Investor sentiment falls with move to alter OT agreement
Parliament's move to draw greater royalties and tax from the Oyu Tolgoi copper and gold project through revision of the investment agreement for the tremendous copper mine has some investors worried for the political stability and its ability to honor agreements.
The proposed 2013 draft budget has been submitted to Parliament for approval and is believed to be accepted due to support from the caucus of the Democratic Party (DP), which leads the coalition government in Parliament.
National statistics show revenue from coal, currently the country's biggest current export, has been significantly reduced over the summer because of a drop in both price and volume. The situation has not meaningfully improved with foreign investment remaining cold while investors wait for clarification over the Foreign Investment Law passed last June. That legislation limits investment to sectors of “strategic importance” above certain thresholds without government approval.
However, the misstep may be an effect of a government that has not yet gotten its bearings or defined its long-term stance on foreign investment.
“We believe that the latest news relating to the OT IA partly relates to a lack of dominant political leadership and unity from June's elections, resulting in a fragmented and fractured ruling coalition of political parties and agendas,” said Origo Partners PLC.
The proposed 2013 draft budget has been submitted to Parliament for approval and is believed to be accepted due to support from the caucus of the Democratic Party (DP), which leads the coalition government in Parliament.
National statistics show revenue from coal, currently the country's biggest current export, has been significantly reduced over the summer because of a drop in both price and volume. The situation has not meaningfully improved with foreign investment remaining cold while investors wait for clarification over the Foreign Investment Law passed last June. That legislation limits investment to sectors of “strategic importance” above certain thresholds without government approval.
However, the misstep may be an effect of a government that has not yet gotten its bearings or defined its long-term stance on foreign investment.
“We believe that the latest news relating to the OT IA partly relates to a lack of dominant political leadership and unity from June's elections, resulting in a fragmented and fractured ruling coalition of political parties and agendas,” said Origo Partners PLC.
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