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Finance

Mongolia: The Wolf Cub Begins to Howl

In 2009, analyst group Renaissance Capital dubbed the nation the “Mongolian Wolf” or next Asian Tiger, thanks to its untapped deposits of gold, copper and coal. Indeed, while the world was in recession, Mongolia, a country of fewer than three million people neighbouring China and Russia, was going through a period of economic growth. It remains a fast-growth economy with a GDP rise of over 11% for 2013, according to the CIA World Factbook.

It would not be the first time that Mongolia has held the world in the palm of its hand. During the Middle Ages, Genghis Khan united the Mongol tribes and built an empire covering Russia, China, India, Poland, and the Balkans. They became a force in the Middle East before being finally checked by the Turks.

Graeme Cobham from Essex has worked on and off in Mongolia for the last decade, having visited as a systems manager and later found work supplying companies with IT hardware. He says it is true that the country is growing extremely fast and it is unrecognisable from when he arrived. But he adds that the country creates many technical challenges which will take a long time to resolve and will necessitate a government able to make them happen.

The biggest problem is that Mongolia is the least populated country on the planet for its scale.  A third of the 2.9 million population is concentrated in one city, Ulaanbaatar, and yet the country is bigger than France and Germany combined.

Telecoms is another issue.

“Connections to Ulaanbaatar are not bad, but once you get outside the city it gets much more dependent on cell and satellite communications,” Cobham says.

Connectivity has improved in the last decade but the massive challenge of bringing communications to a vast number of disconnected people over a wide area remains.

Ulaanbaatar itself is a modern city but it has a few quirks which make it unique. There are the Russian apartment blocks built by the Soviets and the modern skyscrapers of a Western economy. The traditional Mongolian diet of mutton, hard cheese and fermented horse milk is giving way to beer and fast food. KFC was the first Western chain restaurant to open there and Cobham points to a clutch of vegetarian restaurants as a sign that things are changing.

However, occasionally a dust storm sweeps into the city and showers everyone with sand to remind you that this place is different, says Cobham. You do not have to venture far from Ulaanbaatar to find a country that the great warrior Genghis Khan himself would have recognised: a world where a shaman will talk to the spirits for you in exchange for a bottle of vodka.

The IT scene has improved dramatically over recent years. While only 10 years ago companies were complaining about a skills shortage, the Mongolian Technical University has been churning out enough staff lately to mean that foreigners are less common in the industry than in the past.

But if you look at the figures, the country is still IT-light and only about 30 companies import and supply computers and other ICT equipment.

There are indications that is changing, however, particularly in the internet field. Earlier this year, local consulting group and investment bank Frontier Securities claimed that Mongolia’s internet sector was the most rapidly expanding sector in the country. The number of internet subscribers is now over 709,000 and computer use in Mongolia has doubled since 2007. Given that in that year there were only four PCs for every 100 people and now that figure is eight, we are not dealing with big numbers here. But, looked at another way, Mongolia is still better than the giant next door, China, where there are six PCs for every hundred people. 

Only half of provincial towns in Mongolia have anything like high-speed internet access. However, most internet users connect through cafes rather than home use so perhaps a third of the nation is online. Wireless technologies such as Wi-Fi, WiMAX, and VSAT comprise a little less than 1% of those subscribing.

InTeC, a local IT consulting firm, identified some 3,400 websites with Mongolia-related content, about 60% of which use the country’s .mn domain name. There are 1,823 Mongolia-themed blogs, with around one third of them started in 2010. Roughly 160,000 Mongolians have Facebook accounts.

While all this is promising, Cobham says that Mongolia has a long way to go before the country can become anything like a Tiger economy.

“There are a lot of stretch marks in the way things are being set up here,” he argues. “For example, most of the software that Mongolia relies on is pirated, at least outside the main multinational mining companies.”

Most of the smaller companies use aged equipment which, if it does not break, is extremely vulnerable to malware. 

“You see all the teething problems of companies, and a country, moving fast.  Once it does [overcome them] I can see Mongolia becoming the powerhouse that the analysts claim,” Cobham says.

 

Nick Farrell is a freelance writer who was born in New Zealand and recently migrated from Bulgaria to Italy. He writes widely on technology, magic and the esoteric.

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Nick Farrell

Nick Farrell is a freelance writer who was born in New Zealand and recently migrated from Bulgaria to Italy. He writes widely on technology, magic and the esoteric.

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