Foreign investment policy
in Mongolia
by JAVKHLANBAATAR SEREETER
Director General
Foreign Investment Regulations & Registration Department,
Ministry of Economic Development
Ulaanbaatar, 1st March, 2013
Content
How Does Mongolia Protect Foreign Investment?
How Does the FDI Perform?
What Are the Main Principals of FDI Policy?
Why You Should Invest in Mongolia?
Foreign Investment Legal Framework
International
Agreements
1. Washington Convention on
Investment Dispute Settlement
Bilateral Investment
Protection
Agreements
2. Seoul Convention on Investment
Insurance
3. WTO Agreements (including TRIMs)
National Laws on
Foreign Investment
Most-Favoured Nation Treatment
Foreign Investment Legal Framework
International
Agreements
Bilateral Investment
Protection
Agreements
National Laws on
Foreign Investment
•
Mongolia has a Bilateral Investment
Protection Agreement with 43
countries.
Foreign Investment Legal Framework
International
Agreements
Bilateral Investment
Agreements
National Laws on
Foreign Investment
• The Foreign Investment Law of
Mongolia (1993)
• The Law Regulating Foreign
Investment in Entities in the
Strategic Sectors (2012)
Foreign Investment Legal Framework
National Treatment
The Foreign Investment
Law of Mongolia
No-Expropriation
Free Repatriation
Foreign Investment Legal Framework
The Law Regulating Foreign Investment in
Entities in the Strategic Sectors (2012)
Acquisitions &
Transactions
1. Mining
2. Banking & Financing
Certain Thresholds
3. Media &
Telecommunications
Approval from the Govt.
& Parliament
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
Geological prospecting, oil exploration &
mining
73.9%
Trade and catering services
Bank and financial services
16.3%
Light industry
Engineering construction and production of
construction materials
0.9%
0.9%
1.5%
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
4 British Virgin Islands
9.01
1,04 bln
7.48
0.86 bln
5 Singapore
6 Canada
5.45
0.63 bln
4.23
0.49 bln
7 Republic of Korea
8 USA
2.93
0.34 bln
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 name
FDI
%
1 Culture, education, science, and press
58.67
2 Trade and catering service
24.27
COMPANIES
Total
%
Total
6.25
18
637.40 56.25
3
1,540.80
3 Geological prospecting and exploration
9.02
236.89
3.13
2
4 Agriculture
2.21
58.00
3.13
2
1.54
40.50
9.38
2
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
Engineering construction and production of
building materials
6 Production of foods and beverages
5
10 Tourism
Total foreign direct investment
0.38
100.00
10.00 3.13
2,626.15 100.00
1
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
China
0.408
0.178
Russia
0.143
Korea
0.137
Kazakhstan
Australia
0.128
Ukraine
0.116
Austria
0.106
Mongolia
0.096
Norway
0.089
USA
0.089
Sweden
0.059
0
0.1
0.2
0.3
0.4
0.5
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
RAILWAY PROJECT – 1800km
Khankh
Khandgait
Ulaanbaishint
Khatgal
UVS
Ereentsav
Baga-Ilbenh
ULAANGOM
HUVSGUL
Khuur-Numrug
route
Naranbulag
MURUN
ULGII
SELENGE
Sainshand-Baruun UrtKhuut-Choibalsan route
Ulgii
DARKHAN
BAYAN-ULGII
ZAVKHAN
KHOVD
Jargalant
BULGAN
ARHANGAI
ULIASTAI
Havirga
ERDENET
BULGAN
CHOIBALSAN
Tsahir
Battsengel
Tamsagbulag
KHENTII
DORNOD
ZUUN MOD
TUV
TSETSERLEG
Matad
UNDURKHAAN
Yarantai
BARUUN- URT
Uench
BAYANHONGOR
CHOIR
ARVAIHEER
GOVY-ALTAI
SUKHBAATAR
KhuutBichigt Bichigt route
MANDALGOVY
BAYANHONGOR
UVURHANGAI
DUNDGOVY
SAINSHAND
Burgastai
DORNOGOVY
Tsogt Ovoo
Nariin suhait
Tsagaan
suvarga
Tavantolgoi
DALANZADGAD
UMNUGOVY
Oyutolgoi
Khanbogd
Shivee huren
Gashuun Suhait
Nariin Sukhait-Shivee Kuren
ТT- Gashuun Sukhait
ТT-Tsagaan SuvargeSainshand route
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
High
Growth
Developing Country
/Opportunities/
A gate to emerging markets in
East Asia like China & Russia
Comparatively Low Tax & Less
Restrictive Market
A resource rich country in mining, agriculture &
husbandry
A strong democracy
Key Factors Attracting FDI
Securing
Stability
- Economical
- Political
- Diversification
Decrease Costs
- Invest more in
Infrastructure
- Educate people
- Increase
Productivity
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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