Mongolia

Mongolia is a large state in the northeast of Central Asia. The birthplace of Genghis Khan is famous for its rich cultural and historical heritage, fantastic landscapes, diverse landscapes. Mongolia is called the "Land of the Eternal Blue Sky", because the sun shines here for more than 250 days a year.

General information

The official name of the state — Mongolia (since February 1992, before that since 1921 — the Mongolian People's Republic). The territory of the country is about 1,564,116 km² (18th in the world). At the beginning of 2023, the population of Mongolia was approximately 3,424,391 people.

Mongolia is a mono-ethnic state. The most numerous part of the population (94%) are representatives of the Mongolian group. Also in Mongolia live Kazakhs and a small number of Russians and Chinese. The Mongolian ethnic community has developed in Central Asia. The dominant ethnic group of the Mongols living in the country are the Khalkha Mongols (Khalkh), who make up 83.8% of the total population of the country (2020 census).

State language in Mongolia — Mongolian, although in Bayan-Ulegei aimag, the Kazakh language is also used in teaching in schools. The modern Mongolian language, which is spoken by the main part of the population of Mongolia, as well as the Mongols of China living in Inner Mongolia and some other areas, includes several dialects.

Cyrillic writing is currently used for writing, based on the modern literary language created using the Khalkha dialect.

The main religion in Mongolia is Tibetan Buddhism of the Gelug tradition, modified on Mongolian soil. According to the 2020 national census, 51.7% of Mongols identify themselves as Buddhists, 40.6% — non-believers, 3.2% — Muslims (mainly Kazakhs), 2.5% — followers of the Mongolian shamanic tradition, 1.3% — Christians, and 0.7% — followers of other religions

The official currency of the country is the Mongolian tugrik.

Ulaanbaatar — the capital and largest city of Mongolia. Ulaanbaatar — political, commercial, cultural and scientific center of the country, as well as an important financial center of Central Asia. It is a major transport hub. Ulaanbaatar is a key city for the Mongolian economy. The city has Ulaanbaatar CHPP-1, CHPP-2, CHPP-3, CHPP-4, which generate more than 85% of the country's electricity. The city produces about half of the country's gross industrial output. There are: a trailer plant, an industrial complex for processing livestock raw materials, a meat processing plant, metalworking, woodworking, house-building, food and other industries. The flow of tourists visiting the city annually accounts for about 10% of the country's income. Brown coal is mined in the Nalaikh region.

Erdenet — the second largest city in Mongolia. The city-forming enterprise is the Erdenet company. — it is one of the largest mining companies in Asia.

Darkhan — the third largest city in Mongolia. The city was built as one of the main industrial complexes for the production of building materials and structures. Meat processing plant, grain and flour processing plant, confectionery factory, plant for the production of alcoholic and non-alcoholic products — all these food industry enterprises currently provide their own production for the population of the region and the country. In October 2011, the foundation was laid for the Darkhan oil refinery with a design capacity of 2 million tons of oil per year. Also, a steel plant was built in the city.

Choybalsan — fourth largest city in the country. Light and food industries operate in the city, the production of building materials is developed. The Choibalsan thermal power plant was built to supply heat and electricity. Installed capacity — 24 MW, uses lignite from the Berhe open pit near the city. Flour-grinding and meat combines, a wool-washing factory work. In the vicinity, the extraction of brown coal and fluorspar is developed (in Berkh). A polyethylene processing plant is operating.

Mongolia is divided into 21 aimags, aimags — for soums, soums — for bugs, capital — into 9 districts, districts — for funerals (quarters). Ulaanbaatar is an independent administrative unit.

History, geography, culture, mentality

The Mongols are one of the most ancient peoples of Asia. Already at the end of the III century BC. On the territory of modern Mongolia, a large tribal union of the Xiongnu and Dunhu formed. After its collapse in the 4th century AD. an early feudal state of nomads was formed — Juan Khaganate, then — Turkic Khaganate and Uighur Khanate. They were replaced by the Khitan Empire.

Creation in the XII century. a single Mongolian feudal state is associated with the name of Genghis Khan. He and his successors conquered China, Central Asia, Transcaucasia, campaigns were undertaken within the borders of the Russian principalities and in the countries of Europe. As a result of these conquests, a huge empire was formed, which, due to civil strife, collapsed in the 14th century. to a number of independent states.

At the end of the 17th century. the Mongolian lands proper were conquered by China and divided into external and internal parts. The liberation movement of the Mongolian people led in 1911 to the declaration of independence of the outer part of Mongolia. However, according to the Kyakhta Russian-Chinese-Mongolian agreement of 1915, Outer Mongolia received only the rights of autonomy within China, which was liquidated by Chinese troops in 1919

As a result of the victory of the People's Revolution of 1921, the outer part of Mongolia was declared a constitutional monarchy, but all power was in fact concentrated in the hands of the people's government. On November 5, 1921, an agreement was signed between the government of the RSFSR and the government of Mongolia and diplomatic relations were established. On November 26, 1924, the Mongolian People's Republic was proclaimed. Until the end of the 80s of the XX century, the country followed the socialist path of development.

Under the influence of perestroika in the USSR, since the late 1980s, democratic transformations began in Mongolia, which led to a radical change in the country's social system.

In the north, Mongolia borders on Russia, in the south — with China.

Most of the country is a vast plateau located at a height with mountain ranges, steppe expanses, and hilly valleys. The western lands are divided by a continuous chain of valleys and basins into mountainous regions — Mongolian Altai with the highest point of the country Mount Munkh-Khairkhan-Ula (4362 m), Gobi Altai and Khangai, bounded in the south by the semi-desert Valley of Lakes, and in the west — basin of the Great Lakes. In the northeast of Mongolia, near the border with Russia, the Khentei highlands are located. Its northern spurs stretch in Transbaikalia, and the southwestern ones, descending to the central part of the country, surround its capital — Ulaanbaatar. The southern regions of Mongolia are occupied by the rocky Gobi desert. Full-flowing rivers are born in the mountains. The largest of them — Selenga (1024 km), crossing Mongolia, then flowing within Russian Buryatia and flowing into Lake Baikal. Another major river — Kerulen (1254 km) — carries its waters to Lake Dalainor (Gulun-Nur), located in China. There are more than a thousand lakes on the territory of Mongolia. 400 km west of Ulaanbaatar, in a tectonic depression in the area of the Khangai mountains, there is a large lake Khubsugul, which collects the waters of 96 tributaries. This mountain lake lies at an altitude of 1646 m, its depth reaches 262 m. According to the composition of water and the presence of a unique relict fauna, Lake Khuvsgul is similar to Lake Baikal, from which it is only 200 km away.

The culture of the Mongols was originally formed under the influence of a nomadic lifestyle, later it was strongly influenced by Tibetan Buddhism.

Throughout the history of Mongolia, shamanism — ethnic religion, widespread among the nomads of Central Asia. Gradually, shamanism gave way to Tibetan Buddhism, this religion became official at the end of the 16th century. The first Buddhist temple was built here in 1586, and by the beginning of the 1930s there were more than 800 monasteries and about 3,000 temples in the country. During the years of militant atheism, religious buildings were closed or destroyed, thousands of monks were executed. In the 1990s, after the fall of communism, traditional religions began to revive. Tibetan Buddhism has returned to its dominant position, but shamanism continues to be practiced. The peoples of Turkic origin living here traditionally profess Islam.

The nomadic way of life of the Mongols found its expression in the local architecture. In the XVI-XVII centuries, Buddhist temples were designed as rooms with six and twelve corners under a pyramidal roof, resembling the shape of a yurt — traditional dwelling of the Mongols. Later, temples began to be built in the Tibetan and Chinese architectural traditions. The yurts themselves — mobile collapsible tent houses with a frame covered with felt mats are still housing for 40% of the country's population. Their doors are still facing south — to warmth, and in the northern, most honorable side of the yurt, they are always ready to welcome the guest.

In Mongolia, it is not customary to ask a guest questions on the fly. The guest should also not rush to spread everything about himself. In the steppe, life goes on slowly, and the procedure for getting to know the guest and the host is no exception. It is customary before a conversation to exchange snuff boxes and sniff tobacco from each other (when returning the snuff box to the owner, you cannot close the lid to the end, as this can be regarded as an unfriendly gesture and unwillingness to communicate openly), slowly drinking tea, exchanging general phrases about health and weather, the state of affairs in the economy, and only then start talking about business.

You can't throw away the rest of the tea, throw away a bone that hasn't been gnawed, give anything with your left hand, sell your favorite horse, step on spilled milk.

In the past, the Mongols considered it extremely dangerous to dig the earth, as this could lead to misfortune. It was strictly forbidden to dig the earth with a knife, scraper, shovel or plow in an amount of more than one handful. It was also strictly forbidden to cut wood, hunt, and even visit some "sacred places". It was impossible to harm nature. Catch or kill birds, cut down trees at springs, without the need to tear plants and flowers. It is reprehensible to spit into the fire of the hearth, to leave traces of your stay behind, for example, turned over turf, garbage, an unextinguished fire. Do not wash dirty clothes near the water source. You can not break, dig, touch the hitching post, kindle a fire nearby. One should not desecrate a sacred place with bad deeds, thoughts or words. You can not shout loudly and get drunk heavily. Special respect must be shown to elders. You can’t look askance, get angry, swear, take out your bad mood on your father and mother. Offending elders is the same sin as depriving a living being of life.

It is forbidden to pour water on fire. You can not stick a knife into the fire, touch the fire with a knife or a sharp object, take meat out of the boiler with a knife, throw garbage into the hearth, rags — it offends the spirit of the hearth. It is forbidden to give the fire of the hearth to another house or yurt. It is considered a great sin to splash milk into the fire of the hearth, to sleep with legs stretched out towards the hearth.

In Mongolia, there is a custom of the right hand. The bowl during the greeting ceremony is passed only with the right hand. And of course, you need to accept any offering with your right hand or with both hands. To emphasize special respect, the guest is greeted with two hands clasped with palms, as in a Buddhist bow, the handshake in this case is also done simultaneously with both hands. When visiting Buddhist datsans, you must first go around the territory of the temple in the course of the sun, rotating all the prayer wheels. Inside the temple, they move clockwise. You can not go to the center of the temple during the service and take pictures without permission.

When you come to visit, the main gift is not immediately shown, they are given only when leaving. Gifts are not given all at once, but alternately throughout the meeting. You can not step on the threshold of the yurt. It is forbidden to sit, stand and talk with the guest on the threshold of the yurt. It is forbidden to visit the owners of the yurt with rolled up sleeves, with a shovel or other earth-moving tools. According to Mongolian custom, sleeves are rolled up at funerals, and digging tools brought into the yurt are considered a bad omen. You can not come to visit with empty dishes. It is imperative to put something in the dish so that happiness from the yurt is not carried away in an empty dish. It is considered indecent to help the hosts: to pass food, to serve guests. You can't leave without tasting the hosts' treats. You can't drink vodka standing up. Observing the customs of the table, it is necessary to drink the proposed vodka while sitting. It is not customary to leave the remnants of tea on the bottom of the bowl, as well as to throw leftovers of food and leftovers into the cup. Guests sitting at the festive table do not have the right to change their seats.

Power

Mongolia — mixed republic. The Constitution of Mongolia dated January 13, 1992, which entered into force on February 12, 1992, applies here.

Head of State — President, elected on an alternative basis by universal direct and secret suffrage for a term of 4 years. The President can be re-elected for one more term.

In the absence of the president, the functions of the head of state are performed by the chairman of the State Great Khural. The president is also the commander-in-chief of the country's armed forces.

Legislative power is exercised by the Parliament — The State Great Khural (VGH) consists of 76 members elected by popular vote by secret ballot for a term of 4 years. The VGH is headed by the Chairman, Deputy Chairman and Secretary General, elected by secret ballot from among its members.

The executive power is exercised by the government, which is formed by the VGH on the proposal of the prime minister and agreement with the president. The President submits the candidature of the head of the Cabinet of Ministers for consideration by the VGH. The government is accountable to the VGH.

On the ground, power is exercised by local self-government bodies: aimak, city, district and somon khurals, whose deputies are elected by the population for a term of 4 years.

Economy

Small in population, but rich in raw materials, the country in the early 1990s was able to create a large and rapidly growing market for raw materials. Mongolia is rich in coal, copper, gold, uranium, and rare earth metals. The mining industry has become the foundation of the economic development of the Mongolian state. The value of the deposits is estimated at trillions of dollars. The most famous of them — Oyu Tolgoi (one of the largest copper deposits in the world), Tavan Tolgoi (one of the world's largest hard coal deposits) and Dornod (uranium deposit).

In addition to the mining sector, Mongolia is actively developing light industry, energy, infrastructure, IT, agriculture — both traditional animal husbandry and modern farms, the country entered into a free trade agreement with Japan in 2015 and is a member of the Asian Developing Countries bloc. In the ranking of the best countries for doing business in 2020, Mongolia ranked 81 out of 190, between Kyrgyzstan and Albania.

The budget of Mongolia adopts the State Great Khural. In recent years, it has been approved with a deficit, and the lack of funds is covered by loans.

Mongolia is classified by the World Bank as a middle-income country, exceeding the per capita income of many CIS countries. Over the past decade, according to international financial experts, Mongolia has become one of the ten fastest growing countries in the world, and the average GDP growth of the country has exceeded the growth rate of many Asian countries.

In 2010-2011, Mongolia experienced a large economic growth. Mongolia's economic growth has slowed in recent years, but thanks to loans from the International Monetary Fund and rising commodity prices, growth remains positive. The loans have increased government investment from $30 million in 2000 to $3 billion in recent years — more than 100 times.

Mongolia's GDP grew sharply until 2012, when it reached $12.29 billion. Since then, the gross domestic product has steadily reached 11-13 billion until it exceeded 14 billion dollars in 2019, which is the highest in the history of Mongolia. The country achieves such results thanks to the mining industry, which produces more than 20% of the gross product and brings the country 90% of the total income. Mongolia exports copper, molybdenum, coal, oil, agricultural products, cashmere products to more than 170 countries.

In 2021, the total foreign trade turnover reached $16.1 billion, which is 25% higher than in the same period in 2020. The foreign trade surplus amounted to $2.4 billion. During the same period, exports amounted to $9.2 billion, an increase of 22.1%. The share of mineral products in total exports in 2021 amounted to 81.3%.

Mongolia sent 100% of crude oil, iron ore, copper and zinc concentrates to China, as well as 92% of coal. The southern neighbor continues to be the main export partner for the country. Due to high prices for key export commodities such as coal and copper, export earnings exceeded expectations in 2021. For example, copper sales in 2021 exceeded the target by 111%. In 2022, it fell due to a decline in industrial production.

Due to the harsh continental climate of Mongolia, agriculture remains vulnerable to natural disasters in the form of severe drought or cold. There is not enough arable land in the country, but about 80% of the territory is used as pasture. Most of the rural population is engaged in livestock grazing, which consists of sheep, goats, cattle, horses and camels. Mongolia has more livestock per capita than any other country in the world. 140 thousand private farmers breed 70.9 million head of livestock. They are not taxed, but they receive pensions and benefits.

World Bank analysts ranked Mongolia 34th in the world in terms of economic openness. In the last 4 years, the foreign trade surplus — excess of export over import — is about one billion dollars a year. The volume of exports of the Asian country exceeded 7 billion, and imports — 6 billion.

Industrial production fell 32.5% in March 2022, after rising more than 100% in early 2021. It directly correlates with exports. The main industries — production of building materials, textile, woolen, cloth, sheepskin coats, leather, meat processing.

Previously, the tourist flow grew every year. But the coronavirus pandemic has dealt a severe blow to the Mongolian tourism industry, which had grown in popularity in the pre-pandemic period. In 2019, the number of foreign tourists who visited Mongolia increased by 9.1% compared to 2018, and tourism revenues increased by 10.2%. Mongolia was visited by 577.3 thousand foreign tourists. At the same time, tourists from China accounted for 32.% of the total. At present, the contribution of tourism to the state's GDP still does not reach 5%.

In 2018, the Asian country attracted a total of 529.3 thousand foreign tourists, which is 11% more than in 2017. The largest number of foreign tourists come from China, Russia, South Korea, Japan and the USA. They are followed by travelers from France, Germany and Australia.

Thanks to export earnings, the Mongolian authorities have greatly reduced poverty and improved people's well-being.

In 2012, the country's authorities decided to suspend projects with China. The reason for this was the agreement of the Chinese aluminum giant Aluminum Corp of China Ltd (Chalco) to acquire a controlling stake in the Mongolian coal mining company SouthGobi Resources. SouthGobi owned four coal projects in Mongolia, three projects under development and a mining license.

The authorities have demonstrated that they do not intend to distribute the resources of their country, but projects with China have not been stopped.

If we talk about imports, then Mongolia primarily buys oil products, industrial and industrial equipment, and consumer goods. In recent years, the volume of imports is just over six billion dollars. Goods come from China — 33%, Russia — 28%, Japan — 9.5%, USA — 4.72%, South Korea — 4.35% and other countries.

Recently, Mongolia has been trying to get rid of import dependence. For example, in the city of Darkhan, the first oil refinery in Mongolia was built with credit money from India, which was opened at the end of 2022. It should fully meet the country's demand for gasoline, diesel fuel, aviation fuel and LPG in the country.

Among the foreign policy priorities of Mongolia traditionally dominates the "balanced" cooperation with Russia and China. Ulaanbaatar is showing interest in establishing multifaceted cooperation in a trilateral format. At the same time, based on the proclaimed principle of "multi-vector", Mongolia seeks to expand foreign policy contacts to the maximum. For this reason, Ulaanbaatar also implements the "Third Neighbor" concept, which is focused on developing relations with the US, EU, Japan, the Republic of Korea, and Turkey. In 2012, Mongolia became a full-fledged member of the OSCE (on September 15-19, 2015, the autumn session of the OSCE PA was held in Ulaanbaatar), and in 2013, a Partnership and Cooperation Agreement was signed with the EU. Mongolia pays special attention to activities within the framework of the UN and its specialized organizations. Mutually beneficial Russian-Mongolian cooperation has been established on these platforms. Mongolia also participates in the work of the SCO, CICA, ASEM, ACA, STEC, the ASEAN Regional Forum (ARF). The process of rapprochement of Mongolia with the Eurasian Economic Union has begun.

Mongolia and Russia have a long history of economic cooperation and support various forms of interaction in the economic sphere. Here are some aspects of economic cooperation between Mongolia and Russia:

1. Trade. Mongolia and Russia are trading partners. The volume of trade between countries continues to grow, especially in the area of goods such as coal, metals, food and agricultural products. Russia is one of the main export markets for Mongolian goods.
2. Investments. Russian companies are showing interest in investing in Mongolia in various sectors, including mining, energy, agriculture and tourism. Mongolia is also interested in attracting Russian investment and technology to develop its economy.
3. Energy cooperation. Russia is an important energy partner for Mongolia. Projects for the supply of electricity from Russia to Mongolia, such as the power grid connection between Buryatia and the Trans-Baikal Territory in Russia and the Khovd province in Mongolia, contribute to the energy needs of Mongolia.
4. Transport links. Mongolia and Russia are actively cooperating in the development of transport links, especially in the railway sector. For example, the construction of a railway bridge across the Selenga River between Russia and Mongolia will improve transport accessibility and trade flows between the two countries.

Business climate

Local legislation on the acquisition of property by foreigners in Mongolia:

• According to the Law "On Land" (dated 07.06.2002) land, with the exception of privatized by citizens of Mongolia, is the property of the state.
• Land, with the exception of pastures, lands of general use and special state purpose, can be privatized exclusively by citizens of Mongolia.
• A foreign state, an international organization, a legal entity of a foreign state, a foreign citizen, an economic unit with foreign investments, may be land users for a specific purpose, term and conditions on the basis of an agreement.
• The issue of transferring land for use by a foreign citizen permanently residing in Mongolia, or a stateless person solely for the purpose for the joint needs of his family, is decided by the head of the administration on the basis of an auction.
• Citizens for joint family use of land in the amount of not more than 0.7 hectares are allocated free of charge. The size of land for a personal yurt, a residential building should not exceed 0.05 hectares, for growing vegetables, fruits and berries — 0.1 ha.
• The land is transferred for use under an agreement for a period of up to 5 years, a one-time extension for another 5 years is possible. Before applying for the use of land, you must obtain a certificate from the competent authority in charge of foreign citizens.
• The land is transferred to the economic unit with foreign investment for use for a special purpose for a period established by the government.

Minerals in their natural form, located on the surface of the earth of Mongolia and in its bowels, are the property of the state. The state, as the owner of minerals, has the right to grant other persons the right to explore and use minerals. In the case of a joint operation with a private legal entity of a mineral deposit of strategic importance, and for the reserves of which state budget funds have been spent, state participation can be up to 50%.

According to the law on companies, the founder of a company can be a citizen of Mongolia, a legal entity, and also, if provided by law, a foreign citizen, a legal entity, a stateless person. The shares issued by the company may be owned by citizens, legal entities, foreign citizens, legal entities and stateless persons. The founder of the company can be a foreign citizen alone, contributing to the authorized capital an amount of at least 100 thousand US dollars, or together with the Mongolian founders. All legal entities in Mongolia are registered with state registration authorities. Branches, representative offices of foreign legal entities in Mongolia are also registered with state registration authorities. Unless otherwise provided by an international treaty of Mongolia, the issue of establishing a branch, representative office abroad is decided in accordance with the legislation of this country. A branch, representative office of a company does not have the rights of a legal entity and carries out its activities in the manner prescribed by the company that established it. The property of a branch, representative office is entered into the balance sheet of the company that established them. Branch, representative office of the company carries out its activities on behalf of the company that established it. The company is responsible for the obligations of its branch, representative office.

The company appoints the head of its branch, representative office, which operates on the basis of a power of attorney.

Investment climate

The investment climate in Mongolia can currently be described as promising, but with certain challenges and risks. In recent years, the Mongolian government has taken a number of measures to attract foreign investment and stimulate the country's economic development.

The benefits of investing in Mongolia include:

1. Rich natural resources. Mongolia has vast mineral resources such as coal, copper, gold, uranium, rare metals and other resources. This provides potential for investment in mining and other resource extraction and processing industries.
2. Geographic location. Mongolia is located between two major economic powers — China and Russia. This creates potential opportunities for the development of transport and logistics projects, such as the construction of railways, highways and energy facilities.
3. Potential in the energy sector. Mongolia has significant potential for the development of renewable energy sources, including solar, wind and hydropower. This can attract investment in the development of energy infrastructure and clean technologies.

Business and investment support structures

In Mongolia, there are certain structures and measures to support business and investment, which are created to attract foreign investors and stimulate economic growth. Here are some of them:

1. Mongolian Investment Agency (MIA). MIA is the main government agency responsible for attracting foreign investment to Mongolia. They provide information and advice on investment issues, help organize meetings and negotiations with government agencies and assist in resolving emerging problems.
2. Foreign Investment Law. Mongolia has taken a number of measures to improve the investment climate, including the adoption of the Foreign Investment Law. This law provides various benefits and guarantees for foreign investors, such as property protection, freedom of movement of capital, and discriminatory treatment.
3. Special Economic Zones (SEZ). Mongolia has established several special economic zones in order to attract investment and stimulate the development of certain industries. These zones provide tax incentives, simplified registration procedures and other benefits for investors.
4. National Center for Small and Medium Enterprise Development. This center provides support and advice to small and medium businesses in Mongolia. They help develop business plans, train entrepreneurs, and provide financial support.
5. International Agreements. Mongolia is a party to various international agreements such as the Free Trade Agreement between Mongolia, China and Russia.
6. Infrastructure projects. Mongolia is actively developing infrastructure, especially in the sectors of transport, energy and communications. This creates potential for investment in projects such as railways, highways, ports, airports and power generation.
7. Financial support. Various financial instruments and investment support programs are available in Mongolia. International financial institutions such as the World Bank and the Asian Development Bank provide financing and technical assistance for investment projects. There are also state and commercial banks offering loans and financial instruments to investors.