THE BCM ELECTS TWO NEW MEMBERS OF BOARD OF DIRECTORS

The BCM during its Board meeting last week elected two new Board members. From the five candidates who competed, Mr. S. Enkh-Amgalan, Executive Director of Petrovis Oil LLC  and Mr. N.Manduul, Executive Vice President of ETT Mining LLC, had the most votes. The news of the two new Board members was announced by Chairman Mr. Byambasaikhan during the BCM's New Year party.

Mr. S.Enkh-Amgalan, CEO of Petrovis Oil LLC

Mr. S. Enkh-Amgalan is the CEO of Petrovis Oil LLC, fuel import and distribution holding company. He held executive positions in mining and energy sectors as Advisor to the Mining Minister of Mongolia, President and CEO of SouthGobi Resources listed at Toronto and HKEX, and Vice President of Mongolian Mining Corporation listed at HKEX and had an outstanding career with MCS Group. He led the successful completion of the first Mongolian commercial-scale windfarm “Salkhit” as the CEO of Clean Energy LLC.

Mr. Enkh-Amgalan is involved in the business community with Board responsibilities at the BCM and member of the CEO Club. He was the Founding President of Ambassadors for Development, US State Alumni Association

Mr. N. Manduul – Executive Vice President of ETT Mining LLC

Mr. N.Manduul has been serving for ETT Mining LLC since 2019, a spinoff of Erdenes Tavantolgoi JSC, with the purpose for Tavantolgoi international IPO project. Leeds the project, formulates the overall strategy and directs company operations to the TT IPO project.

From 2018 to 2019, Manduul worked as the Head of Securities and Markets division and Senior advisor to CEO at Erdenes Tavantolgoi JSC. From 2014 to 2018, he led Financial Policy Department of the Ministry of Finance. Served as Board Member/Commissioner at the Financial Regulatory Commission. Chaired Mongolian Stock Exchange, Credit Guarantee Fund of Mongolia.

Graduated MBA at Brandeis International Business School in the USA and BA in Business Administration at American University in Bulgaria.

We are happy to welcome Mr S.Enkh-Amgalan, and Mr. N.Manduul to our family and their expertise shall bring invaluable contribution to the BCM's purpose of delivering value to our members.

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The Business Council of Mongolia organized an official meeting with the General Department of Taxation to discuss tax rules and procedures that will become effective starting from 1 January 2020 in accordance with new tax reforms approved by parliament in March 2019. 

The meeting was led by Mr. Khishignemekh (Nicky), Vice-Chair of the Tax, Legal and Ethics Working Group of the BCM.

On 29 November 2019, the BCM in cooperation with the Mongolian National Chamber of Commerce and Industry submitted a list of 34 proposals to the Ministry of Finance and General Department of Taxation concerning draft regulations produced to follow the package of laws on taxation, and this meeting was organized to discuss these items.

Representatives from the Mongolian offices of international auditing companies Ernst & Young, KPMG, and PwC also attended the meeting.

We had a productive meeting, and the General Department of Taxation expressed their appreciation for the significant and important ideas put forward as well as their willingness to consider them.

The MNCCI, BCM, CEO Club, and EPCRC jointly co-organized the 2019 Mongolia Economic Forum on the 30th of October, 2019. The 10th annual forum saw participation by over 200 representatives, and it was agreed that a recommendation shall be submitted to the government based on the ideas discussed.

 Five sessions were held at the forum, on the themes of:

• Responsible Mongolia
• Grey Mongolia
• Creative Mongolia
• Young Mongolia
• MEF – Past & Future

In addition, business associations including the MNCCI, BCM, UB Chamber, CEO Club, and the IWFCI signed a Memorandum of Understanding on enhancing cooperation.

The MoU on cooperation contains 3 goals:

• To combine forces and cooperate with government organizations in order to ensure implementation of efforts to improve Mongolia’s business environment, regulations, and investment climate, and to determine unified policies that will improve business and investment stability;
• To cooperate in support of expanding trade and economic partnerships between Mongolian entrepreneurs and foreign and domestic organizations, introducing world class technology and business models, and exporting domestic products;
• To cooperate on efforts to protect the common and legal interests of businesses and entrepreneurs. 

Government of Mongolia, ADB Promote Private Sector Opportunities

ULAANBAATAR, MONGOLIA (11 September 2019) — The Asian Development Bank (ADB) and the Ministry of Finance of Mongolia co-hosted a private sector opportunities workshop today in Ulaanbaatar, which was attended by over 150 local and foreign private sector companies operating in the country. Mongolia’s Vice Minister of Finance Ms. Bulgantuya Khurelbaatar and ADB’s Deputy Country Director for Mongolia Mr. Declan Magee opened the event.

Representatives from ADB’s private sector teams on infrastructure, agribusiness, health and education, and early-stage ventures presented on relevant case studies, eligibility criteria, typical financing modalities, and terms, and application processes for ADB’s financing. ADB Ventures helps early-stage companies scale technology in Asia and the Pacific for sustainable development impact. ADB discussed potential future collaboration with selected companies during in-depth one-on-one sessions.

“The growth of Mongolia’s private sector is very much aligned with ADB’s new long-term corporate strategy, Strategy 2030, where ADB aims to increase its private sector operations to reach one-third of its operations by 2024,” said Advisor at ADB’s Private Sector Operations Department Ms. Hisaka Kimura. “By actively engaging with Mongolian companies across infrastructure, agribusiness, health care, and education, as well as early-stage ventures, ADB can explore opportunities to support the diversification of Mongolia’s economy.”

Through its private sector operations, ADB catalyzes and funds investments in private and state-sponsored companies across the energy, transport, water, telecom, financial, agribusiness, health care, and education sectors throughout developing Asia. The emphasis is on commercially viable transactions that generate financial returns while promoting environmentally sustainable and inclusive economic growth. In 2018, ADB committed $3.1 billion of its own funds for 32 private sector transactions and mobilized a further $7.4 billion through cofinancing partners.

In addition to ADB’s $2.5 billion sovereign financing for Mongolia to date, ADB has committed $371 million for private sector investments in the energy and financial sectors, including financing to local financial institutions and partner banks through ADB’s Trade Finance Program. ADB’s support for the Sermsang Khushig Khundii Solar Project signed in March 2019 was ADB’s first private sector solar financing in Mongolia and mobilized cofinancing from Leading Asia’s Private Infrastructure Fund (LEAP) into the country’s renewable energy sector.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.

STATEMENT

The clause 9.3 of the amended Law on Special Government Funds submitted in conjunction with the Law on the 2020 State Budget states that “A legal entity engaged telecommunications must pay an amount equal to 3% of their net profit into the Public Services Obligation Fund.” We consider this a violation of the PRIVATE PROPERTY of enterprises that are already paying the 25% income tax along with other taxes and fees in accordance with regulations. This clause contradicts the Constitution of Mongolia, is not reflected in the General Law on Taxation, and contradicts the principle stated in the amended Law on Special Government Funds which says “Additional obligations or expenses shall not be levied on a legal entity with existing obligations.”

Net profits are the legal private property and capital of a company and its shareholders recorded in the owner’s equity section of a financial report by subtracting expenses and taxes from the income that company earns through its activities. Clause 16.3 of the Constitution of Mongolia provides for the right to purchase, possess, and own moveable and immoveable property, and property rights are one of the fundamental human rights that must undeniably exist. The government must be responsible for guaranteeing and protecting private property and for stopping any and all attempts to illegally seize property.

Clause 3.1 of the revised version of the General Law of Mongolia on Taxation states that “only parliament has the power to create, levy, change, discount, or exempt taxes,” and also states in cases other than determining special regulations on free zones, or stabilization of taxation in accordance with an investment agreement with the government through a Stabilization Certificate in accordance Clause 3.1.7 of this law as well as the Law on Investment or Law on Crude Oil, when it comes to creating, changing, discounting, exempting, levying, or paying taxes, it is to be implemented only according to the laws on taxation.

In additional, Article 5 of the revised version of the General Law on Taxation divides taxes into the categories of taxes, fees, and payments, and the money to be paid into the Public Services Obligation Fund does not fit into any of those categories. Furthermore, the Public Services Obligation Fund is categorized as a fund whose predominant source of funding is to come from grants, aid, and donations, in accordance with the Law on Special Government Funds. Despite the legal foundation for the fund’s money being reflected as having to be accrued through voluntary donations and aid, we see the new regulation as mandating a legal entity to pay money from its private capital.

The law states that taxes must be collected only in accordance with laws and resolutions on taxes, and seizure of property can only take place through a court decision in cases of a crime committed, to fine for a violation, to uphold criminal or violation accountability, or to compensate for damages done unto others or for not fulfilling obligations of a contract.

Yet, according to the amended version of the Law on Special Government Funds, funds are being raised by taking money in an unconstitutional manner from the net profits of commercial organizations that have already paid their due taxes in accordance with relevant regulations.

In addition, year after year, cases of the fund’s money being used inappropriately have increased. For example, in recent years, around MNT 2 billion was spent on research, training, promotion, books, and manuals, in violation of the law. Relevant organizations have submitted complaints to the Primary Administrative Court of the Capital City regarding this.

A company’s net profit is the LEGAL PROPERTY of its owners, and because we view that ratification of any law that seeks to raise money for Special Government Funds by violating the property of citizens or enterprises is a direct violation of PRIVATE PROPERTY, we are hereby filing a complaint to the proper legal authority.

The Business Council of Mongolia 

Mongolian National Chamber of Commerce and Industry