⚖ LAW ON BUSINESS LICENSES | ABS MARKET | COAL MONGOLIA 2022

POWERED BY

Hey there! We’re looking for a journalist/market reporter to join our team. If you’re someone who’s interested in connecting Mongolia to the world, send us your CV at [email protected].

🤔 DID YOU KNOW?

🤝 FOR THOSE WHO WANT TO RUN A BUSINESS IN MONGOLIA

The Law on Special Licensing from 2001, which regulates licenses for running a business in Mongolia, has been repealed and replaced by the Law on Licenses that will enter into effect on January 1, 2023.

The new law is expected to make it easier to obtain business licenses, as well as reduce the bureaucracy and bribery surrounding them.

From 1,600 to 360

Today, there are around 1,600 types of business licenses issued not only under the current license law, but also by other laws and regulations. With the new law, legislators are looking to decrease that number to 360.

Between the two types

In order to run a business in Mongolia, one should obtain either an ordinary or a special license.

• A special license is required for the businesses that may affect national security, public interest or health, environment, or financial stability, or that use natural resources. These include mining exploration and exploitation, railroad-related activities, import and export of toxic hazards, incorporation of banks or NBFIs, educational and medical services, etc.

• An ordinary license is required for a one-time business, additional activities based on the special licensed business, or a business using public property and natural resources for personal purposes. For example, land possession, banking and non-banking services, money remittance and insurance services, construction, and transportation of blast substances need ordinary licenses.

Many businesses that are currently categorized in special license regimes will switch to the ordinary one. Logistics and international HR recruitment services, for instance, can be carried out with an ordinary license after January 1, 2023.

Speed and efficiency

• Ordinary>Special: The ordinary license application and issuance procedure will be easier than that of a special one - an ordinary license will be granted automatically if the relevant authority doesn’t respond to the applicant’s request within 23 working days after the submission.

• Digitalized: All the application procedures for license issuance and its extension will be made electronically, and applicants will be able to check their application status online. The electronic system will likely be integrated with E-Mongolia, the unified public services platform. The digitalization is expected to increase efficiency by reducing bureaucracy and corruption.

Term of licenses and extension

According to the new law, a special license is issued for a term of 5 or more years, and an ordinary one - 3 or more years. There is no maximum term limit for both types of licenses.

• Extension: License holders will have an opportunity to extend their license for a period twice as long as the initial term, if they comply with the laws and regulations of Mongolia, properly pay their taxes and keep their business and employment stable. For example, if your license is given for 3 years, you can extend its term for another 6 years as long as you fulfill the mentioned conditions.

• Correction of mistakes: If any ground to suspend or nullify a license is arisen, the license holder must be given prior written notice and provided an additional period to correct the relevant mistake. In other words, it will be illegal under the new law to terminate or suspend your license without letting you know in advance.

What should you know before submitting an application?

• Relevant authorities can’t demand any fees and documents other than those specified in the law from you.

• You must be registered as a taxpayer in the Mongolian tax system before applying.

• If you request an ordinary license, you just need to wait for an approval for 23 working days after the submission. If you don’t get a response, consider yourself an ordinary license holder. Remember that it doesn’t apply to special licenses.

• You are entitled to start your business from the day your license is granted.

📈 DATA STORY

Asset-backed securities (ABS) were first introduced in Mongolia in 2021. Since then four companies have registered their ABS on the Mongolian Stock Exchange (MSE), raising ₮69 billion in total - 94.2% of which was raised this year by Omni Active, Simple and Bers. The average interest rate of all ABS that were issued on the MSE stands at 15.2% per year. 

⛏ COAL MONGOLIA 2022

Around a third of the mining industry’s revenue, which accounts for ⅓ of the state budget, is mainly generated by earnings from coal. Let’s see what the industry players discussed during Coal Mongolia 2022, the two-day forum considered the most important event in the mining field.

Coal exports will double

Due to the pandemic, the Mongolian coal industry has significantly slowed down. To be more specific, 36 million tons of coal were exported in 2019, while in 2020, exports decreased by 13.9% to 31 million tons, eventually dropping to 15.9 million the following year. Fortunately, the pandemic has almost ended, and it’s now planned to export around 36 million tons of coal by the end of 2022.

• With the Tavan Tolgoi-Gashuunsuhait railway having been put into operation, and the construction of the Shiveehuren and Bichigt ports soon to be completed, the coal exports are expected to double.

The issues

The global energy shortage, especially in European countries, is beneficial to us, but it’s clear that we’re not using our 37.2 billion tonnes of coal potential to the fullest. The reason is the frequent changes in law - the Law on Minerals, which was approved in 1994, has since been revised twice and amended 44 times. There’s also the sheer amount of laws and regulations - mining companies have to comply with 92 laws, 1,500 legal provisions and 1,200 standards in total just to operate.

However, despite the issues, there are significant infrastructural improvements in the industry, including the construction of ports and railways mentioned above. In the end, it’s just a matter of time for Mongolia’s coal industry to reach its full potential.

🏃‍♀️ QUICK STORIES

📌 Mongolia to host Alliance for Financial Inclusion's Global Policy Forum in 2023. This year’s event was held in the Hashemite Kingdom of Jordan, during which member institutions exchanged their ideas on policy changes, and new initiatives directed to advance financial inclusion in the post-pandemic world.

📌 Mongolia to be supplied with petroleum at stable price in long term. During a series of talks on the sidelines of the 7th Eastern Economic forum, the Russian side agreed to supply AI-92 fuel to Mongolia at a stable price until 2027. A 10% discount was also agreed upon in terms of diesel fuel.

📌 Tavan Tolgoi-Gashuunsukhait railway starts operation on September 9. Around 20-50 million tonnes of coal is expected to be transported annually via the railway, with the cost of transportation dropping from $40 to $8 per tonne.

📌 Mongolia places 2nd in FIBA U18 Women’s Asian Championship held in India. Mongolia’s team lost to the national team of Malaysia with a score of 53:64, becoming the runner-up in the competition.

🟦 TOP NEWS

1. President to attend General Debate of 77th session of UN General Assembly. (MONTSAME)

2. Prime Minister to take part in 7th Eastern Economic Forum. (MONTSAME)

3. Review of Mongolian Red Cross Society COVID-19 Response. (reliefweb)

4. Rajnath’s visit to Mongolia yields dividends beyond defence. (India Narrative)

5. Mongolia Unveils New Pro-Business Cabinet. (The Diplomat)

6. Russia plans to supply gas to China via Mongolia. (AKIpress News Agency)