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Recording Principles of Direct Investment

June, 2018

The recording principle of direct investment varies depending on the data series.

Table : The recording principle of direct investment varies depending on the data series.
Data series Recording principle General description
  • Balance of Payments
  • Regional Balance of Payments
  • Direct Investment by Region and Industry
      1. Direct Investment Income
  • International Investment Position of Japan
  • Regional Direct Investment Position
  • Regional Direct Investment Position and Regional Portfolio Investment Position (Assets) (All regions)1
Asset and Liability Principle Investments of Japanese companies in foreign companies are classified as assets and investments from foreign companies in Japanese companies are classified as liabilities.
For direct investment income, receipts of dividends etc. by Japanese companies from foreign companies are recorded as credit and payments of dividends etc. from Japanese companies to foreign companies are recorded as debit.
  • Direct Investment by Region and Industry
      2. Direct Investment Flows
      3. Direct Investment Position
  • Regional Direct Investment Position (Inward investment) (Ultimate investor)
Directional principle Investments of a Japanese company in an overseas affiliated company are classified as outward investment (assets) and investments from a foreign company in a Japanese affiliated company are classified as inward investment (liabilities).
For example, investments from an overseas affiliated company in its parent company in Japan are not recorded under inward investment but recorded as reverse investments, namely withdrawals from the parent company, under outward investment.
  1. Note:1 These series are available on the MOF web site (Link to an external website).
  • The conceptual diagram that shows the differences of the way of accounting of direct investment under "Asset and Liability Principle" and "Directional principle".