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SEOUL (Reuters) - Months before the first summit between leaders of two Koreas in 2000, South Korean tech giant Samsung Electronics Inc (005930.KS) invested $730,000 in Pyongyang’s top computer lab. North Korean programmers there would develop online chess games and food recipes for Samsung to sell outside the North.
Samsung quit the business as inter-Korea relations later deteriorated and the lab - Korea Computer Centre - was blacklisted last year for its alleged contribution to the North’s weapons program.
As companies from South Korea to Russia and China again look to cash in on easing tensions with Pyongyang, Samsung’s now defunct businesses in Pyongyang and hundreds of similar failed joint ventures underline North Korea’s status as one of the world’s highest-risk investment destinations.
Yet days before the historic meeting between U.S. President Donald Trump and North Korean leader Kim Jong Un in Singapore, a conference in Seoul to explore investment opportunities in North Korea drew about 600 attendees.
Samsung C&T Corp 028060.KS, the construction arm of South Korea’s largest conglomerate, set up a task force in May to review potential projects such as building railroads, a company official told Reuters on the sidelines of the conference.
“We are not clear yet on how to move in there, and want to know now how much risks we can take,” the official said, asking not to be named because he was not authorized to speak to media.
Russian gas giant Gazprom (GAZP.MM) and state-run Korea Gas Corp (KOGAS) (036460.KS) have held talks over the past two months to discuss a possible construction of gas pipelines passing through North Korea, a KOGAS spokesman said.
Other South Korean companies including retail giant Lotte and telecom company KT Corp (030200.KS) have also launched teams in recent weeks to study the resumption of stalled North Korea projects, officials said.
With vast mineral resources, poor transport networks, infrastructure and power facilities ripe for major upgrades and a population of nearly 26 million, North Korea is a potentially compelling investment opportunity once economic sanctions against it are lifted.
But risks range from political uncertainty to poor infrastructure, as well as the complexity of international sanctions that will continue to limit business even if they are gradually lifted, say several South Korean officials who have done business with North Korea.
In the case of Samsung, it could not expand its business in North Korea, partly due to U.S. sanctions that limit production of “dual use” items that can be used for weapons programmes, said Dong Yong-sueng, who advised the conglomerate on its North Korean business strategy.
“Samsung could not make even microwave ovens there. Why? The technology used in microwaves is the basis of missile guidance systems,” Dong said.
On June 20, Cabinet approved revisions to the bylaws of the Assistance Fund for Mongolian citizens living abroad and the appointment of the fund’s board members. The revisions will provide a regulatory framework for the management of translation costs associated with mutual legal assistance treaties held with other countries.
According to official data, more than 150,000 Mongolian citizens live abroad, and the number of criminal activities involving Mongolians, as victims and perpetrators, has been increasing. From 2009 to 2017, the Assistance Fund provided 1.3 billion MNT in financial support to Mongolian citizens living abroad, provided by through diplomatic missions in foreign countries.
During its weekly meeting, Cabinet updated the rules of the fund to support Mongolians living abroad. The fund operates to help over 150,000 Mongolian citizens living abroad and addresses some challenges facing them.
In response to requests from Mongolians living abroad, the fund has provided a financial support of 1.3 billion MNT from 2009 to 2017 through Mongolian diplomatic mission offices operating in foreign countries.
Almost half of the financial support was spent to bring back the bodies of Mongolians who deceased abroad, and the remaining was used to support citizens who were sentenced and lost their properties because of crimes.
The fund’s revenue was generated through the state budget, and aids and contributions of foreign countries, international organizations, domestic organizations and enterprises, and individuals.
Cabinet ministers agreed to implement some trial projects to reduce poverty, which were outlined in the government action plan 2016-2020.
The projects aim to address the shortage jobs across the country and provide people with sustainable employment by promoting permanent jobs.
Cabinet approved the minimum and maximum incomes of government officials who have authorities to spend the 2019 state budget.
Cabinet agreed to put forward amendments to the Law on Entity Income Tax to Parliament soon.
The government believes that the amendments will reduce expenses with respect to tax payments, enhance the legal and regulatory environment for entities, tax collection operations, and create a fair and transparent tax environment.
During the meeting, Cabinet members renewed a regulation regarding land evaluation to bring it closer to the market rate as the government believes that the regulation doesn’t meet the needs of the society because it has not been updated since 1996.
Cabinet also agreed that the National Veterinary and Sanitation Laboratory, National Laboratory for Drug Testing and Confirmation, and the state-owned Biocombinat factory will operate under the newly established National Veterinary Authority. The National Livestock Breeding and Genetics Resources Center and Science, Technology and Innovation Center on Agricultural Manufacturing will operate under the Ministry of Food, Agriculture and Light Industry.
Ulaanbaatar /MONTSAME/ A Consultative Commission Meeting of ‘Greater Tumen Initiative’ Program between Mongolia, Russia, China and Korea is taking place in Ulaanbaatar city on June 21-22. Over 100 delegates from the four countries are partaking in the consultative meeting, discussing Mongolia’s investment program, government policy and funding opportunities for priority sectors such as agriculture and mining.
According to the last ten years’ statistics, trade made with member states of the initiative Russia, China and Korea is making up 70-90 percent of total trade turnover of our country. Amongst it, Mongolia made over 80 percent of its export with China and about 30 percent of import with Russia. Whereas, investment made by member countries of the initiative to Mongolia equals to just 30 percent, highlighted Deputy Prime Minister U.Enkhtuvshin in his opening speech at a high-level discussion ‘Priority Development Programs: Financial Cooperation Initiatives’.
The Government of Mongolia is ensuring preparation to put ‘Tavan Tolgoi’ project into economic circulation and plan to implement the project in collaboration with private sector and foreign investors in open manner, he said. He also called on member countries of ‘Greater Tumen Initiative’ to establish trade facilitation agreement, to implement joint construction projects and to augment investment.
At the end of his speech, Deputy PM noted the Government is working to establish free trade zones in Altanbulag and Zamyn-Uud border checkpoints and develop export-oriented industry there and requested foreign investors to take part in it.
Furthermore, Director of Investment Policy Department of the National Development Agency L.Munkhbat introduced an investment program which include a total 115 projects worth USD 16.1 billion projected to be implemented in 2018-2021 in the scope of Government's Three Pillar Development Policy.
Financial cooperation is important to realize these projects and to augment investment in the frame of ‘Greater Tumen Initiative’, noted G.Batbayar, Executive Director of Development Bank of Mongolia.
ULAANBAATAR, June 21 (Reuters) - The Mongolian government on Thursday submitted plans to parliament to list a chunk of the state-owned company that holds the giant Tavan Tolgoi coal mine.
The potential initial public offering comes as the country looks to kickstart the long-delayed development of one of the world’s largest coking coal deposits, with international coal prices picking up after years in the doldrums.
Mining minister Sumiyabazar Dolgorsuren presented a bill to parliament proposing the sale of up to 30 percent of the project on domestic and international stock markets, according to a notice on Mongolia’s official parliamentary website. The potential value of an IPO was not mentioned.
The government said in a statement on Wednesday that it would also speed up plans to build a $1 billion coal-fired power plant near the mine, as well as a 247-kilometre railway that would help deliver Tavan Tolgoi’s coal to the Chinese border.
“The government believes that the economic benefits of the deposit will increase,” it said in the statement.
Tavan Tolgoi, in the Gobi desert about 250 kilometres (155 miles) from the Chinese border, has an estimated 7.4 billion tonnes of reserves and is considered one of Mongolia’s flagship mining projects. It is run by state-owned Erdenes Tavan Tolgoi.
However, it has been held back by poor infrastructure and weak coal prices as well as disputes over the role foreign investment should play in Mongolia’s economic development.
As early as 2011, Mongolia appointed BNP Paribas, Deutsche Bank and Goldman Sachs and Macquarie to lead an IPO for Tavan Tolgoi said to be worth as much as $15 billion, and previous administrations have discussed a triple listing for the project in London, Hong Kong and Ulaanbaatar.
Mongolia also allowed international investors to bid to develop the mine’s western block in 2011, but shelved the plan amid complaints from Japan and South Korea that the process was unfair.
In late 2014, a consortium consisting of Mongolia’s Energy Resources LLC., China’s Shenhua Energy and the Sumitomo Corporation of Japan was selected to invest $4 billion in the project. However, talks with the government collapsed in 2016 after a plunge in coal prices.
Some analysts still doubt Mongolia is ready to launch the IPO.
“I am still not convinced Tavan Tolgoi is moving any time soon as unresolved major issues still remain, such as funding for the railway and (coal) washing plant,” said Mogi Badral Bontoi, head of Cover Mongolia, an Ulaanbaatar-based market intelligence firm.
“Will the Chinese be involved again? Without resolving these issues, both on paper and politically the (Tavan Tolgoi) IPO is still far from reality,” he said. (Reporting by Michael Kohn Editing by David Stanway and Joseph Radford)
Aspire Mining Limited announced that a coal sample from Nuurstei’s coking coal project has been found to be of premium quality, according to the latest pilot coke testing.
Managing Director of Aspire Mining Ltd. David Paull noted, “The pilot coke testing results proved that it is possible to sell the Nuurstei project’s coking coal to Japan, South Korea and China’s steel manufacturers." The Nuurstei coking coal project is located in Khuvsgul Province and is connected to the Erdenet railway route.
The company's stock price rose by 4.35 percent on the Australian Stock Exchange after the announcement was made. Aspire Mining owns 90 percent of the Ovoot coal project and plans to build an Erdenet-Ovoot railway.
Seoul, Moscow and Pyongyang can implement several major trilateral infrastructure and energy projects if stability is reached on the Korean peninsula, according to South Korean President Moon Jae-in.
One such project could be a railway that will be able deliver goods from Russia to South Korea through North Korea. "Once the Trans-Korean Main Line is built, it may be connected to the Trans-Siberian Railway. In this case, it will be possible to deliver goods from South Korea to Europe, which would be economically beneficial not only to South and North Korea but to Russia as well," Moon Jae-in said in an interview with Russian media ahead of his state visit to Moscow.
A gas pipeline coming from Russia to North Korea to be extended to the South is another possibility, he said. "We can also build a gas pipeline via North Korea, so that not only South Korea will receive Russian gas but we will also be able to deliver it to Japan," the South Korean president said.
The project to unite the Korean Peninsula with a gas pipeline has been discussed for a long time, but official talks started in 2011. The negotiations were frozen after relations between Seoul and Pyongyang deteriorated. Last week, Russian energy major Gazprom announced it resumed talks with Seoul over the construction of a gas pipeline connecting Russia with North and South Korea.
The countries could also connect their electricity grids, Moon Jae-in said. "We can also establish a powerline that would allow us to receive electricity from Russia. It could also be delivered not only to South and North Korea but also to Japan.”
HONG KONG (Reuters/IFR) - Chinese smartphone maker Xiaomi Corp has lined up $548 million from seven cornerstone investors including U.S. chipmaker Qualcomm Inc for its Hong Kong IPO of up to $6.1 billion, according to a term sheet seen by Reuters.
Xiaomi, which also makes internet-connected devices, has set a price range of HK$17 to HK$22 ($2.17 to $2.80) each for its listing in the Asian financial hub, one of the biggest tech floats globally in recent years.
Other cornerstone investors include Chinese express delivery company SF Express, domestic telecom service provider China Mobile Ltd, state-backed investment firm CICFH Entertainment and state-run conglomerate China Merchants Group Ltd [CNMGP.UL].
The seven will take a combined 10 percent of the shares being offered, and the company will open the book to intuitional investors on ThursdXiaomi, China Mobile and China Merchants Group declined to comment. CICFH Entertainment, Qualcomm and SF Express did not immediately respond to requests for comment.
The IPO values the Beijing-based, Cayman-domiciled company at $54.3 billion - or $70.3 billion after a 15 percent “greenshoe” or over-allotment option which can be sold if there is demand. If the greenshoe is exercised, Xiaomi’s free float will be 9.99 percent of its enlarged share capital.
Xiaomi is selling about 2.18 billion shares in the IPO, 65 percent of which are primary, according to the term sheet. The selling shareholders are early investor Morningside, a Chinese venture capital firm, and Xiaomi managers Wong Kong Kat, Liu De, Heng Feng and Li Wanqiang.
The smartphone maker is also set to hand Hong Kong’s equity bankers one of the biggest paydays in recent years.
According to a preliminary offering document, Xiaomi is looking to pay an underwriting commission of 1 percent and an incentive fee of up to 0.25 percent. That means 23 banks on the IPO would share a total fee of about $76 million, if Xiaomi prices at the top of its range.
While the sheer size of the deal makes the fees attractive, the commission rate is lower than what Postal Savings Bank of China paid in its $7.6 billion IPO in 2016, the world’s biggest listing in four years. The lender paid an underwriting commission of 1.1 percent and an incentive fee of up to 0.5 percent.
Reuters reported on Tuesday that Xiaomi had lowered its likely valuation to a range of $55 billion to $70 billion following its decision to delay its mainland share offering until after its Hong Kong IPO.
The delay was triggered by a dispute between the company and regulators over the valuation of its China depositary receipts (CDRs), sources said, casting doubt on Beijing’s efforts to lure foreign-listed Chinese tech giants back home.
Xiaomi had been expected to raise up to $10 billion, split between its Hong Kong and mainland offerings.
The delay to its CDRs is a blow for Chinese officials, who designed them as a means for China to compete globally for major tech listings and give mainland investors access to the country’s tech champions.
Xiaomi’s blockbuster Hong Kong offering on the other hand is set to be the first listing under new exchange rules designed to attract tech floats, as competition heats up between Hong Kong, New York and the Chinese mainland.
China’s largest provider of on-demand online services, Meituan-Dianping, also plans to file for a Hong Kong IPO later this week, which would be the city’s second multibillion-dollar tech float this year, people familiar with the matter said.
Meituan-Dianping said if it had specific plans to raise capital, it would announce them at an appropriate time. The people declined to be identified as the information was not yet public.
CLSA, Goldman Sachs and Morgan Stanley are joint sponsors for Xiaomi’s Hong Kong IPO.
Reporting by Fiona Lau of IFR and Julie Zhu; Additional reporting by Sijia Jiang; Editing by Christopher Cushing and Stephen Coates...
The Mongolian Cabinet has backed a decision to launch an IPO for 30 percent of Erdenes Tavan Tolgoi JSC on domestic and international stock exchanges. Furthermore, the Cabinet has obliged the Mining Ministry to commence railway projects between Tavan Tolgoi and Gashuun Sukhait, Tavan Tolgoi and Zuunbayan as well as Tavan Tolgoi and Khangi.
In 2017, Erdenes TT mined more than 10.1 million tons of coal and exported 8.4 million tons, amassing revenue of 1.1 trillion MNT. From this revenue, 243 billion MNT was contributed to the state budget.
Tavan Tolgoi is one of the world’s largest untapped coking and thermal coal deposits, located in the South Gobi Province in southern Mongolia. All of Tavan Tolgoi is owned by Erdenes MGL (a government-owned company) except for the Ukhaa Khudag section which is mined by the Mongolian Mining Corporation. Erdenes Tavan Tolgoi JSC (Erdenes TT), a subsidiary of Erdenes MGL, is managing the development of East Tsankhi, and the company is due to float on the Hong Kong, London and Ulaanbaatar stock markets in late 2012
The main border crossing between Mongolia and China was closed for several hours after a demonstration by auto-traders occurred. The road crossing between Mongolia's Zamyn Uud and China's Erlian, China was the scene of the drama: The Chinese officials refused to allow the Mongolian auto-traders to bring19 Russian-built UAZ-469 jeeps into the country; infuriated at this decision, the traders lined up their vehicles, thereby blocking entry to the border crossing. The demonstration began on Tuesday evening.
The crossing, however, reopened earlier today after Mongolian Border Security officers and the Zamyn Uud Police Department moved in to clear the demonstration. Some of the auto-traders have been detained by the police.