Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Last Published: 8/8/2017

Weak Courts:  Ostensibly independent, Mongolia's judiciary is weak and compromised.  Foreign litigants in civil or criminal legal disputes perceive themselves disadvantaged before Mongolian courts.  The government’s 2016 settlement of a large international arbitration award and 2017 comprehensive reforms to Mongolia’s Arbitration Law suggest that alternative dispute resolution may yet become a viable alternative to Mongolia’s problematic courts, but it as yet an untested remedy. 

Vague Laws:  Mongolian law, especially Mongolian business law, is riddled with imprecision.  Mongolia's lack of transparent and effective rule-making processes means that vagueness in law is not mitigated by application of more precise regulations.  This legal and administrative vagueness invites inconsistency of rulings at best and corruption at worst. 

Corruption:  Mongolia has comprehensive laws against corruption, but the government does not always implement them effectively.  Factors contributing to corruption include conflicts of interest, lack of transparency, incomplete access to information, an inadequate civil service system, and weak government control of key institutions.  The Mongolian Parliament approved a National Action Plan to Combat Corruption in November 2016, and the Independent Authority Against Corruption is currently implementing the plan.

SMEs Need Help:  SMEs generally do not qualify for government subsidies aimed at facilitating home ownership and ensuring adequate supplies of basic commodities.  The banks are generally profitable, but the easy money derived from holding government bonds and a worrisome rise in loan non-performance rates combine to leave the banks with little incentive to lend to SMEs.  SMEs will profit as the banks are strengthened following the IMF agreement-mandated comprehensive bank asset quality review, and the economy expands and diversifies.  However, most experts expect it to require another 18 months to two years before SMEs achieve significantly better access to credit.

Inadequate Infrastructure:  Mongolia produces electricity almost exclusively from Soviet-era coal-fired power plants well past their useful lifespans and has yet to fully exploit its vast untapped coal reserves.  At the same time, Russia actively obstructs Mongolian efforts to tap its vast hydro-electric potential.  Although Mongolia has created thousands of kilometers of paved roads in recent years, most are no match for the country's brutal winters and maintenance is minimal.  The ageing Trans-Mongolia Railroad, a spur of the Trans-Siberian Railroad, is owned in equal parts by the governments of Mongolia and Russia, with neither country willing to invest in substantial improvements to expand the existing network.  

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