Privatization in Mongolia
In 1990 the public sector in Mongolia, as in other post-communist countries, accounted for about 90 percent of the gross domestic product (GDP). With a view to reducing this share, the government adopted a sweeping privatization program in mid- 1991. The State Privatization Commission (SPC) was created to oversee the privatization program and placed under the responsibility of the Deputy Prime Minister. Parliament then passed a wide range of laws and regulations to improve the legal basis for capital ownership. The Privatization and Companies Law was passed in June 1991. A stock exchange was created a few months later, in 1992, although a secondary market in equities did not emerge until 1995. The Foreign Investment Law was enacted in July 1993 to provide liberal provisions for profit remittance, tax holidays, and exemptions from customs duties and sales taxes. The Securities Law was passed in June 1994 as a basis for a secondary market trading of shares; and legislation to clarify land ownership and other rights was enacted in November 1994. The privatization of thestate owned enterprises was regarded as “the center of the reform program,” and many senior government officials regarded this as the most important achievement of the reform process. The same priority was given to price liberalization.