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BCM MARCH 2023 MONTHLY MEETING RECAP
The Business Council of Mongolia (BCM) held a Monthly Meeting on Monday, 20 March 2023 on the topic of “Managing Corporate Finances in a Risky Environment,” with BCM Chairman Ts. Tumentsogt hosting for an audience of around 60 people at the Shangri-La Hotel.
The BCM recently signed a Memorandum of Understanding with the Annual Investment Meeting (AIM) based in the United Arab Emirates. On this upcoming May 8-10, the BCM will lead a delegation to the annual forum held in Abu Dhabi. Members are encouraged to attend and seek investment and partnerships at the forum, which saw over 20,000 attendees last year. Contact the BCM Secretariat for more information.
On June 26-29, the 2023 World Export Development Forum (WEDF) will be held in Ulaanbaatar. The WEDF is the flagship event of the International Trade Centre. This year marks the 20th iteration of the forum, and the first since the Covid pandemic. Click here for more information.
Ganbold Enkhtaivan, Deputy Governor of the Bank of Mongolia
Following updates from the BCM, Bank of Mongolia Deputy Governor Mr. Ganbold ENKHTAIVAN gave a presentation on Mongolia’s economic outlook. In February, inflation stood at 12.3 percent, which shows cooling from the highest figure of 16.8 percent reported in June 2022. Although inflation is slowing, it is still too high, but the BoM believes it will fall to single digits by the end of 2023, most likely in Q4. Preliminary estimates for balance of payments showed a USD 727 million deficit. The only way to address is to ramp up exports. Thus, the BoM’s two main areas of focus in 2023-24 will be inflation and balance of payments. Forex reserves stood at about USD 3.5 billion at the end of 2022.
Randolph Koppa, Chairman of TDB
Next up, Mr. Randolph KOPPA, Chairman of Trade and Development Bank and BCM Board Member, gave attendees a quick lesson in corporate finance. Bank failures in the U.S. and elsewhere caused a sharp decline in global banking shares, with some fearing a contagion. However, it is not at a level to cause panic, said Mr. Koppa. Given especially the niche features of banks such as Silicon Valley Bank and Signature Bank, Mongolian banks will not be significantly impacted by the development. Mongolian banks generally hold few MNT government bonds, don’t dabble in crypto, have a broad customer base, high liquidity, and FX availability is slowly improving. However, Mr. Koppa gave three recommendations to mitigate risks. Stay liquid: secure funding before embarking on major projects. Go green: companies looking to expand or diversify should look into green financing. Stay ready: prepare for the better, as household consumption is increasing, and services and other non-mining sectors should continue to recover.
Following the presentations, a panel discussion on the topic of “Practical Cases on Risk Mitigation” was held. Moderated by BCM Chairman Mr. Tsevegmid TUMENTSOGT, on the panel were:
- Mr. Ganbold ENKHTAIVAN, Deputy Governor, Bank of Mongolia
- Mr. Adilbish GANKHUYAG, CEO, Premium Group
- Mr. Randolph KOPPA, Chairman of the Board of Directors, Trade and Development Bank
- Mr. Jon LYONS, Vice President Projects, Erdene Resource Development Corp.
- Mr. Gumenjav TSEVEGJAV, CEO, XacBank
A recurring sentiment during the discussion was that inflation and exchange rate depreciation is nothing new for Mongolia, as such a situation has generally been the case for the past 30 years. Panelists also noted that Mongolia was dealt simultaneous blows to foreign trade with the pandemic, China’s zero-Covid policy, and the war in Ukraine. The biggest issue on the minds of business leaders in the coming years is going to be exchange rate risks. Around 80 percent of USD comes into Mongolia through exports. With a balance of payments deficit, exchange rate correction is the only option. This presents a major risk especially to businesses that deal solely in MNT. One area of disagreement was on the topic of monetary policy vs. fiscal policy. Some may say that there is too much interrelation between the central bank’s monetary policy and the government’s fiscal policy, while others may hold that close coordination is necessary to tackle inflation and foreign exchange rates. However, panelists agreed unanimously that the overall risk profile today is definitely less than in recent years.
After the panel, Ms. Bojoo LAKSHMI, Director of the Economic Policy and Competitiveness Research Center (EPCRC), briefed the audience on Mongolia’s ranking in the IMD World Competitiveness Report. The EPCRC is a non-profit research organization established in 2010.
 Bojoo Lakshmi, Director of the EPCRC
Mongolia is ranked 61 out of 63 countries surveyed in the report, which has 333 indicators among 4 categories. Mongolia ranks poorly in economic health, business profitability, infrastructure, and governance efficiency. The country ranks high in trade index, tax rate, unemployment, banking services, and communications investment. Furthermore, the overall score for Mongolia has been declining for the past five years. In addition, Ms. Lakshmi calls on everyone to fill out the 2023 survey. Evaluating the economy regarding competitiveness sends an important message to government officials and media.
Last but not least, the BCM handed membership certificates to four new members:
Photos from the meeting and networking event can be found from the BCM's Facebook page. Follow the BCM to receive updates and info.
More information can be found from the Editor's notes and presentations linked below.
Links:
- Editor's notes (English)
- "Current state and outlook of Mongolia's economy" (Mongolian) by Ganbold Enkhtaivan, Deputy Governor, Bank of Mongolia
- "Risk aversion and Funding" (English) by Randolph Koppa, Chairman of TDB and BCM Board Member
- "Mongolia in the World Competitiveness Report" (Mongolian) by Bojoo Lakshmi, Director, Economic Policy and Competitiveness Research Center
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