Mongolia – Mongolian Strategic Foreign Investment Law.

21 June, 2012


Legal News & Analysis – Asia Pacific – Mongolia


On 17 May 2012 the Parliament of Mongolia enacted the Law of Mongolia on the Regulation of Foreign Investment in Business Entities Operating in Sectors of Strategic Importance (the “Strategic Foreign Investment Law” or the “SFI Law“). The SFI Law was formally published in the State Gazette (“Төрийн мэдээлэл”) Issue 23 on Tuesday, 19 June 2012.


The official version of the SFI Law published on 19 June is identical to the final version in all material respects. Please click here for a translation of the published version of the SFI Law.


The Ministry of Foreign Affairs and Trade has published its own translation of the SFI Law, together with an introductory note. In that note, the Ministry explained the rationale behind the SFI Law and underscored that it was considered to be a “Golden Middle” between protecting national security interests of the state of Mongolia and encouraging foreign investment. Further, the Ministry indicated that the Government would create rules and procedures to support the SFI Law that are not unnecessarily costly or bureaucratic.


Informal discussions with Government officials and comments from the Mongolian President, Mr. Elbegdorj Tsakhia, suggest that the main thrust of the legislation is aimed against state-controlled entities. President Elbegdorj, in an interview with the Financial Times to open the recent Mongolian International Legal Forum held over 29-30 May and co-sponsored by Hogan Lovells, stated that he was open to the SFI Law being refined and improved. These comments give cause for optimism to private foreign investors that some of the more unclear and cumbersome elements of the SFI Law may in due course be clarified and improved in the next Parliamentary session following the Mongolian general elections on 28 June.


Implementing regulations are currently being drafted by the Foreign Investment Agency in the form of a Government Resolution and it is hoped that all relevant stakeholders will be properly consulted so as to ensure that the SFI Law is developed in a coherent and pragmatic manner.


In short, the firm’s view of the SFI Law as a speed bump, rather than a road block to foreign investment in Mongolia, remains unchanged.



For further information, please contact:


Michael Aldrich, Partner, Hogan Lovells

[email protected] 

Chris Melville, Partner, Hogan Lovells