Remarks of US Ambassador to Mongolia at North America Mongolia Business Council Investors Conference

Woman smiling for photo in front of an American flag. (Photo Credit: State Department)
Piper Anne Wind Campbell, US Ambassador to Mongolia
September 26, 2013
Ulaanbaatar, Mongolia
A few weeks ago, Byambasaikhan [Chairman of the Business Council of Mongolia] and I spoke via webinar with U.S. investors and businesspeople interested in Mongolia.   We offered our candid assessment of what it is like to do business here and what it would take to succeed.  We talked about the opportunities, but certainly didn’t shy away from mentioning the challenges.
Nowadays, in Mongolia, there is much pessimism. While the economy is still growing strongly, we all hear the questions about how and whether that growth will be sustained.  But, if one makes a real effort to see beyond the churn, we are reminded that Mongolia is still blessed with world-class reserves of mineral deposits and is a stable democracy in an important region of the world.  Moreover, the Mongolians have taken steps, though sometimes halting, to improve their legislative framework.  And, we achieved a major bilateral objective -- which has a dramatically positive impact for all English-speaking firms – when the United States and Mongolia signed the Transparency Agreement Tuesday in New York.
So our basic message to the webinar participants was that Mongolia still offers great potential and that for companies who have done their homework and come with “eyes wide open” they can capitalize on the opportunities. Much of the euphoria about Mongolia over the last few years seems now to have been re-calibrated with a healthy dose of realism. But that, I think, is a good thing.   
Just last weekend, I ran the Gobi Marathon. It struck me, both while I was preparing and during the race itself, that doing business in Mongolia is not unlike a marathon. Some investors and observers may have wanted a sprint – the quick money maker.  But Mongolia is better suited for marathons, especially considering the significant time, effort and preparation required to make a go of it here.  This metaphor is something that both the private sector and the Government should bear in mind, so I am going to belabor it a little.
Respect the Race            
The organizers of the Gobi Marathon bill their event as unique.  As they put it, “Mongolia and especially the Gobi Desert are not as easy to travel through as other countries around the world.  Experience, knowledge and good relationships to the nomadic people are very useful.”   
That simple description really encapsulates so much of what it takes to do business here.  In our own experience, we see that those U.S. companies who have flourished here have taken on Mongolians as true partners. They hold themselves to a high standard in their business and environmental practices. Consequently, they have done well.  We see Mongolian companies, increasingly confident that they can put their own stamp on their country, finding opportunities for collaboration via U.S. franchises like KFC and Round Table Pizza.
Stay the Course 
The course of the Gobi Marathon is mostly flat, but there is a nasty hill just before the finish.  This would have been tough, if I hadn’t had clear information about what to expect, which allowed me to pace myself appropriately.   I also appreciated the markers of red cotton that showed me the way.  And the observation cars that came by from time to time to check on the runners.  Really, that was all I – and the other runners – needed. We knew why we were there; we need that our goal was the finish line; we didn’t need more than a predictable route and a few markers to point the way.
Those are good principles for Mongolia’s investment environment to follow.   Define a clear course, set a few legal markers and keep watch over how the race is progressing and you will see that the runners – the business sector – will naturally move toward the goal of prosperity and growth.  It is in their interest to do so. And it is in the Government’s interest.  To keep changing the rules in business would be like changing the race course mid-way.  It confuses people, and it cannot be surprising if some aggravated competitors drop out.
Also, you have to figure out who is managing the race; there can’t be multiple referees with unclear mandates.  In business terms, we’ve seen that it is frustrating for a company to negotiate an agreement with the national government in good faith only to have local authorities stymie exploration or construction, because they don’t feel consulted or do not see themselves included in the benefits of development. 
That is not to say that there should be so few rules that it creates problems.  It is to say that the hand of the state can be (and has been) too heavy too often and that due care must be taken when creating and enforcing laws and regulations.
Know the Finish
Runners love to see encouraging signs along the course to help break the monotony.  Who doesn’t like to be cheered on?  But sometimes, mischievous observers change the mileposts or suggest that one is closer to the finish than is true.  In retrospect, in 2011 and 2012, it seems that too many people were flashing an “almost there” sign about Mongolia.  There was a palpable sense that Mongolia was so close to the finish line that the race was assured.  There was, to echo what I said earlier, a sense of exuberance.  That now seems to have been replaced by a sense of dire pessimism concerning Mongolia’s chances.  It may be that neither view, reflecting as they do extremes of sentiment, is the clear-eyed view that we need. 
My marathon metaphor can only carry us so far. In the truest sense, there is no finish line for Mongolia; that is, the difficult challenge of growing the Mongolian economy really has no end. But Mongolia won’t move toward that goal of steady, sustainable growth unless several steps are taken.
First, all the issues surrounding OT must be resolved once and for all.  The entire global marketplace, as President Elbegdorj has noted, is watching Mongolia.  What global markets want is real resolution of the issues and not just more talk that kicks the can down the road.  Copper concentrate has crossed the border, but that is not enough. We all know that the real value of the mine lies in the underground portion.  Unless that is developed and put into operation, Mongolia – and Mongolians -- will not realize the greatest possible benefits.  OT is important, and will continue to be, because it was first and is big.  As such, OT will always be a marker, a barometer, for how Mongolia is doing.
Second, the investment environment must be made rational, stable, and predictable. A good investment law, and sensible implementing regulations, will go a long way to help that. The other side of that is that international companies must do their homework and come to Mongolia with a clear-eyed understanding that Mongolia is a sovereign nation with its own interests and ways of doing things. As a frontier market, there will be challenges, hiccups, and frustrations. But with all that comes the possibility of great returns and rewards.
A final lesson from a recent experience:  last week, the Mongolian National Chamber of Commerce and Industry held a trade fair that featured exhibitors from several countries. Twenty-two U.S. companies or Mongolian companies that distribute U.S. goods were exhibitors at what we called the “USA Pavilion.”  We saw strong foot traffic and our companies reported how pleased they were with the level of interest in their products and services.  What I’ve learned in my time here is that Mongolians value quality and will pay for it. That is why American goods, known for their quality and reliability, are welcomed by Mongolians.   I see that it is the same with business partnerships. Quality American business partners will always be welcome in the marathon of Mongolia.
Thank you.

Source:US Embassy


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