The Role of the Development Bank of Mongolia
Ulaanbaatar, Aug 23, 2011 AEST (ABN Newswire) - At the Mongolia Capital Raising Conference, Mr. Shagdarsuren, Secretary General of Mongolian Bankers Association, acted as moderator of the panel about the role of the newly established Development Bank of Mongolia (DBM). Delegates from Development Bank of Mongolia, ING, Clean Energy LLC (CE LLC) and National Development & Innovation Commission (NDIC) were represented in order to share their insights with the audience on the way DBM may contribute to Mongolia's economy, especially with respect to the development of its infrastructure.
Mr. Chuluundorj, opened the panel discussion by explaining the roles and coming plan of DBM. DBM has defined itself as the major financial institution to support infrastructure projects in Mongolia. Since its establishment, DBM has followed all international standards, and worked closely with overseas well established developed finance institutions such as Development Bank of Japan and Korean Development Bank. Despite the fact its organization process seems still ongoing, DBM has nevertheless enormous possibilities to raise capital and finance large investment infrastructures.
Mr. Byambasaikhan, from CE LLC, further expanded on the importance of DBM relating to the development of Mongolian infrastructure in the next 5 to 10 years. Infrastructure has long been the bottleneck of this country. Within the next decade, the need for more infrastructure notably in railway, water supply and power plants will be extremely high. For the sole energy infrastructure, Mr. Byambasaikhan foresees that the required investment may amount to US$4.5 billion. Other types of infrastructures may need an aggregate up to US$4 billion. Further to the government support, DBM offers the capability to raise capital from other worldwide development banks and/or agencies and to bring in investors.
Mr. Lambert, from ING, emphasized those opportunities for DBM for overseas financing. To Mr. Lambert, DBM represents a dependable local partner that can aid foreign investors to participate in longterm government sponsored projects. Through the participation of foreign investors, Mongolian could also build up a domestic capability in bond markets, such as bond trade platform and auction process within the stock exchange.
To this extent, DBM has the potential to help developing various sectors beyond pure infrastructure.
Mrs. Bolormaa, the CEO of DBM, added that DBM is notably looking forward to cooperating further with local commercial banks in the following areas:
1. Development of the stock exchange and the bond market in Mongolia;
2. Implementation of strategic projects with commercial banks, DBM being on the lookout for syndication and cofinancing opportunities with local commercial banks.
About the financing requirements, DBM is currently planning to tap the local bonds market, the issued bonds being guaranteed by the government. So far, four main projects have been identified and assigned priority in areas as varied as construction, energy, roads and heavy industry. DBM also works closely with the government to define the best framework to select and prioritize those projects in term of economic and social impact.
All the projects shall be further overlooked by the Ministry of Finance to the extent the bonds will be backed by the government.
DBM is also in contact with several international financial institutions so as to benefit from technical support for feasibility study on projects.
About Frontier Securities
Frontier Securities is the first local Mongolian Securities firm with a global network and international expertise. Established by Masa Igata, Frontier has been given full-service securities related license by the Financial Regulatory Committee (FRC) of Mongolia. Frontier also has brokerage, dealing and underwriting licenses that are regulated by FRC. Since its establishment, Frontier's primary area of focus has been the cross-border investment banking business.
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