By Miyoko Ishigami
BEIJING, Feb 19 (KUNA) -- Mongolia is receiving massive foreign investment
inflows and is developing bilateral ties with countries like Kuwait and other
GCC members to foster economic links in a time when the developed economies
are treading water, the government-affiliated Kuwait China Investment Company
(KCIC) said Sunday.
Mining has opened the doors for investments in many of the economy's
sectors that are still quite underdeveloped, KCIC said in its weekly analysis.
Mongolia's economic potential is enormous and the International Monetary
Fund (IMF) forecasts an average growth of 14 percent for the next five years.
When most of the world's economies are facing slowing growth, and Europe a
likely recession, Mongolia emerges as one of the few countries that will grow
at a staggering pace, it said.
"In 2011, we expect its economy to have grown 11.6 percent year over year,
higher than 2010's 6.4 percent and its highest annual rate in 21 years."
The wealth of coal, copper, gold, silver, and other minerals are source of
80 percent of Mongolia's yearly exports, and expected to grow to 95 percent.
Soon, Mongolia will be one of the top five producers of copper in the world.
"Over the next few years, the country will need to rapidly develop its
infrastructure, financial sector, real estate, and other industries to meet
the growing needs of a nation on the path to becoming one of the richest in
the world (in per capita terms)," it said.
This bright future, however, is not without serious potential risks that
stem from an overly rapid growth driven by resource-exploitation, the firm
"Mongolia's democratic government will undergo elections in 2012 and
populist movements have been pledging the nationalization of mining projects
that had been promised to be open to foreign investment," it said. "There is a
lot of doubt as to whether the government will be committed to spending wisely,
" it said, adding that the Asian nation still faces the major task of steering
its rapid growth and avoiding asset bubbles and high inflation.
The dependence on Chinese demand is also risky, it pointed out. "China has
a growing domestic economy, but it is still susceptible to rapid declines in
foreign demand, especially from the West, and the adverse effects would
directly transfer to Mongolia."
The nature of the mining industry, however, allows a certain level of
stability, as investments in mines take several years of development and
orders for resources tend to be large. Mongolia is a land of opportunity, but
investors must be aware of the possible land mines along the way.
KCIC was founded in 2005 with a capital of KD 80 million by an Amiri Decree
with a mandate to develop investment opportunities in Asia towards building an
Asia focused asset management company. The public company employs a team of
specialists in markets in Asia and currently manages assets in excess of USD
Key shareholders include Kuwait Investment Authority, the Sovereign Wealth
Fund of Kuwait, National Investment Company, one of the leading investment
banks in the Middle East, and Al Ghanim Industries, one of the largest
conglomerates in the Middle East.(end)
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