Mongolia
In-depth country-focused analysis on Mongolia's economic, political and operational risk environment, complemented by detailed sector insight

Our comprehensive assessment of Mongolia's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Mongolia, as well as the latest industry developments that could impact Mongolia's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Mongolia before your competitors.

Country Risk

Mongolia Country Risk

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Core Views

  • Persistent uncertainties clouding Mongolia's political and business environment outlook suggest that downside risks remain to our real 2014 and 2015 GDP forecast of 9.8% and 8.0% respectively. Our core scenario remains for an agreement for the Oyu Tolgoi (OT) mine expansion to be reached by end-2014 although we note downside risks that further delays could mean that an agreement will only be reached after parliamentary elections in 2016. Indeed, rising domestic opposition from both within the ruling coalition and bureaucrats threatens to prevent the government from passing the legislative changes needed to restore investor confidence in the economy.

  • The Togrog remains under immense depreciatory pressures, with the latest dispute between Rio Tinto and the Mongolian government (over alleged tax evasion) further weakening the unit in addition to the 10% losses since...

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Mongolia Operational Risk Coverage (9)

Mongolia Operational Risk

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BMI View : Mongolia has a relatively underdeveloped logistics network, providing limited access to international supply chains. Businesses will be further impeded by lengthy trade procedures and high trade costs resulting from poor liner connectivity. Moreover, while electricity costs remain relatively low for now, over the long term we expect Mongolia's dependence on energy imports to lead to price hikes if it fails to diversify its energy supply, leading to uncompetitive utilities costs. For these reasons, Mongolia receives a score of 28.6 out of 100 for Logistics risks. This ranks the country last out of 30 countries in Emerging Europe, 2.6 points behind Kyrgyzstan and 33.3 points behind the regions strongest performer, Czech Republic.

Investors in Mongolia benefit from inexpensive energy and fuel,...

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Mongolia Crime & Security

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The main concern to foreign visitors in Mongolia stems from a small xenophobic nationalist group that targets foreign business people over concerns that they will exploit Mongolians and Mongolia's natural resources. The main group, known as Tsagaan Khass, has been known to violently attack expatriates and foreign visitors to Mongolia, and condemn Mongolian women who socialise with them. Besides this group, the greatest risk to visitors comes from petty crime such as pick-pocketing and theft, as well as scams involving horse theft, border scams and harassment for money. Corruption is also perceived as being pervasive in Mongolia.

Mongolia faces a low risk of becoming embroiled in interstate conflicts, as the country generally retains cordial relations with its neighbours. Mongolia's strong trading and defence relations with Russia and China, two of the world's greatest powers and Mongolia's neighbouring countries, provide the country with...

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Mongolia Labour Market

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The performance of Mongolia in our Labour Market Risk Index is poor compared to other countries in the region. A low life expectancy, underfunded education system, and low migrant stock pose the greatest risk to investors. However, businesses will benefit from a generally low cost of labour that is competitive among Emerging Europe and Central Asia. With a score of 54.7 out of 100, Mongolia ranks just 20th out of 30 countries in Emerging Europe, between Croatia and Romania. This places the country 77th out of 170 countries in the BMI Operational Risk Index.

Mongolia's minimum wage of USD95 per month drives down the cost of employment for investors, and makes it an attractive place to do business, although higher than the likes of Cyprus, Kyrgyzstan, Georgia, Tajikistan, Uzbekistan, and Armenia. The country's minimal severance and annual allowance costs also reduce overall costs. Employees in Mongolia are entitled to 16...

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Mongolia Logistics

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As the 19 th largest in the world, Mongolia is one of the largest landlocked countries in the world. This poses severe constraints to the country's supply chains, which struggle to connect the vastly populated country. An inadequate road, rail and port service means that transporting goods both within and beyond the country's border is a costly venture, while poor water availability, low internet penetration and rising electricity costs pose risk to businesses operating in the country. The country does, however, have an impressive growth rate with the IMF forecasting that Mongolia's economy will be the fastest-growing economy in the world over the next decade. Investors must therefore balance the strong potential of this country with its heavy risks. BMI scores Mongolia 28.5 out of 100 for its logistical risk. This ranks the country last out of 30 countries in Emerging Europe, 2.6 points behind Kyrgyzstan and 33.3 points behind...

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Mongolia Trade & Investment

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In the past decade, Mongolia has transformed itself from a country under Soviet rule to one of the most rapidly expanding economies in the world. The country was one of the top performing economies in 2013, with growth of 11.7%, and is forecast to be amongst the top-performing countries in 2014. According the World Bank, Mongolia now classifies as a mid-low income country on account of the rapid amount of foreign direct investment is has received, and is expected to enter mid-high income in the near future. The main driver of Mongolia's rapid economic expansion has been the mining industry's development. Mongolia is richly endowed with natural resources, with commodities such as copper, gold and coal making up the majority of the country's exports. Despite the influx of investment, Mongolia's business environment still poses risk to investors. An inadequate legal framework, high levels of red tape and high levels of trade protection increase operational risk in the...

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Mongolia Industry Coverage (1)

Mining

Mongolia Mining

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BMI View: The ongoing development of the Oyu Tolgoi (OT) copper and gold mine is set to transform the economic landscape of Mongolia over the coming years.

We believe Mongolia is on the cusp of a mining boom. The development of the massive Oyu Tolgoi (OT) mine is set to transform the economic landscape of the country due to the impressive growth in copper and gold production over the coming years. The growth of the mining sector will dwarf other areas of the economy, leading to an increasing concentration of labour and wealth in this industry. Indeed, the OT project is the biggest economic undertaking in Mongolia's history and will account for one-third of the economy once it becomes fully operational in 2021.

Boom On Its Way
Mongolia - Mining Industry Value
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