Mongolia’s honeymoon is over but divorce, not on the horizon
In late October 2012, Mongolia’s M.A.D Investments gave a presentation titled, “The Mongolian Tango” at the Mongolian Investment Conference in Hong Kong.
The presentation, attended by many from around the globe, highlighted the prevailing negative perceptions of the international press towards investment in Mongolia while at the same time stating that Mongolia’s economic fundamentals were still extremely strong.
M.A.D’s high profile Managing Partner and young entrepreneur Chris de Gruben says, “It’s now three months later and we continue to see a growing number of businesses that are downsizing their operations. Expats are gradually leaving Mongolia for warmer shores and foreign investment is being diverted away from Mongolia towards more welcoming lands. Mongolia’s FDI honeymoon is most certainly over and it is now time to realise that the bride might not be as pretty, well endowed and welcoming as initially envisaged.”
This however, does not mean that a divorce should be on the cards – far from it.
De Gruben describes how we’re in a period of transition, between major elections and in the thick of new economic strategy. “For the first time in its history, Mongolia has experienced real market-driven economic growth and progress. It’s also starting to realise that with increased FDI inflow, comes a responsibility towards improved governance, transparency and accountability not only to its people, but also to the global press and the foreign investors who follow the country ever so carefully.”
Mongolia with its small population has been forced to grow up, learn a new economic model and stand on its own two feet extremely quickly. “It’s a testament to the people of Mongolia that it is still a functioning democracy which manages to compete with the biggest international powers and contribute significantly in global diplomatic circles,” he says.
The recent downturn in Mongolia’s economy can, in part, be attributed to the slowdown in China and its reduced coal purchases, but an equal proportion of the blame should be allocated to domestic challenges. The SEFIL law, various populist measures and the upcoming Minerals Law, is only adding to the growing malaise being felt by foreign investors. The true impact of those decisions is only now trickling down to the streets of Ulaanbaatar. While it could be argued that over the long term, they might be beneficial to the people of Mongolia, today it is those same people who suffer from the flight of capital away from the country. Foreign investors always have the potential to seek fortunes elsewhere – few Mongolians have such mobility.
Last year M.A.Ds Mongolian Property Report was a sellout success, but this year de Gruben is delighted (and quite proud) to announce that he’s in at the final stages of releasing M.A.Ds Mongolian Property Report 2013. “The 2013/2014 version is not only bigger, better and more complete than the 2012 report, it is also being distributed free of charge as a pdf through our website.” Anyone interested in viewing this publication should visit www.mad-mongolia.com.
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