www.tol.org 28 August 2013
The Mongolian government plans to revise a 2012 law that tied the hands of foreign investors in the country’s vital mining industry, Reuters reports.
Foreign investment tumbled by 43 percent in the first half of 2013, which analysts attributed in part to the effects of the law. The law forces investors to get government approval to buy 33 percent or more of a company in a “strategic” sector, including telecommunications and banking, in addition to mining.
The economic boom of recent years was due in large part to exploitation of the country’s almost untapped gold, copper, and coal deposits by foreign mining companies.
The policy of attracting foreign money took a sharp turn in May 2012 when parliament passed the law to block a Chinese bid for a majority stake in a coal mine, Reuters writes.
“There’s no doubt [the law] led to a more uncertain environment for foreign investors,” Ulaanbaatar-based analyst Nick Plummer said.
The government now wants to revise the law to eliminate the distinction between strategic and non-strategic industries, the Economic Development Ministry’s director of foreign investment, Sereeter Javkhlanbaatar, said.
Parliament will be recalled from its summer recess for an emergency session on an “economic crisis sparked by uncertainty over its biggest mining project and falling foreign investment,” Reuters reported 17 August.