Experts say that Mongolia's new foreign investment law will reduce restrictions on investors. They say the new law is a positive step that will provide increased clarity and certainty for foreign investors, mainly in the natural resources sector, around the terms of their prospective investors.

Hong Kong-based projects expert, Kate Terry of Pinsent Masons, the law firm behind Out-Law.com, said that the new regime was part of an increasing trend towards reducing "resource nationalism" in emerging mining jurisdictions. The regulations came into force on November 1, and removed restrictions placed on foreign investors in the country's "strategic" sectors, such as mining.

The 2013 Mongolian Law on Investment removes the distinction between foreign and domestic private investors in order to encourage investment, according to sources. It removes the need for government approval before private companies can invest in mining, telecommunications and banking projects, although firms with 50 percent or more foreign government ownership that want to hold more than 33 percent of the company will still need to obtain approval from a state administrative body in charge of investment affairs.

The law also provides investors with tax stability by freezing VAT, corporate income tax, mining royalties and customs duties at the rate applicable when the investment is made for between five and 22 years, depending on the investment amount and location within the country. Investors will also be able to freely transfer profits and assets out of the country, as long as they have "properly fulfilled their tax payment obligations" in the country.

According to official estimates, international investment in Mongolia fell by 43 percent in the first half of 2013, following more than a year of uncertainty over the investment rules.