Monday, 14 Mar 2011
Mongolia needs to look beyond the coal and copper mines that are driving its economic boom to find a more balanced model of growth.
Mr Sukhbaatar Batbold PM of Mongolia said that investment in mining projects and speculation on the wealth they will create in the world’s most sparsely populated nation have made Mongolia’s tugrik the best-performing currency since the beginning of last year. That’s putting exports such as cashmere at a disadvantage and adding costs to newer industries such as tourism, food production and metal processing.
Mr Batbold said that it is important to have a good mining industry. But it is a tool of moving many other things forward. What we want to focus on is creating jobs in many other industries.
Mongolia needs to avoid developing Dutch disease where the financial benefits of a resource boom lead to a hollowing out of other sectors, according to the World Bank. Sandwiched by Russia’s far East to the north and 1.3 billion strong, resource hungry China to the south, the government is looking for ways to lessen its vulnerability to competition from its giant neighbor and reduce its reliance as a customer.
Mr Rogier van den Brink lead economist for Mongolia at the World Bank said that “Mongolia can’t compete with China on wages but it can certainly find areas in the Chinese economy where it could have an edge such as in cashmere meat and services. Diversifying from resources would be a solution similar to what the Dutch found to combat the resource disease.”
The discovery of gas in the Netherlands drove up inflation and damaged manufacturing. In Mongolia, Vale SA and Xstrata Plc are leading six groups bidding for 1 billion tonne concession at the Tavan Tolgoi coal project. Rio Tinto is developing the Oyu Tolgoi copper and gold deposit which it expects will account for 30 percent of Mongolia’s gross domestic product when completed.
The country also holds oil, potash, iron ore, uranium and the rare earth minerals used in Toyota Motor Corporation hybrid cars and Raytheon Company’s Tomahawk cruise missiles. Plans this year to begin mining part of Tavan Tolgoi and preparatory work for the 2012 start up of Oyu Tolgoi may cause the economy to expand 33 percent in dollar terms. That compares with a 10 percent growth in local currency terms. (sourced:bloomberg)
Mr Sukhbaatar Batbold PM of Mongolia said that investment in mining projects and speculation on the wealth they will create in the world’s most sparsely populated nation have made Mongolia’s tugrik the best-performing currency since the beginning of last year. That’s putting exports such as cashmere at a disadvantage and adding costs to newer industries such as tourism, food production and metal processing.
Mr Batbold said that it is important to have a good mining industry. But it is a tool of moving many other things forward. What we want to focus on is creating jobs in many other industries.
Mongolia needs to avoid developing Dutch disease where the financial benefits of a resource boom lead to a hollowing out of other sectors, according to the World Bank. Sandwiched by Russia’s far East to the north and 1.3 billion strong, resource hungry China to the south, the government is looking for ways to lessen its vulnerability to competition from its giant neighbor and reduce its reliance as a customer.
Mr Rogier van den Brink lead economist for Mongolia at the World Bank said that “Mongolia can’t compete with China on wages but it can certainly find areas in the Chinese economy where it could have an edge such as in cashmere meat and services. Diversifying from resources would be a solution similar to what the Dutch found to combat the resource disease.”
The discovery of gas in the Netherlands drove up inflation and damaged manufacturing. In Mongolia, Vale SA and Xstrata Plc are leading six groups bidding for 1 billion tonne concession at the Tavan Tolgoi coal project. Rio Tinto is developing the Oyu Tolgoi copper and gold deposit which it expects will account for 30 percent of Mongolia’s gross domestic product when completed.
The country also holds oil, potash, iron ore, uranium and the rare earth minerals used in Toyota Motor Corporation hybrid cars and Raytheon Company’s Tomahawk cruise missiles. Plans this year to begin mining part of Tavan Tolgoi and preparatory work for the 2012 start up of Oyu Tolgoi may cause the economy to expand 33 percent in dollar terms. That compares with a 10 percent growth in local currency terms. (sourced:bloomberg)
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