>> BOP/IIP and FDI by Jens Hald former head of BoP/IIP in Danmarks Nationalbank EU Twinning Project Support to the Israeli Central Bureau of Statistics Activity A.6, Jerusalem, 8-11 July, 2013

>> Who are the users?  International statistical bodies  IMF  OECD  EUROSTAT  ECB etc.  Israeli bodies  BoI  CBS  MoF  MoD etc. 2

>> What are the users’ needs?  International statistical bodies: To ”police” countries to fullfil the requirements in the BoP manuals  Israeli bodies: To increase long term structural economic growth, improve the defence situation of Israel (?) … 3

>> FINANCIAL ACCOUNT  Why is it so difficult to produce accurate statistics in this area?  Why are ”Errors and omissions” so big?  How accurate ought the statistics in this area to be? 4

>> COLLECTION SYSTEM Which data collection system is best? Pro et con:  Surveys  ITRS (information on payments through banks)  Administrative sources  Combination of systems 5

>> COMPILATION SYSTEM Which compilation system is best? Pro et con:  One system vs. combination of systems  Total coverage vs. sampling 6

>> Foreign direct investment (FDI) Why is FDI statistics neccessary or important? Which parts of the FDI statistics are considered to be essential, important or nice to have? 7

>> FDI– manuals and data reporting requirements  Distribution by countries and by economic industries  UCO (Ultimate Control Owner)  Cross investments  SPE-Special Purpose Entities  Real estate investments 8

>> FDI - distribution by countries Requirements, see ch.7 in BD4 Full breakdown by country and territory, i.e. more than 300 countries and territories! Details and problems Directional vs. Asset/Liability principle Supplementary requirements: Look through SPEs For inward FDI, BD4 “strongly encourages” the use of UIC (ultimate investing country) 9

>> FDI - full breakdown by industry (ISIC)  In their reporting to OECD, many countries are using Eurostats Vademecum, i.e. appr. 70 industries  In Denmark, we are able to break down into more than 500 industries.  Details and problems  Mandatory: Breakdown according to the activity of the direct investment enterprise  Supplementary: Breakdown according to the activity of the investor  Mergers & Acquisitions 10

>> FDI, continued  Institutional sector (p. 48, BD4) ?  Cross-classification by country and industry, cf. Vademecum  Confidentiality  UCO (Ultimate Control Owner) – Chapter 3&7 and Annex 10 11

>> FDI, cross investments Cross investments - Ch. 3 (pp )  Cross investments is another word for reverse investment  A complex concept  Presentations of FDI: IMF, ECB, OECD (Annex 2, BD4) 12

>> SPE - Special Purpose Entities SPE-Special Purpose Entities – Ch. 6 and Annex 7 (BD4)  No internationally accepted definition - Inward: relatively easy; used in Denmark - Outward: relatively difficult; not used in Denmark  ”BD4 recommends to differentiate between non-resident SPEs and non-resident non-SPEs …as a supplementary breakdown” (§319) 13

>> FDI - real estate investments Real estate investments pp in BD4 and pp in BPM6 Real estate investments are difficult to measure In Denmark:  non-residents’ purchases of ”real estate for non-commercial purposes” in Denmark is covered by data from Tax Authorities  residents’ purchases of ”real estate for non-commercial purposes” abroad is also covered by data from Tax Authorities  the data on inward investments are of higher quality than the data on outward investments – in both cases the data are used for Danmarks Nationalbanks estimations  getting the necessary data from the Tax Authorities took long and hard negotiations 14