Economy
From The Report: Mongolia 2015
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Given its small, open economy with abundant resources including coal, copper, gold, zinc and fluorspar, Mongolia faces the same boom-and-bust cycles of any resource-dependent nation. The country has the natural endowments to provide opportunities for its 3m citizens; however, managing fluctuating growth rates, ranging from -1.3% in 2009 to 17.3% in 2011, as well as investment, trade and fiscal revenues, remains a challenge. Drawing on support from its two neighbours in the short term, the government is trying to ensure a soft landing for the economy following a significant reduction in foreign investment. That said, a rebound in investment is expected for 2015 due to a raft of new legislation taking effect. As the government consolidates its expansionary policies, it will need to accept slower growth in the interests of economic stability.

This chapter contains interviews with Jim Dwyer, Executive Director, Business Council of Mongolia; Graeme Knowd, Associate Managing Director Asia, Corporate & Financial Institutions, Moody’s Investors Service; and L. Boldkhuyag, Chairman, Bodi Group.

Articles from this Chapter

Interview

Jim Dwyer, Executive Director, Business Council of Mongolia (BCM)
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Interview: Jim Dwyer To what extent has the new investment law been successful at attracting foreign investment? JIM DWYER: I think the new law is quite fair to all investors, both foreign and local, and will enable companies to feel more secure making large-scale investments. The ability, under the law, to enter into stability agreements and fix key items like tax rates is important in this respect. The regulations also streamlined the registration process, bringing it down to less than a week;…

Analysis

Forward planning: Managing debt with a new law under discussion
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While public spending has been key to maintaining growth in 2012 and 2013, its funding has relied on a ramp-up in foreign-currency (FC) debt. Constrained by the Fiscal Stability Law (FSL), which caps public debt at 40% of GDP, the government subsequently channelled expansionary quasi-fiscal spending through the Development Bank of Mongolia (DBM). Rising Leverage The Ministry of Economic Development (MED) drove the government’s external borrowing from its establishment in August 2012 until it…

Interview

Graeme Knowd, Associate Managing Director Asia, Corporate & Financial Institutions, Moody’s Investors Service
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Interview: Graeme Knowd What do you see as the major external challenges currently facing the Mongolian economy? GRAEME KNOWD: The risks facing Mongolia in 2015 resemble those that concern countries around the world. First, there is a pressing need to determine the true extent of the Chinese economic slowdown, and to gauge whether China can effectively rebalance its economy away from investment towards consumption. Second, it is important to manage the impact of an appreciating US dollar. To some…

Analysis

New economic incentives in Mongolia could ease constraints on growth and boost small businesses
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Accounting for 95% of all registered enterprises and around half of employment (910,000 workers), Mongolia’s 90,000 small and medium-sized enterprises (SMEs) are a crucial fabric linking large resource projects to the domestic economy. Indeed, the National Development and Innovation Committee estimates that every $1 invested in mining creates a $1.84 multiplier effect in other sectors like infrastructure, services and the impact of migration. However, SMEs account for just 25% of GDP, according…

Interview

L. Boldkhuyag, Chairman, Bodi Group
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Interview: L. Boldkhuyag To what extent should foreign investors regard Mongolia as an attractive economic destination within the medium to long term? L. BOLDKHUYAG: Despite some economic difficulties in recent years, Mongolia is a significant prospect for both domestic and foreign investors. There is huge potential in its mineral resources if they can be extracted in an effective and equitable manner. In fact, more than 85% of the elements on the Mendeleev Table can be found in Mongolia. Opportunities…