As part of the Government’s economic reform agenda, the Investor Protection Center has been established under the Ministry of Economy and Development with the stated goal of strengthening the legal rights of both domestic and foreign investors and improving the overall investment environment. Foreign investment is often perceived by the public as meaning “the country has sold off its wealth”. Yet an even more pressing question is whether such a center can operate effectively in a country that has earned an international reputation for pursuing, pressuring, and in some cases even imprisoning investors. This concern is compounded by the fact that Mongolia has limited alternatives for attracting capital beyond the mining sector.
Over the past 30 years, Mongolia has received more than 50 billion USD in foreign direct investment, approximately 80 percent of which has gone into mining. This heavy concentration raises doubts about whether the country has successfully diversified its economy, invested sufficiently in broader infrastructure, built cooperative relationships with investors, or created a stable and predictable legal environment outside of the extractive industries.
Speaking at the opening of the center, Deputy Prime Minister and Minister of Economy and Development J.Enkhbayar emphasized the critical role of investors in national development. “Issues such as accelerating and expanding the country’s economy, increasing exports and employment, and expanding production are directly linked to investors,” he said. Acknowledging current challenges, he noted that “the investment situation today is not favorable,” and added that the Government has reviewed past relationships with foreign investors as well as the legal and regulatory framework. According to the Minister, major legal reforms are now being prepared to create a more investor-friendly environment, with strong support from the private sector. As part of this effort, amendments to the Law on Investment (2013) and discussions on the draft Law on Trade are planned for the upcoming spring session of Parliament.
In practical terms, the Investor Protection Center aims to function as a single-point service platform for investors. Its mandate includes providing legal and regulatory information, facilitating the exchange of new data and best practices, organizing training programs and seminars, enhancing transparency, and offering support for submitting and resolving complaints and proposals, ideally before disputes escalate to the courts. Whether the center will succeed in restoring investor confidence remains to be seen. Its effectiveness will depend not only on institutional design, but also on consistent political will, legal certainty, and a genuine shift in how Mongolia engages with investors, particularly beyond the mining sector.
Of more than 200 laws currently in force governing business relations in the nation, an estimated 40 contain provisions that directly restrict or discourage investment activity. Rather than creating coherence and predictability, this fragmented legal framework has contributed to regulatory uncertainty and overlapping authority, which investors frequently cite as one of the country’s most serious structural weaknesses.
The Law on Investment, adopted to serve as a central instrument for regulating investor relations and safeguarding investor rights, has been amended and supplemented 15 times. Instead of increasing clarity, these repeated changes have eroded legal stability. Two years ago, the law was nearly reshaped into what many observers described as a de facto Law on Foreign Investment, prompting concern among lawmakers and the business community alike.
During parliamentary debates at the time, members emphasized the need to establish a National Council for Foreign Trade, a body that would take responsibility for key investment-related issues, including investment thresholds, stabilization certificates, contractual frameworks, and dispute resolution mechanisms. Lawmakers also pointed out that Mongolia currently lacks a clearly defined minimum investment threshold and argued that imposing a single, uniform threshold would be inappropriate, as investment requirements vary significantly across sectors such as mining, agriculture, manufacturing, and services. Despite these discussions and proposed institutional reforms, the overall investment climate has shown little measurable improvement.
According to the World Bank, one out of every three investors in Mongolia ultimately withdraws their investment decision due to contract breaches. This statistic alone underscores a fundamental breakdown in trust between investors and counterparties, including state institutions. Further evidence comes from a study conducted by the Ministry of Justice and Internal Affairs, which found that it takes an average of 6.2 years for investors to resolve disputes and complaints in Mongolia. Even more concerning is the finding that approximately 75 percent of investment-related complaints remain unresolved, leaving investors in prolonged legal and financial limbo. 
Reporting by Business.mn paints an even more troubling picture. Between 2018 and 2023, a total of 69 formal investment-related complaints were filed. Of these, 54 cases have yet to be resolved, and some disputes have reportedly remained in the court system for as long as 16 years. Such delays are virtually unheard of in competitive investment destinations and severely undermine the credibility as a rule-of-law jurisdiction. These concerns are echoed in the “Mongolia Investment Climate Statement 2024”, prepared by the Economic and Commercial Section of the US Embassy in Mongolia. The report notes that investors frequently cite the inability - and in some cases the unwillingness - of the Tax Service and other Government agencies to resolve disputes. This failure, the report warns, creates a risk of indirect expropriation, whereby investors lose effective control over their assets not through formal nationalization, but through prolonged administrative pressure, unresolved claims, and legal uncertainty.
The report also highlights serious deficiencies within the judicial system. Judges often avoid ruling on complex tax and business disputes, proceedings are routinely delayed, and even when court decisions are eventually issued, enforcement remains weak. In some cases, by the time a ruling is made, the opposing party has already liquidated assets and disappeared, rendering the judgment meaningless. This is the environment in which the Investor Protection Center has been established. While the center claims to support and protect the interests of investors, it remains unclear what concrete authority, enforcement mechanisms, or legal tools it will possess to address these deeply rooted problems. Without binding decision-making power, judicial coordination, or legislative reform, the center risks becoming a consultative body with limited practical impact.
In this context, economist and researcher N.Enkhbayar offered a candid assessment of the challenges facing Mongolia’s investment climate. “It is no secret that Mongolia lags behind on many indicators used to measure the business environment. There is a clear need for comprehensive improvement, and the establishment of the Investor Protection Center should be viewed as part of that broader objective,” he said.
At the same time, N.Enkhbayar cautioned against unrealistic expectations. “In practice, the center is not an institution that can resolve all existing problems. Its primary role is to transmit information, facilitate communication, and mediate investors’ suggestions and complaints,” he noted. While the Government has announced reductions in special licenses and the launch of various reform initiatives, N.Enkhbayar questioned whether these measures have been fully implemented in practice. “When we examine the main international indicators used to assess the investment environment, there is no evidence of meaningful progress. Mongolia continues to rank consistently low in key assessments, including the annual Investment Climate Report and the Economic Freedom Index published by the US Department of State,” he mentioned. 
According to N.Enkhbayar, genuine improvement in the investment environment requires measurable progress in these internationally recognized indicators, rather than rhetorical commitments alone. Drawing on the experience of the World Bank Group, he noted that a true one-stop service model for investors can only function effectively if an Investment Promotion Agency adopts a client manager system, in which dedicated managers are assigned to support investors throughout the investment process. International practice shows that these elements must be implemented together to produce real results, he said.
However, one of the most persistent weaknesses of Mongolia’s investment environment is institutional instability. “Organizations and structures are created, operate for a short period, and then disappear without leaving any tangible impact”, he said, pointing to numerous past examples. In this context, he warned that the proliferation of populist or public relations-oriented institutions, particularly various councils, has done little to address structural problems.
“There is no dispute that an institution to protect investor interests is necessary. But the most fundamental form of protection is a stable and predictable legal environment. Numerous past cases involving the illegal seizure of property were often carried out through cooperation between law enforcement agencies and the courts, which have severely damaged investor confidence. Many councils established for similar purposes have ceased to function after holding only two or three meetings, further undermining trust in such mechanisms. Entrusting investor protection to temporary councils and centers that lack permanence, authority and accountability will not produce meaningful results. A more effective and sustainable solution would be for the relevant line ministries to take the lead, focusing on strengthening the stability, enforcement, and accountability of the legal framework itself. Only by improving the consistency and credibility of laws and their implementation can Mongolia create an investment environment that truly protects investor interests,” N.Enkhbayar concluded.
However, a researcher specializing in investment, tax and business law offered a more technical perspective on the issue. According to the researcher, the Law on Investment clearly defines the protection of the rights and interests of both domestic and foreign investors, outlines the forms of support to be provided by the state, and specifies the roles and responsibilities of central Government institutions.
“For example, the law’s provisions on both tax and non-tax incentives are, in principle, a positive feature. However, legislation alone is not sufficient to ensure implementation. Investors come to Mongolia with defined expectations based on the legal framework, only to find in practice that they ‘run into a wall’ created by legal uncertainty, conflicting policies, and uncoordinated actions among state institutions,” he explained.
The researcher also emphasized that non-tax support mechanisms, such as administrative facilitation, regulatory stability and institutional cooperation, play a crucial role in attracting and retaining investment. Under current legislation, responsibility for implementing such support lies primarily with the Ministry of Economy and Development. Yet, as of today, it remains unclear what specific criteria the ministry will use or what concrete forms this support will take within the framework prescribed by law.
“In other words, the legal criteria for granting support and the mechanisms for implementing it are vague and undefined. From this perspective, the establishment of an Investor Protection Center is correct in principle, but insufficient on its own. State institutions currently operate in a fragmented and inconsistent manner, with one agency often contradicting or undermining the decisions of another. Although laws and regulations adopted after 2016 are required to comply with the General Administrative Law of 2011, this principle is not consistently applied in practice. As a result, even when the government declares its intention to support investors, it remains unclear whether such support will take the form of a binding legal act, an enforceable administrative decision, or merely a non-binding expression of goodwill. If the legal environment is not clarified and harmonized,” the researcher warned. 
While the idea of resolving investor issues through a single-window system is commendable, he cautioned that unless Mongolia first undertakes a thorough review of its fragmented and poorly coordinated legal framework, the country risks offering false hope to both domestic and foreign investors, and once again undermining its own credibility.

Published Date:2026-01-26