M-ICP Policy recommendation delivered

Date:  Wed, 2010-10-27

M–ICP Policy recommendation delivered

Ulaanbaatar – 27 October, 2010–– M–ICP Policy recommendation which includes the necessity and importance of introduction of Trade –credit offset (TCO), technology and vendor qualification, a need for increased support for innovation, science and technology development and creation of necessary infrastructure for TCO and the use of intangible assets for loan collateral has been delivered to Mr. Ts. Bayarsaikhan, Chairman of Economic Policy Standing Committee of the Parliament today.

Trade–Credit Offsets: Experience of most countries using TCO showed that it contributes significantly to industry and infrastructure development and acceleration of economic growth, and increase country’s competitiveness, in particular it helps countries to increase its technology competence, to develop high value–added manufactured goods and create more jobs. The use of TCO can help our country to decrease the risk of Dutch decease by providing adequate support to development of manufacturing and agriculture sectors. The mechanism can be used for large investment projects such as Oyu Tolgoi, Tavan Tolgoi, building of power plants, copper smelters etc.

Technology and Vendor Qualification: The use of this service reduces the risk of importing low quality technologies from unreliable, dishonest and unethical suppliers and provides companies and the government to negotiate well with their negotiating parties based on high quality expert service on technology and vendor. This service is also important for above mentioned large projects.

Collateral enhancement: The modern banking service is increasingly becoming a system of collateral enhancement, not of credit enhancement nature. The introduction of this system through which banks can accept intangible assets as loan collateral based on expert advisory and underwriting service can help to modernize Mongolia’s financial system and it can help to create and or expand more businesses, more jobs and eventually it can lead to reduction of interest rates and less risky banking system.