OECD Working Party on International Trade in Goods and Trade in Services Statistics November 2011
Australian Bureau of Statistics
Foreign Affiliate Trade in Services
Overview
• BoP covers resident to non-resident activity
• From this perspective, trade by foreign affiliates is considered non-resident
• Trade by foreign affiliates important for trade negotiations and understanding reach of an economy
Overview (continued)
• Service providers can and do establish overseas presence
• The WTO’s General Agreement on Trade in Services (GATS) identifies four “modes of supply”
• Wider definition than BoP
Modes of Supply
Modes of Supply
ABS Studies
• Australian Outward Finance and Insurance Foreign Affiliate Trade, 2009-10 (5485.0)
• Australian Outward Foreign Affiliate Trade, 2002-03 (5495.0)
• Economic Activity of Foreign Owned Businesses in Australia, 2000-01 (5494.0)
SOFI FATS
• Survey of Outward Finance and Insurance Foreign Affiliate Trade in Services (SOFI FATS)
• Survey funded by the Australian Department of Foreign Affairs and Trade (DFAT)
• Limited Resources• No funding for inwards equivalent
SOFI FATS (continued)
• Run in respect of the 2009-10 reference period– only for OUTWARD trade
– only for the finance and insurance industry
• Survey in 2002-03 identified finance and insurance industry as the largest services industry
• Sent to ALL Australian enterprises who may have affiliates overseas that primarily trade in finance and/or insurance
SOFI FATS (continued)
• Only affiliates that were controlled by Australian resident enterprises were included (i.e. greater than 50% ownership)
• Frame created from a question about direct investment in the International Investment survey.
• Direct investment includes all investment where the investor owns 10% or more of total equity capital.
SOFI FATS (continued)
• Survey collected data on:
– Number of affiliates– Employment, wages and salaries– Sales and purchases of services– Equity and profit
• FISIM and GVA data were derived from the data collected
SOFI FATS (continued)
• Processing was done using IPS and Microsoft EXCEL
• Confidentiality – ABS confidentiality rules– Perturbation– Collapsing cells
The Form
• Very detailed
• Large provider burden
• Asked for Balance sheet information, and detailed profit/loss statements
• Electronic and utilised macros
• Split between resident/non-resident was key
The Form (continued)
• Original plan to send to affiliates, but feedback indicated that parents wished to complete themselves
Results
• 30 Australian enterprises with 1,245 finance and insurance affiliates
• 70 Countries
Results (continued)
• 75,919 staff employed– $6.7 billion in wages and salaries
paid.
• $71.1 billion in Australian equity
• $6.5 billion in profit
• New Zealand, United Kingdom and the United States dominated data.
Results (continued)
• $39b in finance & insurance sales• FISIM high proportion of total sales• 96% of sales (mode of supply 3)• Shows most activity in host country
Global Financial Crisis Impacts
• GFC likely to have impacted profits.• Return on equity 6.8%• Difficult to measure impact• Ratio of income earned to stock down.
Global Financial Crisis Impacts (continued)
• Americas only $99 million profit.• Rates of return on equity for each
region:– Americas -0.1%– Europe 2.7%– Asia-Pacific 13.2%
2002-03 2009-10 Comparison
• Number of affiliates rose from 463 to 1245 (169%)
• Sales (excl. FISIM) rose 11%• Purchases (excl. FISIM) rose 150%
Conclusion
• Unlikely for a survey like this to be run in near future
• Prefer to cover all industries
• Prefer to collect both inward and outward
• OECD provided useful comments which will be used in future studies
Discussion points
• Experience of other countries
• Managing expectations from a client-funded survey
• Impact of confidentiality
• Testing data collection from non-residents
• The challenge of presenting asymmetrical views of data
