By JAVKHLANBAATAR SEREETER Director General Foreign Investment Regulations & Registration Department, Ministry of Economic Development Ulaanbaatar, 1 st.

by JAVKHLANBAATAR SEREETER

Director General

Foreign Investment Regulations & Registration Department, Ministry of Economic Development

Ulaanbaatar, 1st March, 2013

Foreign investment policy in Mongolia

Content

Why You Should Invest in Mongolia?

What Are the Main Principals of FDI Policy?

How Does the FDI Perform?

How Does Mongolia Protect Foreign Investment?

Foreign Investment Legal Framework

InternationalAgreements

Bilateral Investment Protection Agreements

National Laws on Foreign Investment

1. Washington Convention on Investment Dispute Settlement

2. Seoul Convention on Investment Insurance

3. WTO Agreements (including TRIMs)

Most-Favoured Nation Treatment

Foreign Investment Legal Framework

International Agreements

National Laws on Foreign Investment

• Mongolia has a Bilateral Investment Protection Agreement with 43 countries.

Bilateral Investment Protection Agreements

Foreign Investment Legal Framework

National Laws on Foreign Investment

International Agreements

Bilateral Investment Agreements • The Foreign Investment Law of

Mongolia (1993)

• The Law Regulating Foreign Investment in Entities in the Strategic Sectors (2012)

Foreign Investment Legal Framework

The Foreign Investment Law of Mongolia

National Treatment

No-Expropriation

Free Repatriation

Foreign Investment Legal Framework

The Law Regulating Foreign Investment in Entities in the Strategic Sectors (2012)

Certain Thresholds

Acquisitions & Transactions

Approval from the Govt. & Parliament

1. Mining

2. Banking & Financing

3. Media & Telecommunications

The Law is enforce from the date adopted. The relevant entities have to comply with the Article 8.2. which is about informing their shares in the strategic sectors of the Law without waiting the Implementing Regulations !

Foreign Direct Investment Performance

FDI by Sectors in 2012.06.30

73.9%

16.3%

1.5%0.9%

0.9%

Geological prospecting, oil exploration & mining

Trade and catering services

Bank and financial services

Light industry

Engineering construction and production of construction materials

Foreign Direct Investment Performance

FDI by Countries

№Top Investors

1990-2012.06.30 % Total /USD/

1 China 31.71 3.65 bln

2 Netherlands 23.16 2.67 bln

3 Luxembourg 9.01 1,04 bln

4 British Virgin Islands 7.48 0.86 bln

5 Singapore 5.45 0.63 bln

6 Canada 4.23 0.49 bln

7 Republic of Korea 2.93 0.34 bln

8 USA 2.54 0.29 bln

9 Hong Kong, China 1.80 0.21 bln

10 Japan 1.60 0.18 bln

Foreign Direct Investment Performance

FDI from Poland /1994-2012/ - 41st (110 countries)

№ Sector nameFDI COMPANIES

% Total % Total

1 Culture, education, science, and press 58.67 1,540.80 6.25 18

2 Trade and catering service 24.27 637.40 56.25 3

3 Geological prospecting and exploration 9.02 236.89 3.13 2

4 Agriculture 2.21 58.00 3.13 2

5 Engineering construction and production of building materials 1.54 40.50 9.38 2

6 Production of foods and beverages 1.52 40.00 6.25 1

7 Furniture 1.20 31.39 6.25 1

8 Electronics manufacturing 0.81 21.17 3.13 1

9 Processing of animal originated raw materials 0.38 10.00 3.13 1

10 Tourism 0.38 10.00 3.13 1

  Total foreign direct investment 100.00 2,626.15 100.00 32

Foreign Direct Investment Performance

How Mongolia ranks on Doing Business topics

Source: WB Doing Business Report 2012

Source: WB Doing Business Report 2013

Foreign Direct Investment Performance

FDI Regulatory Restrictiveness Index 2012

Sweden

USA

Norway

Mongolia

Austria

Ukraine

Australia

Kazakhstan

Korea

Russia

China

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45

0.128

0.116

0.106

0.096

0.089

0.089

0.059

0.408

0.178

0.143

0.137

Source: OECD, FDI RR Index 2012

Foreign Direct Investment Performance

How Mongolia ranks on Doing Business topics

WB Doing Business Report 2012 WB Doing Business Report 2013

Foreign Direct Investment Performance

New government resolutions for infrastructure

Projects Investment

Tavan tolgoi power station 350 mil usd

Auto road reconstruction /in UB/ 92.3 bln tugrkis

“New railway project” by Mongolian railway 55 mil usd

Program of “New Development” to support the national production of building materials

-

Oil refinery industry in Darkhan city will be built in 2015, the capacity is 2 mil tones oil per year.

-

AUTOROAD PROJECT

Tamsagbulag

Altanbulag

Jargalant

Khandgait

DARKHAN

DALANZADGAD

Khanbogd

Tsogt Ovoo

Gashuun Suhait

DORNOGOVY

TUV

DUNDGOVY

MANDALGOVY

SUKHBAATAR

Matad

Bichigt

Havirga

DORNOD

Ereentsav

Yarantai

ULGII

Ulgii

Uench

UMNUGOVY

ZAVKHAN

GOVY-ALTAI

Burgastai

Naranbulag

CHOIR

MURUN

Khatgal

BAYANHONGOR

UVURHANGAIBAYANHONGOR

Khankh

ERDENET

TsahirBattsengel

TSETSERLEG

ARVAIHEER

ARHANGAI

HUVSGUL

BAYAN-ULGII

ULAANGOM

ULIASTAIKHOVD

UVS

BULGAN

SAINSHAND

CHOIBALSAN

BARUUN- URT

UNDURKHAAN

ZUUN MOD

KHENTII

SELENGE

BULGAN

Baga-Ilbenh

Oyutolgoi

Tavantolgoi

Tsagaan suvarga

Shivee huren

Zamyn-Uud

Ulaanbaatar

Ulaanbaishint

Nariin suhaitТT-Tsagaan Suvarge-

Sainshand route

ТT- Gashuun Sukhait

Nariin Sukhait-Shivee Kuren

Sainshand-Baruun Urt-Khuut-Choibalsan route

Khuur-Numrug route

Khuut-Bichigt route

RAILWAY PROJECT – 1800km

POWER NETWORK

Investment opportunities

Issued successfully ‘Chinggis bond’ in the international markets with following significance:

2 fold increase in foreign reserves that supports macroeconomic stability

Provides basis for stabilization of national currency, allowing inflation expectations to stabilize for the first time in 5 years

This gives turn policy to the Bank of Mongolia to decrease policy rates and increase money supply, which will support overall economy

Increased potential credit sources in the economy

Allows financing the Social Insurance Fund and effective implementation of notional personal accounts system

Allows introduction of classical mortgage finance system

1/3 of Bond projects will be implemented from Foreign Direct Investment

Investment opportunities

Law on Concessions of Mongolia (PPP) adopted on 28 January, 2010.

puts state and local properties into economic utilization vast business opportunities for investors the list of concession items is approved by the state and local

administrative bodies decisions shall be made whether to finance from state fund, to

make a guarantee, to organize a tender or to conclude a direct agreement

Foreign legal entities or their consortiums may submit an unsolicited proposal to enter into a concession agreement

Investment opportunities

The Law of Innovation adopted on 22 May, 2012.This law lays down the legal ground for the principles,

governance, organization, financing, state support for innovation activities as well as for utilization of intellectual property as an economic asset. Due to the adoption of this law relevant amendments to support innovation activities have been also introduced to the existing law on foreign investment.

Key Factors Attracting FDI

Developing Country/Opportunities/

A gate to emerging markets in East Asia like China & Russia

Comparatively Low Tax & Less Restrictive Market

A strong democracy

Key Factors Attracting FDI

Securing Stability

- Economical- Political

- Diversification

Institutional Efficiency

- No Corruption- Transparent

- Less Bureaucracy

Expectations from FDI’s

Job creation

Technology transfer

Value addition

Different Sectors

Environment Friendly

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