Mongolia's SOE Reform at a Turning Point
Mongolia has taken a concrete step toward reforming its SOEs, signing a MoU with Franklin Templeton, one of the world's largest investment management firms. The plan is to consolidate SOE shares under a National Investment Fund and list them on domestic and international capital markets by 2027.
This reform feels different from previous attempts. Past initiatives rarely advanced beyond domestic policy announcements. This one brings a global asset manager to the table, and that alone makes it more promising than anything the last three decades have produced.
The Scale of Mongolia's SOE Challenge
The SOE sector is enormous and uneven. A total of 108 SOEs currently operate in Mongolia, employing 60 thousand people, with total assets of ₮60 trillion. The economic weight is concentrated in a handful of names: in 2024, SOEs generated ₮26 trillion in revenue and ₮5.7 trillion in net profit, with nearly two thirds flowing through Erdenes Mongol Group. Readers of our “Investor's Guide to Mongolia: State-Owned Enterprises” will recall how abruptly that fiscal contribution scaled up: dividend transfers alone hit ₮3.6 trillion in 2024, roughly eight times the previous year, driven by Erdenes Tavan Tolgoi payouts under the new Sovereign Wealth Fund Law.
The weaknesses are just as large. Roughly one in four SOEs operates at a loss, absorbing public resources through inefficient operations and subsidized services, while many survive on debt ultimately refinanced through the state budget. Corporate governance remains weak: boards are still dominated by government officials, ministries frequently intervene in decisions on budgets, staffing, and borrowing, and political priorities often outweigh commercial objectives.
What is different this time
The MoU with Franklin Templeton is not an isolated move. In May, the government restructured Erdenes Mongol into the Chinggis Khaan Sovereign Wealth Fund Corporation, consolidating state-asset management, IPOs, and privatization under a single professional body. The Franklin Templeton partnership represents the next step in that broader restructuring.
The agreement sits under the government's "Unlock" initiative, with a Working Group from the Ministry of Finance, the Cabinet Secretariat, the State Procurement and Property Agency, and the Chinggis Khaan Sovereign Wealth Fund. The MoU commits both sides to joint research on six items: SOE valuation and ranking, offering preparations, governance reforms, investor demand analysis, fund structuring, and the implementation roadmap. The stated end goal is a first portfolio listed on international capital markets by end-2027, via dual-listing IPOs.
Can the SOEs actually be ready by 2027?
The government says it will not rush: SOEs will be evaluated first and listings proceed only once governance, financial standing, and operational readiness are up to standard. That is the correct order, and Mongolia has always done it backwards. Several SOEs were listed on the MSE in the past, yet their results were mixed at best, with little evidence that listing alone improved efficiency or governance. An IPO without governance reform is window dressing, as we argued last September.
That sequence is right, but it is also 18 months. In that window, dozens of SOEs need to be valued and ranked, boards restructured, reporting lifted to international standards, the National Investment Fund legally structured, and offering documents drafted and marketed. Mongolia starts from further back on governance than its peer countries and runs on a tighter political cycle. The calendar the government has set may not accommodate the sequence it has committed to.
What is at stake, and where to watch it
The bigger prize sits beyond the SOEs themselves. Capital markets are where governance reform actually gets tested: boards can be reshuffled and reports rewritten, but only listed companies face daily pricing by outside investors and the disclosure discipline that comes with it. If SOEs are listed properly, with governance fixed before the ticker, Mongolia's local capital markets get lifted in the process, gaining depth and credibility they have long lacked.
The first public checkpoint is already on the calendar. Mongolian SOEs will present their equity story to international investors at the Mongolia Investment Forum: London 2026 on September 15, 2026, where Franklin Templeton will also participate. For professionals wanting to judge whether the reform is on track, that room will be the earliest place to test it against the people responsible for delivering it.
For the first time, Mongolia has sequenced the work correctly and brought in one of the biggest names in global asset management to hold it to the timeline. The signing was the easy part. If the evaluations, board changes, and disclosures actually materialize, the rest is execution.
Mongolia Investment Forum: London → https://mif.capitalmarkets.mn/london-2026
Read the “Investor's Guide to Mongolia: State-Owned Enterprises” → https://capitalmarkets.mn/insights/investor-s-guide-to-mongolia-state-owned-enterprises
