FILE PHOTO: Steaming water, discharged from a coal-to-gas plant in Inner Mongolia, China spreads out over the landscape, Dec. 13, 2013. Resource-rich but sparsely populated, Mongolia is enjoying a boom from rising commodity prices. - Seattle Times/MCT
SINGAPORE: Mongolia's sovereign wealth fund is preparing to appoint independent board members, hire external advisers and adopt a transparent investment strategy as the resource-rich nation sets out an ambitious development plan.
The Chinggis Khaan Sovereign Wealth Fund was established by law in April last year, has US$1.4 billion in assets and expects to finalise its plans in the first half of 2026. It is named after the founder of the Mongol Empire, also known as Genghis Khan, who conquered a large swath of Asia.
Mongolia joins a host of resource-rich Asian and Gulf nations that have established sovereign wealth funds, as well as a clutch of others that have set out their ambitions more recently, including Taiwan, Indonesia and the United States.
"The sovereign wealth fund was set up to build trust between the mining investors and the people of Mongolia," CEO Temuulen Bayaraa said in an interview at the Milken Institute Asia Summit in Singapore.
After more than 17 years of deliberations and national consensus building, "we really needed to make sure it's legislated, it's clear and it's rules-based."
Resource-rich but sparsely populated, Mongolia is enjoying a boom from rising commodity prices but has also witnessed persistent corruption, which led to street protests that toppled the country's government in June.
To address this mistrust, Bayaraa says the fund will create an app so every citizen can see "where we're allocating and putting assets, where revenue sources are coming from, which companies and how much, and what share each citizen is able to benefit from," she said.
The Chinggis Fund will have a tripartite structure akin to Singapore, which allocates funds for strategic investments, public pension provision and support for local companies.
A future heritage fund will reinvest royalties from mineral exports in investments overseas, while a savings fund will be financed by dividends from state-owned mining companies. A development fund funded by windfall taxes on commodity prices will act as an anchor investor in infrastructure projects to attract overseas capital.
The Chinggis Fund is fully owned by Erdenes Mongol, a holding company which owns shares in the country's mineral deposits.
Financial oversight of the fund will sit with the Ministry of Finance and is intended to replicate the structure of the Government Pension Fund of Norway, which runs the US$1.9 trillion Norges Bank Investment Management.
Bayaraa, a software entrepreneur, says the fund is writing its investment policy statement for the year ahead and preparing to hire independent directors for its board. For now, its existing portfolio is allocated in a "very conservative" manner with a lockup until 2030.
"For now, my job is to set solid foundations," she added. - Reuters
