Appendix III. Additional Items

Rita Mesias
Published Date:
October 2015
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III.1 In addition to respondent identification information and data on direct investment positions that are needed for participating in the IMF’s CDIS, compilers may wish to collect additional data items on their direct investment surveys for their own purposes. It is more efficient to collect several items on the same survey than to conduct numerous separate surveys pertaining to the same respondents.

Industry Classification

General Principles to Identify Industry Allocation1

III.2 There is significant interest in the industry classification of both direct investment enterprises (DIENTs) and their direct investors (DIs). However, DIENTs and DIs engage in a variety of economic activities. For a comprehensive economic analysis, enterprises should be grouped by type of activity. Under ideal circumstances, data should be available to compilers to classify both inward and outward direct investment on a dual basis to the industry of the DIENT and the industry of its DI.

III.3 If data for both inward and outward direct investment cannot be compiled on both of these bases, it is suggested that data be compiled at least on the activity of the DIENT, for both inward and outward direct investment. In other words, inward direct investment should reflect the industry of the resident DIENT and outward investment should reflect the industry of the nonresident DIENT (i.e., of the foreign affiliate).

III.4 Each DI and each DIENT must be classified to a single industry, even though many DIs and DIENTs are involved in a wide range of activities. The industry classification of the enterprise should be based on its principal activity. Ideally, the principal product or service will be determined with regard to the value added of the enterprise. In some cases, it is recognized that data on value added may not be available and that data on sales, revenues, or payroll or other basis may need to serve as a proxy.

III.5 It is recommended for direct investment statistics that when the enterprise (DI or DIENT) is part of a local enterprise group (LEG), the industry classification be that of the LEG’s primary activity. This is determined by the local group’s principal product or group of products produced or distributed, or services rendered. Again, value added weight is ideal for this determination.

III.6 A DI involved in a wide range of activities may make its overseas investment in each activity through numerous separate domestic subsidiaries specializing in a given activity, or it may make all of its overseas investment through a single domestic subsidiary established to handle overseas investments or a mixture of these approaches. For data that are presented based on the industry of the DI, the industry corresponds to the main activity of the DI, including all of its activities in its own country of residence. This approach avoids distortions due to different organizational arrangements.

III.7 Data that are presented based on the industry of the DIENT should be based on the reporting enterprise. (If the reporting unit is both a DIENT and a DI, its industry classification should be based on the activities that it conducts and should exclude those conducted by its own foreign affiliates.) In general, DIENTs will reflect their operations in a given economy and in this circumstance it is recommended that the industry of the enterprise represent the primary activity of the enterprise (including all of its consolidated subsidiaries, associates, and branches in its economy of residence if a LEG is used as the statistical data reporting unit).

International Standard Industry Classification (ISIC)

III.8 Economies should compile data by industries that correspond to the major tabulation categories in the United Nations’ ISIC.2 The major categories in ISIC Revision 4 are:

  • A – Agriculture, forestry, and fishing
  • B – Mining and quarrying
  • C – Manufacturing
  • D – Electricity, gas, steam, and air conditioning supply
  • E – Water supply, sewerage, waste management, and remediation activities
  • F – Construction
  • G – Wholesale and retail trade; repair of motor vehicle and motorcycles
  • H – Transportation and storage
  • I – Accommodation and food service activities
  • J – Information and communication
  • K – Financial and insurance activities
  • L – Real estate activities
  • M – Professional, scientific, and technical activities
  • N – Administrative and support service activities
  • O – Public administration and defense, compulsory social security
  • P – Education
  • Q – Human health and social work activities
  • R – Arts, entertainment, and recreation
  • S – Other service activities
  • T – Activities of households as employers; undifferentiated goods- and services-producing activities of households for own use
  • U – Activities of extraterritorial organizations and bodies.

Direct Investment Income

III.9 For details on the concepts of direct investment income, see Chapter 11 in Balance of Payments and International Investment Position Manual (BPM6). BPM6 can be found on the IMF website at

Direct Investment Financial Transactions

III.10 For details on the concepts of direct investment financial transactions, see Chapter 8 in BPM6.

Market Valuation of Equity

III.11 For details on other market valuation principles, see paragraphs 7.16-7.18 in BPM6.

Ultimate Investing Economy

III.12 There are two possible approaches to identify the residence of the DI (for inward direct investment): (1) by immediate counterpart economy, and (2) by ultimate investing economy (UIE).

III.13 The CDIS collects direct investment data by immediate (first) counterpart economy for both inward and outward direct investment. For direct investment, it is possible to determine not only the immediate counterparty economy but also the UIE. For example, the ultimate investor for inward investment is the enterprise that has control over the investment decision to have a direct investment position in the resident DIENT. As such, the ultimate investor controls the immediate DI and is, therefore, the ultimate controlling parent (UCP) of this investor. It is identified by proceeding up the immediate DIs ownership chain through the controlling links (ownership of more than 50 percent of the voting power) until an enterprise is reached that is not controlled by another enterprise. If there is no enterprise that controls the immediate DI, then the immediate DI might be considered the ultimate investor in the DIENT. There will be one (and only one) ultimate investor (i.e., UCP), for each DI (immediate) in the resident DIENT.

III.14 The economy in which the ultimate investor is resident is the UIE for the investment in the DIENT. It is possible that the ultimate investor is a resident of the same economy as the DIENT. (See round tripping, paragraphs III.17-III.20).

III.15 Where a resident DIENT has multiple (immediate) DIs, it may also have direct investment from multiples UIEs. For more information about UIEs see Annex 10 in BD4.

Pass-through Funds

III.16 “Pass-through funds” or “funds in transit” are funds that pass through an enterprise resident in one economy to an affiliate in another economy, so that the funds do not stay in the economy of the affiliate. These funds are often associated with direct investment. Such flows often have little impact on the economy they pass through. While special purpose entities (SPEs), holding companies and financial institutions that serve other nonfinancial affiliates are particularly associated with funds in transit, other enterprises may also have pass-through funds in direct investment flows.

Round Tripping

III.17 Round tripping is a specific case of pass-through funds that involves funds from an entity in one economy (i.e., a host economy) being invested in an entity resident in a second economy (i.e., a routing economy) then having them reinvested in an entity in the first economy. The entity in the routing economy often has limited operations of its own.

III.18 From the perspective of the host economy, the simplest example of round tripping occurs when a domestic investment is disguised as direct investment through a nonresident subsidiary or associate in the routing economy. In Figure AIII.1, Enterprise A in the host economy provides direct investment funds to a nonresident related Enterprise B in the routing economy for investing back in another Enterprise C in the host economy. On the other hand, round tripping can also be viewed from the perspective of the routing economy, in other words, Enterprise B in the routing economy receives direct investment funds from Enterprise A in the host economy, and reinvests these funds in Enterprise C in the host economy.

Figure AIII.1Round Tripping

III.19 Pass-through funds and round tripping of funds within a direct investment network should be recorded as direct investment transactions/positions. In the example shown in Figure AIII.1, round tripping funds appear as outward direct investment of the host economy for the funds channeled to the routing economy, and as inward direct investment for the subsequent return of the funds to the host economy. For the routing economy, they appear as inward direct investment for the funds received from the host economy, and as outward direct investment for the return of these funds to the host economy.

III.20 Pass-through funds and round tripping of funds may be significant in some economies but not so in other economies. Economies with significant pass-through funds and round tripping are encouraged to publish additional information on such flows and/or positions separately.3


See section 7.3 in the Benchmark Definition of Foreign Direct Investment (BD4).


For additional information see International Standard Industry Classification of All Economic Activities (ISIC), Rev. 4, 2008 (


For additional information, see paragraphs A4.34-A.4.40 in the BPM6 Compilation Guide (BPM6 CG).

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