Dateline: Ulaanbataar, Mongolia
I woke up at 3AM this morning to get to the airport on time. In a place as remote as Mongolia, non-stop flights to most places are hard to come by, and the idea of spending 21 hours laying over in Beijing before getting to Hong Kong didn’t sound very appealing.
Such is the price of the Nomad Capitalist lifestyle; weak air connections are something you might expect from a country that essentially gave birth to the concept of “nomads”.
In an attempt to soothe my weary eyes, the taxi driver changed from his folk music track to this:
There has been a lot of interest in investing in Mongolia, partially due to the country’s resources boom a few years back. However, for me Mongolia is a northern version of Myanmar; a lot of potential, but few small scale opportunities yet.
Many of those opportunities are in far-flung places like Mongolia that most people wouldn’t think of. Come to think of it, that’s where most opportunities of any kind are. After all, the benefit of being a Nomad Capitalist is doing stuff before everyone else thinks of it.
Following the same principles I always use to get info on the ground, I met with three lawyers in Ulaanbaatar to get the scoop on immigration:
Second residence in Mongolia
Obtaining residence is rather straightforward in theory: you’re either an employee, or you’re an investor. Since most of our readers aren’t employees – and certainly not in Mongolia – we’ll stick to the investment part. Employment visas in places like this tend to be easy anyway, once you have the job.
To qualify as an investor, you need to start a company and deposit $100,000. Similar to well-known programs such as Panama’s Friendly Nations Visa program, you don’t necessarily need to start a “real” business with activity; you just need a company in your name.
The Mongolian government website lists five steps to setting up a new company, each of which matches what a lawyer I was referred to here discussed.
The first step in setting up a company is choosing your sector. This is important to the government because many of the new companies here are set up to take advantage of the natural resources boom that was here a few years ago. There are still a number of mining opportunities so long as the government plays along, and there’s plenty of room for improvement in the banking sector.
Many of the top industries are monitored by the government, so if your sector qualifies, you’ll need to seek permission. If you’re setting up an online business, you don’t have to.
Once your company is formed, you need to open a bank account. Here’s where the biggest requirement comes in: in order to qualify for an Investor Card, you must deposit $100,000 in cash into your bank account (or, if you want less risk, bank accounts plural).
This cash needs to stay in the account(s) until your residency is finalized, at which point it can be removed. Transaction fees in Mongolian banks are relatively low, and the minimum investment is based in US dollars so currency fees should not apply if you are sending dollars.
The challenging part, I’m told, is sending money from your own country. If you apply for residency as a US citizen, the government wants to see money coming from the United States. That means that money from an offshore company would cause them to halt the process until they figure out the source of the money.
After the actual “investment”, you work with immigration to get the actual Investor Card, which is evidence of what is called “permanent residence”. The residence isn’t really PR in the traditional sense, because it must be renewed every year or two, often in perpetuity.
You do not, however, need to spend time in the country, and residency can be renewed via power of attorney with a good lawyer. (Out of three I met, one totally understood this concept.)
Citizenship in Mongolia
A Mongolian passport could come in handy for many of us whose Tier B passports restrict travel to certain popular destinations. Mongolia’s passport is not exactly great on its own; it does NOT offer access to the Schengen Area, the United States, or other English-speaking countries, nor do I see any reason for this to change.
In fact, the Mongolian passport offers access to a mere 56 countries, but among those are some good ones: Russia, China, Thailand, Brazil, and Serbia. Few westerners hold a passport with visa-free access to Russia or China, and most Tier B passports exclude visits to Thailand and most of the Balkans, including Serbia.
That means that being a Mongolian citizen could fill in some of the gaps and expand your visa-free travel privileges.
Like many countries in Asia, though, becoming a Mongolian citizen is challenging. The easiest way to obtain it seems to be marriage to a local, which never seems “easy” at all.
Obtaining residency alone is not a path to citizenship, either. Unlike in the Americas or Europe where you bide your time as a resident before qualifying for naturalization, Mongolia doesn’t work that way.
I suppose it makes sense in that most foreigners coming here to work or invest don’t really care about the citizenship. If you’re a Swiss guy, you’re not going to go through the hassles of becoming Mongolian just to skip the visa line at the Russian Embassy.
What you can do, however, is request that the President make you a citizen. The process is rather nebulous as there are no set guidelines of what you should do to become a citizen, and word is it requires a lot. After all, plenty of guys are coming and investing millions without even asking for a passport, so the barrier is rather high and not likely one that’s worth it.
So why get Mongolia residency?
One concept I frequently discuss is the idea of achieving solutions rather than chasing shiny objects. What benefit does residency in Mongolia serve, particularly without much likelihood of citizenship as a payoff?
For most people, I imagine there are better options. However, if you believe that Mongolia’s economy will rebound, then getting in now could be a good idea.
CNN recently noted that Mongolia’s economy went from “boom to disaster” in the last five years, with GDP growth all but erased. However, the country still has plenty of natural resources, and if things in neighboring China pick up again, that could mean big money.
When that happens, I imagine Mongolia will strengthen its residency rules. They already have to some extent; you used to be able to bring your entire board of directors with a single $100,000 investment, whereas now you’re required to invest $100,000 per person.
To the extent that residency may become more difficult to obtain in a country that may become a hot place to be, and that some presence here might eventually result in citizenship if naturalization laws loosen up, residency isn’t a terrible call option for a frontier market entrepreneur or investor.
For everyone else, ask yourself: do you want to be a resident of Mongolia?