MONGOLIA is OPEN for BUSINESS Invest Mongolia Agency WHY INVEST IN - - PowerPoint PPT Presentation

MONGOLIA is OPEN

for BUSINESS

Invest Mongolia Agency

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

• pportunity 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

Country Best 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

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& 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 Resources Approved 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 at

the end of 2015 once railway infrastructure is in place and is expected to further increase to 50 million tons by 2017

• Operations at the Oyu Tolgoi deposit have commenced in

2013 and exports of its products began in July of 2013. These exports are expected to play a crucial role in total exports 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

Asgat

Silver 6.4 mm tons

Burenkhaan

Phosphorite 300 mm tons

Erdenet

Copper/molybdenum 1.2 bln tons

Boroo

Gold 0.025 mm tons

Tumurtoi

Iron ore 229.3 mm tons

Gurvanbulag

Uranium 0.016 mm tons

Mardai

Uranium 0.001 mm tons

Dornot

Uranium 0.029 mm tons

Tumurtein Ovoo

Zinc 7.7 mm tons

Tsagaan Suvarga

Copper/ Molybdenum 10.6 mm tons

Baganuur

Coal 600.0 mm tons

Shivee Ovoo

Coal 646.2 mm tons

Nariin Sukhait

Coal 125.5 mm tons

Tavan Tolgoi

Coal 7.4 bln tons

Oyu Tolgoi

Copper 37mm tons Gold 1,431 tons Rashaan t 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

CHINA

US$ 8,358 1351

RUSSIA

US$ 2,014 143

Korea

US$ 1,129 50

MONGOLIA

US$ 10 3

JAPAN

US$ 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

2 4 6 8 10 12 14 16 18 20 5 10 15 20 6.4 12.2 14.8 14.1 2016 2015 2014 2013 2012 % US$ bln 2011 2010 2009 2008 GDP at current prices, US$ bln GDP growth, yoy%

• 1.3

Reason 3. ATTRACTIVE FDI ENVIRONMENT

Foreign Direct Investment into Mongolia

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 FDI Total 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 8

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
• rder 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

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Source: 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

Iceland Russia Tunisia Malaysia Mexico New Zealand Japan India Jordan Indonesia Saudi Arabia China Argentina Greece Belgium Lithuania Ireland France Slovak Republic Hungary Costa Rica Italy South Africa Czech Republic 0.450 0.400 0.350 0.300 0.250 0.200 0.150 0.100 Brazil United States Mongolia Austria Peru Ukraine Israel Australia Korea Kazakhstan Mongolia Canada 0.050 0.000 Luxembourg Portugal Slovenia Romania Netherlands Finland Spain Estonia Germany Colombia Sweden United Kingdom Egypt Latvia Morocco Chile Poland Denmark Turkey Norway Kyrgyz Republic Switzerland

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
• f ROM by 2017.

Coal–to–Gas Plant

1

Coal–to–Liquid Plant

2

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 Sainshand Industrial 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

We WELCOME YOU to MONGOLIA – a land of enormous OPPORTUNITY

• f political, economic, and legal STABILITY

enabling mutual growth and PROSPERITY. WHY INVEST IN MONGOLIA