Over the past decade, Mongolia’s mining sector has been at the center of foreign investors’ attention and national export goals. However, in recent years, a different sector has gained as much or even more popularity and appeal to both locals and internationals.

Web 3.0: what’s next? an international event organized by AmCham Mongolia.

With the global rise of Web 3.0, educated youth driving digital transformation, and internal efforts to develop non-mining sectors, Mongolia has made concrete strides to up its game in the digital business sector. , which strongly engages human capital. Although Mongolia does not have a large pool of IT talent like the Philippines or Vietnam, it certainly has some advantages that potential investors, including those from China or operating in China, should not miss. The advantages are Mongolian young talent with adaptable cultural upbringing and mindset, its freedom to use and penetrate the internet, and the government’s policy of prioritizing the development of the IT sector and to digital transformation at all levels.

First, unlike typical East or Southeast Asians, who have relatively strong national cultural sensitivity and influence in their consumption behaviors and product preferences, etc., Mongolian consumers have a mixed taste interesting in the Western and Eastern cultural influence in their purchasing decisions. The hundreds of years of global adventures of its ancestors, the centuries of influence of the Qin Dynasty and the decades of influence of the Soviet Union have certainly brought about a nation of mixed culture and mindset. This flexible cultural upbringing and diverse influence allowed the Mongols to do business with Westerners, Asians, and Islamic countries.

“Startups in artificial intelligence, fintech and other sectors are poised to transform the Mongolian economy, as they begin to transform the capital of Ulaanbaatar into a small but high-tech hub. flourishing,” Japanese Nikkei Asia reported in 2019. Nikkei Asia also published several other articles about the Mongolian IT sector, its talents, and crypto mining opportunities due to its cold weather and energy price. relatively efficient.

With its hundreds of years of nomadic culture, mindset and resilience, Mongols around the world have proven that they have the ability and capacity to excel in whatever fields they choose. Nikkei Asia reported“The country’s proficiency in mathematics is another asset. This year, Mongolia placed 26th in the International Mathematical Olympiad, just behind France and Canada, and up from 50th place in 2010”.

Therefore, by leveraging not only Mongolia’s geographical proximity to Eurasia and beyond, but also its mixed cultural remit, international investors, namely those from East Asia, should be able to benefit in certain ways, for example by having their investment portfolio managed from Mongolia. .

Second, Mongolia is a member of the Freedom Online Coalition (FOC), a cross-regional intergovernmental coalition of 30 countries established in 2011 that is committed to advancing internet freedom worldwide. In its Freedom of the Press 2017 report, Freedom House, an independent international monitoring NGO, called Mongolia “partly free”, giving the country a score of 85 on a scale of 1 to 100 (0 = best, 100 = worse). South Korea, Ghana and Italy achieved similar scores. In addition, Mongolia was named one of the most active social media, namely Facebook, users in the region.

Mongolia focused on building its basic hardware IT infrastructure (i.e. Internet cable connections) between 2000 and 2010 and software infrastructure (i.e. development and software adoption) between 2010 and 2020. The COVID 19 pandemic has accelerated the use of various digital business solutions like CRM and HRM and the digital business sector at large. By 2025, it is expected that national digital solutions such as the e-Mongolia platform, which has digitized hundreds of government services, will be fully functional.

Third, according to the World Bank’s report, Mongolia’s Mines and Minds, published in 2020, demand for key minerals is likely to fall due to climate change concerns, a shift in investor preference towards sustainability, China’s ambitious goal to reduce coal consumption and the persistence of the COVID-19 shock. (The mining sector accounts for 24% of the country’s GDP, 69% of the industrial sector, 77% of foreign direct investment and 93% of exports.) use its mineral wealth to invest in its people and institutions, while gradually reducing its dependence towards the mining sector.

In 2020, the Mongolian government has defined its five-year mission build a “digital nation”, harnessing data and technology to facilitate innovation, streamline public services and diversify Mongolia’s mining economy. Later in 2021, the government created a new ministry dedicated to digital development and communications. Furthermore, in the latest economic recovery plan, developed and promoted by the current government led by Prime Minister Oyun – Erdene Luvsannamsrai, green economy recovery has been identified as one of the six key areas. Such facts clearly indicate that Mongolia aims to shift its development focus from mining to minds by providing a wide variety of opportunities, including tax incentives for foreign investors in the IT sector.

In summary, due to external global development changes and internal political decisions, namely the push for a greener economy, Mongolia plans to transform itself from a mining-centric economy to a more diverse nation, which cherishes its human capital and takes advantage of technological advances. . Those who lead the tech industry are, again, young, educated, mostly overseas, and have ties to GAFA /Google, Apple, Facebook and Amazon/; their future prospects are to test their products and services in Mongolia and deploy them outside of Mongolia.

Having been Mongolia’s biggest trading partner for decades, China is the ultimate destination to expand for many Mongolian businesses, including tech startups. On the other hand, Mongolia offers internet freedom and unique geographical and cultural proximity to Eurasia, which should create advantages for the international business community. Thus, now may be the perfect time for Chinese investors and companies to tap into its neighbor’s current aspirations by participating in new business developments and old business expansions.

(Enkhzul Orgodol/Zula is an Asian Alliance Partner of Dezan Shira & Associates. She can be contacted at [email protected])