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This publication is available at https://www.gov.uk/government/publications/exporting-to-mongolia/exporting-to-mongolia
1. Mongolia export overview
Mongolia, situated in east and central Asia, is more than 6 times the size of the UK. Its population of only 3.1 million makes it the most sparsely populated independent nation in the world. Nearly half of Mongolia’s population lives in its capital Ulaanbaatar.
Contact a Department for International Trade (DIT) Mongolia export adviser for a free consultation if you’re interested in exporting to Mongolia.
Mongolia is ranked 62nd in the World Bank’s ‘Ease of Doing Business’ index.
UK companies operating in this market include Rio Tinto, PwC, KPMG and What3words.
Benefits for British businesses exporting to Mongolia include:
- expected to be one of the fastest growing economies in the world in the next few decades
- freely convertible currency
- rising number of English language speakers among younger generation
Strengths of the Mongolian market include:
- a well educated population with 97.4% adult literacy rate
- the high proportion of Mongolia’s population which is under 40 - over 72% - and open to new products, services, and ideas
- flexible regulations relating to foreign ownership possible
- the lowest utilities costs in the region
2. Challenges of doing business in Mongolia
The main challenge for UK companies exporting to Mongolia can be costly logistics, due to the fact that Mongolia is a landlocked country.
Other challenges include:
- frequent corrections and amendments to laws and associated regulations
- inconsistent application of established laws and regulations
- language barriers
Mongolia was ranked joint 87th out of 176 countries in the Transparency’s International 2016 Corruption Perceptions Index.
3. Growth potential in Mongolia
3.1 Economic growth in Mongolia
Mongolia is a ‘lower middle income’ country with a Gross Domestic Product (GDP) of $11.03 billion. Its economy is highly dependent on trade with China and world commodity prices.
Over 79% of Mongolia’s imports and exports are traded directly with China.
The mining sector accounts for 20.7% of GDP. About 70% of Mongolia’s exports are minerals, including copper, coal, gold, silver and uranium.
The Mongolian economy has stagnated due to:
- a fall in commodity prices
- the slowing down of the Chinese economy
3.2 Gateway to other markets
Mongolia does not impose export taxes. China has provided a ready market for much of Mongolia’s mineral exports as there are no duties. Mongolia can serve as a gateway to nearby markets if you have a Mongolian partner, or are part of a joint venture.
Mongolia and Japan have signed an Economic Partnership Agreement which exempts 9,300 products from duties when exported from Mongolia to Japan.
4. Top goods and services imports into Mongolia
UN comtrade ranked Mongolia’s top imports of goods from the rest of the world during 2016 as:
- distillation products and mineral fuels, including oil
- vehicles (other than railway or tramway vehicles)
- boilers and other machinery
- electrical and electronic equipment
- iron and steel
- plastics and plastic products
- miscellaneous edible preparations
- rubber and rubber products
- furniture, lighting, signs and prefabricated buildings
UN Comtrade ranks Mongolia’s top services imports from the rest of the world during 2015 as:
- business services, such as consultancy, technical services and research and development (R&D)
- construction services
- financial services
- communications services
- insurance services
- computer and information services
- government services
- royalties and licence fees
4.1 UK and Mongolia trade
UK exports to Mongolia amounted to £24 million in 2016, a 41.5% decrease from 2015.
The largest value UK exports in the 2016 were machinery and mechanical appliances, which made up 19.7% of all UK goods exported to Mongolia. UK education, consultancy and financial services are also significant in Mongolia. However, the value is not known.
There are many third country transactions for UK-originated equipment sold into Asia, such as equipment sales to Singapore, which are then sold on to Mongolia. These do not show in official trade statistics.
5. Opportunities for UK businesses in Mongolia
The Mongolian government is keen to develop its industry. Opportunities for UK companies include:
- oil and gas exploration and extraction,
- supply of equipment and expertise
- mining related infrastructure such as rail and power plants
- financing of mining projects
- other financial, professional, legal and consulting services
Department for International Trade (DIT) provides free international export sales leads from its worldwide network. Search for export opportunities in Mongolia.
5.1 Mining sector in Mongolia
Mongolia is estimated to hold $1.3 trillion in mineral deposits, but only 25% of the country has been geologically surveyed. Major exports include:
- fluorspar concentrates
China provides a ready market for Mongolia’s mineral wealth. As with all industrial sectors in Mongolia, the aging infrastructure is a major concern.
Opportunities for UK companies include:
- mining exploration, extraction and production
- supply of mining equipment and technologies
- engineering consultancy services
- training services
Contact Commercial.Mongolia@fco.gov.uk for more information on opportunities in Mongolia’s mining sector.
5.2 Legal and financial services sector in Mongolia
Demand has risen for legal and financial services as foreign investors have entered the market, seeking high return investment opportunities in Mongolia.
A number of UK firms have representative offices in Mongolia.
Opportunities for UK companies include:
- consultancy (legal and financial)
- training services
Contact Commercial.Mongolia@fco.gov.uk for more information on opportunities in Mongolia’s legal and financial services sector.
5.3 Agriculture sector in Mongolia
Mongolia has vast herds of sheep, goats and cattle. There is considerable demand from Russia, China, Korea, and Japan for these products. However, quotas and restrictive health regulations inhibit the meat trade among Mongolian and its neighbours.
This offers an opportunity for British companies with expertise in meat processing and marketing technologies. Existing Mongolian processing facilities require upgrading to increase production capacity, quality, and sanitation.
Contact Commercial.Mongolia@fco.gov.uk for more information on opportunities in Mongolia’s agriculture sector.
5.4 Education sector in Mongolia
Mongolians value education and have made it their priority to educate their children. Many are prepared to pay premium price for the best quality education.
International curricula are being designed and implemented into the Mongolian education system, but it will take years yet to be embedded. Technical, Vocational Education and Training (TVET) style courses are popular.
Skills are recognised as important to developing a diversified economy and increasing employment opportunities. British education is considered as high quality, so opportunities exist for British schools and standards.
Opportunities for UK educational organisations and companies include:
- partnering for transnational education
- student recruitment in all areas, especially in science, technology, business, finance and English language
Contact Commercial.Mongolia@fco.gov.uk for more information on opportunities in Mongolia’s education sector.
5.5 Consumer goods sector in Mongolia
Disposable incomes of many Mongolians have risen dramatically due to the growing economy. This has brought with it opportunities for manufacturers of consumer goods and retailers. Quality branded goods are making strong inroads on the ‘high street’.
Opportunities for UK companies include:
- fashion retail
- food and drink
Contact Commercial.Mongolia@fco.gov.uk for more information on opportunities in Mongolia’s consumer sector.
6. Start-up considerations in Mongolia
Theoretically it takes 14 days to set up a business in Mongolia.
A minimum of $100,000 per investor of ‘charter capital’ is required for a foreign business entity. This must be paid into a Mongolian bank account, prior to registration, but can be withdrawn after registration. A business entity is regarded as ‘foreign invested’ if a foreign investor holds 25% or more interest.
Projects that meet certain requirements may qualify for favourable tax treatment for periods up to 27 years.
Foreign investors can set up 4 types of business entity:
- Limited Liability Company (LLC) which can have up to 50 shareholders, or only one owner
- Joint Stock Company (JSC) which must have MNT10 million of capital to list on the Mongolian Stock Exchange and one third of the board as non-shareholders
- representative and branch offices, which cannot conduct commercial activities
- partnerships which, can conduct profit generating activities
A company must be registered with the General Authority for State Registration (GASR). By setting up a foreign invested company, you get legal protection and can obtain a year long multi-entry investor’s visa to Mongolia. You should seek a local lawyer to help with this process.
You can also enter the market by finding a local partner and granting them distributorship rights.
It is possible to do direct exports. However, due to cultural aspects, it is recommended that you have a local partner, are physically present in the market, or visit frequently.
7. Legal considerations in Mongolia
Many Mongolian laws are worded vaguely and can be open to interpretation. There are frequent corrections and amendments. If law articles conflict then the more detailed one prevails.
Mongolia has been a member of the World Trade Organization (WTO) since 1997. Mongolian legislation recognises the primacy of international treaties in cases of conflict with domestic legislation.
In most cases, parties are free to select international arbitration as the method for dispute resolution when drafting contracts in Mongolia.
If a claim or complaint is filed and then upheld against a foreign citizen for violation of rights, freedoms or lawful interests they can be banned from exiting Mongolia.
UK companies entering into agreements in Mongolia should undertake professional legal advice.
7.1 Standards and technical regulations in Mongolia
The Mongolian Agency for Standardization and Metrology (MASM) has responsibility for standards.
Labelling of goods in English or Russian is acceptable. For medicine, you must include instructions in Mongolian.
7.2 Intellectual Property (IP) in Mongolia
Mongolia has joined the World Intellectual Property Organization (WIPO) and signed and ratified most treaties and conventions.
The Intellectual Property Office of Mongolia, Mongolian Customs Authority and the National Police have an obligation to protect intellectual property rights. However, infringements may be left unchallenged.
8. Tax and customs considerations in Mongolia
Mongolia and the UK signed a double taxation convention.
Mongolia’s General Department of Taxation has responsibility for taxation.
8.1 Value Added Tax (VAT) in Mongolia
VAT is imposed at the rate of 10% on goods and services, and on imports into Mongolia.
You will need to register with the Tax Office and obtain the status of a VAT payer, if your company turnover exceeds MNT10 million. You also can voluntarily register when your company’s taxable turnover reaches MNT8 million, or if you have invested more than $2 million in Mongolia.
8.2 Corporate tax in Mongolia
Mongolian corporate income tax is 10% for companies with annual income of up to MNT3 billion (about £100,000). It’s 25% for companies with income of more than MNT3 billion.
8.3 Tax exemptions in Mongolia
The Mongolian government occasionally grants tax exemptions, including import duties and VAT for:
- imports of essential fuel and staple food products
- imports in certain sectors targeted for growth, such as the agriculture sector
A 10% tax credit can be granted on a case by case basis to investments in such important sectors as mining, agriculture, and infrastructure.
8.4 Customs in Mongolia
Import duty is payable at the rates from 0% to 25% on the customs value of imported goods. Most goods are subject to 5%. Normally customs value is calculated on the Cost, Insurance and Freight (CIF) value.
The Customs Office of Mongolia provides more information on customs procedures.
You can find more about import tariffs in the Market Access Database.
8.5 Documentation in Mongolia
The documents required for customs clearance are:
- the contract, which includes product description, purchase frequency, length of the trade and Incoterms conditions
- packing list
- insurance documents
- certificate of origin
- other relevant documents such as UK inspection authority certificate required for food products
9. Business behaviour in Mongolia
Mongolians will use their first name and they may also use their father’s or mother’s name as a last name. Family names were re-introduced only over a decade ago. In practice people usually only use their first name.
Exchange of gifts is part of the business process. However, if you offer a knife of any design, they can only accept it if they can pay you a token amount for it.
When dealing with government officials you should always send a hard copy letter and check receipt is acknowledged.
Mongolians like to do business with people they know well. Business deals are often closed during lunch, and especially dinner, with shots of vodka or other spirits.
10. Entry requirements for Mongolia
You need a visa to visit Mongolia for business purposes. Your host will need to apply for a visa invitation from the Mongolian Immigration Agency. The invitation should be sent to the Mongolian Embassy in the UK before you apply for your visa. Your passport must be valid for 6 months.
You must register with the Immigration Office within 7 days of arrival if you are staying for more than 30 days. If you plan to stay for more than 90 days, you will need to obtain residence permission which must be filed within 21 days after entry.
All visas required for onward travel must be obtained before entering Mongolia.
11. Travel advice for Mongolia
If you are travelling to Mongolia for business, check the Foreign and Commonwealth Office (FCO) travel advice before you travel.
12. DIT contacts for Mongolia
Contact a local DIT trade adviser in the UK if you are interested in finding out more about doing business in Mongolia.
Contact the Department for International Trade (DIT) team in Mongolia for more information and advice on opportunities for doing business in Mongolia.