Kathryn Cave (Mongolia) - A Wealth of Contradictions…

"The other morning when I was reading the newspaper I came across an article that made me almost choke on my coffee", began a recent rant by Elizabeth Bryning in the UB Post, on readers' gripes about aspects of life in Mongolia. The reason for this, she explained, was that the paper suggested a good reason to visit Mongolia was "its ‘untouched countryside.'"

"'Untouched?' She exploded, "Mongolia's countryside described as ‘untouched?' There may be an ‘untouched' corner somewhere... but, when you get out of your vehicle and walk around, you can barely go five paces without tripping over an empty vodka bottle, even in the most remote and unpopulated corners of the country..." Yet much to Bryning's disgust, ‘Untouched' probably is the word that would leap to many people's minds, outside of Mongolia. This is a country known for its open spaces, deserts and yurt -dwelling nomads. However, Mongolia really is a wealth of contradictions...

Contrary to the desert imagery, and pictures of a craggy faced Genghis Khan astride his horse, 45% of the population is actually crammed into the main city, Ulaanbaatar. In fact, many live in a yurt shanty community outside the city, which is lacking sewers and running water. According to a 2011 World Bank report; smoke from the coal fires of the area has turned the capital into one of the most polluted places on earth.

However, now the produce of the new copper and gold mines (set for distribution this is June) provide the promise of hope and rejuvenation. This should make up a third of Mongolia's economy by 2020 and could - according to some estimates - make Mongolia the world's richest country per capita by 2021. In contrast to all this at present about a fifth of the population of 3 million are still living on $1.25 a day, and the gap between rich and poor is steadily rising.


Foreign Investment: Good or Bad?

The issue of foreign investment is creating some tension within the country itself.  Last year, World Finance highlighted the pure potential in Mongolia, but earlier this week the government convened to talk about the future of the mine, focusing on foreign investment. At present London-based Rio Tinto Group (RIO) owns 66%, whilst the state has the remaining third. However, controversially Rio Tinto is accused of overspending by £1.3bn and not properly paying taxes for the previous year - accusations it firmly denies.

Last year the government began introducing new regulations on foreign investment. These included a series of government approval measures for non-Mongolian companies gaining large stakes in strategic industries and resulted in a 17% decline in foreign investment in 2012. This could prove a rather serious political point for a government that is holding elections on 26th June. On the one hand, the country desperately needs money from outside, but on the other, it is not necessarily filtering down to the ordinary people.

Now some jitters have been noted by the international press. Mongolian banks cut interest rates this month to promote growth. Yet this week Moody's Investors Service assigned a negative outlook for the Mongolian banking system to reflect "the challenges the banks face in managing what will likely be a period of rapid loan growth in an economy that is increasingly exposed to commodity-driven boom-bust cycles." The National Statistics Office also announced that Mongolia's exports declined 7.8% in the first quarter from a year earlier and imports fell 17.3%.


What Does All This Mean for Tech?

Technology underpins mining and developments. However it is also the lynchpin for most forms of modern progress, and is widely held as an enabler to reduce poverty. Last week, in the name of change, it was announced that a joint Mongolian-Chinese Science and Technology Committee will be established for sharing experiences and launching joint research projects.

This country certainly has a lot to gain and developments are being made. There is a new satellite, due to launch in 2015. This is planned to provide domestic communications, including TV, internet, radio, e-services and government links. The local media reported that, "Regardless of the geographic location, individuals, herdsmen, households and organisations will have access to wireless communication services at a low cost nationwide."

In addition to the satellite project, the National Broadband Programme (2011-15), launched two years ago is a government plan to ensure that at least 50% of all households have access to affordable broadband connections, high-speed internet and television. There are also plans to ensure that 40% of households in remote areas can access wireless broadband.

Things are improving slowly. In October, The International Telecommunication Union announced that Mongolia was in 84th position in its annual "Measuring the Information Society" report - up three places on 2011. In the Networked Readiness Index 2011-12 issued by the World Economic Forum, the country stood in 63th place (out of the 143 counties surveyed) - a considerable improvement from 85th in 2010-11. Whilst the CEO of Skytel Group D Bolor said, "Mongolia's ICT sector has been growing very fast since the middle of 1990s. Mobile phone penetration has grown to 116.4% so competition is very high"

"There is scope for Mongolia to vastly develop if it gets everything right," says Vidur Jain, a strategist at Monet Capital, an investment bank based in Ulaanbaatar. The question remains whether all this will reach ordinary people. In a country like Mongolia however, alive with contradictions, things are not always as they seem. Even today some herders have TV beamed directly into their yurts in the middle of the Gobi desert...


By Kathryn Cave Editor at IDG Connect



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