Over the past decade, Mongolia’s construction sector has developed rapidly, becoming one of the main drivers of the national economy, as many studies have shown. Across the country, new residential zones have been added, and satellite cities and sub-center projects have been pushed forward with investments from both the government and the private sector.
Expanding the capital city through sub-centers to reduce traffic congestion, ease the burden on public services like hospitals, schools, and kindergartens, and to decentralize the population is the right approach. However, a key issue that arises is the level of participation of national manufacturers and businesses in the ongoing projects and programs.
This has become a constant topic of contention and debate. Every construction effort involves taxpayer money to some degree, and more importantly, it affects the livelihoods, jobs, and future of many thousands of people and national industries.
Nevertheless, industry insiders have long criticized that the space for domestic producers and contractors in the construction sector is shrinking year by year, and the government itself is allegedly implementing a covert policy of exclusion and suppression. “The moment something starts, there's a desire to buy goods and services from abroad.”
According to the National Statistics Office, over 200 large and small building materials factories are registered and operating in Mongolia. They produce cement, bricks, lightweight blocks, glass, steel, insulation materials, and rebar, among others. Many of these have the capacity to supply up to 500,000 tons of products annually, yet they reportedly cannot participate fully in national projects and developments. Experts in the field say that the tender requirements for government and concession projects do not match the real capabilities of domestic manufacturers.
They note, “Government agencies usually require companies to supply around one million tons of product per year in contracts. There are barely any factories in Mongolia with that kind of experience or capacity, which simply opens the door for foreign suppliers. In other words, while giving preferential treatment to foreign companies, the government fails to support domestic producers through policy. Even though they are aware of the financial and technological limitations and capacity issues of local companies, the tender criteria are excessively high—this is what leads to these criticisms. Furthermore, due to lack of investment, bank loans, and government support, the competitiveness of domestic factories continues to decline. The hidden ‘suppressive policy’ that some authorities practice has significantly hindered the development of the sector.”
As a result, this sector, which has a 99-year history, has not yet stabilized. Domestic production remains unstable, and the market is still heavily dependent on imports. National producers and contractors often submit complete documentation for tenders in the capital and provinces but are frequently excluded on grounds such as “lack of experience, weak financial capacity, or insufficient production scale”.
These factories and companies provide jobs to many people and try to compete fairly in the industry. But they are often mocked as “wannabes,” while both public and private institutions clearly show a strong preference for buying goods and services from abroad at the earliest opportunity.
At the recent “Barilga Expo 2025” one manufacturer said, “Not all national manufacturers are of poor quality, and not all foreign companies are excellent either. But lately, the capital city’s road, building, and other construction projects have started employing more foreign workers—especially contractors from China and other countries. The reason again comes down to tenders. Our authorities now frequently announce international tenders. We’re not denying the value of foreign investment, manpower, construction quality, or technical capacity. But currently, there are about 17,000 companies registered in Mongolia’s construction sector, of which only half are active. Over 70 percent of those are small to medium enterprises with fewer than 50 employees. Think of how many lives depend on them. The government claims to support SMEs, but in reality, it continues to suppress them. Even the ‘Barilga Expo’ itself now clearly reflects this.”
9.1 trillion MNT circulating in construction sector
Even the “Barilga Expo”, which is supposed to help companies introduce and sell their products and services to the public, has, they say, fallen into foreign hands. This major construction event took place from September 12 to 14 at the “Buyant-Ukhaa” Sports Palace. In recent years, the event has grown into an international exhibition. At this 38th edition, around 60 companies from more than 30 countries—such as China, Germany, Italy, Japan, Russia, South Korea, and Turkey—participated to promote their products and services.
According to presentations at the expo, the volume of construction and major repair work increased from 7.5 trillion MNT in 2023 to 9.1 trillion MNT last year. At the 37th Barilga Expo held in April this year, around 400 companies participated, but only about 100 of them were Mongolian. This was criticized at the time as well.
Therefore, many suggested that exhibition space should be allocated more equitably to national manufacturers and that more attention should be paid to local companies. It is quite disappointing that the only major event that showcases the current state of Mongolia’s construction sector is now dominated by foreigners.
Although the goal is to promote and showcase domestic products and services, it has long turned into a chaotic affair under a nice name. According to last year’s data from the National Statistics Office, around 96,000 people worked in the construction sector, earning an average monthly salary of two million MNT.
The majority of essential building materials in the market are imported. Only cement production met about 60 to 70 percent of domestic demand. Most other materials were imported from China. Moreover, the participation of national companies in the construction sector was relatively low. The National Statistics Office’s report, “Construction Sector Overview,” states that about half of the construction and housing project work was carried out by foreign companies.
Researchers say that even Mongolia’s largest companies have been downsized and are increasingly being forced into the small and medium enterprise (SME) category.
Will we celebrate 100 years of construction with this outlook next year? 
According to statisticians, the main challenges facing national manufacturers are multifaceted and clearly have a significant impact—both directly and indirectly—on the development of the construction sector.
As mentioned earlier, there has been continued criticism regarding the lack of access to project and development tenders for domestic companies. The Mongolian Builders’ Association has held multiple press conferences demanding greater involvement for national producers.
They argue that unless the government implements a consistent policy to support domestic manufacturers, the market will soon be monopolized by a handful of large corporations, pushing out small and medium-sized enterprises (SMEs).
Therefore, they insist on adjusting tender thresholds and requirements to match the real capabilities of national companies, increasing their access to major projects, and maintaining market balance by mandating a set quota for domestic businesses in government procurement. Otherwise, Mongolia’s construction sector will enter its 100th anniversary next year—and likely the years that follow—with this same grim outlook. In developing countries like ours, government policy plays a crucial role in supporting national industries.
For example, Kenya’s National Construction Authority operates with the purpose of supporting small and medium-sized manufacturers. It provides training for construction companies, implements professional development programs, and enables them to participate in tenders—focusing on building their competitiveness.
Similarly, Tanzania’s National Construction Council, funded by the national budget, also enforces policies that support domestic production. The council sets quality and safety standards for the construction sector, works to improve workforce skills, and supports SMEs to ensure sustainable development within the sector.
 Russia is considered a good international example for implementing various supportive measures for construction companies—such as offering flexible loans, tax incentives, lowering mortgage interest rates, and increasing state-backed investments.

Published Date:2025-10-05