Mongolia 2014

In terms of free and fair elections, Mongolia scores high. For decades, Mongolia had been a mere satellite state of the former Soviet Union. But since the peaceful revolution of 1990, the country has undergone a remarkable transformation towards a democratic system. Elections for the 76-seat parliament are held every four years. The 2008 elections were overshadowed by bloody unrest due to allegations of fraud and election manipulation. In the 2012 elections, changes were made to improve the electoral process. These included the introduction of biometric voter identification papers, vote-counting machines, quotas for female candidates and more stringent procedures in the General Election Commission. Mongolia’s party landscape is dominated by three major parties, the Democratic Party

There are no unconstitutional veto players in the political system of Mongolia. Civilian control over the army has been established. Business interests or other pressure groups remain largely subordinate when it comes to policy-making. That the government does not always operate with complete transparency has been a cause of concern. Nevertheless, the integrity of the government is not threatened by extra-legal powers.

Freedom of the press is guaranteed by law. The country has a wide range of privately owned print and broadcasting outlets, with international media groups moving into the market. In the vast countryside however, Radio Mongolia remains the main source of information. Internet access is free, though there is a certain level of censorships on sexual and violent content. Censorship in news reporting is not uncommon though. Several libel, defamation and secrecy laws are in place. They restrict critical reporting, specifically related to government activity. Breaching those laws is punishable with high fines which in turn leads journalists to practice self-censorship. Mongolia’s Communications Regulatory Commission (CRC) holds a “forbidden words” list that seeks to limit

In theory, the Mongolian judiciary is independent. But this is eroded by several factors: The rules regulating judicial independence are not properly enforced. Judges are often nominated and selected in an opaque nomination processes based on personal or party relationships rather than professional qualifications. Furthermore, bribes often determine the outcome of court cases.

Corruption still remains a serious problem but anti-corruption efforts have been stepped up significantly and a decline of corruption can be reasonably expected in coming years. A number of laws (e.g. the Conflict of Interest Law of 2012) were passed during the past few years. They penalise offences such as giving and accepting bribes, misuse of budget, unjust enrichment and conflicts of interest. Sanctions for offences under Mongolia’s anti-corruption laws reach from dismissal from public office to the invalidation of decisions made by the offender and the confiscation of property and profits. Since the Democratic Party’s election win in July 2012, there have been a number of high-profile arrests. The former President of the Mongolian People’s Revolutionary Party was

Mongolia took a huge step forward in 2012 and abolished the death penalty after a two-year moratorium. Freedom of assembly and association are mostly respected and many NGOs are able to operate without harassment from government. However, serious issues remain centred on the conduct of enforcement agencies. There are still allegations of extrajudicial killings, unlawful detainment and torture. Mongolian prisoners routinely complain of cruel punishments and ill-treatment. 

In theory property rights are protected but enforcement remains weak. The same applies to contractual rights. Judges often do not respect contracts or tend to ignore their provisions. The protection of intellectual property rights is not properly enforced. Pirated goods are readily available. 

Government spending (including consumption and transfer payments) is relatively high, equalling about 45% of GDP.

Mongolia has a low top income tax rate of 10% and a moderate corporate tax rate of 25%. Other taxes comprise value-added tax, excise tax on alcohol and vehicles, and dividend tax. Overall tax revenue represents about 33% of the GDP.

Private access to credit is fairly easy, thanks to a restructuring of the banking sector in 2011-12. Access to credit information has recently been improved by guaranteeing borrowers’ rights to look into their personal data. By and large, the government stays out of the financial sector, and foreign investors enjoy a mostly unconstrained access to the domestic capital market. Fourteen commercial banks operate in Mongolia. The number of state-owned banks has been reduced. Additionally, a number of smaller, mostly unregulated lending institutions exist. Starting, running and closing a business are protected by the country's regulatory environment. Starting a business takes 11 days and 5 procedures (compared to 12 days and 7 procedures in 2013) and has been made easier with the

Mongolia’s weighted average tariff rate is about 5.1%. International trade is relatively free and liberalisation is ongoing. But import and export restrictions and taxes, weak enforcement of intellectual property rights, and inefficient and corrupt customs implementation pose an obstacle to international trade.