Below, is a translated version of the DP’s action plan (Mongolian to English).

Should the DP be
successful in its efforts, we expect they will be in power for years to come, to the beneft of the Mon-
golian people and foreign investors alike.
The main concepts of the action plan:
· Develop an economy based on the expansion and prosperity of the middle class, creating true
· Reduce the role of government in the private sector
· Ensure an equality based structure of democracy
· Focus on the distribution of wealth based on merit and seek to eliminate corruption
The main action plans:
· Ìmplement budget, fnance and monetary policies directed to consistently address the needs
of its people, and to create a long term self-supplying and internationally competitive economy.
· Ìncrease the number of jobs, reduce the dependency on government and a halt to cash hand-
outs. Going forward, social welfare will focus on child poverty, veterans and the disabled.
· Decreased economic dependency on the mining sector to ensure more stable and sustainable
· Bring Public Private Partnerships to a new level and create a more business friendly legal en-
· Prepare the future workforce by increasing the quality of education.
We have reviewed the DP’s action plan, which was passed earlier this week during an ex-
traordinary session of parliament. Investors should be very encouraged and impressed by
the detaiIs of this pIan, which we view as a criticaI inñection point for Foreign Direct Invest-
ment. Not only was the oppositions effort to renegotiate the OT agreement defeated, the DP
proposed and passed a thoughtful, free market approach for Mongolia’s future. While the
opposition has vowed to not give up on an effort to renegotiate the OT agreement, inves-
tors should dismiss further rhetoric as “noise” as this plan is iron clad for the next 4 years.
This is especially positive for investors in RIO (Rio Tinto) & TRQ (Turquoise Hill, formerly
Ivanhoe), as headline risk on OT can now be put to rest. It is also clear to us that the DP will
amend and reform prior restrictive and damaging mining legislation, while maintaining Mon-
golia’s sovereignty and independence.
The Heavy Hand of Government Lightens Up
The New Government
Nick Cousyn
Chief Executive Offcer
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· Ìncrease the profle of the country by promoting Mongolian culture and heritage and support
national sports and athletes
· Ìncrease government transparency, remove corruption and bureaucracy from government ser-
vice, and ensure government employees act more like civil servants as opposed to privileged
More detailed action plans:
· Reform tax policy especially in the fnance sector with a purpose to support business
· Reduce interest rates to single-digits from the mid-teens currently
· Reform the capital markets
· Shift into a system which addresses the infation problem in a free market manner, instead of
instituting government mandated price controls
· Reduce urbanization
· Support Small and Medium Enterprise (SME's), whose annual revenue doesn't exceed 1.5
billion MNT. Support for SME’s will exclude the following industries: mining, oil products import
and export, mobile phone operator, vodka, spirit, and cigarette production. SME’s not in these
sectors will receive tax rebates of 90%
· Create 150,000 new jobs
· Support the development of following sectors with proper economic policies:
o Manufacturing
o Cashmere
o Milk and traditional herding
o Tourism
o Bio and information technology
o Manufacturing of import replacing and export products
o Services

Our conclusion:
The next 4 years will be as important as ever for the newly formed government. The biggest project
in Mongolia’s history, Oyu Tolgoi (OT) is nearing production and will have a massive impact on the
economy. The more important part of this action plan is implementing policy that supports long term
economic growth.
This is a welcome change from the prior administration’s policies, which focused on large deals with
international investors on its world class mining projects and free cash handouts to its citizens. This
has left the country to struggle with high infation and too much dependence on the outside world
for its economic growth. This time, the new government has come up with a number of fresh ideas
such as reforming the education system to give the next generation the skills they need to succeed.
Economic policy will be directed towards supporting the middle class and fghting against infation.
Ìt's very clear that the new government is determined to spend a lot of money on the development
projects as well as infrastructure. The best way to do this is to partner with investors whose capital
would stay in the country for the long term via robust and transparent capital markets. We believe
this will lead to structural reforms in Mongolia’s capital markets, in particular, on its current legal
framework which would ultimately help solve long-standing liquidity issues.
Institutional Sales & Research Department
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