Investment Climate in Mongolia Getting Worse

This article titled “Legal impasse threatens Mongolia FDI” gives a good overview on the various measures enacted in the last year by the Mongolians to make the investment climate much worse. Thanks to this tweet by CoverMongolia for the link to this excellent resource, which I recommend reading.

Much of that is aimed at putting some massive brakes on investment in the mining sector. With most of the foreign direct investment and most of GDP growth coming from that, it doesn’t make sense to me trying to slow that down. But most of what is happening in the world doesn’t make much sense.

I am interested in the mining sector only as an indication of how much one can trust the Mongolians to keep their promises (e.g. not much right now). Investment in clean energy may be a different story.

But anyone investing in the prospecting or mining sector in Mongolia clearly is willing to take some substantial risks. And those that are already trapped with substantial investments there will, as the article cited above says, “check their investment protection treaties”.

It may be too early to give up completely on the potential trillion dollar clean energy project in the Mongolian Gobi desert and look for some other path to mitigate global warming.

But clearly any substantial investment there will be in need of some form or other of international guarantees that are substantially better than what bilateral investment treaties and the Energy Charter Treaty are offering right now. I recall having offered an idea for doing exactly that in my book “Energy from the Mongolian Gobi desert (free PDF file available)” , in chapter 5.

 

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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