The US Department of State has released the 2025 Mongolia Investment Climate Statement, providing a comprehensive overview of both the opportunities and challenges that American investors may face in the country’s business environment. The report portrays Mongolia as a frontier market with abundant natural resources and significant potential, but also warns that persistent legal, regulatory and governance challenges continue to pose serious risks for investors.
According to the statement, Mongolia remains attractive for sectors such as mining, agriculture, livestock and consumer goods. International franchises, particularly fast food and convenience retail chains, have exceeded expectations, while agriculture and livestock industries are seen as promising growth areas. The report stresses that Mongolia generally imposes few market-access barriers, giving investors broad entry into the market compared to many other emerging economies.
At the same time, the US government cautions that investors must navigate substantial obstacles. The statement identifies Mongolia’s vulnerability to external economic and financial shocks, weak dispute resolution systems, limited stakeholder engagement in rulemaking, and heightened risks of expropriation as key deterrents. It notes that while investor interest is strong, Mongolia often fails to convert that attention into actual long-term investment.
A central concern is the 2024 legislative package establishing sovereign wealth funds, which requires private companies holding mining assets designated as “strategic deposits” to transfer at least 34 percent of those assets to the state without compensation. Investors widely consider the law expropriatory, and experts warn it could impact as many as 16 projects, while Parliament retains the ability to classify additional deposits at any stage of development. Business groups fear this precedent may extend to other industries, undermining overall investor confidence.
The report also highlights systemic regulatory unpredictability. Businesses describe “substantial and unpredictable regulatory burdens at every level”, with ministries and agencies often contradicting their own laws and regulations. Investors cite long delays in both judicial rulings and enforcement, noting that even when courts issue favorable decisions, enforcement can take years, sometimes so long that counterparties disappear before judgments are carried out. The General Tax Authority is singled out as a chronic source of investor frustration, with complaints that officials issue excessive tax assessments to pressure settlements, in effect creating an indirect form of expropriation.
It says, “Although Mongolia has taken steps to improve transparency and business facilitation, such as signing the WTO’s Investment Facilitation for Development Agreement and reviving its ‘one-stop-shop’ Investment and Trade Agency, businesses argue that implementation remains inconsistent.” While the State Registration Office allows domestic investors to register companies digitally, foreign businesses still face paper-based processes and bureaucratic discretion that can delay registration for weeks or months. Closing a business is described as even more difficult, often taking 18 to 24 months.
Legal and judicial reforms, including revisions to the Law of Judiciary, have modestly strengthened independence, but investors claim courts still frequently delay or avoid controversial decisions and show bias in favor of domestic companies, particularly state-owned enterprises. To date, no foreign plaintiff has prevailed against a state-owned company in Mongolia’s courts. Foreign investors are advised to seek arbitration or non-judicial dispute resolution mechanisms when conflicts with SOEs arise.
The report also notes specific limits on foreign ownership. While foreign and domestic investors generally enjoy the same rights to establish and operate businesses, the Constitution and land laws prohibit foreign nationals and majority foreign-owned companies from owning land outright. Foreign investors may obtain land-use rights but cannot sell, transfer, or collateralize them, unlike Mongolian nationals or majority-Mongolian companies. Furthermore, foreign investors must invest a minimum of 100,000 USD in ventures where they hold 25 percent or more, a threshold not imposed on domestic investors.
Despite these constraints, the country continues to engage internationally. It maintains a bilateral investment treaty with the USA, has ratified the Asia-Pacific Trade Agreement, signed an interim deal with the Eurasian Economic Union in 2025, and is negotiating a free trade agreement with South Korea. The government has also attempted to align with international standards in mining, hydrocarbons and animal health, though businesses argue domestic regulatory practices remain inconsistent and opaque, the report mentions.
