Newport, Great Britain State Statistical Observation on Foreign Economic Activity Investment October 7-9, 2014 State Statistics Service of Ukraine

Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine Business Structure of the State Statistics Service of Ukraine

Department for Production Statistics Division for Short-Term Industrial Statistics Indicators Division for Processing Industry Statistics Division for Statistics of Mining Industry, Electricity and Water and Gas Supplies Division for Statistics of Capital Investment and Fixed Assets Division for Statistics of Foreign Economic Activity Investment Division for Construction Statistics Sector for Statistics of Military and Industrial Complex Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Regulatory Framework for the State Statistical Observation of Foreign Economic Activity Investment in Ukraine Law of Ukraine “On State Statistics” Law of Ukraine “On Investment Activity” Law of Ukraine “On Foreign Economic Activity” Law of Ukraine “On Foreign Investment Regime” Resolution of the Cabinet of Ministers of Ukraine and the National Bank of Ukraine No. 517 dated “On Compilation of the Balance of Payments of Ukraine” Resolution of the Cabinet of Ministers of Ukraine No. 112 dated “On Approval of the Regulation on the Procedure of State Registration of Agreements (Contracts) on Foreign Economic Activity Involving the Foreign Investor” Resolution of the Cabinet of Ministers of Ukraine No. 139 dated “On Approval of the Procedure of State Registration (Re-registration) of Foreign Investment and Cancellation of Registration” Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Pursuant to the Effective Legislation The National Bank of Ukraine is responsible for compilation of the Balance of Payments and determination of the International Investment Position performs methodological guidance and coordination of the range of activities related to compilation of the Balance of Payments and determination of the International Investment Position The State Statistics Service of Ukraine collects, processes and generates information on foreign investment Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

We have been conducting ob servation of foreign economic activity investment since 1994 Main features of the observation Type of the state statistical observation: by coverage of units: total; by time of data registration: current. Organisational form of the state statistical observation: statistical reporting. Units of the state statistical observation: an enterprise, an affiliation, a permanent representation of non-residents in Ukraine. Reporting (accounting) unit of the state statistical observation : a legal entity. Offices to conduct the state statistical observation: The State Statistical Service of Ukraine (SSSU), local state statistical offices Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Methodological Principles of the Direct Investment Accounting Balance of Payments Manual (IMF, Editions 5, 6) OECD Standard Definition of Foreign Direct Investment (Edition 4) Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Observation Toolkit Form No. 10-fea (quarterly) “Report on Foreign Direct Investment” Form No. 13-fea (quarterly) “Report on Direct Investment Abroad” Form No. 11-fea (VPI) (annual) “Report on Relationships of the Company with Foreign Direct Investment within the Framework of Direct Investing” (starts from 2014) Form No. 12-fea (VPI) (annual) “Report on Relationships of the Direct Investor Company within the Framework of Direct Investing” (starts from 2015) Guidelines on their indicators Methodological and organisational principles of the observation are described in the Methodological Regulations on Organisation of the State Statistical Observation of Foreign Economic Activity Investment. Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Basic Definition of “Direct Investment” Direct investment is a category of international investment activity to reflect an intention of an institutional unit resident in one economy to have control or significant influence upon activity of a company resident in another economy. Investment is considered to be direct if the non-resident’s equity/ownership accounts for at least 10% of the value of the resident company's equity or the non-resident holds at least 10% of votes in the resident company management. The direct investment category also covers investment received under concession agreements and joint investment activity contracts; liabilities/claims on loans and borrowings, trade loans and other liabilities/claims of resident companies to/on their direct investor(s). Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Direct Investment Components Capital: paid-up, reversed, reserve, belonging to a local group of direct investment company (inventories and flows) Debt instruments: loans and borrowings, trade loans, other liabilities and claims (inventories and flows) Reinvested income (calculated at the central level) Relationships of the direct investment company with investors of upper degrees of ownership, liabilities and claims to/on fellow companies located abroad, on capital and debt instruments, residency of the ultimate controlling investor Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Flow of equity capital (flows - receipt/disposal) can be followed by investment types: cash contributions; contributions in the form of securities; contributions in the form of movable and immovable property; intangible assets; under concession agreements and joint investment activity contracts на by types of capital revaluation: reclassification of investment change of ownership of capital Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Evaluation of Equity Capital and Debt Instruments equity capital is evaluated on the basis of historical value (book value and for some large-sized companies – on the basis of market value – is adjusted by the difference between market and notional value, property, etc.) debt instruments are evaluated on the basis of fair value Information on the amount of direct investment within the state statistical observation of foreign economic activity investment is generated based on the “Assets-Liabilities” principle. Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

National Classifications Used for the Observation КОPFG – Classification of legal forms of business КОАТUU – Classifier of Entities of the Administrative-Territorial Division of Ukraine KVED (NACE) (2010) – Classification of economic activities NACE (rev. 2) КІSE – Classification of Institutional Sectors of Ukraine’s Economy complies with the international standard of the System of National Accounts (SNA’93)) KK – Country Classification KV – Currency classification Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Generated Output Information is Broken Down by: investing countries /receiving countries: by economic activities by regions companies’ economic activities: by countries by regions regions of Ukraine by countries by companies’ economic activities The information is published on the SSSU official web-site Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Pursuant to the IMF Special Data Dissemination Standard, starting on 2010, the SSSU has been annually providing data on direct investment made into Ukraine’s economy in the format of the Coordinated Direct Investment Survey broken down by components: equity capital reinvested profit debt instruments For 2016, the SSSU scheduled publication of data on foreign economic activity investment according to the directional principle. Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Sources for Generating a Population of Reporting Units (Respondents) By Forms No. 10-fea and No. 13-fea Statistical Units Register (SUR) as the part of the Statistical Business Register (SBR) Respondents listed for the previous reporting period NBU information on legal entities who received/made investment in the form of cash contributions Information of the State Property Fund of Ukraine on companies fully or partly privatised by a foreign investor (for Form No. 10-fea) Information of state registration offices on registered agreements (contracts) on joint investment activity involving a foreign investor (quarterly for Form No. 10- fea ) Information of the Ministry of Economic Development of Ukraine on residents who received investment for property valuables outside Ukraine (for Form No. 13-fea); Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Sources for Generating a Population of Reporting Units (Respondents) by Forms No. 10-fea and № 13-fea Іnformation of state statistical offices on registered foreign investment (quarterly) Information of other state statistical observations: a list of companies with shares placed with or resold to non-residents (based on Form No. 2-B (annual) “Report on Issue, Placement and Turnover of Securities”) information on non-resident founders (participants) available with a resident company (based on Form No. 1-businesses (annual) and Form№ 1-businesses (brief) (annual), “Structural Business Survey”) Mass media information on transactions of purchase-sale of resident companies involving foreign investors. Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

October 7-9, 2014Newport, Great Britain Statistical Business Register (SBR) is the main source for generating the population of reporting units for the state statistical observation State Statistics Service of Ukraine

October 7-9, 2014Newport, Great Britain SBR Information on Legal Entities identification data – identification code USREOU; name; classification data – economic activity (including major activity); territorial belonging; legal form of business; institutional sector of economy; state management body where the company belong; demographic /registration data – data of establishment/liquidation; data and number of registration record; place of registration; series and number of the state registration certificate; reference and special (technological) data – location; legal status; telephone, fax number; ; director’s name; founders; legal successors; indication of belonging to the public sector of economy; public share of property in the authorised fund of a business company; indications of tax payment transactions occurring in the reporting year; date of data entry State Statistics Service of Ukraine

October 7-9, 2014Newport, Great Britain SUR (SBR) Indicators Administrative section Individual code of a local unit Identification code USREOU Name Code based on the Classifier of Entities of the Administrative-Territorial Division of Ukraine (KOATUU); Post code, company address Indication of an entity (legal entity, with no right of a legal entity) Indication of a foreign founder Indication of a new company Type of registration data, date of registration Establishment/liquidation date State Statistics Service of Ukraine

October 7-9, 2014Newport, Great Britain Economic section KVED-2010 (NACE-2010) code of the major economic activity (MEA); Code of legal form of business by KOPFG Code of institutional sector of economy by KISE Indication of the MEA (by NACE 2005, 2010) as of the beginning of the survey Average employment in the company Income (profit) from the company’s sale of products (goods, works, services) (UAH thousand) Net income (profit) from the company’s sale of products (goods, works, services) (UAH thousand) Company size indication (according to the legislation): large-, medium- small- sized, micro companies Company economic activity status State Statistics Service of Ukraine

October 7-9, 2014Newport, Great Britain SUR Indicators Used to Generate the Survey Respondent List Identification code USREOU Code of settlement, address based on the Classifier of Entities of the Administrative-Territorial Division of Ukraine Indication of an entity (legal entity, with no right of a legal entity) Indication of a foreign founder Indication of a new company Type of registration data, date of registration Establishment/liquidation date NACE-2010 code of the major economic activity (MEA); Code of legal form of business by KOPFG Code of institutional sector of economy by KISE Company size indication (according to the legislation) by the annual financial statement: large-, medium- small-sized, micro companies Company economic activity status by statistical reporting, administrative sources, financial statements, structural business statistics (economic activity) State Statistics Service of Ukraine

Criteria for Generating the Population of Reporting Units (Respondents) to the State Statistical Observation of Foreign Economic Activity Investment Unit of observation : a legal entity (resident company), an affiliation, a permanent representation of non-resident in Ukraine Economic activities: all economic activities Institutional sectors of economy: S.11”Non-financial corporations”, S.12 “Financial corporations” Legal forms of business: all legal forms of business apart from “citizens’ association companies”, communities, citizens’ associations, trade unions, charity organisations, foundations, and pension funds. Size of a company (large-, medium-, small-sized) – regardless of the size Economic activity status: active – for functioning companies, inactive – for new companies Information about non-resident(s) availability with the founders Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Newport, Great BritainOctober 7-9, 2014 Approved population of the state statistical observation of foreign economic activity investment for 2013 Respondents reporting in Q4, 2013 Companies whose activity is not specified By F. No. 10-fea By F. No. 13-fea State Statistics Service of Ukraine

Newport, Great BritainOctober 7-9, 2014 Company size Respondents reporting in Q4, 2013 by F. No.-fea % to the total amount Foreign direct investment (equity capital), USD million as of % to the total amount Total , ,9100,0 Small , ,724,4 Medium , ,623,4 Large3101, ,017,5 Company size not specified , ,634,7 State Statistics Service of Ukraine

TWINNING Outcomes during Developed: a new Form No.12-fea (VPI) (annual) “Report on Relationships of the Direct Investor Company within the Framework of |Direct Investing” 2. Improved: the existing statistical reporting forms and the methodology of FDI investment statistics 3. Introduced: a concept of “the special-purpose entity” as a legal person that is a member to an international company group, is under direct or indirect control of a parent company being the head of an international company group, which acts exclusively in its favour and performs financing functions for the company group (provision with funds and their reallocation among entities forming the group) and/or management of companies of the group (a holding company), with an insignificant employment and small turnover. 4. Following: credit amounts of companies within the framework of direct investing. Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

21 correctly filled in reports were received from respondents 8 companies showed relationships with their fellow companies located abroad 6 companies have only immediate direct investors (1 st degree in the ownership relationships) + fellow companies 12 companies showed their ultimate controlling investors of the 2 nd degree in ownership relationships 3 companies showed their ultimate controlling investors of the 3 rd degree in the ownership relations Outcomes of the First Survey of Some Types of Company Relationships by Form No. 11-fea (VPI) for 2013 Newport, Great BritainOctober 7-9, 2014 State Statistics Service of Ukraine

Thank you! October 7-9, 2014Newport, Great Britain State Statistics Service of Ukraine