24 September 2015
CEO of Erdenes Mongol LLC
Excellencies Ministers, Ladies and gentlemen, distinguished guests,
It is my great pleasure to extend a warm welcome you all in Ulaanbaatar and thank all of you for being here today and for your interest in Mongolia.
We hope this investment forum being organized on the margins of the CAREC Program annual meetings could serve a platform to engage national, regional, and international private sector investors in Central Asia regional economic cooperation and CAREC Program initiatives. I also hope that the discussions in this forum will lead to actual business deals.
It is no surprise why we are holding this event. It is all about competitiveness of Mongolian economy.
Regional projects are very important for Mongolian business to be globally competitive.
In the past months, we have been travelling across the world with the government leaders, particularly with the Prime Minister of Mongolia, and business leaders to the financial centers in Japan, United Arab Emirate, United States and United Kingdom. We also visited our neighbors Russia and China.
We traveled with one main objective, which is to tell the investment community that Mongolia is back to Business, and that Mongolia is serious about foreign investment.
As you may know, with our economy that has been growing at high rates between 2010 and 2012, some of us have got over confident with ourselves. As a result, we are seeing certain economic problems.
The way to overcome those problems is to focus on infrastructure, focus on the large projects and to ensure that the mining industry will have the competitive advantage through having proper logistics and transportation.
That key message, I would like highlight again, is Mongolia is open for Business. Overall, the theme of the event today is also serving the same agenda.
Energy, transport and infrastructure bottlenecks remain a key barrier to competitiveness of Mongolian businesses. This is evident from the annual competitiveness reports published by IMD - the World Competitiveness Center and Economic Policy and Competitiveness Research Center of Mongolia and also by World Bank “Doing Business” indicators.
I think this is also common area in countries within the CAREC region.
Infrastructure bottlenecks are also main obstacle to regional integration, and regional connectivity projects still account for only a fraction of the total investment. Providing intra-regional connectivity for a continent as large and as diverse as Asia is not easy. Nor is it a simple matter of identifying projects. Planning, ownership, support and resource mobilization need to be built up at local, national, subregional, and regional levels.
CAREC has been existed for over 15 years now and Mongolia has been a member since founded. The reason why we engage is that USD28 billion of original projects have been implemented up until now.
CAREC initiative helps the region to achieve increased trade and attract investment. Through investment and completion of regional projects, we strive to make Mongolia the hub for investors. The roles of the international financial institutions remain critical to the success of these projects, and ultimately the competitiveness of the private sector.
Regional integration, regional connectivity is important particularly for landlocked economy of Mongolia. Within the CAREC region, we have several other landlocked economies, which share the same problems as we do here.
Sanctity of contract
Sanctity of contract is the other notion we want to highlight today. Confidence is very important for attracting foreign investment into any economy. With that, stable and transparent regulatory regime is important for rule of law and sanctity of contract. The recent cases of various misunderstandings amongst partners led to a delay of large projects. As a result, we end up having economy that businesses do not appreciate.
There of, sanctity of contract is a topic for all of us to understand. One recent example is that the Government of Mongolia, which is shareholder of world-class copper mining – USD7 billion Oyu Tolgoi had various issues and discussions on the way of the project was being managed, and the dispute took for over two years. As a result, underground mine project has been stalled.
In May 2015, the Government of Mongolia reached an agreement with Rio Tinto and Turquoise Hill for the underground phase of the Oyu Tolgoi, a world class copper and gold mine to advance. We have sanctified the Investment Agreement which allowed Oyu
Tolgoi to become the benchmark for foreign investment in Mongolia. The project finance of USD4.2 billion deal, the world’s largest finance package for a mining project, is expected to be signed in the coming month.
Concluding my remarks, I would like to wish you all productive discussions and to extend my sincere appreciation to all CAREC countries, the Asian Development Bank, and other international development partners for close cooperation.
I trust that you will now share my enthusiasm for the tremendous opportunity for investments in Mongolia.
Mongolia is Open for your business.