UB International Financial ZoneGateway to Global Economic stageNarantuya Z. Chair, Financial Regulatory Commission

Steps toward National Strategy 2025

Investor protection • Ensuring investors’ rights

through strong regulation, advocacy and litigation system.

• Small investor protection fund, ombudsmen mechanism and more transparency and accountability

• Structuring a special unit for Investors and clients rights in the financial market.

Decreasing constraint • Identify and decrease any

burdens and constraints that investors or clients face in the market.

• Review and update all current rules and regulations

• Diminish administrative constraints and bureaucracy

• Reduce regulatory and transaction fees

Risk based supervisory • Switch to risk based

supervisory approach in its regulated markets

• Improve efficiency and reduce administrative burdens

• Improved systemic risk management and stability

UB International Financial Zone • Best way of adopting international

best practices and approaches• Advantages in having strategic

position, democratic system, market economy and open financial system

• Infrastructure development • Stable and reliable legal system

UB International Financial Zone initiative

• Special law is drafted • Expected features;

• Unique legal environment• Modern regulatory framework• Tax incentive • Stability guarantee

• Beneficial to;• Adopt international standards • World class knowledge & skills• Capital market integration

• Advantages over region;• Strategic location • Democracy • Market economy • Open financial system

Purpose of UB International Financial Zone

To serve as Financial Hub for Central Asia region

To serve as Commercial products and services cluster

To serve as Data hosting and protection centre

Globalize and modernize the Mongolian economy

Advantages of International Financial Zone

International Financial Zone entails:

Encourages adoption of International Standards: Reporting and Legal

Diversifies the country’s dependency on a single sector (Mining)

Enforces democratic within the political scene

Promotes creation of Intellectual Property versus manual labour (Mining labour)

Requires infrastructural development

Ensures economic stability through globalization

Imports technological innovation

Plays critical role in regional development

Continuous Foreign Direct Investment

Increased quality of human capital

Advantages:

Encourages adoption of International Standards: Reporting and Legal

•International Legal System: Common Law

•International Financial Reporting Standards

•Independent judicial system

•Transparency, best practice

Diversifies the country’s dependency on a single sector (Mining)

•Financial Markets sector•Information Technology sector

•Professional services and consulting sector

•Education sector

Advantages:

•Open market economy

•Liberal reforms

•Common voice legislature

•Political Stability

•Service and product innovations•Trade marking

•High educational standard

Enforces democratic values within the political scene

Promotes creation of Intellectual Property versus manual labour (Mining labour)

Advantages:

•Creative construction

•Green and efficient real estate

•International travel ports

•Roads and other urban transportation

•Increased quality of life index•Access to global view

•Access to a large pool of skilled professionals

Promotes creation of Intellectual Property versus manual labour (Mining labour)

Requires infrastructural development

Increased quality of human capital

Advantages:

•Increased foreign direct investment

•Sustainable financing

•Access to regional wealth and investment

•Decreased FX risk: free capital convertibility

•Provide regional companies and markets access to global markets•Promote regional cooperation, both business and political

•Ensures regional economic stability

Promotes creation of Intellectual Property versus manual labour (Mining labour)Increased quality of human capital

Continuous Foreign Direct Investment

Plays critical role in regional development

Advantages:

•Data hosting

•Transaction security

•Independent from geopolitical influence

•Increased inflow of information

•Taxation stability•Increased flexibility on immigration/visas/work permits

•Mitigation geopolitical risks such as having only 2 neighbors and dominant economic partnerships

Promotes creation of Intellectual Property versus manual labour (Mining labour)Increased quality of human capital

Imports technological innovation

Ensures economic stability through globalization

International Financial Zone in the World

UB

Financial Center

London Dubai

New York Abu Dhabi

Toronto Sydney

Chicago Paris

Zurich Milan

Hong Kong Madrid

Singapore Luxembourg

Seoul Dublin

Tokyo Amsterdam

Shanghai Kuala Lumpur

Frankfurt Washington DC

Moscow JohannesburgNo financial market located within Central Asia region!

Why use Dubai as guidance?

Similarities between the 2 economies

•Heavy reliance on a single sector: Dubai on Oil, Ulaanbaatar on Minerals

•Geographical and geopolitical Isolation

•Experienced Economic Instability

Dubai Legislative Milestones toward DIFC

December 2003

March 2004

July 2004

September 2004

September 2004

September 2004

September 2004

Amendment to UAE Constitution to include DIFC

UAE creates concept of DIFC

UAE creates DIFC

Dubai creates DIFC regulatory bodies

DIFC laws enacted

Dubai Financial Services Authority enforcement commences

First licenses issued

Potential Economic BenefitsSince initiation in 2010, the total value added grew from $2.92 billion to $3.13 billion in 1 year.

Financial activities accounted for 70.3 % of the total value added while other businesses accounted for 25%

As of 2011, Total assets accounted to $115 billion.

Total number of resisted companies reached 817 by 2011 (within 1 year of imitation).

Most of the companies that go to DIFC are from emerging markets, especially from China, India and Central Asian companies

Dubai International Financial Centre economic impact

Total number of employees within the centre reached 12,945 full time staff

Potential Economic Benefits:Infrastructure Before & After

Dubai International Financial Centre economic impact

Total number of employees within the centre reached 12,945

Central Asia and other regional emergingmarkets demand for International Financial Zone

•Secure and efficient platform for business

•Financial hub connecting to the world markets

•Regional minerals and commodities trading platform

•Regional headquarters of Banks

•Access to capital (World vs China)

•IT data storage and security center

•World class services and products hub (Consulting, IPO, Legal, etc)•Infrastructure development

Regional needs are in line with benefits attributable to International Financial Zone

UB

Зорилго

Санхүүгийн салбарын эдийн засагт гүйцэтгэх үүргийг нэмэгдүүлэх, тогтвортой хөгжлийг хангах урт хугацааны санхүүгийн эх үүсвэрийг татан төвлөрүүлж бодит эдийн засагт үр ашигтайгаар хөрөнгө

оруулах чадавхитай санхүүгийн зах зээлийг хөгжүүлэх.

Санхүүгийн зах зээлийн хүртээмжийг сайжруулж хөрөнгийн эх үүсвэрийг бодит эдийн засагт, ялангуяа жижиг дунд үйлдвэрлэл, шинэ бизнес санааг дэмжихэд үр ашигтайгаар байршуулах

нөхцлийг бүрдүүлэх замаар нийгмийн дундаж давхаргын эдийн засгийн байдлыг бэхжүүлснээр ядуурлыг бууруулах.

Санхүүгийн зах зээлийн үр ашгийг нэмэгдүүлж тасралтгүй, найдвартай ажиллагаатай зах зээлийн орчныг бүрдүүлэх.

Санхүүгийн зах зээлийн тогтвортой байдлыг хангах, системийн эрсдлээс урьдчилан сэргийлэх.

Санхүүгийн зах зээлийн өрсөлдөх чадварыг бэхжүүлж олон улсын интеграцчилалд нэгдэх, санхүүгийн салбарын хөгжлөөр бүс нутагтаа тэргүүлэх хэмжээнд хүрэх.

THANK YOU FOR ATTENTION!