06.20.2015, PRESENTATION, FDI Environment in Mongolia, Jim Dwyer
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Transcript of 06.20.2015, PRESENTATION, FDI Environment in Mongolia, Jim Dwyer
FDI ENVIRONMENT IN
MONGOLIA
Jim Dwyer
Executive Director
Business Council of Mongolia
CAMCA Regional Forum
Ulaanbaatar, Mongolia
20 June, 2015
INVEST in
MONGOLIA
FDI into of Mongolia has been decreasing sharply
0.32 0.37 0.50 0.71 0.80
1.03
4.99
4.40
2.29
0.57
15.85% 36.23% 41.80%
13.01% 28.06%
386.36%
-11.82%
-47.95% -75.20%
(2.00)
(1.00)
-
1.00
2.00
3.00
4.00
5.00
6.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014.11.31
bill
ion
USD
FDI Percentage
/in billion USD/
Export of coal (million USD) Export price of coal
Reason 1: • Main export commodity price dropped
2011.01 2015.02
Coal 141.94$ 65.76$
Metals 245.48$ 137.27$
Copper 9533.2$ 5729$
Iron Ore 179.63$ 62.69$
Reason 2:
• Phase 1 of OT Project has completed
Investment Amount:
7.1 billion USD
OT investment has been the main reason for the rapid growth of FDI in 2011-2012
• 40 companies listed in International stock exchanges
Reason 3:
Strategic Entities Foreign Investment Law /2012/
Long Name Law /2009/
Presidential moratorium
on new exploration licenses /2010/
Government Changes
Corruption Issues /in 2013 106 exploration
licenses held by foreign and local investors were revoked as a result of a
court case/
Arbitration cases
Court cases / Imprison cases
Tax disputes
Unexpected Changes of Regulations
Negative messages Unfavorable attitudes
• Uncertainty
EASE OF DOING BUSINESS IN MONGOLIA
According to the 2015 Doing Business report by the World Bank, Mongolia is ranked 72nd place out of 189 Economies
DB 2015 Rank
8
173
142
90
84
74
61
42
30
24
17
Trading Across Borders
Getting Electricity
Resonlving Insolvency
Paying Taxes
Dealing with Construction Permits
Getting Credit
Starting a Business
Registreing Property
Enforcing Contracts
Protecting Minority Investors
Source: MIGA-EIU Political Risk Survey 2013
7
13
24
31
33
43
45
58
War
Terrorism
Expropriation
NHFO
Civil disturbance
T&C restrictions
Breach of contract
Adverse regulatory changes
Types of political risk of most concern to investors in developing economies in
next 3 years /percent/
INTERNATIONAL SURVEYS
Key Findings of the WB and IFC survey in Mongolia /provisional
report/
The main investor concerns are caused by the certain government organizations:
– Lack of Transparency and Arbitrary Government Action
– Expropriation
– Discrimination
– Breach of Contract
Even the investment is adequately protected in legal documents, investors do not feel the reliable protection.
High degree of dissatisfaction to resolve investors grievances.
Scenarios to 2021 INVESTMENT POLICY REVIEW /April 2014, UNCTAD/
Recommendations
2
1
• Resource curse and macroeconomic instability • Mining development hampered by national and international political
and economic difficulties • Investment in infrastructure constrained
• Mining revenues are put to productive use • Macroeconomic stability attained • Economy diversifies, infrastructure improves • Sustainable and inclusive development
1
• New objectives and tools of a comprehensive FDI strategy
2
• Regulatory and institutional reforms for foreign and local private sector development
3
• Programmes for achieving diversification through FDI and other activities of foreign companies
Foreign Investment Law (FIL)
Remove the pre-establishment screening of FDI
Abolish the need for investment certificates
Replace the minimum deposit requirement
Improve the methodology for the collection of FDI
Regulation of Foreign Investment in entities operating in strategic sectors (SEFIL)
Replace the comprehensive pre-establishment screening with a proper national security test
Mongolia’s Investment Promotion Agency (IPA)
Establish an independent, public sector-funded and private sector-oriented agency Remove all regulatory functions, including screening and registration and assign proper investment promotion and facilitation functions Staff the agency with professional and experienced personnel Provide the IPA with secure and adequate financial resources
1. New objectives and tools of a comprehensive FDI strategy
POLICY ACTIONS
• Sector diversification
• Geographical diversification
• Source country diversification
Managing stakeholders interests
More favorable condition
• Synergy between government institutions
• Capacity building programme
• Social program to promote a positive impact of FDI
Diversification
12
Protection
• One stop online services
• Aftercare services
• Grievance management mechanism
• Facilitate procedural barriers
• Incentives
Financial Incentives
Fiscal Incentives
Regulatory Incentives
Expected investment from mega projects and PPP
projects exceeds 18bln USD
OT II Phase
Investment: 5bln USD
Investment Agreement
TT
Investment: 4bln USD
Investment Agreement is under negotiation
TTPP
Investment: 1bln USD
Investment Agreement
Public-Private Partnership Projects
Total Investment amount : ~7bln USD
The Government has signed 17 PPP agreements
• “Telmen power plant” project • “Altanbulag-Ulaanbaatar-Zamyn-Uud highway” project • “Nariinsukhait – Shiveehuren” road project • “Establishment of the mining and metal processing complex” project
• “Tuul-Songino power plant” project •“Tavantolgoi-Khanbogd-Hangi” road project • 9 road projects with total length of 1167.6 km • Projects for construction of 72 kindergarden and school complexes
CHP5
Investment: 1.2 bln USD
Concession Agreement
Thank you for your attention
INVEST in
MONGOLIA
Invest Mongolia Agency
Web: www.investmongolia.com
Phone: +976-11-320706, 310599
Email: [email protected]
The Business Council of Mongolia
Web: www.bcmongolia.org
Phone: +976-11-317027; 70114442
Email: [email protected]