Conference Day 2

I'm a little peon compared to most of these guys I'm sitting with in the investemnt conference.. First of all this is because I forgot to pack a business suit. This is due to a few reasons including having no space in my travelpack, the fear of being charged for extra baggage and the idea of having a suit for 2 months stuffed in my bag without being able to find dry cleaning (I've seen like 6 of them since I've been here)...
So now I have to accept the fact that I look like the casual journalist while everyone resembles a legitimate and professional investor, armed with pin stripes. I wont kid myself though, it's alright because I'm not here to invest just yet, I'm here to learn and report, and thats what journalist do, right? But let me say, there is so much information being covered, more than I could even consider writing in the "Day 2" portion of this blog. For that reason, I am going to be very selective and wright about something which I find most interesting. Ch-check it out.



Potential for Private-Public Partnerships in Mongolia

One vehicle of investment which many are saying is vital to perpetuate growth in Mongol are PPP initiatives (Private-Public Partnerships). PPPs are used typically in developing nations who cannot necessarily fund essential hard infrastructure sectors (transport, housing, water, energy, health and education) themselves and thus need the help of the able and interested global private sector. A common type of PPPs are BOT schemes (Build Operate Transfer schemes). This means that a private investor builds a highway for example, operates and collects revenue from the highway (in this case through a toll) and then transfers the ownership to the government of that nation once he has collected his desired but not piggish profit.

If careful planning is done, many believe this is a viable solution for the government to raise funds for hard assets in Mongolia. This is because such an investment would be a win-win situation for the investor and the government as it has limited obvious drawbacks compared to other methods of capitol raising such as issuing sovereign debt, increasing taxes or increasing the money supply.

One interesting point which I have learned is that honest politicians support BOT initiatives, whereas dishonest ones might reject them. This is because BOT initiatives put the investment out of the politician's hands, making them impossible for them to profit from. A good example of this dishonest profiting was seen in the late 90s when President Maria Gloria Macapagala-Aroyo of the Philippines dishonesty approved (and its implicated that she profited from) the National Broadband (NBN) project despite an initial proposal which would not cost the government a single cent of taxpayers money. More information concerning this scandal can be found in this blog post by the Vincenton Post.

In Mongolia, the IFC, a member of the World Bank Group and the largest global development institution focused on the private sector of developing countries has signed a memorandum to support the government in selecting private partners to prepare, structure, market and implement competitive projects which would best aid the country. The memorandum was signed in October of 2010.

More information is available here courtesy of the IFC. I believe that the involvement of such a globally recognized institution will help avoid any corruption. The next question is what is happening now, a year later, and how can private investors get involved? This is something that I am going to investigate during my time here. Stay tuned.