Opportunities for Collaboration and Investment
Mongolia Digital Sector At A Glance
Commitment by the Mongolian Government: Digital NationThe Mongolian government positions the ICT sector as one of the major pillars of the economy, and in 2020, it announced the concept of Digital Nation, indicating the 5 year target (2022 – 2027) to realize the digital nation. The Digital Nation concept has the following 6 goals with the mission of "Integrate advanced communications and information technologies into all aspects of Mongolia's society and economy to develop a digital nation based on knowledge and intelligence."
Digital Infrastructure
Ensure access to essential infrastructure to meet the growing demand for information and communications technology.
E-Governance
Build a non-bureaucratic, effective and transparent digital government by integrating innovation, communication and information technology into all aspects of society and the economy.
Cybersecurity
Establish a national security system for the Internet, expand knowledge and understanding of information security among citizens, the private sector, and the public, and guarantee the accuracy, privacy, and accessibility of information.
Digital literacy
To improve the digital literacy level of the people, to bridge the digital divide, and to foster innovative people who can contribute to the development of all socio-economic fields based on communication and information technology.
Innovation and Production
By introducing modern technology-based systems, including blockchain, big data, artificial intelligence, and IT, we encourage technology growth while spurring innovation and production.
National Development Accelerator
Introduce ICT products and services in all sectors of society and the economy to enhance competitiveness, productivity and efficiency.
Mongolia boasts a high mobile broadband penetration rate of 142%, positioning it as one of the most digitally connected societies globally.
Source: Mobile Mongolia market report, Inside Mongolia, Digital 2023: Mongolia, Mongolia Telecoms Market Report
Mongolian ICT sector is thriving, with rising revenue each year, led by private sector entities, encompassing both local enterprises and international players.
The Mongolian startup ecosystem, valued at a minimum of MNT 452 billion (0.8% of GDP, 2022), thrives on innovation and collaboration. With 48% of founders holding advanced degrees and 44.6% possessing STEM qualifications, intellectual capital is a driving force.
Source: START venture builderSupportive Regulatory environment
The Mongolian Government is preparing the laws including IT Industry Support Law and Investment Law for Investors, and is aiming to foster a robust IT industry by providing a comprehensive support framework involving government, private sector, and international cooperation.
Summary of Mongolia's IT Industry Support Law (June 5, 2024)
For detail, please access below:
https://legalinfo.mn/mn/detail?lawId=17140722436571Objective
To establish government policies that support individuals and legal entities in the IT industry, diversify funding sources, improve the investment legal environment, and enhance the IT industry's economic benefits.
Legislation Framework
- The law is supported by the Constitution of Mongolia and other legislative acts.
- International agreements prevail if they conflict with this law.
Key Definitions
- Start-up company: Defined in the Law on Innovation.
- Advanced technology: Technologies for creating new IT products and services based on scientific research.
- Information technology: Activities involving creating, processing, storing, transmitting, and exchanging information using computers and communication networks.
Principles for Supporting the IT Industry
- Public and private partnership reliance.
- State refusal to produce new IT products through procurement.
- Transparent, open, and fair support for IT entities.
- Equal and free participation in IT production.
- Development of the national IT industry.
Government Responsibilities
- Approving rules and regulations for IT industry development and support.
- Establishing a virtual zone for IT production support.
- Determining state budget investments for the IT industry.
- Approving advanced technology lists.
- Establishing a sandbox for testing new IT products and services.
State and Local Responsibilities
- Cooperating with the central state administrative organization for IT policies and laws.
- Supporting IT product implementation through procurement.
- Funding support for IT production.
- Conducting research and development in advanced technologies.
Central State Administrative Organization Functions
- Implementing IT industry support legislation.
- Collaborating with professional associations for policy development.
- Promoting international recognition of national IT products.
- Protecting intellectual property and supporting economic policies and research.
National Information Technology Park Functions
- Developing advanced technology and export-oriented national production.
- Coordinating IT product market launches and supporting start-up companies.
- Attracting investments for IT product development.
- Operating a single-window registration system for IT products and services.
Public-Private Partnerships
- Governed by the Law on Public-Private Partnerships.
- State organizations can finance IT production projects through contracts.
Virtual Zone for IT Industry Support
- Managed by a National Council chaired by the Prime Minister.
- Council members include representatives from state administrative organizations, professional associations, and the private sector.
- Council functions include strategic planning, budget approval, and activity supervision.
Support for Legal Entities in Virtual Zones
- Financial and tax reports are required annually.
- Non-tax support includes grants for patents, international certifications, and social security contributions.
- Tax support is provided as per relevant laws.
Sources of Support
Funding sources include state budget allocations, donations, software usage income, and government special fund assets.
Liability
Violations by officials are addressed under the Civil Service Law, Criminal Law, or Law on Violations.
Summary of Mongolia's Investment Law for Investors
For detail, please access below:
https://legalinfo.mn/mn/detail/9491Stabilization Certification
Investors who meet specific criteria can apply for a stabilization certification to ensure a stable investment environment. The certification stabilizes the tax and regulatory framework for a defined period, providing legal guarantees to the investor.
The certification is issued based on a review process within 30 days, extendable by 15 days. It can be revoked if the holder violates specific legal provisions or fails to meet investment completion timelines.
Investment Contracts
The government may enter into investment contracts with investors committing more than MNT 500 billion. These contracts are aimed at stabilizing the operational environment and may include legal guarantees, tax stabilization, and financial support conditions.
Contracts can be made for terms not less than those specified in the law and may include conditions for stabilizing the investment environment.
Foreign State-Owned Entities
Foreign state-owned entities holding 33% or more shares in Mongolian legal entities in mining, banking and finance, or media and communications sectors must obtain a permit.
Entities must apply to the state central administrative body in charge of investment, providing notarized incorporation certificates, references, transaction details, financial statements, and investment plans.
Miscellaneous
The administrative body reviews applications to ensure compliance with national security, business norms, competition laws, and budget policies. Decisions are made within 45 days, with notifications sent within five business days.
Investment Opportunities
Competitive Advantages of MongoliaMongolia is democratic and peaceful country with favorable business environment and high human capital.
In Mongolia, foreign investors conduct their activities by acquiring new or existing company shares or establishing their legal presence. The most common types of establishments by foreign investors are a foreign-invested limited liability company, a representative office or a permanent establishment.
