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In response to the development of the covid-19 pandemic, Mongolia has implemented strict measures since March 2020. Commercial air traffic was stopped, evacuation flights were limited. The cancellation of air traffic and mandatory quarantine for travelers from abroad will last until the middle of 2021. The Mongolian government spent 849.6 million USD from the state budget in 2020 for measures against covid-19.

As a result of the covid-19 crisis, Mongolia’s economy experienced its worst downturn since the 1990s in 2020. The state budget deficit reached USD 1,593 million. The decline in GDP for 2020 compared to the previous year was 11%. The budget deficit reached 8.6%. Foreign trade turnover decreased by 6% compared to 2019. Mongolia’s exports for 2020 decreased by USD 43 million (i.e. 1%) and imports by USD 834 million (i.e. 14%) compared to 2019 The decrease occurred mainly in the export of livestock and industrial products, on the contrary, the export of raw materials increased by 4%.

Foreign direct investment for 2020 was USD 435 million, a decrease of USD 244 million compared to 2019. On the other hand, GDP is expected to grow by 4.3% in 2021, mainly based on the economic stimulus agreed by Mongolian government. Foreign exchange reserves stood at USD billion in March 2021 and were enough to cover the necessary imports for 9 months. In general, it can be stated that in order to maintain the level of foreign exchange reserves, the Mongolian central bank must allow a more flexible exchange rate. A total of 28% of businesses had no profit and 68.9 thousand jobs were lost.

On February 10, 2021, the government approved a package of USD 3,540 million to protect the health of citizens and revive the economy. The funds will be used mainly for vaccinations, for “soft” loans for SMEs, USD 708 million is intended for job creation, USD 1,062 million to support loans for housing construction, USD 354 million for the construction of apartment buildings and schools ( including relevant infrastructure), USD 708 million for strategic projects, USD 177 million for trade support, USD 354 million for financing the mining industry.

Other stimulus measures to support small and medium-sized enterprises are deferral of loan repayments, deferral of social insurance tax payments, reliefs from the income of natural persons and from the income of certain legal entities, special loans with preferential interest for cashmere producers and lower retail fuel prices. The Central Bank of Mongolia cut the interest rate by two percentage points to 6%.

Despite the pandemic measures and restrictions, the trade turnover between the two countries, according to data from the CZSO for the year 2020, reached relatively successful values ​​- Czech exports were 14.33 million USD and imports 474,000 USD. USD. For comparison, exports in 2019 were USD 18.95 million and imports were USD 622,000. USD.

Post-COVID-19 opportunities for foreign exporters

Mongolia is an open economy, dependent on the export of commodities and the import of technology, consumer goods and PHM. Industry is mainly oriented towards the extraction of raw materials and basic processing fields with lower added value, agriculture is oriented towards extensive livestock production. The service sector is small and completely marginal outside the capital, the pandemic has hit the tourism and transport sectors hard. The state sector still has a high share, especially in energy, infrastructure and the mining industry.

In addition to the mining industry and water management, strategic sectors in Mongolia include energy, future infrastructure and the aviation industry. The pandemic has demonstrated the necessity of modernizing the healthcare system. The country is in demand for food technology, leather processing facilities and wool cleaning.

International organizations implement projects in Mongolia in water management (Millennium Challenge Account Mongolia), waste treatment (EBRD, EU) and healthcare. Direct support from the EU, which provided USD 6million to the Mongolian budget for the period 2021-2024, also flows to Mongolia, among other things, for the development of the healthcare sector.

Czech companies find application in the automation of coal-fired power plants, the construction of wastewater treatment plants, meat processing plants, deliveries of crawler machinery to mines, measuring devices for the energy sector, dairy and bakery technologies, and machinery in forestry.

Civil aviation industry

In the aviation industry, Czech companies can apply themselves in the supply of mobile, modular airports and modern airport systems for regional airports in the construction of airport landing areas and also smaller aircraft. Current regional airports are outdated, they do not meet the requirements for connections between the capital, remote regions, mining centers.

There is no rescue or firefighting air service in Mongolia, helicopters and heliports are missing. A segment of small civil aviation is also developing with the aim of commercial transport and amateur flying.

The Czech Republic has provided assistance to Mongolia with the development of civil aviation and the optimization of infrastructure and maintenance at the new international airport in Ulaanbaatar, thanks to which Czech companies can become more visible in this segment. The field of activity for Czech companies is wide, from the delivery of aircraft to assistance with changing the purpose of an international airport to a national airport or a training center to assistance with a comprehensive solution for a network of regional airports.

Transport industry and infrastructure

An important area that is gaining importance in Mongolia is the supply of means of transport (buses, trolleybuses, wagons) and participation in the reconstruction of transport networks. The country is not sufficiently connected by road or rail networks. The Ministry of Transport regularly issues tenders in this area, which can be viewed on the website www.tender.gov.mn. More opportunities are at Search Opportunities | ECEPP (ebrd.com)

Energy industry

According to allcountrylist, most of the electricity and thermal energy in the country is produced in thermal power plants. Water, wind or solar resources are used to a small extent. Demand exceeds the country’s production capacity by 32%. With the expected growth of the mining industry, it is desirable to double electricity production by 2030. A popular vision is Mongolia’s involvement in the so-called East Asian grid, in the form of exporting energy from solar power plants in the Gobi regions of Mongolia to the PRC.

Thanks to 300 sunny days a year and the intensity of solar radiation, the country has a production potential of up to 11 GW from the solar source. The 2015 government document “State Energy Policy” set out the country’s energy policy until 2030. It focuses on three key priorities, namely safety, efficiency and environmental protection.

In October 2018, the government approved Mongolia’s medium-term energy program (2018-2023) setting as a strategic priority the provision of sustainable energy supply and energy security. Czech suppliers can offer technologies for the use of waste heat for the construction of a power plant in Tavan Tolgoi, carbonization and automation of the control of a thermal power plant in Darchan, measuring systems for energy networks in the capital city of Ulaanbaatar and in the regions.

Construction industry

In order to improve the living conditions of the population and the state of the infrastructure, the Mongolian government announced a strategic plan within the framework of SDG’s Mongolia 2030, which includes changing the settlement system and decentralizing the population, creating new industrial, commercial and residential centers and moving the poor population out of yurts. There is an effort to build so-called green centers connected to renewable energy sources. The further development of urban planning must rely on a cadastral database with topographic maps and underground and above-ground engineering networks. Czech companies could assist in these projects.

The investment projects of the capital are directed to the construction of regional centers in Bayankhoshuu, Denjiin and Dambadarjaa. An interesting project is the construction of a technology park in Nalaikh with 1,500 new jobs. The new highway to Nalaikh is completed (also connecting the new international airport).

In Ulaanbaatar, projects are being prepared to provide affordable accommodation, to reconstruct yurts, to build apartments for rent and to heat current houses more efficiently. Investments in road construction and the construction of parking lots are essential. The use of Czech companies is possible in the supply of building materials, equipment and in the construction itself. Czech know-how with energy-saving buildings, insulation of facades, use of insulating materials and energy-saving heating systems can also be used.

Water management and waste industry

New sources of drinking water, their protection and related infrastructure for the rapidly growing Ulaanbaatar, as well as for localities in the provinces, are priorities of the government and regional administrations. The US Millennium Challenge Corporation, as part of a compact program to reduce poverty and promote growth, continues with two water projects in Ulaanbaatar, for which it has allocated USD 350 million.

The construction of a wastewater treatment plant is also planned for the project of the new Emmelt industrial technology center and the tannery complex in Darchan. The Embassy of the Czech Republic recommends that Czech companies register in the MCA-Mongolia directory at [email protected] and [email protected] ( www.mca-mongolia.gov.mn ) to obtain information about tenders ..

There are also opportunities in waste management (collection, collection, sorting and subsequent use). It concerns municipal solid waste, but also hazardous waste, e.g. generated by the mining industry, as well as demolition and construction waste. The EBRD and EU budget covers the construction project of a waste disposal factory and its equipment in the capital. Information about the project is available at www.businessinfo.cz.

Healthcare and pharmaceutical industry

The Mongolian government has used the pandemic to boost demand for direct financial support from foreign donors. He intends to use part of the grants and loans to purchase technology and equipment to modernize medical facilities. Mongolian healthcare lacks critical infrastructure, ICU equipment, operating rooms, diagnostic equipment, sterilizers. Here is a great opportunity for Czech companies.

The space is also available for the implementation of large investment healthcare units, i.e. the construction or reconstruction of hospitals together with the supply of medical material and equipment. It is advisable to propose financing together with the technical offer. In addition to standard medical technology and hospital equipment, it is also necessary to develop services connected to the use of modern technologies for the transmission of data on the patient’s current health condition. Thanks to long distances and low population density, a mobile healthcare solution can be offered.

Agricultural and food industry

Almost 30% of Mongolia’s economically active population is employed in the agricultural sector, and it accounts for about 14% of the GDP. Livestock production accounts for roughly 70% of the sector’s total production. In Mongolia, a very limited amount of cow’s milk is produced, which is due to the extensive form of cattle breeding (herding). There is a new need to reduce the number of cattle due to climate change, switch to intensive breeding and increase milk production. Large local companies are beginning to focus on the development of intensive milk production in the form of stables and establishment of farms.

An opportunity for Czech companies is the construction of closed farms for dairy and beef cattle, dairies, processing of fodder crops and mixtures, as well as investments in veterinary approved production plants with high-quality milking or slaughtering technologies, investments in equipment for the production of dairy or meat products, in smoking and packaging plants technology. The construction of meat plants, cold storage and freezer warehouses will be developed. Mongolia is interested in importing agricultural machinery for primary production in agriculture and forestry.

The government supports the construction of warehouses, granaries, and economic capacities. The central region showed interest in Czech experience and technology in potato growing. Opportunities are in the introduction of sanitary, phytosanitary and veterinary measures. Thanks to the already passed on Czech experience with afforestation and forest maintenance, we can also offer Czech forestry equipment. Czech products will also be used in the Mongolian retail food and beverage market.