In a move to expand its financial markets, the government in Ulan Bator, Mongolia have amended a controversial foreign investment law. The Strategic Entities Foreign Investment Law was designed originally to restrict foreign investments in industries such as mining to a minority, where shareholdings can be up to 49%.
The amendment introduced and passed now removes the need to seek government approvals for investments. This comes after major concerns came up on the growing role of overseas capital markets in the development of the mining industry. Without a doubt, investments have fueled the economic boom from the mining industry.
The law was passed right before Chalco of China made an offer to purchase a majority stake in SoughGobi Resources, a coal miner focusing on Mongolian extractions. The law then was criticized for fostering "Mongolian resource nationalism" to the detriment of investors and the country alike.
The law also precipitated the decline in foreign investments int he country and also the lowest inflow of foreign investments for 2012. Now with the amendment, privately owned foreign companies are exempt from the effectivity of the law.
Join the Conversation