Mongolia: Focus On Investment In Tourism

With the 2015 target date by which Mongolia hopes to welcome 1m visitors per year drawing nearer, officials are calling on the government to channel investment into the country’s tourism industry and take specific steps to encourage greater private sector participation.

Mongolia’s wealth of attractions, such as its fossil fields in the Gobi Desert and the diversity of its unspoiled landscapes, should provide solid foundations to develop the tourism sector and tap niche markets.
But officials have voiced concerns that underinvestment in the industry and a lack of action aimed at driving growth are restricting its potential, with some critics questioning whether tourism risks being eclipsed by the country’s dominant mining sector.
Figures show that the number of people coming to Mongolia is on the rise, with visitor numbers up 11% in the past three years and revenues showing an increase of 32.5% for the same period. However, with tourism still only contributing around 5% to GDP, industry officials are calling for tangible measures to be put in place aimed at generating sectoral growth. In particular, they highlight the need for investment in transport infrastructure, internet and communications connections, high-quality hotel accommodation, flight links and human resources.
“Investment is needed to create a productive tourism sector,” Ts. Orgodol, the head of tourism at the Ministry of Nature, Environment and Tourism, told the Mongolian Economy magazine in June. “Instead of just talking we must start taking action. The government must create a favourable environment for the private sector to operate.”
Orgodol said Mongolia lacked platforms, such as research centres and museums, which would enable the country to share its rich history with visitors. “Today we are not able to tell those great historical stories and display them through exhibits,” he said.
With expansion in Mongolia’s tourism industry slower than industry officials would like, Orgodol, along with others, also fears that the sector is missing out on opportunities to attract good quality human resources, such as translators, guides, managers and accountants, who are instead opting to take up employment in mining.
Some officials, such as B. Indraa, the director of the Mongolian National Tourism Organisation, have additional worries that mining could threaten elements of the country’s heritage. In June, Indraa voiced her concerns on hearing that mining companies had acquired land-use rights in places of historic interest, including the Bichigt Khad Valley, the Darkhad Valley and the sacred meditation sites of Danzanravjaa.
“It’s sad to see the landscape and culture in many areas of Mongolia are irreversibly changing because of mining. There’s no escaping the fact,” she told the Inter Press Service.
While there is frustration among those who believe mining has contributed to delays in the government’s efforts to drive up visitor numbers, some tourism officials acknowledge that the lucrative extractive industries can also play a key role in providing the funds for much-needed infrastructure development.
N. Erdenebat, the vice president of the Mongolian Tourism Association, pointed out that other resource-rich countries had successfully adopted this strategy. “We can reach the level of countries such as Canada, Australia, Chile, Malaysia, and Arabic countries, which all invested their resource profits into their tourism industries,” he said.
Mongolia has already taken the first step along this path by using mining revenues to partially finance the country’s forthcoming Khushigiin Khundii International Airport, which is expected to be a key component in driving tourism growth and improving domestic links.
The mining industry is also proving to be a key driver in Ulaanbaatar’s development, leading to an influx of expatriate workers, investment in public transport, and a wave of major retail brand shop openings. The Hong Kong-based Shangri-La Group, along with MCS Holding, Mongolia, plans to open a 273-room hotel in the capital city by 2013 on the back of the city’s expansion, while Hyatt Regency Ulaanbaatar is to build a 259-room facility which is scheduled for completion the following year.
While concerns remain about the pace at which Mongolia’s tourism sector is expanding, most industry players acknowledge that pushing for resource revenues to be channelled into the industry rather than targeting mining is the way forward. Certainly, Mongolia’s rich resources could be key in the country’s efforts to fund the new infrastructure and marketing initiatives that its tourism industry needs to drive growth.
(Source: Oxfordbusinessgroup)

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