During the “Investment Forum of Ulaanbaatar 2016” Mayor E.Bat-Uul, Governor of Ulaanbaatar City and Chairman of Ulaanbaatar Development Corporation and Mrs. Inci, Vice President of Bureau Veritas, world leader in independent professional inspection signed on the Memorandum of Understanding on the cooperation.

Within the framework of MOU, parties agreed to cooperate in professional inspection services in the construction Conduct professional inspection quality service in HSE control and audit, assessment of firefighting system and electrical safety system, provide professional consultancy on energy efficient consumption and installation of environmentally friendly facilities and controling and monitoring of food safety.

As the result of the cooperation, construction standard and quality control of Ulaanbaatar City will be upgraded to the world class level and technical due diligence will be conducted. When reaching the goals of MOU, the parties agreed to strengthen the capacity of the state professional inspection performance and provide various level of trainings.

Bureau Veritas (www.bureauveritas.com) company was established in 1828 in France and employs over 66500 employees in 1400 offices and laboratories in over 140 countries. Annual revenue is around 4.17 billion euros and inspects around 67% of seaborne coal transportation. Bureau Veritas is national leader in geotechnical engineering and construction material quality control. Some well know projects are Burj Khalifa, Shnghai World Expo. Many municipalities of big cities require Bureau Veritas services such as Astana, Paris, Madrid, Barcelona, Abu Dhabi, London, New York, Chicago, San Diego.

Mayor Bat-Uul sign MOU with Bureau Veritas Kazakhstan

Mayor Bat-Uul sign MOU with Bureau Veritas Kazakhstan

T.Dorjkhand: Developed citizen is the solution


“Investing in people brings the highest returns. This needs to be the policy of the Mongolian government.”

Dorjkhand Togmid was born in Ulaanbaatar in 1977. After graduating from Ulaanbaatar Secondary School number two, he went on to study public finance in the National University of Mongolia. He earned his master’s degree in public policy and economic theory from Hitotsubashi University in Japan. In 1999, he began his career at the Ministry of Finance’s Fiscal Policy Department as a specialist and worked there for 15 years. He held various positions: Specialist at Procurement Policy and Coordination Department of the Ministry of Finance, Deputy Head of the Policy Coordination Office of Financing and Aid, Head of the Project Finance and Debt Management Office, Director General of the Department of Financial Policy and Debt Management, Trainee at the National Tax Agency of the Ministry of Finance of Japan, government procurement consultant at the ADB, Programme Coordinator at the Central Asia Regional Economic Cooperation of the ADB and Coordinator of the UN’s “Greater Tumen Initiative.” Since 2013, he has been working as an Advisor to the Executive Director for Asia and the Pacific at the IMF. In addition, he also studied financial theory and project financing at the Harvard and Oxford.

Q: Several Mongolians work at the World Bank and IMF. However, I understand that you are the first Mongolian to hold an administrative position at such a global financial and economic organisation. Why did choose to work in this organisation, and what requirements did you need to meet to get this position?

A: I am not sure whether that many Mongolians have worked for the IMF. However, several Mongolians worked at the World Bank. It is an open field in which anyone can work if the desire and ambition are there.
As for me, I had dreamt of working at this organisation since I started working at the Ministry of Finance in 1999. At the time, I used to cooperate with IMF economists on many policy solutions when they came to Mongolia. Frankly, we learned much from them also.
As for this position’s requirements, they require professional criteria, such as knowledge of economic theory, experience developing policies and a possibility to represent one’s own and regional countries. Also, they see whether you have previously worked in other countries, and knowing a languages other than English is advantageous as well. Generally, you have to meet all the general criteria set by international organisations.

Q:  Working on an administrative level in an international financial organisation that regulates monetary relations will naturally give invaluable experience and knowledge. What kind of experience and knowledge have you obtained from there?

A:  I gained a lot of experience and knowledge by working at the headquarters of the IMF. I hope that any and all interested Mongolians work here. Many international experts and researchers work here because it is an organisation that aims to ensure global financial and economic stability. It is a firmly established organisation. The advantage of working here is that solid information about nations’ economies, research facilities and archives are rich and open to the employees. Thus, 95 percent of the organisation’s economists have a Ph.D., and all of them are people who have conducted their own research and have experience developing policies. In addition, Nobel Prize-winning economists and world-renowned university professors regularly come to give lectures and hold debates.
As for me, I mainly work on policy documents being discussed by the Board of Directors and on economic assessments of member states. I came upon some interesting results when I compared policy mistakes and successes of resource-rich countries like Mongolia. For example, the IMF has 188 member countries and provides economic assessments to these countries annually. About 45 countries of the member countries have significant natural resources, and most of them are developing countries that depend on mineral exports. There are many examples of economies of some these nations being tarnished because of political instability, weak governance, incompetence and indulgence of populist promises by ruling parties. Sounds familiar, right? The main point is that there are many countries that have bitter stories similar to Mongolia. We need to simply read, learn and study about them to develop a policy.

Q: You worked at the Ministry of Finance for more than ten years. Would you tell us more about the first time you started working there?

A: I am a Mongolian person who was born in Mongolia and raised around livestock. When everyone was avoiding government jobs during the transition period, I went on to work as a specialist at a state ministry. I am one of the guys who was overburdened by work and had to work 18 hours per day. I have always taken pride in that. On my first day of work, the Head of the Fiscal Policy Department, Dashdorj, told me, “The Ministry of Finance will not pay you that much. Don’t even think about being provided with housing, and you will not even have time to get married. All you’re going to get is work.” It was true, and I was overwhelmed with work as soon as I entered the job. When it came time to make the budget, I slept at the office for two months. I truly experienced for the first time what it is like smell awful, having not showered in a long time. I realized my dream of working at the IMF by not losing my thirst for knowledge when starting my career at such a ministry where work never stops.

Q: You worked as a director of two departments at the Ministry of Finance. What projects have you worked on, and what outcomes have you achieved by working there?

A: I used to work a lot on the improvement of fiscal policy, accountability and discipline. We worked on many draught laws to expand tax income when budget revenues were disrupted and introduced a new budget-saving system that significantly contributed to Mongolia.
When you take an oath of a state official and work for the state for a long time, a person’s heart gradually starts to beat for the good of the public and gives you satisfaction. I think that developing the drafts of the Debt Managment Law and Wealth Fund Law before coming here was a timely work, and I am glad about that. These reforms are very important in the long run, as they foster fiscal discipline and economic counter-cyclical fiscal rules.

Q:  You used to work at the Ministry of Finance of Japan. There are many interesting things to be asked. How does Japan’s main public policy ministry operate? What king of systems are in place? How do the personnel go about their work?

A:  Yes, I worked at the Ministry of Finance of Japan as a trainee for over a year while studying in Japan. It was a great opportunity to gain experience and theoretical knowledge. Despite being aware of the Japanese people’s diligent and precise nature, we do not know much about the systems of work. Japanese people do not know about laziness, because the state creates the conditions and instills a mentality to work diligently, honestly and wholeheartedly. They are a people that know the country will develop by working like that, and if the country develops, their lives will be much more comfortable.

Q: When you were in Japan, you translated into Mongolian a book on economic theory written by Nobel Prize recipient Joseph E. Stiglitz. Would you please tell us more about this?

A:  The book is titled “Economics of the Public Sector.” I used to study from this book when I was studying for a master’s degree in public policy and economic theory. One day, the author of the book came to Japan for a lecture and gave a presentation about his Nobel Prize-winning work. His lectures were fascinating. I translated it into my native language because I was impressed when I studied from his book, and the author talked about the book in detail. I wanted to translate it since it will be of great benefit to Mongolians, especially to the people who develop public and economic policy.

Q: Thinking in terms of economic theory, how can Mongolia’s economy be developed?

A: When talking about a country’s developing economy, we have to think about growth theory. There are many economic growth theories. Of these, the most recently accepted theory is new growth theory. In short, the previous standard growth theories considered property and assets as the main factors of growth, while new growth theory says that human knowledge is the main factor in growth. It is an idea which holds that limited resources can be increased by human knowledge. However to achieve this, the state must make investments to develop and educate the people. It is considered a work to be done by the state because individuals and companies have less incentive to invest in this area.

Now let’s apply this to Mongolia. Our country has underground reserves equal to USD 1-3 trillion. The population is three million. However, qualified human resources are lacking. So, the assets are there, but the human capital is not. The idea is that sustainable, long-term growth cannot be achieved without investing in people’s education in such unbalanced and unstable circumstances. In other words, it means it is impossible to fairly distribute the riches when education is a question of the individual and his circumstances. Therefore, it is important to focus on the development of the Mongolian people. Investing in people brings the highest returns. This needs to be the policy of the Mongolian government.

Q: The IMF relayed advice and warnings to the government during the current economic downturn of Mongolia. Experts say that our state and government ignore their advice. What pieces of advice have they given us up to today?

A: The balance of payments (BOP) is under pressure and the fiscal position is weak. These problems are partly due to declining FDI and weak commodity prices, but also due to overly loose fiscal and monetary policies. As noted in the latest IMF Article IV assessment of the Mongolian economy, published in April 2015, we made the following recommendations:
• the fiscal deficit—covering both the traditional budget and the Development Bank of Mongolia (DBM)—should be reduced, and the monetary stance too could be tightened, to bring public debt under control and moderate BOP pressure;
• all fiscal or quasifiscal activity currently undertaken by the DBM, the Bank of Mongolia (BOM), or other agencies should be conducted on-budget by the government;
• exchange rate flexibility should be preserved;
• banks’ provisions and capital buffers should be bolstered, and supervisory and crisis preparedness frameworks strengthened;
• governance reforms at the DBM and BOM would help strengthen these institutions;
• steps should be taken to move ahead with major mining projects, improve the investment climate, boost FDI, and support growth;
• social safety nets should be strengthened and better targeted to the poor.
• some monetary tightening would be desirable, to strengthen the BOP, macroeconomic policies be tightened, and the exchange rate be allowed to move flexibly.

Q: Our government is not heeding the given advice. So what needs to be done?

A: I understand that the government and the Bank of Mongolia have started working on these things. However, they started takings measures late. The price of overcoming today’s difficulties will be greater the longer we lose time without making policy adjustments.

Q:  There is research conducted by international organisations that states Mongolia is one of the leading countries at risk of falling into a debt crisis and possibly defaulting. Can you provide us with specific information about such research and its indicators?

A: Debt sustainability analysis uses a variety of criteria. For example, it includes accumulated debt remainder, debt servicing ability, economic growth and export prospects-based debt dynamics. By the Debt Sustainability Assessment, we reached the conclusion that Mongolia’s current debt levels are too high. More specifically, debt risk is high as the global commodity market is deteriorating, and exports and foreign investment outlooks look poor. The possibility to improve our credit rating and finance the existing debt with cheaper debt instruments will be created if the government corrects policy mistakes and immediately makes adjustments. It is an essential tool for reducing the risks Mongolia is facing.

Q: What about the impact of the mining sector on our economy? How should we create long-term, sustainable economic growth in the long run?

A:  Mining will continue to have a crucial role in Mongolia’s economy given the huge potential reserves of coal and copper. With the second phase of OT now back on stream and the Tavan Tolgoi coal mine under negotiations, we expect large inflows of FDI over the next several years and substantial export revenues thereafter. Putting into operation the proposed Sovereign Wealth Fund and implementation of the Fiscal Stability Law are critical in ensuring that the pickup in the commodity cycle results in an accumulation of savings and not a buildup of debt. A sound macroeconomic environment is crucial for sustainable growth, and this includes maintaining low and stable inflation, a competitive exchange rate and prudent fiscal and monetary policies.

Q:  Have you worked on any issues relevant to Mongolia while working at the IMF?

A: When I first entered the job, I was responsible for Mongolia, Uzbekistan and Micronesia and visited these countries many times, making assessments on their economic situations to let the issues to be discussed by the IMF Board of Directors.
I got some issues relevant to my country resolved. The biggest one is that I initiated was the work to increase Mongolia’s credit rating and getting it approved by the board, which I am very happy about. Our country is in the list of the IMF’s least developed countries with low-income status. It means that Mongolia has the option to receive USD 150-200 million loans from the IMF in case of emergency if the economy collapses. We had the right to receive a relatively small loan. Today, Mongolia’s status has changed to middle-income country and carries with it the possibility to taken out a loan of USD 500-600 million.
The most interesting issue discussed by the council was Argentina’s debt issue, because Mongolia is right behind this country in terms of foreign debt. In beginning, Argentina raised funds through bonds on the international market and took out loans with an annual interest rate of 4-5 percent, similar to Mongolia. However, later on, the annual interest rate reached 24 percent due to mismanagement of fiscal policy expansion and financing debt with debt. Furthermore, they announced a default in 2001, and the situation is still the same today. Defaulting carries a great risk of state assets going to the hands of lenders.

Q:  How is the future of the global economy?

A: Global growth declined in the first half of 2015, reflecting further slowing down in emerging markets and a weaker recovery in advanced economies. It is now projected to be 3.1 percent for 2015 as a whole, slightly lower than in 2014, and 0.2 percentage points lower than the forecasts made in the July 2015 World Economic Outlook (WEO) Update. Prospects across the main countries and regions remain uneven. Relative to last year, growth in advanced economies is expected to pick up slightly, while it is projected to decline in emerging markets and developing economies. With declining commodity prices, depreciating emerging market currencies and increasing financial market volatility, negative risks to the outlook have risen, particularly for emerging markets and developing economies. Global activity is projected to gather some pace in 2016. In advanced economies, the modest recovery that started in 2014 is projected to strengthen further. In emerging markets and developing economies, the outlook is projected to improve: in particular, growth in countries in economic distress in 2015 (including Brazil, Russia, and some countries in Latin America and in the Middle East), while remaining weak or negative, is projected to be higher next year, more than offsetting the expected gradual slowdown in China.

Q: When will your term of work at the IMF end? When will you come back to Mongolia?

A:  As for contract terms, it can be extended by 2 years after initial expiration. For me, my first contract will expire pretty soon. I am thinking of coming back to Mongolia without extending my contract. I am very happy to see many educated youth joining forces to serve their country. I will go back to Mongolia and join forces with those young people to contribute what I can to the country .
When I asked him about his hobbies, he said he enjoys any sport with a ball, especially basketball. He also said that he likes playing chess and checkers, going hiking, familiarising himself with multi-ethnic cultures, reading refreshing books and watching movies. After going to the US, he developed the new hobby of making food for his children and grilling meat for guests. Pushing 40 years old, T.Dorjkhand is a father of four children, and says he does his best to fulfill his fatherly duties.

*Published with consent of the interviewer


Dorjkhand and christine lagarde

With Christine Madeleine, Managing Director of the International Monetary Fund

A.Gansukh: Current Tavan Tolgoi draft Agreement is giving uncontrolled rights to the investors

photo courtesy of gereg.mn

photo courtesy of gereg.mn

A.Gansukh, Adviser to Speaker of SGK is on Tavan Tolgoi draft agreement

Q: Can you update our readers on the main provisions of the agreement?

A.Gansukh: There are co-related agreements; Cooperation Agreement, Investment Agreement and Railway Concession Agreement in the draft proposal, one of them can’t be agreed separately. The main term of the agreement is 30 years, and can be extended another 30 years. Investor side inserted a clause on terms, …if the project couldn’t reach in its break-even before the end of the term, the agreement term will be automatically extended until the project break-even reaches. This clause is extremely dangerous proposal. This means the investor side can extend the agreement term endlessly according to this clause. The Government has no rights to control the terms, because the investor will decide when to invest, how to invest, investment calculations, coal production, how much to export and the selling price. Based on these arguments, the investor side can continue more than 60 years to run the project using this clause only.

Another view on negotiation progress is that the draft agreement breaches the following laws and regulations: provision 3.1.4 of Investment Law of Mongolia, the 39th resolution of SGK of 2010, 35/32 recommendation of the National Security Council of 2011, the Government Resolution 121 of 2012. Also this negotiation is “major transaction” for Erdenes Mongol LLC, hence the Government shall adhere the related clauses of the provision 88 “major transaction” of the Company Law of Mongolia.


Q: Upon realization of Tavan Tolgoi deposit, the biggest concern from the public is how to realize the shares owned by the people? What is your position?

A.Gansukh: The issue of protecting the interest of the people of Mongolia, who are the shareholder of “Erdenes Tavan Tolgoi” JSC, owning collectively 20% of the share (each 1072 shares), is unclear. If the above-mentioned breaches will be included in the agreement, any citizen can win a legal sue against the agreement. Plus, upon the agreement is signed, the Government has no right to raise issue and cash flow will go to outside. According to the draft agreement, some transactions and payments will be made in abroad. This will end our dream to increase the currency reserve of Mongolia.

Q: What is stated regarding the investment?

A.Gansukh: The investment estimation would be 4 billion USD. But investor haven’t made any investment commitment, instead, investment size will vary depending on the financial agreement and feasibility study. This clause says that investment size of 4 billion USD can be changed. Another strange proposal is that 1 billion USD investment in the construction of Energy Resource mine at Ukhaa Khudag will be included in this 4 billion USD investment plan. Ukhaa Khudag has debt worth of 1.3 billion USD. Its owners’ capital is 400 million USD. It is obviously wrong to evaluate such company at 1 billion USD.

Finally 4 billion USD investment schedule is unclear. Investor will decide the size of its production, price and pays 2% royalty. This will allow investor to control whole process and run the project without any control.

Q: How the railway issue stated in the draft proposal?

A.Gansukh: The draft agreement breaches provision 6.2 of the Railway Transportation Law. According to the effective law of Mongolia, railway shall be privatized to the state owned company or the company where the majority shares is controlled by the state.

In accordance with the 35/32 recommendation of the National Security Council of Mongolia 2011, Tavan Tolgoi – Gashuun Sukhait railway right is given to the Mongolian Railways. This can’t be changed and under such legal environment, planned railway rights can’t be transferred to the Consortium. Tavan Tolgoi – Gashuun Sukhait railway is a good project that can reach breakeven within 10 years and there is a calculation that Mongolian Railway can make profit of 2 billion USD. Mongolian Railway shall use this profit to fund the other railway projects in different directions. Mongolia shall use its discounted tariff benefited from the Transit Transport Agreement with People’s Republic of China.

Government recalls TT project draft agreement

MP Bayartsogt

Photo Courtesy of News.mn

During the Business Summit Mongolia 2015, MP Bayartsogt, Chairman of the Cabinet Secretariat made statement on the currently rejected projects by the SGK.

He said that … “Last week, two major project draft agreements, Law on Economic Transparency and the draft Resolution of the Government on Gatsuurt, that can affect the Mongolian economy was not supported by the Parliament. This doesn’t mean that these projects will be dropped, the Criminal Law has to be adopted first and then the Economy Transparency Law will be proposed again together with draft Law on Criminal Mercy. These laws will allow liberalizing the economy and give a chance to the business people. Realizing 70 tons of gold in Gatsuurt deposit will stabilize the national currency rate. It was said by Mr. Byambasaikhan, CEO of Erdenes Mongol LLC, that the Mongolian Government owns share in 16 deposits; therefore, the Government is planning a new arrangement to swap the share with the royalty fee. This will allow the Government to make single effort to finalize long running endless negotiations with investors.

He further commented that … Tavan Tolgoi means, literally, “Five Hills”. This project draft was developed on two of them, Tsankhi, Ukhaa Khudag. The Government decides to pull back the draft agreement this week and re-propose the elaborated project agreement draft. As result, the remaining 60% of the total project (divided into three other hills) will be realized under the agreement. This issue is also connected with 1300 kms long railway project. The Government is working with the Japanese side to establish even wider cooperation.

Is Mongolia on the path of dilemma?

Democratic Party Logo

Democratic Party Logo

War within the party

Late Sunday evening adventurous speech of Prime Minister Saikhanbileg and threatening opening speech of Speaker Z.Enkhbold is the clear evidence on how harsh it becomes the internal fraction within the Demparty.

Long running hearsay about the deteriorating internal tension between Shonkhor, originated from and supported by Speaker Z.Enkhbold and Altan Gadas (Polar Star), the richest and the most powerful fraction of Demparty, has been floating like a ghost since the return of former PM Altankhuyag. At the moment, Speaker Z.Enkhbold is the leader of Demparty, but main decision making institute is consists of Altan Gadas supporters. If the party governing assembly is to be held today, Speaker Z.Enkhbold would face risks of losing the party leadership.

Tension between fractions is fueled by the oppositions’ position over the situation like in late 90s, when Demparty lost its support from public as the result of battle for the Prime Minister’s post. Monday morning, Deputy Speakers from Demparty, MPP and MPRP all signed on the official letter to PM Saikhabileg about reminding him that the signing of Tavan Tolgoi investment agreement will be illegal according to the legislators.

What is next?

If sides don’t pacify the current worsening situation, no single mega project will move forward and PM Saikhanbileg’s ambitious plan will be void. Under such circumstances, it is clear that no potential investor is willing to go into the Demparty’s internal war, sinking its reputation and future into this deepening stagnating situation, rather than waiting for the Parliamentary election of 2016. Can Tavan Tolgoi and OT issues will be decided before September 2016? May be TT



PM Saikhanbiileg’s keynotes

Last Sunday (Apri  5 2015), PM Saikhanbileg made encouraging speech through the main media channels rallying  people of Mongolia to support his actions to boost the stalling economy  of Mongolia

“Let me briefly sum up the speech and its points. The Government of Mongolia has implemented notable amount of works and issued uneasy decisions. We unlocked Oyu Tolgoi and Tavan Tolgoi deadlocks that harnessing the mega constructions and projects. What we should focus on now?

1) Amend the Constitution, and approve Law on Political Party.

2) Launch mega projects succeeding Oyu Tolgoi and Tavan Tolgoi

3) Develop countryside through introduction of local tax

4) Gradual liberation of Government controlled prices on certain products…



Opening of the Spring Session of SGK: Speaker Z.Enkhbold’s speech

President Elbegdorj hasn’t made an opening speech and Speaker Z.Enkhbold made speech instead.

He emphasized the importance of the spring session and expressed his position over Tavan Tolgoi negotiation.

He re-confirmed the letter of SGK to the Government about Tavan Tolgoi negotiation and expressed his intention to present dismissal proposition to the SGK if any Minister tries to sign the Tavan Tolgoi Investment Agreement.

“Erdenet – Ovoot mine railway” project ready to start

20131025 Northern Rail Line

“Erdenet – Ovoot mine railway” project receives green light from the Cabinet Meeting.

In 2013, Erdenet – Ovoot mine railway project was listed in “State Funded Concession Projects” and its category was changed from “tender bid selection” into “direct agreement”. Hence, the potential project management company will be invited to implement the project.

The project was included in the appendix of the “Program to Overcome the Economic Slowdown”, approved by the State Great Khural in 2015. According to the some earlier information, the project size is 1.3 billion US$ for the 547 kms long railroad in between Ovoot coal mine to Erdenet City, to be completed within 3 years. The Pre-Feasibility Study says that the project ROI will be completed within 20 years.

30% of the total fund will be the private placement and 70% is long term loan. Railway performance capacity is 22.2 million tons per year.


Funding Eg River Hydro-power Plant is finalized

bb1bba56d5a4d5831073ac091b10ad05 logo-last-mn

The Cabinet Minister’s Meeting grants green light to “Eg River” Hydro Power Plant to start its construction

According to the Resolution 375 of the Government of Mongolia, “Eg River” hydropower plant project started to improve the stability of the central power line system and reduce the dependability from import, where Mongolia pays US$25-26 million for the imported electricity.

US$827 million of “Chinese soft loan (US$1 billion), penned during the Chinese President Xi’s visit to Mongolia autumn 2014, will be the funding source of the Eg River Hydropower Plant, located in over 600 kms north of Ulaanbaatar.

When the project is in operation, it will decrease coal consumption of Ulaanbaatar City by 200 thousand tons, further reducing the most of the pollution in the urban areas.

The hydropower plant dam is expected about 95 meters tall, 730 meters long, producing 500 million kw with its 4×55 megawatt aggregates.

Mongolia to approve Draft Law on Casino


The Mongolian Parliament would approve draft law on Casino by the Spring Session of the State Great Khural. The new draft law was proposed for the State Great Khural from the Government of Mongolia, after discussing several times by the Cabinet Ministers Meeting.

The first draft stated that only foreign nationals and stateless body over 21 years old can enter to the casinos in Mongolia. The exact locations of planned casinos are not settled yet, but highly considered location is Zamyn Uud, a border town to China, because the another law on Zayn Uud economic free zone stated that casino can operate in the Zamyn Uud free zone.

There are only two legal entities will receive casino licenses and license fee is 35 billion MNT. The lawmakers informed that according to the revenue projection based on the given parameters, the casino is expected to bring 138 billion MNT for the first year and 74 billion MNT in the succeeding years on average. If two casinos are in operation this revenue would double.

Also, Government agency “Casino Regulatory Committee” would be formed in order to provide adopting regulations, issuing and extending the license and monitoring the industry.

Casino can attract approximately US$500 million as investment. The casino is projected to have 80 tables, 1500 slot machines, making US$124 million revenue and providing 800 workplaces with salary of MNT 2 million on average.

The State Great Khural will discuss the draft law during its spring session.

Late 1990s, the Mongolian Parliament and its MPs experienced big scandal over the casino law approval, jailing numerous decision makers over the bribery accusation.

Insights – Central Asia and Mongolia by Commerzbank


  • Economic growth in Central Asian republics will be higher than the global average in the future
  • German businesses see increasing opportunities in the region

The significance of the Central Asian republics and Mongolia will increase further, even if the boom seen in past years is probably over for the time being. This is the conclusion reached in a recent publication by Commerzbank.

“As a result of the proximity to China and Russia, the vast amount of catching-up vis-à-vis the industrialised nations, high foreign investment, and the long period of excellent global economic development, Central Asia and Mongolia have been able to rapidly industrialise and post high growth figures since the start of the new millen­nium,” explained Rainer Schäfer, Head of Country Risk Analysis at Commerzbank. “In the majority of these countries, raw materials continue to dominate foreign trade and foreign exchange inflow. The reserves of natural gas, gold, and copper, as well as the production of cotton, are of global significance; yet develop­ment in this area is not over by far, despite significant infrastructure investment taking place. Greater diversification with a simultaneous reduction in the high degree of government regulation is necessary so as to secure long-term prosperity in the Central Asian region.”

The differences between the countries in the region are substantial, however. The most important trading partner for Germany is currently Kazakhstan, which has profited from the energy boom of the past decade thanks to its extensive oil reserves. The rapid rise of China and the associated increase in demand for raw materials saw an increase in prices, driving rapid growth in the country – which also has other resources in abundance. Measured in terms of the per capita gross domestic product (GDP) Kazakhstan has, as a result, virtually caught up with Russia, and is thus the richest nation in the region by far. Kazakhstan is also clearly ahead of China, where GDP per capita is US$7,000, placing the country on about the same level as Turkmenistan, which has major natural gas reserves and is expanding its process­ing capacities.  Neighbouring Uzbekistan has a position among the top ten gold exporting nations and cotton producers. It has rich uranium deposits and energy reserves, as well as major development opportunities in the “silk road tourism” sector and a diversified manufacturing industry.

Tajikistan and Kyrgyzstan have major water resources, which are also of significance to their neighbouring countries. Both countries are heavily dependent on remittances from immigrant workers employed in Russia. To date, Mongolia has only been able to utilise a small portion of the development potential of the country’s massive raw material deposits.

Despite the dynamic growth rates seen in past years, the potential cooperation between Germany – a major exporter and high-tech leader – and Central Asia/Mongolia has not yet been tapped in full.

“We assume that in the future economic growth in the region will be considerably higher than the global average, and that, as a result, business relations with Germany will be further intensified,” said Axel N. Bommersheim, Regional Head at Commerzbank – Financial Institutions. Commerzbank already accounts for a substantial portion of the processing and financing of foreign trade dealings with Central Asia and Mongolia. The Bank has been present in the region for many years with its own representative offices in Kazakhstan, Turkmenistan, and Uzbekistan, which also serve the neighbouring countries of Kyrgyzstan, Tajikistan, and Mongolia. It has a network of 5,000 correspondent banks worldwide and maintains close relationships with a number of international financial institutions such as the European Bank for Reconstruction and Development (ERBD), the World Bank subsidiary International Finance Corporation (IFC), and the Asian Development Bank (ADB).

“We regard the training and further qualification of the employees of local banks as an important task,” ex­plained Bommersheim. “In this manner Commerzbank can make a decisive contribution to greater professionalism in the region’s banking sector.”

The white paper on Central Asia and Mongolia can be received upon request addressed to Commerzbank’s financial institutions team. (fi.russia-belarus@commerzbank.com)



Press contact

Kirsten Böddeker          +49 69 136-85466

Barbara Stein                +49 69 136-46273



About Commerzbank

Commerzbank is a leading international commercial bank with branches and offices in more than 50 countries. The core markets of Commerzbank are Germany and Poland. With the business areas Private Customers, Mittelstandsbank, Corporates & Markets and Central & Eastern Europe, its private customers and corporate clients, as well as institutional investors, profit from a comprehensive portfolio of banking and capital market services. Commerzbank finances more than 30 per cent of Germany’s foreign trade and is the unchallenged leader in financing for SMEs. With its subsidiaries comdirect and Poland’s mBank it owns two of the world’s most innovative online banks. With approximately 1,100 branches and approximately 90 advisory centres for business customers Commerzbank has one of the densest branch networks among German private banks. In total, Commerzbank boasts approximately 15 million private customers, as well as 1 million business and corporate clients. The Bank, which was founded in 1870, is represented at all the world’s major stock exchanges. In 2014, it generated gross revenues of more than EUR 9 billion with an average of approximately 52,000 employees


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