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The mining sector was a key growth driver of GDP in 2011, when the economy expanded 17.3%. Since 2012 there has been a moratorium on new licences, which is officially set to expire at the end of 2012. Although the major projects are not producing as yet, mining is already the country’s most important economic activity, contributing 20.2% of GDP in 2011, according to preliminary estimates. Coal production and exploration have risen annually since 2003, but new laws are allowing the government more influence over foreign investment. The tax burden on mining companies is also likely to rise. Over the long term the logic of establishing Mongolian mining operations is compelling: only about a quarter of the country is thoroughly explored, and most of what is known comes from outdated knowledge from the Soviet period. That means decades of work for mining service companies – just not in 2013 or perhaps in the short-term future, given the ongoing legal uncertainties in the sector. This chapter contains an interview with Cameron McRae, President and CEO, Oyu Tolgoi.

While insurance in Mongolia remains in its nascent stages, important ongoing reforms may yet drive penetration, build local underwriting capacity and develop the first pool of domestic non-bank institutional investors. While the aggregate sums involved remain modest, buoyant growth bodes well for the medium term. The market is dominated by eight firms, which together account for 89% of non-life premiums. Three underwriters alone account for 54% of the market. New entrants are spurring competition with established players, driving innovation in product development and distribution channels. New rules for private insurers will have to be matched by wide-ranging reform of the states social insurance system. Promoting social acceptance of insurance will be crucial for long-term growth, with underwriters still to overcome distrust of private cover. This chapter contains an interview with T. Batzul, CEO, Mongol Daatgal.

The State Property Committee (SPC) created the Mongolian Stock Exchange (MSE) in 1991 as a vehicle for privatising state assets during the transition to a market economy. Despite early attempts to broaden the share ownership in state firms, shares became concentrated in the hands of a few, and, by 2010, it was estimated that 80% of the market’s capitalisation was owned by a dozen individuals. The MSE experienced a record-breaking year in 2011 when share prices surged thanks to foreign investor interest in the commodity-driven economy. Mining sector stocks performed especially well, with some coal producers seeing shares rise over 200%. Strong growth prospects over the medium term will ensure high returns for investors and will likely lead to the strengthening of the local currency. While some value investors will snap up cheap valuations during the economic rebound expected in 2013, the enactment of the new securities law is crucial to opening the market to new liquidity and issues. This chapter includes a viewpoint from James Passin, Principal, Firebird Management.

The main event for Mongolia’s economy in 2013 will be the opening of the Oyu Tolgoi copper and gold mine, which many see as a make-or-break moment. Coal, presently the country’s most important commodity, declined in price by some 15% in 2012, with volumes slipping by around 22%. In 2012 the current account deficit reached 16.7%, excluding mining-related imports, according to the IMF, compared to 11.3% in 2011 and 5.7% in 2012, with volumes slipping by around 22%. Exports fell from $4.7bn in 2011 to some $4.4bn in 2012. However, Mongolia seems set to see a commodity boom in 2013, with one high-profile mine starting production, and another planning to ramp up coal extraction. Yet mining is not the only sector with greater economic potential. A number of other areas also seem ripe for development, including tourism, agribusiness and renewable energy. This chapter includes interviews with Ch. Ulaan, Minister of Finance; P. Batsaikhan, Chairman and President of the Shunkhlai Group; and Jim Dwyer, Executive Director of the Business Council of Mongolia.

With Curtis, Mallet-Prevost, OBG outlines the key corporate, foreign investment, labour and property laws relevant to companies doing business locally in Oman. This includes an overview of Omani corporate law and the legal structures for doing business. The chapter also features a viewpoint with Bruce B Palmer, Managing Partner in Oman, Curtis, Mallet-Prevost.