18.11.2014 key outcomes of the new investment law, javkhlanbaatar sereeter

KEY OUTCOMES OF THE NEW INVESTMENT LAW

Javkhlanbaatar SereeterDirector General

18 November 2014, Hong Kong, PRC

MONGOLIAINVEST in

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Contents

Section 1: Implications of the Investment Law

Section 2: More Legal Enchancement

Section 3: Projects initiated for Industrialization

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Ease of Doing Business, 2015

INVESTMENT POLICY REVIEW

/April 2014, UNCTAD/ TRADE POLICY REVIEW

/September 2014, WTO/

POSITIVE AND GOOD NOTES

From the Members of the UNCTAD and WTO

Representatives of foreign investors

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The Interest of Investors is Higher in 2014

• Over 50 forums and conferences

• Over 4500 potential investors of 22 countries

• 257 newly registered foreign entities in first 10 months in 2014

� The list of 22 economies:

- China

- Hong Kong, PRC

- France

- Japan

- USA

- Switzerland

- Canada

- Korea

- Germany

- England

- Turkey

- Myanmar

- India

- Latvia

- Austria

- Russia

- Taiwan, PRC

- Italy

- Spain

- Poland

- Hungary

- South Africa

Declining FDI Inflow

/in billion USD/

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Contents

Section 1: Implementation of Investment Law

Section 2: More Legal Enhancement

Section 3: Project Development

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• The amendment to Mineral’s Law seeks to limit

the state’s role in mining and create a stable and

feasible development in the industry.

• The new law provides a number of incentives

available to petroleum explorers, including

exemptions from customs duty and VAT in the

first 5 years, and income taxes from oil sales.

Mineral Law is revised

Petroleum Law is revised

Issue of 106 licenses Issue of 106 licenses

State Policy for Minerals • A policy framework that would define the

country’s priorities and strategies in the minerals

sector in the future.

• The Government approved a decree to settle the

uncertainty caused the frozen 106 mining licenses.

More Legal EnhancementMore Legal Enhancement

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•The “Glass Account Law” enables public control andmonitoring of the budget spending and procurement fortransparency.

SMART Governance Initiative

• Decisive Regulatory reform aimed to reduce andabolish inefficient, business unfriendly, excessivegovernment regulations and red tapes

The Glass Account Law

State Policy on Railway

More Legal Enhancement

1435 mm gauge routes:

• Tavantolgoi – Gashuun Sukhait

• Khuut – Bichigt

1520 mm gauge routes:

• Arts suuri – Erdenet

• Tavantolgoi – Sainshand – Baruun-Urt – Khuut –

Choibalsan

• Khuut – Numrug

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More International Engagement in 2014

EPA• Japan-Mongolia Economic Partnership

Agreement is the first free trade agreement

of Mongolia.

• Negotiations were finalized.

FIPA • Foreign Investment Protection and Promotion

agreements with 43 countries

• Mongolian-Canadian BIT negotiations were

re-commenced

Transparency Agreement • An Agreement on Transparency in Matters

Related to International Trade and Investment

between the United States of America and

Mongolia was signed in September 2014.

• MIGA Guarantee Agreement is underway to

approved at the Parliament.

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Contents

Section 1: Implementation of Investment Law

Section 2: More Legal Enhancement

Section 3: Projects initiated for Industrialization

12

Signed PPP Projects- USD 7.5 bln

In 2013, the Government of Mongolia approved 43 projects under the condition of PPP

mechanism.

№ Project name Total Cost Concessionaire

1 “Telmen power plant” project USD 183.0 million “New Asia Group” LLC

2“Altanbulag-Ulaanbaatar-Zamyn-Uud

highway” projectUSD 5.0 billion

“CHINGGIS LAND

DEVELOPMENT GROUP” LLC

3“Nariinsukhait – Shiveehuren” road

projectUSD 47.6 million “RDCC” LLC

4“Establishment of the mining and

metal processing complex” projectUSD 725.0 million “QSC” LLC

5 “Tuul-Songino power plant” project USD 163.1 million “MORIT IMPEX” LLC

6“Tavantolgoi-Khanbogd-Hangi” road

projectUSD 237.8 million “MCCC” LLC

7 “POWER PLANT #5” (CHP5) project USD 1.2 billion“GDF SUEZ, SOJITZ, POSCO,

NEWCOM” LLC

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CHP 3 CHP 4“Baganuur”

SOE

Amgalan

Power Plant

USD 30.9 millionUnder the project, the

capacity of the plant has been

increased by 50.0 Mw and

reached 186 Mw. The cost for

producing 1 kw/h energy will

decrease from MNT 74.7 to

MNT 36.

Performance: 100%

USD 47.4 millionUnder the project, the

capacity of the plant has

been increased by 123.0

Mw and reached 580

Mw.

The expansion amount

wi l l provide 10% of

domestic energy

consumption.

Performance: 81%

USD 10 millionThe capacity for Coal

crushing and loading

wi l l increase by 4.5

mi l lion ton yearly and

can provide heating and

Ger district households

continuously with coal.

Performance: 100%

USD 25.6 millionThis power plant will

provide east side of

Ulaanbaatar with energy.

Performance: 75%

Million

USD113.9

Light industryPower Plants

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Ulaanbaatar Engineering Infrastructure

Energy

Infrastructure

projects

Performance: 61.1%

Construction

Infrastructure

projects

Performance: 93.2%

City’s ger district

redevelopment

Infrastructure

projects

Performance: 24.2%

Million

USD103.4

More USD 300 mln

loan has been

granted from ADB

and EB from 2013.

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Project financing:

184,5 Million USD

Performance: 43%

Railway

267 km railroad Tavantolgoi

- Gashuun Sukhait Route is

built from 1800 km

145Million

USD

48.6Million

USD

75.1Million

USD

21.3Million

USD

888 projects for import substitution

and export promotion projectsFinanced 85 entities through the

commercial banks

Agriculture and light industry

sectorAim to develop domestic final products’

industry and supply domestic demands

Financed 110 entities

Projects to develop SMEsFinanced 116 entities through the

commercial banks

Light industry

Light industry

“Expecting a positive trend in FDI”

Thank you for your attention