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Overview

Long-term resilience: Tighter prudential regulations have been brought in while lending growth remains healthy
OBG
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Key reforms implemented in the aftermath of the 2008-09 financial crisis have created a more flexible and resilient banking sector just as the economy entered a period of slowing growth in 2012. While the sector has expanded dramatically in the past two years, banks have faced a liquidity squeeze in 2012 that has reduced the pace of growth. Over the longer term, however, Mongolia’s leading…

Overview

The only way is up: Rapid growth is set to continue, with total premiums still at a low level
OBG
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While insurance in Mongolia remains in its nascent stages, important ongoing reforms may yet drive penetration, build local underwriting capacity and develop the first pool of domestic non-bank institutional investors. Admittedly, with total premiums as a share of GDP at a mere 0.44%, or $29.3m, in the first half of 2012, according to the Mongolian Insurers’ Association (MIA), the sector still…

Overview

Rising above: Rebounding from a crisis, market should benefit from new regulations
OBG
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While economic growth is forecast to be in the double digits for 2012, the slowdown in GDP growth from 16.5% year-on-year (y-o-y) in the first quarter 2011 to 11% in the second quarter, election jitters and the migration to a new trading framework kept investors largely on the sidelines in 2012. Equities realised significant value over the last two years before slowing in 2012. Yet over the medium…

Overview

Buried treasure: Vast untapped resources to be exploited, but legal challenges exist
OBG
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With the economy growing 17.3% in 2011, the numbers show a broad-based expansion, but ultimately the mining sector was and will continue to be Mongolia’s main GDP driver. The country is on the verge of breaking through as the next major resources economy, and is perfectly situated just to the north of perhaps the world’s most resource-hungry economy, China. By late 2012, Mongolia’s landmark…

Overview

Still in the game: Despite a challenging 2012, overall prospects continue to look strong
OBG
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Just 22 years after embracing the market economy Mongolia has been going through another cycle of economic and political headwinds, although the country’s fundamental macroeconomic indicators appear to be more solid this time round. In 2013 all eyes will be on the Oyu Tolgoi copper and gold mine, set to begin commercial production. This much anticipated “make-or-break” event could transform…

Overview

On fire: While coal remains king, other energy sources are also heating up
OBG
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With ageing facilities, constraints that discourage efficiency and growing demand, Mongolia’s energy sector faces a number of challenges. Geography makes it reliant on one supplier for refined fuels, with a tenuous supply and a high purchase price. Several projects in the works now have the potential to reverse this trend, if they are successful. Efforts are focusing on boosting and diversifying…

Overview

Finding solutions: A new corridor and fibre-optic networks give signs of promise
OBG
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With one of the best internet infrastructures in the region, Mongolia is a technological surprise. Speeds are high, latency is near zero and restrictions are few. In tests done by Ookla, a broadband performance testing company based in Seattle, Washington, Mongolia’s download speeds were clocked at 11.89 megabits per second (Mbps) at the end of 2012. The country ranked 46th globally in terms…

Overview

Adding value: Efforts to re-establish manufacturing through domestic processing
OBG
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The structural conditions for Mongolian manufacturing remain challenging for 2013, despite potential in a few niche segments such as food processing for local markets and cashmere products for exports. The move into mass production, however, faces the same perennial constraints: Mongolia has a small domestic market, poor infrastructure, a growing minerals sector competing for labour and capital,…

Overview

Building momentum: Rent and sales prices likely to rise rapidly due to supply constraints
OBG
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Thanks to a shortage of supply, Mongolia’s real estate sector is likely to feature fast-rising rents, land values and sales prices for at least the next several years and perhaps more. The market is highly focused on the capital city, Ulaanbaatar, which is under pressure due to a speedy rate of urbanisation; supply constraints due to capacity, weather, geography and capital; and the rising wealth…

Overview

Gaining an edge: Moves to increase transparency and extend services benefit the sector
OBG
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On December 20, 2012, MobiCom extended its 3G network to Erdenebulgan soum (county), a remote area close to the Russian border with about 3000 inhabitants. For the company, which is the largest mobile operator in Mongolia, it was a significant step; it can now claim that it offers 100% 3G coverage in the country. Mongolia’s population density is less than two people per sq km. And with 40% of…