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About Mongolia

2.1 ABOUT MONGOLIA

Mongolia is a landlocked country in East Asia, bordered by Russia to the north and China to the south. It covers an area of 1,564,116 square kilometers (603,909 square miles) and has a population of approximately 3.5 million, making it the world’s most sparsely populated sovereign state. Ulaanbaatar, the capital and largest city, is home to roughly half of the country’s population.​

Key Highlights:

  • Geography: Mongolia is the world’s largest landlocked country that does not border a closed sea. Much of its area is covered by grassy steppe, with mountains to the north and west and the Gobi Desert to the south.​
  • Demographics: Mongolia ranks in the top 20 in terms of land area per capita with a vibrant democracy.​
  • Natural Resources: The country is rich in agricultural and natural resources. Located next to China, the world’s largest consumer of copper, steel, coal, and many other natural resources.​
  • International Relations: Member of the World Trade Organization (WTO).​
  • Economic Outlook: An emerging market with a growing population and economy.​

ECONOMIC ENVIRONMENT

Mongolia has transformed into a vibrant democracy and tripled its GDP per capita. The country has made significant progress in reducing poverty and is classified as an upper-middle-income country in 2024. Creating more and better jobs is critical for the country. However, labor market inclusion remains a challenge, especially for the younger population and women.​

Mongolia’s ongoing mineral export boom is delivering positive macro-fiscal outcomes for the second consecutive year. However, this highlights Mongolia’s growing dependence on the volatile mining sector and underscores the urgent need for economic diversification. The focus on coal-driven growth exacerbates both climate and development challenges, emphasizing the critical need for structural reforms.​

Fueled by coal, Mongolia’s economic growth is projected to remain strong, though it is expected to moderate to 5.3 percent in 2024, down from 7.2 percent in 2023. Growth is forecast to average 6.3 percent over 2025–2026, driven by a significant increase in mineral production, particularly copper from the Oyu Tolgoi mine.​

TRADE AND FOREIGN DIRECT INVESTMENT (FDI)

  • WTO Membership: Mongolia has been a member of the World Trade Organization (WTO) since 1997 and applies Most-Favored-Nation (MFN) tariffs for WTO member countries.​
  • Regional Agreements: Mongolia’s ratification of the Asia-Pacific Trade Agreement (APTA) took place on 12 December 2019, and it entered into force for Mongolia on 1 January 2021.​
  • Tax Treaties: As of now, Mongolia has concluded tax treaties with 26 countries to avoid double taxation.​
  • Foreign Trade Volume: Mongolia’s foreign trade volume reached approximately 27.4 billion U.S. dollars in 2024, marking a robust growth of 12.3 percent compared to 2023. The country reported a significant trade surplus, with exports surpassing imports by more than 4.1 billion dollars. This surplus was primarily fueled by a sharp increase in the export of mining products, which remain a cornerstone of Mongolia’s economy.​
  • Trade Partners: Neighboring China continued to be Mongolia’s largest trading partner, serving as both the top export destination and the primary source of imports. In 2024, China accounted for 91.3 percent of Mongolia’s exports and 40.0 percent of its imports.​

MAIN BUSINESS SECTORS

MINING SECTOR

Mongolia is rich in mineral resources and is among 29 resource-rich developing countries as identified by the IMF, with coal, copper, and gold as the principal reserves mined in Mongolia. Mining sector growth will continue to accelerate in line with improving commodity prices, foreign mining investment, and Mongolia’s proximity to China, a major global consumer of mining products.​

Strategic Deposits: Under the Law on Minerals, mineral resources naturally occurring on and under the earth’s surface in Mongolia are the property of the State. Therefore, the state, as the owner, holds the right to grant exploration and mining rights. The State may participate up to 50% jointly with private entities in the exploitation of a Strategic Deposit. Currently, there are sixteen deposits that have been classified as “Strategic Deposits.”​

RENEWABLE ENERGY

At COP28, countries agreed to recognize the need for collective progress in transitioning away from fossil fuels, which are responsible for nearly 90% of global carbon dioxide emissions. Mongolia, where the energy sector predominantly relies on coal, contributing over 90% to electricity generation, cannot afford to stay behind in this global shift. The momentum is here and now.​

The Government of Mongolia’s target, as outlined in the State Policy on Energy 2015–2030, aims for a renewable energy share of 20% by 2023 and 30% by 2030 of its installed capacity. The country is also committed to reducing greenhouse gas emissions by 22.7% by 2030, while the energy sector accounts for 44.78% of the total as of 2020, according to Mongolia’s Second Biennial Update report.​

AGRICULTURE

Mongolia’s agricultural sector is a significant part of its economy, with vast grasslands supporting livestock farming. The country is one of the world’s leading producers of cashmere, and its agricultural products are vital for both domestic consumption and export.​

BANKING

Since 1991, Mongolia has operated a two-tier banking system. At its core is the Bank of Mongolia (Mongol Bank)—the country’s central bank—representing the first tier. Mongol Bank is responsible for managing Mongolia’s official foreign exchange reserves, ensuring overall financial stability, regulating monetary policy, and maintaining a secure and efficient payments system. It also oversees the circulation of physical currency within the country.

Compared to other sectors of the Mongolian economy, the financial sector is relatively well-developed, though highly concentrated. As of 2020, the banking sector accounts for over 93.3% of total financial assets, while other components—such as insurance, non-banking financial institutions, leasing firms, pension funds, and investment funds—remain underdeveloped.

The five largest commercial banks dominate the sector, holding approximately 93% of total banking assets. All major banks are rated by international credit rating agencies, which supports investor confidence and transparency.

In recent years, banking has emerged as a particularly attractive sector for foreign investment—second only to mining. It has drawn significant interest from investors in Japan, the United States, Canada, and other countries. Although many major Mongolian banks are partially funded by foreign capital, only a limited number of foreign banks currently maintain representative offices in Mongolia, including ING Bank, Bank of China, ICBC, Sumitomo Mitsui Banking Corporation (SMBC), and Bank of Tokyo-Mitsubishi.

CAPITAL MARKETS

Established in January 1991, the Mongolian Stock Exchange (MSE) is the only stock exchange in the country. Approximately 178 companies are currently listed on the MSE.

There are no restrictions on foreign ownership of shares, with the exception of certain sensitive sectors such as uranium, where approval is required from the Nuclear Energy Agency.

Mongolia’s capital markets have seen rapid growth in recent years. In 2021, the market value surged by 95%, increasing from MNT 3.0 billion to MNT 5.9 billion. Capital raised on the primary market also rose sharply, reaching MNT 842 billion, compared to MNT 15 billion in 2020. This surge was driven largely by private companies seeking alternative financing options—particularly bond issuance—amid tighter lending conditions in the banking sector and the requirement to pledge real estate as collateral.

The insurance sector is regulated under the Law on Insurance, with the Financial Regulatory Commission of Mongolia (FRC) overseeing licensing, regulation, and supervision. By law, companies registered in Mongolia may only purchase insurance coverage from insurers licensed by the FRC.

INSURANCE SECTOR

Mongolia’s insurance industry is still in its early stages of development, with low market penetration. However, recent years have seen strong growth. In 2021, the sector’s total assets grew by 11.3%.

The market currently includes:

  • 17 insurance companies (15 general, 1 life, and 1 reinsurance),
  • 57 insurance brokerage firms,
  • 25 loss adjusting firms,
  • 36 professional actuaries, and
  • Over 2,400 licensed insurance agents.

Due to the limited size and capital capacity of domestic insurers, high-risk and high-value insurance policies are typically reinsured through international firms.

Foreign insurance companies looking to establish a branch or representative office in Mongolia must meet a series of regulatory requirements, including but not limited to:

  • Registration in Mongolia,
  • A minimum of two years of operational history in their home country,
  • Recognition by an internationally accepted credit rating agency,
  • A minimum deposit of MNT 1 billion held in a Mongolian commercial bank.