Foreign%20Direct%20Investments%20Comments%20by%20Eeva%20Hamunen,%20Statistics%20Finland%20on%20the%20IMF%20paper%20THE%20NEED%20FOR%20HIGH%20QUALITY%20DATA%20ON%20FDI%20IN%20THE%20INTERNATIONAL%20AND%20NATIONAL%20ECONOMIC%20ACCOUNTS

1
Foreign Direct InvestmentsComments by Eeva
Hamunen, Statistics Finland on the IMF paperTHE
NEED FOR HIGH QUALITY DATA ON FDI IN THE
INTERNATIONAL AND NATIONAL ECONOMIC ACCOUNTS
Agenda item 9

• GGNA 11.-13.5.2009 IMPACT OF GLOBALISATION ON
  NATIONAL ACCOUNTS

2
FDI from the perspective of National Accounts

• Important SNA transactions are produced in FDI
  statistics, though FDI and BOP use functional
  categories and different terminology
• In financial accounts of SNA foreign direct
  investments are included under different
  instruments debt securities, loans, equity, trade
  credits and other instruments
• In non-financial accounts of SNA terminology and
  classification of property income differ from BOP

3
SNA 2008

• SNA 2008 recommends FDI to be shown as memorandum
  items in financial accounts and balance sheets
• Table 26.6. In SNA 2008 Chapter 26 shows the
  links between financial assets and BOP functional
  categories

4
About practice

• For national accountants FDI statistics may not
  be very familiar, particularly if balance of
  payments and FDI are not compiled by the same
  institution
• The new SNA improves the situation
• This requires more co-operation between
  compilers of FDI, NA and FA

5
In Finland

• Bank of Finland is responsible for FDI statistics
• Statistics Finland is in charge of national and
  financial accounts
• Business register maintained by Statistics
  Finland is used both for FDI and source
  statistics of NA
• Frames of the FDI surveys are mainly based on the
  information on foreign ownership of resident
  enterprises in the business register as well as
  on the register of consolidated enterprises
  maintained by Statistics Finland

6
Data sources in Finland

• For FDI statistics
• a cut-off type annual survey with estimation
  procedure for the tail based on financial
  statements
• major enterprises supply monthly BoP/FDI data
  excl. reinvested earnings and equity stock
• For non-financial and financial accounts the main
  source is Structural Business Statistics
• Foreign-owned enterprises in Finland are not
  treated separately for NA and FA purposes

7
About data compilation in Finland

• Operating surplus data of NA is a residual item
  after some modifications made in the basic data
• However, reinvested earnings for NA are taken
  from BOP (FDI) as such

8
Some general problems in compilation of FDI
statistics

• Reinvested earnings and profits difficult to
  estimate before survey data available risk of
  marked revisions
• COP-concept applied but difficult in practice
  how to identify holding gains and losses no
  support from IFRS
• Reinvested earnings and dividends have mirror
  image in COP
• One problem for NA is that treatment of
  re-invested earnings on FDI introduces asymmetry
  to sector accounts - which however are very
  important for SNA statistics

9
More problems in practice

• Foreign unincorporated branches included in
  inward FDI only if separate accounts available
  but for the most part are included in NA
• Who is the ultimate controlling parent (UCP)
• Accounting practices vary between countries
• Global financial centres are a problem
• Unlisted shares, untraded equity - difficult to
  estimate and value
• A special problem construction projects abroad

10
What is important

• A common business register with one single
  identification number is first step to coherence
  - the BR should be used for all macro economic
  statistics
• Enterprise group register helps very much FDI
  data collection
• In Europe EuroGroups Register is under
  development for the major European groups

11
We welcome

• In EU the FDI network is under development
• The new Regulation on European Statistics
  exchange of confidential data is allowed
• The new co-ordinated CDIS-survey
• Memorandum items for FA and balance sheets in SNA
  2008