COORDINATING FDI WITH

OTHER POLICY AREAS

Invest Mongolia Agency

RESPONSIBLE AGENCY

• Invest Mongolia Agency established in 2013 with a wide program to promote and facilitate business investment in Mongolia.

• We are strongly dedicated to serve as a single point of contact for investors, coordinating investment advocacy all the way up to the decision makers, providing facilitation services to make sure that you invest faster and build your business efficiently in Mongolia.

FDI INFLOW ( in billion USD)

SECTORIAL BREAKDOWN of FDI

FOREIGN INVESTED COMPANIES

GOALS OF ATTRACTION

• Mongolia recognizes the importance of harnessing economic growth for sustainable and inclusive development. Mobilizing investment and ensuring that it contributes to sustainable development objectives is a priority for our country.

STRATEGY

Mongolian legal environment for sustainable development and inclusive growth • Removal of the distinction between foreign and

domestic private investors • No restrictions on foreign investors in the

countries’ strategic sectors • Open for investment in any industry or sector

without limitation or government approval • Foreign government ownership obtains approval

from a State Administrative Body

STRATEGY

Investment Law of Mongolia provides:

Protection of investors’ interests and rights

Tax stabilization

Investment incentives

Stability guarantees

STRATEGY

Tax incentives

Exemption from the payment of certain taxes, including:

• Preferential tax treatment

• Accelerated depreciation and amortization that is deductible from taxable income,

• Carrying forward of losses

STRATEGY

Non-tax incentives • No import duty for machines and equipment of manufacturing, processing and industrial facilities • Employee training costs are deducted from taxable income • Investors are served through simplified registration and immigration procedures • Land lease by foreign investors from 40 to 60 years to development projects • Simplified procedures for permanent residence permit and multiple entry visa for investors

TRADE POLICY

Diversify the sources of FDI through “third neighbor strategy”

• Mongolia-Japan Economic partnership agreement

• Mongolia-Canada Foreign Investment Promotion and Protection Agreement (FIPA)

TRADE POLICY

• According to World Trade Organization (WTO) review on Mongolia Trade Policy: “As foreign investment is important to the economy for both the exploitation of minerals and for development of other sectors, state simplified investment and registration requirements, and provided greater legal precision to several terms, including the definition of a foreign invested entity and a foreign government owned legal entity”.

INDUSTRIAL DEVELOPMENT, INNOVATION and R&D

Science, Technology and Innovation Policy

• Telecoms sector was deemed a strategic industry.

• Imported Machinery and equipment may be exempted from the customs duty and VAT to build plants to use nanotechnology, biotechnology and innovation technologies.

INDUSTRIAL DEVELOPMENT, INNOVATION and R&D

Infrastructure Policy

• New railway project incorporates Japanese, German, Korean and Russian investors

• Transit transportation consensus between Mongolia and China

• Ongoing construction of airport and rail network

INDUSTRIAL DEVELOPMENT, INNOVATION and R&D

Industrial Policy

• Emphasis on the expansion of manufacturing sector

• One of the main focuses is Sainshand Industrial Complex which requires huge amount of investment with considerably open policy

EASE OF DOING BUSINESS, 2015

ENVIRONMENTAL ISSUES

Along with the boosting mining sector, issues regarding land degradation is the main concern.

• Mongolian "Law of the Prohibition of Mining Operations in the Headwaters of Rivers, Protected Zones of Water Reservoirs and Forested Areas," commonly referred to as "The Law with the Long Name.“

• The government has already repealed over 200 exploration and exploitation licenses from mining companies operating within 200 meters of forest and water sources, binding them to another legal tenant: they have two years to rehabilitate the areas, under the observance of local government and citizens.

ENVIRONMENTAL ISSUES

• Recognizing the need for careful consideration of environmental and social issues towards attaining sustainable development, Mongolian Government incorporated this concern in the recently adopted Investment Law.

• According to the Law, the agency in charge of implementing the law /Invest Mongolia Agency/, will issue tax stabilization certificates to qualified investors.

INVESTMENT OPPORTUNITIES

• Abundant Natural Resources and Minerals-natural resources and minerals, which promise an unprecedented growth potential.

• Mongolia’s agricultural sector is a major source of revenue base, contributing to the diversified economic drivers.

• Significant potential for Renewable Energy sources.

INVESTMENT OPPORTUNITIES

• Expanding Railway and Highway Infrastructure development

• Industrial mega projects to utilize abundant coal

resources in order to create value add and domestic sources of strategic products.

• A Growing Banking and Financial Sector-

Insurance, fund management, private equity and venture capital and new credit and loan products.

INVESTMENT OPPORTUNITIES

• Demand Driven Healthcare Sector -new information technology and health and medical care insurance.

• Multi-Adventurous Tourism Sector - investments in hotels, tour camps and foreign tour operators are highly in demand.

INVESTMENT OPPORTUNITIES

• Diversifying Manufacturing Sector- cashmere products, food and beverage, garbage bags, napkins and number of construction materials.

• Communication Sector - higher-speed network and building competitive network to global markets.

LESSONS LEARNED

• FDI is an engine of growth for Mongolia. FDI inflow is more than a capital flow to the country; it contributes to 40% percent of the Mongolia’s tax revenue, and attributes to 17% of jobs created.

• Reaping the development benefits from

investment and gearing it towards sustainable development requires not only an enabling policy framework, but also coordination with policies in other related key areas.

LESSONS LEARNED

Mongolia increasingly promotes investment in sustainable development projects and innovative technologies:

Providing assistance in the start-up phase of such projects, and in the form of tax incentives.

On the regulatory side sustainability considerations are a key concern for investment incentives.