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2019/20 KSP Policy Consultation Report Tel Ministry of Economy and Finance (MOEF) Presented by the MOEF, Republic of Korea Sejong Government Complex, 477, Galmae-ro, Sejong-si 30109, Republic of Korea 2019/20 KSP Policy Consultation Report Tel. 82-44-215-7746 www.moef.go.kr Korea Development Institute (KDI) Namsejong-ro, 263, Sejong-si 30149, Republic of Korea Tel. 82-44-550-4114 www.kdi.re.kr Knowledge Sharing Program (KSP) www.ksp.go.kr 2019/20 KSP Policy Consultation Report Mongolia Suggestions on the Establishment of Cross-border Securities Issuance and Investment Infrastructure for the Advancement of the Investment Infrastructure for the Advancement of Mongolian Capital Market Investment Infrastructure Securities Issuance and Suggestions on the Establishment of Cross-border Mongolian Capital Market 94320 9 791159 325748 ISBN 979-11-5932-574-8 ISBN 979-11-5932-556-4 (set) Government Publications Registration Number 11-1051000-001040-01 2019/20 KSP Policy Consultation Report Mongolia Suggestions on the Establishment of Cross-border Securities Issuance and Investment Infrastructure for the Advancement of the Mongolian Capital Market 2019/20 KSP Policy Consultation Report Project Title Suggestions on the Establishment of Cross-border Securities Issuance and Investment Infrastructure for the Advancement of the Mongolian Capital Market Prepared for The Government of Mongolia In Cooperation with Ministry of Finance of Mongolia (MOF) Supported by Ministry of Economy and Finance (MOEF), Republic of Korea Prepared by Korea Development Institute (KDI) Project Director Sanghoon Ahn, Executive Director, Center for International Development (CID), KDI Project Manager Hokyung Bang, Director, Division of Policy Consultation, CID, KDI Project Officers Yerim Kim, Senior Research Associate, Division of Policy Consultation, CID, KDI Jieun Song, Research Associate, Division of Development Research, CID, KDI Senior Advisor Seok Dong Kim, Former Chairman of Financial Services Commission Principal Investigator Ho Yeol Lim, President, Tantan Global Network Authors Chapter 1. Jae Woong Kim, Director, Korea Securities Depository Battulga Khatanbaatar, Chief of Depository, Mongolian Central Securities Depository (MCSD) Chapter 2. Ki Hoon Ro, Senior Specialist, Korea Securities Depository Heung Seok Ko, Head of Team, Korea Securities Depository Hoon Kim, Head of Team, Korea Securities Depository Amarbayasgalan Batbaatar, Specialist, MOF Chapter 3. Ho Yeol Lim, President, Tantan Global Network Undraa Nursed, Specialist, MOF English Editor Bering House LLC Government Publications Registration Number 11-1051000-001040-01 ISBN 979-11-5932-574-8 979-11-5932-556-4 (set) Copyright ⓒ 2020 by Ministry of Economy and Finance, Republic of Korea 2019/20 KSP Policy Consultation Report Suggestions on the Establishment of Cross-border Securities Issuance and Investment Infrastructure for the Advancement of the Mongolian Capital Market Preface Knowledge is an essential ingredient in a country’s economic growth and social development. Of particular importance is government capacity to formulate and implement policies. The global society is making various efforts to promote knowledge sharing between countries and improve their policy capacity to tackle development issues and enhance global prosperity. Indeed, knowledge has taken on an ever greater importance as the world confronts this new global pandemic. In the crisis which physical interactions are highly limited, the value of knowledge-sharing is becoming evident since it is the most flexible and prompt instrument to develop and share timely solutions. When it comes to Korea’s economic development, knowledge laid the foundation for Korea’s unprecedented transformation from a poor agro-based economy into a modern industrialized nation with an open and democratic society. Technology transfer from abroad and educational investment helped expand the domestic knowledge stock and made this transformation possible. The Korean government could also accumulate invaluable practical lessons not found in a conventional textbook through the course of development. The Ministry of Economy and Finance (MOEF) of Korea introduced the Knowledge Sharing Program (KSP) in 2004 to share Korea’s development experience with the international community through joint research, policy consultations, and capacity-building activities. Since its inception, the program has played a vital role in supporting socio-economic development of partner countries around the world. Korea Development Institute (KDI) has participated in the KSP since the program’s launch and has been working with more than seventy foreign countries. KDI, Korea’s leading think- tank with an extensive experience in policy research, has provided solutions to the challenges that partner countries face in a variety of fields, ranging from industrial development to public-sector reform. In the 2019/20 KSP, KDI carried out twenty policy consultation projects including the one with Georgia, a new participant in KSP. Among these meaningful projects for mutual learning, this one was initiated by the Ministry of Finance of Mongolia (MOF) with the aim of “Establishment of Cross-border Securities Issuance and Investment Infrastructure to Advance the Mongolian Capital Market.” Upon the request of the MOF, the MOEF and KDI organized a research team consisting of Mongolian and Korean experts. The team conducted in-depth analysis of internal and external policy environments, identified Mongolia’s key development challenges, and offered policy recommendations and action plans. The COVID-19 pandemic has affected the project this year, as it has done every aspect of our lives. Despite the unprecedented challenge, the project was successfully completed thanks to devotion from the teams from both countries. Throughout the process, I witnessed how collaborative efforts can lead to overcoming hardship, and learned the importance of knowledge-sharing as more and more countries seek to learn how others have dealt with challenges. On behalf of KDI, I would like to express my deepest appreciation to the Government of Mongolia and MOF for their collaboration in the project. In particular, I would like to extend my profound gratitude to His Excellency Minister Khurelbaatar Chimed of Ministry of Finance for his unwavering support. The completion of this project would not have been possible without their devotion. I also wish to thank the KSP consultation team— Senior Advisor Seok Dong Kim, Principal Investigator President Ho Yeol Lim, researchers Director Jae Woong Kim, Senior Specialist Ki Hoon Ro, Head of Team Heung Seok Ko, Head of Team Hoon Kim, and local consultants Chief of Depository Battulga Khatanbaatar, Specialist Amarbayasgalan Batbaatar and Specialist Undraa Nursed—for producing this report. This project benefited greatly from many others both inside and outside the Mongolian government, including Ms. J.Baigalmaa, CEO of Mongolian Central Securities Depository. I would like to extend my sincere thanks to all who have made valuable contributions to a successful completion of the project. I am also grateful to the Center for International Development of KDI, in particular Executive Director Dr. Sanghoon Ahn, Hokyung Bang, and Project Officer Ms. Yerim Kim and Jieun Song for their hard work and dedication to the project. I firmly believe that the KSP will serve as a stepping stone to further elevate mutual learning and economic cooperation between Mongolia and Korea, and hope it will contribute to their sustainable development. Jeong Pyo Choi President Korea Development Institute Contents 2019/20 KSP with Mongolia ······································································································015 Executive Summary ····················································································································019 Chapter 1 Establishment of Infrastructure for Cross-border Securities Issuance Summary ····································································································································025 1. Introduction ····························································································································028 2. Analysis on Infrastructure of Cross-border Securities Issuance in Mongolian Capital Market ·····································································································································029 2.1. Overview ··························································································································029 2.2. Legal Framework ·············································································································030 2.3. Market Structure: Double Taxation Treaty ·····································································033 2.4. Procedures of Securities Issuance ··················································································034 2.5. As-is Model Analysis ········································································································042 2.6. Case Study ·······················································································································044 3. Analysis on Global Standards and Global Market’s Experience ··········································048 3.1. Experience of Korea in Cross-border Securities Issuance (Inbound) ··························048 3.2. Korean Experiences in Cross-border Securities Issuance (Outbound) ························065 4. Recommended
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