Risks UK businesses may face in Mongolia
Mongolia is the second largest landlocked country in the world and sits between two even bigger neighbours, China and Russia. It has a varied geography, including mountains, steppes and deserts. It has an extreme continental climate and is very dry, especially in the south, which is dominated by the Gobi Desert. It is rich with a wide variety of natural mineral resources and home to many protected species including the snow leopard, long-eared jerboa and wild Bactrian camel.
Mongolia is sparsely populated with just under 3.5 million people, almost half of whom live in or around the capital Ulaanbaatar. The majority of the population are Khalkh Mongols (86%) but there are a few other small ethnic groups and a large Kazakh minority (6%) in the far west of the country. The official language is Khalkh Mongolian, although Kazakh is widely spoken in the western aimags (provinces). Mongolian is written in the Cyrillic script, although the traditional Mongolian script may be reintroduced in schools. English is increasingly spoken as a second language. The UK government offers scholarships for Mongolians to study masters degrees at UK universities through the Chevening scholarship scheme, funded by the Foreign, Commonwealth and Development Office.
The UK was the first Western country to establish diplomatic relations with Mongolia on January 23, 1963. Today, the UK supports Mongolia’s efforts to strengthen its democracy and economy. Mongolia only borders Russia and China and although the UK is geographically distant, Mongolia regards it as one of its ‘third neighbours’ due to its long standing diplomatic relations and of its growing business relationships. Mr Daniel Kawczynski, MP, has been appointed Prime Minister’s Trade Envoy to Mongolia in 2020. His role is to build on existing relationships with Mongolia to help UK businesses leverage the Kingdom’s global trade agenda -United. British companies are active in Mongolia in multiple sectors, including mining, infrastructure, education, renewable energy, food and drink, agriculture and health. The UK is among Mongolia’s top 10 trading partners and a major foreign investor.
2. Policy overview
Mongolia held its first democratic elections in 1990, after 70 years of one-party rule during which Mongolia was a satellite state of the Soviet Union. There are two major political parties in the country: the Mongolian People’s Party (MPP), which emerged from the one-party communist government, and the Democratic Party (DP), which emerged from the Mongolian democratic movement of 1990. The special evaluation of the election 2021 presidential election by the OSCE’s Office for Democratic Institutions and Human Rights described it as “effectively administered and candidates were able to campaign freely”, but that there were “excessive limitations on the right to nominate and stand as a candidate, as well as restrictive media rules”.
Executive power in Mongolia is shared between the Parliament, the Prime Minister and the President. Members of the single-chamber state Grand Khural (Parliament) are elected for a fixed four-year term, while the President serves a single six-year term (on different election cycles). The Cabinet is appointed by the Prime Minister. The president is the commander-in-chief and holds the right to veto legislation, although this can be overridden by a two-thirds majority in parliament.
In the eight parliamentary elections held since the entry into force of the 1992 Constitution, power has alternated between the two main parties. The DP formed grand coalition governments in 1996, 2004 and 2012, while the MPP won decisive victories in elections held in 1992, 2000, 2008, 2016 and 2020. The next parliamentary elections are scheduled for 2024.
Eight presidential elections have been held in Mongolia since 1992. On June 9, 2021, Ukhnaagiin Khurelsukh (MPP) was elected president with a large majority in the first round of voting. Former President Khaltmaagiin Battulga (DP) was not eligible for a second term following a constitutional ruling. The next presidential election is scheduled for 2027.
Interparliamentary relations between the UK and Mongolia have existed since 1970. The Mongolia-UK Parliamentary Group, led by MP Ch. Undram, was re-established in the Mongolian Parliament in 2021. In the UK Parliament, the All-Party Parliamentary Group for Mongolia was also reinstated in 2021, chaired by MP James Gray.
3. Economic overview
According to the World Bank, Mongolia’s nominal GDP was $13.3 billion in 2020 with a GDP per capita of $4,060. Due to the COVID-19 pandemic, GDP growth was -4.6% in 2020 and 1.4% in 2021. A largely export-led recovery is underway. In 2021, Mongolia’s total exports amounted to USD 9.2 billion, of which 82.7% went to China, 9.4% to Switzerland and 2.8% to Singapore. Exports of mineral products constituted 81.3% of total exports. The three main exports of copper, coal and gold concentrates (raw or in semi-finished form), accounted for 72.3% of total exports. Mongolia exports gold, bituminous coal, combed cashmere and knitted cashmere products to the UK.
Mongolia is a member of the International Monetary Fund and the World Bank and has been a member of the WTO since 1997. It generally pursues an open trade policy. Mongolia is not a signatory to the WTO Agreement on Government Procurement, although it has observer status with the Government Procurement Agreement (GPA) Committee. Mongolia has been part of the UK’s Enhanced Trade Preferences Agreement since January 2021. The UK and Mongolia signed a double tax treaty in 1996 and a bilateral investment treaty in 1991 (DIT published a guide to the UK/Mongolia double tax treaty which can be obtained from the DIT team in Mongolia, details below). Mongolia has an Economic Partnership Agreement (EPA) with Japan and is conducting joint research on possible future EPAs with the Republic of Korea, China and the Eurasian Economic Union. Mongolia joined the Asia-Pacific Trade Agreement in 2020.
Mongolia’s vision is “to become a leading Asian country in terms of social development, economic growth and quality of life for its citizens”, as stated in its long-term development policy “Vision 2050” launched in 2020. Mongolia will prioritize the development of mining, agriculture, tourism and creative industries. In the World Bank’s Doing Business 2020 report, Mongolia was ranked 81st out of 190 countries with a score of 67.8, down from 74th (score 67.74) a year earlier.
4. Business and Human Rights
Mongolia has been a member of the International Labor Organization (ILO) since 1968 and has ratified 21 ILO conventions, including the 8 fundamental conventions. To find out more, consult the Information System on International Labor Standards. Mongolia revised its labor law in 2021 after 22 years. The Revised Labor Law, Law on the Legal Status of Foreign Citizens, Law on the Use of Foreign Labor, Law on Employment Support and other relevant laws and regulations concern all employment of foreign citizens to work in Mongolia. The usual duration of work permits for foreign citizens is a maximum of one year, and can be extended. When inviting a foreign employee, a letter should be obtained from the relevant department or agency.
5. Bribery and Corruption
Corruption is illegal. It is an offense for UK nationals or someone ordinarily resident in the UK, a UK incorporated body or a Scottish partnership, to bribe anywhere in the world.
In addition, a business organization carrying on business in the UK may be liable for the conduct of a person who is neither a UK national nor a resident of the UK or a body incorporated or incorporated in the UK. In this case, it does not matter whether the acts or omissions which form part of the offense take place in the UK or elsewhere.
According to Transparency International’s Corruption Perceptions Index (CPI) 2021, Mongolia ranks 110 out of 180 countries. In the World Bank’s 2019 Ease of Doing Business Survey, Mongolia was ranked 81st.
Mongolia signed the United Nations Convention against Corruption (UNCAC) on April 29, 2005.
Read the information provided on our Bribery and Corruption page.
6. Terrorism and Security
For up-to-date information, please see FCDO’s current travel advice for Mongolia. Also read the information provided on how to reduce your risk of terrorism abroad.
7. Intellectual property
Mongolia has been a member of the World Trade Organization (WTO) since 1997 and of the World Intellectual Property Organization (WIPO) since 1979. Mongolia has acceded to and ratified the main treaties and conventions. As a member of the WTO and WIPO, Mongolian intellectual property laws must meet certain minimum standards. In practice, however, infringements often go unchallenged. The Intellectual Property Office of Mongolia (IPOM) administers all types of intellectual property rights in Mongolia.
Intellectual property rights protected in Mongolia include the following:
- Industrial property rights:
- geographical indication
- utility model
The IP address can be registered or unregistered.
To request the IPR guide published by DIT for doing business in Mongolia, contact the DIT Mongolia team.
Read more information on intellectual property.
8. Organized crime
Read the information provided on our Organized Crime page.
9. Government support
The government can provide finance or credit insurance specifically to support UK exports through UK Export Finance – the UK’s export credit agency. For up-to-date country-specific information on available support, see UK Export Finance’s country coverage policy and indicators.
ten. Useful links
For more information on exporting to Mongolia, or doing business there, read the Guide to Exporting to Mongolia.
Other useful links:
Contact the DIT team in Mongolia for more information and advice on doing business opportunities in Mongolia.