TUV PROVINCE INVESTORS FORUM 2011

FOREIGN DIRECT INVESTMENT FRAMEWORK OF MONGOLIA AND TOV PROVINCE

2011.10.20 Mr . Ochirkhuyag G.

Vice-Chairman

Foreign Investment and Foreign Trade Agency

Government of Mongolia

Content

• Economic prospects and current

development of Foreign Direct Investment

(FDI) in Mongolia

• Mongolian priority economic sectors

• Mining and mineral resources

• Food, agriculture and light industry

• Tourism

• Top priority investment projects

Tuv province’s some prospects

Shibu lijack

Economic prospects and current development of FDI in Mongolia

3.7

4.5

6.0 6.0

8.2

0

1

2

3

4

5

6

7

8

9

2006 2007 2008 2009 2010

(National Statistical Office, 2011)

GDP growth in 2010 is

6.1% reaching 8.25 trillion

MNT (6.6B 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.

Gross Domestic Product /trillion MNT/

Export and Imports /billion USD/

Total trade

turnover increased

by 2.15 billion

USD or

53.5%, total export

increased by

1.013 billion or

53.8% and total

import increased

by 1.14 billion

USD or 53.3%.

2.97

4.00

5.77

4.02

6.17

1.541.94

2.53

1.88

2.89

1.43

2.06

3.24

2.13

3.27

0

1

2

3

4

5

6

7

2006 2007 2008 2009 2010

Total turnover Export Import

(National Statistical Office, 2011)

Foreign Direct Investment 2010

366.50

499.90

708.90801.10

1,025.90

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

2006 2007 2008 2009 2010

(million USD)

( Foreign Investment and Foreign Trade Agency, 2011)

Top 3rd level for Economic Freedom Country /ranked by Transparency International, 2009/

Lowest tax rates country in Asia Pacific region / Corporate tax-10%, 25%/

73rd country of Doing Business 2011 inquiry

7200 items can be exported to the EU markets on GSP+ scheme with zero import tariff

Attractive targets for FDI

SME production equipment and utilities are exempted from the customs tariff and VAT

• Government Resolution No.316 approved on 14th 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

• June 2010

Tax exemptions and Incentives

Law on Concessions of Mongolia (PPP) approved on 28

January, 2010.

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

Law of Mongolia on Concessions

Investor’s Protection in Mongolia

Investors in

Mongolia

WTO member since 1997

Member of Multilateral Investment Guarantee

Agency (MIGA)

General agreement on

trade and economy with 24

countries

Washington Convention on

Investment Dispute

Settlement,

1996

Seoul Convention

on Investment Insurance,

1999

Agreement on Avoidance of

Double Taxation with 34 countries

Agreement on Mutual

Protection and Promotion of Investment

with 44 countries

Shibu lijack

Mining and Mineral Resources

Foreign Direct Investment – by Sector

65.3%

18.9% 2.7%

13.1%15.8%

Mining & Mineral exploration

Service & Trade

Bank

Others

( Foreign Investment and Foreign Trade Agency, 2011)

Mining and quarring /billion MNT/

www.themegallery.com

193.2

422.8

1104.8987.9

107.5162.0 209.2 209.2

1533.31417.4

1774.91648.4

48.3 40.9 65.6 51.9

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2008 2009 2010 of which: abroad

Mining of coal and lignite, extraction of peat

Extraction of crude petroleum and natural gas

Mining of metal ores

Other mining and quarrying

(National Statistical Office, 2011)

Strategically important largest

deposits of MongoliaNo

Name of Strategically

Important DepositLocation (Province, County) Reserve Amount

1 Tavan Tolgoi Umnugobi, Tsogtsetsii 4.3 bln tons, coal

2 Nariin Suhait Umnugobi, Gurvantes 90.79 mln tons, coal

3 Baganuur , Baganuur 512.8 mln tons, coal

4 Shivee Ovoo Gobisumber, Shiveegobi 564 mln tons, coal

5 Mardai Dornod, Bayandun 1104 tons, uranium

6 Dornod Dornod, Dashbalbar 58933 tons, uranium

7 Gurvanbileg Dornod, Bayandun 16073 tons, uranium

8 Tumurtei Selenge, Huder 229.3 mln tons, iron ore

9 Oyu Tolgoi Umnugobi, Khanbogd 16.39 mln tons, copper; 623.3 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

Mongolia is 33rd oil and energy

exporting country in the world.

www.themegallery.com

Mineral elements that exist in Mongolia

Yellow parts are elements of the Periodic Table of

Mendeleev that exist in Mongolia

69 elements or 62% of the total 111 elements of the

Periodic Table have been discovered and studied in Mongolia

Food, Agriculture and

Light industrial sector

One of the Economic priority sector

of Mongolia

60.4%

40.9%

10%

• of manpower works in this sector

• of GDP

• of export revenue

Shibu lijack

Agriculture sector

Shibu lijack

80%

20%

Animal Husbandry sector products

Light industry & SMEs produce

Food & Agriculture in 2010

2.1 million tons of cereals, potatoes and

vegetables harvested from 541.4 thousand hectare.

100% domestic

needs of meat and potato

50-97% of vegetables

and celeries

Livestock reached 32.7 million

20% of milk and dairy products

23.2 % of total FDI

Tourism

Mongolian Tourism sector in a glance

Mongolian tourism sector was almost fully private-sector based in the last decade and a business-friendly legal environment has been

effectively sustained in this sector.

420 tour operator

companies

360 tourist camps, of which

74 are high standard camps

340 hotels, of which 63 are

star-rated

• Law of Tourism /2000/

• About 10 regulation and standards of tourism organization, camps, hotels etc.

• Discharge to VAT & tax credit shall be granted for certain percent of investment of construction of high class hotels, tourist complex

• International cooperation in tourism sector is widening these years and 16 intergovernmental agreements have been made

Legal environment of Tourism

451 450

411

456

380

390

400

410

420

430

440

450

460

2007 2008 2009 2010

Tourist /thousands/

In 2010, Government of Mongolia elaborated General

Development Plan for Main Tourism Regions

“Kharakhorum 13th Century” tourist complex

Top priority projects

• Oyutolgoi, Tavantolgoi, Black metallurgical complex, Copper smelting plant, Coking coal plant, Construction materials plant

Mining, Energy & Heavy Industry

Total amount 10.2 billion USD

• Supporting the development of irrigation fields

• High-tech industrial complex & science parks

Agriculture & Light Industry

Total amount650 million USD

• Project to build houses, roads, railways and to construct power station & factory for generation from biomass

Infrastructure sector

Total amount240 million USD

Tourism, Environment & Information technology

sector

• Total amount 1.1 billion USD

Tuv province’s some prospects

Infrastructure development

Road construction

Electricity network development

Tourism development

SME’s development

Agriculture processing

Geological survey and mining

Tourism

Investment opportunities

Energy and Mineral

Resources

Road, Urban development

Trade & service

Light industry Food

Agriculture

ICT and Human

Development

Shibu lijack

THANK YOU FOR YOUR

KIND ATTENTION

Address: FIFTA, Sambuu Str.11, Government Bld.11,

Ulaanbaatar 211238, Mongolia

Email: fifta@investmongolia.com

Website: www.investmongolia.com