The Government regulatory body, National Development Agency /NDA/ aims to ensure the country’s economic stability and to develop and implement the integrated socio-economic and investment policy.
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IMPLEMENTATION OF INVESTMENT LAW IN PRACTICE:
Investment legal environment
The Investment Law /IL/ of Mongolia adopted in 2013 introduces a simpler and more open investment process and provides an array of investment incentives. The IL enables protection of domestic and foreign investors on non-discriminatory basis, allows factual tax and non-tax incentives to investors who meet certain criteria according to IL provisions. Investment Agreement and Stabilization certificate are the main mechanisms to grant tax and non-tax incentives to investors.
Recent measures of the Government to improve investment environment
The Government of Mongolia has been making continuous efforts to improve investment environment and raise the efficiency of foreign investment. A number of important steps were taken recently towards creating conducive investment environment.
Investment Reform Map /IRM/
In order to create favorable investment framework, the National Development Agency is working to develop Investment Reform Map /IRM/ in collaboration with IFC of the World Bank Group. The IRM will enable policy makers to define investment priority sectors with a clear vision, assess strength and weakness; therefore it will facilitate the process grounding investment policy in a broad roadmap for economic growth and sustainable development based on a realistic assessment. The IRM is expected to be drafted within 2017, and a public presentation and consultation of the document will be followed.
Investment Protection Council
The Government attaches significant importance to protecting investors’ rights, retaining existing investment and regaining trust of investors. Within this framework Investment Protection Council was established under the Cabinet Secretariat of the Government to protect investors’ interests by applying Systemic Investor Response Mechanism. The council, consisting of representatives from the State Secretaries of Ministries and National Development Agency will work to create pleasant legal conditions for cooperation with investors, prevent potential risk for investors, and help to resolve investors’ complaints related to public services and procedures.
Creation of the model Bilateral Investment Treaty
In collaboration with UNCTAD, the Government is working to create appropriate model Bilateral Investment Treaty /BIT/ of Mongolia which covers all investment related areas including the clear definition and mechanism of investment protection. During 1990-2016, Mongolia had concluded 43 BITs with its partner countries. And we are expecting to establish more BITs with emerging markets in coming years. The model treaty aims to clarify the investment protection, dispute settlement mechanism and other related concerns.
Foreign Direct Investment overview
The Government of Mongolia is committed to fostering an attractive environment for foreign direct investment and trade through an open policy by ensuring public sector efficiency, legal certainty and sound governance. All sectors of Mongolia’s economy are open to foreign direct investment /FDI/. The country's ranking in terms of its business climate is improving steadily, and Mongolia ranks 64th out of 190 countries in the Doing Business report of 2017, published by the World Bank.
FDI has been the engine of Mongolia’s economic growth. Foreign investment into Mongolia has been increasing significantly up until 2011 when it reached its highest of USD 4.9 billion. Since then, FDI inflow is growing steadily by bringing capital, new technology, creating new jobs and knowledge. In fact, from 2014-2016 business entities with foreign investment have created over 38,000 jobs on average, 80 percent of which are composed from Mongolian staff.
As of 2016, Mongolia has attracted about USD15 billion foreign investment from 112 countries. Over 13,000 foreign invested entities operate in the country. The sectors that attract most foreign investment are geology, mineral exploration, mining, oil industry and trade and catering service sectors. Mongolia’s main investment partners are Netherlands, China, Luxembourg, UK, Singapore, Canada, Korea and the United States.
Source: National Development Agency