(Japanese Note)

      Ulaanbaatar, March 11, 2014

Excellency,

 I have the honour to confirm the following understanding recently reached between the representatives of the Government of Japan and of the Government of Mongolia concerning a Japanese loan to be extended with a view to promoting the economic stabilization and development efforts of Mongolia:

1. A loan in Japanese yen up to the amount of seven billion five hundred and thirty-five million yen (\7,535,000,000) (hereinafter referred to as “the Loan”) will be extended, in accordance with the relevant laws and regulations of Japan, to the Government of Mongolia by the Japan International Cooperation Agency (hereinafter referred to as “JICA”) for the purpose of implementing Higher Engineering Education Development Project (hereinafter referred to as “the Project”).

2. (1) The Loan will be made available by a loan agreement to be concluded between the Government of Mongolia and JICA.  The terms and conditions of the Loan as well as the procedures for its utilization will be governed by the said loan agreement, within the scope of the present understanding, which will contain, inter alia, the following principles:

 (a) The repayment period will be fourteen (14) years after the grace period of six (6) years;

 (b) The rate of interest will be nought point two per cent (0.2%) per annum; 

 (c) Notwithstanding sub-paragraph (b) above, where a part of the Loan is made available to cover payments to consultants of the Project, then the rate of interest of the said part will be nought point nought one percent (0.01%) per annum; and 

 (d) The disbursement period will be eleven (11) years after the date of coming into force of the said loan agreement.

 (2) The loan agreement mentioned in sub-paragraph (1) above will be concluded after JICA is satisfied of the feasibility of the Project, including environmental consideration.

 (3) The disbursement period mentioned in sub-paragraph (1)(d) above may be extended with the consent of the authorities concerned of the two Governments.

3. (1) The Loan will be made available to cover payments to be made by the Mongolian executing agency to suppliers, contractors and/or consultants of eligible source countries under such contracts as may be entered into between them for purchases of products and/or services required for the implementation of the Project, provided that such purchases are made in such eligible source countries for products produced in and/or services supplied from those countries.

 (2) The scope of eligible source countries mentioned in sub-paragraph (1) above shall be agreed upon between the authorities concerned of the two Governments.

 (3) A part of the Loan may be used to cover eligible local currency requirements for the implementation of the Project.

4. The Government of Mongolia shall ensure that the products and/or services mentioned in sub-paragraph (1) of paragraph 3. are procured in accordance with the guidelines for procurement of JICA, which set forth, inter alia, the procedures of international competitive bidding to be followed except where such procedures are inapplicable or inappropriate.

5. With regard to the shipping and marine insurance of the products purchased under the Loan, the Government of Mongolia shall refrain from imposing any restrictions that may hinder fair and free competition among the shipping and marine insurance companies.

6. Japanese nationals whose services may be required in Mongolia in connection with the supply of the products and/or services mentioned in sub-paragraph (1) of paragraph 3. shall be accorded such facilities as may be necessary for their entry into Mongolia and stay therein for the performance of their work.

 
7. The Government of Mongolia shall exempt:

 (a) JICA from all fiscal levies and taxes imposed in Mongolia on and/or in connection with the Loan as well as interest accruing therefrom;

 (b) Japanese companies, other Japanese organizations and/or Japanese nationals operating as suppliers, contractors and/or consultants from all fiscal levies and taxes imposed in Mongolia with respect to the income accruing from the supply of products and/or services to be provided under the Loan; 

 (c) Japanese companies, other Japanese organizations and/or Japanese nationals operating as suppliers, contractors and/or consultants from all duties and related fiscal charges imposed in Mongolia with respect to the import and re-export of their own materials and equipment needed for the implementation of the Project; and

 (d) Japanese employees engaged in the implementation of the Project from all fiscal levies and taxes imposed in Mongolia on their personal income derived from Japanese companies and/or other Japanese organizations operating as suppliers, contractors and/or consultants for the implementation of the Project.

8. The Government of Mongolia shall take necessary measures to:

 (a) ensure that the Loan be used properly and exclusively for the Project;

 (b) ensure and maintain the safety of persons engaged in the implementation of the Project and of the general public of Mongolia in constructing the facilities under the Loan and in using such facilities; and

 (c) ensure that the facilities constructed under the Loan be maintained and used properly and effectively for the purpose prescribed in the present understanding.

9. The Government of Mongolia shall, upon request, furnish the Government of Japan and JICA with:

 (a) information and data concerning the progress of the implementation of the Project; and

 
 (b) any other information related to the Project.

10. The two Governments shall consult with each other with respect to any matter that may arise from or in connection with the present understanding.

 I have further the honour to propose that this Note and Your Excellency’s Note in reply confirming on behalf 
of the Government of Mongolia the foregoing understanding shall constitute an agreement between the two Governments, which shall become effective on the date of receipt by the Government of Japan of the written notification from the Government of Mongolia of the completion of necessary domestic procedures for the entry into force of such agreement.

 I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.

(Signed) Takenori Shimizu
Ambassador Extraordinary and 
Plenipotentiary of Japan to 
Mongolia

His Excellency
Mr. Luvsanvandan Bold
Minister for Foreign Affairs of Mongolia

(Mongolian Note)

      Ulaanbaatar, March 11, 2014

Excellency,

 I have the honour to acknowledge the receipt of Your Excellency’s Note of today’s date, which reads as follows:

“(Japanese Note)”

 I have further the honour to confirm on behalf of the Government of Mongolia the foregoing understanding and to agree that Your Excellency’s Note and this Note in reply shall constitute an agreement between the two Governments, which shall become effective on the date of receipt by the Government of Japan of the written notification from the Government of Mongolia of the completion of necessary domestic procedures for the entry into force of such agreement.

 I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.

(Signed)　　 Luvsanvandan Bold
Minister for Foreign Affairs
of Mongolia

His Excellency
Mr. Takenori Shimizu
Ambassador Extraordinary and
Plenipotentiary of Japan
to Mongolia