Australian Outward Foreign Affiliates Trade methodology

The ABS would like to thank the Department of Foreign Affairs and Trade (DFAT) and the Australian Trade and Investment Commission (Austrade) who have provided funding and support for this publication

The aim of the Australian Outward Foreign Affiliates Trade (AOFAT) is to measure the economic activity of the foreign affiliates of Australian resident enterprises, disaggregated by the level of Australian ownership, country of origin and industry with respect to the 2018-19 reference period.

The reporting unit is the Australian parent enterprise in the Australian enterprise group on behalf of their foreign affiliates that trade in goods and/or services. The statistical unit for the 2018-19 issue of this publication generally consists of all enterprises in an enterprise group within a single resident institutional sector. An Australian enterprise may hold more than one affiliate in more than one industry.

The scope of the AOFAT is the economic activity of Australian resident enterprise controlled foreign affiliates that trade in goods and/or services. This publication defines control as per the Balance of Payments Manual, sixth edition (BPM6), which states it is determined to exist 'if the direct investor owns more than 50 per cent of the voting power in the direct investment enterprise' (BPM6, para. 6.12). The results in AOFAT are presented in terms of Australian owned foreign affiliates where Australian ownership is greater than 50 per cent.

The survey frame was obtained from the ABS Survey of International Investment business frame.

The reference period for this publication was the 2018-19 financial year. For most respondents, this period represented a 1 July 2018 to 30 June 2019 period. No adjustment was made for estimates to account for differing financial year reference periods, however, a pro-rata adjustment was made for non-twelve-month periods where applicable.

This publication presents statistics classified according to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0) and Standard Economic Sector Classifications of Australia (SESCA), 2008 (Version 1.1) (cat. no. 1218.0). Each business unit is classified to a single industry based on the industry details reported on the form, irrespective of any secondary activity. The sector of the Australian resident enterprise group was sourced from the ABS Business Register (ABSBR).

This publication identifies Australian owned foreign affiliates as those enterprises residing overseas that are majority owned by the Australian enterprise group, i.e. holding more than 50% of the ordinary shares or voting stock for an incorporated enterprise or the equivalent for an unincorporated enterprise.

This includes all subsidiaries and branches residing overseas, and foreign joint ventures that are majority owned by the Australian enterprise group as defined below:

• Subsidiaries - incorporated enterprises residing overseas that are wholly or majority owned by the Australian enterprise group. The direct investor has control over a subsidiary though its majority holding. This includes where an enterprise group has control over a second-tier subsidiary, i.e. a subsidiary of a subsidiary.
• Branches - unincorporated enterprises residing overseas that are wholly or jointly owned by the Australian enterprise group.
• Foreign joint ventures - those foreign joint ventures that are wholly or majority owned by the Australian enterprise group.
   

The following country groups are represented in this publication:

• APEC – Brunei Darussalam, Canada, Chile, China (excludes SARs and Taiwan), Hong Kong (SAR of China), Indonesia, Japan, Korea (Republic of South), Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russian Federation, Singapore, Taiwan, Thailand, and the United States of America and Vietnam.
• ASEAN – Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
• EU - Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia (former Czech Republic), Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic (Slovakia), Slovenia, Spain, Sweden, and the United Kingdom.
• OECD - Austria, Belgium, Canada, Chile, Czechia (former Czech Republic), Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Republic of South Korea, Latvia, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic (Slovakia), Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States of America.
• PACER - Cook Islands, Fiji, French Polynesia, Kiribati, Marshall Islands, Micronesia, Federated States of, Nauru, New Caledonia, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.
   

The ABS presents data on foreign investment in Balance of Payments and International Investment Position, Australia, (cat. no. 5302.0), and the related release International Investment Position, Australia: Supplementary Statistics (cat. no. 5352.0) broken down by investment type e.g., direct investment (10%+ ownership of shares or voting power), portfolio investment (less than 10% ownership of shares or voting power), derivatives and other investment.

The Balance of Payments is a statistical statement that systematically summarises the economic transactions of Australia with the rest of the world for a specific time period. It also draws a series of balances between inward and outward transactions, providing an overall net flow of transactions between Australian residents and the rest of the world, and examines how these flows are funded.

The International Investment Position (IIP) measures the stock of Australia's foreign financial liabilities and foreign financial assets at a point in time. The difference between foreign financial liabilities and foreign financial assets is referred to as Australia's net IIP.

While both 5302.0 and 5352.0 capture levels of direct investment between residents of Australia and residents of the rest of the world (non-residents), there are multiple scope differences between these releases and the AOFAT. Examples of differences include the addition of investment funds, reverse investments and fellow investments in the 5302.0 and 5352.0, and a broader scope to include the 10%+ ownership level group.

In contrast, this publication focuses solely on the economic activity of the foreign affiliates of Australian resident enterprises (outwards investment), presented only in terms of ‘Australian ownership greater than 50%’. This scope aligns with the definition of foreign affiliates recommended by United Nations Statistics Division Manual on Statistics of International Trade in Services (footnote 1) which limits the population to those that are majority owned (or controlled). As such, this publication presents a subset of the data presented in 5302.0 and 5352.0. Users will need to take this into account when making comparisons, as the data is not directly comparable.

Commodities were classified according to the United Nations' Standard International Trade Classification Revision 4 (SITC Rev4). This classification is used in international trade statistics and is the underlying scheme used in balance of payments publications. Each commodity was classified to a SITC division (2-digit level).

The services classification used in AOFAT follows the Balance of Payments Manual (Sixth Edition, IMF, Washington D.C. 2009). Further information on services classifications is available in Balance of Payments and International Investment Position, Australia: Concepts, Sources and Methods, 2011 (cat. no. 5331.0).

In cases of non-response or partial-response, data for those units were imputed using established statistical imputation methods approved within the ABS.

Where figures have been rounded, discrepancies may occur between sums of the component items and totals.

The data collected generally represent the 12-month period ended 30 June 2019. However, where businesses report data on a different basis an alternate or off-June year accounting period is used. As a result, in some instances estimates may reflect trading conditions occurring outside of the published reference year.

While covering the same economic concepts, this publication has not been compiled on an identical basis to that of the 2002-03 reference period issue. Users should take this into account when making comparisons between issues as the data is not directly comparable due to the changes in data sources and methodology.

There have been a number of changes to the ABSBR since the last issue of this publication was released in 2004. These changes are outlined in detail within the Counts of Australian Businesses, including Entries and Exits, June 2015 to June 2019 (cat. no.8165.0).

The industry structure for the 2002-03 issue was presented in accordance with ANZSIC 1993. Changes in the structure between 1993 and 2006 will impact the value of estimates presented due to the increase in the number of industry categories in the ANZSIC 2006. For more information on changes between ANZSIC 1993 and ANZSIC 2006 refer to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0).

In accordance with the Census and Statistics Act 1905, estimates in this publication have been confidentialised to ensure that they are not likely to enable identification of a particular person or organisation. For this reason, it has been necessary to suppress some cells of the published tables (shown as ‘np’). In most cases, where a cell relating to a particular country has been suppressed, the suppressed data have been included in the total for that indicator.