Mongolia: Revision of Investment Law
On 17 May 2012 Mongolia’s parliament passed a new law requiring both government and parliamentary approval for any foreign investments worth more than $76m that buy a stake of more than 49 percent in businesses in certain strategic sectors.
Under the final version of the law, foreign investments need approval if they fall into any of three “strategic” sectors: minerals, banking and finance, and media and telecommunications. Investments in these sectors of more than $76m for a stake of more than 49 per cent will have to be approved by Mongolia’s Foreign Investment and Foreign Trade Agency (Fifta), and subsequently by parliament. Each has 45 days to make a decision, bringing total approval time to around 90 days.
“It’s a good law for Mongolia and provides stability and clarity for investors,” said Eric Zurrin, chief executive of ResCap, a boutique investment bank in Ulan Bator. “This brings Mongolia more in line with mature, resources-rich economies like Australia and Canada.”
Update May 8, 2013:
In April 2013 at its annual session, the Mongolian parliament has partially reversed the investment law. Foreign investors no longer need to seek parliamentary approval for all investments. Government approval, however, is still required, as is parliamentary approval for acquiring stakes of more than 49% of equity. This has been done in order to reattract foreign investment, as it had dropped by 17% in 2012, hitting the lowest monthly level of FDI inflow since at least 2010 in February 2013.
Any Evidence-Based Deliberation:
|Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations?|
|Is there any evidence that alternatives to the proposed measure were considered?|
|Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government?|
|Was such evidence identified?|
|Is such evidence publicly available?|
|Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives?|
|Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken?|
|Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory?|
|Did the government state its intention to review the measure within one year of implementation?|
Date of inception:
GTA Evaluation: Amber
Mongolia open to talks on investment law:
US Embassy in Ulaanbaatar "2012 Mongolia Investment Climate Statement": http://photos.state.gov/libraries/mongolia/662225/pdfs/2012_mongolia_inv...
Mongolia’s new investment law: deterrent or clarification?
Update April 2013: MSN Money News Center, http://money.msn.com/business-news/article.aspx?feed=OBR&date=20130423&i...