It has been nearly a year since the approval of the Strategic Investment Law (Law on Regulation of Foreign Investment in Commercial/Business Entities Operating in Sectors of Strategic Importance). The purpose of the law is to regulate the approval process on strategically important sectors on basis of national security. The SGK determined that strategically important sectors are mining, banking and finance, and media and telecommunications.
Depending on the country’s regime, geopolitics and economical situation, it determines its’ strategically important sectors. Most of the developing and highly industrialized countries have laws to regulate such sectors, Mongolia being no exception.
Laws and regulations constantly need to be updated and improved from time to time. Open door to foreign capital and investments does not mean that it will accept conducts that will threaten national security of a country. Following that example, Mongolia took a brave step to regulate strategic investments.
On 2nd of March, 2013, SGK approved to raise what was mentioned in Article 3.7 of the law from 100 billion to 1 trillion tugriks if foreign acquisition in strategic sector is more than 49% that needs a SGK approval. This decision eased the regulation on SMEs.
The cabinet has passed the procedure to implement the law to minimize the encumbrance. The approvals needed from the government will be given after the Minister of Economic Development consults with the relevant sector’s minister in 30 days, excluding the acquisitions from 1% to 34%. The procedure reflected more contrast distinction between state-owned and private acquisitions, and clarification on operations of strategic importance.