Mongolia’s state-owned enterprises (SOEs) stand at a decisive crossroads, and reform is no longer optional — it is inevitable. Long considered the backbone of the national economy, they generate trillions in revenues and control strategic assets in mining, energy, and transportation. Yet inefficiency, indebtedness, and governance failures have turned many into liabilities, fueling public frustration and draining fiscal resources. The government’s 2025–2028 reform roadmap seeks to chart a new course — but which path will truly deliver?

Without governance reform, IPOs risk being just a mere window dressing.

Many previous governments failed in their plans to privatize 10–66% of 20 state-owned enterprises, but the initiative is now framed as the centerpiece of the 2025–2028 reform roadmap. On paper, the logic is compelling: IPOs promise transparency, broader ownership, and fresh capital to modernize state companies. But Mongolia has been down this road before: even after several SOEs were listed on the domestic market, inefficiency and political interference continued to undermine their performance. Unless governance and management problems are addressed, IPOs risk becoming symbolic gestures and another example of dead listed state-owned public companies that raise capital but fail to address deeper structural flaws.

At the same time, the financial potential is hard to ignore. From an earnings perspective, Mongolia’s SOEs also represent a massive pool of untapped capital. In 2024, they reported ₮5.7 trillion in net profit (~USD 1.7 billion). Applying a conservative price-to-earnings (P/E) multiple of 8–10, broadly in line with regional mining and energy companies, their combined market valuation could fall between ₮45–57 trillion (USD 13–17 billion). If the government proceeds with privatizing 10–66% of these firms, IPOs could realistically raise anywhere from ₮4.5 trillion to as much as ₮37 trillion (USD 1.3–11 billion) in fresh capital — a scale that would dwarf the current size of Mongolia’s capital market.

Realizing this potential, however, will require more than just offering shares to the domestic market. Dual listings in hubs like Hong Kong or London could open the door to deeper pools of capital, attract global investors, and subject Mongolia’s SOEs to the kind of international scrutiny that enforces discipline where politics has failed. 

Yet IPOs alone cannot solve Mongolia’s SOE dilemma. Real transformation may lie in broader strategies — from forging global strategic partnerships or investments to build a National Investment Fund. 

Strategic Partnerships: Opening Gates Beyond Capital

In many emerging economies, global partnerships through strategic investment have proven to be game changers. Kazakhstan’s energy sector, for example, has relied on joint ventures with foreign partners such as Chevron, the country’s largest international investor, and ExxonMobil, the world’s biggest publicly traded oil company — bringing not only capital but also advanced technology, know-how, broader business opportunities, and global market access. 

For a resource-dependent country like Mongolia, strategic partnerships are not just about fresh capital — they are about discipline. When international firms join forces with local SOEs, they bring global standards of governance, independent oversight, and professional management practices that Mongolia has long struggled to enforce internally. Such alliances can curb political interference, improve transparency, and demand efficiency where state systems often fall short. Beyond the money, this transfer of governance and management know-how may be the greatest value of all, giving Mongolian SOEs the chance to evolve from politically driven entities into professionally run companies that can compete on the regional and even global stage. Yet partnerships also carry risks — from overdependence on foreign firms to potential sovereignty concerns — underscoring the need for carefully designed agreements.

National Investment Fund: From Resource Rents to Long-Term Wealth

Another path lies in creating a National Investment Fund. Rather than allowing resource rents to be drained by subsidies and short-term spending, Mongolia could redirect SOE dividends into a professionally managed vehicle for long-term prosperity. Even allocating just ₮1–2 trillion annually would enable the fund to build up ₮5–10 trillion (USD 1.5–3 billion) within five years — roughly 10–15% of GDP — creating a stabilizing pool of capital for future generations. 

With the most recent example of Uzbekistan deciding to run the National Investment Fund by professional asset managers like Franklin Templeton, the fund could enforce global governance standards, smooth out volatile revenues, and invest in priority sectors from mining to energy and infrastructure. Norway’s oil fund shows how such a model can safeguard long-term prosperity. For investors, it would be the safest gateway; for Mongolia, a way to turn investments into real long-term alpha.

Risks and Challenges: The Power Problem

SOEs remain political instruments first and commercial enterprises second.

No matter which path Mongolia pursues — IPOs, global partnerships, or a national investment fund — the same underlying risk remains: power. SOEs remain political instruments first and commercial enterprises second. Boards are stacked with government officials, decisions bend to election cycles, and patronage networks thrive where independent oversight should stand. The result is a system that rewards loyalty over performance and politics over profitability. 

Transparency gaps widen the trust deficit, leaving both citizens and investors wary, while an overdependence on resource revenues keeps the economy hostage to commodity swings. Without fixing the power problem, every reform — IPOs, partnerships, or even a sovereign wealth fund — is doomed to fail. Until SOEs are insulated from political capture and governed with true independence, reforms will remain another cycle of promise without delivery — and Mongolia cannot afford another lost decade. 

Read the full report: Investor’s Guide to Mongolia: State-Owned Enterprises