Mongolia serves to test Korean financial system

By Kim Jae-won

Korean financial leaders are going to Mongolia to export its financial knowhow to the Asian country, Korea Development Bank (KDB) and the Financial Services Commission (FSC) said Friday.

KDB said that it has signed a contract with the Development Bank of Mongolia (DBM) Tuesday to manage the government-controlled lender on behalf of the nation for the coming four years.

Under the deal inked in Ulan Bator, KDB will send five financial experts, who specialize in funding and risk management to Mongolia Monday, which includes DBM’s new head Kim Jang-jin.

KDB will build an overall business operating system for DBM and take charge of its development financing business. The contract could be extended if necessary, KDB added.

DBM, 100 percent owned by the Mongolian government, was established in May in a bid to help bolster the development of resources, infrastructure and a manufacturing base in the landlocked country.

An industry source familiar with the matter said the management contract will help Korean companies take active roles in resource exploration projects in Mongolia.

“Mongolia has abundant reserves for commodities such as coal, gold, bronze and iron. We expect Korean companies may benefit from the contract when it starts mining projects,” said the source on condition of anonymity.

Mongolia is estimated to have reserves of 163.3 billion tons of coal, 13.6 tons of gold, 67.3 million tons of bronze and 264 million tons of iron, according to KDB.

In 2009, Korea was Mongolia’s fourth-largest export destination. Mongolia’s economy grew 6.1 percent last year while its government is targeting an annual growth of 15 percent in the next four to five years.

FSC Chairman Kim Seok-dong also left for the Asian country Thursday invited by Lhanaasuren Purevdorj, governor of the Bank of Mongolia (BOM). Kim will visit the head of Mongolian central bank and the Financial Regulatory Commission (FRC), Mongolian financial authorities.

Kim will sign a memorandum of understanding (MOU) with the FRC, which guarantees cooperation between the two parties on financial supervision, exchanging information, regular meetings of high-level officials and support for technology and education programs.

The FSC head is also scheduled to address speech on Korea’s successful development story to officials of the BOM under the title of “Korea’s path to economic growth and future tasks under the changing global economic conditions.”

Kim will present three key factors ― labor, technology and capital ― which lie behind of economic success of the nation. He will point out hard working and educated workforce, R&D investment in advanced technology and the government’s initiative to attract foreign and domestic capital contributed to the development of the fourth-largest economy in Asia.