DBM Deputy CEO: Creating a happy society with jobs and education is the duty of the Development Bank
July 5 (Mongolian Economy) The Development Bank is the key to sustainable development. Thus, this ticket must be guarded with care. If that ticket becomes invalid, then huge risks await.Luvsandorj Bolormaa is the First Deputy CEO of the Development Bank of Mongolia. She has been working in the banking sector for the last 15 years. Prior to her position at the Development bank, she acted as Vice President of Deutsche Bank responsible for North-American banks, broker dealers and finance companies in New York.
When she was appointed as the First Deputy CEO of the Development Bank, many discouraged her, saying that she could not handle such a tough job. But now Mongolia has a Development Bank that is globally recognized. It has been a year since Mongolia’s Development Bank made a home on the global market. Bolormaa has formed a team with 40 young active and creative members. Her knowledge, experience and sensitive mind has determined the goals and aims of the Development Bank. With only six personnel, the Development Bank opened its door last year. Now the organization has become a big family.
-It has been a year since the Development Bank was established. What achievements have been made so for?
-The Development Bank has gathered necessary financial resources for Mongolia. With these resources we aim to implement large development projects. Last year we raised our funds through issuance of 5 year bonds with 5.75 percent interest in international markets. This opens an opportunity for Mongolia to raise funds internationally like any other emerging market countries and if domestic macroeconomic and state budget policies remain prudent we will be able to raise long-term funding through issuance of 10, 15, 20 year bonds.
Our bank has successfully raised funds despite such turbulent times in the financial markets and these resources allowed us to implement important economic projects. We approved MNT 415.6 billion for 7 rural area roads of total 662 kilometres and MNT 98.6 billion for 13 roads in the Ulaanbaatar city. The contracted companies have started their construction work. Also, we approved design works for the construction of around 3,300 kilometres of roads in rural areas. The Development Bank is financing the first three phases of the Buyant-Ukhaa 2,000 Housing project, which is to be developed by the Housing Finance Corporation.
We also provided MNT 50 billion for the State bank for 6% mortgage program for low and middle income families. At present, we are working to approve MNT 50 billion for the Small-medium Enterprises Fund that will help to create new jobs in rural area. Going forward, we will finance road and railroad projects, processing plants in Sainshand industrial park and other strategic projects once feasibility studies and tender processes complete. Creating a happy society with jobs and education is the duty of the Development Bank. With its purpose to establish an independent and diversified economy, the bank aims to support strategically important sectors, thus creating new jobs.
-What are some of the successes the bank made this year?
-As the main financing body for the strategic projects in Mongolia, the Development Bank needs to develop its relations with foreign investors, banks, financial organizations as well as project companies. Cooperation agreements and memorandums were signed with the leading organizations, banks and development funds, such as the Japan's Sumimoto Mitsui Banking Corporation, the Development Bank of China, and the US Exim and China Exim banks.
Behind each signature on the agreements are plans and priorities. For example, under cooperation agreement with the Japanese bank we intend to bring high technologies for Sainshand processing plants. Recently we approved a loan for MIAT to purchase 2 Boeing airplanes, which is will be financed further by US Exim bank. Currently we received a project to develop the ger districts of Ulaanbaatar with the help of energy saving technology from America.
-Does the bank independence sometimes is challenged?
-Our main policy is to keep our independence. The Development Bank’s contribution to the economic development will be significant if its independence is kept intact. As a financial organization, the risks are carefully measured and controlled in order to maintain its long term stability. Financing revenue generating good projects will improve the bank’s financial capacity and as a result diversify domestic economy that will lead to sustainable development.
In addition to legalizing the bank’s independence through law, the bank should sign a contract with the Government and Ministry of Finance every year, strengthening its independence. The Development Bank is the key to a sustainable development. Thus, the ticket must be guarded with care. If that ticket becomes invalid, then the country will face huge risks.
-What is your opinion on corporate governance? Are there any good examples of corporate governance in Mongolia.
-The Development Bank was finally established after many years of discussion. Thus, we strive to create a strong viable bank with good governance, prudent management and sustainable operations. If any Development Bank is in a risk of default it will be viewed as a sovereign risk and the country will be perceived as at risk. Thus, the Ministry of Finance, the Bank of Mongolia and the government have to support the Development Bank with comprehensive and targeted policy. If each organization carries policies that are contradictory, which hinder economic and financial stability the country could be at risk. As a result our economic development could be delayed further.
Development banks in Germany, South Korea and in China have managed to develop their country due to this comprehensive policy support. Good corporate governance is the secret ingredient. For our bank to develop such corporate governance we need long term financial strategy of the country.
Mongolia needs a medium-term economic policy that is not constantly revised, amended as we have now. Many resolutions targeted at our bank get delayed or changed frequently and deficiencies in our law create challenges for bank’s stable operation. Furthermore, ability for the bank to choose its own projects to finance may hinder our operations if not implemented in the short term. In other countries, the government defines strategic sectors for their development bank to finance and then the bank independently chooses projects it will invest in. That allows the organization to be become the main driver behind the economy growth.
-Do you feel politics interfere with the Development Bank’s business?
-If we look into other developed countries there is very little politicization. Singapore and Switzerland are great examples of this. Although political parties may have their differences in their development policies, when it comes to ministries or agencies that are responsible for the implementation of these policies politicization disappears. But in Mongolia, involvement from political parties in the implementation ministries and agencies slow down the economic development.
Of course, the elected party should hold on to its economic policy. However, for implementation and enforcement of these policies, they should leave it to the professionals. In turn, the government can request responsibilities and professionalism from public servants. Political involvement won’t solve everything. People need to be educated before politics get involved. We need professionals in every level of the society. A country will develop only when its youth strives for knowledge and education to a better future.
-Your contract with the Development Bank is nearing its end. What would you say your biggest achievement was?
-It was not an easy job to put the bank on its feet. I, personally think that we have managed to create a good bank and we have achieved a lot in such a short time. But the biggest achievement is that we created together a team, one family that is united by a single goal of helping and contributing to the development of our country. That is the biggest success.
When she was appointed as the First Deputy CEO of the Development Bank, many discouraged her, saying that she could not handle such a tough job. But now Mongolia has a Development Bank that is globally recognized. It has been a year since Mongolia’s Development Bank made a home on the global market. Bolormaa has formed a team with 40 young active and creative members. Her knowledge, experience and sensitive mind has determined the goals and aims of the Development Bank. With only six personnel, the Development Bank opened its door last year. Now the organization has become a big family.
-It has been a year since the Development Bank was established. What achievements have been made so for?
-The Development Bank has gathered necessary financial resources for Mongolia. With these resources we aim to implement large development projects. Last year we raised our funds through issuance of 5 year bonds with 5.75 percent interest in international markets. This opens an opportunity for Mongolia to raise funds internationally like any other emerging market countries and if domestic macroeconomic and state budget policies remain prudent we will be able to raise long-term funding through issuance of 10, 15, 20 year bonds.
Our bank has successfully raised funds despite such turbulent times in the financial markets and these resources allowed us to implement important economic projects. We approved MNT 415.6 billion for 7 rural area roads of total 662 kilometres and MNT 98.6 billion for 13 roads in the Ulaanbaatar city. The contracted companies have started their construction work. Also, we approved design works for the construction of around 3,300 kilometres of roads in rural areas. The Development Bank is financing the first three phases of the Buyant-Ukhaa 2,000 Housing project, which is to be developed by the Housing Finance Corporation.
We also provided MNT 50 billion for the State bank for 6% mortgage program for low and middle income families. At present, we are working to approve MNT 50 billion for the Small-medium Enterprises Fund that will help to create new jobs in rural area. Going forward, we will finance road and railroad projects, processing plants in Sainshand industrial park and other strategic projects once feasibility studies and tender processes complete. Creating a happy society with jobs and education is the duty of the Development Bank. With its purpose to establish an independent and diversified economy, the bank aims to support strategically important sectors, thus creating new jobs.
-What are some of the successes the bank made this year?
-As the main financing body for the strategic projects in Mongolia, the Development Bank needs to develop its relations with foreign investors, banks, financial organizations as well as project companies. Cooperation agreements and memorandums were signed with the leading organizations, banks and development funds, such as the Japan's Sumimoto Mitsui Banking Corporation, the Development Bank of China, and the US Exim and China Exim banks.
Behind each signature on the agreements are plans and priorities. For example, under cooperation agreement with the Japanese bank we intend to bring high technologies for Sainshand processing plants. Recently we approved a loan for MIAT to purchase 2 Boeing airplanes, which is will be financed further by US Exim bank. Currently we received a project to develop the ger districts of Ulaanbaatar with the help of energy saving technology from America.
-Does the bank independence sometimes is challenged?
-Our main policy is to keep our independence. The Development Bank’s contribution to the economic development will be significant if its independence is kept intact. As a financial organization, the risks are carefully measured and controlled in order to maintain its long term stability. Financing revenue generating good projects will improve the bank’s financial capacity and as a result diversify domestic economy that will lead to sustainable development.
In addition to legalizing the bank’s independence through law, the bank should sign a contract with the Government and Ministry of Finance every year, strengthening its independence. The Development Bank is the key to a sustainable development. Thus, the ticket must be guarded with care. If that ticket becomes invalid, then the country will face huge risks.
-What is your opinion on corporate governance? Are there any good examples of corporate governance in Mongolia.
-The Development Bank was finally established after many years of discussion. Thus, we strive to create a strong viable bank with good governance, prudent management and sustainable operations. If any Development Bank is in a risk of default it will be viewed as a sovereign risk and the country will be perceived as at risk. Thus, the Ministry of Finance, the Bank of Mongolia and the government have to support the Development Bank with comprehensive and targeted policy. If each organization carries policies that are contradictory, which hinder economic and financial stability the country could be at risk. As a result our economic development could be delayed further.
Development banks in Germany, South Korea and in China have managed to develop their country due to this comprehensive policy support. Good corporate governance is the secret ingredient. For our bank to develop such corporate governance we need long term financial strategy of the country.
Mongolia needs a medium-term economic policy that is not constantly revised, amended as we have now. Many resolutions targeted at our bank get delayed or changed frequently and deficiencies in our law create challenges for bank’s stable operation. Furthermore, ability for the bank to choose its own projects to finance may hinder our operations if not implemented in the short term. In other countries, the government defines strategic sectors for their development bank to finance and then the bank independently chooses projects it will invest in. That allows the organization to be become the main driver behind the economy growth.
-Do you feel politics interfere with the Development Bank’s business?
-If we look into other developed countries there is very little politicization. Singapore and Switzerland are great examples of this. Although political parties may have their differences in their development policies, when it comes to ministries or agencies that are responsible for the implementation of these policies politicization disappears. But in Mongolia, involvement from political parties in the implementation ministries and agencies slow down the economic development.
Of course, the elected party should hold on to its economic policy. However, for implementation and enforcement of these policies, they should leave it to the professionals. In turn, the government can request responsibilities and professionalism from public servants. Political involvement won’t solve everything. People need to be educated before politics get involved. We need professionals in every level of the society. A country will develop only when its youth strives for knowledge and education to a better future.
-Your contract with the Development Bank is nearing its end. What would you say your biggest achievement was?
-It was not an easy job to put the bank on its feet. I, personally think that we have managed to create a good bank and we have achieved a lot in such a short time. But the biggest achievement is that we created together a team, one family that is united by a single goal of helping and contributing to the development of our country. That is the biggest success.
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