Foreign Direct Investment non-mfis

Transcription

1 MEDSTAT III Foreign Direct Investment non-mfis BALANCE OF PAYMENTS STATISTICS DATA COLLECTION AND COMPILATION Rome, 9-10 June, 2011 Silvia Sabatini, Maurizio Iannaccone

2 Agenda Foreign Direct Investments General overview on the new data collection system Data sources for FDI Equity capital Other capital A look to the data page 1

3 Agenda Foreign Direct Investments The new data collection system Data sources for FDI Equity capital Other capital A look to the data page 2

4 Foreign Direct Investment Direct Investor Direct Investment enterprise FDI transactions and positions Round - tripping Extended Directional Principle Ultimate Controlling Parent - UCP Framework of Direct Investment Relationship - FDIR page 3

5 Foreign Direct Investment Objective of establishing a lasting interest Ownership of 10% of the voting power Influence versus control Main components: Equity Reinvested earnings Intercompany debts Includes initial equity transaction and subsequent transactions and positions page 4

6 Direct Investor an entity (an institutional unit) resident in one economy that has acquired, either directly or indirectly, at least 10% of the voting power of a corporation (enterprise), or equivalent for an unincorporated enterprise, resident in another economy. A direct investor could be: an individual; a group of related individuals; an incorporated or unincorporated enterprise; a public or private enterprise; a group of related enterprises; a government body; an estate, trust or other societal organisation; or any combination of the above. page 5

7 Direct Investment enterprise an enterprise resident in one economy and in which an investor resident in another economy owns, either directly or indirectly 10% or more of its voting power if it is incorporated or the equivalent for an unincorporated enterprise A direct investment enterprise could be: an incorporated or unincorporated enterprise; a public or private enterprise; a group of related enterprises; or an estate, trust or other societal organisation. page 6

8 Financial Flows FDI transactions Equity + Reinvested Earnings + Other Capital Income Flows Flows of funds within a given period of time Income on Equity (Dividends and Reinvested earnings) + Income on Debt FDI positions FDI Position Levels of accumulated investment at a given point in time Equity (Included Reinvested earnings) + Other Capital page 7

9 Round-tripping Definition provided by BD4 (annex 3 par.1.2): Round-tripping refers to the channelling abroad by direct investors of local funds and the subsequent return of these funds to the local economy in the form of direct investment. Economic effect: A domestic transaction is split in an Outward Direct Investment and an Inward Direct Investment. Different causes: - Tax advantages - Property right protection - Accessing better financial conditions - Avoid restrictions for capital movements - Money laundering Data sources used for the estimation: - DR information (FDI inward, UCP Identification) - SEC filing, Orbis Database (BvD), Investor Relations (Internet) Methodological Issue: Round-tripping performed by resident enterprises are not considered in the estimation procedure in order to avoid possible double counting effects due to the grossing up of DR results page 8

10 Is DI also the UCP? No Estimation of Round-tripping Yes Yes Is UCP a NP? Yes Is NP resident In Italy? Yes RA has a foreign DI? No No Is UCP resident In Italy? YES NO RT NO RT excluded No RT RA DI NP UCP Reporting Agent Direct Investor Natural Person Ultimate Controlling Parent page 9

11 Directional principle and Extended Directional Principle Directional principle Reflects the direction of influence by the direct investor underlying the direct investment: inward or outward direct investment FDI according to directional principle refers to the treatment of: Reverse investment FDI according to extended directional principle refers to the treatment of: Reverse investment Investments between fellow enterprises Resident Ultimate Controlling Parent Non Resident Ultimate Controlling Parent Outward investment Inward investment page 10

12 Identification of the UCP Identification of the UCP is crucial for: - FATS Outward Statistics - The application of ExDP to FDI statistics according to BD4 DR definition of group slightly deviates from commercial law and from FATS Regulation with the aim to preserve the quality of statistics and reduce reporting burdens (i.e. The minimum number of companies involved in a group relationship is 2; the effective control is applied with exclusion of de facto control) Future developments to improve the quality: - use of EuroGroup Register - conclusions of Task Force FDI requirements on EGR page 11

13 Is RA head of EG? No Estimation of country of UCP Yes Yes Is head of EG resident in Italy? No Is head of the EG controlled by a NP? No The RA pertains to an EG? Yes Yes Foreign UCP No Is head of the EG controlled by a NP? Yes Is NP resident In Italy? No No Yes RA Reporting Agent EG Enterprise Group Resident UCP NP UCP Natural Person Ultimate Controlling Parent page 12

14 Framework for Direct Investment Relationship (FDIR) A general framework Population of enterprises involved in FDI For the compiling economy: all enterprises related to a given enterprise Provides consistency and comparability for cross-country analysis Allows a better coverage of the enterprises involved in FDI page 13

15 Framework for Direct Investment Relationship (FDIR) Basic types of enterprises A subsidiary is an enterprise in which the investor has the control of more than 50% of the voting power; An associate is an enterprise in which the investor owns at least 10% of the voting power and no more than 50%; Fellow enterprises are enterprises which do not have enough (or any) voting power in each other to constitute FDI influence but have a common parent. Principles for extending the relationship through indirect ownership A series of subsidiaries can continue as long as control exists at each stage in the ownership chain. Any subsidiary can extend the FDI relationship to an associate by owning from 10 to 50% of the voting power of that enterprise. An associate can extend the FDI relationship to another associate of the higher level investor only by owning more than the 50% of the voting power of that enterprise. Such a chain of associates can be extended as long as majority ownership of voting power exists each stage. page 14

16 Framework for Direct Investment Relationship (FDIR) Consolidation perimeter and alternative methods Relationship with A E F G H I J FDIR included included included None Included None PMM (Partecipation Multiplication method) Included included None included None None DIIC (Direct influence / Indirect control method Included None None None included None page 15

17 Agenda Foreign Direct Investments The new data collection system Data sources for FDI Equity capital Other capital A look to the data page 16

18 The new data collection system compliant with present standards (BPM5/BD3) main innovations recommended by BD4 have been implemented (equity capital transactions distinguished among greenfield, M&A, extension of capital, ExDP, identification of SPEs, identification of UCP, etc.) critical issues related to the innovations of BD4 have been jointly analysed with reporting companies whenever necessary, concepts and definitions have been simplified and a step by step approach has been adopted in order to reduce the burden for companies (accounting consolidation perimeter as a proxy of FDIR) page 17

19 Agenda Foreign Direct Investments General overview on the new data collection system Data sources for FDI Equity capital Other capital A look to the data page 18

20 Data sources for FDI - Equity capital Resident institutional sector Data sources MFIs Integrated bank reports (IBR) OFIs Non financial and Insurance Companies Households Other financial institutions reports (OFIR) Direct Reporting (EMF, CAF), SEC filing, commercial data providers Tax authorities information, SEC filing, commercial data providers page 19

21 Data sources for FDI - Equity capital OFIs Type: Integrated OFIs Reporting Frequency: Monthly (Investment Funds); Quarterly (Real estate Funds, Private Equity, and other residual FI) Semi-annual (Investment firms) Data: Stock data (Flows are derived, adjustments are calculated) page 20

22 Data sources for FDI - Equity capital Non financial and Insurance Companies DR DR EMF Eventi Mensili Finanziari (Monthly financial events) Periodicity: monthly (companies have to report if the event occurs) Timeliness: 1 month after the end of the reference period Number of respondents: 5750 for 2011 Contents: Financial Events involving equity capital or dividends Questionnaire (for participations >=10%) greenfield changes in ownership (M&As) extension of capital provision of capital to cover losses distribution of ordinary dividends distribution of extraordinary dividends page 21

23 Data sources for FDI - Equity capital Non financial and Insurance Companies DR DR -- CAF CAF Consistenze Annuali Finanziarie (Annual stock data) Periodicity: yearly Timeliness: 6 months after the end of the reference year Number of respondents: 5750 for 2011 Contents: financial assets and liabilities of the reporting company referred to FDI Equity Capital (participation >=10%): equity shares with/without ISIN code other types Questionnaire page 22

24 Data sources for FDI - Equity capital Non financial and Insurance Companies Other data sources: Commercial data providers and SEC filing Data Providers available for M&A transactions: Bloomberg Zephyr (Bureau Van Dijk) SEC filing Aim: check EMF questionnaire integrate monthly DR flows with large transactions not covered (e.g. greenfields, households, DI or DIE not included in DR sample) Practical Issues: Numerous transactions available for each reference period Need to verify (amount, effective counterparts and relative details, reference period etc) via press releases or direct contacts Time-spending and labour-intensive activity page 23

25 Data sources for FDI - Equity capital Other data sources: FDI network The FDI Network has been established in the European Union in order to facilitate a secure exchange of information on FDI between compilers, Eurostat and ECB and increase the quality of statistics produced. In particular, the FDI Network aims at ensuring coherence between the balance of payments figures of the EU and those of the economic territory of the euro area, i.e. Member States which have adopted the single currency. Next steps and envisaged improvements: a major involvement of other EU countries also introducing transactions below the threshold extension to the exchange of positions Use of the FDI network in Italian BoP compliation procedure: check EMF questionnaire integrate monthly DR flows with large transactions received in the network page 24

26 Agenda Foreign Direct Investments General overview on the new data collection system Data sources for FDI Equity capital Other capital A look to the data page 25

27 Coverage: Trade credits (receivables and payables) between FDI related enterprises. It represents short-term credit in the ordinary course of business by suppliers/buyers of goods and services. Loans are financial assets that are created when a creditor lends funds directly to a debtor through an instrument that is not intended to be traded. It also covers treatment of financial leases and repurchase agreements. Deposits include savings deposits, term deposits, transferable and nontransferable deposits in local or foreign currencies. Debt securities include non-participating preferred shares, bonds, debentures, commercial paper, promissory notes and other non equity securities. Other (assets/liabilities): residual item for assets and liabilities between FDI related enterprises not included in the above items. Data sources: Data sources for FDI Other Capital As the coverage of FDI Other Capital matches perfectly with the coverage of the Other Investment BoP functional category, a joint description of data sources will be presented later on. page 26

28 Agenda Foreign Direct Investments General overview on the new data collection system Data sources for FDI Equity capital Other capital A look to the data page 27

29 A look to the data FDI stock data by geographical counterpart 90% FDI stock data - Assets FDI stock data - Liabilities 80% 100% 70% 90% 80% 60% 70% 50% 40% 60% 50% 40% 30% 30% 20% 10% 0% Europe America Asia Africa Oceania Not allocated % 10% 0% Europe America Asia Africa Oceania Not allocated page 28

30 A look to the data FDI stock data vis-à-vis Mediterranean countries (millions of euros) Assets Liabilities page 29

31 70% 60% 50% 40% 30% 20% 10% 0% MEDSTAT III A look to the data FDI stock data vis-à-vis Mediterranean countries FDI assets FDI Liabilities 70% 60% 50% 40% 30% 20% 10% 0% page 30 Algeria Egypt Jordan Israel Lebanon Morocco Occupied Pales tinian Territory Syria Tunisia Algeria Egypt Jordan Israel Lebanon Morocco Occupied Palestinian Territory Syria Tunisia

32 MEDSTAT III Silvia Sabatini Maurizio Iannaccone Banca d Italia Statistics Collection and Processing Department External Statistics Division silvia.sabatini@bancaditalia.it maurizio.iannaccone@bancaditalia.it