All Mongolian global equities
FOREIGN INVESTMENT REGULATION LAW TASKFORCE HEAD: NOT RETROSPECTIVE, VERY FLEXIBLE LAW, GOLDEN MIDDLE BETWEEN INTERESTS OF MONGOLIA AND INVESTORS
According to major Mongolian daily “ Zuuny Medee” on May 21,2012 Head of taskforce on law on regulation of foreign investment into enterprises of strategic significance, Deputy Chairman of Parliament of Mongolia N. Enkhbold said in the interview:
- In some respects, foreign investors have concerns and doubts that changing old legislation would put them into difficult situation. However, this law is a golden middle between interests of Mongolia and investors, for mutual benefit of cooperation.
- Law is to issue permission in connection with national needs and requirements, not to stop or limit foreign investment
- It seems that foreigners are seeing it as limiting foreign investment , increasing administrative steps and stages. We will not refuse this to happen to certain degree. However, our goals are not money, not investment. Where should be our national interests, how is it to be connected with national security policy, this idea is reflected in the law
- We have made best effort to reflect great many opinions of foreign investors, embassies representatives and domestic organizations that they have submitted to us. If one compares initial bill and approved law one would see that they have been reflected
- If law is followed in content I would think that there would be no negative effect on the foreign investment
- Law is not retrospective. Agreements done by companies with foreign investment according to law are in force and will go on.
- There are two separate issues reflected in the law. State owned foreign investment will have to get permission from Government. This is difficult issue. If foreign state owned companies start operating it becomes more of a political issue rather than economical one. Conflict of opinions and interests arise. Any country is cautious of that.
- As for private foreign investment into strategic sectors, if investment below one third it will go by business rules. If it is between one third and 49 per cent Government has to be informed and permission obtained. If agreement has conflict it will be said that it is not possible. If investment is above 49 per cent and 100 billion MNT Parliament will decide by introduction of Government. To clarify, if it is above 49 per cent and below 100 billion MNT it is not necessary to be required to discussed by Parliament, Government can decide. On the other hand if it is above 100 billion MNT but below 49% it is also not necessary to be required to be discussed by Parliament
- This means it is very flexible law
• Not retrospective feature of the law has positive impact on valuation of all current global Mongolian equities as it their increases value because now, after the law, getting same investment stakes would be subject to the law.
• In their investment analysis, actions and decisions, among other considerations we recommend investors to account for not retrospective feature of the law
Recommendation for Southgobi (TSX: SGX, 1878 HK) /Winsway Coking Coal (1733 HK) / Aluminum Corporation of China Limited(2600 HK)
• our views remain unchanged since our last update note of May 17,2012