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The Mongolian National Development Agency met with the International Finance Corporation (IFC) this week in consultations regarding foreign direct investment in Mongolia.
The IFC released a report earlier this year focusing on foreign direct investment in Mongolia. Part of the impetus of the report is to assist Mongolia in developing a new investment policy, and to implement solutions for maximizing efficiency and economic optimization via FDI.
Consultations this week was intended to develop a plan for increasing attractiveness of Mongolia for potential foreign private sector investors.
The original “Investment Reform Map for Mongolia” was released by the IFC in June this year. Broadly, the report identifies FDI as important in providing Mongolia with enough capital inputs to continue the government’s ambitious development strategy. The report raised concerns that FDI into Mongolia has been uneven and unreliable in recent history, and overly targeted toward natural resource extraction, resulting in economic imbalances. Over 80% of FDI in Mongolia since 2012 has been in the natural resource extraction sector.
The IFC’s report proposes a two pronged approach to maximizing benefits of FDI. The first is rightly centered on increasing FDI into the natural resource sector via sustainable development investments. Part of this includes seeking to perform more refinement work on natural resources mined in Mongolia before export, adding value here in Mongolia.
The second prong calls for additional efforts at diversification of the Mongolian economy by promoting FDI in sectors other than extractive. The report identifies hospitality and tourism, agriculture, and e-commerce industry as having high potential for growth in Mongolia.
The report also makes recommendations focused on making doing business in Mongolia safer and more predictable for foreign investors, including through effective enforcement of existing Investment Law, and by improving access to and implementation of the Investment Protection Council.
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