Mongolia is a parliamentary democracy with a centralized state structure. The President serves as the head of state, while the Prime Minister, typically the leader of the majority party, heads the government. The country’s legislature, the Parliament of Mongolia, consists of 76 members elected by the public. Mongolia’s legal system is based on Romano-Germanic civil law, with the Supreme Court acting as the highest appellate body for civil, criminal, and administrative cases.
Economically, Mongolia is an emerging market, with significant growth driven by foreign investments in mining, construction, financial services, and other sectors. In the early 2010s, Mongolia saw GDP growth rates peak at 12.3% in 2012 and 11.7% in 2013, illustrating the rapid pace of development. The country also offers a stable tax regime, with some of the lowest tax rates globally, making it an attractive environment for businesses and investors. Mongolia’s participation in international organizations such as the World Trade Organization (WTO) and its adherence to various treaties reflect its commitment to integrating with the global economy.
Operating as a liberal market economy, Mongolia allows prices to be set by supply and demand, while the government regulates key sectors like energy and public transportation. The Mongolian Tugrik (MNT) is the local currency and has seen significant depreciation over the last decade. All domestic transactions are conducted in MNT, though cross-border transactions can occur in any currency, and there are no restrictions on repatriating funds.
The Central Bank of Mongolia (Mongolbank) governs banking, regulating monetary policy and commercial banks. Meanwhile, the Financial Regulatory Commission oversees other financial institutions and public companies. Ulaanbaatar, the capital, serves as the financial hub of the country.
Since 1990, foreign investment has been a key driver of Mongolia’s transition to a market economy. The Investment Act of 2013 encourages foreign direct investment (FDI) with tax stabilization agreements and allows investments across most sectors, though restrictions apply in mining, banking, and telecommunications. While FDI grew rapidly in the early 2010s, fluctuations due to global commodity prices and political factors have presented challenges. Risks to investors include political unpredictability, tax ambiguity, and previous legislative changes that briefly discouraged foreign investments.
(Cover Photo by Mathias Eik)
