Mongolia

The collapse of a leading Mongolian bank has underscored both the weaknesses and strengths of the banking system, with an apparent failure of corporate governance prompting a swift reaction from regulatory authorities.

The government in Mongolia is taking steps to clean up its reputation when it comes to the environment, with a green development policy planned, a huge wind farm opening and the Ministry of Environment and Green Development confronting the mining industry. However, balancing growth with green objectives is still proving a challenge.

Home ownership rates in Mongolia are set to climb in 2013 and beyond as a new state-backed mortgage scheme has improved access to low-cost loans, though demand for housing could push up prices if the construction sector cannot keep up a smooth flow of units onto the market.

Delivery of a key new 450-MW combined heat and power plant known as CHP5 continues to face implementation uncertainties, with competing projects likely causing a delay in the final investment decision in the near term. Foreign participants who spoke to OBG remain interested in offering technology and expertise. However, progress appears to be stalling as a result of an internal debate over project viability.

Concerns that falling demand for coal from China and a decline in commodity prices could weigh on Mongolia’s resource-related boom look to have been realised, at least in part, with figures for the first quarter of 2013 showing growth more than halved over the same period the year before.

Attendance and school construction are on the rise in Mongolia, and the Ministry of Education (MoE) continues to harness foreign expertise, suggesting significant progress in the sector. However, critics say the government needs to do more to ensure improved and inclusive schooling at all levels, particularly given the promise of growing social development as a result of increased resource-related investment.