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Doing Business in MONGOLIA Doing Business and Investing
With a growing number of businesses and investors turning their attenti we spoke with Berwin Leighton Paisner’s Marius Toime to get an ins Mongolia, where an increasing focus on the mining sector is taking plac
Q
Mr Toime, please tell us about yourself and your firm…
I am a partner at international law firm Berwin Leighton Paisner (BLP), based in the Singapore office.
BLP have embarked on a strategy of on-going international growth and a focus on emerging markets, which has seen us form a strong presence in places such as Indonesia, Mongolia and more recently, Myanmar.
We have established offices in key jurisdictions around the world and believe in working with local partners to provide the best legal advice.
In Singapore, our projects relate largely to mining and infrastructure, spanning not only South East Asia but also Central Asia and Africa. Mongolia has been a focus country in the last couple of years, with its vast wealth of natural resources, and this has correlated well with our firm-wide strategy and expertise in emerging markets.
How can Berwin Leighton Paisner assist individuals and firms that invest or start-up in Mongolia?
Q
BLP is well positioned to provide a full range of legal services in connection with foreign investment into Mongolia or other Mongolia based projects, including assistance with the merger or acquisition of Mongolian interests, consortium or joint ventures with local partners, or other project and financing arrangements.
Generally, our projects executed from here in Singapore revolve around mining, power and infrastructure.
As Mongolia is a frontier market, the regulatory and fiscal environment can change rapidly and we are committed to assisting our clients in Mongolia to obtain up to date clarity and practical legal advice on the current position.
Q
What are the benefits for businesses that want to start-up in
Mongolia?
Mongolia is democratic and relatively open compared to its neighbours and foreign investors may be able to take advantage of the various bilateral investment treaties. Furthermore, the tax position is favourable in certain sectors and Mongolia has signed a number of double tax treaties with other countries (although these are currently being scrutinised by the Government).
Specific opportunities exist primarily in natural resources, power and infrastructure. Two major mining projects that are helping to drive the mining boom are:
• Oyu Tolgoi - expected to be the world's third largest copper and gold deposit when it reaches full production in 2018. Located in the South Gobi desert approximately 80km north of the Mongolia - Chinese border, the estimated value of the project is approximately US$13 billion. The mine is being developed by Turquoise Hill Resources and Rio Tinto, and commercial production is expected to commence in the coming months.
• Tavan Tolgoi - the extensive coal fields located in the south Gobi desert, also close to the Chinese border. The initial block with significant amounts of coking and thermal coal will be developed by Erdenes Talvan Tolgoi, a Government owned company.
While Tavan Tolgoi is currently 100% government owned, there are plans in place to divest part of the project, presenting an opportunity for international investors to take an equity stake.
Apart from mining, there is also a push into other industries, with Mongolia keen to develop a diversified and competitive economy. Downstream industry such as smelters and ore processing facilities are in focus, as well as mine mouth power plants. For example, Mongolian coal can have a high ash content and it is more profitable to run the product through a washing plant in Mongolia before exporting to China.
Other sectors include tourism, agriculture and technology - all of which are referred to in the Government’s four year action plan. However, some of these projects may be viewed as ambitious and could take time to come to fruition.
Q
Are start-ups complex for businesses looking to Mongolia for
the first time?
The process to establish a start-up entity is perhaps no more complex than in other emerging economies. At least for now, one important consideration