MONGOLIA is for BUSINESS - · PDF fileCopper Smelter 2.0 bln Oil Production $0.8 bln ......
Transcript of MONGOLIA is for BUSINESS - · PDF fileCopper Smelter 2.0 bln Oil Production $0.8 bln ......
WHY INVEST IN MONGOLIA
1. Large mineral resource base that can
be leveraged for value added
processing
2. Situated between two giant
economies, China and
Russia, Mongolia promises abundant
opportunity for growth
3. Attractive FDI environment and trade
through an open policy committed to
reducing bureaucracy and corruption
4. Vibrant and flourishing democratic
Government with stability since 1990
5. A large number of Industrial &
Infrastructure mega projects open for
investors to participate
CountryBest Practice,
Mineral Capacity Index
MONGOLIA #1
Chile #8
Columbia #21
Vietnam #40
P.R China #45
All countries 96
Reason 1. LARGE MINERAL RESOURCE BASE
3
& Scrap
Minerals – Main Composition of Total Exports
(1H2013)
Coal
Copper
Iron ores
Crude oil
Zinc
Gold
Other
16%
7%
4%
10%
27%
17%20%
Mongolia’s World Class Mineral Reserves
Main Mineral ResourcesApproved
Reserves(2013)
Copper (million tons) 84.1
Coal (billion tons) 26.8
Gold (thousand tons) 2.4
Zinc (thousand tons) 37 340.4
Iron ore (mln tons) 1 088.9
Uranium (thousand tons) 47.9
Rare Earth (thousand tons) 3,768
Conventional crude oil (mln barrel) 2,438
Total coal exports are estimated to exceed 30 million tons atthe end of 2015 once railway infrastructure is in place andis expected to further increase to 50 million tons by 2017
Operations at the Oyu Tolgoi deposit have commenced in2013 and exports of its products began in July of 2013.These exports are expected to play a crucial role in totalexports of Mongolia.
Leading country in Mineral Resources
Source: Fraser Institute Report,2013
Ulaanbaatar
Strategic Deposits including Oyu Tolgoi and Tavan Tolgoi, world’s largest untapped deposits
AsgatSilver6.4 mm tons
BurenkhaanPhosphorite300 mm tons
ErdenetCopper/molybdenum1.2 bln tons
BorooGold0.025 mm tons
TumurtoiIron ore229.3 mm tons
GurvanbulagUranium0.016 mm tons
MardaiUranium0.001 mm tons
DornotUranium0.029 mm tons
Tumurtein OvooZinc7.7 mm tons
Tsagaan Suvarga
Copper/Molybdenum10.6 mm tons
BaganuurCoal600.0 mm tons
Shivee OvooCoal646.2 mm tons
Nariin SukhaitCoal125.5 mm tons
Tavan TolgoiCoal7.4 bln tons
Oyu TolgoiCopper 37mm tonsGold 1,431 tons
Rashaant
Gantsmod
jargalant
Hushuut
Olonubulag
Tsahiurt
Hotgor
Hugshin gol
Tamasagulag
Choibalsan
Ondorhaan
Ulaangom
Mongolia’s world class mineral reserves
Estimated reserves by 2012
Reason 1. LARGE MINERAL RESOURCE BASE
CHINAUS$ 8,358 1351
RUSSIAUS$ 2,014 143
KoreaUS$ 1,129 50
MONGOLIAUS$ 10 3
JAPANUS$ 5,959 128
Reason 2. STRATEGIC LOCATION
GDP 2012 in USD billions
Population 2012 in millions
Situated between two massive economies, China to the south and Russia to the
north, Mongolia promises abundant opportunity for growth.
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STARTING A BUSINESS
PROTECTING INVESTORS
REGISTERING PROPERTY
ENFORCING CONTRACTS
GETTING CREDIT
According to the 2014 Doing Business report by the WORLD BANK,
MONGOLIA is ranked 76th progressing by four places compared to the previous year.
Reason 3. ATTRACTIVE FDI ENVIRONMENT
MONGOLIA CONTINUES TO GROW IN DOUBLE DIGITS
Ministry of Economic Development forecasts Mongolia to continue in double digit growth in the coming years.
3.9 3.9
5.3
6.9
8.8
10.6
12.8
15.9
18.9
8.9
17.5
12.0
19.0
-2
0
2
4
6
8
10
12
14
16
18
20
0
5
10
15
20
6.4
12.2
14.8 14.1
20162015201420132012
%
US$ bln
2011201020092008
GDP at current prices, US$ blnGDP growth, yoy%
-1.3
Reason 3. ATTRACTIVE FDI ENVIRONMENT
Foreign Direct Investment into Mongolia
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
USD mm
Non-Mining FDITotal FDI
2011: Oyu
Tolgoi
Progression
2010: Oyu Tolgoi
construction budget of
$758 million
2008: Oyu Tolgoi
completion of first
construction phase
2005: Oyu Tolgoi project
receives approval
2001: Oyu Tolgoi
discovers mineral deposit
2012: Unfavorable
coal market
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Source: Invest Mongolia Agency, 2012
Reason 3. FDI continues to grow despite coal price
Reason 3. THE REVISED INVESTMENT LAW
Effective Nov 1, 2013
Key features
Eliminates approval system to foreign investors and replaces it
with registration procedure.
Promises the same guarantees and protections to both Domestic
and Foreign Investors.
Creates an independent agency to serve investors in many ways
Reveals possible tax and non-tax state supports and incentives to
investors
Increases efficiency of investment facilitating a mechanism to
follow up real projects in the economy
First Legal Act including regional and sectors classification in order to diversify the economy as a whole.
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Reason 3. THE REVISED INVESTMENT LAW
Tax Incentives Provided by the new Investment Law
10Source: Government of Mongolia, 2013
10%
5%
VAT
Corporate income
5
years
22
years
Tax-free
economic
zones
Tax rate
5%
10%10%
5%
VAT
Corporate income
Customs duty
Royalty
The new investment law is aimed at reviving foreign investment by
easing restrictions on investors in key sectors such as mining and by
providing greater certainty on the taxes.
New Services to Investors
1. Provide integrated information
2. Guide Investors to business and public procedures
3. Organize Field Tours
1. Legal Consultancy
2. Project Management Consultancy
3. Aftercare assistance
1. Investment Research
2. Investment & Investors Database
3. Targeted Promotion & AD Campaign
Reason 3. INVEST MONGOLIA AGENCY
• WTO member since 1997
• Member of Multilateral Investment Guarantee Agency (MIGA)
• Avoidance of Double Taxation Agreement signed with 26 countries
• Mutual Protection and Promotion of Investment Agreement signed
with 44 countries
• Bilateral Transparency Agreement signed with United Stated
• Joined to Asia-Pacific Trade Agreement (APTA)
• Negotiation for the Japan-Mongolia Economic Partnership
Agreement (EPA) is at the last stage
Reason 3. ATTRACTIVE FDI ENVIRONMENT
Icela
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Russia
Tu
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ia
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Japan
India
Jord
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rabia
Chin
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Arg
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Gre
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Belg
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Lithuania
Irela
nd
Fra
nce
Slo
vak R
epublic
Hungary
Costa
Ric
a
Italy
South
Afr
ica
Czech R
epublic
0.450
0.400
0.350
0.300
0.250
0.200
0.150
0.100
Bra
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United S
tate
s
Mo
ng
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Au
str
ia
Peru
Ukra
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Isra
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Austr
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Kore
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Kazakhsta
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Mo
ng
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a
Canada
0.050
0.000
Luxem
bourg
Port
ugal
Slo
venia
Rom
ania
Neth
erla
nds
Fin
land
Spain
Esto
nia
Germ
any
Colo
mbia
Sw
eden
United K
ingdom
Egypt
Latv
ia
Moro
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Chile
Pola
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Denm
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Norw
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Kyrg
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Sw
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nd
After adoption of the Strategic Entities Foreign Investment Law, 2012
Potential after the new Investment Law
Non-OECD
Average
OECD
Average
FDI Regulatory Restrictiveness Index (Closed =
1, Open = 0)
The drop in FDI in 2013 is largely attributable to the completion of Phase 1 of the OT
project as well as some changes to the strategic investment law of 2012 and other
temporary factors.
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Reason 3. ATTRACTIVE FDI ENVIRONMENT
Reason 4. DEMOCRATIC GOVERNMENT
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Tested with 7 consecutive successful democratic elections
Free and Fair election system
Less Domestic protests and Civil movement
Stability-next elections are in 2016 and 2017
Member of 69 international institutions and entered 250
international agreements and pacts
Peaceful and ultimately successful translation since 1990
to become a mature democracy over the last 20 years
Reason 5. MEGA PROJECTS
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Railways
$16.0 bln
Highways
$0.46 bln
Subways
$1.50 bln
Copper Smelter
$2.0 bln
Oil Production
$0.8 bln
Iron Ore Cluster
$1.0 bln
Coal to Gas
$10.0 bln
Coal to Liquids
$2.5 bln
Coal Washing
$0.8 bln
The Development Bank of Mongolia provides loans to finance large scale development
projects and programs1 of Mongolia approved by the Parliament and the list of projects
and programs to be financed shall be approved by spring session of the Parliament.
New Development Medium Term Target Program
Railroad Transportation
Sainshand Industrial Complex
Auto Roads and Energy Facilities
Reason 5. MEGA PROJECTS
Industrial mega projects to utilize abundant coal resources in order to create value add and
domestic sources of strategic products.
• To increase energy efficiency and cut
reliance on oil and gas imports
• To provide cleaner fuel sources vital
for solving pollution in urban centers.
• The Project aims to create domestic
source of petroleum products thus
enhancing energy independence and
security of supplies through the
introduction of commercially
proven, cutting edge technology in
Mongolia.
• CHPP complex to be constructed as 2
x 10Mtpa modules, and
commencement of construction in
2014.
• First module in June 2015, and
second 5 mtpa in November 2014.
• CHPP ramping up to processing 20Mt
of ROM by 2017.
Coal–to–Gas Plant1
Coal–to–Liquid Plant2 Coal Washing and Handling
Plant
3
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• In 2010, the Government approved the list of 121 concession projects.
• The Cabinet made amendments to the list of Concession projects (reduced to 56 projects).
• Major infrastructure projects such as Power plants, Railroads and Highways, infrastructure of SainshandIndustrial Complex; social sector projects
• The PPP project pipeline list is updated with more bankable and Government priority projects
• The new list consists of 51 projects submitted by line ministries and 5 projects submitted by private sector.
Reason 5. CONCESSION PROJECTS
Sectors
Infrastructure 10
Road and transportation 16
Railway 1
Pipeline transport 1
Airport 2
Energy 13
Environment 3
Education 3
Health 2
Culture and sport 4