European Bank to Boost Investments in Mongolia by Almost 50%

By Hanny Wan

Sept. 13 (Bloomberg) -- The European Bank for Reconstruction and Development plans to boost investment in Mongolia by almost 50 percent this year, in industries ranging from retail to mining.

The bank will increase spending in the Asian nation to 50 million euros ($70 million) this year, and forecasts another gain to 100 million euros in 2009, John Chomel-Doe, the bank's director for Mongolia, said on Sept. 10 in Ulan Bator.

``This is a good demonstration of the potential Mongolia has for private-sector investments,'' Chomel-Doe said during the Euromoney Mongolia Investment Forum.


Foreign investment in Mongolia reached $500 million last year, of which 67 percent went to mining and 22 percent to food, according to the World Bank. Between 2005 and 2007, total foreign direct investment was $1.2 billion, equal to the total over the 14 years from 1990 to 2004, the World Bank said.

The European Bank has to date invested in Mongolian businesses that include a supermarket chain, a bank, a drilling company, a coal mine and a fruit-juice producer, Chomel-Doe said, declining to identify the companies.

The bank started investing in Mongolia last year, with 33 million euros, he said. The institution, known as the EBRD, is owned by 61 countries, including the U.K., Germany, Australia and Mongolia, and two intergovernmental institutions, the European Community and the European Investment Bank, the EBRD's Web site shows.

Growth Sectors

Mongolia's ``growth sectors'' include retail distribution, beverages, real estate, tourism, textiles and mining, Chomel-Doe said. Cement, renewable energy and financial industries are also likely to generate high growth, he said, adding that ``many of them are in our pipeline.'' The bank is seeking to increase investment in Mongolia because the nation has an active democracy, he said.

Other positive factors include a fully privatized banking sector, ``one of the best tax regimes for business and individuals,'' a free press and a private sector that accounts for 80 percent of the country's economy, he said.

To contact the reporters on this story: Hanny Wan in Ulan Bator at hwan3@bloomberg.net