BCM Monthly Meeting Recap - January 25, 2010

The first monthly meeting of the new year on January 25 was a full house with 82 in attendance. Membership is also flourishing, standing presently at 111, a 30% increase over last January, raising hopes it should reach the year’s target of 150 in the months ahead. As Executive Director Jim Dwyer pointed out, this indicated a faith not just in BCM and what it does, but also in Mongolia and what it is set to achieve.

The four new members since the last meeting are BD Sec, brokers and underwriters; Chandman Tal, which works in construction, drilling and exploration; Nomin Insurance; and SM Container Bag, manufacturers of industrial bags.

U.S. Ambassador Jonathan Addleton, who had served as the USAID Director here not so long ago –- “Great to be back,” he said -- noted that while “the challenges facing resource rich economies with relatively small populations are huge”, he found many “positive indications” in the business environment in Mongolia to be optimistic. U.S. development assistance has been increasing, with the 2009 amount being the largest in any single year so far, and the USD285 million from the MCC, to be spent over just five years, exceeding the approximately USD200 million in total USAID funds provided to Mongolia since 1991.

Noting that “decisions Mongolia makes now will shape the economic and political future of the country for years to come”, Mr. Addleton said BCM and its members can make “a useful contribution in the extent to which we highlight international experience and provide ‘lessons learned’ in other countries and contexts around the world”.

He stressed that “work at the development end becomes simply a foundation or platform for bringing about the kind of change that truly brings about lasting economic change – specifically, the promotion of entrepreneurship and the establishment of enterprises that are needed to generate employment, promote economic diversity and generate the revenues needed to advance Mongolia’s other objectives, including those related to health, education and cultural development”. He then detailed U.S. Embassy programs that “have an important development dimension with business implications”.

As American Ambassador, he wanted American firms to participate in all MCC programs in a big way but Mr. Addleton affirmed that “the intent of MCC is to procure the best possible contractors and technical advisors from around the world, wherever they may be found”. He urged the audience to consult the recent investment climate statement produced by the U.S. Embassy.

The next speaker was also one who has come back. Mr. B. Bold has returned home to take over as CEO of the Newcom Group after 13 years of working in senior positions in banks and financial institutions abroad. He outlined the ways in which Newcom planned to expand and diversify in the coming years. He noted they will be helped along by other professionally-qualified Mongolians coming back from foreign countries -- whom Mr. Bold has named “re-pats” -- a development BCM Chairman Laurenz Melchers found to be of significance, as indicating the changing perceptions of Mongolia’s economic future.

Mr. Mandar Jayawant, Chairman of BCM’s Capital Markets Working Group, gave an update of their work. This focused on three major areas. The first was to provide assistance to the Financial Regulatory Committee and the group was now clear about what the FRC would need to do improve its oversight of the Mongolian Stock Exchange (MSE) and non-banking financial institutions. The second was to help the MSE grow and the group was finalizing its draft recommendations. GTZ was expected to play an important role in funding international experts’ advisory input to enhance the management and technical capabilities of the MSE to enable it to be privatized. The third was to help the National Development and Innovation Committee (NDIC) in investment planning, especially in the present capital markets downturn.

Mr. Barry Evans, head of the BCM Food & Beverage Working Group, gave what he called his “monthly pitch”, and described a few blatant anomalies in the VAT regulations that make things difficult for businesses.

The NDIC reports directly to the Prime Minister and thus has the standing of a Ministry. Its Chairman, Dr. Ch. Khashchuluun, said its recommendations on a 5-year program for the national economy were almost ready to be submitted. These included reforms in the business environment to help achieve more competitiveness. Infrastructure development was hamstrung by the difficulties in raising the huge sums needed, and so was setting up heavy industry units, even though the availability of locally produced raw material was a help.

There still was no national consensus on finally setting up the Development Bank of Mongolia (DBM), but the NDIC has completed its assignment of preparing a blueprint for this institution, after detailed and extensive consultation with the Japanese international development agency, JICA. The Government was willing to be a minority shareholder to make the work of the DBM transparent and efficient. A lively question and answer session concluded this presentation and the business part of the meeting.

One question was about development of a legal system with unambiguous laws to protect investors against interpretations, and Mr. Khashchuluun said work on this was going on. He told another questioner that a very large share of FDI was already from China and so Mongolia is being “very careful” in taking a decision on how to use USD3 billion offered by China “for investment in any project”. The IT sector is being modernized, with a planned uplink with satellites. The Government was trying to help SMEs, and “doing something must not be seen as interfering”. He corrected the perception that the State employed too many people. Only 2,400 people worked directly for the Government and with serious efforts being made to improve human resources, including encouraging expatriate Mongolians to return home, skills will rise, he said.

Add comment

JComments

Business Council of Mongolia

Add comment