Latest release

Australian Outward Foreign Affiliates Trade methodology

Reference period
2018-19
Released
10/09/2020
Next release Unknown
First release

Explanatory notes

Acknowledgement

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

Introduction

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.

Statistical unit

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.

Scope and coverage

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.

Reference period

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.

Classifications

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).

Australian owned foreign affiliates

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.
     

International country groups

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.
     

Relationship with other ABS statistics

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.

Goods

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).

Services

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).

Imputation for non-response or partial response

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

Rounding

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

Off-June reporting

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.

Comparability to the previous issue

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).

ABS Confidentiality Restrictions

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.

Footnote

  1. United Nations Statistics Division Manual on Statistics of International Trade in Services, Chapter VI, Foreign Affiliates Statistics and International Supply of Services. 

Glossary

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Australian equity in the affiliates

The market value of equity held by the Australian parent enterprise in a foreign affiliate. This definition includes the value of shares on issue, but excludes non-participating preference shares and equity held by the local resident office of a nominee on behalf of non-residents.

For listed enterprises, the market value of equity position is determined using the value of recent transaction share prices. If this is not available, market value of equity is determined using the midpoint of the quoted buy and sell prices of the shares on the main stock exchange at the reporting date.

For unlisted enterprises, the market value of equity position is determined using one of the following methods in order of preference:

  • A recent transaction price; or
  • Director’s valuation; or
  • Net asset value.
     

Australian owned foreign affiliates

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.
     

Business size

Businesses are categorised as:

  • Small to medium businesses, with employment of 0 to less than 200 persons; or
  • Large businesses, with employment of 200 or more persons.
     

Capital expenditure

Total (gross) expenditure on acquiring fixed tangible and intangible assets, before deduction of trade-in allowances, and including expenses (except capitalised interest) incurred during the year in acquiring such assets. Fixed tangible assets include land, dwellings, other buildings and structures, plant, machinery and equipment (including motor vehicles). Intangible assets include capitalised exploration expenditure, patents, licences and goodwill.

Compensation of employees

The total salary, wage and other labour costs incurred by a business. In the case of companies, it includes remuneration of directors as per payment summaries. In the case of partnerships, it includes salary, wage and other labour costs paid or payable to persons employed in the business of the partnerships.

Contractors & Commissions

Payments to other businesses and self-employed persons for work done or sales made on a contract or commission basis. Payments to persons paid by commission without a retainer are also included.

Employment

Number of persons working for businesses during the last pay period ending in June of the given year. Includes working proprietors and partners, employees absent on paid or prepaid leave, employees on workers' compensation who continue to be paid through the payroll, and contract workers paid through the payroll.

Industry division

Statistics are classified according to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat no. 1292.0). The structure of ANZSIC comprises four levels, ranging from industry division (broadest level) to industry class (finest level).

The main purpose of the industry division level is to provide a limited number of categories which give a broad overall picture of the economy. There are 19 industry divisions within ANZSIC; each identified by an alphabetical letter, that is, 'A' for Agriculture, forestry and fishing, 'B' for Mining, 'C' for Manufacturing, etc.

The statistical unit generally consists of all enterprises in an enterprise group within a single resident institutional sector. The industry of this statistical unit, which may cover a broad range of activities is determined on the basis of the predominant activity of the unit.

Industry value added (IVA)

Industry value added (IVA) is an estimate of the difference between the market value of the output of an industry and the purchases of materials and expenses incurred in the production of that output.

For market producers, the derivation of IVA is as follows:

 Expenditure on wages and salaries
plus
 Operating profit or loss
 Depreciation and amortisation
 Interest income
less
 Other expenses not reported elsewhere
equals
 IVA

IVA is related to, but different from, the national accounting variable Gross Value Added (GVA).

Operating business

For the purposes of this publication, a business is defined as 'a legal entity engaging in productive activity and/or other forms of economic activity. Such entities accumulate assets on their own account and/or hold assets on behalf of others, and may incur liabilities.

Excluded are the economic activities of individuals (except where individuals engage in productive activity either as sole traders or in partnership) and entities mainly engaged in hobby activities.

For more information on the ABS definition of a business, users should refer to the following Information Paper: A Statistical View of Counts of Businesses in Australia (cat no. 8162.0).

Operating profit before tax

Profit prior to the deduction of income tax and depreciation and amortisation.

Profit after tax

Profit after tax is the operating profit of the business less the tax owed on taxable income.

Profits returned to the Australian parent

The earnings that Australian owned foreign affiliates residing overseas return to their Australian parent enterprise.

Purchases of goods and services

Purchases of goods and services relates to expenditure on goods and services purchased during the reference period.

Sales of goods and services

Sales of goods and services relates to income derived expressly from the exchange of goods and services for consideration between two or more parties. This excludes income indirectly derived from other sources, such as government payments or interest income.

Sales of services to the Australian parent

Income from the sale of services provided by the Australian owned foreign affiliate to the Australian parent.

Taxable profit

The total amount of income used to calculate the end of financial year tax liability for each business. The number is based on total business income less costs and all deductions.

Total assets

Store of value over which ownership rights are enforced by institutional units, individually or collectively, and from which economic benefits may be derived by their owners by holding them, or using them, over a period of time. Economic benefits consist of primary incomes derived from the use of the asset and the value, including possible holding gains/losses, that could be realised by disposing of the asset or terminating it.

Total liabilities

Is an obligation which requires one unit (the debtor) to make a payment or a series of payments to the other unit (the creditor) in certain circumstances specified in a contract between the two parties.

Total operating expenses

Total of all costs expenses not directly related to the production and sale of outputs, i.e. Total expenses less the cost of goods sold.