Gloomy situation of the Mongolian construction industry

Mongolian construction industry is hard hit by the economic crisis facing the country. Commercial banks stopped giving loans to construction companies in fear of bad loan. Dozens of half-completed buildings can be seen today in Ulaanbaatar. Construction cranes sitting idle and thousands of construction workers joined ranks of unemployed. Thousands of people who paid downpayments for apartment buildings are still waiting for companies to finish the buildings. Chinese building contractors in Ulaanbaatar complaining about delayed payment and wages and packing up and heading home.

About 30 thousand housing units with cost of 800 billion Tugrig are yet to be completed due to lack of financing.

Representatives of the construction industry met with President Elbegdorj last week and asked for government assistance. After the meeting, government officials and the industry started negotiation on government aid for the industry. According to some sources, Government pledged to buy 4000 housing units for government employees through loan term loan package. According to tentative deals reached between the government and the industry, price of 4000 housing units are reduced by 10-40% and costs minimum 700 thousand Tugrig or $ 483 US and maximum 1,166.000 Tugrig or $ 805 US per square meter.

President Elbegdorj advised the industry representatives to reduce current price of housing units to a level which ordinary residents can afford to buy.Unless either massive cash injection in the industry or price reduction of the half-finished housing units, no long term solution for the Mongolian construction industry is seen.
Report by Ganbat, Reporter of MonInfo, News Service


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