Mongolia Bill Would Bar the State From Competing With Private Business

Mongolia is considering legislation that would define, for the first time in statute, where the state may and may not operate as a commercial actor.

The proposed Act would establish clear limits on state power, providing that the state cannot compete with the private sector in activities the private sector can perform — a provision intended to halt what analysts describe as the uncontrolled expansion of state-owned enterprises.

Two further provisions target the risks investors most often cite. Business assets, bank accounts and operations could not be frozen or blocked without a court warrant, removing the possibility of arbitrary administrative action, and any expropriation of private property would have to be fully compensated. Many permits would move to a notify-and-act model intended to reduce bureaucratic delay.

The bill forms part of a parliamentary session that opened on 16 March with 32 legislative items, several carrying direct implications for foreign investors.

Why the state's commercial footprint is the issue

The scale explains the legislation.

Mongolia's state-owned enterprise sector is valued at around 22.8 trillion tugrik, roughly $6.7 billion, accounting for approximately one-third of GDP. More than 70 SOEs were operating as of the most recent full count, overseen by a government agency that has not published a complete list.

Successive governments have attempted restructuring. Holdings were consolidated into Erdenes Mongol for mining assets and Erchist Mongol for non-mining assets, the latter bringing together 44 enterprises concentrated in energy, with former member of parliament Amartuvshin G. appointed chief executive.

A draft Law on Improving SOE Productivity, Transparency and Governance was advanced to first reading under former prime minister Oyun-Erdene, who was subsequently toppled amid protests over corruption and inequality — an episode that illustrates both the urgency of the reform and its political fragility.

Public appetite for the more radical version is limited. Polling has found only 6% of Mongolians support full privatisation of assets designated strategic, with most favouring state-controlled partnerships.

The wider legislative picture

The state participation bill sits alongside a larger prize for investors.

The Minister of Industry and Mineral Resources has indicated around 50% of the Minerals Law will be amended, in what would be the most substantial reform of Mongolia's mining framework in over a decade. Proposed changes include an "easy entry, costly holding" approach, with exploration licences issued through direct application and competitive bidding to speed investor access.

The context is a government pursuing austerity. The New Confidence–Bold Reform programme, launched within the 2026–2030 Five-Year Development Plan, targets ten domains including government efficiency, taxation, state-owned enterprises and green energy, with measures aimed at closing a budget gap of around 3.3 trillion tugrik.

What to watch

Whether the bill passes in its current form is the first question, and the property rights and state competition clauses are the ones most likely to be contested.

The second is the "strategic" designation. Existing law has labelled some enterprises strategic without clear criteria — in 2022 a state-owned hotel chain was so designated to block its sale — and any new limits on state participation will be tested against that loophole.

The third is the Minerals Law. For foreign investors, it matters more than anything else on the session's agenda.