Mongolia Business Landscape

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Mongolia Business Landscape

  1. 1. Mongolia’s Business LandscapeDevelopments and impactSeminar ‘Doing Business in Mongolia’:The Hague, February 26, 2013Larive InternationalWouter van Vliet Your partner in emerging markets
  2. 2. Larive InternationalYour partner in emerging markets Our history • Established in 1975 • 30+ years of experience Our presence • 30 local offices • Asia, Central & Eastern Europe, Turkey, Eastern Africa Our clients • Western companies • International focus Our areas of service • Business intelligence • Market entry support • Local support & implementation • Operational assistance Public I © Larive Group | 2
  3. 3. Economic developments 2008-2012 The economy grew by 17.3 percent in 2011, GDP is expected to grow at a double digit rate over the period from 2013 to 2017. Poverty has been on a downward trend over the past decade.Source: WorldBank, The Economist © Larive Group | 3
  4. 4. MongoliaThe country The economy of Mongolia depends upon mineral mining, livestock & animal products and textiles. The currency of Mongolia is the tugrik. Mongolia has a harsh continental climate The first democratic elections for the Great Hural held in 1990, first presidential election in 1993. Mongolia covers a total area of 1,564,116 sq km Population density 1.76/km2 (NL = 405.5/km2) Strategic location between Russia & China © Larive Group | 4
  5. 5. Changing landscape Rural Urban © Larive Group | 5
  6. 6. Past vs. Present Number of cars on the road in Mongolia (1990): 450 Number of cars on the road in Mongolia (2008): 110.000 Number of cars on the road in Mongolia (2013): 563.887 Cars added every month: 3.000 in UB alone © Larive Group | 6
  7. 7. If Mongolia were 100 people then there were… 43 5750 men, 50 women Living in rural Living urban conditions conditions 27 64 9 0-14 years’ 15-54 years’ 55+ years’ © Larive Group | 7
  8. 8. Facts and figures: Macro economicMongolia Macro-economic health matrix Foreign trade balance, mln USDSource: Mandal Asset Management, Mongolia © Larive Group | 8
  9. 9. Facts and figures: easy of doing businessMongolia Doing Business topics Starting a business (39) Resolving Insolvency (127) Dealing with Construction Permits (121) Enforcing Contracts (29) Getting Electricity (169) Trading Across Borders (175) Registering Property (22) Paying Taxes (70) Getting credit (53) Protecting Investors (25) Source: Doing Business database © Larive Group | 9
  10. 10. Facts and figures: mining the mother lodeMongolia Source: Economist © Larive Group | 10
  11. 11. Main sectors in Economy (% of GDP)Agriculture: 15.1%Industry: 33.8%Services: 51.2% (2012 est.)Industrial production growth rate: 23%Source: CIA World Factbook © Larive Group | 11
  12. 12. Strengths & WeaknessesStrengths:• Richly supplied mineral resources• Improving macroeconomic index• The peopleWeaknesses:• Small internal market• Landlocked country• Importing country• High cost for transit & transport• Dependence of agricultural sector on weather conditionsSource: National Development Strategy,http://www.ukessays.com/essays/education/economy-of-mongolia-mining-and-agriculture.php © Larive Group | 12
  13. 13. Opportunities for Western CompaniesTake the flight • Agribusiness • Infrastructure • Mining equipment • Transport & Logistics • Water sector (irrigation) Source: http://www.vno- ncw.nl/publicaties/Forum/Pages/Groeikansen_voor_Ned erlandse_export_buiten_eurozone_16887.aspx#.USuG9x 0z3To © Larive Group | 13
  14. 14. Some example companiesMonos • Established in 1990 • Pharmacy supplier • Monos Group unites 10 branch companies • More than 1.000 employees © Larive Group | 14
  15. 15. Some example companiesNomin Supermarket • Established in 1992 • One of the top 8 enterprises in Mongolia • Leading the trading sector, especially retail • Growth of total turnover was 43.7% (2010) © Larive Group | 15
  16. 16. Much debatedOyu Tolgoi Project (1) • Joint venture between Turquoise Hill Resources, Rio Tinto and the Government of Mongolia • Main project: Oyu Tolgoi Project in Southern Mongolia • Mongolian government has a 34% stake in the Oyu Tolgoi project • Under construction since 2010, scheduled to begin production in 2013, reach full capacity in 2018 • Over 45 years Oyu Tolgoi is scheduled to produce 450,000 tonnes of copper per year, and 330,000 ounces of gold annually. • More than 15,000 workers on site currently © Larive Group | 16
  17. 17. Much debatedOyu Tolgoi Project (2) © Larive Group | 17
  18. 18. Downside of fast growth The other side of the coin• ‘Minegolia’• Locals don’t benefit from the big mining projects directly• Gap between have & have-not increasing• Lagging infrastructure, traffic, pollution © Larive Group | 18
  19. 19. Mongolian management association• Established in March 1991• Develop modern management thinking• Active in the fields of development, training and research, public and business administration © Larive Group | 19
  20. 20. Means of entry Into the land of the blue sky• Export *PSI• Distributor / Agent • Project budget: Max 1.5• Sales office million• Joint Venture • Subsidy: 50% (max EUR 750,000)Lowering barriers • Project duration:• Subsidy programs (e.g. PSI) maximum 2 ½ or 3 years • Focus sectors: agro-food, water, manufacturing • Successfully conducted over 70 projects © Larive Group | 20
  21. 21. Ease of starting a business and trading across bordersIn Mongolia Ease of starting a business Ease of trading across borders Source: Doing Business database © Larive Group | 21
  22. 22. Do not get stuck in the mud.. Source: Doing Business database © Larive Group | 22
  23. 23. Larive International BV Sparrenheuvel 2 3708 JE Zeist P.O. Box 870 3700 AW Zeist The Netherlands Tel.: +31 30 6933221 Fax: +31 30 6932908 Website: http://www.larive.com Email: Wouter.van.vliet@larive.nlwww.larive.comYour partner in emerging markets

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