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Landlocked in part by its rapidly industrialising neighbour, China, Mongolia’s potential for manufacturing and other industry is limited by factors beyond its control. The government has responded to these challenges by focusing on areas of competitive advantage. Cashmere, for which Mongolia could supply up to 30% of the world, has proven an excellent export commodity, and producers are hoping to boost the amount processed in country. One related strategy is for Mongolia to develop itself as a brand for premium agricultural products, trading on its image as a remote and spiritual land. The government’s plans for traditional industrial development, meanwhile, depend on the development of Sainshand Industrial Complex, which will specialise in processing Mongolia’s abundant mineral resources. This chapter features an interview with T. Badamjunai, Minister of Food, Agriculture and Light Industry.

The communications sector in Mongolia has grown rapidly, with wireless telephony saturating the market within a decade of its introduction. The challenge now for providers is figuring out how to further monetise their customers, who generally have low incomes. Some companies are focusing on bundling, offering internet access and television along with phone subscriptions. On the IT side, the penetration of computers is low, although it nearly doubled between 2007 and 2008. The government has earned commendation for connecting with its citizens through technology, rising from 82nd position to 53rd rank on a UN E-government survey. This chapter includes interviews with J. Bat-Erdene, Chairman, Information, Communication Technology and Post Authority (ICTPA); O. Batchuluun, President and CEO, Telecom Mongolia; and D. Bolor, CEO, Mobicom.

As a landlocked and historically underdeveloped country, Mongolia’s transport challenges are steep. Airports are dilapidated, roads are cracking, and railways need updating. The government is planning major investments on all fronts, including upgrading roads to serve the huge freight trucks that travel to and from mining sites, rehabilitating Ulaanbaatar’s urban network. Some $5bn will be spent on expansions to the railway system, connecting mining sites to the export destinations of China and Russia. Meanwhile, the aviation sector is set for a boom, particularly in charter flights, as mining employees will need transport in and out of remote locations. This chapter features an interview with Kh. Battulga, former Minister of Roads, Transportation, Construction and Urban Development.

Mining is the driving force of the Mongolian economy, contributing 30% of GDP, and upcoming projects will surely increase this ratio. The two biggest are Tavan Tolgoi, a massive coal mine, and Oyu Tolgoi, a copper and gold mine, which should both be in full operation by 2013. In addition, Mongolia has potentially viable deposits of rare earth minerals, although extraction has yet to begin for these. The sector faces a number of key challenges, however, particularly with an unclear regulatory environment. The issuing of new licences has been stalled through 2012, and the government has drawn criticism for trying to renegotiate the Oyu Tolgoi contract after it had been signed. This chapter features interviews with D. Zorigt, Minister of Mineral Resources and Energy; Tom Albanese, CEO, Rio Tinto; B. Enebish, CEO, Erdenes Tavan Tolgoi; and G. Battsengel, CEO, Mongolian Mining Corporation (MMC).

Mongolia’s energy sector has long depended entirely on the one resource it possesses in abundance: coal. This paradigm is unlikely to change drastically in the near future, but the country is looking to diversify its energy portfolio while modernising infrastructure. Solar and wind power are candidates for development, given Mongolia’s 257 cloudless days per year and its wide, open spaces. With major reserves of uranium, moreover, nuclear power is another potential avenue to be pursued, albeit in the long-term. In the short term, Mongolia is focused on building out its electricity grid to handle the energy demands of various mining projects and the increasing adoption of modern amenities in its cities. This chapter features interviews with John Rice, Vice-Chairman, GE; and D. Enkhchimeg, CEO, Petrovis.

The insurance sector, like that of many emerging markets, is small, undersubscribed, poorly staffed and confusingly regulated. However, Mongolia’s growth story has driven annual premium growth of around 20%, and new initiatives should help the industry grow further. Motor insurance, for example, became mandatory on January 1, 2012. Eight firms dominate the sector, with legacy provider Mongolia Daatgal commanding a 30% share, and foreign-owned companies beginning to appear on the scene. One unique product being offered now is livestock insurance, which seeks to mitigate the losses frequently suffered by rural farmers during intensely cold winters, or dzuds. This chapter features an interview with S. Ganbold, Insurance Market Department Director, Financial Regulatory Committee (FRC).