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Jon Springer
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I write about emerging and frontier markets in Asia. I now primarily contribute work to Forbes Asia. My most recent work and my complete bio can be found on Forbes Asia's site: http://www.forbes.com/sites/jonspringer/ If it is easier, you can find my recent work sorted by country on this... More
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  • Alex Jantsch
    , contributor
    Comments (151) | Send Message
     
    Jon,

     

    Bear with me on this one, because you know I share your same optimism about Mongolia and the economic growth still to come (it's seemingly inevitable from my perspective). I simply want to play devil's advocate for a second and bring up a question to someone who has a more direct experience with the country in question. I like purposely trying to find news/articles/viewpoints that contradict mine so as to have more clarity and piece of mind in knowing that my opinion withstood my own tests.

     

    The question I have relates to inflation, as has been brought up by many news outlets recently. I have heard conflicting stories as to how much this is truly affecting Mongolians (beyond the upper class ones). And while this might be too broad of a question, or topic, what are your thoughts on above average inflation stifling higher real growth rates in the short term due to the lower and middle classes (the most necessary participants for rapid economic growth) inability to fully participate in some of the newer industries as they would like to (such as insurance, property upgrades, financials, etc.), as well as their inability to potentially find better jobs due to the government focusing more on handouts, rather than job creation?

     

    Again, I certainly share your viewpoint. And I think some of the fears are overblown on that front, especially if you have a long term horizon like we do, but I simply wanted to get another opinion on the effects in the short term (i.e. 1-2 years).

     

    http://bit.ly/HmbFOj (an example of an article on the topic i just brought up)
    29 Mar 2012, 04:55 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4100) | Send Message
     
    Author’s reply » Greetings Alex,

     

    I'll give this a go.

     

    Inflation and the stability of the currency are pretty dynamic issues in the Mongolian economy.

     

    I recently posted a link to Frontier Securities Exchange Rate Outlook (19 pages): http://bit.ly/GW733s in a conversation with Sharfich about the currency stability in the comments of the brokerage blog (which I need to write an update on, but the dialogue is here - http://bit.ly/Htw0Dj)

     

    The government has recently raised the wages of teachers and governments employees 53% and their wages are still trailing the growth-rate in the private sector.

     

    Inflation and currency appreciation are anticipated going forward post-election. Until the election, things are a bit up in the air as things are in a state of question until June's election. When Oyu Tolgoi and Tavan Togloi ramp up, the growth rate in the GDP is going to be significant, very significant.

     

    Some people that live locally philosophically think the lagging development of infrastructure (particularly in rail and energy) may actually be a good thing as it will keep the economic growth of the country at a more contained and manageable pace for the central bank.

     

    A small example of changes coming: the 21,000 tugrik payout is supposed to end after the election; many people from many political views want it to end and think it is bad for a number of reasons. Will it end? I'm not sure, and honestly I'm a bit more concerned right now about how the government handles the distribution of citizens' shares in Erdenes Tavan Tolgoi (as if that is handled poorly, it will be a false distribution to the people, and really something the wealthy take advantage of; i.e. the opposite of the stated intention of this distribution).

     

    On my ride to the airport before I departed, a friend of my driver came along. My driver bragged about his friend's job operating a crane or like-equipment for a mining company (a bit may have been lost in translation after three days of celebrating Tsagaan Sar). His friend's wages were about $10,000 per year if I recall correctly (can't find my notes on that right at the moment). His friend, at that wage scale, is making huge money relative to the average. Huge.

     

    Talk of Dutch Disease is frequent because the risk is there. Jargalsaihan has been writing columns at least once per week for three years. He has recently started translating them all into English and republishing them in the UB post. They can be found here: http://bit.ly/HtvPbb I need to write more about him, and inflation, and many things. However, I'd be more reliant on his local-point-of-view concern than other things that are passed off in the western media. He does not always write from a singular perspective, as he takes different tacts to flesh out different ideas and things that are going on.

     

    Jargalsaihan offers the best critical view of what is happening in Mongolia from a Mongolian's point of view in English (there are others, but in Mongolian language only; one of my primary questions to everyone I met this last trip was: who are the leading critics of the government?).

     

    I'd also recommend checking out Mongolian Economy which was commended to me by several NGOs as another Mongolian based establishment with insights into the country translated into English http://bit.ly/wBFd3N

     

    The fact is I believe the government *can* manage what will be difficult challenges of inflation and currency valuation, but that's an opinion. Thus, I'm forwarding you these recommended reading links to provide some local color from people who are writing both with their boots on the ground, and about the challenges their own home country faces.

     

    While I write what I believe, it is important to me that I give readers the tools to do their own due diligence and to question me further.

     

    Much obliged for the inquiry and I hope that's a good start to an answer.
    29 Mar 2012, 06:06 PM Reply Like
  • Alex Jantsch
    , contributor
    Comments (151) | Send Message
     
    That was exactly what I was looking for, and it was very helpful in adding to my insight on the whole topic that I was unable to garner from reading articles on it. I appreciate the additional sources as well, because while I certainly trust your insight there is something satisfying about reading it for yourself. I personally think it adds to a persons credibility if they insist that you don't take their word for it, but rather see for yourself. Thanks Jon! And as always, keep it up.
    30 Mar 2012, 11:23 AM Reply Like
  • Valley Boy
    , contributor
    Comments (2207) | Send Message
     
    Proactive Investor passes along corporate news and viewpoints pertinent to the Mongolian resource extraction industry sector, too.
    http://bit.ly/Z63VgW
    14 Dec 2012, 01:26 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4100) | Send Message
     
    Author’s reply » Yes they do. Just be aware a lot of stuff on there is from investor relations departments and paid consultants.
    14 Dec 2012, 04:26 PM Reply Like
  • Valley Boy
    , contributor
    Comments (2207) | Send Message
     
    Some of the stuff is more informative than others; some of it is just chatter.
    14 Dec 2012, 07:17 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4100) | Send Message
     
    Author’s reply » Agreed.
    14 Dec 2012, 07:59 PM Reply Like
  • gupta2013
    , contributor
    Comments (2) | Send Message
     
    http://bit.ly/12nIEQd Read what the Mongolian resource nationalism is all about
    4 Feb 2013, 02:46 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4100) | Send Message
     
    Author’s reply » Would be helpful if these folks dated their posts; and also if they identified who they are, and who is paying their bills.

     

    Thank you for the link gupta2013.
    4 Feb 2013, 02:53 PM Reply Like
  • gupta2013
    , contributor
    Comments (2) | Send Message
     
    In fact, this could well be another in a row of his populist statements. He is well known for this
    5 Feb 2013, 12:28 AM Reply Like
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