Impact of higher tobacco tax on output and employment in Vietnam

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SOUTHEAST ASIA INITIATIVE ON TOBACCO TAX (SITT)
Impact of higher tobacco tax
on output and employment in Vietnam
NGUYEN THI THU HIEN
Faculty of Economics, University of Commerce
GIANG THANH LONG
Institute of Public Policy and Management, National Economics University
PHAM NGOC TOAN
Institute of Labour Science and Social Affairs, MoLISA
June 2014
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TABLE OF CONTENTS
EXECUTIVE SUMMARY ................................................................................................... 4
I. INTRODUCTION OF THE RESEARCH .................................................................... 6
1. Background ............................................................................................................... 6
2. Research objectives and questions .......................................................................... 9
2.1. General objective .................................................................................................... 9
2.2. Specific objectives .................................................................................................. 9
2.3. Research questions ................................................................................................. 9
3. Research structure .................................................................................................. 10
II. LITERATURE REVIEW ............................................................................................ 10
III. METHODOLOGY AND DATA ............................................................................. 13
1. Estimation framework, estimation steps and assumptions ................................. 13
2. Detailed estimations of studied indicators ............................................................ 14
3. Data .......................................................................................................................... 16
IV. FINDINGS AND DISCUSSION ............................................................................. 17
1. Impacts of tobacco tax on households’ final consumption ................................. 17
2. Contribution of tobacco industry to employment ............................................... 19
2.1. Contribution of Tobacco Cultivation Sector ........................................................... 19
2.2. Contribution of Tobacco Manufacture Sector ....................................................... 20
2.3. Contribution of Tobacco Distribution Sector ......................................................... 21
2.4. Contribution of Tobacco Industry to National Employment ................................. 21
3. Contribution of the tobacco manufacture in national output ............................ 22
4. Impacts of tobacco tax on national output and employment ............................. 23
V. CONCLUDING REMARKS AND COMMENTS ..................................................... 27
VI. LIMITATIONS OF THIS STUDY .......................................................................... 28
REFERENCES .................................................................................................................... 29
APPENDICES ..................................................................................................................... 30
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LIST OF FIGURES
Figure 1. Estimation framework .......................................................................................... 14
LIST OF TABLES
Table 1. Twenty-two sectors in IO Table ............................................................................ 16
Table 2. Studied indicators and their sources ...................................................................... 17
Table 3. Change in household’ final consumption of goods and services due to 20-percent
and 40-percent increase in excise tax on tobacco ................................................................ 18
Table 4. Employment in Tobacco Cultivation Sector, Vietnam, 2000 - 2010 ................... 20
Table 5. Labor in Tobacco Manufacture Sector, Vietnam (2000 – 2010)........................... 21
Table 6. Number of employment created by the cigarette trade sector, Vietnam 2010 ...... 21
Table 7. Employment by Sectors, Vietnam, 2010 ............................................................... 21
Table 8. Gross output by sector, Vietnam, 2010 ................................................................. 23
Table 9. Impacts of tax changes on national output ............................................................ 24
Table 10. Impacts of tax changes on national employment ................................................ 26
LIST OF APPENDICES
Appendix 1. I-O Model Description .................................................................................... 30
Appendix 2. Inverse IO Matrix............................................................................................ 34
Appendix 3. Employment–Output Ratio, Vietnam, 2010 ................................................... 35
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EXECUTIVE SUMMARY
Rationales
There are two opposite points of view of tobacco control exist in Viet Nam. The first
group (such as social policy makers, tobacco control activists, health care professionals,
and even tobacco users) believes that tobacco control measures should be reinforced to
decrease tobacco consumption and its consequences. One of these measures is higher tax
of tobacco. On average, taxes on cigarettes accounts for almost 45 percent of the
cigarette’s retail price, which is much lower than many other countries and is below the
recent WHO’s recommendation (i.e., the excise tax should be at 70 percent of the retail
price). The second one, from cigarette producing companies, claims that strong tobacco
control measures, which include high tax on this product, will have negative impact on
employment and substantially reduce the tax revenue contributed by the tobacco industry
to the government budget. With such opposite arguments, the question is how this measure
to control cigarette production and consumption will affect employment of the sector and
the whole economy?
Given such a research demand, this research will provide an evaluation of tobacco
control measures on employment in tobacco manufacturing sector and the whole economy.
Previously, Nguyen et al. (2008) conducted a research with similar purposes, using data
from IO Table in 2000 along with data from Vietnam Living Standard Survey (VHLSS) in
2006. Due to a number of policy changes, the results might be out of date. Therefore, the
main aim of this research is to update and compare with that research, using data from IO
Table in 2007 and VHLSS in 2010. The results will help to see how these studied
indicators would be changed along with socio-economic and policy changes in Viet Nam
over the past few years. This study will add important pieces of information for policy
makers in forming tax policies and tobacco control measures in Viet Nam
Methodology
Input–Output methodology is used to analyze the impact of tobacco control on
output and employment in the tobacco industry and the economy as a whole. The year
2010 is considered as the base year for estimation.
Results
The total employment created by the tobacco industry in 2010 was 153,754, which
accounts for 0.31% of the total national employment. Of these employees, the cultivation
sector created 96,796 jobs (accounting for 0.2% of the total national employment), the
tobacco manufacture created 13,908 employments (accounting for 0.03% of the total
national employment), and the distribution created 43,050 employments (accounting for
0.09% of the total national employment).
Results from two scenarios for increasing the excise tax for tobacco are as below:
− A 20-percentage point increase in the excise tax for tobacco (or from 65% to
85%) would increase in the total national output (GDP) by 0.09% (or VND
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1,979 billion) and employment by 0.12% (or 60,278 jobs) in comparison with
the baseline's total national output and employment, respectively.
− A 40-percentage point increase in the excise tax for tobacco (or from 65% to
105%) would increase the total GDP by 0.18% (or about VND 3,959 billion)
and employment by 0.24% (or 120,566 jobs) in comparison with from the
baseline's initial total national output and employment, respectively.
Comments
Increase tax of tobacco leading to two opposite impacts on output and employment in
Vietnam. On the one hand, given unchanged technology, it would result in a reduction of
tobacco consumption and production, and thus reduction in both national output and
employment. On the other hand, money released from tobacco consumption will be
reallocated to other goods and services, so the output of these sectors would increase and
national employment would correspondingly increase. More importantly, net impacts on
both national output and employment would be positive.
Given these simulated results, this report suggests that government should increase
tax on cigarette. Though, the roadmap for such an increase should be well designed, so as
to avoid unexpected consequences for the sector, especially in terms of income and
employment of people working in the sector.
Key words:
Employment, tobacco control, tax policy, output, Vietnam
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I. INTRODUCTION OF THE RESEARCH
1. Background
Among industries in manufacturing sector, tobacco production in Vietnam has a
remarkable growth. According to the statistics from General Statistics Office (GSO) for the
period 1995-2011, the average growth rate of tobacco production - measured by the
number of packs produced - was about 8% per annum. In particular, the number of packs
produced increased from 2.15 million in 1995 to 4.84 million in 2005 and to 5.45 million
in 2011. Vietnam Tobacco Association (VTA, 2013) showed that the number of packs
produced in 2012 was slightly higher than that in 2011, at 5.6 million. By market share,
80% of cigarettes produced were consumed domestically, while the remaining 20% were
exported.
In terms of economic contribution, VTA (2013) indicated that all tobacco producers
contributed VND 14,908 billion to the government budget, and about VND 877 billion as
imported tax revenue. Revenue at current price for tobacco production increased from
VND 16,477 billion in 2005 to VND 27,372 billion in 2010. Similarly, the total number of
the employed in tobacco production decreased in recent years, from 537,220 persons in
2011 to 420,000 persons in 2012. The number of people working in the wholesale for
tobacco decreased from 21,107 persons to 16,203 persons, and the same trend occurred
with the retail from 139,190 persons to 128,064 persons.
As argued in various reports and discussions, however, tobacco use is one of the
most preventable causes leading to fatal diseases and death in the world. Tobacco use
caused over 5 million deaths each year and expected to cause over 8 million deaths yearly
by 2030 (Mathers and Loncar, 2006). In Vietnam, a simulation model developed for
Vietnam estimated that nearly 40,000 deaths were attributed to smoking in 2008, and a
figure to set to rise above 50,000 deaths annually by 2023 (Levy et al., 2006). The use of
tobacco also imposes a burden on households in Vietnam as it cost VND 14,000 billion,
which accounted for 5% to 10% of total household consumption expenditure, accordingly
to an estimate from the Vietnam Household Living Standard Survey (VHLSS) in 2007.
The World Health Organization (WHO) indicated that smoking has been the second among
ten most harmful health-risk behaviors for people in developing countries. Results from the
Global Adult Tobacco Survey (GATS) by WHO in 2010 also indicated that Vietnam was
one among the 15 countries with the highest numbers of smokers.
Given such a fact, the Government of Vietnam has made commitments and
implemented measures to control tobacco production and consumption since 2000. The
Government Resolution No.12/2000/NQ-CP on “National Tobacco Control Policy 2000–
2010” which is being implemented by a Committee headed by the Ministry of Health
(MoH) and draw form most ministries and community organizations. In 2003, Vietnam
signed the Framework Convention on Tobacco Control (FCTC) and ratified it on 2004. In
2006, Vietnam had applied a uniform Special Consumption Tax (SCT) level at 55% on all
kinds of cigarettes instead of levying two rates of 45% and 65% on different kinds of
cigarettes as before. Since April 2009, the SCT for tobacco has increased to 65% of the
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wholesale prices.1 In 2009, the Prime Minister issued the Decision No.1315/QĐ-TTg on
Ratification of the Action Plan for the Implementation of the WHO's Framework
Convention on Tobacco Control (FCTC), in which "from now until 2010, develop a price
and taxation road map for tobacco products with the aim to: increase taxation and prices of
tobacco products; levy high tax on imported tobacco products; apply regulations on
minimum price for tobacco products; and apply measures to reduce and strictly control
product sales at duty free shops" (Term a, Section I.1).
The Tobacco Control Law has been passed by the National Assembly on 18 June
2012, which provides important legal framework for regulating the tobacco control
activities in Vietnam, including measures on tobacco production and distribution as well
smoking prevention. The main highlights of the Law include:
(i) Smoke-free spaces: 100% indoor smoke-free spaces are mandated for work
places and the most part of public places. Exemptions have been made for the
establishment of designated smoking areas in airports, bars, karaoke lounges,
discos, hotels and guesthouses, ships, and long distance trains.
(ii) Graphic Health Warnings: Cigarette packages are to be covered 50% by
warnings that include both text and pictures within six months of the date when
the law officially goes into effect.
(iii) Tobacco Advertising, Promotion and Sponsorship (TAPS): Advertising and
promotion of tobacco products is strictly prohibited. Although tobacco industry
sponsorship of specified philanthropic activities/purposes is allowed, there is a
ban on media announcements of such sponsorship. Point-of-sale displays are
allowed, but are limited to the display of one pack/carton per brand. Tobacco
sales are banned from areas within 100m of child care facilities, schools,
hospitals etc. Tobacco sales to minors are prohibited.
(iv) Tobacco Control Fund: A fund to support activities designed to prevent and
control the harmful effects of tobacco (hereafter called the Fund) has been
established. The financial resources for the Fund will come from compulsory
contributions made by tobacco manufacturers and importers; this contribution
is calculated as a percentage (%) of the excise tax-based prices. A roadmap
detailing the contributions has been established as follows: 1.0% from the
effective date of the Law 01/05/2013; 1.5% from 01/05/2016 on ward; and
2.0% from 01/05/2019 onward.
(v) Kiddie Packs: A total ban is placed on the sale of Kiddie Packs, commencing 3
years from date of the law’s implementation.
Despite the efforts of the government and relevant agencies in the tobacco control
activities, Vietnam is still among the countries with the highest smoking rate in the world
1 - Import tax: for cigarettes and cigars: the tax rate is 150% for all kinds of finished cigarettes (cigars,
cigarettes, beedies, cigarettes or cigars made from tobacco-subsitutable materials); and for tobacco materials:
the tax rate is 30% (with tobacco stem, the rate is 15%).
- Special consumption tax: (i) cigars: 65% (in effect since 2005); (ii) cigarettes: 55% in 2006 – 2007; and
65% since 2008.
- Value-added tax: 10%
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(Higashi et. al 2011). The prevalence of smoking among adult men was 47.4% and among
adult women was 1.4% (GATS 2010).
It has been argued that taxes on cigarettes have not been raised at a significant level
to control tobacco consumption. On average, taxes on cigarettes accounts for almost 45%
of the cigarette’s retail sale price, which is much lower than many other countries and is
below the recent WHO’s recommendation rate (70%). Findings from Ministry of Finance
and HealthBridge (2011) showed that real cigarette prices (or inflation-adjusted prices) of
three types of brand (the most expensive, the most popular, and the cheapest) have
consistently declined over the past decade. Therefore, cigarette has become more
affordable for Vietnamese consumers over time.
Vietnam’s Tobacco Control Program has been working hard to intensify tobacco
control activities. However, it is facing policy issues regarding employment since this
sector has created a significant number of jobs. According to MoIT (2012), there were
about 13,000 permanent jobs in producing and retailing activities, and about 250,000
seasonal jobs in the tobacco industry.2 In some provinces in the Northern Mountain (such
as Cao Bang, Lang Son) and the Central Highlands (such as Gia Lai and Dak Lak), tobacco
production accounts for a majority of agricultural production, and the local governments
believe that tobacco cultivation helps reduce poverty, create jobs, as well as provides high
economic efficiency for peasants. In argument on tax changes, the Vietnam Tobacco
Association (VTA) highlighted that the Tobacco Control Law needed to be implemented
with a comprehensive roadmap which would not make shocks to tobacco producers in
regards their income and employment. However, according to the statistics from GSO in
the period 1995-2011, the average growth rate of tobacco production, which is measured
by the number of packs produced, was about 8 percent. In particular, the number of packs
produced increased from 2.15 million in 1995 to 4.84 million in 2005 and 5.45 million in
2011. The number of packs produced in 2012 was slightly higher than that in 2011, at 5.6
million - according to the report by Vietnam Tobacco Association (VTA, 2013). By market
share, 80 percent of cigarettes produced were consumed domestically, while the remaining
20 percent were exported. Thus, two opposite points of view exist. The first group (such as
social policy makers, tobacco controllers, health care organizations, and even tobacco
users) based on a rich international and regional experience argued that tobacco control
measures should be reinforced to decrease tobacco consumption and its consequences and
that the SCT on tobacco products should be increased in order to limit the access of youth
and the poor to tobacco and that tobacco tax increase will make positive impact on the
government revenue from tax and in a short term does not have any negative impact on
employment. The second one, from cigarette producing companies, claims that strong
tobacco control measures, which include high tax on this product, will have negative
impact on employment and substantially reduce the tax revenue contributed by the tobacco
industry to the government budget. The questions include: (i) how large are the
contributions made by the tobacco industry to the economy?; and (ii) how measures to
2 MoIT (Ministry of Industry and Trade). 2012. 'Báo cáo tổng hợp dự án quy hoạch sản xuất sản phẩm thuốc
lá và phát triển vùng nguyên liệu thuốc lá Việt Nam đến năm 2020'.
8

control cigarette production and consumption will affect the country’s output and
employment?
Given such a research demand, this study will provide an evaluation of tobacco
control measures on employment in this industry. In particular, the study will calculate the
number of jobs created in the industry; the industry’s revenue and its contribution to the
economy; and analyze effects of tobacco control measures on employment. Previously,
using data from IO Table in 2000 and VHLSS 2008, Nguyen et al. (2008) conducted a
research with similar purposes. Due to a number of policy changes, the results might be
outdated, and therefore this research will update and compare with those in the previous
study by using data from IO Table in 2007 and VHLSS 2010. The results will help to see
how these studied indicators would be changed along with socio-economic and policy
changes in Vietnam over the past few years. This study will add important pieces of
information for policy makers in forming tax policies and tobacco control measures in
Vietnam
2. Research objectives and questions
2.1. General objective
The general objective of this study are to estimate the impact of increased tax on
tobacco on employment and output of this industry as well as the economy as a whole, and
to provide policy suggestions for Vietnamese policy makers in tobacco control.
2.2. Specific objectives
This study will focus on the following works:
(i) Estimate the total full-time employment created by the tobacco industry
(especially employment in the tobacco cultivation, cigarette production and
cigarette distribution).
(ii) Estimate the impact of excise tax increase on tobacco on the total output (or
Gross Domestic Product - GDP) in Vietnam and outputs of other relevant
industries under different scenarios.
(iii) Estimate the impact of excise tax increase on tobacco on the national and
industrial employment under different scenarios.
2.3. Research questions
In order to pursue the aforementioned research objectives, this study will answer the
following research questions:
(i) How many jobs the tobacco sector has created for the economy?
(ii) How many percent of jobs created by the tobacco sector in the total created
jobs in the economy?
(iii) How would output and employment of the tobacco industry as well as the
national economy be changed once the excise tax on tobacco was increased?
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3. Research structure
To follow above research objectives and questions, this study will be laid out as
follows. In the next section, we will present findings from previous studies in other
countries on the similar topics. Then, in the third section, we will present in detail our
methodology and data. In section IV, main findings will be discussed. Some limitations
and expected future studies will be presented in section V. Section VI concludes the study.
II. LITERATURE REVIEW
Using the published statistics for the period 1980-1997, Hu and Mao (2002)3
estimated how number of jobs would have been changed if special consumption tax on
tobacco in China was increased. The results showed that with a 5.4% loss of sales in the
cigarette industry, employment rates would drop by the same percentage which is about
27,000 employees. The authors suggested that a short term solution could be cross subsidy
from additional tobacco taxation to tobacco farmers and the cigarette manufacturing
industry, which might result in transition to other products in the long term.
Hu et al., (2008)4 used the annual statistics of China on household consumption on
tobacco and other products to conduct various simulations with different price-elastic
demand for tobacco. The simulated results indicated that, if the tax was 1 Yuan per tobacco
pack, the tax revenue for government would have increased by 64.9 billion Yuan (or US$
7.9 billion), saved 3.4 million people (thanked to not smoke anymore, or smoke less),
reduced health expenses by 2.68 billion Yuan (or US$ 325 million) and increased labor
productivity by 9.92 billion Yuan (or US$ 1.2 billion) for the whole Chinese economy.
Given the same tax rate and employment was considered as a linear function of tobacco
output, the authors showed that revenue for tobacco industry would have reduced by 1.6
percent, and thus the number of jobs would reduced 1,656 (with assumed price-elastic
demand was -0.15) or 5,549 (with assumed price-elastic demand was -0,5). In comparison
with other industries with a loss of 59,000 jobs due to merging, such a loss in tobacco
industry would be very small.
Given a research question of how to maximize cigarette excise tax revenues in
Indonesia, Mark (2003)5 used the Indonesia Central Board of Statistics in 2000 and the
2002 National Socioeconomic Survey. The results showed that the direct impact of an
increase in cigarette tax on employment of production workers in the cigarette sector
would be a loss of 89,756 jobs, with 86,820 jobs lost in the hand rolled kretek sector
(sigaret kretek tangan—SKT). In the short run, the workers who lost jobs in the cigarette
industry most likely would be either unemployed or would work in the informal sector.
3 Hu, T. W and Z. Mao. 2002. Effects of cigarette tax on cigarette consumption and the Chinese economy.
Tobacco Control 2002, 11: 105–108.
4 Hu T-w, Mao Z, Shi J, Chen W. 2008. Tobacco Taxation and Its Potential Impact in China. Paris:
International Union Against Tuberculosis and Lung Disease.
5 Marks. Stephen V. 2003. Cigarette Excise Taxation in Indonesia: An Economic Analysis. Paper prepared
for Bappenas by Partnership for Economic Growth (PEG) Project.
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From the findings, the author suggested that the effective tax rate on producers of SKT
would be 21.8 percent, and for cigarette producers overall would be 36.6 percent.
Also on Indonesian case, Ahsan and Wiyono (2007)6, using the National Labor Force
Survey (NLFS) 2003, found that increasing cigarette tax to the economy in terms of
employment would be positive: increasing by 100% would create new jobs in 60 sectors
while generate job losses in only 6 sectors. In detail, the number of new jobs would
increase by 281,135 (or 0.3% of employment), 140,567 and 84,340 for a 26 percentage
point (or 100-percent increase), 13 percentage points (or 50-percent increase) or 8
percentage point (or about 25-percent increase) when increasing the cigarette tax. The net
impact for employment in the whole economy would be positive. From the findings, the
authors recommended that government should increase the cigarette tax because it would
create more output, income and employment, and that government should increase
cigarette tax and then use some of the increased tax revenue to help labor with transition
from tobacco sectors to other sectors in the economy.
Barber et al., (2007)7 showed that tobacco industry in Indonesia has contributed less
than 1 percent of the total labor force since 1970s. Using socio-economic survey (Susenas)
and Indonesian Family Life Survey (IFLS), the authors simulated the impact of higher tax
on tobacco. The results indicated that if the current tax rate was doubled, there would have
been 0.3 percent of the total labor force as newly-generated ones (or 281,135 new jobs).
The authors explained that tobacco leave growing and production industries were not
highly productive ones, which could provide significant number of jobs with high salary.
Beginning with an argument that job loss in tobacco industry due to higher tax would
be compensated by job creation in other industries, John et al., (2010)8 proved the case of
India. In particular, they showed that money that would not be spent for tobacco (due to
quitting smoke or smoking less, which results from higher tobacco price) would not
disappear from the economy; rather, it would be used for consumption in other goods and
services, which in turn promote production on non-tobacco industries. In addition, higher
tax on tobacco in India would have positive impacts: an increase to 98 Rps for every 1,000
cigarettes produced would increase tax revenue by 36.9 billion Rps, avoid 15.5 million
death of young people among those who are smokers or will be smokers. Similarly, an
increase to 369 Rps for every 1,000 cigarettes produced would increase tax revenue by
146.3 billion Rps, avoid 3.4 million death of young people.
A study by Barkat el at., (2012)9 for Bangladesh indicated that employment in
tobacco farming accounts for less than 0.5% of agricultural employment in Bangladesh.
6 Ashan, A., and Wiyono, I. N. 2007. Analysis of higher tobacco prices on employment in Indonesia. Jakarta:
Southeast Asia Tobacco Control Alliance (SEATCA)
7 Barber S, Adioetomo SM, Ahsan A, Setyonaluri D. 2008. Tobacco Economics in Indonesia. Paris:
International Union Against Tuberculosis and Lung Disease.
8 John RM, Rao RK, Rao MG, Moore J, Deshpande RS, Sengupta J, Selvaraj S, Chaloupka FJ, Jha P. 2010.
The Economics of Tobacco and Tobacco Taxation in India. Paris: International Union Against Tuberculosis
and Lung Disease.
9 Barkat A, Chowdhury AU, Nargis N, Rahman M, Kumar Pk A, Bashir S, Chaloupka FJ. 2012. The
Economics of Tobacco and Tobacco Taxation in Bangladesh. Paris: International Union Against
Tuberculosis and Lung Disease.
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Using annual time series data on aggregate cigarette consumption from 1981 through 2004
to estimate price elasticity of demand for tobacco when higher tax is applied, the authors
showed that taxing all cigarette brands at a specific tax rate of 34 taka per 10 sticks (70%
of retail price) could lead nearly 7 million current smokers to quit and prevent 7 million
youth from initiating smoking, preventing 6 million premature deaths and raising
additional excise revenues of 15.1 billion taka (US$ 200 million). Further, taxing all bidis
at a specific tax rate of 4.95 taka per pack (40% of average prices) could lead 3.4 million
adult bidi smokers to quit and prevent 3.5 million youth from initiating bidi smoking,
preventing 2.5 million premature deaths and raising additional excise revenues of 7.2
billion taka (US$ 87.5 million).
Using IO table for Egypt in the period 1990-1999, Heba et al., (no date)10 evaluated
the impacts of tobacco control policy on wage and employment. The estimated results
showed that the impact of this policy on final aggregate demand and the economy as a
whole via wage would be small (multiple effect would be 0.027 and 0.035, respectively),
while the impact on employment in other industries also would not be large due to weak
linkages between tobacco industry and other industries in the economy. The employment
multiplier was only 0.06, so that higher tax would not make serious job loss in the long
term. This is because of the fact that tobacco industry was not input for other industries,
and most of inputs for tobacco production were imported. With such estimates, the authors
recommended that tobacco control would need to get a consensus on policy
implementation from both demand and supply sides.
Buck et al., (1995)11 applied IO table and data from Family Expenditure Survey
(FES) and General Household Survey 1990. They found that 40-percent reducing tobacco
consumption led to net gains in employment but fairly small; and a reduction in spending
on tobacco would result in more jobs (i.e., create 155,000 to 165,000 total jobs or 155,000
to 125,000 full time equivalent jobs, depending on the government increased other taxes to
compensate for lost revenue or reduced expenditure). Also, the jobs were created by new
spending on non-tobacco products would be more likely to be part-time than the jobs lost.
From such findings, the authors suggested that tobacco consumption should be reduced
and there should be a strategy to respond a loss of revenue in some way.
Using IO table in 1992, Irvine and Sims (1997)12 provide an analysis on the impact
of increasing tax on tobacco in Canada. The authors showed that the final number of job
loss due to higher tax on tobacco would be 9,054, of which 7,347 were wage jobs and
1,707 were non-wage jobs. In particular, agriculture and retail industry would be most
affected by this policy.
Also using IO table and data from the Agricultural Resource Management Survey
(ARMS) as well as other data in 1997 from Economic Research Service, U.S. Department
10 Heba,N., Manal MM. (no date). Evaluating the impact of tobacco control policies in employment in
Egypt. Centre for Economic and Finance Research and Studies.
11 Buck, D., Godfrey, C., Raw, M., and Sutton, M. 1995. Tobacco and Jobs - Impact of reducing consumption
on employment in UK. York: University of York.
12 Irvine, I. J., and W. A. Sims. 1997. Tobacco Control Legislation and Resource Allocation Effects.
Canadian Public Policy - Analyse De Politiques, Vol. XXIII, No. 3: 259-273
12

of Agriculture, Gale et al., (2000)13 estimated the potential impacts of higher tobacco tax.
The results indicated that such a policy would reduce from 74,700 to 96,800 jobs,
including both jobs in production lines and services. Of which, 11,600 to 15,100 jobs
would be from cultivation sector; 34,300 to 43,400 jobs from wholesale and retail sectors;
and about 10,000 jobs in finance-related sectors (such as finance and business). The
authors recommended that, in addition to raising tax on tobacco, government support
laborers working in tobacco industry as well as developing other industries.
Also about the US, PolEcon Research (2011) used data from the US Census
Bureau’s County Business Patterns, and the U.S. Bureau of Labor Statistics between 1998
and 2009 and “IMPLAN” input-output modeling system to explore the relationship
between an excise tax cut and employment. They found that for each excise tax cut of
$0.10 per pack of cigarette would result in an increase of jobs in 39 states but would reduce
state's tax revenue. This in turn would have negative impact on employment, in which 100
jobs would be lost, and the net job loss would be 90 jobs.
In summary, raising tax on tobacco would have negative or positive impacts will
depend on socio-economic context of each country. Previous studies have indicated two
conclusions as follows. First, if tobacco industry accounts for a small proportion of the
economy's output and has weak forward and backward linkages with other industries,
higher tax on tobacco would reduce demand for tobacco, promote other industries due to
higher demand of other goods which substitute for tobacco, and therefore promote
investment and job creation. Second, if tobacco industry accounts for a large proportion in
the economy's output, higher tax on tobacco would have impacts on both short-term (the
magnitude would depend on price-elasticity of demand for tobacco) and thus long-term
employment of tobacco industry in particular and the whole economy in general.
Therefore, government's policies support to firms and laborers would be crucial.
III. METHODOLOGY AND DATA
1. Estimation framework, estimation steps and assumptions
Figure 1 presents framework for our estimation of the impacts of tax on cigarette on
employment. To follow the above framework, we will conduct the following estimation
steps:
(1) First, using estimation model proposed by Walbeeck (2010)14 we will estimate
the reduction in smoking rate. Then, we transfer the reduction in smoking rate
to reduction in household expenditure of cigarette due to higher excise tax on
tobacco.
(2) Second, based on the household consumption model, which is estimated from
household survey, we will then examine how households would have switched
13 Gale, H. Frederick; Jr., Linda Foreman; and Thomas Capehart. 2000. Tobacco and the Economy: Farms,
Jobs, and Communities, Economic Research Service, U.S. Department of Agriculture, Agricultural
Economic Report No. 789
14 Walbeeck, C, v. 2010. A simulation model to predict the fiscal and public health impact of a change in
cigarette excise taxes, Tobacco Control, 19:31-36
13

from cigarette consumption to other consumptions when tax on cigarette had
been increased.
(3) Last, we use input-output (IO) analysis15 to estimate the impact of higher tax
on tobacco on the national output and employment. In particular, we will
examine two different policy scenarios of tax on tobacco and their potential
impacts on national output and employment under different scenarios.
Figure 1. Estimation framework
Source: Adapted from Walbeeck (2010)
To pursue the estimation steps above, especially in applying IO analysis with some
explicit limitation,16 we have some assumptions as follows:
− No change in Government expenditure.
− Technology unchanged
− The labors easily remove to other sector when they become unemployment.
This assumption might not be true in practice, but it is acceptable in this study,
however. This can be explained as follows. For laborers working in the cultivation
industry, tobacco trees could be replaced by others (except the places where only
can grow tobacco trees). For laborers working in cigarette production, this would
be more difficult, but these laborers account for a very small proportion of the total
labor force. For the distribution sector, the impact would not be clear since tobacco
is sold with a number of other products, so that laborers in this sector will be able to
keep revenue.
2. Detailed estimations of studied indicators
2.1. Estimate Employment in the Tobacco Industry:
• Tobacco Farming Employment
First, estimate the total amount of working hours used in tobacco production:
Total working hours = number of working hours required per 1 hectare of tobacco per crop *
* number of ha of tobacco planted * 2 crops (1)
Then, convert the calculated working hours into the equivalent number of full-time
employments:
15 See Appendix 1 for further details about this approach.
16 See the last section of this study to present its limitations
14

Number of full-time labors = Total working hours ÷
÷ Standard working hours of a full-time labors (2)
• Leaf marketing and Processing Employment
In Vietnam, after farmers do one part of the processing (raw-drying), they sell their
semi-processed tobacco products to tobacco material processed manufacturers and other
tobacco manufacture enterprises. The major of employment created by this sector is
included in the manufacturing sector, and thus we cannot estimate separately the
employment in this sector.
• Tobacco Manufacturing Employment
These data can be obtained from the official statistics (such as Enterprise Census;
and Labor Force Survey, Annual VTA Reports). In this study, the data comes from the
Labor Force Survey (2010).
• Tobacco distribution sector employment
We use indirect method to estimate the employment in this sector based on the value
added (GDP) from tobacco distribution sector as follows:
To calculate the retail margin in the distribution sector, we first calculate the retail
margin per pack of cigarette, which equal the average retail price of cigarette minus the
average wholesale price with tax. MoH (2013) calculated the average retail price of
cigarette in 2010 was VND 7,931 per pack and the whole sale price with tax per pack was
VND 7,210.17 So the retain margin per pack in distribution sector is VND 721 (=7921–
7210). The total sales of cigarette multiple by the retail margin per pack equals the GDP
created in the cigarette distribution sector (GDPdist. tob). Then, total employment created by
the cigarette distribution can be calculated as follows:
Number of jobs created by cigarette distribution =
= (GDPdist. tob/GDP of the whole distribution sector *
* number of jobs in the whole distribution sector (3)
2.2. Estimate the share of tobacco sector’s employment in the national employment
We calculate the ratio of employment to total employment in three separate sectors
that tobacco industry belongs to and the ratio of employment of tobacco industry to total
national employment. We will have four measurements:
(i) The percentage of jobs associated with tobacco farming to total employment
for agriculture production.
(ii) The percentage of jobs associated with tobacco manufacturing to total
employment in manufacturing.
(iii) The percentage of jobs associated with tobacco wholesaling and retailing to
total employment in wholesaling and retailing.
(iv) The percentage of tobacco jobs to total national employment.
17 Ministry of Finance. 2013. "Report on purchasing power and impacts of tax increases" (in Vietnamese),
unpublished monograph
15

3. Data
The basic data being used in this research is IO Table. As will be discussed in
Appendix 1, the IO Table is a tool to give a comprehensive picture of an economy in
aspects of production technology applied to create products, shown by input coefficients,
use of output produced domestically (reflected by the structure of gross capital formation,
final consumption and exports) and production income (described by the structure of
compensation of employees, consumption of fixed capital, other net taxes on production
and operating surplus).
In 2008, Vietnam conducted input-output survey for compiling input-output table.
The concepts and definitions applied to compile Vietnam IO 2007 follow the
recommendations by United Nations in the 1968 System of National Accounts (SNA) and
1993 SNA. The 2007 IO Table has dimension 138 x 138 of commodity by commodity
The IO Table in 2007 is the most up-to-date table in Vietnam. Previously, there were
three tables constructed in 1989, 1996 and 2000. The choice of 138 products was based on
their importance in the economy, as well as in economic analysis and statistics. Concepts
and methods used to set up the IO Table 2007 resulted from those in the SNA 1986 and
1993 and were consistent with the method of IO tables compiled in the past. In this study,
we transfer IO Table with 138 products into a new I-O Table with 22 sectors to make the
calculations easier. For instance, as presented in Table 1 shows 22-sector converted from
138 products.
Table 1. Twenty-two sectors in IO Table
I-O code
Sector
1
Agriculture, forestry and fishing
2
Mining and quarrying
3a
Manufacturing
3b
Tobacco manufacture
4
Electricity, gas, steam and air conditioning supply
5
Water supply; sewerage, waste management and remediation activities
6
Construction
7
Wholesale and retail trade; repair of motor vehicles and motorcycles
8
Transportation and storage
9
Accommodation and food service activities
10
Information and communication
11
Financial and insurance activities
12
Real estate activities
13
Professional, scientific and technical activities
14
Administrative and support service activities
15
Public administration and defense
16
Education
17
Human health and social work activities
18
Arts, entertainment and recreation
19
Other service activities
20
Activities of households as employers; undifferentiated goods- and services-
producing activities of households for own use
16

I-O code
Sector
21
Activities of extraterritorial organizations and bodies
Source: GSO (2010)18
To make estimates for other indicators, we will also use various sources of data at
national level. Table 2 presents the studied indicators and their respective sources.
Table 2. Studied indicators and their sources
No.
Indicators
Source(s)
1
Number of hectares tobacco cultivated
Statistical Yearbooks (GSO)
2
Number of working hours required per 1
ha of tobacco cultivating
Nguyen et al,. (2008)
3
Average retail price and Whole sale
price with tax of cigarette
MoF (2013)
4
Cigarette retail sale
VTA Annual Report
5
GDP in whole distribution sector
Statistical Yearbook (GSO)
6
Number of labor in whole country and
sectors
Employment and Labor Force Surveys (GSO)
7
Smoking rate
GATT (2010)
IV. FINDINGS AND DISCUSSION
1. Impacts of tobacco tax on households’ final consumption
The simulated results with a 20 percentage point increase in excise tax of tobacco
from 65% to 85% the smoking rate will reduce from 23.8% to 23.2%, equivalence to a
2.52% (=(23.8 – 23.2)/23.8) relative reduction in smoking rate; with 40 percentage point
increase in the excise tax of tobacco from 65% to 105%, the smoking rate will reduce from
23.8% to 22.6%, equivalence to a 5.04% (=(23.8 – 22.6)/23.8) relative reduction in
smoking rate (Luong, 2014).19
Using the above results, we now calculate how much cigarette consumption (in
VND) would reduce under the two scenarios, i.e., a 20-percent tobacco excise tax increase
from 65% to 85%, and a 40-percent tobacco excise tax increase form 65% to 105%
The total expenditure of household on cigarette in year 2007 was VND 11,099.65
billions.20 Annual increase in tobacco consumption is estimated by increase in the number
of consumed tobacco packs multiplied by inflation rate (estimated from consumer's price
index - CPI). According to VTA, the number of consumed tobacco packs increased from
3571 millions in 2008 to 4068.5 millions in 2012. Therefore, annual growth rate of the
consumed tobacco packs was 4.23 percent (= (4068.5/3571-1)*100/4). Inflation rate was
23% in 2008; 6.9% in 2009 and 9.2% in 2010.21 Thus, total household consumption on
tobacco was VND 17,802 billion in 2010.
18 General Statistics Office (GSO). 2010. The input-output table Vietnam 2007. Hanoi: Statistic Publishing
House.
19 Luong Ngoc Khue. 2014. Lo trinh tang thue thuoc la (Roadmap for raising special consumption tax on
tabacco). Paper presented at the joint seminar on special consumption tax by Government Office, Ministry of
Finance, and VCCI in Vinh Phuc on 19 May 2014.
20 Source: IO Table 2007, Vietnam
21 GSO, Statistical Yearbook, various years
17

For the first scenario, we transfer 2.52% reduction in smoking prevalence to
decreased level in cigarette consumption of households. The total expenditure of household
on cigarette in year 2010 was VND 17,802 billions. So with the smoking prevalence at
23.8%, the total value of cigarette consumption of household is VND 17,802 billions.
Smoking prevalence after 20% increase in tax of tobacco is 23.2%. We assume that the
reduction in smoking prevalence will leads to decrease in cigarette consumption
correspondingly. Therefore, 2.52% reduction in smoking prevalence leads to VND billions
449.8 (= 17,802 x 2.52%) decrease in household expenditure on cigarettes. But increasing
tax will also leads to increasing in the price of cigarette and then will also reduce smoking
intensity among existing consumption among continuing smokers. In this study, we
assume that half of the impact of increasing tax is on prevalence and half on the
consumption among continuing smokers. Therefore, the total decline in cigarette
consumption will be twice and equal to VND 897.56 billions. ( = 2*449.8).22
For the second scenario, we do the same steps to the basic scenario: 40% increase in
tax of tobacco will leads to decrease in household consumption of cigarette by VND
1795.11 billion. The amount of money saved from reducing tobacco consumption could be
used for consumption on other goods and services, as well as savings. However, due to
lack of data on such behaviors, we assume that households will use 50% of saved money
for consumption on other goods and services.
To estimate the impact of switching from consumption of cigarette to consumption in
other sectors, we allocate this reduction of cigarette expenditure to other “non-manufacture
of cigarette” sectors of household expenditure. We allocate base on the ratio of the
household expenditure to other non-manufacture of cigarette that was calculated from
household expenditure in the Viet Nam I-O Table 2007. The result of this calculation is
presented in Table 3.
Table 3. Change in household’ final consumption of goods and services
due to 20-percentage point and 40-percentage point increase in excise tax on tobacco
Sector
HHs.
Consumption
(VND mil)
Ratio
Allocation of consumption
to other sectors due to
reduced consumption on
tobacco (VND billion)
20
percentage
point tax
increase
40
percentage
point tax
increase
Agriculture, forestry and fishing
50,487,605
7.51%
33.7
67.4
Mining and quarrying
3,052,818
0.37%
1.7
3.3
Manufacturing
408,683,366
49.87%
223.8
447.6
Tobacco manufacture
11,099,650
0.00%
0.0
0.0
Electricity, gas, steam and air
conditioning supply
25,161,841
3.07%
13.8
27.6
Water supply; sewerage, waste
management and remediation
activities
12,126,026
1.48%
6.6
13.3
22 Note that, using Walbeeck (2010), the impact of demographic changes have been integrated in estimating
the impact of higher tax on tabacco on smoking rate
18

Sector
HHs.
Consumption
(VND mil)
Ratio
Allocation of consumption
to other sectors due to
reduced consumption on
tobacco (VND billion)
20
percentage
point tax
increase
40
percentage
point tax
increase
Construction
(0)
0.00%
0.0
0.0
Wholesale and retail trade; repair
of motor vehicles and motorcycles
23,451,763
2.86%
12.8
25.7
Transportation and storage
36,847,023
4.50%
20.2
40.4
Accommodation and food service
activities
47,188,804
5.76%
25.8
51.7
Information and communication
31,772,229
3.88%
17.4
34.8
Financial and insurance activities
22,756,554
2.78%
12.5
24.9
Real estate activities
33,884,693
4.13%
18.6
37.1
Professional, scientific and
technical activities
5,134,437
0.63%
2.8
5.6
Administrative and support
service activities
6,668,274
0.81%
3.7
7.3
Public administration and defense
7,146,370
0.87%
3.9
7.8
Education
47,487,299
5.79%
26.0
52.0
Human health and social work
activities
37,000,900
4.52%
20.3
40.5
Arts, entertainment and recreation
4,821,563
0.59%
2.6
5.3
Other service activities
1,903
0.00%
0.0
0.0
Activities of households as
employers; undifferentiated
goods- and services-producing
activities of households for own
use
3,865,609
0.47%
2.1
4.2
Activities of extraterritorial
organizations and bodies
844,549
0.10%
0.5
0.9
Total
819,483,275
100%
448.8
897.6
Source: Own calculations from IO Table 2007
Through output and employment multiplier we can, as in the part below, calculate
the impact of decreasing cigarette consumption to output and employment for the whole
economy and the net impact of increase tax on tobacco in terms of output and employment.
2. Contribution of tobacco industry to employment
In this part, we present some estimated results on the share of employment created by
the tobacco industry for the economy. The share of employment created by the tobacco
cultivation sector, cigarette production sector, cigarette distribution sector and the entire
tobacco industry are respectively presented.
2.1. Contribution of Tobacco Cultivation Sector
In this study, we estimate the employment created by the tobacco cultivation sector
base on the data of hours requires to cultivating 1 ha of tobacco and number of ha of
tobacco cultivated in Vietnam. From the survey, Nguyen et al,. (2008) found that the time
19

needed for to cultivate 1 ha of tobacco (2 crops per year) was about 7,000–10,000 person-
hours, which was equivalent 3.5–5 full-time employees. VTA also gave a similar number
of hours to cultivate 1 ha of tobacco. It needs 500 working hours to cultivate a hectare per
crop (Vinataba, 2014).23 Therefore, we assumed that cultivation of 1 ha of tobacco would
create 4 full-time jobs and this number would be constant due to the fact that we assumed
that technology will be unchanged. Then, the number of employment created by the
tobacco cultivation is upon on tobacco cultivation area. Table 4 shows the number of
tobacco cultivation areas, employment created by tobacco cultivation sector and share of
tobacco cultivation sector labor in labor of whole agriculture. Because we do not have data
of the planted area in the year 2010, we assume that the planted area in this year is the
same the area in 2009.
Table 4. Employment in Tobacco Cultivation Sector, Vietnam, 2000 - 2010
Year
Planted area
(ha)
Full time Employment
(Own estimation)
Share of whole
agriculture sector
(%)
Share of whole
economy (%)
2005
16,800
62,160
0.26%
0.15%
2006
26,700
98,790
0.41%
0.22%
2007
19,200
71,040
0.29%
0.16%
2008
16,400
60,680
0.25%
0.13%
2009
20,300
75,110
0.31%
0.16%
2010
26,161
96,796
0.40%
0.20%
Source: GSO (2010) and own estimations
2.2. Contribution of Tobacco Manufacture Sector
Statistic of laborers in the cigarette production sector is quite sufficient. Annually
tobacco companies release their production and sales report to VTA and Ministry of
Industry and Trade. These reports sometimes include statistics of their laborers. As a result,
we can rely on these statistics to estimate the share of labor in the cigarette production
sector in comparison with the entire industry and country. The share of labor in the
cigarette production sector amongst the entire industry is presented in Table 5. In 2010,
labor created by this sector presented 0.044% of the total labor force in the entire
manufacturing industry.
23 Vinataba. 2014. 'Đã đến lúc phải chuyển đổi nghề cho người trồng thuốc lá hay chưa?' (Is this the time to
change jobs for tabacco tree growing laborers?'. http://www.vinataba.com.vn/?module=viewnews&id=463,
accessed 20 October 2013.
20

Table 5. Labor in Tobacco Manufacture Sector, 2005–2010
Year
Labor in tobacco
manufacture sector
1
Share of total labor in the
industrial (%)
2
Share of whole economy
(%)
3
2005
18,400
0.33
0.043
2006
17,991
0.32
0.041
2010
13,908
0.21
0.028
Source: 1 VTA Annual Report; 2, 3 Own estimates using data from various GSO statistical yearbooks
2.3. Contribution of Tobacco Distribution Sector
Basing on the total tax revenues, volume of retail sale and assume the retail margin
per pact is 20% we calculate the GDP created by the cigarette distribution sector. From the
GDP created by the cigarette distribution sector, we can estimate the employment that the
sector creates. The results are presented in Table 6.
Table 6. Number of employment created by the cigarette trade sector, Vietnam 2010
Indicators
Unit
2010
Total tax revenue
Bil. VND
11180
Cigarette retail sale
Mil. Pack
4068
Whole sale price with tax per pack
VND
2748
Retail margin per pack (20%)
VND
550
GDP in cig. Distribution (retail margin 20%)
Bill VND'
2,236
GDP in whole distribution sector
Bill VND'
759,202
Number of labors in whole distribution sector
person
1,461,700
Number of jobs created in cig. trade sector
person
43,050
Source: Author’s estimate
In 2010, total employment (full time retailers) created by this sector was about 43.05
thousands accounted for 3.7% of the total distribution sector. If we assume that rate of
return in distribution
If it is assumed that the rate of return in distribution activities would be 10%, the
number of jobs created by distribution sector would be 21,530. Similarly, if the rate of
return is assumed at 20 number of jobs created by distribution sector would be 64,580.
2.4. Contribution of Tobacco Industry to National Employment
In this part, we estimate the contribution of tobacco industry to the economy in year
2010. Total employment in all sectors of the economy in 2010 was 49,225,875 labors.
Table 7 shows the number and share of employment in each sector in the economy.
Table 7. Employment by Sectors, Vietnam, 2010
I-O code
Sector
No. of labor
% of total
1
Agriculture, forestry and fishing
23,970,221
48.69%
In which: cigarette plant cultivation
0.2%
2
Mining and quarrying
277,952
0.56%
3
Manufacturing
7,057,385
14.34%
4
Tobacco manufacture
13,908
0.03%
5
Electricity, gas, steam and air conditioning supply
135,284
0.27%
6
Water supply; sewerage, waste management and
118,426
0.24%
21

I-O code
Sector
No. of labor
% of total
remediation activities
7
Construction
3,183,592
6.26%
8
Wholesale and retail trade; repair of motor vehicles
and motorcycles
5,671,717
11.52%
In which: cigarette distribution sector
0.09%
10
Transportation and storage
1,428,602
2.90%
11
Accommodation and food service activities
1,826,152
3.71%
12
Information and communication
259,554
0.53%
13
Financial and insurance activities
256,600
0.52%
14
Real estate activities
149,146
0.21%
15
Professional, scientific and technical activities
219,323
0.45%
16
Administrative and support service activities
187,028
0.38%
17
Public administration and defense
1,366,502
2.78%
18
Education
1,687,408
3.43%
19
Human health and social work activities
441,646
0.90%
20
Arts, entertainment and recreation
234,345
0.48%
21
Other service activities
696,028
1.41%
22
Activities of households as employers;
undifferentiated goods- and services-producing
activities of households for own use
198,308
0.40%
23
Activities of extraterritorial organizations and
bodies
2,559
0.01%
Total
49,382,000
100%
Source: ILO (2011)
In 2010, employment in the tobacco industry accounted for 0.3% of the total
nationwide. In which, tobacco cultivation sector contributed 0.2% (96,976 employments),
tobacco manufacture contributed 0.028% (13,908 employments), tobacco distribution
sector contributed 0.09% (43,050 employments) of total national employment. This
provides evidence that labor in tobacco distribution and manufacture sector was not in
significant position compared to total labor in the economy.
In sum, the cigarette sector has created three categories of employment for the
economy: employment in the tobacco cultivation, employment in the tobacco manufacture
and employment in the cigarette distribution sector. Tobacco manufacture and tobacco
distribution accounted for modest share of the total labor in the economy. Tobacco
cultivation sector creates the majority of jobs in the tobacco sector. However, it was not
high position compared to other agriculture sectors.
3. Contribution of the tobacco manufacture in national output
Table 8 presents total output by sectors in Vietnam in the year 2010. The total output
in 2010 is VND. 2,861,116 billion. The Agriculture sector contributed 11.9%, Industrial
and contraction sector presented 44,79% and 10,31% respectively. Service sector
accounted for 27%. The Manufacture of cigarette and other tobacco products presents
0.75%. This sector was ranked 16th among 22 sectors in the economy in terms of gross
output.
22

Table 8. Gross output by sector, Vietnam, 2010
I-O code
Sector
Gross output
(VND billion)
% of total
output
1
Agriculture, forestry and fishing
340573.96
11.90%
2
Mining and quarrying
123266.59
4.31%
3a
Manufacturing
1281459.45
44.79%
3b
Tobacco manufacture
21519.83
0.75%
4
Electricity, gas, steam and air conditioning
supply
71982.89
2.52%
5
Water supply; sewerage, waste management
and remediation activities
7284.15
0.25%
6
Construction
295027.98
10.31%
7
Wholesale and retail trade; repair of motor
vehicles and motorcycles
192571.21
6.73%
8
Transportation and storage
96474.97
3.37%
9
Accommodation and food service activities
63152.51
2.21%
10
Information and communication
66906.79
2.34%
11
Financial and insurance activities
35746.60
1.25%
12
Real estate activities
54011.69
1.89%
13
Professional, scientific and technical
activities
26056.18
0.91%
14
Administrative and support service activities
11440.28
0.40%
15
Public administration and defense
58337.64
2.04%
16
Education
54472.99
1.90%
17
Human health and social work activities
44701.45
1.56%
18
Arts, entertainment and recreation
5843.01
0.20%
19
Other service activities
2607.52
0.09%
20
Activities of households as employers;
undifferentiated goods- and services-
producing activities of households for own
use
4900.87
0.17%
21
Activities of extraterritorial organizations and
bodies
2777.50
0.10%
Total
2,861,116.053
Source: Own estimates from IO Table 2007
4. Impacts of tobacco tax on national output and employment
In this part, we first present changes in output and then present changed in
employment under the two scenarios of tax changes.
4.1. Impact on national output
The impact of changing cigarette expenditure on output under different policy scenarios is
calculated assuming that final demand for tobacco product is reduced and the released
money from cigarette expenditure is allocated to other goods and services. The summary of
output impacts is presented in Table 9.
23

Table 9. Impacts of tax changes on national output
Unit: (VND billion)
I-O
code Sector
20 percentage point increase
in tax of tobacco
40 percentage point increase
in tax of tobacco
Decrease Increase Net
impact Decrease Increase Net
impact
1
Agriculture, forestry
and fishing
-38.0
330.3
292.2
-76.1
660.5
584.4
2
Mining and
quarrying
-4.7
129.8
125.2
-9.3
259.7
250.4
3a
Manufacturing
-20.6
606.6
586.1
-41.1
1213.3
1172.2
3b
Tobacco manufacture
-1059.4
2.1
-1057.3
-2118.7
4.2
-2114.5
4
Electricity, gas, steam
and air conditioning
supply
-11.1
238.4
227.3
-22.2
476.8
454.6
5
Water supply;
sewerage, waste
management and
remediation activities
-17.5
276.4
258.9
-35.0
552.8
517.8
6
Construction
-0.3
6.4
6.1
-0.6
12.8
12.2
7
Wholesale and retail
trade; repair of motor
vehicles and
motorcycles
-18.0
274.9
256.8
-36.1
549.7
513.7
8
Transportation and
storage
-12.5
248.8
236.3
-25.0
497.6
472.6
9
Accommodation and
food service activities
-1.7
57.0
55.3
-3.3
113.9
110.6
10
Information and
communication
-5.5
126.9
121.4
-10.9
253.8
242.8
11
Financial and
insurance activities
-6.0
151.3
145.2
-12.1
302.6
290.5
12
Real estate activities
-4.1
86.2
82.1
-8.2
172.4
164.1
13
Professional, scientific
and technical activities
-13.1
212.8
199.7
-26.2
425.6
399.4
14
Administrative and
support service
activities
-7.7
120.3
112.6
-15.5
240.7
225.2
15
Public administration
and defense
0.0
4.9
4.8
-0.1
9.7
9.7
16
Education
-0.2
32.2
32.0
-0.5
64.4
63.9
17
Human health and
social work activities
-0.3
27.8
27.5
-0.5
55.6
55.1
18
Arts, entertainment and
recreation
-0.6
15.1
14.5
-1.3
30.2
28.9
19
Other service activities
-1.6
41.6
40.0
-3.3
83.2
79.9
20
Activities of
households as
employers;
undifferentiated goods-
and services-producing
activities of households
for own use
-1.9
40.7
38.8
-3.9
81.4
77.6
24

Impact of 20-percentage point increase in tax on tobacco
For the negative impact, 20-percentage point increase in tax of tobacco leading to a
reduction of cigarette consumption by VND 897.56 billion, the total output decreases by
VND 1233.6 billion.
For the positive impact, 20-percentage point increase in tax of tobacco leading to an
increase in consumption on other goods and services by 50% amount of money release
from reduction of tobacco expenditure (VND 448.8 billion), the total outputs increases by
VND 3212.9 billion.
The total net impact on national output of 20-percentage point increase in tax of
tobacco, therefore, is positive. The total outputs in the economy increases by 0.09% (VND.
1979.3 billion) from the initial total outputs (VND 2,157,828 billion).
Impact of 40-percentage point increase in tax on tobacco
For the negative impact, 40-percentage point increase in tax of tobacco leading to a
reduction of cigarette consumption by VND 1795.1 billion, the total outputs decreases by
VND 2467.3 billion.
For the positive impact, 40-percentage point increase in tax of tobacco leading to an
increase in consumption on other goods and services by 50% amount of money release
from reduction of tobacco expenditure (VND 897.5 billion), the total outputs increases by
VND 6425.8 billion.
Total net impact on output of 40-percentage point increase in tax of tobacco,
therefore, is also positive: in this optimistic scenario, total outputs in the economy
increases by 0.18% (VND 3,958.5 billion) from the initial total outputs (VND. 2,157,828
billion).
4.2 Impact on national employment
Table 10 presents the overall change in employment as a result of 20-percentage
point and 40-percentage point increase in tax of tobacco. The year 2010 is also used as the
base year for the estimation. The active employment of whole country in 2010 was 49.38
million.
21
Activities of
extraterritorial
organizations and
bodies
-8.7
182.4
173.7
-17.4
364.8
347.4
TOTAL
-1233.6
3212.9
1979.3
-2467.3
6425.8
3958.5
25

Table 10. Impacts of tax changes on national employment
Unit: (1,000 jobs)
I-O
code Sector
20-percentage point increase
in tax of tobacco
(from 65% to 85%)
40-percentage point increase
in tax of tobacco
(from 65% to 105%)
Decrease Increase
Net
Impact
Decrease Increase
Net
Impact
1
Agriculture, forestry and
fishing
-2678
23245
20567
-5356
46490
41134
2
Mining and quarrying
-10
293
282
-21
586
565
3a
Manufacturing
-113
3341
3228
-226
6682
6456
3b
Tobacco manufacture
-645
1
-643
-1290
3
-1287
4
Electricity, gas, steam
and air conditioning
supply
-20
435
415
-40
870
829
5
Water supply; sewerage,
waste management and
remediation activities
-284
4494
4210
-569
8988
8419
6
Construction
-3
67
64
-6
134
127
7
Wholesale and retail
trade; repair of motor
vehicles and
motorcycles
-531
8096
7564
-1063
16191
15129
8
Transportation and
storage
-185
3684
3499
-370
7369
6998
9
Accommodation and
food service activities
-48
1647
1599
-97
3294
3198
10
Information and
communication
-21
492
471
-42
984
942
11
Financial and insurance
activities
-43
1086
1043
-87
2172
2085
12
Real estate activities
-8
163
155
-16
326
310
13
Professional, scientific
and technical activities
-110
1791
1681
-221
3583
3362
14
Administrative and
support service activities
-126
1967
1841
-253
3935
3682
15
Public administration
and defense
-1
114
113
-2
228
226
16
Education
-8
998
990
-15
1996
1981
17
Human health and social
work activities
-3
274
271
-5
548
543
18
Arts, entertainment and
recreation
-26
606
580
-51
1212
1161
19
Other service activities
-435
11054
10619
-870
22107
21237
20
Activities of households
as employers;
undifferentiated goods-
and services-producing
activities of households
for own use
-78
1648
1569
-157
3296
3139
21
Activities of
extraterritorial
organizations and bodies
-8
168
160
-16
336
320
TOTAL
(5,386)
65,664
60,278
(10,773)
131,328
120,556
26

Impact of 20-percentage point increase in tax on tobacco
For the negative impact, 20-percentage point increase in tax of tobacco will lead to a
reduction in cigarette consumption by VND 897.56 billion, the total employment decreases
by 5,386 employments accordingly.
For the positive impact, 20-percentage point increase in tax of tobacco leads to an
increase in the consumption of other goods and services by 50% amount of money release
from reduction of tobacco expenditure (VND 448.8 billion). As a consequence, the total
employment increased by 65,664 employments.
And, therefore, the total net impact on employment of 20-percentage point increase
in tax of tobacco is positive. The total employment in the economy increases by 0.12%
(60,278 jobs) from the initial total employment (49,382,000).
Impact of 40-percentage point increase in tax on tobacco
The direction of impact on employment in this scenario is similar to and the level of
impact is higher than the basic scenario.
For the negative impact, 40-percentage point increase in tax of tobacco leading to a
reduction on cigarette consumption by VND 1795.1 billions, the total national employment
decreases by 10,773 employments.
For the positive impact, 40-percentage point increase in tax of tobacco leading to an
increase in consumption on other goods and services by 50% amount of money release
from reduction of tobacco expenditure (VND 897.5 billion). And, then the total national
employment increased by 131,328 employments.
The net impact on employment in the economy is also positive. The total national
employment in the economy increases by 0.24% (120,556 jobs) from the initial total
employment (49,382,000 labors).
V. CONCLUDING REMARKS AND COMMENTS
Implementing tobacco control policies will lead to reduce smoking prevalence and
will have has a positive implication for the whole economy: 20-percentage point increase
in tax of tobacco will increases the national output by 0.09% (VND. 1979.3 billion) and
employment by 0.12% (60,278 jobs). And, 40-percentage point increase in tax of tobacco
will increases the national output by 0.18% (VND 3958.5 billion) and employment by
0.24% (120,556 jobs). There are 21 sectors out of 22 sectors in the economy have net
positive gains from tobacco control policies in terms of output and employment and only 1
sector has a net negative gain from those policies. Sector with net negative impact is
cigarettes and other tobacco products manufacture. Because of the positive impact of
tobacco control on employment we can say higher tax in tobacco is not only create more
output and employment in the economy but also generate additional tax income for the
government.
The tobacco industry supposed that if tobacco control policies are strongly
implemented, the output and employment in the economy will reduced. This is because
27

they assumed the released cigarette expenditure simply disappeared from economy, so
final demand for tobacco products is eliminated but no increase in final demand for other
goods and services is made. This is the gross impact not the net impact. In fact, final
demand for tobacco products reducing will leads to increase in demand for other goods and
services and, therefore, help to create more employment in these sectors. As it was referred
above, we should concern about the net impact of tobacco control on employment.
Tobacco control measures will reduce the output in the tobacco industry, but this
reduction in tobacco sector will be more than compensated for by increased output in other
sectors. For this negative impact on employment of tobacco industry, it is not a big
problem. Laborers in the tobacco cultivation and tobacco distribution sectors are highly
mobile, i.e. they can transfer their jobs quite easily and quickly. In the tobacco
manufacture, labor force may find it harder to transfer jobs, so if there is a before-hand
plan and if the government increase cigarette tax then it can use some of the newly
generated income to help labor with transition form tobacco sector to other sector of the
economy, then transferring is by no means a headache. More ever, direct employment in
tobacco manufacturing and sales are declining also due to improvements in technology
applied by cigarette manufacturers and modern equipment used by the tobacco industry.
The reduction in direct employment in the tobacco industry due to using equipment and
machinery is many times bigger than the reduction caused by tobacco control. Worrying
about the employment reduction caused by tobacco control is just an excuse to restrain
tobacco control efforts for the sake of the mankind.
Then it can be concluded that the impacts of the tobacco control on the national
output and employment are positive. The government should increase tax on cigarette and
implement other tobacco control policies to prevent smoking and reduce harmless of using
tobacco products.
VI. LIMITATIONS OF THIS STUDY
The limitation appears from the Input – Output analysis method. In this method, we
assumed the constant return to scale, but in the real world we have the increasing or
decreasing return to scale. It is not clear whether adjusting for this limitation would lead to
positive or negative bias in our estimates.
The model was based on some assumptions, in the real world, if these assumptions are not
satisfied, the calculation results can differ from the fact. For example, we assumed that
there was no change in the government expenditure. In fact, if the government increase
excise tax on tobacco products, the Government expenditure may increase. The final
demand for other goods and services, therefore, increase. So, tobacco control will lead to
net positive change in employment in the economy even higher. And other assumption is
that labors easily move among sectors, but in fact there need to be a transitional period for
labors to find another job.
28

REFERENCES
Guindon GE, Nguyen TT Hien, Hoang V Kinh, McGirr E, Dang V Trung, Nguyen T Lam.
2010. “Tobacco Taxation in Vietnam”. Paris: International Union Against
Tuberculosis and Lung Disease.
National Assembly. 2008. Law on Special Consumption Tax No. 27/2008/QH12. Hanoi:
National Assembly.
Levy DT, Bales S, Lam NT, Nikolayev L. 2006. The Role of Public Policies in Reducing
Tobacco: Policy Simulation Model. Soc Sci Med 62: 1819-1830.
Mathers, CD, Loncar D. 2006. Projection of Global Mortality and Burden of Disease from
2002 to 2003. PloS Med 3 (11): e442
Ministry of Health of Viet Nam, Ha Noi Medical University, General Statistics Office and
World Health Organization. 2010. Global Adult Tobacco Survey (GATS) Viet Nam
2010.
Norman R. Higashi H, Vos T, Barendregt J, Linh BN, A AL. 2010. The burden of disease
attributable to tobacco smoking in Vietnam in 2006.
Nongnghiep Online. 2012. Appropriate roadmap for cigarette plants (in Vietnamese),
http://nongnghiep.vn/nongnghiepvn/vi-vn/72/45/45/75510/Lo-trinh-phu-hop-cho-
cay-thuoc-la.aspx, accessed on 28/7/2012).
Southeast Asia Tobacco Control Alliance. 2012. “Paving the way toward higher tobacco
taxes: Southeast Asia Initiative on Tobacco Tax (SITT) Year 2 Annual Report”
General Statistic Office. 2007. Vietnam Household Living Standard Survey 2006. Hanoi:
General Statistics Office.
The Government of Vietnam. 2000. Government Resolution No.12/2000/NQ-CP on
“National Tobacco control Policy 2000–2010.
The Government of Vietnam: Decision No. 1315/QĐ-TTg of the Prime Minister, on
Ratification of the Action plan for the Implementation of the WHO Framework
Convention on Tobacco Control. 2009.
Zhang, Ping. 2013. “Tool 5: Tobacco Control, Understand and Evaluate the Impact of
tobacco control policies on Employment” in Ayda Yurekli & Joy de Beyer (eds.) The
World Bank Economics of Tobacco Toolkit.
29

APPENDICES
Appendix 1. I-O Model Description
Input-output analysis is a means of examining relationships within an economy, both
between businesses and between businesses and final consumers. The analysis captures all
monetary market transactions for consumption in a given time period. The resulting
mathematical formula allows examination of the effect of a changing one or several
economic activities on an entire economy.
The core of the analysis is the construction and manipulation of input-output tables.
These tables describe the flow of goods and services in the economy in the matrix form.
There are three different matrices in a standard input-output model:
 Inter-industry transaction matrix:
This matrix describes the flow of goods and services between all individual sectors
of an economy in a given year. The rows of the transaction matrix display the distribution
of a particular industry’s output throughout the economy and the rows show the sales by a
particular industry from all other industries. For example, the data in the farming
(agriculture) sector column (Table A.1) show that, in order to produce its $30 million
output, the sector purchased $4 million from farm enterprises, $7 million from
manufacturing firms, and $6 million from service sectors, and made $13 million in
payments to the final payment sectors (households, gross savings, government, and
imports). The data in the farming sector row indicate that the sector sold $4 million to farm
enterprises, $8 million to manufacturing, $2 million to services, and $16 million to final
demand.
Table A.1. Illustrative Input-Output Transaction Matrix
Agriculture
Manufacturing
Service
Final
Demand
Total
Outputs
Agriculture
4
8
2
16
30
Manufacturing
7
15
6
22
50
Service
6
5
4
10
25
Final Payment
13
22
13
0
48
Total Inputs
30
50
25
48
153
 Direct requirement matrix:
This matrix indicates the requirements from each industry for a particular industry to
produce an average $1 of output. Obtain these purchase coefficients by dividing the
purchasing data in each industry column of the transaction matrix by the corresponding
output value for that industry.
For example, Table A.2 shows the results of these equations by using the data in
Table A.1, as follows. The first column (agriculture) shows that to produce an average $1
output, the sector buys $0.13 (4 ÷ 30) from farms, $0.23 (7 ÷ 30) from manufacturing
firms, and $0.20 (6 ÷ 30) from service sectors, and makes $0.44 (13 ÷ 30) of payments to
30

the final payments sectors. Of course, the sum of these input ratios is one. Assuming this
matrix also represents the spending pattern necessary for additional production, it is
possible to predict the effect of a change in final demand of the output on other sectors. For
example, assume that export demand for agricultural products increases by $10 million.
Based on the data in Table ii, the new demand requires purchases of $1.3 million from
agriculture, $2.3 million from manufacturing, and $2.0 million from the service sector.
This is called “direct effects” and in this example, they amount to a total impact on the
economy of $15.6 million (the initial change of $10 million plus the total direct effect of
$5.6 million). The effect of the increase in export demand on an economy, though,
continues beyond the point where the direct effect occurs, due to additional purchases
elsewhere. In the example, the agricultural sector increases purchases of manufactured
goods by $2.3 million. To supply agriculture’s new need for manufacturing products, the
manufacturing sector must increase production. To accomplish this, manufacturing firms
purchase additional inputs from other sectors of the economy: $0.37 million (2.3 × 0.16) of
agricultural goods, $0.69 million (2.3 × 0.30 = 0.69) from itself, and 0.23 million (2.3 ×
0.10) from the service sector. Thus, the impact on the economy from an increase in
agricultural exports is more than the $15.6 million first identified. The total impact is $15.6
million plus the indirect effect on manufacturing ($1.29 million) plus the indirect effect on
the service sector ($0.96 million) for a total of $17.85 million.
Table A.2. Illustrative Direct Requirement Matrix
Agriculture
Manufacturing
Service
Agriculture
0.13
0.16
0.08
Manufacturing
0.23
0.30
0.24
Service
0.20
0.10
0.16
Final Payment
0.44
0.44
0.52
Total Inputs
1.00
1.00
1.00
 Total Requirement Matrix:
The cycle doesn’t stop, however, after only two rounds of impacts. To supply the
manufacturing sector with the newly required inputs, agriculture must increase output
again, leading to an increase in manufacturing and trade sector outputs. The calculations
continue until the additional increases drop to an insignificant amount. The total impact on
an economy, then, is the sum of a series of direct and indirect impacts. The total
requirement matrix, also called the Leontief Inverse Table, contains both the direct and
indirect requirements (presented in Table A.3). In addition to the inter industry interactions
discussed above, this matrix can be extended to include the effect of household income and
spending.
Table A.3. Total Requirement Matrix
Agriculture
Manufacturing
Service
Agriculture
1.28
0.32
0.22
Manufacturing
0.55
1.64
0.52
Service
0.37
0.27
1.30
In Table A.3, data in the columns for each industry indicate the total requirements of
all industries necessary for that industry to deliver $1 of output to final demand. For
31

example, in order to increase output for agricultural sector by $1, there would be an
increase by $1.28 from agricultural sector itself along with by $0.55 from manufacturing
sector and by $0.37 from service sector. The total output increase of agriculture is the sum
of these three values, which is 2.2 times of the initial output expansion in the agriculture
sector. This is the concept of an output multiplier, which is a summary measure of
magnitude of the leverage that changes in one industry have on other industries.
The basic input-output model can be represented as a system of linear equations and
expressed in matrix form.
Let Xi = total output of industry i; Xij = total amount of the product of industry i
used by industry j; Yi = total amount of Xi left over for final demand (consumption apart
from other producing industries), then
(a.1)
(i.e., outputs are equal to the transactions plus final demands)
Let aij = Xij ÷ Xj, then
(a.2)
Equation (a.2) shows that output minus transactions equals final demands.
Let A = matrix of aij; X = vector of industry outputs; Y = vector of final demand; I =
identity matrix, then:
X = (I – A)-1 × Y, (a.3)
where: (I – A)-1 is called Leontief Inverse.
The equation shows that output is equal to Leontief Inverse multiplied by final
demands. This relationship is also held in the form of changes:
Δ X = (I – A)-1 × ΔY (a.4)
Let e = matrix [e] nx1, where [e]nx1 is the matrix employment-output coefficient by
sectors, in which n is the number of row (n = 1 to 48) and 1 is the number of column.
Then:
ΔE = e × X = e × [(I – A)-1 ΔY] (a.5)
From (a.5), we can get a vector whose element is the total amount of employment in
each sector that accompanies the new final demand, or the change in amount of
employments:
ΔE = e × ΔX = e × [(I – A)-1 × ΔY] (a.6)
Generally this analysis consists of following steps:
(1) Determining the effect of tobacco control on cigarette consumption from
previous studies. Then translate it into reduction of tobacco output.
(2) Estimate the change in final consumer demand for goods and services from a
reduction of cigarette expenditure
∑
=
+=
n
jijii XYX 1
i
n
jjiji
YXaX =−
∑
=1
32

(3) Determine the Output consequence
(4) Translate the change in output in to change in Employment
The key information needed to estimate the output consequence of changes in final
demand is the total requirement matrix and the matrix of change in the final demand for
goods and services resulting from the change in the final demand.
33

Appendix 2. Inverse IO Matrix
I-O
code 1 2 3a 3b 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
1
1.40
0.02
1.25
0.04
0.01
0.00
0.17
0.05
0.04
0.04
0.02
0.00
0.01
0.01
0.00
0.01
0.01
0.02
0.00
0.00
0.00
0.00
2
0.07
1.05
0.55
0.01
0.06
0.00
0.13
0.02
0.02
0.01
0.01
0.00
0.01
0.00
0.00
0.01
0.01
0.01
0.00
0.00
0.00
0.00
3a
0.30
0.04
2.64
0.02
0.02
0.00
0.35
0.08
0.09
0.03
0.03
0.01
0.01
0.01
0.01
0.02
0.02
0.03
0.00
0.00
0.00
0.00
3b
0.00
0.00
0.01
1.18
0.00
0.00
0.00
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
4
0.17
0.04
0.94
0.01
1.17
0.02
0.16
0.06
0.05
0.03
0.08
0.01
0.08
0.01
0.01
0.03
0.03
0.03
0.01
0.00
0.00
0.00
5
0.40
0.02
1.12
0.02
0.03
1.04
0.20
0.06
0.06
0.03
-
0.01
0.01
-
0.06
0.01
0.02
0.04
0.05
0.05
0.01
0.00
0.01
0.00
6
0.01
0.00
0.03
0.00
0.00
0.00
1.06
0.00
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.00
0.00
7
0.24
0.03
1.11
0.02
0.02
0.00
0.20
1.07
0.05
0.02
0.03
0.00
0.01
0.01
0.00
0.02
0.01
0.03
0.00
0.00
0.00
0.00
8
0.16
0.08
0.96
0.01
0.02
0.00
0.19
0.10
1.17
0.02
0.04
0.01
0.01
0.01
0.01
0.02
0.02
0.02
0.00
0.00
0.00
0.00
9
0.03
0.01
0.13
0.00
0.01
0.00
0.04
0.03
0.02
1.00
0.01
0.01
0.00
0.00
0.00
0.02
0.01
0.00
0.00
0.00
0.00
0.00
10
0.09
0.03
0.44
0.01
0.01
0.00
0.11
0.11
0.05
0.01
1.10
0.02
0.05
0.01
0.01
0.05
0.03
0.03
0.00
0.00
0.00
0.00
11
0.09
0.03
0.55
0.01
0.07
0.00
0.13
0.08
0.06
0.01
0.03
1.59
0.01
0.01
0.00
0.03
0.02
0.02
0.00
0.00
0.00
0.00
12
0.05
0.01
0.26
0.00
0.00
0.00
0.06
0.11
0.03
0.02
0.07
0.00
1.09
0.01
0.01
0.01
0.10
0.02
0.01
0.00
0.00
0.00
13
0.13
0.04
0.89
0.01
0.02
0.00
0.24
0.09
0.05
0.01
0.07
0.03
0.03
1.10
0.01
0.05
0.04
0.03
0.01
0.00
0.00
0.00
14
0.09
0.03
0.48
0.01
0.01
0.00
0.13
0.08
0.07
0.01
0.05
0.00
0.02
0.02
1.02
0.03
0.04
0.04
0.01
0.00
0.00
0.00
15
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.04
0.00
0.00
0.00
0.00
0.00
0.00
16
0.00
0.00
0.02
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01
1.04
0.00
0.00
0.00
0.00
0.00
17
0.00
0.01
0.02
0.00
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.12
0.00
0.00
0.00
0.00
18
0.01
0.00
0.05
0.00
0.00
0.00
0.02
0.02
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.04
0.01
0.00
1.02
0.00
0.00
0.00
19
0.02
0.00
0.18
0.00
0.00
0.00
0.04
0.02
0.01
0.00
0.02
0.00
0.00
0.01
0.00
0.03
0.01
0.01
0.00
1.07
0.00
0.00
20
0.03
0.01
0.16
0.00
0.00
0.00
0.04
0.03
0.01
0.00
0.02
0.01
0.01
0.01
0.00
0.05
0.03
0.01
0.00
0.00
1.01
0.00
21
0.15
0.02
0.73
0.01
0.62
0.01
0.12
0.05
0.03
0.02
0.05
0.01
0.05
0.01
0.01
0.03
0.05
0.03
0.01
0.00
0.00
1.00
34

Appendix 3. Employment–Output Ratio, Vietnam, 2010
I-O code
Sector
E - O ratio
1
Agriculture, forestry and fishing
0.486944
2
Mining and quarrying
0.005646
3a
Manufacturing
0.143367
3b
Tobacco manufacture
0.000266
4
Electricity, gas, steam and air conditioning supply
0.002667
5
Water supply; sewerage, waste management and remediation
activities
0.002406
6
Construction
0.062642
7
Wholesale and retail trade; repair of motor vehicles and
motorcycles
0.115218
8
Transportation and storage
0.029021
9
Accommodation and food service activities
0.037097
10
Information and communication
0.005273
11
Financial and insurance activities
0.005213
12
Real estate activities
0.002075
13
Professional, scientific and technical activities
0.004455
14
Administrative and support service activities
0.003799
15
Public administration and defense
0.02776
16
Education
0.034279
17
Human health and social work activities
0.008952
18
Arts, entertainment and recreation
0.004761
19
Other service activities
0.014079
20
Activities of households as employers; undifferentiated
goods- and services-producing activities of households for
own use
0.004029
21
Activities of extraterritorial organizations and bodies
5.2E-05
35