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The banking sector has recovered from a financial crisis in 2008-09 that resulted from economic overheating and internal inflation. The sector is set to benefit from an influx of new mining projects, although the scale of the mining enterprises themselves far outstrips the available capital of all top banks combined. Instead, banks will focus on lending to service industries and to consumers who use their newfound wealth to buy houses and cars. Small and medium-sized enterprises are a major focus, and the government has launched programmes to improve access to credit. One threat to growth, however, is a tightening of interest rates as the central bank tries to curb inflation. This chapter features an interview with L. Purevdorj, Governor, Bank of Mongolia (BOM), and a roundtable discussion with John P Finigan, CEO, Golomt Bank; Norihiko Kato, Acting CEO, Khan Bank; Randolph S Koppa, President, Trade and Development Bank (TDB); and D. Bat-Ochir, CEO, XacBank.

Mongolia’s bourse is the focus of much investor interest, given its massive resource endowment and relative obscurity. In some ways, Mongolian stocks are proxy for Chinese securities, which are unavailable to foreigners; Chinese growth is directly linked to increased demand for Mongolian coal and other minerals. The barriers to investment in the Mongolian Stock Exchange are typical of a small emerging market: low liquidity and primitive data and information systems. Upgrading the market’s infrastructure is the goal of a new partnership with the London Stock Exchange that began in 2011. This chapter features interviews with Xavier Rolet, CEO, London Stock Exchange Group (LSEG); B. Bold, Chairman, Mongolia Stock Exchange (MSE); and D. Achit-Erdene, President and CEO, MICC.

Mongolia’s resource-based economy is forecast to be one of the fastest growing in the world over the next two decades. The two big stories of 2011 were Tavan Tolgoi, a coal mine now ramping up its production, and Oyu Tolgoi, a copper and gold mine that should begin operations in 2013. The IMF expects investment in these projects, and growth in spinoff industries, to drive GDP growth to 12% in 2012, and the government projects even higher growth, at 25%. However, economists are warning of “Dutch disease” whereby overreliance on resource exports crowds out manufacturing and boosts inflation. Investing in infrastructure and educating citizens to participate in a modern economy will be key to achieving diversified growth. This chapter features interviews with Ch. Ganhuyag, Vice-Minister of Finance and Founder, Mongolia Economic Forum; B. Ganzorig, Chairman, Foreign Investment and Foreign Trade Agency; Jim Dwyer, Executive Director, Business Council of Mongolia (BCM); and J. Odjargal, Chairman, MCS Group. It also includes a viewpoint from B. Byambasaikhan, CEO, Newcom Group.

Mongolia’s political history is dominated by its relationships with its only two neighbors: China and Russia. Although in the 13th century, Genghis Khan conquered lands as far away as eastern Europe and established one of the largest empires in history, Mongolia fell under Chinese dominion by the 17th century. The fall of the Qing Dynasty in 1919 paved the way for Bolshevik Russia to turn Mongolia into a satellite state. With the dissolution of the USSR, Mongolia entered the multiparty era and now boasts relative political stability and a fledgling democracy. It strives to maintain good relations with China and Russia, but the country also hopes to develop relationships with the US, Japan and other nations through its “third neighbour” policy. This chapter features interviews with President Ts. Elbegdorj; Sukhbaatar Batbold, Prime Minister of Mongolia; and Gombojav Zandanshatar, the Minister of Foreign Affairs and Trade. Angela Merkel, the Chancellor of Germany, and Joe Biden, Vice-President of the US, provide viewpoints.

With some 17,500 islands tied into a single political system, a centralised unitary government has not proved adaptable to Indonesia’s geography or society. Decentralisation, which began in 1999 and devolved power to local administrative units, has seen both successes and failures, but should hopefully prove more stable in the long run. Critics see the programme as multiplying local bureaucracies and putting power in the hands of inexperienced or corrupt politicians, while supporters point to the dissipation of violence in formerly restive areas. The government’s Grand Strategy for Implementation of Decentralisation would attempt to address the concerns, giving a supervisory role to provincial governors, and allowing the central government to overrule local laws that conflict with national laws. The Indonesia Investment Coordinating Board (BKPM) has also instituted a Regional Champions programme that highlights certain provinces with the institutional qualities required for quick impact projects. Projects that have been awarded to regional champions include toll roads, geothermal power plants, mining and airport projects. This chapter includes a viewpoint from Satish Mishra, Managing Director, Strategic Asia