Download FATS - CARICOM Statistics

CARICOM TRADE IN SERVICES
STATISTICS (CTIS)PROJECT
June-December 2016
Regional Training Workshop
November 21 to 25, 2016
by
Lucilla Lewis, Lead Consultant
FOREIGN AFFILIATES TRADE IN
SERVICES (FATS)
What are FATS
FATS are FDIs with more than 50% foreign
ownership of voting power, that is
majority ownership
 What does FATS measure?

◦ Commercial presence abroad of service
suppliers and their impacts
Foreign Affiliates Trade in Services (FATS)
Comprises:
Inward FATS: Foreign controlled affiliates in
the compiling economy are called inward
FATS
Outward FATS: Foreign controlled affiliates
held outside the compiling economy are
called outward FATS
Examples?????
Why are FATS Established

Affiliates are usually established abroad
to deliver services that require close
contact between the supplier and the
consumer. On this basis, in MSITS 2010
domestic sales by foreign affiliates is
referred to as international supply of
services. For the BOP however sales by
foreign affiliates to residents of the host
country are excluded, as foreign affiliates
are treated as residents
What are the FATS Variables
Priority variables
-sales turnover and/or output
-employment
-value added
-exports and imports of goods and services
-number of enterprises
Long-term variables
-assets
-compensation of employees
-net worth
-net operating surplus
-gross fixed capital formation
-taxes on income
-research and development expenditure
-purchases of goods and services
FATS Variables cont’d
Priority variables
-sales turnover and/or output
Output is the preferred variable to be
compiled, however for services, sales data
may be easier to obtain and is also desirable.
While the 2 may sometimes be the same for
wholesale and retail distribution the output
is the service which is measured as the
margin and not the total sales value which
includes cost of the good. Same is true for
financial services including insurance.
FATS variables Cont’d
Sales measures gross operating revenues less rebates, discounts
and returns and should not include consumption and sales
taxes and value added taxes
Sales indicates the extent to which Foreign Affiliates are used to
deliver outputs to customers irrespective of where output
originated
-employment
The number of persons on the payrolls of foreign affiliates at
the end of a year or if there is a great level of seasonality
should be given for a specified period.
This data can be used to measure the contribution of Foreign
affiliates in job creation in the domestic economy and to
what extent it complements, supplements or competes with
other sources of employment in the economy
FATS Variables Cont’d
-value added
According to SNA 2008 gross value added
of an enterprise is the amount by which the
value of the outputs produced exceeds
the value of the intermediate inputs
consumed, while net value added is
defined as gross value added less the
consumption of fixed capital.
Gross value added is also equal to the sum
of primary incomes generated in
production, that is, compensation of
employees, profits etc.
FATS Variables Cont’d

Gross value added can therefore provide
information on contribution of foreign
affiliates to gross domestic product of the
host country in total and by industry and
is a very useful measure from the
perspective of GATS and analysis of
impacts of globalisation .
FATS Variables Cont’d
-exports and imports of goods and services
This is an important indicator of the impact of
foreign affiliates on the domestic country’s
external accounts -number of enterprises
-number of enterprises
It is a basic indicator of the prevalence of foreign
control of enterprises in the host economy,
although size differences relative to domestic
companies must be taken into consideration
FATS Variables Cont’d
Long-term variables
-assets: are entities owned and from which economic benefits may be derived. Assets include
both financial and nonfinancial
-compensation of employees: the total remuneration in cash or in kind payable by an
enterprise to an employee for work done during an accounting period
-net worth: the difference between the value of all assets produced, non produced and
financial, and liabilities
-net operating surplus: gross value added less compensation of employees, consumption of
fixed capital and taxes on production, plus subsidies receivable
-gross fixed capital formation: total value of a producer’s acquisitions, less disposals of fixed
assets during the accounting period plus additions to the value of non-produced assets
realized by productive activity
-taxes on income: corporate income taxes, corporate profit taxes, , corporate surtaxes etc.
-research and development expenditure: expenditure of work undertaken on a systematic
basis to increase the stock of knowledge and to use this stock of knowledge to for the
purpose of discovering or developing new products
-purchases of goods and services: is also described as intermediate consumption is
expenditure on goods and services consumed as a process of production (excludes fixed
assets)
FATS Classifications
MSITS 2010 recommends classification of FATS
variables by activity according to the ISIC
Categories for Foreign Affiliates (ICFA) Rev.1
which is derived from ISIC Rev. 4.
 ICFA covers all activities including goods
production

Recommended ICFA Classifications
Recommended template for FDI FATS Statistics based
on ICFA
FATS DATA SOURCES
Domestic affiliates of foreign enterprises
are to be surveyed directly – inward FATS
Resident parent enterprises are to be
surveyed directly on the activities of their
affiliates overseas – outward FATS
FDI statistics is a good starting point for
determining the FATS target population
1.
2.
3.
◦
◦
It identifies the portion of majority owned
affiliates on the register of establishments
It provides information for the geographical
allocation of FATS data
APPROACH TO SURVEY OF FOREIGN
AFFILIATES
1. Design new survey Forms for foreign affiliates
and resident parents with overseas affiliates or
add FATS variables to existing FDI surveys.
(Priority levels will vary from country to
country)
2. For inward FATS only identify the subset of
existing statistics on resident enterprises
referring to majority owned foreign affiliates
3. Close collaboration between national statistical
offices, the various ministries and the Central
Bank
The approach used will depend on available
resources. The US and most EU countries
use FDI surveys.
Many other countries compile only inward
FATS based on existing business statistics
END OF SESSION