The Parliament of Mongolia approves Investment Law

A highly anticipated decision was made by Parliament yesterday with the passing of the nation's investment law. Parliament members agreed that the law is meant to provide legal guarantees and rights to both domestic and foreign investors to create sustainable working environments, attract foreign investment and to support exports. Three types of investment funds will be established with the passing of the law.

The new law stabilizes taxes for investors who bring more than 15 billion tugrug (around 9 million US dollars) into the country. Four kinds of levies would be stabilized for 10 to 13 years depending on location and investment value. A mining boom has given Mongolia one of the world's highest economic growth rates and created a wealthy new elite. That windfall, however, has also raised accusations of exploitation by foreign companies and concerns over the environmental impact of the mining industry.

In 2012, Mongolia brought in a stricter foreign investment law that tightened approval requirements for foreign companies seeking to do business in "strategic" sectors such as minerals. Incoming investment subsequently fell sharply, raising alarm bells. Mongolia's economy grew by 17.5 percent in 2011 but only 12.3 percent last year.

Growth slowed further in the first half of 2013 and foreign investment has dropped by 43 percent - prompting parliament to hold special sessions in recent weeks.