BOP Data Collection: Year ended March 2015

####Period-specific information Reference period This release uses the same data from the quarterly release, but presents the statistics on a March year-end basis, and with additional disaggregations by country and by industry. Hedging – sample population and response rate The 2015 survey covered a sample population of 70 enterprises, which encompassed 88.2 percent of New Zealand’s overseas liabilities denominated in foreign currencies, and achieved a 94.3 percent response rate. ####General information Data included in the annual release The annual balance of payments release brings together previously released quarterly statistics into year-ended March totals. Information in this release includes: investment income, financial account flows, and international investment position (IIP) stocks, disaggregated by country (tables 21 to 29) international assets and liabilities, foreign direct investment (FDI), and investment income disaggregated by industry (tables 18 to 20) – these descriptions use the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006 methodology (see Industry classifications for more detail) hedging of New Zealand’s foreign-currency-denominated overseas debt (tables 32 to 33). Data sources The source data and information for BoP and IIP statistics collected and processed each quarter are summarised below and include: • Statistics NZ surveys of New Zealand-resident enterprises • surveys conducted by other organisations • administrative data • financial market information. Statistics NZ has ministerial approval to survey New Zealand-resident enterprises as set out in the Statistics Act 1975. The main surveys that provide data for BoP and IIP are: • Quarterly International Investment Survey (QIIS) – a sample survey that is the main source of data on primary income, financial account flows, and the stock of overseas assets and liabilities. • International Trade in Services and Royalties Survey (ITSS) – a quarterly sample survey that is the primary source of data on trade in commercial services • transportation surveys – full-coverage surveys that measure transactions relating to transportation services such as passenger airfares and port expenses. Surveys conducted by other organisations – we use data from other organisations that operate surveys that are relevant to our data needs. For example: • the International Visitors Survey – is run by a marketing company for the Ministry of Business, Innovation and Employment. The data is used to estimate exports of travel services in the current account • the Quarterly Managed Funds Survey (QMFS) – a Reserve Bank of New Zealand (RBNZ) survey that provides data on overseas income, financial account transactions, and IIP for the pension, money market, and non-money market sectors. Administrative data – examples include non-resident withholding tax data from Inland Revenue, and New Zealand Customs Service records of imports and exports published in the overseas merchandise trade statistics. Financial market information – includes interest, exchange rates, and share prices for major investment partner countries. The information is used for survey validation purposes. We take much of this information from publicly available websites. Hedging New Zealand’s overseas debt liabilities – hedging survey The hedging survey collects information that measures the extent of hedging (risk management) of New Zealand's overseas debt liabilities denominated in foreign currencies. The results supplement the IIP statistics by providing indicative information on the risk management practices New Zealand enterprises use for their overseas financial liabilities denominated in foreign currencies. At 31 March each year, we survey a selection of New Zealand enterprises to obtain information covering the extent to which their overseas debt liabilities denominated in foreign currencies are hedged. The means by which enterprises hedge that are covered in the survey include financial derivative contracts, balance sheet assets, or expected foreign currency revenues. The first statistics were collected for 31 March 1998. Note that the historical data from the hedging survey is not revised. Because of this, the total foreign currency denominated external debt reported in tables 32 and 33 may not always reconcile with estimates provided elsewhere. Undercoverage estimate for the international investment position BoP uses a purposive sampling method to capture international investment position data for the ‘other sectors’ of the economy. BoP and IIP data is disaggregated by four main sectors: central bank, depository corporations, general government, and other sectors. Under a purposive sampling method, all units identified as being significant are surveyed each quarter. Those that are considered less significant are surveyed annually and often on a sample basis. The annual survey results are rated-up to represent all other smaller units in the target population frame. The rated-up estimate is then added to the result of the quarterly survey to represent the IIP position for the entire population. Each new estimate results in a level change to the IIP positions and the magnitude of the change is recorded within other changes in the IIP reconciliation statement. The rated-up estimates are held constant for four quarters till the next survey results become available. The annual survey results are also used to add large responding units to the quarterly population. Net errors and omissions (residual) The BoP statement is compiled using the double-entry bookkeeping system to ensure the account balances. For example, we record exports of goods as credits while payments in exchange for the goods are recorded as debits, denoting either increases in financial assets or decreases in financial liabilities. In practice, the BoP statement does not always balance. To balance the account, a balancing item called the 'net errors and omissions' or 'residual' is used. The residual is always entered on the credit side of the account. The residual can be calculated by one of two means: • the sum of all current, capital, and financial account credits (inflows), less the sum of all the debits (outflows) • the current account balance, plus the net flow of the capital and financial accounts. A positive entry means the sum of the debits is greater than the sum of the credits. Persistent large residuals in one direction may indicate serious and systemic errors. However, a small figure does not necessarily mean that only small errors and omissions have occurred, since large positive and negative errors may be offsetting. Timing differences in data reported by the different sources used to estimate the credit and debit sides of a transaction may result in positive and negative errors and omissions offsetting each other. In any quarter there may be financial account transactions occurring but not recorded in the accounts. The reasons for them may include: transactions undertaken by entities not in the frame for BoP surveys; omissions of data by existing survey respondents; and errors in data reporting and compilation. Industry classifications This release expands on the range of industry information relating to international investment and income provided in the Balance of Payments and International Investment Position quarterly release. Stocks of direct investment abroad, foreign direct investment in New Zealand, and international assets and international liabilities at 31 March are disaggregated at the division level of ANZSIC06. Flows of international income credits and debits for year-ended 31 March are expanded to include lower-level industry information. All possible data, at industry levels, that meet approved confidentiality standards is released. The industry assigned to New Zealand's overseas assets is the industry classification of the New Zealand firm making the investment abroad. The data does not necessarily represent the overseas industry in which the New Zealand investment is held. Foreign investment into New Zealand is recorded as being held in the industry in which the New Zealand-resident recipient firms are classified. See Classifications and related statistical standards for more detailed information on the ANZSIC 2006 and 1993 editions. Data captured in the AIIS is reflected as part of the item 'unallocated to industry'. The AIIS each year is directed at a selection of enterprises that are not in the regular quarterly sample (see Undercoverage estimate for the international investment position). These results are used to update the non-sampled estimate used since the previous survey. Economic regions We derive countries allocated to the European Union (EU), Organisation for Economic Co-operation and Development (OECD), Association of Southeast Asian Nations (ASEAN), and the Asia-Pacific Economic Cooperation (APEC) economic regions are derived from the respective websites of these organisations. Countries are only included in a country grouping for the period in which they are a member of that group. For example, Israel joined the OECD in May 2010 so is included from the year ended March 2011 onwards, but is excluded from previous periods. As at 31 March 2015, the countries that made up the following groups were as follows: EU – United Kingdom, Ireland, Austria, Belgium, France, Germany, Luxembourg, Netherlands, Denmark, Finland, Sweden, Italy, Portugal, Spain, Greece, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia, Bulgaria, and Romania. OECD – Australia, New Zealand, United Kingdom, Ireland, Austria, Belgium, France, Germany, Luxembourg, Netherlands, Switzerland, Denmark, Finland, Iceland, Norway, Sweden, Italy, Portugal, Spain, Greece, Czech Republic, Hungary, Poland, Slovakia, Turkey, Japan, Republic of Korea, Canada, United States of America, Mexico, Israel, Slovenia, Chile, Estonia. ASEAN – Myanmar, Cambodia, Laos, Thailand, Viet Nam, Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore. APEC – Australia, New Zealand, Papua New Guinea, Russia, Thailand, Viet Nam, Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, People's Republic of China, Hong Kong (Special Administrative Region), Japan, Republic of Korea, Republic of Taiwan, Canada, United States of America, Chile, Peru, Mexico. Understanding country breakdowns in the release The country data available in this release is for the BoP financial account and IIP components (direct, portfolio, and other) as well as for total investment. Financial derivatives and reserve assets are not disaggregated by country in this release. However, the data for these two components is included in the tables of total investment by country. The country allocation represents the country in which the immediate non-resident counter-party is resident. This provides the first-level source or destination in all cases, but will not necessarily describe the ultimate source or destination of the transaction or investment. This country allocation is consistent with IMF BPM6 standards. For example, if an investor from the United States acquires the majority ownership in a New Zealand company via a regional head office in Australia, then this direct investment would be classified to Australia. Similarly, for New Zealand investment overseas, the country classification is the country in which the immediate non-resident investee is located. There are cases where New Zealand companies own subsidiaries overseas, which in turn raise funds in international capital markets and lend to the New Zealand parent companies. The liabilities of the New Zealand direct investor are classified to the country in which the overseas subsidiary is located. For portfolio assets managed by fund managers, a common practice is for the New Zealand fund managers to place some portion of the funds under the management of overseas fund managers, who then invest in a worldwide portfolio. These assets are classified to the country of the first-level destination; that is, the country in which the first-level overseas fund manager is resident. Reclassification of group top enterprises In the data collection process, the survey target is usually the top New Zealand enterprise of the group of enterprises linked by common ownership. Typically, this top enterprise will have an ANZSIC of K6240 (financial asset investing). This classification usually does not reflect the main activity of the group as a whole. To improve analysis, we may reclassify group top enterprises to better reflect the industry in which they operate. These are assigned using the following process: • the activity units are grouped by ANZSIC classification • the New Zealand group top enterprise is assigned the ANZSIC of the grouping with the highest employee count • there are cases where the employee count does not reflect the principal industry of the enterprise. In such cases, financial information is used to determine a more appropriate ANZSIC. Direct investment by asset and liability and directional presentation bases The asset and liability principle refers to the presentation of direct investment data where lending to, and borrowing from, all direct investment counterparties ie foreign direct investors, foreign direct investment enterprises, and foreign fellow enterprises are recorded depending on whether they relate to an asset or a liability from the reporting economy’s perspective. According to the directional basis, direct investment is organised by whether the direct investment is outward or inward. Outward direct investment is when a New Zealand company owns 10 percent or more of a company abroad. We present borrowing and lending (and the associated interest flows) between the New Zealand company and its subsidiary abroad on a net basis on the asset side of the account. Inward direct investment exists when a non-resident owns 10 percent or more of a New Zealand company. We present borrowing and lending (and interest flows) between the New Zealand company and its foreign parent on a net basis on the liability side of the account. While the total assets and liabilities differ in each presentation, the net IIP result is identical, regardless of the method used. Confidentiality and accessing the data Where data within a table in this release discloses information about an individual respondent, or would allow close estimation of such information, we publish data only after obtaining the consent of those respondents (ie published under section 37(4)(a) of the Statistics Act 1975). Where affected respondents have not provided their consent, data remains confidential. More information Statistics in this release have been produced in accordance with the Official Statistics System principles and protocols for producers of Tier 1 statistics for quality. They conform to the Statistics NZ Methodological Standard for Reporting of Data Quality. 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