(IBTimes) - Weeks before a parliamentary election, Mongolia
has approved a draft law that bans or limits the potential
ownership of any foreign state-owned companies of its massive
The proposal, which is seen to be passed into law by June,
blocks foreign investors from owning more than 49 per cent of
companies to be put up in the resources, finance,
telecommunications and media industries in Mongolia. Should
foreign investors pursue, they will be required to first secure
government review and parliamentary approval.
The draft law specifically zeroes in on potential deals worth
$75 million and above, The Wall Street Journal reported.
Foreign-investors backed by state-governments, aside from the
government review and parliamentary approval, will also require
special approval to buy into their preferred sectors.
In an interview with Bloomberg News, Mongolian Vice Finance
Minister Ganhuyag Chuluun Hutagt said the list of strategic
assets and industries will be released later. Uranium and rare
earths minerals will be likely included in the list, he said.
If there's anything fortunate, existing companies in Mongolia
that are above the 49 per cent ceiling are safe from the draft
law, such as the $6 billion Oyu Tolgoi copper mine of the Rio
"Investors don't like it when the rules of the game are
changed after the game has started, and changed often at that,"
chief investment strategist Dale Choi said in Bloomberg News. "It
would be in the interests of Mongolian people to make a decision
based on commercial factors, rather than geopolitical
Unless barred by the president of Mongolia, the law takes
effect 10 days after, he said.
The people of Mongolia, from as far as two years back, have
pressured the federal government that albeit being a nation
abundant with coal, copper, gold and other natural resources, the
populace believed they and their country are still at the losing
end as foreigners will just usurp their assets, get rich and once
depleted, leave Mongolia and its people poor and potentially
The Mongolian populace, currently registered at 2.8 million,
also wants that foreign investor presence in companies in key
assets are composed of entities representing several nations,
instead of solely owned.
"We don't want to be faced with one sovereign," Mr Ganhuyag
said. "Our struggle to get political freedom was a long one and
we cherish that. We will not let foreign government-owned
entities control strategic assets in Mongolia."
Mongolia, known for its coal reserves, currently have key mine
projects but are however still in their infancy.
According to a February report by the World Bank, total world
sales of coal in 2011 hit $2.2 billion, half of which came from
Latest data from the Customs General Administration of
Mongolia showed that 89 per cent of Mongolia's total exports in
April were mostly made up of mineral resources.
Exports to northeast Asian countries were $389 million of a
total $409 million, the data show.
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