An investment guide to Mongolia
Mongolia has been a member of the WTO since 1997. Mongolian legislation recognizes the primacy of international treaties in cases of conflict with domestic legislation.
Launched in 2006, GSP Plus covers around 7,200 products. It is accessible to especially vulnerable countries that have ratified and effectively implemented key international conventions on sustainable development, labour rights and good governance.
The EU GSP is the most generous of all developed country GSP systems. The volume of imports to the EU from developing countries under the GSP is greater than the volume of imports under the US, Canadian and Japanese GSP systems combined.
The Asia-Pacific Trade Agreement is open to all members of the UN Economic and Social Council for Asia and the Pacific. It aims to promote economic development through the adoption of mutually beneficial trade liberalization measures. In addition to tariff concessions, it covers non-tariff measures, trade facilitation, trade in services and investment.
The agreement covers trade in goods, investment, trade in Services, intellectual property, e-commerce, rules of origin, customs procedures, competition, cooperation, dispute settlement, sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT).The text can be found at: http://investmentpolicyhub.unctad.org/Download/TreatyFile/3372
The mining sector plays a key role in Mongolia's economy. Since the Minerals Law was passed in 2006 it has been amended 22 times, with recent amendments seen as liberalizing the regulatory framework, following a more restrictive approach adopted in 2012.
Over 6,000 deposits of approximately 80 minerals exist in Mongolia, among them coal, copper, uranium, iron ore, oil, tungsten, molybdenum and phosphate. Of particular note are Mongolia’s excellent metallurgic coal deposits. Currently, 160 are being exploited. Mongolia’s location next to China provides a ready market for Mongolia’s mineral wealth. As with all industrial sectors in Mongolia, there is plenty of potential to develop supporting infrastructure.
Mongolian law provides that mineral resources are the property of the state. Under the Minerals Law, individuals and legal entities may apply for exploration licenses and mining licences which authorise exploration and mining activities (respectively) for minerals within the licence area. Unlike in many other jurisdictions, a license under the Minerals Law relates to minerals generally rather than specific minerals.
Mongolia's biggest mine is Oyu Tolgoi. Jointly exploited by Rio-Tinto (UK), Ivanhoe Mines (Canada) and the Government of Mongolia, it is expected to yield 450,000 tonnes of copper and 330,000 ouces of gold annually, and contribute an estimated 30 percent to Mongolia's GDP.
|Exploration Licence||Mining Licence|
|Rights of a license holder||Exclusive right to conduct exploration for minerals; exclusive right to obtain a mining licence; right to transfer or pledge all or any of the exploration licence; right to explore for radioactive minerals if special licence is granted.||Right to engage in the mining of minerals; right to sell mineral products at international prices right to transfer or pledge all or any of the mining licence; right to engage in mining of radioactive minerals if a special licence is granted.|
|Maximum term||9 years||70 years|
|Annual license fees||1st year is $0.10 per hectare. Increases thereafter to a maximum fee of $1.50 per hectare.||Coal and common mineral deposits are $5 per hectare. Other minerals are $15 per hectare.|
|Royalties||N/A||Domestically sold coal base rate: 2.5% of sales value. Other minerals and exported coal base rate: 5% of sales value. Additional rate depending on mineral type, market price and degree of processing: maximum 30% of sales value.|
|Minimum investment||2nd to 3rd years: $0.50 per hectare. 4th to 6th years: $1.00 per hectare. 7th to 9 years: $1.50 per hectare.||N/A|
There is an estimated 66 million head of livestock, composed mainly of sheep (28 million), goat (25.5 million), horse (3.6 million) and cattle (2.8 million) by 2017. There are an estimated 1.2 million hectares of arable land of which only half is in use.
A number of opportunities exist. These include:
In order to support the sector, the government is establishing the Khalh Gol agricultural free zone in Khalhgol soum, with an area of 500 thousand hectares.
“Mongolia’s next” Tavan Tolgoi” and “Oyu Tolgoi” will be in agriculture and farming, reserve and potential for Mongolians. It is my goal and dream to see newsfeeds depicting Mongolia meat and dairy produce exports as a significant percentage of world output. I will do everything I can to make this a reality”
/Mr. L.Chinbat, Director of Gatsuurt LLC/
Tourism has been a growing sector and since the opening of the economy in 1992. Today there are around 500 tour companies, 375 hotels, 390 tourists camps and more than 20,000 people are working in this field.
Mongolia has developed a reputation as a key destination for outdoor and adventure sport and other related activities, including trekking, climbing, fishing, hunting and bird-watching, making use of its landscapes, rivers and lakes, and nomadic traditions.
Principle access is through the main international airport is Chinggis Khaan, outside Ulaanbaatar.
Key features of interest for tourism in Mongolia include:
The country is aiming to be a hub for the North-East Asia region and visitors come mainly from China, Russia and South Korea (mainly for business), followed by the United States, Japan, France and Germany. Tourists are mostly in the senior category.
In order to support the growth of the sector the government plans, under its National Tourism Development Plan:
Developers wishing to build a lodge in a national park can apply for a permit from the Ministry of Tourism. These are provide for five years and are renewable.
With regards to hotels for business and meeting-related tourism, the view is that a recent building boom has let to an over-supply of business hotel rooms in the capital.
|Relevant documents||Law on Tourism|
|Relevant institutions||Ministry of Environment, Green Development and Tourism|
The financial services sector is expected to see growing demand as:
Within the banking sector, there are 14 local commercial banks and two representative offices of foreign banks (ING and Standard Chartered). The minimum capital requirement for commercial banks is approximately $12 million. The Central Bank of Mongolia (BOM) formulates and implements monetary policy to achieve its main objective of the stability of the national currency. Foreign banks may establish local subsidiaries no earlier than one year after the establishment of their Mongolian representative offices. The minimum capital requirement for a Mongolian subsidiary of a foreign bank is set at $50 million.
Insurance activities in Mongolia are regulated by the Financial Regulatory Commission of Mongolia through the adoption of regulations and issuance of insurance contracts with insurance companies that have not obtained a license from the FRC, including foreign insurance companies. At present the minimum capital requirement is approximately $1.4 million, although expected to increase to $2.5 million in 2017.
|Relevant documents||Law of Mongolia on Banking 2010 Law of Mongolia on Securities Market Law of Mongolia on Insurance Investment Funds Law Activities of Insurance and Reinsurance intermediaries law|
|Relevant institutions||Mongolian Stock Exchange Financial Regulatory Commission of Mongolia Central Bank of Mongolia|
The Securities Market Law 2014:
The Investment Funds Law 2014: