Back Matter
  • 1 https://isni.org/isni/0000000404811396, International Monetary Fund
  • | 2 https://isni.org/isni/0000000404811396, International Monetary Fund

References

Annex I. Mirror Data

Usefulness and Limitations of Derived Data

Direct investment positions by counterpart economy available at the CDIS allow for a comparison between data reported by one economy and mirror data reported by its counterpart CDIS reporting economies. Mirror information can be used to calculate derived data for direct investment. Derived data could be lower or higher than the CDIS data reported by a specific compiling economy. When reported data and derived data substantially differ, efforts are made to explain such differences and to address them, if feasible. Differences are often spread among several counterpart economies or concentrated in a limited number of counterparts. Differences can be explained due to bilateral asymmetries or because some relevant counterparts of the compiling economy may not participate in the CDIS, or provide data as confidential. If reported data by a given economy are lower than derived data, it can suggest under coverage.

Usefulness. Mirror data are a useful source of information for economies that do not compile direct investment positions (or compile direct investment with no counterpart economy detail) as they can give insights of their total inward and outward direct investment positions with breakdown by counterpart economy and can complement other data sources. In addition, the comparison between reported and derived data may be useful for economies that do compile direct investment data to cross-check and verify their own estimates and to highlight data gaps or errors, or identify areas for improvement.

Limitations. When using derived measures of direct investment, users should note that differences with actual data (reported or not) arise not only due to bilateral asymmetries between reporting economies. For example, some relevant counterparts of the compiling economy may not participate in the CDIS, or may not provide data for such economy due to confidentiality, or because these data fall below a reporting threshold. Therefore, the use of derived data should be done with caution.

Annex II. Fellow Enterprises

Fellow enterprises are enterprises under the control or influence of the same immediate or indirect investor but neither fellow enterprise controls or influences the other fellow enterprise (BPM6. Paragraph 6.17 c).

International guidelines establish that direct investment positions between fellow enterprises should be recorded in the CDIS based on the extended directional principle and, only when the residence of the UCP is unknown, these positions should be recorded on an assets liabilities basis.

Compilation methods (CDIS Guide, paragraph 4.10)

  • The extended directional principle implies that “both asset and liability positions between fellow enterprises are to be recorded in outward direct investment when the ultimate controlling parent is a resident, and in inward direct investment when the UCP is a nonresident”.

  • The assets liabilities principle implies “to record assets of a resident fellow enterprise on a nonresident fellow enterprise in outward direct investment, and to record liabilities of a resident fellow enterprise to a nonresident fellow enterprise in inward direct investment”.

Most CDIS reporters (around 85 percent) include direct investment positions with fellow enterprises in their total inward and outward direct investment positions and nearly half provide separate data on fellows. The CDIS metadata questionnaire shows that 50 percent of the CDIS reporters record direct investment positions with fellow enterprises abroad using the extended directional principle and around 30 percent of the economies apply the assets liabilities principle.

Annex III. Asymmetries in Data Between Fellows

This annex presents two scenarios: (a) when the ultimate controlling parent (UCP) is nonresident for both economies that is, it is resident in a third economy; and (b) when one economy collects consolidated data from local enterprise groups (LEGs).

(a) When the UCP is nonresident (additional examples to Section V, A)

Table 9 shows two examples of this type of asymmetry. The four countries included in this table record direct investment positions between fellow enterprises using the extended directional principle, according to their responses to the CDIS metadata questionnaire. The first example shows the positions between enterprises resident in Poland and their fellow enterprises resident in Spain. Both countries record a larger amount, in absolute value, under inward than under outward, because the ultimate controlling parents should be resident in a third economy (different than Poland or Spain). The difference between outward between fellow enterprises reported by Poland in Spain and inward between fellow enterprises reported by Spain from Poland is very large ($2.5 billion) and it is similar to the difference between the mirror values, that is, outward reported by Spain in Poland and the inward reported by Poland from Spain ($2.7 billion). In this case, when comparing the total net direct investment (outward minus inward) of one economy against the other, the bilateral asymmetry drops to $0.2 billion. The same occurs with the asymmetry on direct investment positions with fellow enterprises between Germany and Sweden; when comparing the total net values, the difference drops from around $1.2 billion to $0.1 billion.

Table 9.

Asymmetries when the Ultimate Controlling Parent is Nonresident for Both Economies as of end-2015

(US Dollars, millions)

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Source IMF CDIS, 2016 release

(b) When one economy collects consolidated data from local enterprise groups

When one economy collects consolidated data from local enterprise groups (LEGs), bilateral asymmetries can arise in the component: “direct investment between fellow enterprises” but bilateral asymmetries in total direct investment will not be affected.

What is a Local Enterprise Group?

Local (or territory-specific) enterprise group refers to an investor and the legal entities under that investor that are resident in the reporting economy (BPM6, paragraph 4.55).

Some economies collect consolidated direct investment data from the resident parent companies. In this case, direct investment positions of the affiliated units, that are resident in the compiling economy, are consolidated into a single enterprise and they are referred to as a local enterprise group (LEGs).

The local enterprise group consolidates data from the resident direct investor (or direct investment enterprise) with the data from its subsidiaries that could be fellow enterprises of nonresident companies. The consolidated data are recorded as outward if the reporting company is the direct investor or as inward if the reporting company is the direct investment enterprise, and in both cases, no values are recorded under “direct investment between fellow enterprises”.

When one economy collects its data through local enterprise groups and its counterpart economy collects data from individual enterprises, there could be bilateral asymmetries when compiling data between fellow enterprises.

Example

If fellow enterprise A is resident in economy A, which collects consolidated data from a local enterprise group (the reporting enterprise is the direct investor of the nonresident company) and its fellow enterprise B is resident in economy B, which collects data from individual enterprises.

If enterprise A provides a loan to enterprise B, economy A will record this loan under total outward direct investment and will not include any value under “direct investment between fellow enterprises” because consolidated data do not identify separate data for each enterprise which are part of the group, and economy B will record this loan under inward direct investment between fellow enterprises.

In this case, there would be a bilateral asymmetry between outward with fellow enterprises recorded by economy A (null) and inward with fellow enterprises recorded by economy B, but at aggregated level there would be no asymmetries; total outward reported by economy A would be consistent with total inward reported by economy B.

Table 10 shows an example when one economy collects data from local enterprise groups. In this case, the Netherlands collects consolidated direct investment data from local enterprise groups and Slovak Republic collects direct investment data from individual enterprises. The table shows that the former does not report any values on direct investment between fellow enterprises (the local enterprise group consolidates the data from all affiliated resident companies and does not identify the transactions or positions undertaken by fellow enterprises) which implies large asymmetries arising in this component (US$1.4 billion).

Table 10.

Asymmetries when One Economy Collects Data from LEGs as of end-2015

(US Dollars, millions)

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Source IMF CDIS, 2016 release

When comparing, total outward DI reported by the Netherlands with total inward reported by Slovak Republic, the bilateral difference decreases from more than $1 billion to almost zero as shown in table 10.

When one economy compile direct investment data from LEGs, the CDIS bilateral asymmetries should be analyzed at aggregated level (total inward vs. total outward) to eliminate asymmetries produced in the component “direct investment between fellow enterprises”.

Annex IV. Special Purpose Entities

Why Should SPEs Data Be Included in the CDIS?

SPEs are entities that channel a large amount of funds between entities outside the economy in which they are located and have little presence in the host economy. The creation of SPEs affects direct investment since these structures, generally located in countries offering tax or other advantages, generate cross border transactions and positions between subsidiaries located in different countries and are an important instrument in multinational enterprises organization. For these entities, most assets and liabilities are with nonresidents. SPEs are often used as devices to raise capital or to hold assets and liabilities and usually do not undertake significant production. Usually they have little or no physical presence and the funds they transfer may have limited impact on the local economy.

These units are to be included in the direct investment statistics of an economy even though the funds they transfer and the positions they hold may have little impact on the local economy. The funds are an integral part of a direct investor’s financial transactions and positions with affiliated enterprises; excluding these funds from direct investment would distort and substantially understate direct investment financial flows and positions at aggregate levels. On the other hand, the inclusion of these data in direct investment promotes symmetry and consistency among economies.

How can SPEs be identified?11

  • The enterprise is a legal entity, formally registered with a national authority and subject to fiscal and other legal obligations in the economy in which it is resident;

  • The enterprise is ultimately controlled by a nonresident parent company, either directly or indirectly;

  • The enterprise has few or no employees, little or no production in the host economy, and little or no physical presence;

  • Almost all the assets and liabilities of the enterprise represent investments in or from other economies; and

  • The core business of the enterprise consists of group financing or holding activities, this is, they channel funds from nonresidents to other nonresidents. However, in its daily activities, managing and directing plays only a minor role.

Annex V. Economies Reporting Data on Fellow Enterprises to the CDIS

Inward direct investment

The table below shows the top 15 inward economies that report data for fellows, ranked per the size of their total investment. For all economies reporting fellow enterprises data for inward, positions with fellow enterprises represent 2 percent of total inward direct investment12. The highest percentage corresponds to Belgium (40 percent in absolute terms), followed by Mexico (12.7 percent). The lowest percentages correspond to Switzerland (0.6 percent in absolute terms and Mauritius with 0.8 percent).

Table 11-A.

Inward Direct Investment Positions – Economies Reporting 2015 Data for Fellow Enterprises

(US Dollars, millions)

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Source IMF’s CDIS, 2016 releaseEconomies listed are those that separately identify fellows’ data.Fellow enterprises’ data are an of which item of total inward.

Outward Direct Investment

The table below shows the top 15 outward economies that report data for fellows, ranked per the size of their total investment. For all economies reporting fellow enterprises data for outward, positions with fellow enterprises represent 0.7 percent of total outward investment. The highest percentages correspond to Spain, with a 4.4 percent in absolute terms, followed by Republic of Korea, and Russian Federation, with 4.3 and 4.2 percent respectively. The lowest percentages correspond to Cyprus, Switzerland, and China, P.R.: Hong Kong with percentages rounded to 0.0 percent.

Table 11-B.

Outward Direct Investment Positions – Economies Reporting 2015 Data for Fellow Enterprises

(US Dollars, millions)

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Source IMF’s CDIS, 2016 releaseEconomies listed are those that separately identify fellows’ data.Fellow enterprises’ data is an of which item of total outward.

Annex VI. Top Economies Reporting Unallocated or Confidential Data

This analysis shows that 53 percent of the total “Not specified (including confidential)” for inward direct investment positions is concentrated in the top 16 economies listed in Table 12-A and 46 percent of the total “Not specified (including confidential)” for outward direct investment is concentrated in the top 10 economies listed in Table 12-B.

Table 12-A.

Not Specified over Total Inward Direct Investment for Individual Economies as of end-2015

(US Dollars, millions)

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Source IMF’s CDIS, 2016 release
Table 12-B.

Not Specified over Total Outward Direct Investment for Individual Economies as of end-2015

(US Dollars, millions)

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Source IMF’s CDIS, 2016 release

Annex VII. Information Included in the CDIS Metadata Questionnaire

  • i. Contact information of the reporting economy and information about the website used for disseminating direct investment data;

  • ii. Data sources and collection methods including information on whether data sources for direct investment are based on a sample or a census (with detail by sectors), the primary and secondary source(s) of information used in building the sample frame or census of resident direct investment enterprises /direct investors, the reporting threshold applied (indicating if direct investment data below the threshold are estimated), the source(s) of information used to collect CDIS data, the method, if any, used in estimating data for nonresponding units, and whether CDIS data refer to calendar or fiscal year;

  • iii. Valuation principles for equity investments (listed and unlisted) and for debt instruments (debt securities and other debt instruments); whether accrued interest is included in the valuation of debt instruments; and if the exchange rate at the end of the period is used to estimate positions for financial instruments denominated in a foreign currency;

  • iv. Other specific compilation issues such as coverage of flexible corporate structures with little or no physical presence, whether the reporting unit is an enterprise or a local enterprise group, whether positions of/with fellow enterprises are recorded on a straight Asset/Liability basis or depending on the residence of the UCP, information on how economies determine UCP, the method used to determine direct investment relationships, whether direct investment in real estate is included or no, and whether debt (including permanent debt) between selected affiliated financial corporations is included in or excluded from direct investment;

  • v. Questions to assess consistency of CDIS data with the IIP.

Annex VIII. Actions to Reduce Asymmetries

CDIS Participants: Specific Planned Actions to Reduce Asymmetries

Continue analyzing the reasons for discrepancies on an aggregated level. More active bilateral consultations and interaction with counterparts. Participation in the FDI Network (European countries)

  • Continue participation in the general annual exercise of the FDI Network.

  • Participate more actively.

  • Send more data on direct investment positions via the FDI network, more especially for the EU countries and instruments with the highest asymmetries.

  • Share the major identified asymmetries and discuss them at a micro-level data with the counterpart.

European Group Register

  • Continue work in progress, which will ensure that all EU countries in the future will have the same information on enterprise group structures when creating sample frames for direct investment surveys.

Revisions to CDIS data

  • Revise CDIS data as soon as annual direct investment survey results become available.

  • Transmit more regularly revised version of CDIS to IMF, in accordance with national revision and dissemination practices for direct investment.

  • Revise CDIS full time series data according to new methodological standards.

Enhance reporting systems and improve data sources

  • Address methodological issues.

  • Address misreporting and adjust figures accordingly.

  • Establish a mechanism to identify the counterpart economy in the case of SPEs.

  • Address lack of data coverage.

  • Apply new methods for the non-sample under coverage.

  • Improve collection methods and estimation techniques for intercompany loans.

  • Apply more rigorous validations and editing during processing of data.

  • Contact more actively the survey respondents to provide guidance on reporting in complex cases.

  • Improve information by counterpart economy particularly regarding the identification of the immediate counterpart (without looking through enterprises in the middle of an ownership chain) and in cases of complex organizational structures.

  • Examine possible under coverage due to misclassifications with portfolio investment.

1

We are thankful to Eduardo Valdivia-Velarde for his useful suggestions and comments.

3

For specific studies on asymmetries see related Statistical Papers at the Committee’s website.

4

Definition and compilation are described in Annex II.

5

See Austria’s CDIS metadata questionnaire, question i-11.

6

Own funds at book value: sum of (a) paid-up capital; (b) all types of reserves identified as equity in the enterprise’s balance sheet; (c) cumulated reinvested earnings; and (d) holding gains or losses included in own funds in the accounts, whether as revaluation reserves or profits or losses.

7

Chapter 9 of the BPM6 CG describes the data sources that can be available to compile international investment position statistics including the data sources that could be used to collect direct investment positions.

8

For the differences between the three methods, see 2015 CDIS Compilation Guide (paragraphs 2.38 to 2.54).

9

OECD’s FDI database contains as well very valuable information on bilateral DI positions, transactions, and income (See OECD.Stat).

10

See Work on Bilateral Asymmetries in the Coordinated Direct Investment Survey: Paper by IMF (BOPCOM 16/10).

11

OECD Benchmark Definition- BD4

12

Percentages for inward and outward data are calculated based on net figures (following the directional principle and netting liabilities and assets). Weights for gross liabilities and assets would be higher.