By Lee Cashell, Asia Pacific Investment Partners
Mongolia’s economy had a bruising year in 2014 with barely a week passing without the currency hitting a new low against the US dollar and foreign investment dropping by a precipitous 74 per cent year-on-year. But last month’s announcement that the Mongolian government has broken the deadlock in negotiations with Rio Tinto for the development of the second phase of the Oyu Tolgoi copper mine signals that a new round of foreign investment will begin flowing into the country.
Saikhanbileg Chimed, the prime minister, has been building a clear case that Mongolia’s economic growth will stall without foreign investment, appearing on national television in January to hold an X-factor SMS style vote on the question of whether Mongolians want austerity or prosperity. The majority of the country’s 3m citizens texted “prosperity” which he has taken as a mandate turn the green light back on for foreign investment. Read more
By Marius Toime of Berwin Leighton Paisner
Chimed Saikhanbileg, Mongolia’s incoming prime minister, must do more than simply continue the policies of his predecessor, ousted amid accusations of economic mismanagement and corruption.
His election by parliament last week, after Norov Altankhuyag was removed by a vote of no confidence, leaves big question marks over whether he can bring about real change. The opposition People’s Party boycotted his election, fearing that he will let the country drift without fresh leadership and put investment, jobs and income at risk. Read more
By Gavin Bowring, Asean Confidential
In November 2012, Mongolia issued US$1.5bn of five and 10-year sovereign debt – cutely called “Chinggis bonds” after the 13th century Mongol conqueror Genghis Khan. These were happily snapped up by yield-hungry investors as Mongolia continued to post one of the world’s fastest GDP growth rates. The government, in theory, should have used this money to invest in commercially viable infrastructure to provide power, transport and logistical infrastructure to support the country’s continued growth.
But with a substantial portion of this debt maturing within the next 3 years, concerns have been mounting about the government’s ability to repay. While some of the US$1.5bn bond was used to build useful social infrastructure within the capital, Ulaanbaatar – including new roads and schools – an equally significant portion was spent on pork-barrel and pump-priming programs. Moreover, the government has little to show in terms of commercially viable investments that generate returns. Read more
It was only an April Fool’s day joke – but when an Ulaanbaatar website suggested that Mongolia go on a Genghis Khan-style “investor roadshow” across several continents on horseback to win back international investors, it hinted at the size of the image deficit the north Asian nation faces.
In Mongolia, the 13th century great Khan is thought to have mythic powers “to make the difficult easy and the distant closer by”. So channelling his spirit to serve investor relations seems natural enough – especially when the task at hand is significant. Read more
Resouce-rich Mongolia is going back to the international bond market in a push to offset a weakening economic cycle.
Government-backed Development Bank of Mongolia (DBM) has placed a ¥30bn ($290m), 10-year samurai bond to invest in much needed infrastructure projects. But the deal is stretching the country’s borrowing rules to the limit. Read more
The incumbent vs the wrestling champion vs the first female candidate: Mongolia’s presidential election is being fought against a backdrop of rapid economic expansion. But there is rising voter discontent with the lack of benefit from the country’s mineral resources and from corruption. The FT’s Leslie Hook reports.
By Julian Dierkes of the University of British Columbia
As Mongolia gears up for its presidential election on June 26, wrestlers have increasingly become part of the political landscape. Both main parties in Mongolia now count sporting heroes among their prominent members. The Mongolian People’s Party has even nominated a former wrestling champion, B Bat-Erdene as its candidate in the election.
Has Mongolian politics become a grappling sport? Read more
By Julian Dierkes of the University of British Colombia
With three candidates declared for Mongolia’s presidential election a month from now, one of the issues that will be watched most closely from abroad is the candidates’ positions on large-scale mining projects. Much (foreign) ink will be spilled describing all three candidates as “resource nationalists” of various stripes. Read more
By Julian Dierkes of the University of British Colombia
Over the weekend Mongolia will host the seventh ministerial conference of the Community of Democracies, a global caucus of democratic nations formed with the intention of fostering democracy around the world. For Mongolia, holding the chairmanship and hosting the ministerial conference are confirmation of its achievements in democratic development. Read more
By Terrence Edwards of bne in Ulan Bator
Mongolia’s parliament passed an amendment on Friday to its controversial foreign investment law of last year, which should allow over 100 pending investment deals in the country to now progress.
The Strategic Entities Foreign Investment Law (SEFIL) was rushed through parliament in May 2012 as protests grew about the increasing foreign (ie Chinese) control over the country’s vast mineral wealth. But the wide-ranging nature of the law caused foreign investment to fall through the floor. Read more
By Julian Dierkes of University of British Columbia
With the increased level of interest the world has taken in Mongolia given its blistering economic growth rate, resource nationalism is mentioned more and more often as a threat. But what exactly is this resource nationalism?
In Mongolia there is a parade of ideologies and slogans that are being lumped into the category of resource nationalism. They range from the obscure fringes of blood-line focused nationalism to the concerns of dedicated and serious politicians who are genuinely grappling with the challenges that rapid, almost instant, economic growth on the basis of a resource boom is bringing with it. Lumping these different streams together into a single category suggests that there is a coherent ideology that unites them. This is not the case. Read more
Mongolia and China have never exactly gotten along. For the past millennium the two countries invaded and ruled each other in turn. In the thirteenth century, Kublai Khan swept into China and founded the Yuan dynasty, putting Mongolians on the Chinese throne for nearly a century. Then in the 17th century Mongolia was conquered by the Manchu-led Qing dynasty.
Both have gone their own way for the past hundred years, but the history lesson is worth remembering, because Mongolia’s mining development today is dependent on its giant, resources-hungry neighbour. Read more
Let the political wrestling begin
This week Mongolia is celebrating Naadam, a holiday marked by horse races, archery competitions, wrestling, and lots of airag, which is fermented mare’s milk.
But amid the festivities there is also some serious political wrestling taking place. Mongolia’s new parliament, sworn in July 6, has been in the process to see which parties will form a coalition government to rule the country for the next four years. Read more
By David Sneath of Chatham House
Mongolia’s June 28 election is set to produce a coalition government with no party in overall control but with the right-leaning Democratic Party commanding the largest number of seats in the nation’s parliament, the Ikh Khural.
Tellingly, voter turnout fell to a historical low of around 65 per cent, from 74 per cent in the 2008 parliamentary elections and 82 per cent in 2004. This signals a steadily rising public cynicism regarding party politics, which has failed to deliver improved living standards for the majority of the population despite the recent ‘mineral boom’ that boosted last year’s economic growth to 17 per cent. Read more
By Oliver Belfitt-Nash of business new europe
Nambaryn Enkhbayar, former president of Mongolia and current opposition leader, has been arrested on corruption charges. Uniformed and plainclothes police seized him in a dawn raid on a house to which he had fled after refusing to answer questions about corruption, the government said.
Given that the arrest occurred just hours after Enkhbayar (pictured left) released a transcript of a security council meeting concerning the supposed illegitimacy of the 2008 elections that led to deadly riots, and only weeks before Mongolians go to polls in June for general elections, analysts suspect darker motives. Read more