🚗 Mongolia's car exports | Stock market ratio in GDP | Tax easing

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YAY, it’s finally December! As we bid farewell to 2023 with just 27 days left, let's take this opportunity to check in on our New Year's resolutions and make adjustments as needed. Remember, it's never too late to reassess your goals and make a fresh start. Embrace the energy of December and set the stage for a fulfilling 2024!

In today’s edition

• Mongolia’s Car Export Blooming

• Stock Market Capitalization Ratio in GDP

• Law Amendment on Stock Market

Let’s delve into the details.

🚗 Mongolia's Car Exports

Over the past decade, Mongolia has exported cars and related equipment valued at $75.1 million. But what exactly are we selling, and where is it going?

• What's in the mix? Our automobile and related equipment exports cover a range of items, from trucks and vehicles to special-purpose vehicles, motorcycles, headlights, alarms, and windshield wipers.

Big jump - 8.7 times!

Back in 2014, Mongolia exported cars and equipment valued at $2.4 million. Fast forward to the first 10 months of this year, and the figure has surged to $20.8 million.

• 672.8% up, but imports too: Over the years, our car exports surged by an average of 672.8% per year, whereas imports only saw a 14% increase. However, in the first 10 months of this year, we imported 44.7 times more cars and gear than we exported - a whopping $930.2 million.

Where? What?

We're not just importing cars. We're actively exporting them. In the first 10 months of this year, 813 passenger cars were exported, marking a 12.7-fold increase compared to the previous year. The majority, 61.1%, found their way to Kazakhstan, 23.2% to Kyrgyzstan, 13.8% to Russia, and the remaining portion was exported to other countries.

• 17.2 Times More Money! The value of these passenger car exports jumped 17.2 times, from $994.7 thousand to $17.1 million in the last 10 years.

• Imports Insight: We also imported 60.4 thousand passenger cars, with a 7.1% increase from the previous year. That's a lot of cars coming in, right?

Last but not least…

While Mongolia doesn't manufacture cars, it predominantly sells its used passenger cars through Russia. Despite the notable surge in exports, the nation's dependency on imports is clear. Nonetheless, the escalating influx of cars and equipment indicates a swift and dynamic development in Mongolia's car trade.

DATA STORY: 🎇 Stock Market's Growing Grip on GDP

In the past 5 years, the stock market's ratio to GDP has expanded by 9.3 percentage points, now accounting for 17% of GDP. This expansion was mainly due to 5 major banks' IPOs.

🤙🏻 Mongolian Stock Market Calls Foreign Investors

Mongolia’s stock market will reduce the sales income tax rate imposed on foreign investors to 10%, offering them a more flexible investment environment. In addition, 2 amendments were made to the law that will be effective starting in 2024.

• Capital gains tax: Previously, income tax for foreign investors was levied on 20% of total income. However, the change will see a shift to a 10% capital gains tax. This modification ensures that investors are only taxed on the profits accrued from the sale of securities, offering a more nuanced and equitable taxation structure.

• Tax cut: The next amendment brings about a phased reduction in the capital tax of securities issued by enterprises located in Mongolia. A 90% reduction is approved for the years 2024-2026, followed by a 50% reduction from 2027-2029 of the 10% of capital gains tax.  

It's essential to note that these changes exclusively apply to securities issued by enterprises located in Mongolia. This includes entities incorporated in compliance with Mongolian laws or foreign business entities with their governing bodies situated in Mongolia. 

With these amendments, foreign investors and enterprises pay a tax of 1% until 2027 and 5% from 2027 to 2029 on the profit from the sale of securities issued by enterprises located in Mongolia. Also, there are no constraints on the holding period for securities, nor are there limits on applicable discounts, differentiating Mongolia from other countries.

In a broader context, It not only fosters a tax-friendly environment for foreign investors but also marks a significant stride in aligning Mongolian enterprises with global financial markets. This means the prospect of dual listings on international stock exchanges, signals a promising era of collaboration and economic growth.

🏃 QUICK STORIES

🔵Moody’s reaffirms XacBank’s (XAC) credit rating at B3 with a stable outlook. The bank’s projected creditworthiness resilience for the next 12-18 months underpins the continuation of the current rating. 

🔵The government has successfully executed a new bond issuance, attracting orders exceeding $4.2 billion. This issuance is strategically designed to repurchase the maturing "Khuraldai" bond, slated to expire next year. The bond carries a 5.5-year maturity with a 7.875% coupon, aiming to raise ₮350 million.

🔵Mongolia and UAE sign MOU on visa-free travel. During the working visit to the UAE for COP 28, Mongolian President Khurelsukh. U signed a memorandum of understanding with the President of UAE to exempt visa requirements for diplomatic, official, and ordinary passport holders.

🔵Mongolia's first exchange-traded fund (ETF), Invescor Global Q (INQ), made a debut on the stock market. Invescor Asset Management issued 850,492 units valued at ₮520. Additionally, Invescor Global Q is listed on the UBX exchange.

⭐ TOP NEWS

• Rank: Mongolia Top’s in Gender Equality in Chess Index. (Chess.com) 

• Idea: 9 Things To Do When Temperatures Drop in Mongolia. (MeanwhileMongolia)

• Article: COP28 Won’t Stop Mongolian Coal’s Big China Thirst. (MongoliaWeekly)

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Editor: E.Zolbayar
Writer: M.Khulan & Skh.Angirmaa & G.Aminaa

Disclaimer: The information Inside Mongolia provides is for educational and informational purposes only. It is not intended to be or constitute financial advice, trading advice, or any other advice. The decision whether to consider the information we provide is solely our readers' independent decision.