign nationals. In the 2011 BAS (page 5), 22% of total expenses are listed as “other expenses,” which would be good to disaggregate. For purchases, it would be interesting to know:

• How much was imported directly by the business?
• How much was produced overseas but purchased from a local importer or other business?

The BAS doesn’t ask directly about profits, but they can be calculated by subtracting outlays from income. Capital flight is a problem in all developing countries, and a particularly severe one here where our national wealth is finite and shrinking. Timorese businesspeople often complain about difficulties in raising capital, while foreign contractors repatriate large portions of public disbursements to their home countries. Is there a way for the BAS to ask how much money is taken out of the country by business owners, in addition to what they spend on expenses?

It would be good to ask if goods and materials purchased for capital investment came from Timor-Leste or from overseas.The current questions are not clear, and perhaps a category should be added to cover purchases of imported assets from a local supplier.