October 25, 2011
Ulan Bator, Mongolia
Chinggis Khan has been gone for centuries, but his spirit undoubtedly lives on in Mongolia. Empire-building is in the cultural DNA here.
Mongolians know that they’re sitting on trillions of dollars worth of valuable resources, and that the economy is undergoing a rapid transformation. You can see it in their eyes… the energy, the buzz.
Bear in mind that Mongolia is an incredibly young country. The average age is mid-20s, and it’s common to see younger people in positions of significant influence. I dined with a director of the local stock exchange yesterday and doubt he was even 35. Same with the bank executives that I met.
This relative youth infuses the local economy with tremendous drive, energy, and creativity. These people don’t want to sit back and watch the economic boom happen; they want to be at the forefront of their country’s emergence into the developed world. And they know the time is now.
One of the most striking things about Mongolians is that they know they can’t do it alone. They want foreign capital… and expertise.
I’ve traveled to more frontier markets than I can remember, and most of the time when a local sees a foreigner, he thinks, “how can I rip this guy off?” In Mongolia, he thinks, “how can I partner with this guy to build an empire…?”
It’s an amazing difference that’s echoed throughout the society.
Right when you arrive, you’ll get the instant impression that this country welcomes foreign people and their capital. Nobody’s going to tear through your underwear looking for dirty bombs or subject you to an intrusive line of immigration questioning.
US citizens, in fact, are entitled to visa-free travel to Mongolia; there’s not even a ‘visa on arrival’ money grab at the airport– you just show up and present your passport as you would in Paris.
Another refreshing thing about Mongolia is that they aren’t terrified of a strong currency. With so much foreign investment flowing in to the country, the local tugrik (MNT) has appreciated steadily against the US dollar. Last year it was the world’s best performing currency.
Most countries are running away from a strong currency like a scalded dog. Not here. Based on the government’s calculations, every 3% appreciation of the MNT will cause a 1% decrease in the general price level. They see this as a major benefit for the Mongolian people.
Then there’s the 10% flat corporate tax, protected foreign asset ownership, and rules which allow foreign investors to settle disputes using foreign arbitrators. In sum, it’s a good environment for international investors and entrepreneurs.
The thing about Mongolia is that the economy is growing rapidly, but business practices are stuck in the past from when the country was a Soviet satellite. There is limited professional infrastructure, and I’m convinced that the few folks here focusing on this niche will become incredibly wealthy by the end of the decade.
People will think this is crazy. Make a fortune in Mongolia? Yeah, right.
Hey, things change. In the 14th century, Europe was a disgusting backwater where millions of people were dying from plague, starvation, and ridiculous wars. China, meanwhile, was among the most advanced civilizations on the planet.
To a wealthy merchant in the Ming Dynasty, it was INCONCEIVABLE to think that the west would someday dominate the world. But it happened.
Thanks to modern technology and transportation, change happens even faster today. Nations can rise and fall in a matter of decades. Right now as the west declines, it’s Asia’s time. And Mongolia is well-positioned to be one of the greatest beneficiaries of this trend.
Yes it’s cold. It’s dirty. It’s polluted. It’s unpredictable. And English proficiency is atrocious. But for a few intrepid souls out there, Mongolia may be the best place in the world to build your own empire.