Since 1990, Mongolia is pursuing an open economic policy with reforms in the social and economic fields and is promoting foreign direct investment.

In order to attract FDI, the Parliament of Mongolia has approved the first ever Foreign Investment Law in 1990 which was amended in 1993 and 2001. It established the rights of foreign investors, including the right to invest in any sector and any region that is not prohibited by law, register companies, lease land, repatriate investment returns and enjoy legal protection and treatment no less favorable than that granted to Mongolia investors.

According to the Law, foreign investment within the territory of Mongolia shall not be nationalized or be subject to unlawful expropriation. Foreign investors accorded equal and no less favorable treatment than that accorded to Mongolian investors and can possess, use and dispose of their investments.

According to the law on Foreign Investment, a business entity incorporated under the laws of Mongolia that has minimum capital of 50,000 USD is a foreign investment entity.

Why should you invest in Mongolia? Becuase Mongolia offers the following favorable conditions for foreign investors:

- comparatively stable political situation and open economic policy

- a strategic location between vast emerging markets of Russia and China

- extensive and largely untapped natural resources

- favorable legal framework

- educated and cheap labor force

- clean water, air and ecologically favorable environment

- membership in WTO, IMF and World Bank

Mongolia has signed "Agreement on Avoidance of Double Taxation" with 19 countries of which negotiations with 9 countries are being effective into force and also has negotiated "Investment protection and Mutual protection Agreement" with 28 countries. Mongolia has joined the "1965 Washington Convention on Settlement of Disputes" in 1996 and the "1985 Seoul Convention on establishing of multilateral investment insurance agency" in 1999. In 1997 Mongolia became a member of the World Trade Organization.

Foreign investors can invest in all sectors of Mongolian economy except cultivation, collection and sale of drugs and drug-containing herbs, manufacturing of military weapons and guns, and pornography.

Special authorisation is needed for investment in banking, financial and insurance services, manufacturing and sale of spirits, tobacco products, chemicals and explosives, establishment of hospitals. production and sale of medicines and biochemicals, and establishment of schools.

As of 1 January 2000 more than 1400 foreign companies and joint ventures representing 70 countries worldwide have been officially registered to operate in Mongolia. The aggregate amount of the investments total more than 300 million US dollars. Within this total, Chinese, Japanese, Russian and US companies are prevailing.

Trade and food sectors are leading in respect of the number of foreign investment companies, and construction, production of construction materials, mining, food and light industry, processing animal origin raw materials, transportation and agriculture sectors are the areas of most interest to investors.