MONGOLIA - ON THE CATWALK OF INTERNATIONAL FINANCE

Interview with Mr. Philip ter Woort, Head of the European Bank for Reconstruction and Development (EBRD), Ulaanbaatar Resident Office, by N.Ariuntuya, MMJ journalist

I’m pleased to interview you during the remarkable period of development in Mongolia. As a country director of the European Bank for Reconstruction and Development (EBRD) in Mongolia, what would be your opinion about current social and economic situation of Mongolia? 

This is indeed a remarkable and even historic time for Mongolia. I travel often between Europe and Mongolia and I can therefore compare the prevailing moods in both Europe and Mongolia. Mongolia’s economic prospects are much better than faced by most European countries and the public mood in Europe is somewhat dim, quite the opposite of the optimism in Mongolia. It feels at present good every time I return to Mongolia to share in the positive atmosphere where Mongolians themselves feel that, finally, “their time has come” which adds to the optimism in the air.

Mongolia’s economic prospects are indeed quite exceptional due to a few dynamics pointing in the same direction. Firstly, Mongolia’s prospects are strongly correlated to those of China which is expected to continue to grow for the foreseeable future and which needs resources to feed that expansion. Mongolia’s location, sometimes seen as a misfortune, has turned at present into a blessing. And then there is a China’s Inner Mongolia and Gansu province where a substantial number of Mongolia’s customers (steel mills etc) are located and which show growth figures in excess of China’s already impressive numbers. Finally, we would not be where we are now without the worldwide commodity price surge with no signs of a let down.

There is the unfolding ‘Coal Story’, a commodity Mongolia possess in abundance. China, the largest coal importer worldwide, will see its needs for coal increase substantially to feed its coal fired power plants and steel mills. Add to that the Chinese Government policy to close unsafe coal mines and the result is that Chinese demand for imported coal is expected to grow. Finally, more tail wind for Mongolia comes from the woes faced by Australia, a major coal exporter for seaborne coal, due to recent natural disasters but also due to structural port and railway congestions.

These external dynamics are supported by the Mongolian Government which has proven to be in general pro-business, best illustrated by the signing of the Oyu Tolgoi investment agreement after years of negotiations. Mongolia’s stable coalition Government has added to the positive perception from an investor point of view.

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