US Embassy’s 2010 Mongolia Investment Climate Statement candidly
assesses FDI issues, including expropriation of uranium licenses

The American Embassy in Ulaanbaatar has released its 2010 Mongolia Investment Climate Statement, a 77 page comprehensive, detailed and candid tour d’horizon of all issues affecting foreign direct investment (FDI). The full text is available below.

The 2010 statement – an annual report required of all US embassies worldwide -- notes the progress made in some areas but also identifies several 2009 regulatory and legislative actions in environmental law, taxation, and mineral rights that have effectively narrowed Mongolia's openness to FDI. Compiled by embassy officers and staff, the statement was then personally reviewed and approved by US Ambassador Jonathan Addleton.

Of particular concern, according to the statement, are changes to the uranium law that set a precedent for uncompensated expropriation that will further chill and discourage FDI and domestic investors and which – if enforced -- would violate more than a dozen bilateral investment treaties Mongolia has signed with the USA and other nations. A bilateral Canada-Mongolia Foreign Investment Protection and Promotion Agreement (FIPA) has been in negotiation for several years.

On the positive side, the statement cites the signing of the Oyu Tolgoi mining agreement, which demonstrates that Mongolia can welcome key projects involving foreign investors and do so without expropriation of foreign-owned assets.  Also on the plus side are important reforms in the tax code, including extending loss-carry forward provisions and terminating the Windfall Profits Tax on copper and gold in 2011.

 However, although most Mongolian industrial and economic strategies do not discriminate overtly against foreign investors, specific governmental actions regarding foreign involvement in uranium exploration and development have ignited public criticism that the government is curtailing the rights of foreign investors in favor of the Mongolian state.

In addition, the US Embassy – as well as other diplomatic missions and businesses in Mongolia -- express deep concern about abuses of Mongolia’s exit visa system by both Mongolian public and private entities in disputes with foreign investors. For further information or to share your comments on the statement, please contact Dr. Michael D. Richmond, Senior Commercial Specialist at the US Embassy:

Email: [email protected], Tel: 976 (11) 329-095, Fax: 976 (11) 320-776

Click here for full PDF text of 2010 Mongolia Investment Climate Statement.

Ambassador Jonathan Addleton

US Embassy in Ulaanbaatar