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US-Mongol Construct 2000 Business Prospectus: Building A New Democracy | 2000

Researcher and Writer: David South

Consultancy: David South Consulting

Publisher and Client: USAID

Published: 2000

Results Review and FY 2002 Resources Request (USAID/Mongolia March 17, 2000): Improving Productivity and Exports: A key to Mongolia’s growth is increasing non-traditional exports. However, with less than ten years of free-market experience, Mongolia has little experience on how to accomplish this objective. In response, USAID began a six-month program in January2000 to: 1) instruct Mongolians on the principles of competitive analysis; 2) establish benchmark data that will help Mongolians to rank their country against others vis-a-vis key competitiveness indicators; 3) create Mongolian-specific case studies to illustrate successful competitive behavior or pinpoint obstacles and constraints; 4) work with business leaders from garment, cashmere, meat, information technology and tourism industries to apply competitiveness tools and focus attention on key priorities for government and private sector action. Over six hundred influential Mongolians from government, private sector and academia are participating in the process. USAID hopes to assist in developing a national action plan for competitiveness in the fall, once a new government is in place.

The Global Bureau’s Global Technology Network (GTN) which develops business linkages between U.S. and Mongolian firms has been active for two years. GTN efforts have fallen short of expectations with only three relatively modest linkages established in 1999. In January 2000, through its relationship with the International Executive Service Corps (IESC), GTN sponsored Mongol Construct 2000, a trade mission to the United States for construction firms. The purpose of the mission was to learn about advanced construction techniques and develop linkages with U.S. firms. In 2000 IESC will expand its assistance to a select group of garment manufacturers, who are attempting to establish non-traditional markets.

Background: This excerpted text is from a business prospectus prepared in 1999 for USAID to promote construction opportunities in Mongolia to the US construction industry. At the time, Mongolia was in the grip of a severe crisis, called one of “the biggest peacetime economic collapses ever”. By 2012, Mongolia was called the “fastest growing economy in the world”. It is proof the foundations for Mongolia’s recovery from crisis were laid in the late 1990s.

“No other Asian country enjoys more political freedom today than Mongolia. And no other Asian country has shown greater commitment to open markets. But Mongolia has received little reward for its efforts.” Fortune Magazine, December 1998

Discover a New Democracy

Mongolians are some of the highest per capita donor recipients in the world: On average US $50 per person. The vast majority of this aid is targeted at infrastructure projects. Mongolia in 2000 is an opportunity waiting for American business. Democratic, with a free market economy, the country offers regulatory freedom, a belief in the private sector setting standards and a pro-Western attitude friendly to American companies. 

Mongolia’s history is marked by the rise and fall of cities, the ebb and flow of political and economic systems. The country has experienced being the largest empire for its time in the 13th century, to being occupied by foreign powers. Economically and socially the country has lived through feudalism, communism and now, capitalism. The one thing that has remained stable throughout this rich history has been the nomadic way of life. Livestock remains to this day a major pillar of the economy and contributes to one of the country’s major foreign currency earners, cashmere wool. 

After over 70 years of communist rule, Mongolians finally turned their backs on communism and robustly embraced free markets and democracy in 1996 with the election of the Democratic Coalition. A gradual opening up of the country had begun under the ruling Mongolian People’s Revolutionary Party after the collapse of the Soviet Union and under pressure from peaceful public demonstrations.  

After the fall of the Soviet Union, the country suffered what many economists have called the largest peacetime economic collapse in the 20th century. 

While it is a fact that Mongolia’s economy is severely underdeveloped, both in terms of infrastructure and diversity, it is also true the country is the freest in Asia. As Fortune Magazine noted in a December, 1998 issue, “No other Asian country enjoys more political freedom today than Mongolia. And no other Asian country has shown greater commitment to open markets. But Mongolia has received little reward for its efforts.” Mongolia, for American business, offers a win-win situation, an opportunity to join in the building of a strong democracy in Asia while tapping the rich resources, both natural and in human capital. American businesses can enjoy a regulatory environment that is more flexible than in the United States, and a government that lets businesses do what they do best: serve the needs of customers and make money. 

Youthful

A Bright Young Future

Demographically, Mongolia is a very young country. A by-product of high birth rate policies during the communist period, 60 per cent of Mongolia’s population are aged between 1 and 24, with 37.6 per cent between the locally accepted definition of youth of 15 to 34. In 1998 the New York Times Magazine called Mongolia “The youngest place on earth”. Even a cursory glance at the streets of the capital, Ulaanbaatar (population 600,000), will reveal a young population taking their fashion and cultural cues from the West, and who hold correspondingly Western aspirations to own homes and start businesses. Mongolia enjoys exceptionally high rates of literacy ( 96 per cent), post-secondary enrolment (65,089 students in 1998) and the urban population quickly embraced Western consumer products as they became available. 

Growing

The Construction and Environmental Services Industry in Mongolia

Today, Mongolia officially has 100 architectural and engineering design companies and over 500 construction companies. Of these, 40 are considered large operations with their own in-house design and engineering outfits, or who have a close relationship with one or more companies that either manufacture or import construction materials. The country is a rich resource for raw materials for the construction industry, but this vast wealth remains under-utilised. According to geological surveys spanning the decades from 1930 to the 1990s, over 200 deposits were discovered that could be tapped for construction materials. 

At the beginning of the 20th Century, there were few permanent standing structures in Mongolia, apart from Buddhist monasteries and royal palaces. At the beginning of the 20th Century most Mongolians lived in the round ger felt tent. It wasn’t until the communist revolution that construction of sedentary dwellings and buildings in the country picked up pace. In 1924, three years after the 1921 revolution, the State Committee for Construction was established (by 1926 it became the Construction Department of the Ministry of Industry), and undertook the large-scale construction of buildings based on European designs. 

From the 1960s the construction industry in Mongolia emerged as the country industrialised. Mongolia received aid from both China and Russia up to the Sino-Soviet dispute, and both countries were the main funders for construction projects. Many buildings in the downtown of the capital were built by the Chinese government.

Up until the election of the Democratic Coalition in 1996, all construction activities were conducted under the direction of the state. Building booms took place in the 1970s and 1980s as the communist government tried to meet the demand for apartments and other facilities. At its peak in 1989, the construction sector made up 10 per cent of the gross national product. With the collapse of the Soviet Union at the end of the 1980s, many building projects in Mongolia ground to a halt as Soviet subsidies were withdrawn.  Across the country it is possible to see the empty shells of apartment buildings, holiday resorts and half-built sports stadiums.

The Mongolian People’s Revolutionary Party, under popular pressure for a change, began to gradually make the shift to free markets and democracy. The first state privatization programme began in 1993 under the direction of international experts. It wasn’t until the election of the Democratic Coalition in 1996 that significant reforms were taken to fully introduce a free market economy. And it wasn’t until 1997 and 1998 that the fruits of these measures started to appear.

The construction industry was fully privatised in 1998, with companies becoming limited or wholly owned entities. There now exists a mix of private and public companies in this sector. All of the companies are in the early stages of learning how to work and prosper in the free market.

The legacy of working under a command economy has left many companies ill-equipped and under-funded, many not operating at full capacity or not at all.

The private sector has shown itself to be capable of initiating real estate development projects, most commonly the building of private apartments, shopping complexes and small hotels.

Weaknesses in management and financing do lead to long delays, poor quality and in some cases, the abandonment of a construction project mid-way.  According to the State Statistical Office, the construction sector shrank from 1991 to 1994. In 1994, activity increased 26 per cent from 1993. Since then the gross national product has averaged growth of 3.3 per cent, but still has not caught up with the rate at the end of the 1980s. 

The environmental services sector has received a significant boost from international donors working in Mongolia. Various donor funded projects are building and renovating facilities using energy-efficient technology. These donors have also conducted training workshops and education campaigns for local construction companies. Being a very cold country, awareness is high over the financial and environmental benefits of energy-efficient techniques. Construction techniques, however, are weak and Mongolia has a long way to go in utilizing these technologies efficiently.  

It is a misnomer to think most Mongolians are wandering nomads. In fact the majority of the population of 2.4 million now live a sedentary lifestyle in small towns or in the big cities of Ulaanbaatar, Erdenet and Darkhan. Under communism these urban centres were economically dependent on state enterprises, many of  which now have either gone bankrupt, idle or have been privatized. There is currently a significant migration to the capital from these economically devastated communities. Officially the government was able to track 6,518 people, mostly between the ages of 18 and 39, moving to the capital in the first half of 1998 – a 60 per cent increase on 1997. Unofficial migration to the capital is believed to be far higher. 

At present a majority of the population still live in ger tents or sub-standard makeshift wooden housing. The construction industry cannot meet the high demand for modern housing, with amenities like running water, toilets and electricity.

“The business atmosphere in Mongolia is inviting and [our] partnership has faced very few obstacles while entering the market. Based on our positive experience here, we plan to continue and expand our presence in the Mongolian marketplace.” Mrs. Bolormaa Reiner, Representative Johnson and Johnson-Mongolia

Foreign Aid

Economic Prospects for the Country

Large donor community

Along with the collapse of the Soviet Union, Mongolia also lost significant economic subsidies, which contributed to the severe crisis of the early 1990s. The World Bank has estimated these subsidies reached a third of Mongolia’s GDP in the late 1980s. Since then international donors have played a key role in helping to restructure the Mongolian economy to adapt to the demands of a market economy.  

Infrastructure has always been a weak point for Mongolia, and it was considered the most isolated and underdeveloped of the former Soviet bloc countries. International donors have placed infrastructure development at the top of their agendas. Since 1997 foreign aid in the form of grants and loans has hovered around US $250 million, with the vast majority of this aid going towards infrastructure development. Priority areas are highways and transportation, power stations and communications. By sector the aid breaks down as follows: 30 per cent to mining, 27 per cent to energy, 19 per cent to transport, eight per cent to communications, five per cent to social security and three per cent to other areas. The donor community and the Mongolian government want to dig the country out of decades of underdevelopment, which currently hampers the budding private sector from becoming more sophisticated. 

These large-scale infrastructure projects offer enormous opportunities for US firms experienced in working in cold-weather conditions. There are also opportunities to develop world class office space for these international donors, something that is currently lacking in Ulaanbaatar.  

Foreign investment to date

Actual large-scale foreign investment to the country has been slow coming and still doesn’t represent a major economic opportunity. The major players in direct foreign investment outside of development aid have been Mongolia’s old neighbours, Russia (20 per cent) and China (33 per cent). This decade the country has attracted US $200 million in foreign investment and registered 840 jointly owned or wholly owned ventures.

New-found affluence

It is estimated that around five per cent of the capital’s population fit into a middle or upper income category. The late 1990s have seen the emergence of a new breed of affluent Mongolians. Many of these affluent Mongolians struck it rich trading in once-unobtainable consumer products or servicing the expanding foreign community. This class of traders have developed a sophisticated taste for all things Western – Mercedes Benz cars, four-by-four jeeps and western fashions. Vehicle registrations have steadily risen since the introduction of a market economy. In 1996 the number of vehicles was 65,020; by 1997 it was 70,088. 

New home owners

In 1998 50,000 families became homeowners as a result of privatization of apartments. All the apartments are of Soviet era and do not meet the aspirations of the growing middle class. Many of these new homeowners immediately set about renovating these apartments, installing modern appliances and furniture. A significant minority is renovating apartments with the intention of selling them on to wealthier Mongolians or foreigners. The high number of renovations and additions to buildings in the capital is also indicative of other things: the economy has changed and existing buildings do not meet the new demands, and that people have money to pay for the renovations. 

Business Opportunities

USAID has identified the following opportunities in the Mongolian construction sector:

– Donor-funded projects: Large-scale infrastructure projects that are funded by loans or grants from international donors, are a safe bet. These projects require management and technical expertise that is often difficult to find locally. This includes projects that require an international tender.  

– Fully funded foreign projects: Any project requiring a building that meets international standards. International companies have little choice when it comes to finding adequate office or retail space.

– Low-cost labor: The Mongolian workforce is highly literate and often speak a second language, usually Russian amongst older workers, and English amongst the young. Unemployment levels are high in Mongolia and workers are keen to get a job. Generally salaries are as follows:

– Manager: US $250

– Accountant: US $200

– Engineer: US $150

– Secretary: US 100

– Driver: US $100

– Qualified worker: US $100

Source: FIFTA

– Donors: Many large-scale projects are directly funded by donor grants or loans and therefore are a low-risk, reliable source of income. At the June, 1999 donors meeting in Ulaanbaatar, US $320 million was pledged, the largest amount in eight years of donor funding. Most of these pledges are targeted at “hard” infrastructure and private sector development. 

– Imports rule: Imported construction materials dominate the marketplace and will continue to do so for the foreseeable future. Many of the materials are poor quality and from China. American companies can attract customers with their obvious advantages in both quality and innovation.

– Large resource base: Mongolia’s large wealth of mineral resources is inefficiently utilized, with many mines and factories working under capacity or not at all. These resources could be tapped to produce construction materials locally for the domestic market, or more lucratively, for the booming Chinese market hungry for resources. 

– Very cold country: Mongolia’s capital, Ulaanbaatar, is the coldest capital in the world. Mongolia’s winters dip below minus 40 Celsius, and for those who live in apartment buildings, this can be a difficult time. Many apartments are inadequately insulated, and dip below zero when the central heating system is disrupted due to poor maintenance. There is an urgent need for high-quality aluminium and plastic windows and doors. Budgets are tight in Mongolia yet many organizations spend vast sums to heat buildings. It has been proven that during the course of the winter heating costs can be reduced from Tg 4,200 (US $4.20) per square metre, to Tg 280 (US $0.28) in an energy efficient dwelling. 

–  Windows are expensive: Mongolia must import all windows and glass products. When the cost of freight is added, windows become an unnecessarily expensive portion of any construction bill. This is a business opportunity for any company who can domestically produce glass products and windows at a cheaper price than imports. A National Code for Insulation of Buildings is being revised and none of the existing windows and doors meet this requirement.

– No chemical industry: While Mongolia exports oil to China for refining, the country does not have a domestic chemical industry, and consequently plastic and rubber is imported for construction purposes. Stone tiles like marble are currently also imported from outside, despite this resource being available in Mongolia.  

– Central heating and water unreliable:  For those who live in apartment buildings, the regular disruptions to both the water and heating supply are not only inconvenient, but also bad for business.  Technology that can by-pass relying on the central system (common to many Soviet-era cities, this system is wasteful and subject to regular breakdowns), is urgently needed. Alternative energy sources like solar power and wind can bring electricity to those who are not on the grid.  

 Free trade zones: The towns of Sukhbaatar (Russian border) and Zamyn-Uud (Chinese border), both served by rail, are the focus of Mongolian government attempts at increasing cross-border trade. At Zamyn-Uud Japan has upgraded the customs house facilities and trans-shipment facility. On the Chinese side, a major trading market has been constructed and a boom is taking place based on trade with Mongolia.  

“Arthur Andersen has had representation in Mongolia since 1993. We have been very active in the development of the accounting and auditing profession in Mongolia. January 1999, Arthur Andersen opened Arthur Andersen Mongolia Audit LLC.” Mr. C. L. Ruddell, Representative Arthur Andersen-Mongolia

What Do Mongolians Say They Need?

In interviews conducted by USAID, Mongolian government officials and construction companies detailed what they felt were the most urgent priorities: 

– Education and training: The vast majority of engineers and managers in the Mongolian construction industry received their training under communism. They were trained to work under a centrally planned economy, and will need to learn how to thrive in a free market situation where there are no guarantees. The Construction Training Institute currently only offers courses to managers and engineers. Its curricula is out-of-date and awareness of modern construction techniques and standards is weak. Exposure to computer-assisted construction methods is urgently required as well as training in foreign languages. 

– Awareness of International Standards: No Mongolian companies can offer state-of-the-art consulting on construction projects. 

– Licensure, apprenticeships and guilds: Standards are very weak in the construction sector and there is not a highly developed mechanism to ensure construction managers, engineers and workers meet a minimum qualification.     

– Being Earthquake-proof: While the National Design Codes and Regulations do stipulate that buildings must meet minimum requirements against earthquakes (Mongolia is located in a seismically active region, and severe earthquakes have happened), most buildings post-1989 fail to meet these requirements. 

– Weak infrastructure: Developing the transportation infrastructure of Mongolia will be key to future improvements in the economy. The rapidly developing Chinese economy offers many opportunities to Mongolia if roads and highways can be upgraded.  

– Better coordination and promotion: Working with FIFTA or the Foreign Investment and Foreign Trade Agency, Mongolian companies seeking foreign investment for projects need to improve their networking and presentation skills.  

Obstacles and Market Risks

Corruption: While Mongolians will tell you corruption has reached all levels of government, it is important to keep in mind it does not come close to the levels of corruption found in other former Communist countries. Foreign businesses do not suffer from harassment or intimidation by criminal gangs. 

Inexperience with the free market: Foreign businesses and travellers to Mongolia do experience difficulties communicating Western business concepts like consumer rights and service. It has to be said that over the past three years this has changed considerably for the better, and continues to improve as Mongolian businesses learn the importance of the axiom “the customer is always right”. 

Differences between Mongolian and US standards: While Mongolia’s regulations and laws are different from those in the US, it is important to keep in mind that the regulatory environment in Mongolia can be much freer in some areas. Also, many of the new laws have been drafted based on US laws and Mongolia’s constitution was written upon the advice of US legal experts. 

Harsh climate: The long cold winters do present problems for some foreign businesses not used to working in cold-weather climates. This is also an area where American companies are at a specific advantage. 

Financial instability: Mongolia has had a number of serious banking crises since the early 1990s. Many private and public banks are insolvent due to bad loans. This can lead to long delays to construction projects and/or non-payment of salaries.   

Contract bidding: Only those contracts that are directly commissioned by the government will be subject to an open bidding. Private sector work is usually not subject to open bidding or design competitions. 

Downtime: Since Mongolia does no international corporate presence in the capital, any technical problems to equipment or software can involve downtime and delays as parts or repairs are sought in China. It is important to take this into consideration when establishing an operation in Mongolia. 

Advantages of Working in Mongolia

– Regulatory freedom

– Private-sector driven

– Market economy taking off

– Democratic

 Privatization of Land: Can I Own Land in Mongolia?

The dual legacies of communism and nomadism have made the issue of private ownership of land in Mongolia a thorny one. The government has passed the necessary legislation to make owning land in urban areas possible. However, inexperience with the concept of owning property and the laws that govern this make buying land risky. It is advisable to get a reliable local partner and to use the services of a law firm that knows the Mongolian situation. Long-term leases are available and might be a good option. 

Mongolian Government 

Financial commitment to date: 

The Ministry of Infrastructure Development has developed projects to encourage the production of construction materials locally. Due to financial constraints these projects have not been implemented. They include projects on cement, glass and paint production, rock processing, lime extraction and road development.

Government plans:

At this time the Mongolian government has not been able to develop a long-term strategy for the development of the construction sector. There are no specific policy incentives directly supporting real estate and housing development. The Ministry of Infrastructure is looking to the private sector to offer direction and guidance. 

Future Opportunities

The Tumen River Project: The eastern portion of Mongolia is included in a major trade zone development project initiated by the United Nations Development Programme. The Tumen River Area Development Programme (TRADP) is focusing foreign investment and infrastructure upgrading on eastern Mongolian, North-East China, the Democratic People’s Republic of Korea and eastern Russia. This region has cumulatively attracted US $961 million from 1991 to 1997, with Mongolia’s second biggest trading partner, China, making significant development gains.  While the Democratic People’s Republic of Korea has been a thorn in the Project’s side, both Mongolia and China are keen to push ahead with improving infrastructure and trade links. It is impossible to ignore the fact that China has made significant gains and that trade links with Mongolia continue to tighten. 

A feasibility study is currently underway on a railway link from Arxan, China to Choibalsan, Mongolia, and possibly on to Ulaanbaatar. As donors begin to fund these projects it would be prudent for American businesses to start building a relationship in the region to take advantage of future contracts. 

Commercial Street 2005: The City of Ulaanbaatar, Mongolia’s capital and commercial centre, has drafted the blue prints for the construction of a modern commercial and business centre for the next millennium. Commercial Street 2005 will offer infrastructure and services that match global standards. The current Soviet-era infrastructure of Ulaanbaatar is an impediment to future growth and is unsuitable for Mongolia’s new market economy. 

The project covers 20 hectares of 1 km length in a historically vibrant part of the city. The city will pay for the engineering and infrastructure works for the complex and local businesses will pay for the construction of secondary buildings. Commercial Street 2005 is looking for foreign investment to participate in the building of a food supermarket, trade and service complex, a twin-towered international trade and service complex, a banking centre, a business centre and renovations to nearby apartment buildings. It is estimated the project will create 10,000 jobs and would cost an estimated US $100 million. 

Darkhan: With a population around 55,000, Darkhan is as-yet an untapped opportunity. Located north of  Ulaanbaatar and close to the border with Russia, Darkhan is linked by a good road and rail. Along with the mining town of Erdenet, Darkhan has a modern infrastructure. Having been trained to work in the former state industries that once dominated the city, the population is well-educated and skilled. Today, coal mining and agriculture are key to the economy. The city is potentially a good stable base for accessing the Russian market.

Getting started

Registering prior to undertaking construction work is relatively simple. The Government Agency for Construction issues three degrees of licenses. The first license is for small projects, the second is for small to medium-sized projects, and the third is for large-scale projects anywhere in Mongolia. As the project develops the company is obligated to notify and allow local building inspectors to enter the site. 

Residency Permits

All foreigners wishing to remain in Mongolia for more than 30 days must apply to the State Centre for Civil Registration and Information for a temporary residency permit or a short-term residency permit. 

Temporary Residency Permit

The applicant must present to the State Centre for Civil Registration a request issued by FIFTA. FIFTA will issue such a request to any agreed foreign investor immediately. Permits are generally issued within a couple of days and are valid for a period of time from three months to one year. A temporary residency permit can be renewed an unlimited number of times. Each renewal will re-validate the permit for a period from three months up to one year, as requested by the investor. 

Short Term Residency Permit

This non-renewable permit is issued to foreigners who plan to spend no more than 90 days in Mongolia. Applicants are required to present a written request from a Mongolian or foreign organization stating the activity in which the person will be engaged and the reason the permit is needed. In case of an exploratory visit by a potential investor, a letter from the home company will suffice. 

Entry Visas

Investors may apply for single-entry and multiple-entry visas at the Foreign Ministry’s Chancellery Building in Ulaanbaatar or at Mongolian diplomatic missions in other countries. 

Single-Entry Visas

A single-entry visa is valid for three months from its date of issuance and entitles the bearer to enter and stay in Mongolia for 30 days. A letter of invitation or applicable work papers are required. This type of visa is issued at the Ulaanbaatar airport or land border-crossing point. 

Multiple-Entry Visa

A multiple-entry visa entitles the bearer to enter and exit Mongolia an unlimited number of times and is valid for a period of six months to one year. For the issuance of this type of visa, an official letter stating the reason for travel and a copy of the certificate of the organization must be submitted by the investor. 

(Source: FIFTA)

Infrastructure facts

Airports – Mongolia has 81 airports, of which 31 can be used year-round. Only eight are paved. 

Roads and highways – Mongolia has 1,531.7 km paved roads.

Railway – Mongolia has 1,750 km of rail track, mostly a north-south line reaching from Russia to China, with spur lines to the copper mining city of Erdenet and the coal mining city of Baganuur. A short line goes from the eastern city of Choibalsan to Russia. 

Registered trucks – 25,473 (1998)

Major infrastructure projects (1997-1999)

USA 

Mongolia energy sector project – US $45,500,000

World Bank

Mongolia coal project – US $35,000,000

Transport rehabilitation project – US $32,313,000 

Asian Development Bank

Telecommunications – US $24,381,000

Power station rehabilitation – US $38,277,000

Ulaanbaatar heat efficiency project – US $29,487,000

Provincial towns basic urban services project – US $7,695,000

Road development – US $22,499,000

Ulaanbaatar airport project – US $37,524,000

Japan

Road construction (1996)  – (Yen) 11,590,000

Rehabilitation of power plant IV (1995) – US $46,000,000

France 

Rehabilitation and extension of UB telephone network – (F Franc) 25,000,000

Germany

Telecommunications – (DM) 10,000,000

South Korea

Thermoelectric power plant in the Gobi desert – US $8,000,000

Upcoming major infrastructure projects

Asian Development Bank 

Improving Ulaanbaatar heat efficiency (until 2002) – US $39,785,000 

Japan

Building of rural schools – US $20,000,000

In 1998 Tg, 208 billion was invested in Mongolia, of which Tg 57.2 billion was on construction/major improvements

Source: State Statistical Bulletin

Construction trends in Mongolia show that in-country production of materials has suffered greatly. 

Building doors and window

Tg 417.8 million in 1989

Tg 2.9 million in 1998 

Bricks (million pieces)

172.8 (1989)

18.9 (1998) 

Cement (in thousand tons)

512.6 (1989)

109 (1998)

On a positive note, sales of furniture went up

Tg 34.7 million in 1989

Tg 185.2 million in 1998

US-Mongol Construct 2000: Building a New Democracy was published by USAID. It helped lay the foundations for a construction boom in the mid-2000s.

Media Coverage:

Construction Business Review: Creating Overseas Market Opportunities for U.S. Companies

“Support for incoming and outgoing trade missions are among the business outreach and support services offered by the U.S. Agency for International Development’s (USAID) Global Technology Network (GTN) program. USAID, in turn, draws heavily on expertise from the International executive Service Corps (IESC) in organizing and implementing these trade missions.

In January 2000, a USAID supported, IESC-assisted, incoming trade mission from Mongolia was instrumental in introducing Mongolian businesses to the American construction industry. Dubbed “U.S.-Mongolian Construct 2000,” the “reverse” trade mission brought representatives from 15 Mongolian construction firms to meet one-on-one with American companies in Dallas, Seattle and Anchorage and Fairbanks, Alaska. The Mongolian trade mission began in Dallas, where the group attended the National Association of Home Builders’ Show (NAHB) – the largest event of its kind in the country. Next, they traveled to Seattle for the Evergreen Gateway Building Products program. In Alaska, the group learned how U.S. construction companies handle building on permafrost and deal with extreme cold weather conditions. According to the U.S. Ambassador to Mongolia, Alphonse F. LaPorta, ‘Mongolia is at the center of a region undergoing substantial infrastructure upgrading, as the market economy takes hold.'”

Update:

A resources “boomtown” throughout the 2000s. Source: Bloomberg. When I left in 1999, Mongolia’s PPP was US $8.8 bn; today (2021) it is US $42.4 bn.
A dramatic decline in inflation paired with political and economic stabilisation allowed Mongolia to enjoy the fruits of the fast-growing economies of the 2000s. Source: Statista.
It doesn’t hurt when your neighbour (China) is experiencing an economic boom as it drives down poverty rates.

https://davidsouthconsulting.org/2021/09/16/case-study-6-international-consulting-1999-2014/

https://davidsouthconsulting.org/2022/02/01/citing-wild-east-the-new-mongolia/

https://davidsouthconsulting.org/2023/02/03/environmental-public-awareness-handbook-case-studies-and-lessons-learned-in-mongolia/

https://davidsouthconsulting.org/2022/05/16/high-impact-communications-in-a-major-crisis-undp-mongolia-1997-1999-18-february-2016/

https://davidsouthconsulting.org/2022/04/04/human-development-report-mongolia-1997/

https://davidsouthconsulting.org/2023/01/09/mongolia-update-1998/

https://davidsouthconsulting.org/2023/02/07/mongolian-rock-and-pop-book-mongolia-sings-its-own-song/

https://davidsouthconsulting.org/2022/11/23/papers/

https://davidsouthconsulting.org/2021/05/14/un-ukraine-web-development-experience-2000/

https://davidsouthconsulting.org/2021/11/16/undp-in-mongolia-the-guide-1997-1999/

https://davidsouthconsulting.org/2020/11/05/wild-east-17-years-later-2000-2017/

“I highly recommend Mr. David South as a communications consultant who gets results.” Brian DaRin, Representative/Director, USAID Investment & Business Development Project, Global Technology Network/ International Executive Service Corps-Mongolia, 23 September 1999

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Categories
Archive Development Challenges, South-South Solutions Newsletters

2014: Development Challenges, South-South Solutions

By David SouthDevelopment Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY 

ISSN 2227-3905

The fifth issue of Southern Innovator has launched online and in print. Order copies now for distribution. Email: southerninnovator@yahoo.co.uk.

Issue six will be on science, technology and innovation. This issue will be different from previous issues and will be including supplements and inserts to boost the impact of the magazine. Southern Innovator is seeking sponsors to fund this and also to help us expand the print run (currently 5,000 copies for global distribution).

July

3D Home Printing Landmark: 10 Houses in a Day Development Challenges: The global South is experiencing urban growth on a scale unprecedented in human history, far outstripping the great urbanization wave that swept across Europe and North America during the 19th and 20th centuries.

Old Boats Become New Furniture in Senegal Development Challenges: Every country has its fair share of waste and the remnants of past economic activity. Old cars nobody wants, discarded tins of food, old plastic bags, spare copper wire, cast-off clothing – all can have a new life in the right hands.

Innovative Solutions Celebrated in Ashden Awards Development Challenges: The world’s population is heading towards 9.6 billion by 2050 (UN). Combined with a growing middle class and rising living standards across the global South, that means ever-greater demand on the world’s finite resources. This raises a crucial question: Where will the energy to power rising living standards come from, and how much damage will be done to the planet’s environment by pollution created generating it (https://www.un.org/en/development/desa/news/population/un-report-world-population-projected-to-reach-9-6-billion-by-2050.html)?

Innovative Ways to Collect Water from Air Development Challenges: World water resources are being depleted quickly as populations grow, urbanize and demand better living standards. Many scientists believe we are reaching peak water – the point at which fresh water is consumed faster than it is replenished.

June

Caribbean Island St. Kitts Goes Green for Tourism Development Challenges: Going green may sound like the right thing to do but it can also be associated with being a costly burden and boring. But, as one island nation is proving, being green is a great selling point for attracting tourists and investors – especially in a world where many places are grappling with pollution and resource depletion.

Big Data Can Transform the Global South’s Growing Cities Development Challenges: The coming years will see a major new force dominating development: Big Data. The term refers to the vast quantities of digital data being generated as a result of the proliferation of mobile phones, the Internet and social media across the global South – a so-called ‘data deluge’ (UN Global Pulse). It is an historically unprecedented surge in data, much of it coming from some of the poorest places on the planet and being gathered in real time.

Indian Business Model Makes Green Energy Affordable Development Challenges: The technology already exists to provide renewable energy and electricity to all the world’s poor. The trick is finding a way to pay for it and to make it sustainable. Many innovators are experimenting with business models to reach the so-called Bottom of the Pyramid (BOP) cohort, and the 1.2 billion poorest people in the world who do not have access to electricity (World Bank) (http://tinyurl.com/n9p3f5x). A further 2.8 billion have to rely on wood or other biomass materials to cook and heat their homes.

South-South Trade Helping Countries During Economic Crisis Development Challenges: Weathering the global economic crisis is testing the stability of countries across the global South. But many countries are finding South-South trade and catering to their domestic middle classes can lift incomes and maintain growth rates despite the global turmoil.

May

3D Printing Gives Boy a New Arm in Sudan Development Challenges: 3D printing is rapidly going mainstream and is now starting to make a big impact in health care. One innovative solution is using the technology to manufacture artificial arms for amputees harmed by war in Africa.

African Hotel Boom Bringing in New Investment and Creating Jobs Development Challenges: Africa is experiencing a boom not seen for decades. The IMF forecasts economic growth in sub-Saharan Africa of 6 per cent in 2014, compared to global growth of 3.6 per cent.

China’s Outsourced Airliner Development Model Development Challenges: Many emerging-market countries in the global South have built up substantial foreign currency reserves. Much of this has been a response to past foreign currency crises, particularly the Asian Crisis in the late 1990s (http://en.wikipedia.org/wiki/1997_Asian_financial_crisis).

Brazilian Design for New Urban, Middle-Class World Development Challenges: Countries across the global South are experiencing rapid urbanization as people move to cities for better economic opportunities — and this massive social change is creating new business opportunities. Those who recognize how fundamentally people’s lifestyles are changing will be those who will benefit from this big shift in populations.

April

Cheap Paper Microscope to Boost Fight Against Diseases Development Challenges: To tackle diseases in the developing world, the most important first step is diagnosis. Without effective diagnosis, it is difficult to go to the next steps of either treatment or cure. While much attention is given to the high costs involved in treating and curing ailments, screening for diagnosis is also expensive, especially if it involves lots of people. Anything that can reduce the cost of diagnosis will free up resources to expand the number of people who can be checked, and help eradicate contagious diseases.

Asian Factories Starting to go Green Development Challenges: Media headlines have recently highlighted the growing air pollution crisis in Asia’s expanding cities. This is caused by a mix of factors – the growing number of vehicles, coal-powered factories, people burning dirty fuels to heat their homes, and poor enforcement of standards – and has severe consequences for human health. If it’s not tackled, more and more countries will see large rises in respiratory problems, cancers and early deaths from pollution-caused illnesses (http://www.nrdc.org/air/).

Reality Television Teaches Business Skills in Sudan Development Challenges: Learning how to thrive in a market economy does not necessarily come naturally. But for young people who have grown up under a different economic system or known nothing but economic chaos, learning business skills can give them the tools to get on in life.

Popular Chinese Social Media Chase New Markets Development Challenges: China has a vast and growing market for the Internet and mobile devices. Over the past decade that market has been largely confined to China –  most businesses have had enough domestic demand and opportunities inside the country to keep them busy.

The BRCK: Kenyan-Developed Solution to Boost Internet Access Development Challenges: Using the Internet in Africa has its challenges, as anyone who has worked there knows. Issues can include weak Wi-Fi signals, slow Internet service providers, electricity outages and power surges that can damage or destroy sensitive electronic devices.

March

Women Empowered by Fair Trade Manufacturer Development Challenges: There is sometimes a great deal of negativity surrounding the issue of manufacturing in Africa. Some claim the risks of doing business are too high or that the workers are not motivated enough. But one garment manufacturer is out to prove the skeptics wrong. It pays decent wages and gives its mostly female workforce a stake in the business in a bid to drive motivation and make it worthwhile to work hard.

Global South Trade Boosted with Increasing China-Africa Trade in 2013 Development Challenges: It was announced in January 2014 that China has surpassed the United States to become the world’s number one trading nation, as measured by the total value of exports and imports. This new economic behemoth also continued to grow its trade relationships with Africa.

India 2.0: Can the Country Make the Move to the Next Level? Development Challenges: With the global economic crisis threatening to cause turmoil in the emerging markets of the global South, it is becoming clear that what worked for the past two decades may not work for the next two.

“Pocket-Friendly” Solution to Help Farmers Go Organic Development Challenges: Interest in organic food and farming is high, and organics have become a growing global industry. The worldwide market for organic food grew by more than 25 per cent between 2008 and 2011, to US $63 billion, according to pro-organic group the Soil Association. That is an impressive accomplishment given the backdrop of the global economic crisis, and evidence that people value quality food, even in tough times.

Cheap Farming Kit Hopes to Help More Become Farmers Development Challenges: Food security is key to economic growth and human development. A secure and affordable food supply means people can meet their nutrition needs and direct their resources to improving other aspects of their lives, such as housing, clothing, health services or education.

While Southern Innovator’s digital presence has been key to its success and global reach, the hard copy of the magazine was designed with special features. The magazine needed to be robust and able to stand a fair bit of abuse and hard wear. It needed to be easy to read in low light conditions. And it needed to look sharp and eye-catching to reach as wide an audience as possible.

Back Issues

Development Challenges, South-South Solutions Newsletter | 2011-2014

Development Challenges, South-South Solutions Newsletter | 2007-2010

2013

2012

2011

2010

2009

2008

2007

ISSN Portal.
South-South cooperation for development, SSC/17/3, High-level Committee on South-South Cooperation, 12 April 2012.

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

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This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2022

Categories
Archive Blogroll Southasiadisasters.net United Nations Office for South-South Cooperation

Innovations In Green Economy: Top Three Agenda

By David South

southasiadiasters.net December 2013

The transition to a green economy has reached a crossroads: while multilateral global initiatives have been long-running and complex, the idea of a green economy still seems fragile and achieving it far from certain. In the face of the ravages of the global economic crisis that has raged since 2007/2008, countries are now trying to roll back their green pledges or slow the pace of transition. 

This exposes a dilemma: a perception that a green economy is in conflict with economic growth, prosperity and the advance of human development, particularly in developing countries seeking to make rapid gains in reducing poverty and building a middle class, consumer society. 

Three things need to be foremost in the minds of those who care about creating a global green economy in the 21st century: innovation in design, in market prices and in business models. I think these three factors will be the deciding elements in whether green technologies are taken up quickly and used by large numbers of people to improve their lives. 

The green option needs to always be the more appealing, cheaper option that also improves living standards. Happily, many people are doing this all around the world – you just may not have heard of them yet (unless you are reading Southern Innovator magazine that is). 

As editor of the magazine Southern Innovator since 2011, I have had the privilege to meet, interview and see first-hand green economy innovators across the global South and profile them in the magazine. What has stood out for me is this: the ones who have achieved sustainable success have put a great deal of effort into design – how the technology is made, what it looks like and how it is used, how efficiently it is made and distributed – while also thinking through the business case for their work and how to make it appealing to others. 

We have tried to apply this thinking to the magazine as well, by using clear and modern design with bright, eye-pleasing colours, and by choosing to use 100 per cent renewable energy (much of it from geothermal sources) for the magazine’s design and layout and to have it printed on paper from sustainable forest sources. 

The fourth issue of Southern Innovator (www.southerninnovator.org), on cities and urbanization, launched in October at the Global South-South Development Expo 2013 in Nairobi, Kenya. It profiles many practical initiatives and innovators that are currently building green homes, communities and even whole cities. The magazine’s fifth issue will focus on the theme of waste and recycling and hopes to be a one-stop source of inspiration to better use the finite resources of planet earth.

David South, Editor, Southern Innovator
United Nations Office for South-South Cooperation (UNOSSC)

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

https://wrd.unwomen.org/explore/library/climate-smart-disaster-risk-management-action

https://davidsouthconsulting.org/2022/09/28/asian-factories-starting-to-go-green/

https://davidsouthconsulting.org/2022/09/27/caribbean-island-st-kitts-goes-green-for-tourism/

https://davidsouthconsulting.org/2021/01/25/creating-green-fashion-in-china/

https://davidsouthconsulting.org/2023/02/03/environmental-public-awareness-handbook-case-studies-and-lessons-learned-in-mongolia/

https://davidsouthconsulting.org/2021/02/01/ethiopia-and-djibouti-join-push-to-tap-geothermal-sources-for-green-energy/

https://davidsouthconsulting.org/2021/08/29/indian-business-model-makes-green-energy-affordable/

https://davidsouthconsulting.org/2022/11/11/innovation-cairos-green-technology-pioneers/

https://davidsouthconsulting.org/2021/10/22/lima-to-delhi-what-can-be-learned-on-urban-resilience/

https://davidsouthconsulting.org/2021/08/07/mongolian-green-book/

https://davidsouthconsulting.org/2022/04/14/prisons-with-green-solutions/

https://davidsouthconsulting.org/2021/10/22/south-south-cooperation-for-cities-in-asia/

https://davidsouthconsulting.org/2021/02/23/southern-innovator-in-southasiadisasters-net/

https://davidsouthconsulting.org/2021/03/05/southern-innovator-issue-5/

https://davidsouthconsulting.org/2021/07/15/undp-mongolia-handbooks-and-books-1997-1999/

https://davidsouthconsulting.org/2021/01/02/a-undp-success-story-grassroots-environmental-campaign-mobilizes-thousands-in-mongolia-1998/

https://davidsouthconsulting.org/2021/02/04/us-450-million-pledged-for-green-economy-investments-at-kenyan-gssd-expo/

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This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2023

Categories
Archive Blogroll Harvard Institute for International Development Special Unit for South-South Cooperation United Nations Development Programme United Nations Office for South-South Cooperation

CASE STUDY 6: International Consulting | 1999 – 2014

Expertise: Project evaluation, strategy, project management, project delivery, UN system, MDGs, research papers, media strategies and digital media strategies.

Locations: Ulaanbaatar, Mongolia, Kiev, Ukraine, Pretoria, South Africa, Ashgabat, Turkmenistan 2000 to 2006

Consultant: David South

Abstract

From 1999, I worked as a consultant for United Nations (UN) missions in Africa, Asia, Central Asia and Eastern Europe, for USAID Mongolia and for a UK-based international development consultancy. 

About

Was the United Nations being effective and reflecting the potential for change in the mobile and information technology age? What needed to change? Who were the policy innovators?

This work included overseeing various digital media projects, including the strategic re-development of the UN Ukraine web portal, aiding in the rolling out of the media campaign for the Millennium Development Goals (MDGs) in Mongolia, including the first use of infographics in the Mongolia UN mission, advising on strategies for youth engagement in development goals in South Africa, and support to the UN mission in Turkmenistan as it finalised its United Nations Development Assistance Framework (UNDAF) with the government and also work with UNICEF there. What I learned during this period proved crucial to the insights and thinking reflected in two highly influential United Nations publications, e-newsletter Development Challenges, South-South Solutions, and Southern Innovator magazine (developed in 2010). 

This period was particularly advantageous because I had a front-row seat to the unfolding digital and mobile information technology revolution sweeping across the emerging markets and the global South. I also had insight into what worked and didn’t in international development as well as the UN system. I also learned a great deal about development challenges first-hand in highly varied countries, how the Millennium Development Goals (MDGs) were actually being rolled out, and met amazing people who were challenging existing precepts on how to do development. All of this work proved very useful later on. 

I have either travelled to, or worked and lived, in many countries, enhancing my global perspective and affording me a valuable trove of knowledge that has in turn informed my work in international development. I have always paid attention to the level of development in the country, how it has organized itself, the quality of its design, and how it interacts with other countries for trade and relations. The countries visited to date include: Antigua and Barbuda, Australia, Azerbaijan, Belgium, Canada, China, Cuba, Denmark, Domenica, Finland, France, Germany, Greece, Guadalupe, Haiti, Hong Kong, Iceland, Ireland, Israel, Italy, Japan, Kenya, Luxembourg, Malaysia, Mexico, Monaco, Mongolia, Montseratt, Morocco, the Netherlands, Norway, Philippines, Portugal, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, Tunisia, Turkey, Turkmenistan, Ukraine, the United Kingdom, the United States of America, Vatican City. A fascinating mix of countries – some holders of top place on the UN’s Human Development Index – and others where human development is at its worst. Seeing with your own eyes what works and what does not is highly illuminating, while knowing first-hand how human development can be improved is critical for giving informed advice.  

Timeline

1999/2000: USAID Mongolia (design and publicity strategy for business development brochure, US Mongol (Mongolia) Construct and US tour, work with Riverpath Associates in the UK on communications strategies and the drafting of papers for the American Foundation for AIDS Research, the Global Fund to Fight AIDS, Tuberculosis and Malaria, UNCTAD, Harvard Institute for International Development, and the preparation of the report and launch strategy for the World Bank’s Task Force on Higher Education. 

http://www.davidsouthconsulting.com/blog/2018/1/10/us-mongol-construct-2000-business-prospectus-building-a-new.html

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2000: UN Ukraine: strategic re-development of the UN Ukraine web portal and incorporation of the Millennium Development Goals (MDGs). 

2004: UN Mongolia (media campaign for MDGs) and UN South Africa (evaluation of youth NGO associated with the University of Pretoria and its projects and providing a strategic marketing plan).  

2005: UN Mongolia (media campaign for MDGs) and UN Turkmenistan (finalising its United Nations Development Assistance Framework – UNDAF).

Rukhnama publishers in Turkmenistan’s capital, Ashgabat (2005). Photo: David South
An infographic commissioned for UN Turkmenistan MDGs report (2006).

2006: UN Turkmenistan (work with UNICEF). 

Testimonials 

“I highly recommend Mr. David South as a communications consultant who gets results.” Brian DaRin, Representative/Director, USAID Investment & Business Development Project, Global Technology Network/ International Executive Service Corps-Mongolia, 23 September 1999

Impact 

Micro 

  • working as a communications consultant for UN missions – Ukraine, South Africa, Mongolia, Turkmenistan
  • redeveloping mission websites, preparing content, reports, advising on communications strategy
  • working with local designers on new ways to present development data through inforgraphics (2005/2006) 

Macro 

  • in the course of travel and work, seeing the unfolding impact of the global communications revolution, in particular the rapid roll-out and take-up of mobile technologies, and the urgent need for the UN system to take this on board. Also witnessed firsthand the grassroots solutions revolution brought about by information and mobile technologies and the Internet, which needed to be fully embraced by the UN 

Resources 

A Marketing and e-Marketing Strategy – the New SASVO, Prepared from December 2004 to February 2005 for the Southern African Student Volunteers (University of Pretoria). 

A Moment in Time: AIDS and Business, American Foundation for AIDS Research, 1999 

Closing the Loop: Latin America, Globalization and Human Development, UNCTAD, 1999 

David South Consulting Summary of Impact 1997 to 2014

Development Challenges, South-South Solutions

Innovations in Green Economy: Top Three Agenda

Mongolian Media Project Infographic

Peril and Promise: Higher Education in Developing Countries, World Bank/UNESCO Task Force on Higher Education, 2000

South-South Cooperation for Cities in Asia

Southern Innovator

Southern Innovator and the Growing Global Innovation Culture

Southern Innovator Summary of Impact 2011 to 2012

Southern Innovator Summary of Impact 2012 to 2014

This work is licensed under a Creative Commons Attribution 4.0 International License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2025