FDI flows excluding capital in transit and restructuring of asset portfolios

The capital in transit and asset portfolio restructuring are two phenomena that distorts data within the normal range of enterprises, excluding SPEs. Capital in transit means when a resident, non-SPE enterprise belonging to a multinational group also performs, in addition to its normal (production, service) activity, transfers of the capital received within the group. When a multinational company reorganises its asset portfolio across the borders, by liquidating one of its subsidiaries and creating a new subsidiary, contributing the assets of one of the subsidiaries to another one, etc. in the balance of payments – and thus also in the FDI data – particularly high capital disinvestment and investment transactions must be recognised without actual disinvestment or investment in the country. In Hungary, due to the small size of the Hungarian economy and the magnitude of a few multinational corporations, the capital reallocations of these companies distort the data to such a degree that unless they are separated (cleansed) they would render the published transactions difficult to interpret.

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