External debt rises by 7.2% year-on-year to $35.6 billion. The debt continues to grow, but what about the investment flowing into Mongolia?

🏃🏃 The Investor Country Has Changed!

In the first 9 months of the year, foreign direct investment (FDI) in Mongolia grows by 26%, reaching $2.9 billion. Regarding the dynamics of investor countries, Canada accounted for more than 50% of total FDI in 2020 and 2021. In 2022, the Netherlands represented 66.2%, in 2023 it drops to 38.3%, and in the third quarter of this year, it makes up 46.6%. While investment from Canada and the Netherlands declines, investment from the United Kingdom and Singapore rises significantly in 2023.

• 🤔 Hmm Interesting… In the first quarter of 2024, FDI from countries classified as “others” represents 96.7% of the total. It is intriguing to find out which countries contribute this share.
• 🏃‍➡️ To Which Sector? Mining remains the dominant sector attracting investment in Mongolia. This sector consistently accounts for over 80% of total FDI and, in some years, even 90%. Other sectors struggle to draw significant investment.
• ⚖️ Debt or Investment? In the third quarter alone, FDI inflows total $830 million, while outflows amount to $289 million. This results in a net FDI inflow of only $541 million. Notably, 51% or $16.7 million of the FDI balance comes from loan funds, with the remaining 49% from equity investments.

🙌 Lesson to Learn

Kazakhstan sets an ambitious goal to attract $150 billion in FDI by 2029. The country aims to secure significant investment in the technology and renewable energy sectors. Last year, the number of foreign-invested projects increases by 132% compared to the previous year, reaching 65 projects. Among them, 3 projects have investments exceeding $1 billion, with major investors from Germany and China.

• From 2019 to 2023, Kazakhstan attracts 185 foreign-invested projects, totaling $26 billion. Like Mongolia, Kazakhstan shares geopolitical and geographical similarities, along with a high dependence on mineral resources. However, Kazakhstan is evolving rapidly, emerging as a leading example in the region.

Overall, Mongolia, with its legal and regulatory environment, forces investors to commit once, only to leave and say, "We will never invest in Mongolia again." While other countries succeed in attracting investment, Mongolia remains stuck in a cycle of missed opportunities.