While writing a business plan for a large scale residential project in Ulaanbaatar Mongolia, the issue of property ownership was raised by the lender. At the time, under Mongolian law a foreign national was restricted and could only purchase a “land use” permit. Apparently, the Korean owned developer/construction company working in partnership with the Mongolian national was not enough to satisfy the lender.
As of August 2016, Mongolian citizens could own real estate. However, difficulties still exist for corporate entities of any type, foreign or domestic, from owning real estate. While foreigners and foreign firms may own the structures outright, the parcel of land they occupy can only be obtained through the use of "land use rights." Terms of the leases range from one (1) to ninety (90) years.
In China, the ownership of real estate and land usage rights have been separate issues as China practices ‘socialist public’ ownership of all land. As in the case of Mongolia, obtaining land usage rights in China allows the property owner (lease holder) to manage the land in order to develop houses and buildings or even pledge them as collateral. However, true ownership of the land belongs to the state, which also maintains the right to withdraw the land leasing rights mid-term.
The purpose of the above examples while the information is believed to be correct, serve to provide the reader with an understanding of the difficulties a developer or foreign lender may encounter.
Are you wanting a closer look at what’s happening inside your business operation? Look no further than your mailbox! Receiving the bank statement before anyone else affords the opportunity to review accounts for deposits, expenses as well as any unauthorized activity. With the “heads up,” you can match questionable banking items with corresponding journal entries for the Who, What, Where, When and Why!
So before relying on someone else to discover a problem, oftentimes months later, be proactive and assert your control. Not only will you stop or reduce the possibility of suspicious activity, your good and honest employees will appreciate the “hands on” approach!