Legal Alert: Public-Private Partnership Legal Environment Reform and Policy Framework
INTRODUCTION
The Law on Public-Private Partnership (PPP Law) entered into force on 31 December 2023, comprising 9 chapters and 60 articles, for the purpose of implementing PPP projects in the field of public infrastructure and public services, supporting private sector participation and investment, ensuring efficient long-term cooperation between the public and private sectors based on the optimal risk management of partnership agreements, and creating a favorable legal environment in connection with the implementation of proper financial and budget management. The draft PPP Law was developed through a comprehensive process involving research, meetings, and discussions with relevant state and local government agencies, private-sector organizations in the respective fields, as well as consultants and experts from international organizations such as the World Bank and the International Monetary Fund. The feedback and recommendations received through these consultations were reviewed and incorporated into the draft. The research includes:
- Preliminary Research Report on the Draft Law on Public-Private Partnership;
- Recommendation and report prepared for developing the Draft Law on Public-Private Partnership of Mongolia based on a comparative study of international experience on Public-Private Partnership laws;
- Report and recommendation titled “Budgetary Expenditures and Risk Management of Public-Private Partnership Law of Mongolia” issued by the International Monetary Fund;
- “Policy Recommendation for Public-Private Partnership projects and Other Foreign-funded State Budget Investment Projects” prepared by the World Bank”;
- Recommendation and report titled “Development of Draft Law on Public-Private Partnership” prepared by the Asian Development Bank;
- Research report on overlaps, gaps, and conflicts in the Law on Concessions;
- Impact assessment report on the Draft Law on Public-Private Partnership;
- Cost estimation report for the Draft Law on Public-Private Partnership.
It has been identified that there is an urgent need to establish a clear, actionable, and internationally credible set of policies to govern the lifecycle of PPP projects in light of the adoption of the new Law on Public-Private Partnership. In this regard, the Ministry of Economy and Development (MED), in collaboration with Cybiant company, over a six-month period with financing from the Asian Development Bank (ADB), completed the development and approval of nine key policy documents that form the foundational framework of Mongolia's PPP system. These policies have since laid the foundation for improved governance, transparency, and investor engagement in PPP projects across the country. Furthermore, the collaborating company has stated that during the policy development process, guidelines and global best practices from international organizations such as the World Bank, UNCITRAL, and the EBRD were utilized, and the policies were adapted to align with the specific characteristics of Mongolia's governance structure and legal environment.
