mongolia investments 2013
TRANSCRIPT
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New Infrastructure Development Projects
Government of Mongolia
MINISTRY OF ROAD, TRANSPORTATI ON, CONSTRUCTION AND URBAN
DEVELOPMENT
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Government Policy Agenda for Growth and Development
2
The government has approved a series of infrastructural projects and
plans, aimed at supporting sustainable, long-term growth.
Ministry of Roads, Transportation, Construction and Urban Development
New Development Projects: a Snapshot
New Development
medium-term target program
Sainshand Industrial complex
Expansion of National Railway
Ulaanbaatar road re-generation
Improving national infrastructure
100,000 Housing Project
Boosting Job growth
Utilities reform
Rural regional development Easing internal migration
Strategic position near key mineral deposits
In prime location near China
Cost effective mineral processing
Cost effective expansion through sea ports
Strengthens international trade position
Boosts mining freight turnover
Fosters regional economic development
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Policy Agenda & Institutional Framework in Place
3
The government has passed an extensive institutionaland legislativeframeworkfor its infrastructural reform program, these include*:
Concession Law: the government has passed key concession law to facilitatePublic-Private Partnerships (PPP).
Mongolia Development Bank is to manage and oversee the financing of theJRYHUQPHQWVLQIUDVWUXFWXUDOSURMHFWDJHQGD
New Development Program (NDP). The Parliament of Mongolia has approvedWKH1HZ'HYHORSPHQWPHGLXP-term target program (on 25 June 2010).
Economic Standing Committee formed to oversee implementation of the NDPwith the passing of the program (on 25 June 2010).
Ministry of Roads, Transportation, Construction and Urban Development. * This is not an exhaustive list.
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Mongolia Outlook: Solid Economic Prospects
4
A Continued broadening in economic growth:
The Mongolian economy is expected to growsolidly (Figure 1).
The domesticeconomy has been growing, butQHHGVWRFDWFK-XSIXUWKHU)LJXUH
The industrial & manufacturing sectors are posedto expand with mining exploration (Figure 3).
Ministry of Roads, Transportation, Construction and Urban Development
Source: Worl d Bank
0
25
50
75
100
125150
2005 2006 2007 2008 2009 2010
Net Trade Investment (GFCF)
Consumption
% GDP
10
30
50
70
90
1995 1998 2001 2004 2007 2010
Agriculture Industry Manufacturing
% GDP, Value added
Figure 1. GDP growth
Figure 2. Components of GDP
Figure 3. Sector splits of GDP
-2
0
2
4
6
8
10
12
1995 1998 2001 2004 2007 2010
Estimate
% Year-on-Year
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5Ministry of Roads, Transportation, Construction and Urban Development. * The spread is the lending rate minus the deposit rate
-5
0
5
1015
20
25
30
35
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Interest Rate Spread Real Interest Rate%
Figure 6. Easing credit conditions*
0
10
20
30
40
50
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Domestic credit to private sector
Domestic credit from banking sector
% GDP
Source: Worl d Bank
Figure 7. Domestic Private Sector Credit
Mongolia Outlook: Moving to Private-Sector Led Growth
0
2
4
6
810
12
14
16
18
20
1995 1998 2001 2004 2007 2010
Market capitalization of listed companies (% of GDP)
% GDP
Figure 8. Market Capitalization Spikes
Favorable Financial Climate:
Credit conditions have eased following the financial
crisis, and will continue to do so (Figures 6 &7).
Although inflation remains a challenge, businessconditions are favorable. Listed companies continueto grow (Figure 8).
The Mongolian Stock Exchange (MSE) is set toexpand in cooperation with global partner exchanges.
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6
Mongolia Outlook: Natural Commodity Resources
Coal Deposits
Copper Deposits
Precious Metals Deposits
Oil Deposits
Ministry of Roads, Transportation, Construction and Urban Development
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Expansion of National Railway: Phases of Development
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Phase I : Expansion of 1100km Dalanzadgad-Tavantolgoi -Tsagaan suvraga - Zuunbayan: 400 km
Sainshand -Baruun -Urt: 350 km
Baruun-Urt - Khuut : 140 km
Khuut - Choibalsan :150 km
Phase I I : Expansion of 900km
Nariinsukhait - Shiveekhuren : 45.5 km
Ukhaa hudag - Gashuunsukhait : 267 km
Khuut -Tamsagbulag- Numrug : 380 km
Khuut - Bichigt : 200 km
Phase I I I : Expansion of 3600km
Approximately 5,684 km of new railway is to be built between 2010-2014:an unprecedented increase. Development is already underway:
Eastward expansion 50/50 joint venture with Russian for Eastward
expansion Strategic and cost effective collaboration with
discount on transport tariff & in the process of re-
negotiating 65% for 30+ years.
Ministry of Roads, Transportation, Construction and Urban Development
A Westward expansion is planned alongside furtherexploration of mineral deposits.
This will progress in tandem with the JRYHUQPHQWV
regional development policy.
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RAI LWAY: Access to International Markets & Seaports
Ministry of Roads, Transportation, Construction and Urban Development
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Expansion of National Railway: Economic Benefits
10
Strategic support for the mining sector
Strengthens linkages with strategically key mineral deposits (Tavan Tolgoi & Oyu Tolgoi), Boosts freight turnover of mining products, transit cargos and exported goods.
Mineral goods to top an average 60mn ton per year due to plans.
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Stands to boosts structural capacity of the economy and the level of GDP significantly:
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Improves national transit capacity
Total volume of cargo transported is expected to increase by a factor of 3.5*
Eliminates significant bottlenecks
Sets solid foundation for future passenger travel across the country
Ministry of Roads, Transportation, Construction and Urban Development
*See Resolution No 32, June 24 2010, Resolution of the State Great Hural of Mongolia
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Sainshand Industrial Park: Prime Location
Ministry of Roads, Transportation, Construction and Urban Development 11
Cost Effective Processing & Transit:
Facilitates cost-effective ore transportationfrom Tomortev, Tavan Tolgoi & Oyu Tolgoi &
Tomortev mines
Near key mineral deposits: On the Trans-Mongolian railway (TMR) and strategically
close to key mineral deposits
Prime Strategic Location:
Close to China: Sainshand is the capital ofDornogobi, the aimag closest to China, a key
export market
On the 1,100 km railway between Tavan
Tolgoi & Choibalsan and will join onto
5XVVLDV7UDQV-Siberian Railway to accesssea ports
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Sainshand Industrial Park: Key Facilities
12Ministry of Roads, Transportation, Construction and Urban Development
The Industrial complex will include
facilities for the following:
Oil Refining
Cement Plant facilities
Coke Plants Iron Pellet Plants
HBI / DRI Plants
Coal Gasification
Copper Smelting
Power Plant
Tavan Tolgoi (Coal)
Darkhan (Iron Ore) Oyu Tolgoi (Copper concentrate)
Tsagaan Suvarga (Copper concentrate)
Timurtein Ovoo
Tsagaan Tsav
Minerals will be transported to Sainshand to be
processed and smelted and prepared for export tointernational markets.
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1HZ'HYHORSPHQW0HGLXP-Term Target Program
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Urban development & planning
Improving infrastructure
Expanding housing supply
Boosting job growth & education
Tackling pollution
Supporting rural development
Incentivizing enterprise & business
Easing internal migration
8 key policy areas aimed to ensure sustainable, broad-based and equitable growth
Ministry of Roads, Transportation, Construction and Urban Development
Overcrowding in Ulaanbaatar
Bottlenecks in transportation
Unemployment
Severe pollution
Ecological deterioration
Persistent poverty
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Disproportionate urban migration
Policy areas:Policy Challenges
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Key Policies: Urban Development & Infrastructure
14Ministry of Roads, Transportation, Construction and Urban Development
Ulaanbaatar (UB) roads: re-build and
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National Roads & Trans-M ongolian
highway system: upgrade and build new roads
connecting UB with all aimags (5,572 km) .
Water & waste management: Establish new
sources of underground & pure water supplyand revamp national sanitation facilities
Efficient National Power Supply: An
independent & centralized power source in
Ulaanbaatar, in regional pillars and aimags.
Centralized Power Grid: A new centralpower grid, introducing renewable energy
technology. Aimags to be connected to a
centralized national power grid.
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Build 212 km worth of new roads
Construct 7 double-level intersections
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roads will be reduced significantly.
Capacity of main roads will beimproved dramatically
Standard of living and ease oftransit will improve dramatically
Ministry of Roads, Transportation, Construction and Urban Development
54% of UB roads > 25 years old;
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ULAANBAATAR
Improving Infrastructure: National Road Network
Ministry of Roads, Transportation, Construction and Urban Development
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Improving Infrastructure: Trans-M ongolian Highway
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Ministry of Roads, Transportation, Construction and Urban Development
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Key Policies: The 100,000 Housing Units Project
Ministry of Roads, Transportation, Construction and Urban Development.
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Key Policies: The 100,000 Housing Units Project
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75,000 housing units are to be built in UBand a further 25,000 units in local areas.
Housing program to be implementednationally in UB city, Aimags and Soumcenters:
Mongolia has 21 Aimags, or provinces. EachAimag comprises administrative Soumdistricts, which total 330.
1HZSoum &HQWHUproject:Hospitals, schools, kindergartens, vocational
training and business centers will be built toservice local areas alongside new housingsupply.
Ministry of Roads, Transportation, Construction and Urban Development.
41,200(55%)
24,800(33%)
9, 000(12%)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
New homes in new districts
Re-generated homes in Ger district
New homes in downtown UB
75,000 New Housing Units inUlaanbaatar (UB):
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Key Policies: The 100,000 Housing Units Project
20Ministry of Roads, Transportation, Construction and Urban Development.
Re-generation of Ger districtaround UB city:
Demolish houses and apartment blocks
that are not earth-quake resistant &
replace with new housing districts
Increase housing supply & support
financing needs
Issue low interest loans with long
maturity to low & medium income
households
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Key Policies: Supporting Enterprise and Manufacturing
21
Targeted development and investment in factories to produce construction
materials, intermediate and high value added goods for domestic and international markets.
Introduction of new heat-saving technology in the construction process to induce a cost
efficient and environmentally sustainable production process.
Creation of technological parks to support small and medium-sized enterprise and
employment, targeting the specific needs of Aimags and Soums.
Ministry of Roads, Transportation, Construction and Urban Development
Continued cost reduction for business
start-ups, to support private-sector led
economic growth. Costs have been declining
(Figure 14). 0
5
10
15
20
2003 2004 2005 2006 2007 2008 2009 2010 2011
% of GNI per capita Incentivize new companies in strategic
commodity and mining sectors:
oil, gas, bioethanol, biodesel, dimethylephir
and synthetic diesel production
Figure 14. Cost of business start-up procedures:
Source: World Bank
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Key Policies: Tackling Pollution
22
Upgrade basic public servicesin8%V*HUGLVWULFWVUH-vamping
electricity, water and gas supply for60,000 households.
Replace wood and coal burningstovesin Ger district with low-pressure steam furnaces and energyefficient systems.
Create green areas(trees and grass)equivalent to 20 square meters percapita in Ulaanbaatar
Improve public transport andreduce exhaust fumes by introducingenergy efficient technology in UB city
and suburbs.
Comprehensive waste managementto transport, sort, recycle and disposeof waste in an environmentallyfriendly manner.
Ministry of Roads, Transportation, Construction and Urban Development
Nearly 85% of Ger residents use
wood or coal burning stoves for
heating. Upgrade would
ultimately reduce smoke exhaust
by 60% by 2013.
Semi-coked coal supply for Ger
district is to produce smokeless
fuel and will have 100% private
sector financing.
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Projected Social Benefits of the New Development Program
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Present Situation Post-Project I mplementation
Employment:
Household Income:
SmokePollution, Poverty & Crimelevels:
Ministry of Roads, Transportation, Construction and Urban Development
Source: Boston Consulting Group
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Financing New Development projects
24Ministry of Roads, Transportation, Construction and Urban Development
Investment
ProjectBillion(USD)
Projected TimeFrame
New Railway Project 4.5 2010-2014
Sainshand Industrial Complex1 13.9 2010-2016
National Road Network 4.8 2010-2016
Ulaanbaatar Road Network 0.8 2010-2016
Trans-Mongolian Highway 1.9 2010-2014
Domestic Road Network 2.1 2010-2016
100,000 Housing Project 6.2 2010-2016
96 Soum Centers 0.7 2010-2016
TOTAL 35.0/approx/
1. Estimate includes 6 processing and manufacturing plants, 2. Estimate is in millions of US dollars
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Contact Details:
Ministry of Road, Transportation, Construction and Urban Development of Mongolia
Government Building XII
Barilgachdyn Talbai
Ulaanbaatar, Mongolia
Telephone: 976-51-263319Fax: 976-11-329190