1. MANUFACTURING SERVICES ON INPUTS OWNED BY OTHERS
Edona Sekiraca
Acting Head of Balance of Payments Statistics Division
Central Bank of the Republic of Kosovo
3 June 2015

2. Content: Introduction
Concepts and definitions of manufacturing services
Data collection and compilation
Conducting the new survey

3. Introduction CBK is responsible for compiling the BoP statistics;
The significance of goods for processing for Kosovo s'Bop;
Only inward processing is relevant for Kosovo;
No entries is recorded in manufacturing services abroad at the moment;
Old methodology;
New methodology;
The Central Bank of the Republic of Kosovo (CBK) is responsible for compiling and disseminating b.o.p, i.i.p, and related external sector statistics such as the external debt, foreign direct investment statistics, and reserve assets statistics for Kosovo.
The first comprehensive annual statement of the Kosovo’s b.o.p. was published in 2006 with the data for the reference period Since 2009 quarterly b.o.p. statistics was published. From 2015, the CBK has started to publish b.o.p. data on a monthly basis. The data for the i.i.p. and external debt statistics (e.d.s.) were published for the first time in 2011 with an annual periodicity starting from starting from March 2015 b.o.p. statistics are compiled and published on monthly basis with a timeliness of t + 60 days. Whereas, the i.i.p. and e.d.s. statistics are published on a quarterly basis with a timelines of t + 90 days.
We don’t have so much to say for the manufacturing services, inward processing is not a significant item for Kosovo’s BoP; Only goods for processing in the compiling economy (inward processing) is currently relevant for Kosovo. No entries is recorded in manufacturing services abroad at the moment.
According to the old methodology the goods for processing were compiled using the CPC data as the difference between goods received for processing and goods returned to the country of origin after processing – were considered goods for processing. With the new methodology we have conducted a new survey with the main manufacturer companies in Kosovo.

4. Concepts and definitions
Manufacturing services on physical inputs owned by others cover processing, assembly, labelling, packing, undertaken by enterprises that do not own the goods concerned.
The manufacturing is undertaken by an entity that does not own the goods and that is paid a fee by the owner. In these cases, the ownership of the goods does not change, so no general merchandise transaction is recorded between the processor and the owner.

5. Concepts and definitions
Manufacturing services in physical inputs own by others cover the transaction between the owner and processor, and only the fee charged may cover the cost of materials purchased by the processor.
Merchanting services:
Includes oil refining, liquefaction of natural gas, production process of chemicals, assembly of clothing and electronics, car and computer manufacturing;
Excludes assembly of prefabricated construction (construction services) and labelling and packing incidental to transport (transport services).
In order to reconcile national accounts and balance of payments trade in goods data, with the IMTS data, it is recommended by the sixth edition of Balance of Payments and International Investment Position Manual that the value of the goods sent abroad for processing and returning from abroad after processing are recorded as supplementary items, rather than a debit and a credit in manufacturing services.

6. Old methodology (BPM5) BPM 5 methodology
Imputed change of ownership when goods sent abroad for processing;
Goods for processing were recorded in gross basis;
Data source: CPC data
The value of the goods before and after processing should be recorded when the goods are imported and then exported, or vice versa:
Implementation. The guidance in the Goods Sent Abroad for Processing Manual identifies change of ownership as the key principle in determining whether cross-border movements of goods are treated as general merchandise in national accounts and BoP, or not. Where there is no change of ownership, then there is no general merchandise entry in the trade in goods account, but rather a trade in service transaction (manufacturing services on physical inputs owned by others) that reflects the fee for processing paid by the owner.

7. New methodology (BPM6) New methodology:
Imputations no longer made: no change of ownership;
Payment of a fee to the processor, recorded as an import of “manufacturing services on physical inputs owned by others”.
Only the fee charged for processing the goods should be recorded under the manufacturing services.
Country X
Goods processed - 80 € (including rocessing services - 50 €)
Country X

8. BPM6 survey form
It was recommended by the Eurostat mission that CBK separately approach “processing” companies in Kosovo to collect the value of manufacturing services provided to non-residents, as the quality of CPC data may not be of sufficient quality to estimate exports of manufacturing services as the difference between goods received for processing and goods returned to the country of origin after processing.
Hence, we have designed an excel survey form in line with the IMF model survey form for manufacturing services and sent it to around 20 of the main inward processors identified via the ITRS. The deadline for reporting the survey is May 2015 for the months of This will provide data to be compared with the existing estimates based on the difference between goods received and returned after processing from Customs data.

9. Manufacturing services in Kosovo

10. Thank you for your attention