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South korean direct investment in Mongolia Прямые южнокорейские инвестиции в Монголию
УДК 339.5 (517.3) DOI 10.24411/2658-3569-2019-14060 Григорьева Юлия Геннадьевна,
кандидат исторических наук, младший научный сотрудник, Институт монголоведения, буддологии и тибетологии Сибирского отделения Российской академии наук (ИМБТ СО РАН), 670047, Россия, Республика Бурятия, г. Улан-Удэ, ул. Сахьяновой, 6; grigoreva-yulia23@mail.ru)
Grigoreva Julia Gennadievna,
candidate of historical sciences, junior researcher, Institute of Mongolian Studies, Buddhology and Tibetology, Siberian Branch of the Russian Academy of Sciences (IMBT SB RAS), 670047, Russia, Republic of Buryatia, Ulan-Ude, st. Sakhyanova, 6; grigoreva-yulia23@mail.ru) Аннотация. За последние несколько лет интерес к Монголии со стороны иностранных инвесторов, особенно из Восточной Азии и Северной Америки, вырос, главным образом, в горнодобывающей промышленности, торговле и сфере услуг. Инвестиционное сотрудничество становится одним из ключевых факторов развития двусторонних торгово-экономических отношений Монголии и Республики Корея. На основе официальных статистических данных автор исследует современное состояние и потенциал инвестиционного взаимодействия между Монголией и Республикой Корея. Summary. Investment cooperation is one of the most important factors in the development of trade and economic relations between Mongolia and the Republic of Korea. On the basis of official statistics the present situation has been analyzed. The factors that impede the development of investment relations between Mongolia and the Republic of Korea are defined in the article. The author comes to the conclusion that investment cooperation between South Korea and Mongolia lags behind despite the existing mutual potential.
Ключевые слова: инвестиционные отношения, монголо-южнокорейские отношения, Монголия, Республика Корея, инвестиционное сотрудничество.
Key words: investment relations, Mongolian-South Korean relations, Mongolia, Republic of Korea, investment cooperation.
The globalization of the world economy plays an important role not only in the strategy of great powers, but also testifies to the new opportunities of developing countries like Mongolia, which have gained the opportunity to use the achievements of world scientific and technological progress, make wider use of foreign investment, and exit their products to foreign markets and take advantage of international cooperation and the division of labor.
Over the past 15 years Mongolia has been consistently implementing transformations towards a market economy. For the successful development of the country's economy, three conditions are necessary: natural resources, labor, foreign investment. Foreign loans and assistance from donor countries are temporary and should serve as an impetus for the development of the economy of Mongolia.
Investment cooperation is becoming one of the key factors in the development of bilateral trade and economic relations between Mongolia and the Republic of Korea. The investment environment of Mongolia is limited, but, according to experts, the country has the potential for great economic growth. In addition, Mongolia has a good geographical location — between Russia rich in natural resources and China, one of the leading countries in the world. The country may also in the near future enter the zone of developed countries in East Asia, which already includes South Korea. Therefore, Mongolia can play an important role as a geo-economic bridgehead.
One of the earliest and most important bilateral agreements between the states was the Agreement between the Government of the Republic of Korea and the Government of the Mongolian People's Republic on investment cooperation, signed on March 28, 1991 in Seoul. According to the document, «both parties intend to encourage and create favorable conditions for investments from investors of one state in the territory of another state on the basis of equality and mutual benefit» [1]. This agreement was the starting point in the formation of the Republic of Korea as one of the largest investors in Mongolia, and also helped to stimulate and intensify bilateral relations for many years.
However, active investment cooperation between Mongolia and the Republic of Korea is complicated by a number of problems. For example, the transition to a market in Mongolia was accompanied by chaos in politics and economics, so the problems existing from the time of socialism regarding transparency of the economy and system stability were soon revealed. For these reasons, the conditions for attracting foreign investment are assessed as unsatisfactory. Korean potential investors point out that a lack of transparency is a serious obstacle to normal operations.
Table 1
South Korean direct investment iu Mongolia (1994-201?, in thousand dollars)
Number of Acceptance Number of Overseas Enterprises Accepted Amount (Unit: KS) Number of Remittance Invested Amount (Unit: KS)
1994-1999 25 14 13,647 21 9:002
2000 13 7 5.457 15 2,584
2001 9 5 4.552 14 2.634
2002 13 > 5:715 13 2,884
2003 11 8 4:567 19 1,337
2004 29 IS 7:931 4S 3:4S5
2005 54 25 14.226 104 6.705
2006 53 26 44.129 119 19,703
2007 105 55 50.731 179 44,433
2008 196 79 105,201 262 60,62?
2009 115 46 123,017 204 28,285
2010 115 45 58,447 162 27,185
2011 136 53 59.9S7 172 44,123
2012 136 46 96,591 1S7 55,979
2013 121 34 61,249 168 49,336
2014 111 46 43,402 145 32,100
2015 114 32 S3,4 75 136 39,337
2016 71 14 30,922 97 10,84S
2017 79 33 21.346 101 13.569
2018 S3 25 43,60S 122 22:6S5
2019 65 33 15,071 S2 11,623
Source: Export-Import Банк of the Republic of Korea
(htip5://stat3.koreaexim.go.kr/ea/eDMaia.do)
The Mongolian government continues to try to stabilize the economy, for example, legislation is being adopted in the area of mineral resources development and measures to maintain the financial system. The Oyu Tolgoi mine development agreement, signed in 2009 and attracting foreign investors, can be called successful.
There are many other risk factors in the Mongolian economy. The termination of long-term contracts, changes in political policies and laws, increased transportation and logistics costs, higher average salaries and other problems actually become insurmountable obstacles. Macroeconomic
problems, such as high inflation and cost increases, as well as low availability of the financial market, are becoming the main factors that deter Korean enterprises from entering the Mongolian market. However, the Mongolian government is aware of the need to attract foreign investment in order to develop the national economy and modify industry, and therefore is not going to stop trying to stabilize the existing economic system.
In order to achieve financial stability and attract foreign currency, the Mongolian government works closely and regularly consults with the World Bank, the International Monetary Fund, the Asian Development Bank and other large financial organizations. These international organizations, having a huge impact on the Mongolian economy, are contributing to the transparency of the country's economy. Mongolia continues to make every effort to gain recognition from the international community. In the future, it is planned to increase economic stability and the ability to predict events in the state economy.
In the 1990s the main investment flow consisted of articles in wholesale and retail trade, hotel and restaurant business, but since the 2000s. Investments in publishing and filmmaking, real estate, and mining began to increase. Particularly noticeable is the trend of a sharp increase in investment in the mining industry after 2008 [13].
The early Korean investors were Hyundai, Kia Motors and Sky Shopping Center. Since the early 1990s Samsung worked with the largest operating copper mine in Mongolia — Erdenet. The main South Korean investors today are the Skytel joint venture; a joint Mongolian-Korean venture «Unitel» which provide global cellular services since 2006.
Since 1994 the majority of investments have come in wholesale and retail trade, medium and small enterprises, as well as private entrepreneurs. Gradually expanded trade in used cars, tobacco products, household appliances, kitchen utensils, goods for tourism, machine tools and equipment, metal products, cosmetics, computers and software engineering. In 1999 publishing, film production, television, radio and information services received a total of 1.75 million dollars, and by the end of 2011 the total investment reached 24.84 million dollars [13].
At this time, medium and small enterprises managed cinemas, printing and publishing, in 2006, 100 thousand dollars were invested in the development and delivery of software engineering. Since 2007, the scale of investments in this area has increased, but after 2009 it began to decline.
Until 2011, among all Korean investments in Mongolia, investments in the hotel and restaurant business amounted to $ 8.01 million. According to the register of Korean investments in Mongolia, investments in medium and small enterprises and private entrepreneurs occupied a special place in investments that began to enter the sphere of wholesale and retail trade. From the
end of 2011 to the present day there are a large number of enterprises and retail outlets, restaurants of foreign cuisine, ateliers, pubs and hotels[3].
However, South Korea's direct investment is small compared with China, Japan, Canada, Australia and the United States. Given the historical and cultural ties between the two countries, as well as the influence of the Korean Wave and other factors, there is a need to expand the scope of South Korea's investment in Mongolia. In addition, there is a need to modify direct investments, which until now have been concentrated in the restaurant business, retail and other enterprises in the service sector, with the exception of mineral resource development enterprises, and to qualitatively improve economic cooperation.
Table 2
South Korea's Foreign Direct Investment (1990-2018. in thousand dollars)
Number of Acceptance Number of Overseas Enterprises Accepted Amount Number of Remittance Invested Amount
1990 970 367 2.454.378 996 1.147.944
2000 4.222 2.188 6.332.132 5.815 5.407.998
200: 9.58? 4.721 9.984.330 16.889 7.420.262
2010 9.213 3.069 34.826.956 14.851 25.492.709
201 = 10,326 3.215 40.443.153 15.66S 30.355.595
201S 12.707 3.540 59.263.003 16.949 49.785.594
Thus, it can be noted that investment cooperation between South Korea and Mongolia lags noticeably, despite the existing mutual potential. The reasons for this are the following factors. Firstly, repeated changes in the laws of investment relations of Mongolia, the absence of laws such as the cancellation or amendment of existing agreements, as well as not only insufficient compliance with laws, but also corruption of officials.
Secondly, the limited domestic market in Mongolia, the lack of developed infrastructure, such as a logistics transport network, etc., the vulnerability of infrastructure development associated with the financial sector and resources, especially in severe winter weather conditions, and the working environment had a negative impact on expansion economic cooperation of South Korean companies with Mongolia.
Thirdly, the main reason is the lack of awareness of the local investment environment. In an interview with Korean entrepreneurs, it turned out that there were some difficulties in providing them with systematic information regarding entry into the Mongolian market. Currently, interest in the Mongolian market is growing, but studies of the Mongolian market in South Korea are still at an initial level. There are also difficulties in finding Mongolian specialists for a national research
institute and non-governmental research organizations. Consequently, Korean enterprises planning to enter the Mongolian market, in most cases, find information about Mongolia with the help of acquaintances, rarely receive help from consulting firms or local organizations, so in the end it is difficult for them to obtain comprehensive, systematic information about the Mongolian market.
Fourth, the high cost of air travel between Korea and Mongolia is also a factor hampering the development of economic cooperation. Usually the cost of a one-hour international flight is a little more than $ 100, but although the flight time between Korea and Mongolia is a little more than three hours, the cost of round-trip air tickets is 800 dollars. Mongolian civil servants offered to use the services of many cheaper airlines, but these airlines are still not allowed in the air transportation market, as the monopoly position of the national airline of Mongolia (MIAT) is maintained.
In addition, according to a survey aimed at promoting Korean companies in Mongolia, the tax sphere became a big obstacle — different interpretations and application of taxes by each tax representative, arbitrary taxation of agencies, tax administration, etc.
The «North Policy» was adopted by the Korean government after the Seoul Olympics in 1988 in order to strengthen economic and diplomatic relations with former socialist countries, such as Russia, China, the CIS, and Mongolia. However, the focus was on Russia and China, as well as countries rich in natural resources, such as Kazakhstan and Uzbekistan. As a result, the volume of trade and direct investment between Korea and Mongolia showed only a slight increase, which did not meet the expectations of the South Korean government.
Список использованной литературы
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