Law reform to improve conditions for investors in Mongolia

By Igor Bogdanich
Asia Capital Markets Government Infrastructure Resources

In brief

Last week, the Mongolian Government released the agenda for the upcoming autumn sitting of parliament. The release of the agenda, twice annually, is always of interest to investors, and the autumn 2014 agenda is no exception. Partner Igor Bogdanich and Associate Tess Fitzgerald look at what may be of interest to foreign investors.

New laws mooted

The draft parliamentary agenda heralds a raft of new laws aimed at improving conditions for business in Mongolia as part of the Government's continued effort to rebuild investor confidence in the resource-rich nation. Items slated for discussion include:

  • Draft Law Amending the Minerals Law;
  • Draft Law Approving the Mongolia and US Agreement on Transparency in Matters Related to International Trade and Investment;
  • Draft Law on Pledge of Moveable Property and Non-Tangible Assets (Draft Pledge Law);
  • Draft Law on State Registration of Legal Entities; and
  • Draft Resolution on Approving Policy Documents on the Long-term Development of Mongolia.

While investors in the mining sector will watch with particular interest the proposed amendments to the Minerals Law, other laws such as the Draft Pledge Law look to benefit investors more generally. Mongolia's parliament has previously considered a draft law on moveable property pledges in 2011, however, the law was not enacted. The 2011 draft law sought to enable registration of pledges over moveable property including shares. Assuming the Draft Pledge Law is constructed along similar lines, its enactment, along with the introduction of associated registration procedures, would be a significant milestone in Mongolia’s legal framework that should assist in facilitating the development of lending and financing activity.

Rail infrastructure

In addition, a draft parliamentary resolution is proposed to do with measures to implement the State Policy on Railway Transportation, reflecting the Government's recent attention to the nation's rail network. In August 2014, high-profile visits by Chinese President Xi Jinping and Russian President Vladimir Putin saw President Tsakhia Elberdorj enter into multiple Memoranda of Understanding and agreements for the development of Mongolia's rail network with the nation's two powerful neighbours. Further developments in the rail sector such as the proposed parliamentary resolution will be closely scrutinized given the importance of rail to resources companies operating in the land-locked country and the potential for substantial rail infrastructure projects to come on-line in the near future.

Tax reforms, trade and monetary policy are also scheduled for consideration.

Allens will keep you up to date on the content of the draft laws and their progress through the Mongolian Parliament as this information becomes available.

Allens is an international law firm which practices throughout the Asia Pacific region. It advises on international legal issues in Mongolia but does not provide Mongolian legal advice. Allens regularly works with Mongolian counsel where Mongolian legal advice is required.