Landlocked but not Mindlocked: Modernizing Mongolia from Mines to Minds – Kenneth Leung

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*This article is originally published in the Asia Pacific Policy Observatory December 2024 Report.

Bracing Transformations with Second-Wave Democracy 

As Mongolian People’s Party (MPP) Chairman Luvsannamsrain Oyun-Erdene assumed his second prime ministership on July 5, 2024, he extended an invitation to opposition parties in his acceptance speech to form a “Joint Government” for bold reforms and driving the nation’s “second wave of democracy”. 

Such an invitation by the third-consecutive-time ruling party might seem unnecessary (henceforth unexpected) at first glance, but MPP’s victory margin in the June 28 parliamentary election has shrunk from over 80% of parliamentary seats (supermajority) to just over 50% (simple majority) at the State Great Khural (i.e., parliament). The decision of a “joint government” as opposed to a “coalition” could also be seen as MPP’s strategic positioning against the backdrop of persistent corruption scandals, a sluggish economy and a distinction from previous renditions of a “fragile” coalition government. 

While Oyun-Erdene took over as Mongolian Prime Minister in 2021 and reshuffled the cabinet appointed by his predecessor in 2022, this election allowed him to overhaul government leadership following a series of constitutional reforms. The newly appointed 22 ministers across the political spectrum are tasked to promptly tackle the nation’s urgent developmental challenges in joint efforts. Appointing three Deputy Prime Ministers with distinct portfolios – one from each of the three major political parties: MPP, the Democratic Party (DP) and the National Labour Party (HUN) – instead of precedently one also ascertained Oyun-Erdene’s pledge for collaborative governance. 

The joint government is intended to fortify the legislative and governance support needed for Prime Minister Oyun-Erdene’s agenda on socio-economic reforms for liberalization and privatization. Specifically, the cabinet appointment of nine DP members, including Luvsannyamyn Gantömör as First Deputy Prime Minister and Minister of Economy and Development and Tsend Baatarkhuu to head the Ministry for Digital Development, Innovation and Communications (MDDIC), would bolster more progressive policies in the digital economy given DP’s advocacy for a more pro-business and investment environment with greater economic freedom and privatization. Besides, with the nation’s first MDDIC Minister Uchral Nyam-Osoryn being appointed as Minister and Chief of Cabinet Secretariat, Mongolia’s digital development and economic transformation shall receive further backing.

“I believe that science, advanced technology, and artificial intelligence solutions based on big data will provide advanced solutions to the transport logistics problems of landlocked countries in the near future… Mongolia is landlocked, but not mind-locked.”
– H.E. Mr. Luvsannamsrain Oyun-Erdene, July 2023 
Prime Minister of Mongolia

Transformative Leader for Transformational Time

As for Luvsannamsrain Oyun-Erdene himself, his rise to Prime Minister is perceived as a key transformative generational change of leadership in Mongolia. With fresh perspectives and international experience, he also positions himself as part of a “global wave of young leaders” that drives digital transformation and progressive governance with a global outlook. 

During Oyun-Erdene’s tenure as Chief of the Cabinet Secretariat from 2019 to 2021, he prioritized modernizing Mongolia through economic diversification and digital transformation. Traditionally a nomadic nation, Mongolia’s economy relies on the trading of natural resources including agricultural and animal products, rocks and minerals. In recent years, not only the country has been expanding their focus on tourism, digital service and blockchain/crypto industries, but the e-Mongolia platform was also launched in October 2020 to modernize the country’s governance.

In his first year of prime ministership in 2021, Oyun-Erdene doubled down on Mongolia’s Digital Nation 2020 ambition by pushing the E-Nation Medium-Term Plan (2022-2027) to achieve goals around digital infrastructure, e-governance, cybersecurity, digital literacy, innovation and production, and national development accelerator. Additionally, Mongolia’s Communications and Information Technology Authority has been revamped and elevated in 2022 to a ministerial-level body (i.e., MDDIC), in recognition of ICT being a “leading sector” of the nation’s economy.

Dissonance, Doubts and Disillusionment?

However, critics are raising eyebrows over Oyun-Erdene’s proposition of collaborative governance for rapid development could be a calculated move to further consolidation of MPP’s power without sufficient oversight given Oyun-Erdene now has the right to change cabinet members “at his discretion” following the constitutional amendment he pushed for in 2022. 

Furthermore, despite calls from Oyun-Erdene (and MPP) to combat corruption, Mongolia’s Corruption Perception Index (CPI) continues to “score well below the regional average” of 45 out of 100. In fact, the score dipped from 35 in 2021 to 33 in 2023 over the course of Oyun-Erdene’s prime ministership so far, and anti-corruption-related legislation first tabled in 2019 has seen little progress. In terms of press freedom, while there are early indications of the welcoming reform of the Law on Freedom of The Press 1998, Mongolia’s 2024 Press Freedom Index has fallen from last year’s 59.33 to 51.34 out of 100 – with a drop across all index indicators. And while the 2024 parliamentary elections are largely well-administered, there are reports of biased media coverage favouring the ruling party as well as incidents of cash bribery and election corruption being caught on camera.

It remains to be seen whether such “generational change” will see strides in upholding checks and balances or regress into old patterns. Yet, in one way or the other, we should expect Mongolia’s economy and its digital landscape to undergo progressive shifts under the expanded State Great Khural and multi-party cabinet following the 2023 constitutional amendments and 2024 parliamentary elections.

2024 State of Digital Governance

In regard to the current status of Mongolia’s overall digital governance, a sleuth of digital development laws have been formulated and enacted since the promulgation of its Digital Nation plan. With some of them repealing earlier adjacent versions of regulations, the Law on Public Information and Transparency, the Law on Digital Signatures, the Law on Cyber Security, the Law on Personal Data Protection, and the Law on Virtual Asset Service Providers were among the legal frameworks that entered into force in 2022.

With a certain extent of local adaptation, Mongolia’s latest digital development laws largely align with international standards and are interoperable with corresponding stipulations in other jurisdictions. This is seen to be intentional as a key objective of establishing these policies is to catch up with the global digital regulatory environment and ease business operations without bringing about extra debates to stall its overall E-Nation Plan (which could arguably give rise to the lack of transparency and public consultation in formulating these laws).

The Law on Personal Data Protection, for example, introduced to Mongolia almost all data subjects’ rights and obligations of data controllers and processors stipulated under the EU General Data Protection Regulation (GDPR) and OECD privacy guidelines. There are also no stringent restrictions on cross-border data flows and other compliance requirements. A 2022 UNSW Sydney research concluded the law to be “relatively comprehensive” and more progressive when compared with neighbouring jurisdictions including China, Russia and Central Asian (C5) countries. 

Nevertheless, scepticisms arise over the efficacy and enforcement effectiveness of these digital regulations, especially with the eroded confidence over ”notable implementation deficiencies” in combating corruption activities despite years of legislative efforts. As the set of digital development laws took effect, MDDIC envisaged their work to continue creating a favorable legal environment. Following the 2024 parliamentary elections, Mongolia’s overall quality of governance could be improved theoretically with better checks and balances in the case of a multi-party government.

In the meantime, the government has also been active in seeking technical assistance and advice from international bodies such as the Asian Development Bank (ADB) and the World Bank to identify issues and areas of improvement as the landlocked country transforms digitally. Most recently in December 2024, the United Nations Department of Economic and Social Affairs (UN-DESA) conducted a Capacity Development Workshop on National Data Governance Framework and Digital Government with MDDIC. UN-DESA identified the key challenges and gaps in Mongolia’s digital data management and cooperation to be its (1) lagged legal frameworks for emerging technologies and evolving digital landscape, (2) limited infrastructure, and (3) lack of digitally skilled personnel. The rest of this analysis will zoom in on how (and if) the newly elected Government of Mongolia is making plans and progress to address these current deficiencies.

Emerging Legal Frameworks for Emerging Tech and Threats

In October 2024, State Great Khural Chairman Dashzegviin Amarbayasgalan unveiled the “Three Pillars of Excellence” agenda as part of the Parliament 2.0 initiative for the current parliamentary term being the first after Mongolia’s 2023 constitutional reform. With the three pillars emphasizing human-centered laws, responsive legislation and clear legal frameworks, the agenda specifically highlighted to ensure evolving digital advancements are reflected across legal and regulatory frameworks. More broadly, State Great Khural also pledged to “simplify legal language for transparency, reduce ambiguity and differentiate between matters best addressed by law and those that require specific regulatory guidance”. Therefore, we shall expect more legislative activities under the current parliamentary term focusing on Internet and digital governance.

Among others, personal data and artificial intelligence (AI) shall be the first key digital policy movements with MDDIC’s scheduled launch of “Concept of Data Governance and National Artificial Intelligence Strategy of Mongolia” in January 2025. Therefore, reviews and amendments to the Law on Personal Data Protection should not come as a surprise. Once praised to be a relatively progressive piece of legislation than its immediate neighbours, further burnishment could be identified after three years since the Law was finalized. Taking cues from global data governance discourse, greater alignment on data classification and Mongolia’s overall enforcement capabilities might be addressed in the coming months.

In terms of the latter part of the launch, setting the course for an appropriate policy framework for AI would be a priority for the national strategy. Currently without one, Mongolia is likely to reference outcomes from global summits and other jurisdictions that already have AI policies in place. Yet, unlike data governance where EU GDPR is adopted as the main blueprint, Ulaanbaatar needs to take a wider array of governance propositions and ideologies into account with less of a “Brussels Effect” in the global AI arena. China, for instance, has been asserting Beijing’s influence with the “Global AI Governance Initiative” for Belt and Road Initiative participating countries (including Mongolia). Meanwhile, Mongolia also strengthened its Strategic Third Neighbor Partnership on digital economy and other areas with the U.S. and stepped up digital development cooperation with Singapore. 

Whether the national AI policy will be a set of guiding principles or an overarching piece of legislation like the EU AI Act remains to be seen, but the strategy is expected to table a more coordinated approach to improve Mongolia’s overall AI readiness, where it currently stands at 109th place out of 193 countries with a lack of vision. Such an intention was also reflected in the Joint Government Agreement “Courage for Rapid Development” and the subsequent Action Program for 2024-2028. By the end of 2028, objectives and projects under this Action Program should boost Mongolia’s GDP per capita by 80% to USD10,000. Achieving such an ambition would require a whole-of-a-society progressive adoption of ICT and AI technologies across education, mining, processing, energy, roads, transportation, logistics, health, and agriculture sectors.

Recent technical assistance reports by the ADB also identified other issues including outdated and varying bureaucratic procedures (e.g., licenses) with uneven adaptation to digitalization making the e-government initiative and vulnerability to cybersecurity threats with the absence of a national computer emergency response team (CERT). Besides, ADB sounded alarm over Ulaanbaatar’s insufficient legal and regulatory framework for financial technology (FinTech) in addition to the overall fragmented supervision and limited capacity. In addition to the latest efforts by Ulaanbaatar to strengthen the national e-commerce ecosystem, industry-/service-specific policies might also emerge to ensure regulatory authorities and enforcers are effective, coordinated and digitally enabled.

Interestingly, another possible stream of governance might emerge when taking a closer look at the incumbent Mongolian cabinet. HUN’s Togmidyn Dorjkhand was appointed Deputy Prime Minister in charge of competition Issues. In this newly created portfolio and additional role heading the Anti-Monopoly Agency by a DPM-level senior government leader, there could be a stronger emphasis on addressing antitrust and competition matters ​​for the betterment of trade and investment climate. On the digital front, Mongolia could ride onto the global trend of antitrust investigations against Big Tech as Ulaanbaatar works to develop its local and regional economies.

“Introducing a regulatory ‘sandbox’ within a comprehensive legislative framework aimed at facilitating the business landscape for cutting-edge technologies will ensure that the government actively fosters ongoing growth and innovation across key domains such as the space economy, artificial intelligence, IoT, and other emerging technologies.”
– H.E. Mr. Uchral Nyam-Osor, March 2024 
Then-Minister of Digital Development and Communications
(incumbent Minister of Mongolia and Chief Cabinet Secretary)

Project Connectivity: from Underground to Outer Space

For Mongolia, a nomadic country that dates back over 2,000 years and is currently the most sparsely populated sovereign state across the globe, nationwide systematic construction of infrastructure in fixed locations for mid-/long-term socioeconomic development has not been a priority. As a result, Mongolia has been focusing on developing and urbanizing the capital, where most economic activities happen in modern history. 

Today, almost half of the nation’s population resides in Ulaanbaatar and around 40% of Mongolians continue to practice traditional (self-sustaining) nomadic lifestyle without major utilization of urban infrastructures. With such a population distribution, while 23.8% of Mongolia’s habitable land has access to terrestrial or cellular networks, network coverage has reached more than 82% of the country’s 3.47 million population with all provincial capitals (i.e., aimags) having 4G access.

However, progress could be expedited with the latest “Action Program 2024-2028” that crystalizes Mongolia’s “Vision 2050”. Underpinning “Local and Regional Development” as one of eight key Visions, the Government of Mongolia looks to decentralize economic activities from Ulaanbaatar through diversification and specification. In order to develop an integrated infrastructure network for economic integration, critical infrastructure has taken center stage with the 14 mega-projects listed in the Action Program across the four years. With these mega-projects spanning from railways, water pipelines, mining, and renewable energy to Internet connectivity, they are intended to forge fundamental conditions for the country’s “rapid economic growth”.

One of the mega-projects is to launch Mongolia’s first independent national satellite in 2027 to make Internet networks available in “every corner of the country”. While this initiative was first announced in October 2023 with the partnership agreement signed between Thales Alenia Space and MDDIC in the presence of Mongolian and French presidents, embedding the project in the Action Program marked the National Satellite Project is now given the priority and budget to construct a high-performance Ku Band satellite (to be named “Chinggis Sat”) within the set timeframe. 

The Project was officially greenlighted by the State Great Khural in October 2024 with the Feasibility Study completed in December 2024. Further discussions in 2025 are anticipated when the Study is presented before the parliament and accessible to the public. Amendments to relevant laws shall follow with 15% of the Project’s funding allocated from the 2025 State Budget. 

While Chinggis Sat is still in the early stages of construction, the Mongolian government is already reaching out to potential foreign partners such as SpaceX for the launch and operation of the national satellite. Once in full operation, digital transformation and regional economic development will be given a further boost; disaster and emergency management capabilities will also be improved across the country that has the Altai Mountains to its West and the Gobi Desert to its South.

In the meantime, the Government continues to drive nationwide connectivity with a multi-pronged approach. SpaceX’s Starlink services were made available across the country from March 2024 after having obtained two licenses in 2023 to operate as an Internet service provider (ISP) utilizing low-earth orbit (LEO) satellites. Looking ahead, MDDIC announced in November 2024 plans to expand the country’s network coverage to 129 sub-districts (i.e., bags/brigades) in the next 24 months, connecting herding and nomad households to the Internet via fiber optic cables and landline technologies. 

Under Prime Minister Oyun-Erdene’s leadership, the Mongolian government has already made a plethora of commitments to remedying the limited infrastructure currently in place for economic development and digital transformation. Not only that, this administration is now even making its first aspirational moves to position Mongolia as a “high-value investment and R&D destination for global companies across the space and technology sectors”. With the latest launch of two domestically manufactured LEO nano-satellites “Cubesats” (via SpaceX) and plans to develop Mongolia’s own “space regulatory sandbox”, MDDIC and the rest of the government need to be all hands on deck and garner consistent sufficient financial and political support as the 620 objectives in the Action Program and other development projects progress in the current term of second Oyun-Erdene administration.

“Launching our own satellite marks a defining moment for Mongolia’s journey towards becoming a spacefaring nation. It signifies Mongolia’s commitment to fostering a thriving domestic space industry and its pursuit of a digital future driven by cutting-edge innovation.”
– H.E. Mr. Uchral Nyam-Osor, February 2024 
Then-Minister of Digital Development and Communications
(incumbent Minister of Mongolia and Chief Cabinet Secretary)

Luring and Nurturing Talents and a Youth-dedicated Year

In the past four years of Oyun-Erdene’s prime ministership, it is perceived that his emphasis on digital transformation and economic diversification attracts expatriates and the return of skilled Mongolians abroad to return home.

The latest push by the current Mongolian cabinet is reflected in its Action Program 2024-2028, which vowed to allocate at least 1% of the National Wealth Fund to innovation and technology and raise the expenditure on scientific and technological activities to 1% of Mongolia’s GDP. Such spending is coupled with the establishment of tax-free zones and science parks for information technology, R&D, and innovation activities, as well as a virtual tax-free zone to support IT production stated in the 4-year Program. Together with the ongoing social policy reforms and regional development strategies under “Vision 2050” and “New Recovery Policy” shall create a surmountable number of investment and job opportunities for foreign players which would eventually help upskill Mongolians to be digital-savvy.

Additionally, the Government of Mongolia has also been forging partnerships with global technology firms and international organizations such as KT on digital payments and related transformations; Alibaba on digitizing economic and industrial development; Huawei on technology-powered transitions and training; Google on digital access and closing the homework gap; Meta on cybersecurity and child online protection and various UN bodies on honing 21st-century skills. Ulaanbaatar’s nudges and incentives to lure public-private partnerships are not straggling. These collaborations could eventually result in the greater ease of doing business internationally driven by a constant supply of highly mobile and digital-skilled personnel.

On the other hand, the cabinet is also future-proofing Mongolia’s education system to bolster the digital literacy of future generations. In particular, the 2024-2028 Action Program underpinned the introduction of AI, robotics, and coding training from 3rd grade of generation education (primary education) and updating secondary and high school education curricula with hi-tech, space science, and environmental studies embedded to prepare young Mongolians for “future global development directions”. The government also laid out the objective to nurture pools of talents with specialization in cybersecurity and other digital technical skill sets.

With 2025 being the “Year of Youth” as declared by Oyun-Erdene’s cabinet, the government pledged to double down efforts to improve Mongolia’s legal environment and workplace for youth, empowering their participation in social activism, start-up and leisure activities. We shall expect more clarity from the government’s pending “Youth Development Strategic Plan 2025-2029” and subsequent announcements on youth and talents in the coming year amidst rapid digital transformation without leaving anyone behind.

“In the era of digital transformation, upskilling and reskilling throughout the life cycles is critical to help all, particularly youth today.”
– Dr. Changhee Lee, August 2024
Director of Country Office for China and Mongolia
United Nations International Labour Organization (UN-ILO)

To Mongolia and Beyond

During Prime Minister Oyun-Erdene’s deliberation of the Action Program 2024-2028 before the State Great Khural, he underscored upfront the significance of this current term for its time frame overlaps with AI’s rapid development “at the scale of an industrial revolution”. Therefore, it is crucial for Mongolia not only to have high hopes and ambitious plans, but also sound execution and coordinated governance in a sustained manner.

As the current government works to boost national unity through collaborative governance, we shall continue to assess how Oyun-Erdene (and President Ukhnaagiin Khürelsükh) leads the team in setting a new course for Mongolia’s digital transformation across sectors and the 21 aimags. Whether the current administration will be able to hit the mark of 620 Action Program objectives by 2028 or found fault for being overly aggressive with a lack of focus remains to be seen. But before the verdict was made in the coming years by the people, both the parliament and cabinet have so far demonstrated to be visionary, competent and practical (with the latest evidence from the approval process of the 2025 Budget Law). Luvsannamsrai Oyun-Erdene represents a generational shift in Mongolia’s leadership. As with the “younger, ‘Western’-educated” MPP leader securing a second term following the well-administered 2024 parliamentary elections, Mongolians exhibited continued eagerness for change in the face of global digital evolution. This tradition-rich and technophile nation is getting hard to overlook in global digital economic and policy developments as Mongolia makes greater “digital leaps forward” in becoming a more advanced “Mongolia”.

Written by Kenneth Leung (Edited by Jasmine Ko)

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