Lower the pressure instead of closing business accounts! www.ubpost.mn

The old Mongolian proverb rings true across generations: “Busy hands bring wealth”. Unfortunately, for a growing number of business owners across the country, this wisdom has curdled into bitter irony. They toil, they strive, they put in the hours, and still find themselves sinking deeper into financial quicksand. At the heart of their plight lies a punishing cycle that has ensnared companies nationwide. When businesses fall behind on tax and social insurance obligations, government authorities respond by freezing their bank accounts and seizing their assets. Revenue continues to trickle in, but owners cannot touch a single tugrug. They watch helplessly as their operational lifeline runs dry, unable to pay wages, settle debts, or even chip away at the very obligations that triggered the freeze in the first place. It is, by any measure, a catch-22 of staggering proportions.

What follows the freeze is perhaps more troubling still. Businesses describe receiving calls from tax and social insurance officials who, rather than offering a path forward, engage in what amounts to backdoor bargaining. “When and how much will you pay?” the officials reportedly ask. “Give us a clear commitment, and we’ll unfreeze your account.” For entrepreneurs already stretched to breaking point, these conversations feel less like problem-solving and more like having a boot pressed firmly on their throat. Few stories illustrate this predicament more starkly than that of LKG Engineering, a construction firm that has weathered 16 years in one of the country’s most volatile industries. Today, it teeters on the edge of collapse. 

“We are staring down the barrel of bankruptcy,” confessed a company representative, speaking with a weariness that comes from fighting a losing battle. The numbers tell a grim tale: over 200 million MNT owed in social insurance contributions and another 310 million MNT in value-added tax arrears. LKG Engineering is no faceless corporation, it is a family affair, founded by brothers and staffed by relatives who once believed that honest work would see them through. That faith has been tested to its limits. The representative laid bare the arithmetic that has bled the company dry. Social insurance alone claims 24 percent of earnings, or 12.5 percent from the employer’s pocket, 11.5 percent withheld from workers. Layer on personal income tax and value-added tax, and a staggering 44 percent of every tugrug earned vanishes into government coffers before the company sees a cent of profit. “One in every four MNT we make goes straight to contributions. Add the rest, and nearly half our revenue disappears before we can reinvest a single coin,” the representative noted. 

The crushing tax burden might have been manageable in better times. But Mongolia’s construction sector has seen better times come and go. A speculative bubble inflated property prices beyond what ordinary buyers could stomach, and now the market has gone cold. Across Ulaanbaatar, apartment blocks stand half-empty, monuments to overconfidence and miscalculation. With sales drying up, cash flow has become a trickle. Subcontractors wait months for payment. Workers’ wages arrive late, if they arrive at all. When forced to choose between paying staff and paying the taxman, most owners opt to keep their people fed. The debt to the state compounds, interest accrues, and eventually the dreaded freeze arrives.

Moreover, in Bayangol District, small business owners are feeling the pinch of rising costs and heavy tax burdens. For many, staying afloat has become a daily struggle. In particular, D.Otgonbayar, who runs a landscaping and service company, employs about 50 to 60 seasonal workers. He admits that while their daily pay ranges between 80,000 and 100,000 MNT, most are hired on a temporary or contract basis and remain unfamiliar with how to declare or pay taxes. “When we tell them to set aside 10,000 MNT from their daily wages for taxes, many get upset. They also refuse to pay social insurance at the minimum rate. To keep them from quitting, we’ve been paying full wages without deductions. Now we’re 98 million MNT in debt, and 65 million MNT of that is for social insurance, and our account has been frozen,” D.Otgonbayar explained. He accepts part of the blame for this debt, saying the root of the problem lies in the system itself. “Both employers and employees shy away from paying because the tax rates are simply too high. People don’t see any benefit from their contributions. Many feel the government services are poor and the quality of life gets worse every day while the gap between rich and poor keeps widening,” he said. 

J.Tuvshin, who manages a small furniture factory in the same district, also tells a similar story. “We’re neck-deep in debt to the tax office, the social insurance fund, and even non-bank lenders. It’s barely manageable,” he said. His company employs 10 people, each earning about 3 million MNT a month. “Our monthly payroll comes to 30 million MNT, but over 10 million MNT of that goes straight to taxes and social insurance. When we don’t have enough cash flow, we end up postponing tax payments just to cover salaries. Skyrocketing prices for raw materials and transportation have further eaten into profits. Taxes are calculated on sales, not net profit, which makes things even harder. On top of that, we still have to pay VAT. To stay competitive, we tried offering customers the option to buy furniture with or without VAT. The tax authorities ordered us to include VAT in all sales and warned of penalties for any violations. At this point, running a small or medium-sized enterprise in Mongolia feels impossible,” J.Tuvshin shared. 

‘Account closure may be required again under the law’  

Across the country, small and medium-sized enterprises remain the lifeblood of the economy but for many, surviving under mounting tax debts and frozen accounts has become a daunting challenge. Ask any small business owner in the service sector, and their story is likely to echo the same refrain, such as unpaid taxes, overdue social insurance contributions and bank accounts locked by the authorities. The question that now hangs in the air is how to break this vicious cycle, how to ensure that businesses can meet their obligations while continuing to operate without being suffocated by debt.

An official from the Mongolian Tax Authority’s Public Relations Center explained that tax inspectors are legally empowered to freeze a company’s accounts, seize assets and demand settlement of outstanding taxes. “If the debts and payments are cleared, those measures are lifted. However, following an order from the Prime Minister earlier this month, the accounts of 12,153 enterprises were unfrozen for a period of one to two months to allow them to pay off their debts. These companies owed a collective 3.7 trillion MNT. Between April 7 and 21, 1,578 of them have already paid 43.6 billion MNT in tax. If they fail to meet their obligations within the given period, their accounts will be closed again. That’s the law,” the official said. 

According to official data, Mongolia has around 265,000 registered enterprises, but only about 117,000 are currently active, or roughly 40 percent. By the end of 2025, some 16,000 companies had their accounts sealed due to unpaid taxes. On April 7, under the Prime Minister’s directive, bank accounts of more than 12,000 tax-indebted firms and an additional 6,000 with overdue social insurance payments were reopened temporarily. Collectively, they owe about 3.7 trillion MNT to the tax authority and several trillion more to the social insurance fund. In short, only one in two registered businesses is still operating, and nearly one in 10 remains trapped in debt. The Government’s recent measure to reopen these accounts has offered a brief window of relief and a chance for recovery, which is part of a broader effort under the “Liberate” initiative to ease bureaucratic hurdles and support struggling enterprises. Whether this breathing space will be enough to bring lasting stability to the small business sector remains to be seen. For now, owners can only hope that this reprieve marks the first step toward genuine economic revival rather than just a temporary pause before the next wave of hardship.

No tax amnesty 

For many small and medium-sized businesses, the weight of taxes has become unbearable. Owners across industries say they are being brought to their knees by rising VAT and mineral resource taxes. Few companies, they claim, can pay their dues in full without slipping into debt. In principle, everyone who earns income from companies and organizations to individual citizens is required to pay taxes. However, the growing mountain of unpaid dues reflects a broader failure to keep pace with economic reality.

According to A.Munkhzaya, a consultant at the financial and tax advisory firm Bodit Credit, “While wages and pensions have gone up and sales have increased, real profits have not. Inflation, a volatile exchange rate, and import dependence have eroded earnings. Unless tax amounts and thresholds are adjusted to reflect net profits, businesses won’t grow. A company that made 5 billion MNT five years ago might now record 7 to 8 billion MNT simply because of exchange-rate differences, but its actual profit hasn’t changed, and it’s taxed all the same,” she said. 

She added that inconsistencies in how VAT is applied and exemptions are granted create even more obstacles. As long as the tax environment and rates remain as they are, no amount of “preferential loans” will truly support business growth, A.Munkhzaya informed.

Economist and financial analyst Ch.Batsuuri offers a more nuanced view. He argues that rising tax and social insurance debts do not necessarily mean businesses are losing money or being crushed by taxation. “Our tax rates are not higher than the global average. But monitoring and transparency have improved, reducing the scope for hiding income and creating the perception that debt is growing. In many cases, the issue isn’t excessive taxation but tighter enforcement and clearer oversight,” he explained.

To provide relief, the Government is considering raising the threshold for small and medium-sized enterprises eligible for the 90 percent tax refund from 1.5 billion to 2.5 billion MNT, and expanding the simplified one percent VAT regime to cover businesses with annual revenue up to 400 million MNT. Plans to implement these reforms next year are included in the latest tax package proposals.

Still, most experts agree that closing bank accounts should be a measure of last resort. “Businesses won’t solve their problems simply by reopening accounts or declaring amnesty. Success depends on managing finances wisely and enforcing fair, balanced tax policies,” A.Munkhzaya warned. 

Officials at the Ministry of Finance share a similar concern. A representative emphasized that while most taxpayers meet their obligations, blanket amnesty could encourage negligence and undermine trust in the system. The official noted that previous amnesty measures had even contributed to Mongolia’s inclusion on the Financial Action Task Force’s “Gray List,” as they risked legitimizing untraceable or illicit funds. Given that risk, the Government is steering away from one-off pardons and instead focusing on structural changes to ensure fairer taxation, lower burdens, and a healthier relationship between the state and the business community. The upcoming reforms may well mark the first real step toward that goal.

Bank of Mongolia to support commercial banks securing long-term foreign funding www.gogo.mn

On April 28, G.Enkhtaivan, Deputy Governor of the Bank of Mongolia (BoM), addressed a press conference to outline new measures aimed at supporting commercial banks that successfully attract long-term external resources.

During the briefing, G.Enkhtaivan noted that foreign funding within the banking sector has been increasing, though these resources were previously excluded from mandatory reserve calculations. Following a recent decision by the Monetary Policy Committee, the central bank will now actively support banks in securing long-term foreign funding. This policy is intended to alleviate potential pressure on the tugrik exchange rate and the balance of payments, both of which remain vulnerable to volatility in international markets.

The move comes amid heightened global uncertainty, with Enkhtaivan citing Middle East instability and Brent crude oil prices hitting $110 per barrel this morning. Currently, foreign assets make up 25 percent of commercial bank resources, and the BoM aims to stabilize these holdings to ensure systemic financial health over the coming years.

To support this initiative, the central bank will facilitate currency swaps and assist in converting foreign resources with maturities exceeding 360 days into tugriks.

UNDP, GEF, and Government of Mongolia Launch Green and Inclusive Cities Initiative to Transform Urban Development www.undp.org

 The United Nations Development Programme (UNDP), in partnership with the Ministry of Environment and Climate Change of Mongolia and with funding from the Global Environment Facility (GEF), has launched the “Green and Inclusive Cities in Mongolia” project to advance climate-resilient, low-carbon, and nature-positive urban development in Ulaanbaatar, Darkhan, and Erdenet.

The five-year initiative will support the targeted cities to embed climate action, biodiversity conservation, and social inclusion into urban development plans, spatial and land-use planning, and municipal budgeting processes. Reforms will focus on strengthening urban governance, enhancing municipal financial management, and expanding access to innovative financing instruments, such as blended finance, public-private partnerships, and green municipal bonds.

“The Government of Mongolia is committed to steering urban development toward a greener, more inclusive, and climate-resilient pathway,” said the H.E. Mr. Sandag-Ochir Tsend, Minister of Environment and Climate Change of Mongolia. “In line with this commitment, the draft Law on Climate change will be submitted for discussion at the Government meeting tomorrow. At the same time, the launch of the “Green and Inclusive Cities in Mongolia” project is expected to make a significant contribution to ensuring the implementation of the Law on Climate Change once it is adopted. The project aims to integrate climate change and biodiversity considerations into urban planning and investment while strengthening coordination at the national and local levels. This approach is fully aligned with Mongolia’s priority policies on climate change mitigation and adaptation.”

The project is part of the GEF-8 Global Sustainable Cities Integrated Program, implemented by the Ministry of Environment and Climate Change with UNDP providing technical support. The project will support low‑carbon heating, clean transportation, flood protection, and large‑scale ecological restoration of nearly 40,000 hectares of degraded land. Through innovation, digital solutions, and active public engagement, the initiative fosters inclusive, gender‑responsive growth and long‑term urban resilience.

Ms. Matilda Dimovska, UNDP Resident Representative in Mongolia, emphasized that “At its core, this project is about transforming how cities plan, finance, and deliver development. By combining policy reform, innovative financing, and targeted investments, it supports cities to become more resilient, livable, and inclusive while contributing to global climate and biodiversity goals.”

By embedding sustainability within core urban governance and investment systems, the project will generate transferable models and practical knowledge for cold-climate, rapidly urbanizing countries.

About GEF

The Global Environment Facility (GEF) is the world’s largest multilateral fund for the environment. Its family of funds work together to address the planet's most pressing challenges in an integrated way. Its financing helps developing countries address complex challenges and work towards meeting international environmental goals.

About UNDP

The United Nations Development Programme (UNDP) is the leading United Nations organization working to end poverty, reduce inequalities, and build resilience to crises and shocks. Operating in more than 170 countries and territories, UNDP partners with governments, civil society, and the private sector to help countries develop integrated, lasting solutions for people and planet.

Jade Gas Holdings Secures Key Approval for Mongolian Gas Production Licence www.smallcaps.com.au

Jade Gas Holdings (ASX: JGH) has cleared a major regulatory hurdle for its Mongolian gas project, taking a key step towards booking reserves and applying for a production licence.

Mongolia's regulator, MRPAM, has approved Jade's TTCBM Project Appraisal Report, marking the formal completion of the project's appraisal phase.

This approval is a prerequisite for formally booking reserves and registering them with the Mongolian Minerals Council (MRC).

The approved report covers a 4.2km2 area, with the economic analysis based on one out of the three to six known gassy coal seams in the project area.

Pathway to Production Licence Unlocked
Following MRC registration, Jade will submit its Plan for Development of Operations (PDO) that outlines a Phase 1 drilling campaign of up to 175 wells.

Broader field development contemplates approximately 800 wells and a potential project life exceeding 30 years.

Upon PDO approval, Jade will apply for its exploitation licence, enabling the transition towards commercial gas production at scale.

The company continues to engage in positive commercial discussions with domestic and international partners, energy buyers, and infrastructure providers.

Environmental and social impact assessments that form part of the regulatory submissions required for the exploitation licence process are ongoing.

Recent Funding and Operational Progress
Jade recently completed an A$1.8 million placement in March 2026 at A$0.03 per share to support commercial and strategic activities for the Red Lake gas field.

The company's 2025 Annual Report detailed the successful drilling of Mongolia's first horizontal CBM wells.

Continuous gas production commenced in June and August 2025 from two wells at the South Gobi Red Lake Project.

Commercial progress in 2025 also included a conditional LNG Gas Sale Agreement with UB Metan.

Furthermore, a non-binding Letter of Intent (LOI) was signed with Langrun for infrastructure financing.

Outlook and Risks
Jade Gas has achieved a significant regulatory milestone, clearing the path for reserve booking and a production licence application.

While this de-risks the project's progression, the company still faces substantial execution, funding, and regulatory risks as it aims to scale up development and achieve commercial gas production.

Investors will be monitoring the progression of regulatory approvals for an exploitation licence, the achievement of maiden gas reserve booking, and the company's strategy for ongoing funding to meet operational and development expenditure.

Market Entering Short-term Stable Growth www.montsame.mn

MONTSAME National News Agency, in cooperation with “MICC Securities” LLC (MICC Mongolia International Capital Corporation), is providing readers with a weekly overview of Mongolia’s domestic capital market and economic developments.

Weekly Capital Market and Economic Overview

(2026.04.20–2026.04.26)

MONGOLIAN STOCK EXCHANGE

During the week, a total of 13.25 million securities worth MNT 6.37 billion were traded on the Mongolian Stock Exchange. Khan Bank JSC, Golomt Bank JSC, Ard Credit NBFI JSC, XacBank, and APU JSC led trading by value.

During this period, two block trades were executed, specifically:

610,000 shares of Golomt Bank JSC (GLMT) at MNT 1,240 per share, totaling MNT 756.4 million;
6.67 million shares of Ard Credit NBFI JSC (ADB) at MNT 122 per share, totaling MNT 812.93 million.

Last week, the Mongolian Stock Exchange indices closed higher, maintaining a positive market sentiment. The TOP-20 Index rose by 1.41%, the MSE A Index by 1.53%, and the MSE B Index by 0.16%.

This growth continued the recovery trend observed in the previous week, indicating sustained buying activity in the market. In particular, the increase in the MSE A Index reflects relatively strong performance among large- and mid-cap stocks. Meanwhile, the modest rise in the MSE B Index suggests continued stability and limited movement in the small-cap segment.

Overall, the market appears to be entering a short-term phase of stable growth, with previous seasonal and technical factors (such as ex-dividend effects and seasonal volatility) gradually subsiding.

FUEL PRICES, GEOPOLITICS, AND THE CAPITAL MARKET: EXTERNAL PRESSURES ON MONGOLIA’S ECONOMY

At the regular Cabinet meeting held on April 22, 2026, Prime Minister N. Uchral presented an update on the economic situation. Rising global oil prices—driven by geopolitical tensions in the Middle East—are affecting the domestic fuel market.

Specifically, there are conditions for increases in domestic fuel prices:

Regular diesel rising by MNT 2,200 to MNT 5,200;
Euro-5 diesel to MNT 5,300;
AI-95 gasoline to MNT 4,100.
 
The government is monitoring the situation and has submitted a draft law to Parliament seeking authority to set import customs duty rates. However, on April 23, the government stated that fuel prices would not increase sharply.

Fuel risk: Rising diesel and AI-95 prices may increase production costs in transport, mining, and agriculture.

Legal measures: The government submitted an urgent bill to gain flexibility in setting customs duties.

MSE outlook: After reaching historic highs earlier in 2026, benchmark indices may continue to decline.

Inflation pressure: Inflation is projected to remain around 7.0% in 2026 due to rising fuel and energy prices.

Fluctuations in global oil prices create additional inflationary pressure for a country that relies entirely on fuel imports. While flexible customs tariff policies may help contain short-term price spikes, they could place pressure on fiscal revenues in the medium term.

For the Mongolian Stock Exchange, rising costs in fuel, transport, and food sectors may be reflected in second-quarter earnings reports, potentially deepening stock price declines.

INDUSTRIAL OUTPUT GREW BY 61% IN Q1 2026, DRIVEN BY MINING

According to preliminary Q1 2026 data from the National Statistics Office, total industrial output reached MNT 16.4 trillion, increasing by MNT 6.2 trillion, or 61.2%, year-on-year. This marks significant growth compared to MNT 8.7 trillion in 2023, MNT 11.7 trillion in 2024, and MNT 10.2 trillion in 2025.

The main driver of this growth was the mining and extractive sector. Output in this sector reached MNT 13.6 trillion, growing by 74.2%. This was largely driven by:

Metal ore extraction, which increased 2.3 times (MNT 4.8 trillion);
Coal production, which rose by 28.0% (MNT 1.0 trillion).
 
Total sales also reached MNT 18.8 trillion, up 75.3%, with metal ore extraction accounting for 62.9% of exports.

Key indicators:

About 94% of total growth came from the mining sector, indicating continued risks to economic diversification.
Copper concentrate (metal content) increased by 36.4% to 611 thousand tons.
Coal output rose by 68.7% to 25.7 million tons, reinforcing its role as a key export commodity.
Cement production increased by 96.7% to 171 thousand tons, reflecting rising demand in construction and infrastructure.
The food and beverage sector weakened: beverages declined by 18.2% and meat production by 62.3%.
The industrial production volume index reached 214.0 (2015=100) in March 2026, down 14.1% year-on-year.
 
While overall output growth is strong, it is largely driven by mining. The decline in the physical volume index suggests that nominal price effects are outweighing real production growth. Investors should therefore carefully distinguish inflation effects in market valuations.

EXPORT OF PLANT-BASED PRODUCTS GROWS, BUT MARKET CONCENTRATION REMAINS HIGH

Over the past year, Mongolia’s exports of plant-based products reached 183.5 thousand tons, maintaining a steady upward trend. However, 86% of total exports were directed to China, indicating continued high market concentration. In terms of export structure, 75% consists of cultivated crops; 24% processed products; 1% timber materials.

Key export products include rapeseed, feed bran, and hay:

Rapeseed: 100.8 thousand tons
Bran: 27.9 thousand tons
Hay: 23.7 thousand tons
Potatoes: 10.8 thousand tons

Smaller volumes of sea buckthorn, carrot juice, and pine nuts were also exported.

The growth in exports has stimulated activity in the agricultural sector, supporting crop diversification, improved soil fertility, and higher yields. However, the high concentration in a single export market continues to pose risks.

Overall, while plant-based exports are supporting agricultural performance, further progress in market diversification and value-added production remains crucial.

Bear Attacks Livestock, Destroys Beehive in Selenge www.montsame.mn

On the 26th of this month, a bear attacked a household’s cow and destroyed a beehive in Gangat, the 2nd bagh of Tsagaannuur soum, Selenge aimag.

Local residents report that incidents of bears approaching settlements after emerging from hibernation in spring and causing damage to livestock are increasing, creating a real risk for herders.

Similar cases have also been recorded in Selenge aimag in previous years. In Yeruu soum, a bear killed a herder’s cow in 2025, while earlier in 2026 two cattle were reportedly eaten within a short period in the same area. In Sant soum, bears had also entered livestock enclosures in past years and attacked sheep and goats.

Officials warned that bears become more active in spring as they search for food, urging residents living in forest and steppe areas to remain vigilant.

Relevant authorities advised herders to keep livestock under close supervision, strengthen nighttime protection measures, and urged beekeepers to take additional steps to secure their hives.

Mongolia has submitted a bid to host the 2038 Asian Games, competing with South Korea and India www.open.kg

The race to host these games also includes South Korea and India. The final decision on where the Asian Games will take place is expected to be made by the Olympic Council of Asia (OCA) around 2028.

Mongolia has confirmed its intentions regarding hosting the 2038 Asian Games, and this proposal was discussed at a recent meeting of the OCA Executive Board held in Sanya.

However, Mongolia is not the only country interested in hosting the 2038 Asian Games. South Korea has already submitted a joint proposal from the cities of Gwangju and Daegu, while India is also considered one of the potential candidates.

The Asian Olympic Council is expected to finalize the host city for the games around 2028. By that time, the dates for the upcoming Games will already be known: Aichi-Nagoya will host them in 2026, Doha in 2034, and Riyadh in 2030.

Of these three countries, only South Korea and India have experience in hosting the Asian Games. Mongolia, in turn, is making its first attempt to organize this large-scale event.

India last hosted the Asian Games in 1982 in New Delhi, while South Korea held them in Incheon in 2014. Since then, the format and scale of the events have changed significantly, attracting thousands of athletes from across Asia.

What Can We, Mongolians, Learn from the Country That Produces 40% of the World's Uranium? www.open.kg

Kazakhstan holds a leading position in global uranium production, accounting for about 40% of this resource. Uranium, used in nuclear power plants, plays a key role in ensuring nuclear energy, making it strategically important for countries like France, China, and the USA, which depend on imports of this fuel for electricity generation.

Kazakhstan's economic position is bolstered by its status as the most developed country in Central Asia, where it ranks 50-55 in the International Monetary Fund's GDP rankings. In the context of energy independence, Kazakhstan plans to increase the share of nuclear energy to 5% by 2035, which is part of a strategy supported by 70% of votes in the 2024 referendum.

Despite significant uranium reserves, Kazakhstan continues to import 20% of its energy resources, especially during peak hours and in the western regions, where electricity is supplied from Russia. The country has long sought complete energy independence, but only now is the construction of new power plants beginning.

The utilization of uranium reserves could significantly reduce dependence on external supplies, but this requires a comprehensive approach. Last year, Kazakhstan signed a long-awaited agreement with the French company Orano Mining, covering the Zöevch-Ovoo and Dulaaan-Uul deposits, which should improve the economic situation in the country.
The project is expected to create over 1,600 jobs and generate about 1 billion dollars in tax revenues in the long term. The country's political course has already been confirmed in the direction of developing nuclear energy, as reflected in the memorandum of understanding signed during the state visit of the President of Mongolia to Kazakhstan.
The Minister of Industry and Mineral Resources of Kazakhstan announced plans for joint training of specialists and studying the investment climate, using Kazakhstan's experience in nuclear energy and safety standards.

Experts Highly Evaluate Economic Cooperation Between Mongolia, China, and Russia at the Transbaikal Forum www.open.kg

During the forum, Shurenchimeg Tsogtbayar, the General Director of the Great Tea Road Development Fund of Mongolia, emphasized the historical significance of the Silk and Tea Roads, which connected Asia with Europe and turned this region into a major transport, cultural, and historical hub of Eurasia. “Our ancestors worked together to develop these routes and strengthen cooperation,” she added.

According to Professor Xu Dehun from Xi'an International University, it is crucial for landlocked regions to develop land and air transport corridors to stimulate economic growth.

Xu also noted that the Trans-Baikal region has significant mineral resources, forest resources, and diverse agricultural products, and the presence of the Chita railway station and major transport hubs creates excellent conditions for establishing an international inland port.

The Governor of the Trans-Baikal region, Alexander Osipov, stated: “We have wonderful opportunities to form sustainable international transport corridors that are important not only for China, Russia, and Mongolia but for all of Eurasia.”

Bulat Amagabazarov, the director of the tourism company "Silver Ring," added that the residents of Trans-Baikal view trips to the Chinese villages of Manzhouli and Hailar as ordinary visits to neighboring settlements for quality goods, while actively working to attract tourists from China.

Mongolia is Redefining Steppe Diplomacy with Kazakhstan www.montsame.mn

President of Mongolia Khurelsukh Ukhnaa’s recent visit to Kazakhstan forges a new model of Eurasian middle power resilience. 

From April 20 to 23, Mongolian President Khurelsukh Ukhnaa completed the first state visit to Kazakhstan by a Mongolian head of state in two decades. Hosted by Kazakh President Kassym-Jomart Tokayev, Khurelsukh’s visit marked the culmination of 18 months of accelerated engagement, which began with Tokayev’s 2024 trip to Ulaanbaatar. That 2024 summit was when the two nations elevated ties to a formal strategic partnership – making Kazakhstan Mongolia’s first and only strategic partner in Central Asia. 

While official rhetoric framed Khurelsukh’s visit as a celebration of “shared nomadic heritage and millennial brotherhood,” its substance tells a pragmatic, strategically urgent story: two landlocked, resource-rich states sandwiched between Russia and China are using high-level engagement to reduce structural economic dependence, exchange lessons in geopolitical resilience, and carve out greater strategic autonomy amid intensifying great-power rivalry. Kazakhstan and Mongolia are redefining middle-power cooperation in Eurasia’s polarized landscape.

The Calculated Drivers of Reciprocal High-Level Engagement

The flurry of bilateral exchanges since late 2024 reflects three overlapping, strategically urgent priorities, amplified by shifting Eurasian geopolitics.

First, Mongolia and Kazakhstan aim to translate 34 years of diplomatic goodwill into tangible economic results, addressing a shared vulnerability: overreliance on their two giant neighbors for trade and transit. Official data from Kazakhstan’s Ministry of National

Economy shows bilateral trade with Mongolia reached $133 million in 2025, up 7.7 percent year-on-year – but still a fraction of the two nations’ combined economic capacity. During the recent state visit, both sides reaffirmed an ambitious target to lift bilateral turnover to $500 million, anchored by a temporary free trade agreement ratified in 2025 between Mongolia and the Eurasian Economic Union (EAEU), which offers tariff preferences for 367 Mongolian export lines (97.5 percent agricultural and livestock goods), and the 2025–2027 Trade and Economic Cooperation Roadmap.

During Khurelsukh’s Kazakhstan visit, delegations exchanged 13 intergovernmental agreements spanning foreign policy, trade, energy, nuclear energy, central banking, finance, and media collaboration, while the concurrent Kazakhstan-Mongolia Business Forum drew 250 representatives, yielding 19 binding commercial deals worth over $20 million.

Landmark agreements include a memorandum between Kazakhstan’s Samruk-Kazyna sovereign wealth fund and Mongolia’s Erdenes Mongol state mining holding on critical mineral exploration and value-added processing; a long-term deal for Kazakhstan to meet 100 percent of Mongolia’s wheat import demand; and a commitment for stable Kazakh gasoline and diesel supplies to Mongolia. 

Kazakhstan’s advances in agricultural processing, food security, and livestock biosecurity directly address Mongolia’s chronic inability to add value to its 70-million-head livestock herd – the world’s largest per capita. During a joint press briefing, Tokayev formalized plans to establish joint vaccine production facilities in Mongolia and deepen collaboration on modern agrotechnology, alongside aligning livestock product standards with international safety norms. The two sides also advanced two-way processing ties. Building on a wool and leather agreement, Mongolian investors are targeting the Kazakh livestock sectors, leveraging Mongolia’s established expertise in these industries.

For Kazakhstan, the partnership opens a low-risk gateway to Northeast Asia; for Mongolia, it offers a rare pathway to reduce extreme dependence on China, which absorbs over 90 percent of its exports, and Russia, which supplies 90 percent of its refined energy. And the benefits extend beyond Kazakhstan itself: Khurelsukh also met Armenian President Vahagn Khachaturyan, who was visiting Kazakhstan to attend the Regional Ecological Summit 2026 (RES 2026), to discuss expanding Mongolian agricultural exports to the South Caucasus via the Mongolia-EAEU agreement.

Second, the bilateral exchanges advance both nations’ signature foreign policy doctrines: Mongolia’s “Third Neighbor” policy and Kazakhstan’s multi-vector diplomacy. For Mongolia, deepening ties with Kazakhstan operationalizes the Third Neighbor framework in its western neighborhood, framing a fellow Eurasian steppe nation as a reliable partner beyond its two giant neighbors. Mongolia is also increasing its engagement with the Organization of Turkic States (OTS), in which Kazakhstan is a founding member. For Kazakhstan, which recalibrated its foreign policy to reduce overreliance on Russia in the wake of the January 2022 unrest and then Russia’s February 2022 full-scale invasion of Ukraine, engagement with Mongolia burnishes its credentials as a neutral regional bridge-builder between Central and Northeast Asia.

Neither country seeks to align against Russia or China; instead, the partnership offers a way to diversify options without crossing geopolitical red lines. As Zolboo Dashnyam, director of the Institute of International Studies at the Mongolian Academy of Sciences, noted, both Kazakhstan and Mongolia are working to “pursue pragmatic cooperation without provoking the sensitivities of their larger neighbors.”

Finally, these visits serve domestic political legitimacy and legacy-building goals for both presidents. For Khurelsukh, the trip marks the completion of his historic campaign to conduct state visits to all five Central Asian republics during his tenure, cementing his legacy as the architect of Mongolia’s westward strategic pivot ahead of the 2027 presidential election. It also reinforces his domestic “Ethics Revolution” agenda, framing his foreign policy as a tool to deliver economic opportunity and reduce corruption-driven dependence on extractive exports to China.

For Tokayev, the recent state visits come just weeks after a national referendum that adopted a sweeping new constitution, the centerpiece of his “New Kazakhstan” reform agenda. Hosting Khurelsukh reinforces his narrative of a Kazakhstan that is open, influential, and committed to inclusive regional leadership, while providing a high-profile diplomatic win to consolidate domestic support for his reform agenda. 

Two-Way Learning

The most understudied, consequential dimension of the deepening Kazakhstan-Mongolia relationship is the structured exchange of governance and development lessons, rooted in complementary strengths and shared vulnerabilities. Both nations rank among the world’s leaders in per capita land availability, while facing identical threats from climate change, desertification, and great-power economic coercion.

For Ulaanbaatar, Kazakhstan offers field-tested models to address its structural weaknesses. Kazakhstan’s decades-long experience building a foreign direct investment (FDI) ecosystem, which has attracted $151.3 billion in inward FDI stock – nearly 70 percent of total FDI in Central Asia – holds lessons for Mongolia. Kazakhstan’s success rests on a unified legal framework, a centralized “one-stop shop” for investors, and 17 Special Economic Zones with targeted incentives, offering a replicable blueprint for Mongolia to attract diversified capital beyond its mining sector.

Furthermore, Kazakhstan’s expertise in turning geographic isolation into an asset via the Trans-Caspian International Transport Route (the Middle Corridor) provides a blueprint for Mongolia’s transit ambitions. As a fellow landlocked state, Kazakhstan has leveraged its position between Europe and Asia to become a critical transit hub, exactly what Mongolia hopes to achieve by linking to Central Asia via Kazakhstan. During the summit, the two sides agreed to form a joint working group to advance a cross-border highway, resume direct Astana-Ulaanbaatar air service, and launch a new Oskemen-Bayan-Ulgii route, addressing the greatest barrier to bilateral trade: the lack of a shared border, which forces all overland goods to transit Russian territory.

In addition, Kazakhstan’s advances in digital governance and aerospace innovation align with Mongolia’s modernization ambitions. With 2026 designated Kazakhstan’s Year of Artificial Intelligence, the country has built a mature tech ecosystem anchored by the Astana Hub technopark, and previously exported its first domestically engineered Earth remote sensing satellite to Mongolia in 2024. Kazakh officials have also shared lessons from its eGov system, which provides online access to more than 90 percent of government services, a model Mongolia is eager to adapt for its e-Mongolia platform, which already covers 85 percent of the adult population.

For Astana, Mongolia provides equally valuable lessons aligned with its reform agenda. 

Mongolia’s 30 years of implementing the Third Neighbor policy offer a proven playbook for balancing relations with Russia and China while cultivating diversified global partnerships. Kazakhstan’s post-2022 multi-vector diplomacy mirrors Mongolia’s long-standing approach: maintaining pragmatic ties with its giant neighbors while avoiding over-dependence, and using neutral status to attract investment and influence. As Mendee Jargalsaikhan, director of the Institute for Strategic Studies of Mongolia, emphasized, Mongolia’s constitutionally enshrined neutrality has allowed it to navigate repeated great-power shocks without sacrificing sovereignty – a lesson Kazakhstan has embraced amid post-Ukraine war geopolitics.

Meanwhile, Mongolia’s global leadership on sustainable rangeland management and dryland restoration offers a blueprint for Kazakhstan’s climate goals. As the driving force behind the United Nations’ designation of 2026 as the International Year of Rangelands and Pastoralists, and host of the 2026 UNCCD COP17 desertification summit in August, Mongolia has developed globally recognized expertise in community-based pastoral management. During Khurelsukh’s visit, the two nations agreed to synchronize Mongolia’s “Billions of Trees” campaign with Kazakhstan’s “Two Billion Trees” initiative – a partnership now formally included in the RES 2026 regional project portfolio as a flagship cross-Altai ecological program.

At RES 2026, which convened 1,500 delegates from more than 15 countries from April 22-24, Khurelsukh unveiled three core Mongolian initiatives for regional cooperation: integrated water resource management, sustainable pasture governance, and nature-based solutions. He also formally invited all participating nations to attend UNCCD COP17 in Ulaanbaatar, positioning Mongolia as a global leader in dryland restoration.

Mongolia’s inclusive governance of its 120,000-strong ethnic Kazakh minority in Bayan-Ölgii aimag offers a model for cross-border ethnic cohesion, with Tokayev explicitly thanking Mongolia for its support in opening a Kazakh consulate in the province.

Finally, Mongolia’s track record of democratic consolidation – the country is rated “free” with a score of 84 out of 100 in Freedom House’s 2026 report, compared to Kazakhstan’s 23 score and “not free” rating – offers a low-pressure reference point for Kazakhstan.

Strategic Significance and Inescapable Structural Limits

The summit’s significance extends far beyond bilateral ties. Regionally, the partnership creates a critical bridge between Central and Northeast Asia, with Tokayev’s proposed “Trans-Altai Dialogue” platform seeking to scale this model into a regional cooperation framework for the four Altai Mountain nations. The two presidents also discussed Mongolia’s potential inclusion in future C5+1 dialogues, formalizing its place in a regional architecture from which it has historically been excluded. 

There are, however, significant structural constraints to the expanding partnership. The most intractable barrier is geography. The lack of a shared border means every shipment must transit Russian or Chinese territory, exposing bilateral trade to external vetoes and cost inflation. While the planned highway promises to reduce transit times by 800 kilometers and cut logistics costs by 20 percent, it requires tripartite negotiations with Russia, with no clear timeline for completion.

Second, bilateral trade remains deeply imbalanced, with Kazakh exports accounting for over 90 percent of total turnover in 2025. Mongolia’s exports are dominated by low-value, unprocessed livestock products, while Kazakhstan sends value-added processed food, machinery, and industrial goods. This dynamic risks entrenching dependency rather than balanced interdependence. Reaching the $500 million trade target will require transformative investment in Mongolia’s processing capacity.

Third, domestic political uncertainty could disrupt long-term continuity. In Mongolia, Khurelsukh is bound by the 2019 constitutional amendments to a single non-renewable six-year term. With the 2027 presidential election already shaping up to be a divisive contest, his westward pivot could be deprioritized under a new administration. In Kazakhstan, while Tokayev’s position appears stable, the implementation of his new constitutional framework is in its early stages, with bureaucratic resistance potentially slowing cooperation. 

Finally, the partnership faces invisible geopolitical red lines. Any meaningful expansion requires the tacit approval of Russia and China, and neither nation can afford to alienate its giant neighbors. The partnership’s greatest strength – its non-aligned, neutral character – is also its greatest limitation, restricting cooperation to areas that do not challenge the regional status quo.

Conclusion

Khurelsukh’s historic state visit to Kazakhstan is more than a celebration of shared nomadic heritage. It marks the coming of age of a pragmatic partnership between two middle powers seeking to turn geographic vulnerability into strategic advantage amid great-power rivalry. The summit’s agreements, commercial deals, trade targets, and connectivity plans demonstrate that Kazakhstan and Mongolia have moved beyond symbolic rhetoric to tangible, results-driven cooperation. The two-way exchange of development lessons further cements the partnership as a rare model of peer-to-peer learning between Eurasian middle powers.

Yet the ultimate success of the partnership will not be measured by the number of documents signed, but by its ability to overcome structural barriers of geography, trade imbalance, and geopolitical constraints. For Mongolia, the test will be whether deeper ties with Kazakhstan deliver meaningful diversification away from its dependence on China and Russia, while strengthening its geopolitical resilience. For Kazakhstan, the test will be whether the partnership enhances its influence as a Eurasian bridge-builder, while advancing its domestic reform agenda.

In an era when great-power competition often crowds out regional initiative, the Astana-Ulaanbaatar axis offers a hopeful counternarrative.

By Sumiya Chuluunbaatar (International Relations and Economic Analyst)

(This article was published in The Diplomat on April 24, 2026,

under the title “Mongolia is Redefining Steppe Diplomacy with Kazakhstan”)

Editorial Note:

The views and opinions expressed in articles published under the “Guest Author” section of the website of the Mongolian National News Agency MONTSAME, which features works by researchers, analysts, and commentators from various fields, do not represent the official position of the Agency and reflect the analysis, conclusions, and perspectives of the respective author.