FOREIGN INVESTMENT OPPORTUNITIES OF MONGOLIA

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1 Foreign Investment and Foreign Trade Agency Government of Mongolia FOREIGN INVESTMENT OPPORTUNITIES OF MONGOLIA Dr. Ganzorig Baasankhuu Chairman Foreign Investment and Foreign Trade Agency

2 Content Economic overview and investment opportunities Foreign investment environment, investment policy of Mongolian Government Top priority projects Italy s FDI to Mongolia Shibu lijack

3 Gross Domestic Product /trillion MNT/ ,2 6,0 6,0 4,5 3, GDP growth in 2010 is 6.1% reaching 8.25 trillion MNT (6.6 billion USD) at current prices. GDP growth was mainly due to 23.4% increase in services and trade, 11.3% increase in processing industry and 6.3% in mining (National Statistical Office, 2011)

4 Export and Imports /billion USD/ 2,97 Total turnover Export Import 1,54 1,43 5,77 4,00 4,02 1,94 2,06 2,53 3,24 2,13 1,88 6,17 3,27 2, (National Statistical Office, 2011) Total trade turnover increased by 2.15 billion USD or 53.5%, total export increased by billion or 53.8% and total import increased by 1.14 billion USD or 53.3%.

5 Foreign Direct Investment 1.200, ,00 800,00 708,90 801,10 (million USD) 1.025,90 600,00 400,00 200,00 366,50 499,90 0, ( Foreign Investment and Foreign Trade Agency, 2011)

6 Investor s Protection in Mongolia Agreement on Mutual Protection and Promotion of Investment with 44 countries Agreement on Avoidance of Double Taxation with 34 countries WTO member since 1997 Investors in Mongolia Member of Multilateral Investment Guarantee Agency (MIGA) General agreement on trade and economy with 24 countries Seoul Convention on Investment Insurance, 1999 Washington Convention on Investment Dispute Settlement, 1996

7 Attractive targets for FDI Top 3rd level for Economic Freedom Country /ranked by Transparency International, 2009/ Lowest tax rates country in Asia Pacific region / Corporate tax-10%, 25%,Value added tax- 10%/ 60th country of Doing Business 2010 inquiry 7200 items can be exported to the EU markets on GSP+ scheme with zero import tariff

8 Tax exemptions and Incentives SME production equipment and utilities are exempted from the customs tariff and VAT Government Resolution No.316 approved on 14 th of October of 2009 The Parliament of Mongolia approved the Policy of High Technology Industry and it has enabled the legal base of granting tax exemption, and credit guarantee for business entities those are running business in high technology sector State Great Khural approved on June, 2010

9 GSP+ GSP+ Scheme EU GSP+ GSP+ incentive is aimed at encouraging sustainable development and good governance of developing countries. GSP+ GSP+ scheme allows Mongolia to export around 7200 products duty free to the EU market. For instance: - copper and copper products, iron and iron products, alluminuim, lead and lead products, iron and iron products - meat, meat offal or blood products, prepared or preserved meat - textile, knitted or crocheted articles - wool, cashmere, cashmere products - wool, fine or coarse animal hair etc.

10 Law of Mongolia on Concessions Law on Concessions of Mongolia (PPP) approved on 28 January, puts state and local properties into economic utilization vast business opportunities for investors the list of concession items is approved by the state and local administrative bodies decisions shall be made whether to finance from state fund, to make a guarantee, to organize a tender or to conclude a direct agreement Foreign legal entities or their consortiums may submit an unsolicited proposal to enter into a concession agreement

11 Mining and Mineral Resources Shibu lijack

12 Foreign Direct Investment by Sector 65,3% 18,9% 2,7% Mining & Mineral exploration Service & Trade 15,8% 13,1% Bank Others ( Foreign Investment and Foreign Trade Agency, 2011)

13 Mining and quarrying /billion MNT/ ,3 422,8 1417,4 1104,8 1774,9 987,9 1648,4 193,2 107,5 162,0 209,2 209,2 48,3 40,9 65,6 51, of which: abroad (National Statistical Office, 2011) Mining of coal and lignite, extraction of peat Extraction of crude petroleum and natural gas Mining of metal ores Other mining and quarrying

14 No Strategically important largest deposits of Mongolia Name of Strategically Important Deposit Location (Province, County) Reserve Amount 1 Tavan Tolgoi Umnugobi, Tsogtsetsii 4.3 bln tons, coal 2 Nariin Suhait Umnugobi, Gurvantes mln tons, coal 3 Baganuur, Baganuur mln tons, coal 4 Shivee Ovoo Gobisumber, Shiveegobi 564 mln tons, coal 5 Mardai Dornod, Bayandun 1104 tons, uranium 6 Dornod Dornod, Dashbalbar tons, uranium 7 Gurvanbileg Dornod, Bayandun tons, uranium 8 Tumurtei Selenge, Huder mln tons, iron ore 9 Oyu Tolgoi Umnugobi, Khanbogd mln tons, copper; tons, gold 10 Tsagaan Suvarga Dornogobi, Mandakh 1.28 mln tons, copper; 43.6 thousand tons molybdenum 11 Erdenet Orkhon, Erdenet 3.2 mln tons, copper; 90 thousand tons, molybdenum 12 Burenkhaan Khuvsgul, Alag-Erdene 40.5 mln tons of phosphorit 13 Boroo Selenge, Bayangol 22 tons of gold 14 Tumurtein Ovoo Sukhbaatar, Sukhbaatar 820 thousand tons of zinc 15 Asgat Bayan-Ulgii, Nogoonnuur 2247 tons of silver

15 Mongolia is 33rd oil and energy exporting country in the world. Shibu lijack

16 Top priority projects Mining, Energy & Heavy Industry Total amount 10.2 billion USD Agriculture & Light Industry Total amount 650 million USD Oyutolgoi, Tavantolgoi, Black metallurgical complex, Copper smelting plant, Coking coal plant, Construction materials plant Supporting the development of irrigation fields High-tech industrial complex & science parks Infrastructure sector Total amount 240 million USD Project to build houses, roads, railways and to construct power station & factory for generation from biomass Tourism, Environment & Information technology sector Total amount 1.1 billion USD

17 Italy s FDI to Mongolia FDI from 106 countries have been registered. Italy is on the 24 th place Since 1990 totally: 47 companies from Italy Total investment 15.5 million USD Sales Enjineering Other 8.5% Sales construction 4.7% Production of foods and beverages Processing raw 6.4% materials of animal origin 6.4% Trade and catering services 66%

18 Italy s Trade with Mongolia As of August 2011: Export of Mongolia to Italy 30.5 million USD /Main exports of goods: leather of bovine or equine animals,goat or kid skin leather, wool and fine or coarse animal hair, combed/ Mongolia s import from Italy 23.0 million USD /Main imports of good: spare parts for vehicles, machinery and transport equipment, laboratory equipment, medicine, granulated sugar, rice, vegetable oil, beer, wine, alcohol drinks, cigarette, food commodities /

19 Investment opportunities: Energy and Mineral Resources Light industry Food Road, Urban development Agriculture Trade & service Tourism ICT and Human Development

20 THANK YOU FOR YOUR KIND ATTENTION Address: FIFTA, Sambuu Str.11, Government Bld.11, Ulaanbaatar , Mongolia Website: Shibu lijack