IFC holds joint corporate governance forum to enhance investor protection, develop capital markets in Mongolia www.developmentaid.org
IFC, a member of the World Bank Group, held the 10th annual Corporate Governance Forum in Ulaanbaatar. The event focused on enhancing investor protection, which is timely, as almost half of the state-owned enterprises in Mongolia are to be privatized over the next two years. The forum was co-hosted by the Financial Regulatory Commission (FRC) of Mongolia and the Corporate Governance Development Center (CGDC).
More than 100 regulators, policymakers, business leaders, and corporate governance professionals attended the forum. Experts highlighted the importance of proper disclosure and transparency in companies’ reporting to better protect investors. They also discussed the latest local and international regulatory developments related to corporate governance.
“Attracting both foreign and local investment is important for the Mongolian economy, but we need to make sure that our corporate governance standards meet international best practices and provide adequate protection for investors,” said FRC Chairman Davaasuren Sodnomdarjaa. “Good corporate governance is essential to building sustainable companies and further developing Mongolia’s capital markets.”
Investor protection is gaining prominence, especially because public participation in the Mongolian stock market is likely to increase after the government’s recent approval of a plan to privatize almost half of the state-owned enterprises between now and 2020.
Since its inception 26 years ago, the Mongolian Stock Exchange has made tremendous progress, recording its highest turnover last year. Market capitalization rose about 67 percent compared to five years ago, with several successful initial and secondary public offerings attracting interest from both foreign and Mongolian investors.
The Mongolian translation of the G20/OECD Principles of Corporate Governance, a globally recognized benchmark for assessing and improving governance practices, was also launched at the forum. Studies show that stronger governance enhances company performance and reduces risks, thus making such companies more attractive to investors.
“To build a vibrant capital market, Mongolia needs to strengthen the supervision of listed companies and enforcement of market regulations. Introducing international principles and standards will cultivate a stronger corporate governance culture among Mongolian companies,” said Tuyen D. Nguyen, IFC Resident Representative in Mongolia. “We believe the forum will help regulators and other market participants to stay on top of the latest developments and adopt effective measures to cope with emerging governance issues.”
Since 2009, IFC has been supporting Mongolia’s efforts to enhance corporate governance practices, including the development of a corporate governance scorecard in 2013 and regulations governing related-party disclosures to protect minority investors. These efforts are part of the broader IFC Corporate Governance Program in East Asia and the Pacific, which is implemented in partnership with the State Secretariat for Economic Affairs of Switzerland.