Legal Market Overview
A commodities-driven economy reliant on coal and other natural resources such as minerals, Mongolia has seen a slowdown in the capital markets in recent years, as well as the Mongolian government deleveraging parts of its economy to pay down external debts to China.
The legislative reforms of 2019 remain in effect, notably shifting power away from the presidency and towards the prime minister, as well as significant reforms to taxation in Mongolia. Of particular interest has been the implementation of a reduction of withholding tax on key areas such as mining rights and mineral exploration to a flat rate of 10%.
Green energy remains a niche area of investment, although there has been an uptick in wind farm investment from Japanese banks, with the government of Mongolia in 2018 setting out a plan to commission at least two major wind power projects a year for the foreseeable future to reduce its energy dependence. Additional investment into major solar power projects is expected to continue as well.
Notably, Mongolia’s response to Covid-19 was swift and effective, showing its centralised pandemic response was robust, ensuring that only approximately 300 total cases were recorded and no recorded deaths. The Mongolian markets remain at average real GDP growth of -1% and an average inflation rate of approximately 5%. Chinese investment remains constant through Covid-19, with no obvious changes made to long-term plans. Japanese investment also appears to have continued with little serious change.
The structure of Mongolian firms is split into two different service offerings: local Mongolian firms specialise in Mongolian law, while international firms practice international law. Since their service offerings differ considerably, both Mongolian and international firms see each other as partners in the legal market.
In 2020, local firms lead in the market: MahoneyLiotta LLP, MDS & KhanLex LLP, Melville Erdenedalai LLP were all notable for their work, although Australian-based firm Minter Ellison has made a name for itself. Anand Advocates LLP, DB & GTS, and Nomin & Advocates LLP are also strong firms worth paying attention to.