Outline of the Project

Title

The Project for Capacity Development for Promoting Foreign Direct Investment

Country

Mongolia

Date of Agreement

July 30, 2010

Project Site

Ulaanbaatar

Technical Cooperation Period

From November 1, 2010 until May 30, 2013

Counterpart Agency

Foreign Investment and Foreign Trade Agency, Ministry of Foreign Affairs and Trade

Background

Mongolia has experienced a rapid privatization of the domestic market liberalization since 1990, acceded to the WTO in 1997. Accordingly, the Government of Mongolia has been revising legislation related to direct and indirect trade and investment. Investor protection, job creation, development of diversified industries are also included in such efforts.

In the long-term strategy until the year 2021 "Millennium Development Goals Based Comprehensive National Development Strategy of Mongolia" (2008) (the "Comprehensive National Development Strategy"), Mongolia emphasizes on export-oriented industrial development, and private sector-led economic growth. It aims of more than 14% of economic growth rate per annual from 2007 to 2015 with at least 5,000 USD per capita/year. From 2016 to 2021, the government aims to reach more than 12% of economic growth per annual and at least 12,000 USD per capita, shifting to a Knowledge economy, and to be a member of middle-income countries.

The government's four-year plan "Action Plan of the Government for 2008-2012" indicates the promotion of foreign direct investment environment to promote industrial development and export-oriented private sector development, and the improvement of investment environment, like "One Window Service."

It is crucial to diversify export products, collect information and develop foreign markets, in order to promote foreign trade and investment. It is pointed out that lack of transparency of information compliance, bribery and corruption of public officials, various procedures related to the complexity of the business, lack of consultation on the business problems associated with are hindering the business opportunities in Mongolia from overseas.

Under such circumstances, the Government of Mongolia requested the Government of Japan to provide a technical assistance project that aims to strengthen the capacity of Foreign Investment and Trade Investment Promotion Agency (FIFTA) and related agencies. JICA has accordingly dispatched a preparatory team in April 2010, and a record of discussion (R/D) was signed between two countries on August 5, 2010.

This project focuses on investment promotion in the country, will assist formulating "investment promotion and facilitation action plan" in accordance with getting private business groups involved to promote such investments (Outcome 1), and carry out capacity building for investment promotion services at the FIFTA, against the private sector (2 outcomes, 3 results).

• (1) Overall Goal:
  Investment promotion services to the private sector are improved.
• (2) Project Purpose:
  Research and coordination for investment promotion is strengthened.
• (3) Outputs:
  1. An action plan for improving investment environment in Mongolia is formulated, based on the result of research.
  2. Analysis for improving FIFTA's function for provision of investment services is conducted.
  3. A working plan for FIFTA's investment services (i.e., data management, data provision and One-Stop Services (OSS)) is improved in the collaboration with related organizations.
• (4) Activities:
  • 1-1  Working Group 1 (WG1) is organized.
  • 1-2  Baseline survey is conducted to grasp current situation of FDI in Mongolia
  • 1-3  WG1 conducts research to analyze current situation and identify problematic issues by utilizing "The Policy Framework for Investment" of OECD.
  • 1-4  WG1 grasp the needs of the private sectors in terms of investment policy.
  • 1-5  WG1 analyzes and identifies the impact of foreign direct investment on Mongolian economy.
  • 1-6  WG1 makes recommendation to improve "division" of function of related organizations and investment policy.
  • 1-7  WG1 drafts action plan, based on activities from 1-2 to 1-6.
  • 2-1  Working Group 2 (WG2) is organized.
  • 2-2  WG2 reaches the services provided by Investment Promotion Agencies (IPAs) in other countries, such as data management and provision of information related to investment promotion.
  • 2-3  WG2 analyzes and grasp the needs and expectation of the private sector for FIFTA in terms of registration services and information provision services.
  • 3-1  WG2 examines necessary information and data of registered foreign investment, which FIFTA need to save and process for supporting relevant ministries make investment policy.
  • 3-1-1  Existing methodology at FIFTA to glean and process information and data about FDI is reviewed and analyzed.
  • 3-1-2  Necessary information and data are identified.
  • 3-1-3  New methodologies for effective data management are designed.
  • 3-2  WG2 examines necessary information for provision of information services to private sector.
  • 3-2-1  Existing FIFTA's function as well as MNCCI of providing information are reviewed and analyzed.
  • 3-2-2  Necessary information and data are identified from the view point of investment promotion.
  • 3-2-3  An effective way of providing information and data is designed.
  • 3-3  WG2 reviews and analyzes "One-Stop Services Center" in other countries.
  • 3-3-1  WG2 identifies the bottleneck of the existing procedures of making investment and doing business in Mongolia.
  • 3-3-2  WG2 makes the framework and working plan to establish a "One-Stop Service Center", which reflect private sectors needs.
• (4) Inputs:
  

  Japanese Side
  (Japanese side) personnel
  Expert

  1. Chief Advisor/Investment Promotion Service 1
  2. Economic Evaluation 1
  3. Economic Evaluation 2
  4. Organizational Evaluation/Information Management 2
  5. Information Management 1
  6. Investment Promotion Service 2/Institutional Capacity Development

  <Counterpart training in Japan and/or study visit to other countries.>

  1. Training in Japan
     7 persons. 14 days
  2. Study Visit to the third country
     7 persons. 14 days

  Mongolian Side
  (Mongolian side) personnel
  Counterpart personnel
  <Provision of Equipment>
  Office space for the project

  Organizational Structure:
  (1) Executing agencies
  - Ministry of Foreign Affairs and Trade
  - Foreign Investment and Foreign Trade Agency (FIFTA)
  Other relevant agencies

  (2) Supporting structure:
  Advisory Panel

Related ODA activities

Japan's ODA

• Trade and Investment Policy Advisor from November 2010 until November 2007 (individual expert), assigned to Ministry of Industrial Development, back then.
• Ministry of Economy, Trade and Industry in Japan and Ministry of Foreign Affairs and Trade jointly has held "Mongolia-Japan Public and Private Sector Committee" in order to further promote investment and trade.