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Bill to control foreign investment into strategic enterprises makes it to the floor of united session of parliament for final reading

All Mongolian global equities

BILL TO CONTROL FOREIGN INVESTMENT INTO STRATEGIC ENTERPRISES MAKES IT TO THE FLOOR OF UNITED SESSION OF PARLIAMENT FOR FINAL READING

EVENT

According to official website of Parliament of Mongolia on May 15,2012 (http://open.parliament.mn/index.php?option=com_content&;view=article&id=4881:2012-05-15-10-36-23&catid=557:2009-06-07-04-45-38&Itemid=940)

“Joint meeting of Parliament’s Standing Committees on Security and Foreign Policy, Economics made final reading of bill on regulation for foreign investment into enterprises of strategic significance. Members have voted on proposals by bill taskforce and supported transferring the bill to floor of the united session for discussion and approval.”

According to leading Mongolian news portal news.mn on May 15,2012(http://politics.news.mn/content/107791.shtml) during voting several formulations have been sorted.

  • There is no issue on private foreign investor company making investment into sectors of strategic significance. It can be 100 billion MNT, 200 billion MNT or even 500 billion MNT. Only investment will be capped and should not go above 49% stake. At this instance foreign investor company must approach Government and get a permission. If stake goes above 49% it should raise issue with Government and Government will introduce to Parliament and get a permission. If state owned foreign investor company wants to invest in the sectors it must get permission even if it is 1 %. This is to ensure national security and regulation to have foreign investment in proper amount.
  • Bill taskforce head MP N. Enkhbold has said that bill has been significantly changed, strict clauses have been substantially softened and positions of both sides have been brought closer. In order to do so, personal meetings have been held with President Ts.Elbegdorj, Prime Minister S.Batbold, Mongolian Mining Association and many others, opinions exchanged and solutions reached.

Following is the link to draft bill before it went to final reading to standing committee today , however in Mongolian - http://dl.dropbox.com/u/42174832/15MAY%20DRAFT%20VERSION%20TO%20BE%20INTRODUCED%20TO%20STANDING%20COMMITEE%20_MONGOLIAN.pdf

IMPACT

•            Negative.

RECOMMENDATION

•            We expect the bill to be approved shortly

•            Frontier Securities will comment on draft bill shortly

•            We re-iterate our recommendation to investors to continue further diligently research implications of this bill for their investments