“Special attention needs to be paid to the issue concerning foreign investment”Economy
Ulaanbaatar /MONTSAME/. As of today, there are 35 foreign investor entities in Mongolia. This is a clear sign of how the issue concerning foreign investment requires special attention, highlighted Speaker of the State Great Khural G.Zandanshatar during a discussion held under the theme, ‘Legal reforms to support investment’.
The discussion was jointly organized by the Parliamentary Office and the American Chamber of Commerce in Mongolia (AmCham Mongolia) at the State House on October 26. During his opening remarks, the Speaker noted how it has become necessary to make urgent legal reforms to support investment in Mongolia alongside taking appropriate measures to attract foreign and domestic investors alike, and address public misconceptions about the matter.
He then said, “In terms of the corresponding legal environment, Mongolia has an open, favorable environment for foreign investment. The Government of Mongolia has signed agreements on the exemption from double taxation with 29 countries, agreements on trade and economic cooperation with 24 countries, and agreements on the mutual promotion and protection of investment with 42 countries so far. Despite this, we are currently faced with the necessity to improve the investment environment, issue legal guarantees and provide support for investors, and bring investment benefits to a new level. While the annual amount of investment was USD 1.5 billion in 2016, it reached USD 3.1 billion in 2019 - which was the highest amount in the last eight years at the time. However, in 2021, investment dropped to a level that was nearly 3 times less, sinking to USD 1.3 billion. Of the total investment made in Mongolia, the mining sector makes up 70 percent, a significantly large amount, while the trade and services sector makes up 17 percent.
The State Great Khural and the Government of Mongolia have set one of its main objectives as to diversify the economy by increasing the profits made in the agricultural sector and supporting industrial development for export products for starters.”
During the discussion, UN Resident Coordinator Tapan Mishra expressed his support for the development of legal reforms as a countermeasure for the decrease in foreign investment in Mongolia. He also noted the crucial importance of attracting investment in order for Mongolia to reach the Sustainable Development Goals by 2030.
As for MP Kh.Gankhuyag, he underlined how there are no investment minimums for foreign investors in 118 countries during his introduction of the bill for the Law on Investment, and highlighted that legal reforms are being focused on attracting investment in a short period of time to recover the economy.
Director of Policy and Advocacy for the American Chamber of Commerce in Mongolia G.Javkhlantugs said, “In the last two years, foreign investment has dropped by USD 571 million in Mongolia. It is currently considered that there will be a significantly positive impact on the country’s economy by supporting investment from ‘Third Neighbor’ countries alongside the two neighboring countries. For instance, Kazakhstan was able to attract an investment of USD 3.9 billion in 2020 through measures, such as exempting entities with foreign investment from customs duties and giving a guarantee for long-term financing alongside having approved a law on foreign direct investment that came into effect from 2015."
The American Chamber of Commerce in Mongolia also put forth suggestions, which included developing a long-term strategic plan to attract investors, and its urgent implementation, providing support for entities with foreign investment, ensuring stability in the legal environment, and creating incentives such as tax exemption and discounts.
Representatives of the Chambers of Commerce of the U.S., Europe, Australia, Germany, and France in Mongolia participated in the discussion and expressed their views on challenges and difficulties faced by foreign investors as well as further opportunities. They also made a request to have more attention paid to certain issues, such as the usage of electronic signatures, and electronic processing and receipt of documents.
President of Mongolian National Chamber of Commerce and Industry O.Amartuvshin said, “As it is domestic SMEs and business owners that are currently opposing the matter regarding foreign investment, we consider that it is necessary to organize a large movement to address the misconceptions. As foreign investment creates an environment for growth through the introduction of new cultures, technology, and information, it is crucial to help inform the public in order to change the perception.”