International finance community continues to support Mongolian growth amidst fresh challenges

Key local business leaders gathered with those finance practitioners seeking to support Mongolia’s economic growth at the 3rd Annual Mongolia Trade & Commodity Finance Conference, organised by GTR Events, which took place at the Blue Sky Tower, Ulaanbaatar on May 19, 2014.

Now widely recognised as the leading event for Mongolia’s corporate, financial services and international trade sectors, the gathering focused on the crucial support required from the international trade finance community to ramp up commodity production and exports, both in supplementing the financing capacity of the domestic banking sector and providing the specialist expertise necessary to facilitate lending in the context of volatile global markets.

Open discussion at the event indicated that confidence in the huge potential opportunities offered by Mongolia’s extensive reserves of natural resources and rapid economic growth remains high amongst the globe’s leading trade and commodity financiers despite the continued headwinds impacting on the domestic economy. Numerous speakers from both local and international markets emphasised the view that investment opportunities are currently at their peak as the Mongolian economy reaches the full extent of its slowdown, it being only a matter of time until recovery takes hold.

Recent amendments to FDI regulation, though encouraging and illustrative of the government’s intentions to form international partnerships in order to unlock Mongolia’s mineral wealth, leave much room for improvement from the foreign investor’s perspective. The revised legislation is not sufficient alone to bring Mongolia out of the current economic slump, suggested Stephen Tricks of Clyde & Co., who joined domestic law firm Khan Lex & MDS on stage to provide the gathering’s central regulation focused session.

The one-day summit, which featured expert speakers from companies including Newcom Group, Erdenes Tavan Tolgoi, Wagner Equipment and Mongolian Growth Group, provided perspectives on the key structural and operational challenges being experienced by the domestic corporate sector and the resulting financing requirements, opportunities for collaboration between the domestic and international finance sectors, and in-depth discussion on the extensive scope for ECA and export financing provided by investment in production capacity and infrastructure development.

Speaking on the side lines of the conference, Randolph Koppa, President of Mongolia’s Trade & Development Bank and Conference Chairman said: “The prospects for trade and utilising a variety of structures and ECAs will only increase, and not just strictly trade related to the input and output of Oyu Tolgoi and other mines. There will be a move towards further processing, which again will be capital-intensive.”

Jim Dwyer, Executive Director of the Business Council of Mongolia added: “2013 was a challenging year, but we are bullish on the prospects for economic recovery. It will be interesting to hear the views of key stakeholders not only on challenges they are facing, but also the status of implementation of the new Investment Law. This law could provide stability for both domestic and foreign investors and rekindle FDI.”