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Mongolian Government always encourages licit foreign investment www.montsame.mn

Ulaanbaatar /MONTSAME/ The Government of Mongolia has declared that it has been and will always be supportive of foreign investments that comply with international agreements and the country’s domestic legislation.

However, regarding Erdenet Mining Corporation (EMC) and Asgat and Salkhit deposits, that have lately been drawing public attention, the Government took note of and the corresponding legal bodies are inspecting them as criminal offences of tax evasion, corruption, bribery and money-laundering have been found in their operations. It is worth to note that explorations of these deposits were conducted and their reserves were defined with funding from the State Budget.

For instance, exploration of the Salkhit deposit in Gurvansaikhan soum of Dundgobi aimag was conducted in 1983 with the State Budget funding and the deposit was licensed to GPF LLC for mining until 2043, 2047. The reason for the government’s revocation of the deposit’s special license lies on the fact that the investor concealed its tax liability, got involved in corruption and the adjudication was delaying too much. The company avoided paying tax worth over MNT 930 million, filing a false tax return. In particular, it did not pay mineral royalties from its silver ore sales income of MNT 13.19 billion in 2014. Hence, the General Department of Taxation imposed re-taxation of MNT 659.9 million, a penalty of MNT 197.9 million, and interest of MNT 71.7 million. In the early 1970s, researchers of Mongolia and the former Soviet Union conducted a joint exploration at the Asgat silver deposit located in Nogoonnuur soum of BayanUlgii aimag. Since this strategically significant deposit was licensed to the Mongolrostsvetment LLC in 1993 due to its location in a high mountain zone, no work was carried out at it. Therefore, on January 7, 2019, the Government assigned the Mineral Resources and Petroleum Authority and authorities of Mongolrostsvetment and Erdenes Mongol companies to transfer Asgat and Salkhit deposits to the Erdenes Mongol LLC and put them into economic circulation. The Government of Mongolia is paying attention to imposing liabilities on the companies conducting illegal activities as well as to proper use of state properties by means like these. One more instance is the issue regarding ownership of the 49 percent stake in Erdenet Mining Corporation. On June 28, 2016, the Government of that time announced that Mongolia has claimed full ownership of EMC as a result of the deal with the Rostec Corporation of Russia, transferring the 49 percent stake to Mongolia and having acquired by the Mongolian Copper Corporation (MCC). However, in fact the Government of that time purposely refused its preference to buy the 49 percent stake and privileged a private entity to obtain it instead and that 72.4 percent of USD 400.2 million paid on buying the stake might be taken from state source, informed the Cabinet Secretariat to the public on March 6, 2019. Considering the deal of the purchase of EMC’s 49 percent stock a probable act of illegal acquiring of state property and money laundering, the Independent Authority Against Corruption of Mongolia and National Police Agency have sent a request to the Prosecutor’s Office of the Capital City for running investigation. With an aim to implement Parliamentary Resolution No. 23 of 2017 and a recommendation H05/05 of the National Security Council, the Government on March 6 set a sixmonth emergency regime at EMC and Mongolrostsvetmet LLC. During the period of emergency regime, there will be no interruptions in the operations of the enterprises and only the financial activities will be inspected. Afterwards, on March 11, authorities of MCC made a proposal to the Government on holding negotiation and the Trade and Development Bank, which worked as a financial advisor in the purchase deal of 49 percent stock also expressed to take part in the negotiation, sending an official letter to the Prime Minister.

Prime Minister U.Khurelsukh: “The Government will consistently support foreign and local investors who are respecting laws. In the last two years Mongolia’s economic growth has been revived, foreign trade and investment augmented and budget revenue has been over fulfilled. I want to make it clear to our foreign partners that foreign investors have been doing businesses with Mongolians and it will be open for doing businesses with Mongolians. We resolve issues within legal framework and fulfill established agreements”

As a result of the implementation of the Extended Fund Facility Program in partnership with the International Monetary Fund, Mongolia’s economic growth reached 6.9 percent in 2018, which was 1.2 percent in 2016. Furthermore, investors’ trust has been restored and direct investment of USD 85­220 million in each month of 2018 or a total of USD 1.9 billion was made in Mongolia. Some 80 percent of this investment targeted to mining sector. Furthermore, the Government expresses to back foreign investors, opening Invest in Mongolia Center, one stop service center (OSSC) in this February besides setting up Investors’ Protection Council in 2016.

'Invest in Mongolia center' one stop service for investors

The ‘Invest in Mongolia center’, a one stop service for investors has started to operate with aims of providing foreign investors with easy and quick access to government services, creating a favorable environment for investment, minimizing time to spend for resolution of some issues and eliminating the difficulties that investors are facing. At the center, General Agency for State Registration, General Department of Taxation, Mongolian Immigration Center, General Authority for Social Insurance and other departments and agencies whose operations are associated with foreign enterprises provide government services through a single interface.

The center’s services include:

• Provide information and advisory services on investment legal framework

• SIRM /Systemic Investor Response mechanism/–Maintain an e-system for Investor’s grievance, complaint and petition related to the public services

• Provide information and advisory services on investment law and environment

• Advice and information on tax and non-tax investment and guarantee

• To receive petition related to activities of state bodies from investors and operate decisive electronic information system

• Services on registration of foreign invested legal entities, confirmation of proper name, its change, reference and definition, investor’s card and other additional services, advice and information related to it

• Advice and information on tax, tax payer’s registration, to grant digital signature, to give reference, to receive report as well as to collect vehicle tax from foreign invested companies and investors

• To grant Mongolian visa and visa permission, to make registration of permanent residence and its elimination, to give permission of residence, to make extension of the term, to provide information and advice related to it

• To receive social insurance fund registration and report, to give reference and definition and additional information and advice related to it.

Address: Invest in Mongolia Center. Behind the 2nd Government building United Nations Street, Chingeltei District

Timetable: 8.30 am-5:30 pm

At the opening ceremony of the center, Foreign Minister D.Tsogtbaatar said, “State administrative body in charge of foreign investment in Mongolia has experienced organizational and structural changes for many times in the past, changing its name. It is certain that instability of this institute causes difficulties for investors and causes trouble in their operations. Therefore, I am confident that establishment of One Stop Service Center with intention of running constant stable operation will make tangible progress in promoting investment”



Published Date:2019-03-24