MEETING OF THE WORKING GROUP ON FOREIGN · PDF fileFDI/2016/02 MEETING OF THE WORKING GROUP ON ... 2014 FDI flows data availability (T41 and T42 questionnaires at t+9 months)

EUROPEAN COMMISSION EUROSTAT Directorate G: Global Business Statistics Unit G2: Structural business statistics and global value chains

FDI/2016/02

MEETING OF THE WORKING GROUP ON

FOREIGN DIRECT INVESTMENT STATISTICS

15 JUNE 2016

BECH Building Meeting room QUETELET

5, rue Alphonse Weicker, L-2920 Luxembourg - Kirchberg

Starting: 10.00h Ending: 17.00h

Please note that there will be no interpretation service available. As a consequence, English will be

the common language for all presentations and discussions.

Delegates are invited to bring with them the copies they received through CIRCABC∗∗∗∗

∗ Website: https://circabc.europa.eu/w/browse/a89a8e8a-cdcd-476d-83c3-01d4c4ba381d Path: CIRCABC > Eurostat > Foreign Direct Investment statistics > Library >

2016.06.15 - FDI Working Group

FDI/2016/02

FDI data production cycle 2015

(Item n° 3 of the Agenda)

1

INTRODUCTION

The purpose of this document is to present the main outcomes of the annual FDI data reporting to Eurostat done by EU Member States in 2015, for the reference periods 2013-2014.

As a reminder, the last year production cycle was the second one made under the new BPM6/BD4 methodology.

Apart from the data deliveries and according to Regulation (EC) No 1055/2008, and its amendment No 1227/2010, each EU compiler must supply a quality report no later than 31 May every year. The quality report must cover the official FDI data requirements stated under Commission Regulation (EU) No 555/2012, and must be based on the quality criteria defined under Regulation (EC) No 223/2009.

During the last BOPWG meeting in April 2016, Eurostat presented the first feed-back of the 2016 BoP quality assessment which, at that date did not incorporate replies from all Member States.

As usually, the assessment of the 2015 FDI data transmission cycle addresses in the current document results of the quality reports with respect to completeness (data availability and disclosure of information - sections 1 and 2), punctuality and coherence (section 3).

Eurostat provides an overview on the quality of the data transmission achieved by non-EU countries (section 4).

After the overall quality appreciation done as a conclusion (section5), the last part of the document (section 6) focuses on the forthcoming 2016 data reporting due by end of September 2016, including the impact of the coming amendment to the Regulation (EC) No 184/2005.

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1. Data availability

For the reference period 2014, the EU average rate of completeness was estimated at 94%, both for FDI flows and FDI stocks.

This ratio is a bit higher than in the last year (91%) due to the new reporting made by Croatia with the BPM6-based structure, for the first time in 2015.

For the reference period 2013, FDI data transmission encompassed not only revised breakdowns by counterpart area but also data requests by economic activity. Some Member States had problems in providing a detailed activity breakdown, a new request that, in the context of FDI positions, was extended to the Special Purpose Entities (SPEs). Consequently, the EU average level of completeness observed on FDI stocks at "T+21" months was estimated at 88%, far behind EU completeness ratio observed in 2014 (above 94%).

Just like last year, half of the Member States reported values different from zero for FDI held by, or hosted by resident special purpose entities (SPEs). Remaining Member States were either not able to separately identify SPEs, or declared not being concerned by this issue when compiling their FDI statistics.

2014 FDI flows data availability (T41 and T42 questionnaires at t+9 months)

Overall, 95% of FDI flows and income data requirements by counterpart area have been fulfilled. Only Austria (62%) and France (67%) had a coverage rate below 90%, mainly due to the non-recording of reverse equity capital acquisitions (or reverse dividends), negligible in the majority of cases. In addition, the breakdown by functional category (i.e. excluding or between fellows and, for the later, according to UCP's residency) is performed only on debt instruments.

NB: For these two countries, the recording of (true) negligible amounts with nil values, as suggested by the BOP Vademecum, would have brought their completeness ratio at the same levels as those observed for other reporters.

3

2013 FDI flows data availability (T41, T42 and T43 at t+21 months)

Overall, completeness ratio of FDI flows and income data reported at "T+21" months is slightly inferior to the EU average ratio observed for the data transmission at "T+9" months (93% against 95%). Ireland, Sweden and, to a lesser extent Finland, have been particularly affected by activity breakdown requests, which reduced their completeness rate by more than 10 percentage points.

2014 FDI positions data availability (T51 questionnaire at t+9)

The EU overall availability ratio on FDI positions data was estimated at 94%, comparable with the one for FDI flows and despite of the expanded request on SPEs.

Different practices are still prevalent within the Member States not concerned by SPEs issues. While some of them report zero values, others leave empty the corresponding (SPEs) columns, thus reducing "artificially" their completeness ratio.

For the same reasons already expressed in the FDI flows section, Austria and France had a lower coverage rate than (most) other EU reporters (i.e. non-recording of reverse equity capital positions, breakdown by functional category and/or according to UCP's residency done only on debt positions).

Belgium kept the lowest completeness ratio (54%) mainly because of under-coverage of requested information by functional category. Data related to the debt positions between fellows were not available, there were no allocation of inward stocks between fellows by residency of the UCP, and SPEs' data were provided only on net basis.

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BE BG CZ DK DE EE IE GR ES FR HR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK

(%)

EU28 Member States

FDI flows data availability - 2013EU average 2013

93%

4

2013 FDI positions data availability (T51 and T52 questionnaires at t+21)

Official requirements on positions data at end 2013 were difficult to meet, mainly because of the new queries by activity extended to SPEs. As a result, the overall EU average completeness ratio was estimated at (only) 89%. Six countries – Ireland, France, Croatia, Lithuania, Slovakia and Finland - faced to a significant drop of their completeness ratio, when compared to those based on delivery of FDI positions at end 2014. Obviously and as already described above, the data availability of the reporting entities not recording any values vis-à-vis their resident SPEs is heavily impacted by all SPEs data requirement.

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BE BG CZ DK DE EE IE GR ES FR HR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK

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EU28 Member States

FDI stocks data availability - 2014EU average 2014

94%

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2. Disclosure of information / Confidentiality issues

Six Member States allowed Eurostat to disclose all the FDI data transmitted in September 2015 (i.e. no confidential flags found in the original datasets) – Bulgaria, Greece, Italy , Poland, Slovenia and Croatia. To some extent, Germany did not make use of the confidential flags system when delivering its FDI positions data and the Netherlands did the same for the transmission of their FDI flows information.

Reversely, FDI data for Slovakia are still not disclosed and a very restricted dissemination (less than 10% of provided cells) occurred with FDI data reported by Austria, Portugal, Finland and, to a lower extent, Luxembourg (only for FDI positions). For Austria , it should be pointed out that detailed FDI data excluding SPEs are disclosed nationally whilst these data do not enter in the scope of Eurostat FDI data dissemination.

Sixteen Member States are dealing with confidential data ("C" or "D" flags), on a smaller or larger scale according to the national sensitivity of the issue. In some cases and for practical reasons, some countries make an extensive use of "N" flags also to prevent the disclosure of confidential information. Therefore, these flags are not always used according to the guidelines expressed in the BOP Vademecum.

3. Punctuality and coherence of the datasets with integrity rules

3.1. Punctuality

In comparison with the previous production cycle, there has been a strong increase in the number of data transmission made on time. At end September 2015, Eurostat had the datasets from 25 Member States whilst there were only 15 having been able to deliver their figures on time the year before.

However, Eurostat could not fully benefit from this timeliness improvement mainly for two reasons:

• Several compilers omitted to deliver the FDI questionnaires by activity ("T43" and "T52"), requested for the first time at end September 2015. For consistency reasons, Eurostat had to wait for their availability before processing the whole FDI data package.

• Another critical point is the multiple data transmission done for a same questionnaire, not related to inconsistencies issues. This is due to either a non-operational flagging system, or a national data production policy not aligned on the Eurostat production cycle. During the bi-lateral validation process (with Eurostat), some Member States take this opportunity to provide recently revised FDI data.

Date of transmission notification Number of Member States

Before/ On the deadline 25

Within 15 days after the deadline 1

Later than 15 days after the deadline 2

6

Eurostat reminds that its annual FDI production cycle is bounded by the EU Regulation and, as far as possible, encourages countries to align their national FDI production and dissemination policy with that of Eurostat.

3.2. Coherence with integrity rules

Eurostat can report perfect consistency with integrity rules in almost all submitted datasets. With this excellent job at the Member State level, less "re-sendings" were made and Eurostat has been able to reduce the duration of its whole internal compilation process of EU aggregates by more than three weeks (compared with the previous production cycle).

4. Data transmission of non EU countries

Seven non-EU countries are involved in the Eurostat annual FDI data production cycle on a regular basis - Switzerland, Iceland, Norway, Macedonia, Montenegro, Serbia and Turkey . Thanks to their contribution and increasing involvement, Eurostat has enriched its external database and is more and more able to answer to an increasing number of FDI users requests related to these countries.

Switzerland provided Eurostat with its 2014 FDI data compiled for the first time under the new BPM6/BD4 methodology, and within the required deadline.

Iceland takes part to the annual BOP quality exercise, regularly providing coherent FDI datasets on time. But it is the only country transmitting its FDI datasets under "Excel", without using one of the two accepted SDMX format.

Norway is also a regular participant to the annual BOP quality exercise and made a consistent delivery of its 2014 data (only FDI positions and income) within 15 days after the official deadline.

Macedonia and Montenegro made on time and consistent deliveries of their 2014 FDI data.

Serbia and Turkey made on time, consistent and very detailed of their data covering the five requested FDI questionnaires over the 2013-2014 reference years.

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5. Conclusions on the results from the 2015 FDI data reporting to Eurostat

Overall the quality of 2015 annual FDI reporting cycle, covering the 2013-2014 reference periods, was very satisfactory vis-à-vis each Member States, and also vis-à-vis non EU countries. This can be considered being a very good performance just two years after the official implementation of the new FDI methodology.

Eurostat would like to thank all the data reporters for their hard work and strongly encourage them to intensify their efforts for further improving their results.

One of the remaining aspects on a way towards an optimal situation concerns the treatment of confidential data. Eurostat had to apply its data processing program for the treatment of secondary confidential flags for more than half of reported datasets. This deteriorates the timeliness of EU aggregates because the programs are "semi-automatic", and sometimes vary from the wishes or requirements of the concerned institutions. National data compilers able to take care of the secondary confidentiality in their national data treatment are strongly encouraged to do it.

In due time all the confidentiality treatments should be established at Member State level. The necessary know-how should be built where not yet available.

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6. The Next FDI annual production cycle - end of September 2016

FDI data requirements for the forthcoming 2016 (end September) production cycle are available in the Balance of Payments Vademecum of February 2016. A detailed presentation of the five FDI questionnaires is available on page 79 to 91 of the BOP Vademecum.

However and as announced in the introduction, amendment made by the European Parliament (EP) and the Council on Regulation (EC) No 184/2005 is about to be released, thus meaning its entry into force 20 days after the published date.

For the current FDI data collection, the implementation of the new Regulation Act impacts only on the transmission of the 2015 FDI data at T+9 months (end September 2016), as shown under paragraph 6.1 below:

6.1. New requirements at "T + 9 months" – 2015 reference period

� (Questionnaire T41 p 80 of the BOP Vademecum – FDI of all resident Units)

Entry line '1. Direct investment abroad (DIA) – Transactions' is replaced by:

Entry line '2. Direct investment in the reporting economy (DIRE) – Transactions' is replaced by:

* Mandatory from reference year 2015 onwards

Same lines shown under table 4.1 p 81 are considered to be updated accordingly.

Assets Liabilities NI NO

1 Direct investment abroad (DIA) - Transactions A.DO.#.%[email protected].$.I._X._X.FDI_T._Z Geo 6* Geo 6* Geo 6

Geographical breakdown


2 Direct Investiment in the reporting economy (DIRE) - Transactions A.DI.#.%[email protected].$.I._X._X.FDI_T._Z Geo 6* Geo 6* Geo 6


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Entry line '1. Income on direct investment abroad (DIA)' is replaced by:

Entry line '2. Income from direct investment in the reporting economy (DIRE)' is replaced by:




Entry line '1. Direct investment abroad (DIA)' is replaced by:

Entry line '2. Direct investment in the reporting economy (DIRE) ' is replaced by:



� (FDI with resident SPEs – all questionnaires T41, T42 and T51)

• No changes from the previous reporting cycle • FDI by resident SPEs is mandatory for all FDI flows, income and positions questionnaire

Credit Debit II IO

1 Income on direct investment abroad (DIA) A.DO.#.%[email protected].$.I._X._X.FDI_T._Z Geo 6* Geo 6* Geo 6


Credit Debit II IO

2 Income on direct investment in the reporting economy (DIRE) A.DI.#.%[email protected].$.I._X._X.FDI_T._Z Geo 6* Geo 6* Geo 6



1 Direct investment abroad (DIA) A.DO.#.%[email protected].$.I._X._X.FDI_T._Z Geo 6* Geo 6* Geo 6



2 Direct Investiment in the reporting economy (DIRE) A.DI.#.%[email protected].$.I._X._X.FDI_T._Z Geo 6* Geo 6* Geo 6


10

6.2.Requirements at "T + 21 months" – 2014 reference period

Requirements for the 2014 reference period refer to:

• The cross tabulation geographical and activity breakdown (T43 and T52 questionnaires) • Revisions of T41, T42 and T51 questionnaires, that is geographical breakdown revisions

of data (previously) reported at T+9 months during the 2015 production cycle.

No changes in the FDI requirements. Just take note on the bullet point below related to the geographical breakdown codes.

Eurostat reminds that FDI by resident SPEs is mandatory for all FDI flows, income and positions questionnaire

6.3.Other Requirements

� (Optional revisions for 2013 reference period…. but strongly encouraged by Eurostat)

In an optimal situation the FDI data sets would be "final" already in their first or at least second transmission round.

Nevertheless, whenever necessary and as far as possible, Eurostat encourages the Member States to provide a further revisions of their annual FDI data for reference year 2013, both on geographical and activity breakdown (i.e. the five questionnaires).

These deliveries allow Eurostat to make a final compilation of the 2013 EU FDI data, and to obtain a final consistency with quarterly FDI time series.

� (for information)

Eurostat has ended the compilation of FDI data under the old BPM5 methodology (i.e. reference period until 2012) and is no longer processing any FDI datasets with old format.

� (Geographical breakdown codes)

No changes as regards compulsory requirements. Euro/Extra Euro Area are requested now with 19 countries (I8 and J8 codes). As supplemental data and only for revised datasets, reporters are encouraged to provide also the Euro area information with 18 countries (I7 and J7 codes). However, this requirement is no longer mandatory.

As regards non-mandatory geographical codes, please note that Candidate countries are requested both according to its old (C4 code) and new composition (C5 code), as stayed on page 112 of the Vademecum.

� (Activity breakdown codification)

No changes.

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Annex 1 : Data availability for FDI flows, income and positions.

FDI flows & income (2014)

FDI flows and income (2013)

FDI stocks (2014)

FDI stocks (2013)

BE 94% 96% 54% 77%

BG 92% 88% 100% 97%

CZ 100% 99% 99% 99%

DK 94% 97% 98% 99%

DE 97% 97% 100% 99%

EE 100% 99% 100% 99%

IE 100% 66% 90% 50%

EL 97% 98% 100% 99%

ES 100% 100% 100% 99%

FR 67% 75% 62% 55%

HR 100% 100% 100% 77%

IT 97% 98% 100% 99%

CY 96% 98% 99% 99%

LV 96% 98% 99% 99%

LT 98% 99% 100% 77%

LU 100% 100% 100% 100%

HU 99% 98% 99% 98%

MT 97% 98% 86% 94%

NL 96% 97% 100% 98%

AT 62% 60% 62% 51%

PL 99% 98% 99% 98%

PT 100% 96% 100% 96%

RO 97% 97% 100% 99%

SI 99% 99% 100% 99%

SK 91% 95% 100% 77%

FI 96% 79% 100% 62%

SE 100% 81% 100% 99%

UK 94% 94% 94% 94%

EU 95% 93% 94% 89%

IS 16% 27% 36% 18%

NO 21% 27% 49% 32%

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Annex 2: percentage of available cells for dissemination

FDI flows and income FDI stocks % provided cells % value % provided cells % value

2013 2014 2013 2014 2013 2014 2013 2014 BE 77% 74% 84% 77% 96% 93% 99% 99%

BG 100% 100% 100% 100% 100% 100% 100% 100%

CZ 89% 89% 80% 76% 92% 89% 90% 91%

DK 96% 97% 96% 96% 96% 99% 99% 99%

DE 98% 99% 99% 99% 89% 100% 99% 100%

EE 89% 91% 98% 99% 90% 93% 99% 99%

IE 80% 79% 86% 89% 70% 70% 95% 95%

EL 100% 100% 100% 100% 100% 100% 100% 100%

ES 16% 18% 59% 46% 14% 18% 66% 54%

FR 39% 62% 71% 76% 56% 77% 99% 99%

HR 100% 100% 100% 100% 100% 100% 100% 100%

IT 100% 100% 100% 100% 100% 100% 100% 100%

CY 76% 73% 77% 72% 76% 73% 77% 81%

LV 38% 90% 66% 98% 99% 88% 99% 99%

LT 99% 94% 99% 99% 99% 94% 99% 99%

LU 10% 21% 28% 31% 3% 7% 17% 24%

HU 95% 89% 99% 99% 95% 89% 99% 99%

MT 82% 73% 99% 99% 80% 68% 99% 99%

NL 100% 100% 100% 100% 99% 98% 99% 99%

AT 9% 10% 24% 25% 6% 6% 25% 25%

PL 100% 100% 100% 100% 100% 100% 100% 100%

PT 5% 10% 16% 20% 5% 8% 21% 25%

RO 84% 84% 92% 93% 90% 88% 99% 99%

SI 100% 100% 100% 100% 100% 100% 100% 100%

SK 0% 0% 0% 0% 0% 0% 0% 0%

FI 8% 5% 42% 43% 4% 5% 49% 49%

SE 85% 79% 94% 90% 85% 78% 94% 99%

UK 70% 79% 81% 61% 80% 86% 95% 99%

IS - - - - - - - -

NO 74% 87% 94% 95% 93% 0% 98% 0%

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Annex 3: First FDI data transmission to Eurostat

Before/On the deadline

Within 15 days Later than 15

days a

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MEETING OF THE WORKING GROUP ON FOREIGN · PDF fileFDI/2016/02 MEETING OF THE WORKING GROUP ON ... 2014 FDI flows data availability (T41 and T42 questionnaires at t+9 months)