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Wednesday, July 6, 2011




Mongolia Briefing is a magazine and daily news service about doing business in Mongolia. We cover topics relating to the Mongolian economy, the market in Mongolia, foreign direct investment and Mongolian law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates



Tourism Sector Accounts for Nearly 4% of Mongolia’s GDP

Mar. 16 – Mongolia’s travel and tourism sector directly contributed around US$256.3 million to the country’s gross domestic product in 2011, accounting for almost 4 percent of the total. Furthermore, it is forecast to rise by 7.3 percent in 2012, according to the World Travel and Tourist Council’s (WTTC) recent report titled, “Travel and Tourism: Economic Impact. Mongolia.”

The total contribution of the industry – direct, indirect and induced – is even larger and accounts for US$592.4 million, or 9 percent of Mongolia’s GDP, and is forecasted to rise by 6.4 percent in 2012. By comparison, the global average for direct industry contribution to GDP is 5.12 percent and for overall economic impact – 13.8 percent.

The WTTC defines “direct contribution” as economic activity generated by hotels, travel agencies, airlines and other passenger transportation services, and activities in businesses supported by tourists – like cafés, restaurants and leisure industries.

According to the data of Mongolia’s National Tourism Centre (MNTC), some 457,514 tourists visited Mongolia last year, among which China accounted for 198,191 (43.4 percent), followed by Russia with 102,733 (22.5 percent). The other three rounding out the top five were South Korea with 9.6 percent and the United States and Japan with 3.3 percent each.

The MNTC estimates that in 2010 some 350,000 foreign visitors spent between three to seven days in the country. Meanwhile, according to market players, significant numbers of Russian and Chinese travelers are shuttle traders rather than tourists.

Last year, an estimated 157,817 tourists came to Mongolia from different states of the European Union. A similar number of tourists came from Australia (7,093), the UK (7,120), while a slightly bigger number of travelers came to Mongolia from Kazakhstan (7,914) in 2011.

The number of tourists – 457,514 ¬– may seem relatively low compared with other popular holiday destinations in Asia, but the number of tourists coming to the country is notably large considering the size of the local population, which is less than 3 million people.

In 2012, Mongolia is expected to attract 467,000 international tourist arrivals, the report says.

The sector is expected to have attracted capital investment of US$403.759 million in 2011. This is expected to rise by 15 percent in 2012, and rise by 6.7 percent annually over the next 10 years to US$885.488 million in 2022.

The seasonality of Mongolia’s tourism sector is significant. The annual temperature range is considerable with winter temperatures potentially dropping down to -40° C, while summer temperatures can reach +45° C. Currently, 80 percent of travelers come during the summer months.

The sector employs roughly 39,000 people, accounting for 3.3 percent of the country’s employment, WTTC data shows. This is expected to rise by 5.1 percent in 2012 and rise by 0.9 percent to 40,000 jobs (2.9 percent of total employment) by 2022. The sector directly and indirectly supports 92,000 jobs, approximately 7.8 percent of the total. This is forecast to raise by 2.4 percent in 2012 to 94,500 jobs.

The internal tourist market is also growing. The WTTC estimates 46.3 percent of direct industry GDP is generated by domestic spending, totaling US$163.75 million in 2011. This is likely to rise to US$366.05 million by 2021.

WTTC calculates that business travel spending accounted for 34.1 percent of direct sector GDP in 2011, or US$169.26 million.

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