In its specific policies, laws, and general attitude, the Government of Mongolia (GOM) has tended to support foreign direct investment (FDI) in all sectors and businesses. In general, Mongolian law does not discriminate against foreign investors. Foreigners may invest with a minimum of US $100,000 cash or the equivalent value of capital material (office stock, structures, autos, etc.). In both law and practice, foreigners may own 100% of any registered business with no legal, regulatory, or administrative requirement to take on any Mongolian entity as a joint venture partner, shareholder, or agent. Mongolia pre-screens neither investments nor investors, except in terms of the legality of the proposed activity under Mongolian law. The only exceptions to this flexible investment regime are land ownership, petroleum extraction, certain rail projects, and strategic mineral deposits. Reflecting on the year just passed, 2010 presented investors with a very mixed business climate. Positively, the key Oyu Tolgoi copper-gold project (OT) continues to move forward, having brought over US $2 billion into Mongolia through technology, jobs, and other revenues. Although some clouds loom over the OT horizon, this marquee project represents and justifies Mongolia's investment potential for most investors. More negatively, 2010 continued regulatory and legislative trends that began in 2009 in the areas of environmental law, taxation, and mineral rights which have been widely perceived as narrowing Mongolia's openness to FDI. We expect these trends to bleed into other sectors into 2011 and beyond. While many Mongolian industrial and economic strategies do not discriminate actively or passively for or against foreign investors, specific governmental acts regarding foreign involvement in Mongolias nascent uranium sector as well as preferential treatment for state-owned mining ventures have spurred criticism that the government is curtailing the rights of foreign and domestic private investors in favor of the Mongolian state.
