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Wednesday, July 6, 2011




Mongolia Briefing is a magazine and daily news service about doing business in Mongolia. We cover topics relating to the Mongolian economy, the market in Mongolia, foreign direct investment and Mongolian law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates


Markets

Moody’s Downgrades Mongolia’s Government Bond Outlook to Negative and Affirms B1 Rating

By Elena Fehrbach

Moody’s Investors Service has changed the outlook on Mongolia’s government bond from stable to negative. At the same time, Moody’s affirmed government’s issuer and bond B1 ratings, unsecured MNT rating at (P)B1 and the issuer’s short-term Not Prime issuer rating.

As part of the rating action, Moody’s has changed the outlook on the government-owned bond raised by the Development Bank of Mongolia (DBM) from stable to negative and affirmed DBM’s senior unsecured B1 rating and its senior unsecured MNT (P)B1 rating. DBM’s debt obligations justify rating at the same level as the government of Mongolia as DBM’s payment obligations carry a credit guarantee of the government. Continue reading

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Mongolia to Cooperate with Russia on Major Infrastructure Projects

By Elena Fehrbach

On May 13, 2014, Mr. O. Chuluunbat, the Deputy Minister of Economic Development of Mongolia, met Mr. Alexey Likhachev, the Deputy Minister of Economic Development of Russia, to discuss bilateral cooperation and relations in various sectors of the economy. Continue reading

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Credit Ratings Update from Moody’s and Fitch

By Elena Fehrbach

Moody’s: Outlook for Mongolia’s banking system remains negative

Moody’s Investors Services (Moody’s) announce that the outlook on Mongolian banks remain negative due to expectations of continued weakness in Mongolia’s key commodity exports. Key commodities in Mongolia are coal and copper with the exports of both commodities accounting for 88 percent of total exports and 20 percent of Mongolia’s GDP. Continue reading

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New Methodology for the Minerals Royalty Calculation has been Established

By Elena Fehrbach

The Government of Mongolia has issued new Resolutions Nos. 88 and 89 on the definition and calculation of mineral royalties.

Basis for the royalty calculation and general terms:

  • The royalties on coal exports will be based on the export sale’s contract price of the coal mine owner. The previous royalty was based on the buying Chinese market price.
  • The mineral royalties shall be paid within 21 days after the commodities sale’s completion. In the previous version of the regulation, the royalty was supposed to be paid within the next quarter from the sales date. Continue reading
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The Draft Bill on the Treasury Fund has been Introduced in Mongolia

By Elena Fehrbach

Mongolia is making another step forward in the direction of establishment of their own Treasury Fund. The President of Mongolia has initiated the establishment of the Treasury Fund that should be based on the Government revenue from the mining industry. The first draft has just been discussed by the Parliament of Mongolia and on an opening remark, Mr. L.Dashdorj, the advisor to the President, stressed upon the lack of system and policy on saving of wealth for the long-term future usage by the next generation. Continue reading

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Mongolian Stock Exchange- a new securities investment vehicle in Mongolia

By Elena Fehrbach

Jan. 20 - 2013 was a very busy year for the Mongolian Stock Exchange (MSE) and resulted in a legal and structural reform being introduced to the investment community on 1 January 2014. The new Securities Market Law came into force on that day, marking a beginning of the new securities investment era in Mongolia. The adoption of the new Securities Law came straight after adoption of the revised Investment Law on 1 November 2013 that has replaced the controversial Strategic Foreign Investment Law. New regulations are targeting the attraction of the foreign investment into Mongolia by providing internationally-accepted best practices and platforms for investments.

Securities Markets Law

As the newest regulation, Securities Markets Law (SML) immediately became the major point of discussion and attention since January 1 this year. It took about 5 months to draft the Law with all the relevant regulations. The final document is a sophisticated framework introducing financial instruments and concepts which have never been practiced in Mongolia before, such as custody, differentiation between nominee and beneficial ownership, options, futures, depository receipts and warrants. Twenty-two tailored regulations have been designed for each component of the Law, such as dual listing, clearing and other relevant components. Continue reading

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Mongolia’s Policy on the Minerals Sector is Under Final Discussion

By Elena Fehrbach

Jan. 5 – The Policy on the Minerals Sector has been first introduced in July 2013 as a legal guideline on the main principles of operation in the minerals sector approved by the government. Since July, the Policy undergone a number of revisions and is now well-shaped for the final discussion by the Parliament. It should be noted, that the Policy is not an equivalent or substitute to the Minerals Law, but a leading document showing country’s direction in the minerals sector.

As for the Minerals Law, the new draft of the Law has been introduced to public approximately year ago and became a reason for a serious criticism on behalf of mining companies and potential investors. The first draft of the Law had a series of unfavorable ownership and operations conditions treated as “unacceptable” in some cases. The Government’s reaction on the criticism was a prompt promise of further work on amendments that would involve specialists from the industry involved in the minerals sector operations directly or indirectly, such as representatives of mining companies, law firms and financial institutions. Continue reading

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Mongolia Signs MoU with Securities and Future Commission of Hong Kong

By Elena Fehrbach

Representatives of the Securities and Future Commission of Hong Kong (SFCHK) visited Mongolia and signed the Memorandum of Understanding (MoU) with the Financial Regulatory Commission of Mongolia on mutual cooperation and information exchange. Hong Kong delegation was headed by Mr. Carlson Tong, Chairman of the Securities and Futures Commission and Mr. Mark Stuart, Head of Enforcement of the Commission. Continue reading

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