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In conjunction with Ernst & Young, OBG explores the taxation system. Peter Markey, Partner, Ernst & Young, shares a viewpoint on building a qualified workforce for professional services.

With hundreds of newspapers, magazines, and television and radio stations, Mongolia’s media scene is competitive, dynamic and increasingly varied. The sector’s strong growth, with new outlets opening on a regular basis, reflects the vibrancy of Mongolia’s growing democracy. Television is the main medium of consumption, with cable becoming increasingly popular, and eight new broadcast channels opened in 2010 alone. The launch of Bloomberg TV Mongolia, for example, highlights both the growing importance of Mongolia as well as the maturity of the media market. This burgeoning audience has also translated into the growth of advertising.

The health care system in Mongolia is in transition, moving away from a comprehensive yet out-dated Soviet model to a more private sector-focused approach. This shift, combined with the government’s openness to public-private partnerships, indicates an opening for foreign investors to make gains in this sector. Key challenges including fighting non-communicable, lifestyle diseases, and bridging the gap between urban and rural health care quality. In education, meanwhile, a similar communist-to-capitalist transition is occurring. The government spends up to 20% of its GDP on education, a considerable sum that it must now orient towards training Mongolians for a market economy. In the secondary and tertiary markets, private schools are in high demand.

Mongolia’s tourism industry has blossomed under a laissez-faire regime that allows private ownership and operation of facilities and tour companies. Leisure tourists, who number approximately 90,000 annually, visit the Central Asian countries for its unspoiled natural beauty and unique cultural attractions. Traditional tourists make up only a small fraction of those who visit Mongolia every year, with the rest being shuttle traders, although they still use facilities such as hotels and restaurants. One challenge is fighting the seasonality of the market, given the extreme winters Mongolia experiences. The government is looking to promote winter experiences such as the Eagle Festival and the Ice Festival. This section has an interview with L. Gansukh, Former Minister of Environment and Tourism.

Agriculture, particularly herding, is the traditional foundation of Mongolia’s economy and culture. Even today, the sector supplies 20% of GDP and employs 35-40% of its population. But the transition to modernity has been jarring, with Soviet experiments in collectivised farming and a modern emphasis on producing for export. Cashmere wool has been the true success story here, earning $180m in income in 2009. However, there are concerns that the profitability of cashmere is pushing herders to switch their flocks to goats, increasing desertification. Another constant threat to the sector is Mongolia’s recurrent dzuds — extremely cold winters — which killed more than a quarter of all livestock in the winter of 2009-10.

The Mongolian construction industry has seen a surge of activity in the past two years. The driver is government spending, particularly the New Development Programme, which will address roads, railways, affordable housing, rural development and industrial development schemes, with a price tag of some $28.6bn. One key part of this is the 100,000 houses project, which represent an attempt to offer modern, affordable housing to the many citizens who still live in traditional gers. This will address some of the huge demand for homes in Ulaanbaatar. On the upscale front, luxury real estate is a growing market aiming to tap into the fortunes that will be created through the mining projects. This chapter includes an interview with D. Ganbaatar, President, Max Group.