Ability to apply some forecasting models for Vietnam Customs

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Ninh Binh Customs officers (Ha Nam Ninh Customs Department) inspect and guide businesses in implementing regulations in the customs field. Photo: Hong Nu

Apply forecasting methods around the world

The choice of forecasting method depends on the field of activity. In forecasting fields related to natural phenomena, quantitative methods are often used such as modeling and scenario methods. However, depending on each field and industry, forecasting methods may be different.

For example, in Europe, models of environmental change are divided into different themes such as agriculture; Air quality; Biodiversity; climate; energy; using land; solid waste; water, each topic often has many models/tools.

Specifically in the field of energy and environment, Europe is currently using some of the following models: E3ME: Economic, environmental and energy model; MESSAGE: Alternative energy supply strategy model and overall environmental impact; GEM-E3: General equilibrium model for environment, economy and energy.

Currently in the world, in the field of environmental resources, many models are being researched and applied to predict the rate of ice melt in the Arctic, greenhouse gas emissions, and vegetation cover on earth in the future.

The choice of forecasting method depends largely on the forecasting object, forecasting purpose and base data.

Forecasting methods/models in Vietnam

In Vietnam, forecasting plays a very important role in strategic management and planning, as well as being applied in many different fields, especially in the socio-economic sector. Socio-economic forecasting is one of the essential tools in macroeconomic management so that the economy and social activities develop in a sustainable manner, avoiding major disturbances that can affect the initial target.

Vietnam currently mainly uses 3 specific forecasting methods (in one method there can be many different models) as follows:

a. Extrapolation method

The essence of the extrapolation method is to extend the rules formed in the past to make predictions for the future. The basic assumption of this method is the preservation of the rhythm, relationships and development rules of the forecast object in the past for the future. The information provided for the extrapolation method is data about the movements of the forecast object in the past over a certain number of years, usually requiring the past period of data to be many times larger than the forecast period. This method is suitable for predicting objects that develop in a progressive type. The extrapolation method has the advantage of being simple, but the main disadvantage is that it cannot calculate the influence of objective factors on the forecast results.

b. Professional solution

The essence of the expert method is to get the opinions of experts to make forecast results. This method is implemented according to a strict process including many stages: establishing an expert group, evaluating expert capacity, formulating questions and mathematically processing the results obtained from expert opinions. The difficulty of this method is selecting and evaluating the abilities of experts. This method is effectively applied to subjects lacking (or not enough) statistical data, developments with great uncertainty, or subjects of complex forecasts without background data. The results of this forecasting method mainly serve the needs of orientation and management, so it should be combined (where possible) with other quantitative methods.

c. Modeling method

The approach of this method is to use mathematical relations to describe the relationship between the forecast object and related factors. Modeling methods applied to economic and natural resources-environmental research will have to use many equations of econometric models because the object of forecasting (the relationship between economic activities and environmental quality, resource use) is related to many economic factors such as GDP, prices. This method requires data on many relevant factors in the past, while the extrapolation method only requires one type of data. However, this method also has advantages, which is that it can explain forecast results and analyze the influence of factors related to forecast results.

Currently in Vietnam, the customs sector mainly applies simple extrapolation models to forecast human resource growth and forecast tax revenue over the years.

Recommend application

Forecasting changes in human resources, the amount of imported and exported goods, the number of containers through, the number of declarations through, and customs tax revenue is extremely necessary. However, in the current conditions of information, data, equipment and human resources, it is necessary to focus on researching and applying some of the following methods/models.

1. Apply the I-O Model: The I-O model can be used to forecast the resource consumption of the economy at a certain time. To use this model, it is necessary to have enough data (many years of data to use trend extrapolation method) on economic growth, input materials, output products, and each production sector.

2. Research and modify the MESSAGE model so that it can be applied to the Vietnamese case in predicting the environmental impacts of alternative energy strategies. For example, climate change is considered a consequence of greenhouse gas emissions in the past and currently the whole world is making efforts to reduce emissions but it is not easy and the impact of global climate change is becoming more and more apparent. The results of this model can help Customs authorities plan management policies in a circular economy, towards Green Customs.

3. Applying the expert method (delphi) needs to take into account Vietnam's social and institutional environment: This qualitative method is suitable for Vietnam's current conditions when there is a lack of long-term data on the current state of operations of the Customs agency. This method can be applied and brings reliable results if done correctly and with all the steps. In particular, this method is suitable for determining industry development goals for the period up to 2030, in accordance with the deadline for implementing the Customs Development Strategy with specific goals.

4. Using more than one method in combination may yield more reliable results. Apply simple extrapolation and linear extrapolation models in forecasting the volume of imported and exported goods, import-export turnover, container volume, declaration volume and other professional indicators in the Customs agency.

The areas that can be forecasted first need to focus on forecasts for operative purposes such as the amount of goods, import-export turnover, number of declarations, and number of civil servants to be recruited. Another requirement before designing and building a model for forecasting is input data and information. For example, long-term data, even 20-30 years, it is needed to be able to run a model to forecast future fluctuations, based on time-series correlation data.

Thus, it can be concluded that forecasting serves as a planning tool for the Customs agency. Forecasts help Customs make strategic decisions and ensure the implementation of political tasks.