THE COMPANY: Established in 1924, three years after Mongolia’s communist revolution, APU – which comes from the name Arkhi Pivo Undaa, meaning “vodka, beer, drinks” – is the country’s largest beverage producer and its first national brand. APU was partially privatised in 1992 with 51% of its shares retained by the state and 49% floated...
While public spending has been key to maintaining growth in 2012 and 2013, its funding has relied on a ramp-up in foreign-currency (FC) debt. Constrained by the Fiscal Stability Law (FSL), which caps public debt at 40% of GDP, the government subsequently channelled expansionary quasi-fiscal spending through the Development Bank of Mongolia (DBM).
Given its small, open economy with abundant resources including coal, copper, gold, zinc and fluorspar, Mongolia faces the same boom-and-bust cycles of any resource-dependent nation. The country has the natural endowments to provide opportunities for its 3m citizens. However, managing fluctuating growth rates, ranging from -1.3% in 2009 to 17.3% in 2011, as well as...
Accounting for 95% of all registered enterprises and around half of employment (910,000 workers), Mongolia’s 90,000 small and medium-sized enterprises (SMEs) are a crucial fabric linking large resource projects to the domestic economy. Indeed, the National Development and Innovation Committee estimates that every $1 invested in mining creates a $1.84 multiplier effect in...
Foreign direct investment (FDI) financed the current account deficit (CAD) in the boom years, but the FDI drop since 2012 has compounded balance of payment (BoP) pressures. While the CAD has narrowed, the fall in FDI inflows has sustained the tugrik’s devaluation. Expansionary monetary policy from the Bank of Mongolia (BOM) helped provide a soft landing for the economy...
A new investment law passed in October 2013 sent a clear message about the government’s pro-business reform ambitions, placing foreign and local investors on equal footing. New “tax stabilisation certificates” now offer an alternative to the previous investment agreements by freezing the relevant taxes for a period of up to 22.5 years.
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