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Analysis

Competing demands: The country maintains a long-standing balancing act between its powerful neighbours
OBG
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Since Mongolia emerged from the break-up of the Soviet Union two decades ago, it has developed a strong commitment to democratic governance and economic liberalism, a commitment that it has demonstrated via six presidential elections and seven parliamentary ones, and its democratic institutions have rapidly matured, despite the substantial challenges faced by any transitional economy. This transition…

Analysis

Chinggis can: The country’s first sovereign bond was heavily oversubscribed
OBG
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The government in Mongolia has revealed plans to support domestic export manufacturers, with the aim of reducing a burgeoning import bill and boosting the country’s economic foundations. Prime Minister N. Altankhuyag said at a press conference in January 2014 that the government would allocate $216m from the $1.5bn raised by the sale of “Chinggis bonds” to provide loans to local businesses in…

Analysis

Funding the little guys: Small businesses comprise the largest number of players
OBG
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The development of financing for smaller companies is vital for the Mongolian economy. While resources-focused ventures have the potential to transform the country, it will be more modest enterprises that provide stable employment and income, long-term underlying growth and locally made products. Without a vital small and medium-sized enterprise (SME) sector, Mongolia could find itself with a perpetual…

Analysis

Learning to let go: The central bank has been a strong supporter of the economy, but may need to start backing off
OBG
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The Bank of Mongolia, the country’s central bank, has a tough job. Not only does it have to contend with international crises and crashes, like everyone else, but it has responsibility for a relatively young and untested banking system. Moreover, and more to the point, it has to deal with extreme money flows caused by fluctuating resource prices and speculative investment, all in an environment lacking…

Analysis

From the bench: New, clearer rules for investing are being implemented
OBG
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Legislative changes in early 2012, like the Strategic Entities Foreign Investment Law (SEFIL), combined with a global trend of capital outflow from developing countries, unnerved investors and led to 17% and 47% year-on-year drops in foreign direct investment (FDI) in 2012 and the first three quarters of 2013, respectively. In November 2013, the newly elected government enacted a new Investment Law…

Analysis

Foundations for development: The government has begun investing heavily in infrastructure
OBG
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Ranked 133rd of 148 in the World Economic Forum’s 2013 Global Competitiveness Index for overall infrastructure quality, Mongolia’s domestic and regional connectivity is hampered by poor-quality roads, inadequate power supply and the limited reach of its railways. From 2012 the government began investing heavily in infrastructure development, although most of this spending has been off-budget through…

Analysis

Lending a hand: The authorities have been implementing a pro-growth policy
OBG
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The Bank of Mongolia (BOM) pursued cautious and targeted monetary easing in 2013 in a bid to maintain macro stability, prevent credit crunch risk, and offset the impact of reduced exports and foreign direct investment. Amid benchmark interest rate cuts totalling 2.75 points in January (0.75), April (1) and June (1) to 10.5%, the BOM has used unconventional monetary policy instruments to pump MNT liquidity…

Analysis

The world’s neighbour: Reaching out beyond bordering nations
OBG
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Although landlocked between China and Russia, Mongolia’s priority is to cultivate trade and investment links with its “third neighbours” – a phrase first coined in 1990 by US Secretary of State James Baker to describe Mongolia’s relations with the US. A WTO member since 1997, Mongolia has since lowered barriers to trade. With a growing array of cooperation and liberalisation agreements, the…

Analysis

Raising the roof: Various measures could support the growth of SMEs
OBG
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New measures aimed at lowering the tax burden for small and medium-sized enterprises (SMEs) should incentivise private operators to expand, but businesses may still face challenges in obtaining the credit they need. In January 2014 the government announced it would submit a plan to parliament to amend regulations on the payment of value-added tax (VAT) by SMEs. Under the proposal, companies with revenues…

Analysis

BDS ec: Investment banking
OBG
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The Company BDS ec was established in 1991 and is both the oldest and largest brokerage and investment bank in Mongolia. BDS ec is the only publicly traded financial company on the Mongolian Stock Exchange (MSE) and trades under the symbol of MO:BDS. BDS ec’s market share of traded volume on the MSE over the past three years is 69%, and the company has underwritten 75% of primary equity offerings…