B.Uyanga: DBM not only provides loans, but also supports development projects it financedEconomy
We interviewed B.Uyanga, Director of Credit Financing Department of the Development Bank of Mongolia.
- To start with, please introduce us the activities and goals of the Development Bank of Mongolia (DBM)?
The Development Bank of Mongolia (DBM) was officially inaugurated and began its operations in 2011. DBM works to provide financing of large-scale projects and programs for Mongolia’s development as well as to support and track the results of the development projects. The Law on Development Bank of Mongolia was revised in 2017 with primary amendments made to ensure that not less than 60 percent of the DBM’s funding to be provided for export-oriented projects and programs. In this respect, the DBM has been mainly financing projects, enterprises and factories that are working to export their outputs abroad. In addition, we provide funding to major projects of imports, infrastructure and power plant. According to the aforementioned law, all of these shall adhere to government’s midterm and long-term development policies.
- Could you tell us about the goals you have set for this year?
First of all, we are working on non-performing and problem loans by announcing this year as the year to deal with problem debts. Furthermore, DBM’s improvement of domestic regulation, loan issuing activities as well as internal restructuring, reorganization and enhancement of corporate governance are being carried out. Not to mention the main operations toward the country’s economic growth, to fund export projects and programs. Goals for this year focus by and large on these three directions.
Most importantly, apart from loan issuing activities, we are working together with government and non-government organizations to bolster the loan investments provided to entities and tackle challenges of exporting faced by them. For instance, DBM has been maintaining cooperation with ‘Export International Trade Center’ NGO since 2015, giving support to exporting entities to sell their products to the USA, Canada and Japan and European markets.
DBM’s efforts to assist the lending entities and projects include organizing meetings with government departments in charge of trade, chambers of commerce and other relevant organization of foreign countries, delivering information on documents required for exports and document preparation and studying what products made in Mongolia attract the most attention of overseas customers. This implies that when providing services and loans, DBM works together with the companies and development projects it funded until they are fully completed to show tangible results and profits with eventual intention toward the nation’s future growth.
Could you introduce loan and financing indicators of your bank?
As of today, our bank has loan portfolio of MNT 2.7 trillion. Besides giving direct loans to major projects and programs, we provide funding to commercial banks. In other words we finance small and medium sized enterprises through commercial banks. Currently, we have funded 15 programs through 11 commercial banks. Number of entrepreneurs and entities that received financing reached 1700 now. Whereas direct loans granted by our bank, has been given to 74 loan holders or such number of projects and programs.
1700 entities are not a small number. How effective are the loans being granted through commercial banks?
These loans are effective. Commercial banks take their risks at 100 percent, studying the loan requests themselves. Finally, they submit their request to our bank with suggested factories and entities to provide loans. After running selections, relevant ministries also send a list of the factories and entities that are considered proper to support. The commercial banks study these entities and our bank provides loans to the selected entities. There is not any risk on loans being given through commercial banks and repayment of loans is running at 100 percent without any problem.
What about loan disbursement by sectors or purpose?
40 percent of loan portfolio is allocated to processing industry, 24.2 percent to construction sector, 16.3 percent to indirect loans or commercial banks, 10.6 percent to mining, 8.3 percent to energy and 2.6 percent to other sectors.
I heard that the Development Bank would support ‘Export Mongolia-2019’ international business forum to be held in Mongolia on October 28-29. Could you elaborate it?
As we finance projects and programs targeted to export, our bank will involve the exporting entities that have got loans from our bank in the forum and provide information. ‘Export Mongolia’ forum will be held for the 5th time. Previously, only domestic companies and entities used to attend the forum, but this year many international organizations will take part and bilateral and trilateral meetings will be held in a wider range. Financial institutes, which promote businesses, will participate as well. We will introduce our projects and programs at the forum.
The Development Bank of Mongolia has right to draw its funds and financing from foreign sources. The bank issues various types of bonds and collaborates with international banks and financial institutes.