Guidance

Overseas business risk: Mongolia

Published 25 March 2022

1. General overview

Mongolia is the second largest landlocked country in the world and is located between two even larger neighbours, China and Russia. It has a varied geography, including mountains, steppe and desert. It has an extreme continental climate and is very dry, particularly in the south, which is dominated by the Gobi Desert. It is rich in a wide variety of natural mineral resources and is home to a number of protected species, including the snow leopard, the long-eared jerboa and the wild Bactrian camel.

Mongolia is sparsely populated with just under 3.5 million people, nearly half of whom live in or around the capital city Ulaanbaatar. The majority of the population are Khalkh Mongols (86%) but there are some other small ethnic groups and a sizeable Kazakh minority (6%) in the far west of the country. The official language is Khalkh Mongol, though Kazakh is widely spoken in the western aimags (provinces). Mongolian is written in Cyrillic script, although the traditional Mongolian script may be reintroduced to schools. English is increasingly spoken as a second language. The British Government provides scholarships for Mongolians to study master’s degrees in British universities through the Chevening scholarship scheme which is funded by the Foreign, Commonwealth and Development Office.

The United Kingdom was the first western nation to establish diplomatic relations with Mongolia on the 23rd of January 1963. Today the UK supports Mongolia’s efforts to strengthen its democracy and economy. Mongolia only has borders with Russia and China and although the UK is geographically distant, Mongolia considers it to be among its “third neighbours” due to its longstanding diplomatic ties and growing trading relations. Mr Daniel Kawczynski MP was appointed as the Prime Minister’s Trade Envoy to Mongolia in 2020. His role is to build on existing relations with Mongolia to help British businesses take advantage of the UK’s global trade agenda. UK companies are active in Mongolia in multiple sectors including mining, infrastructure, education, renewable energy, food and beverage, agriculture and healthcare. The UK is among Mongolia’s top 10 trading partners and a major foreign investor.

2. Political overview

Mongolia held its first democratic elections in 1990, after 70 years of single-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 evolved from the communist single-party government, and the Democratic Party (DP) that grew out of Mongolia’s 1990 democracy movement. The OSCE Office for Democratic Institutions and Human Rights’ Special Election Assessment of the 2021 presidential election described it as “administered efficiently 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 Great Khural (Parliament) are elected for a fixed four-year term, while the President serves a single six-year term (on different electoral cycles). The Cabinet is appointed by the Prime Minister. The President is the Commander-in-Chief and holds the power to veto legislation, although this can be overridden by a two-thirds majority in Parliament.

In the eight Parliamentary Elections held since the 1992 Constitution came into effect, power has alternated between the two major parties. The DP formed grand coalition governments in 1996, 2004 and 2012, while the MPP achieved 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 9 June 2021, Ukhnaagiin Khurelsukh (MPP) was elected President with a large majority in the first round of voting. Former President Khaltmaagiin Battulga (DP) was ineligible to run for a second term following a constitutional ruling. The next Presidential Election is due in 2027.

UK-Mongolia inter-parliamentary relationships have been in place since 1970. The Mongolia-UK parliamentary group, headed 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 re-established in 2021, chaired by James Gray MP.

3. Economic overview

According to the World Bank, Mongolia’s nominal GDP was $13.3 billion in 2020 with 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 totalled 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 top three exports of copper concentrates, coal and gold (unwrought or in semi-manufactured forms), constituted 72.3% of total exports. Mongolia exports gold, bituminous coal, combed cashmere and cashmere knitwear products to the UK.

Mongolia is a member of the International Monetary Fund and World Bank and has been a WTO member since 1997. It generally pursues an open trade policy. Mongolia is not a signatory to the WTO Agreement on Government Procurement although it is an observer in the Agreement on Government Procurement (GPA) Committee. Mongolia has been part of the UK’s Enhanced Trade Preference Agreement since January 2021. The UK and Mongolia signed a Double Taxation Convention in 1996 and a Bilateral Investment Treaty in 1991 (the Department for Business and Trade (DBT) has published a guide on the UK/Mongolia Double Taxation Convention which can be obtained from the DBT team in Mongolia, details below). Mongolia has an Economic Partnership Agreement (EPA) with Japan and is conducting joint research into possible future EPAs with the Republic of Korea, China and the Eurasian Economic Union. Mongolia acceded to the Asia-Pacific Trade Agreement in 2020.

Mongolia’s vision is to ‘become a leading Asian country in terms of its social development, economic growth and its citizen’s quality of life’ as stated in its “Vision 2050” long-term development policy launched in 2020. Mongolia will prioritise developing the mining, agriculture, tourism, and creative industries. In the World Bank’s Doing Business report 2020, Mongolia was ranked 81st out of 190 countries with a score of 67.8, a fall from being ranked 74th (score 67.74) a year earlier.

4. Business and human rights

Mongolia has been a member of the International Labour Organisation (ILO) since 1968 and has ratified 21 ILO Conventions including the 8 fundamental Conventions. See more at the Information System on International Labour Standards. Mongolia revised its labour law in 2021 after 22 years. The revised Labour Law, Law on Foreign Citizens’ Legal Status, Law on Using Foreign Labour, Law on Supporting Employment and other relevant laws and regulations are all relevant to employing foreign citizens to work in Mongolia. The usual duration of work permits for foreign citizens is up to one year, which can be extended. When inviting a foreign employee, a letter has to be obtained from the relevant ministry or agency.

5. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

According to the 2021 Transparency International’s Corruption Perception Index (CPI), Mongolia ranks 110th out of 180 countries. In the World Bank’s Ease for doing business survey in 2019, Mongolia was ranked 81st.

Mongolia signed the United Nations Convention against Corruption (UNCAC) on 29 April 2005.

Read the information provided on our Bribery and corruption page.

6. Terrorism and security

For up-to-date information please consult the FCDO’s current travel advice for Mongolia. Also, read the information provided on how to reduce your risk from 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 accessed and ratified the main treaties and conventions. As a member of the WTO and WIPO, Mongolia’s intellectual property laws are required to meet certain minimum standards. In practice, however, infringements are often left 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:

• Copyright
• Industrial property rights:
  • trademark
  • geographic indication
  • patent
  • utility model

IP can be either registered or unregistered.

To request the DBT-published IPR guide for doing business in Mongolia, contact the DBT team in Mongolia.

Read more information on Intellectual property.

8. Organised crime

Read the information provided on our Organised 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 the support available see UK Export Finance’s country cover policy and indicators.

10. Useful links

For more information about exporting to Mongolia, or doing business there, read Exporting guide to Mongolia.

Other useful links:

• practical export advice
• export opportunities
• events for exporters and international buyers
• information on products or services which require licences for supply outside of the UK
• checking trade barriers
• reporting trade barriers
• step-by-step guide on exporting goods from the UK

Contact the DBT team in Mongolia for more information and advice on opportunities for doing business in Mongolia.