Suggestions given to amend Investment Law
- By Amarjargal Munkhbat -
- May 03,2023
The Ministry of Economy and Development organized a discussion on amendments to the Investment Law. The discussion was attended by representatives of international organizations, foreign embassies in Mongolia, and representatives of investors.
An order to draft the revision of the Investment Law was given by the Minister of Economy and Development, and Deputy Prime Minister on April 5.
Head of the Investment Policy Department of the Ministry of Economy and Development B.Anar said, “The draft law on investment includes how to register foreign investment, how to attract investment and what kind of support and tax exemptions will be provided. It has characteristic that foreign investors clarify the mechanism of how to solve the problems in their activities. Also, issues related to land relations are still very unclear. If foreign investors want to come and set up a factory and use the land, there is a regulation on land use for a very short period of time in the Land Law. This is well coordinated with the law on land, or the regulation of land use has been reflected more clearly.”
According to the Investment Law, the functions of government institutions should be clear and the tax environment should be stable and dispute resolution should be open. Deputy Minister of Economy and Development G.Tuvdendorj said, “There should be less state supervision”.
SOME REPRESENTATIVES SUGGESTED:
Executive Director of American chamber of Commerce in Mongolia O.Adiya said, “We have talked about the investment law for the past two years. It’s commendable that they are reforming the investment law and changing eight sets of issues. Most importantly, the problem should be solved in a comprehensive legal way. The Law on Taxation, Law on Land, and Law on Minerals can be fully implemented in conjunction with the Law on Investment. The Law on Mineral bill has been discussed since last week. It is important how this law is connected to the Investment Law. I think it’s useful for two working groups to exchange opinions and combine their concepts. I believe that the issue cannot be solved by only one law.”
Chairman of the board of Mandal Financial Group LLC said, “I agree with the Representative of European Bank for Reconstruction and Development Hannes Takacs, that there are problems with the implementation of the law. From 2009 to 2012, I concentrated and brought 70 million USD from foreign investment funds in the non-mining sector. We know why foreign investors left since 2013. I like this law. However, when the law is implemented, it falls into the hands of the tax in- spectors. No matter how you register, you are violating some provision. Some tax inspector comes in and imposes a fine of several billion. Foreign investors are shocked when they see that.
The next issue is that if the Mongolian government has given a special permit or license, the government itself must protect it. However, there are many companies whose work has been stuck for decades after going to a group of people who do not know whether they represent the interests of local governors or citizens. If the Mongolian government has given a permit, they must control the issue of keeping the permit valid. In Mongolia, there is a problem of how many people must get permission to do business.”
The Chairman then continued, “I will also comment on the MNT exchange rate. There were almost no investments coming into Mongolia last year. I attracted investment from a foreign investor and established a life insurance company in Mongolia. That person lost 25 percent of his investment on the MNT exchange rate before he started his business. There were directors in the Mongol Bank who said that the depreciation of MNT is beneficial and correct. Now that they have an economic policy ministry, I hope they pay attention to this fact. In Mongolia, people take their USD and convert them into MNT. They do a 10 percent profitable business with MNT, and when they leave, if the MNT has weakened by 30 percent, they suffer a loss of 20 percent. A lot of partners who have invested with me have suffered such huge losses.
Today, the Mongol Bank and Ministry of Finance must understand this. Without doing this, foreign investors will not come to Mongolia no matter how beautiful the law is. Therefore, I think it is right for the Ministry of Economy and Development to help the Mongol Bank and the Ministry of Finance to understand their work honestly.”