Mongolia has long relied on the exploitation of its vast mineral resources, which include coal, copper and gold, for economic development. The World Bank estimated mining's contribution to gross domestic product (GDP) at 20 percent currently, twice the ratio of a decade ago. But the country suffered amid the global commodity rout, with GDP tumbling to 2.3 percent in 2015, from 7.9 percent in 2014.
While the DM made significant legislative progress in liberalizing resource investment, policy flip-flops and a prevailing sense of nationalism dampened interest from foreign investors. In May 2012, the government passed a controversial law aimed at curbing foreign ownership in certain sectors, including mining, which Reuters reported led to a 43 percent annual crash in overseas investment during the first half of 2013, before the law was abolished.
Sentiment took another hit in October 2012, when Mongolia detailed Australian lawyer Sarah Armstrong, who was working in the country for SouthGobi Resources. Mongolia claimed Armstrong was a potential witness in a tax evasion case, but SouthGobi told journalists the move was payback for a dispute the company had with the government over mining licenses. Mongolia lifted the travel ban on Armstrong two months later following intervention from the Australian government.
Now that the MPP is back in power, economists anticipate improved policy coordination going forward, pointing to the party's robust track record of unity and leadership.
"MPP's victory will reduce political friction within the parliament given that MPP appears to be an older party with stronger structure and discipline, as compared to DP, which is operated by several factions," Citi economist Adrienne Lui commented in a note this week.
Moreover, MPP's parliamentary majority meant they could govern without the need to form a coalition government, thereby avoiding political compromise, a factor that plagued the DP, Hamilton said. Almost all anti-mining populists were ousted from parliament in last week's vote, paving the way for a healthier business environment, he added.