FDI Directional Principle Law and Legal Definition

Presentation of the FDI data on a directional basis reflects the direction of influence by the direct investor underlying the direct investment: inward or outward direct investment. FDI according to directional principle relates to the treatment of reverse investment and to the treatment of fellow enterprises.

(i) Reverse investment

(ii) Investment between fellow enterprises:

If the ultimate controlling parent is a resident of the compiling economy, then the transactions and positions between the two fellow enterprises are categorized as outward foreign direct investment.

If the ultimate controlling parent is not a resident of the compiling economy, then the transactions and positions between the two fellow enterprises are categorized as inward foreign direct investment.