BCM Macro-Economic Updates: March 2020
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.
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.
THE BCM CHAIRMAN B.BYAMBASAIKHAN APPOINTED AS VICE PRESIDENT OF THE MNCCI
Pursuant to the Memorandum of Understanding signed on 30 October 2019 between the Mongolian National Chamber of Commerce and Industry (MNCCI), the Business Council of Mongolia (BCM), Ulaanbaatar Chamber of Commerce (UBCC), International Women’s Federation of Commerce and Industry (IWFCI Mongolia Office) and CEO Club, the Chairman of BCM Mr Bayanjargal Byambasaikhan has been appointed as Vice President of MNCCI at the annual ceremony of “Entrepreneur 2019 Awards” hosted by the MNCCI on 20 December 2019.
The leaders of above mentioned associations join to the Committee of Presidents under the MNCCI to collaborate on improving Mongolia’s competitiveness in business, legal and investment environment.
Mr Byambasaikhan has been serving to accelerate Mongolia’s businesses for almost a decade by joining and chairing the BCM Board to deliver value for the public, its 250 members, and employees by advocating economic freedom and property rights provided by the constitution of Mongolia, and protecting and promoting common lawful interests of members for a fair, stable, and internationally competitive business environment.
From left: Ch.Gankhuyag (President of UBCC), O.Baigali (President of IWFCI Mongolia Office), S.Demberel (Former President of MNCCI), B.Byambasaikhan (Chairman of BCM), O.Amartuvshin (President of MNCCI), V.Ganzorig (President of CEO Club)
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
“One Day of the World" Exhibition
On 22 December 2019, Artist N.Sergelen along with his students held an opening ceremony for the biggest Mongolian Painting, that is described to have 21m long and 2.5m wide, encompassing a total area of 52.5m2.
Mr. N.Sergelen stated: To make a long story short, the idea of this painting came along in 1998. We had to do a lot of research beforehand. And finally, here we stand after 12 years of hard work with my student painters S.Ganzam, N.Khosbayar, Sh.Sainzul My friend Erkhembayar and peers from the art gallery have brought great contributions to motivate and support me throughout this period. "One Day of the World" shows different continents and countries of the world with a variety of lifestyles, animals, plants, natural wonders, innate traditions and cultures of different nations - over five thousand different items are embedded into the painting."
Mr. Byambasaikhan, Chairman of BCM noted: "I know that Mr. Sergelen has been working enormously hard on this project for many years. It is important to support our culture and artists, and it is essential to introduce Mongolia's unique artworks to the world to promote our country and attract foreign investment and foreign investments into our country. BCM is proudly co-hosting the opening ceremony of the masterpiece "One Day of the World" that combines the ancient style of Mongolian Painting together with illustration of science and theory."
Chairman of BCM, Mr. Byambasaikhan presented “Honor of Achievement Certificate” to Mr N.Sergelen and his students in recognition of inaugurating the XXI Century Mongolian Art masterpiece.