The webinar on Mongolia’s Business Environment was successfully presented on 2 May 2024. The 60-minute webinar jointly organized by The Mongolian National Chamber of Commerce and Industry (MNCCI) iand the Confederation of Asia-Pacific Chambers of Commerce and Industry (CACC), ABA’s parent organization, featured MNCCI President Enkhtuvshin D., MNCCI CEO Duuren T., and MNCCI Investment & Trade Agency Officer Dulgun Barsuren, who provided detailed information about current Mongolia’s economic conditions, business opportunities and plans for further business growth.

 

SUMMARY

 

The webinar started with a presentation from MNCCI President, Mr. Enkhtuvshin D. who explained the history and functions of MNCCI , the largest representative of the business community in the country which was founded in 1960. He said that with 6,000 members distributed over the country’s 21 provinces, MNCCI advocates policy on behalf of its members and provides trade services like certificates, intellectual property services and also inspection services, among many other services. It also has an arbitration center recognized nationally and it works closely with foreign invested companies, he pointed out.

In terms of the current economic conditions, the MNCCI President said that current GDP per capita stands at US$5,000 and the economy has been growing at 5.6%, adding that the economy’s four major sectors are mining, trading, agriculture, manufacturing and logistics with mining being the most coveted sector by foreign investors.

Mr. Enkhtuvshin said that given Mongolia’s geographical conditions, China is their major foreign trade partner, with Russia being second. In fact, 80% of Mongolian exports are purchased by China, which are mostly mining commodities, he noted.

The MNCCI President reported that in the import side, Mongolia imports a lot of machinery and goods from China mostly, while gasoline and energy are imported to a lesser extend from Russia.

He further said that the mining sector is very dominant in the national economy, with more than 90% of the export as generated by the sector, including products such as cooking coal iron, copper and related commodities.

On the agricultural side, he noted that the key product is raw cashmere, but agriculture represents a fraction of all exports standing at 3%. He also reported that tourism has been recently positioned for promotion  as a credible business sector that could impact the national trade balance.

The MNCCI President said that there are a lot of export opportunities that require infrastructure investment to exploit financial and energy sectors, as well as free industrial zones located close to the Chinese border.

 

MNCCI CEO Mr. Duuren T. focused on a special government program introduced at the beginning of 2024 geared toward boosting the economy, the Business Recovery National Program.

He remarked that since the national economy is highly dependent on mining, the government considers that the level of export is not sufficient to effectively support the average household’s daily expenses.

Thus, the government wants to increase light industries such as food processing and other businesses, that unlike mining, do not require large capital investment but require more labor, he said.

In fact, there is an emerging demand for new labor but the supply is limited, he indicated, adding that the government in association with MNCCI is therefore introducing a training program for youth since 60% of the Mongolian population is under 35 years of age.

In addition, the MNCCI reported that:

(1) The Business Recovery National Program also includes training and consulting services, researches and surveys, exhibitions and trade fairs. It also has a digitalization dimension to help businesses hold meetings, forums, knowledge sharing, books and handbooks to upskill the Mongolian labor.

(2) MNCCI is training 10,000 youth of whom it will filter to 1,000 students and other  smaller elite groups to train them in international business practices, too.

(3) The goal, structured also in association with the Government’s Small and Medium Enterprises Agency, aims at creating an entrepreneur class ready to establish businesses on their own. The Indian Embassy, Malaysian Embassy, and the Singaporean Chamber are also cooperating in the program.

(4) MNCCI will launch this coming Autumn an equipment exposition of 500 tools to energize and incentivize SMEs’ investment into local operations.

(5) An important part of the The Business Recovery National Program also includes sharing of business information given the limited real market information available.

 

 

Investment & Trade Agency Officer Mr. Dulgun Barsuren presented the current business climate for investment opportunities, highlighting the following:

(1) Mongolia has received US$41 billion of foreign direct investment in the last 30 years, of which 70% has been invested in the mining sector and some 11% in the wholesale and retail sectors.

(2) Inflation has been decreasing since 2022 when it apparently reached its peak, standing now at 7.2%.

(3) Regarding the foreign investment’s qualitative conditions, Mongolia has signed international investing frameworks, such as the convention on the establishment of investing disputes, double taxation treaties with 26 countries and investment protection and promotion agreements with 43 countries.

(4) Certain foreign direct investment factors show positive developments such as the country’s credit rating improving to Bb minus and B plus as of June of 2023 and a lower than average taxation rate according to the World Bank.

(5) The Investment Law was approved in 2013 and its implementation has allowed foreign companies to benefit from tax incentives under the investment law. He said that the minimum foreign investment required is US$100,000.

(6) Renewable energy capacity in Mongolia could also be a very attractive investment opportunity given the geographical conditions, legal incentives and government policies promoting the establishment of green financing system to achieve net 0 carbon emission.

(7) New foreign investment targets for Mongolia also include the development of tourism within the next 2 years, together with the establishment of foreign direct invested free zones in the frontier with China.

(8) And for a country as large as Mongolia, agriculture is a business area with great potential that today still remains at the free range livestock growth.

(9) There is a plan to establish 50 free-trade zones in the Chinese border that could process agricultural products easily exportable to China. China is a huge potential market for Mongolia. However, to really profit from such proximity, Mongolia needs foreign direct investments.

A copy of the presentation can be downloaded from the ABA website HERE.

The video recording of the presentation can be viewed at the CACCI YouTube channel HERE.