SGK Approves Amendments to Strategic Sectors Foreign Investment Law

Apr 25 • Economy, Laws, legal, Mining, News • 2456 Views • No Comments on SGK Approves Amendments to Strategic Sectors Foreign Investment Law

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On April 19, 2013, SGK passed amendments to Strategic Sectors Foreign Investment Law (SSFIL) that was adopted in May last year. The new amendment aims to ease restrictions and create more favorable conditions for foreign investors. Parliamentary approvals for foreign non-state owned companies and threshold of MNT100bn (US$70mn) have been removed. The investments of state owned or state participated companies will still need parliamentary approval in case the investment exceeds 49% stake.

The SSFIL came into force on May 17, 2012 which stipulated in its article 4.7 that if a foreign investor stake in companies operating in strategic industries exceeds 49% and the investment amount exceeds MNT100bn (US$70mn), then the foreign invested companies will need an approval from SGK. The law states strategic sectors include mining, financial services, banking and media and communications. The impact of this law raised serious concerns among international and domestic investment community and multilateral development agencies as the law has brought in regulatory uncertainty, complicated the process of issuing permissions and put on hold a number of ongoing and new investment projects.

The previous version of the law believed to affected the inflow of the foreign direct investment. The FDI fell 17% comparing to last year to 3.93 billion USD. The GDP growth also slowed by 5% from 17.5% last year to 12.3%.

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