Mongolia is a rapidly-developing, resource-rich country in the midst of significant economic transformation. Historically, Mongolia’s economy was lead by agriculture and herding, but recent discoveries of mineral deposits have attracted significant levels of foreign investment into the mining sector and heralded an economic boom for the country as a whole. The International Monetary Fund forecasts real annual GDP growth to be over 16.8% over the coming three years.

Located between Russia and China, Mongolia is poised to become a major global commodities supplier as several of its major mining deposits come online. Only a third of the country’s massive territory has been sufficiently explored to date, yet over a dozen major mineral deposits with total estimated reserves valued at more than US$1 trillion have already been discovered. Further geological prospecting is underway for oil and gas, rare earth metals, and other minerals.

In 2011, the GDP of Mongolia grew by 17.3 percent and is expected to maintain double-digit growth in 2012 in spite of a notable drop in volume and prices of Mongolian commodity exports. Nonetheless, the copper and gold mega-mine, Oyu-Tolgoi, is expected to start production in 2013 and projected to generate over US$60 billion in revenues over three decades, just 80 miles from the Chinese border. Another nearby mining asset, Tavan Tolgoi, is one of the largest untapped coking coal deposits in the world with proven reserves of approximately 5 billion tons. While initial production has already started on a small scale, it is expected to generate US$1.5 billion annually for thirty years once in full operation.

While rapid GDP growth over the next several years will be largely driven by mining, other industries such as agriculture, infrastructure, and services are also quickly gaining momentum. The Mongolian crop farming sector is seeing record wheat and vegetable harvests while meat and dairy sectors have also been experiencing sustained growth.

World Bank reports have found that Mongolia is one of the top ten business reformers due to recent reduction of regulatory barriers that have allowed for local companies to conduct business more freely. Mongolia attracts investment with one of the lowest tax regimes in the region: a business tax ranging from 10 to 25 percent and a flat personal income tax of 10 percent. In addition to low tax rates, investors can take advantage of the various incentives, such as an investment tax credit and provisions for loss carry-forward in certain sectors.

Schulze Global sees potential for rapid and sustainable economic growth in Mongolia. The country’s rich mineral deposits and strategic location as China’s immediate neighbor provide a basis for development that will benefit all sectors of the economy. Similar to oil-rich Arab nations, the development of Mongolia’s natural resources will lead to significant demand in sectors such as financial services, logistics, real estate, infrastructure, mining services, education, and healthcare.