MONGOLIA TO BE COMPETITIVE WITH ITS SOCIAL AND ECONOMIC DEVELOPMENT IN THE ASIA PACIFIC REGION BY 2050
Minister of Mongolia, Head of the Cabinet Secretariat Oyun-Erdene Luvsannamsrai is one of the leading young politicians of Mongolia. Elected as a Member of the State Great Khural (Mongolian parliament) since 2016, and appointed as Minister of Mongolia, Head of the Cabinet Secretariat since early 2019, he was the one to lead the working group to develop the ‘Vision-2050’ long term development policy of Mongolia. We held an interview with him to discuss ‘Vision-2050’ policy document, which laid out the country’s development plans for the next 30 years.
Born in 1980, L.Oyun-Erdene majored in journalism, political science, and law. He also has a Master’s degree in Public Administration, of which studies he completed at the Harvard University of the United States in 2015.
It has been 30 years since Mongolia transitioned into democracy.
The past 30 years is regarded to have been years of major changes and reform in your country.
Yes, Mongolia’s GDP has increased from USD 768.4 million in 1993 to USD 13.8 billion today, having grown by 17.9 times compared to then. From just the numbers, this is a considerable achievement. However, 28.4 percent of the total population continues to have lower than average quality of life. Thus, the Government of Mongolia is faced with the challenge to give special attention to our citizens’ quality of life in the coming years.
To do this, we came to the conclusion that we had to look back on the past 30 years as a whole, and develop a long-term development policy that envisions the entirety of the next 30 years. With the approval of the ‘Vision-2050’ policy document, additional amendments were also made to the Constitution according to the document. To put it simply, the year of 2021 will be the start of a new set of 30 years for the citizens of Mongolia.
Could you elaborate on the constitutional amendments?
How does the development policy correlate with the Constitution?
In short, the average “life expectancy” for the Government of Mongolia was 1.7 years in the past 30 years. Although there are many factors that resulted in this, it was found that the issue was mainly caused by a structural issue rooted in the Constitution. Due to unstable governance, development policies were not properly implemented and did not have correlation in between, which affected the core indicators of development.
So, it could be said that with the amendments to the Constitution, the legal foundation to ensure governance stability has been put. Furthermore, the Constitution now reflects that development policies are to be stable and have correlation. It has also become possible for the Prime Minister to bring together the members of his Cabinet independently.
What is the main feature of ‘Vision-2050’ policy document?
Vision-2050’ is a ‘Mongol development model’ that brings together the history of the Mongol Empire, nomadic culture, and unique national characteristics with the modern development ideology being followed internationally. Prior to 1990, our development model was mostly replicated from those of the USSR, then began to follow the lead of western countries from 1992. Directly “copying” them without adapting them to our characteristics and condition was perhaps a mistake in the past 30 years.
This was corrected in the ‘Vision-2050’ policy document. That’s why it is being referred to as the Mongol development model. Some 1,500 experts from all sectors came together to work on the development policy for the course of over a year. For the coming 30 years, you could say that our objective is to make big changes in our economic structure by reducing the overdependence on mining, and transition from a consumer economy into a manufacturing and export economy. Consisting of 9 goals and 47 objectives, it will be implemented in 3 phases, each for 10 years. We also have a vision to increase our current GDP per person of USD 4,000 to USD 12,054 by 2030, and over USD 38,359 by 2050.
What will be the priority areas for the economic development of Mongolia in the next 30 years? Anything of interest for foreign investors?
First things first, we will make investments in establishing factories and refineries for mining products—especially products such as copper concentrate, coking coal, iron ore as well as gold and silver.
Large-scale infrastructure projects to connect these refineries will also begin to be implemented. In aims of developing all the other sectors aside from mining, projects with considerable investment are planned to be implemented in the sectors of agriculture, energy, tourism, transport and logistics, science, and IT as well as the creative industry. We are currently working to create highly favorable conditions for foreign investment in regards to taxation and legal framework. Moreover, most of these large-scale projects will be implemented through the partnership of the public and private sectors.
What will be the priority areas for the economic development of Mongolia in the next 30 years? Anything of interest for foreign investors?
First things first, we will make investments in establishing factories and refineries for mining products—especially products such as copper concentrate, coking coal, iron ore as well as gold and silver.
Large-scale infrastructure projects to connect these refineries will also begin to be implemented. In aims of developing all the other sectors aside from mining, projects with considerable investment are planned to be implemented in the sectors of agriculture, energy, tourism, transport and logistics, science, and IT as well as the creative industry. We are currently working to create highly favorable conditions for foreign investment in regards to taxation and legal framework. Moreover, most of these large-scale projects will be implemented through the partnership of the public and private sectors.
Foreign cooperation and investment would certainly be needed in successfully implementing the abovementioned joint projects. Could you elaborate on how cooperation will be carried out with other countries?
Yes, as one would expect, the Government will not be carrying out all the projects on its own. We perceive that these projects will be implemented through the partnership of public and private sectors, foreign investment, and in cooperation with foreign large-scale projects and programs. It could be considered that the ‘Vision-2050’ policy document is based on the long- term plans and policies of countries that are able to cooperate with Mongolia in regards to economy, such as our neighbours, the US, India, Japan, South Korea, Canada, and Germany. To take some examples, projects are currently successfully being implemented or in its preparation phase with China in mining export and trade, with Russia in mining and railway construction, with Canada in the underground mine of Oyu Tolgoi, and with India in the oil refinery and coal export. In addition, we are actively cooperating with Estonia in e-governance, with Singapore in housing and a Central Provident Fund system, and with South Korea in building the capacity of state servants.
We are open to cooperate with all those who can be involved—which is why we wish for people of many countries to learn about the new development policy of Mongolia, to actively carry out cooperation, and to jointly develop.
What about information technology sector?
Information technology one of the leading sectors of Mongolia which already created a number of advantages for the country. We have many IT experts who are working and bringing values with their skills to many international technology companies. Now, we already have a number of companies who are competing in the international markets. I can name a few. For instance, And Global LLC who recently started its fintech business in Asia, just signed a partnership agreement with Marubeni Corporation on providing innovative information technology across the globe. Erxes LLC, which was evaluated at 18$ million has been providing its open source program B2B service to over 100 countries. Also, Call Pro LLC has been proving its communication service to Central Asian countries and the users increased dramatically since the pandemic started. World Plus Digital LLC created an application which provides read-see-listen services to the world as it includes all the popular journals, magazines and newspapers around the world.
Shoppy.mn is an e-commerce platform or we can say it is Mongolia’s Amazon which has been providing its service during the recent lockdown.
There is much information that a significant amount of controversial issue has been created relating to Oyu Tolgoi mining project?
As for the Oyu Tolgoi project, a Government working group has been established, and talks are underway with the investors. There are issues that are inevitable to be negotiated, such as the feasibility study for the project, power plant, and tax matters.
In connection with the changes in the investor’s management composition, currently, several works are in anticipation. I am confident that the controversial issues will be resolved positively by mutual consent.
Mongolia has a vast territory and low population density. How do you define the country’s regional development in the development policy document for the next 30 years?
Mongolia is linking its concept of regional development to the economic prospect. We are making preparations to announce the Gobi region, where major mining and industrial projects are being implemented, as a mining and heavy industry zone, Selenge and Darkhan-Uul aimags that have fertile soils as an agricultural and farming zone, and the western region, where energy projects are being realized, as an energy zone, as well as the historical and cultural areas and lands with beautiful natural formations as a natural and historical tourism zone.
We have a lot of potential for food exports. Mongolian livestock still has the advantage of being nomadic. Organic food products without any chemicals or fertilizers can be supplied from Mongolia. In recent years, we have been paying much attention to the quality requirements on food preparations in accordance with international standards.
I think it is true that some Japanese researchers say that the strength of Mongolian wrestlers in sumo is related to their healthy food.
Mongolia’s statehood traditions from the time of the ancient Xiongnu to that of established by Chinggis Khaan in the 13th century and the pristine nature have been remained unchanged, which attract tourists’ interest much.
Mongolia can be said the first nomadic country in the world and is still preserving its nomadic lifestyle. Mongolia is the only place where visitors can get acquainted with real nomadic life and travel to pristine nature by enjoying the big sunrise in the Gobi and visiting the untouched natural places that were mentioned in the historical sources. We have long-term plan to attract tourists through the Asia-Pacific region.
How many tourists does Mongolia receive annually now?
Mongolia receives approximately 600 thousand foreign tourists a year. This is very unsatisfactory. The countries, which receive the most tourists in the world, are located around Mongolia. In short, there is a lot of tourist potential. The annual number of tourists to our two neighbors, S.Korea and Japan alone, is 239.6 million. The major policy changes, included in the ‘Vision 2050’, will be made in the tourism sector. There will be many major changes in the coming years, such as the liberalization of air transport, digitalization of visa services, enforcement of international tourism standards as well as great focus on security.
You have said above that in the implementation of significant projects that are pillars for future development, Mongolia will actively collaborate at the international level through attracting foreign investment. So, could you tell me about the present state and environment for foreign investment in Mongolia? How do you plan to improve the legal environment for investment in the future?
Mongolia is a democratic country with a parliamentary system, situated between two big neighbours. That’s why the country considers it important to have active international cooperation and open international investment, and has been pursuing an open policy to be connected with other countries through large-scale projects. Of course, there are issues that foreign investors face when they communicate with us directly. For example, most Mongolian laws, government documents, and websites of ministries and government agencies are only in Mongolian language. People interested in cooperation and investment have limited access to information without the help of interpreters or intermediaries. Therefore, we are focusing on translating laws and websites into English.
Second, foreign investors sometimes do not know where to apply. Therefore, we will strengthen and ensure sustainable operation of the state administrative body for foreign investment. Investors can visit the organization in person or receive information by phone, for example. We are working on this work to complete by 2024, so that the legal environment for foreign investment will be understandable and have one rule for the game.
Mongolia is to have a one-window policy for foreign affairs. In other words, Mongolia aims to become a Digital Mongolia; thus it is implementing a major project named “E-Mongolia” that meets international standards, allowing both Mongolians and foreigners to set up companies, invest, obtain services, and get visa facilitation without having a face-to-face meeting with government officials. This project is being implemented in two phases. The first phase, shifting all public services of Mongolia into electronic form, is progressing well. The second phase is the “E-Citizen” menu for investors. If you want to invest in our country, or maybe want to rent an apartment, it is the phase that enables to conduct social and economic relations, sitting at your computer without coming to Mongolia. By doing so, it will create a favorable environment for investment in Mongolia.
Mongolia has big market not only for mining but also organic food, agricultural products, cashmere products, energy, transportation logistics, tourism and creative industry. There are full of possibilities and opportunities to cooperate in these fields.
International promotional activities or advertising of Mongolia do not seem sufficient even though it has a great role in cooperation expansion and investment attraction. So, you would certainly put emphasis on the country’s promotion abroad. What policy will you be using? What activities are underway and what are planned?
I agree. The international promotional activities have been inactive. In light of that, we are starting to take certain steps. We will put more emphasis on the matter in the future. In particular, the country is actively working to promote its policy, stance, and activities in collaboration with major world news outlets and agencies. In short, we will be promoting the country’s opportunities, investment climate, foreign cooperation, culture, and history more in the future.
Countries are focusing more on regional development and solving challenges together as the world globalizes. There is a special goal for regional cooperation reflected in the “Vision 2050” policy document. What measures are planned as part of the goal to enhance trade and economic cooperation with the regional countries?
It will be our policy to diversity the economy by developing the sectors that are competitive in the long-term and expanding export possibilities and markets through joining the regional trade and economic integration and facilitating trade. Through improvement of the Mongolia-Russia-China trilateral agreement on the economic corridor establishment, we plan to implement infrastructure development projects to enhance transport, logistics, urban development, cross-border trade, and tourism. The matter of building a natural gas pipeline connecting Russia, Mongolia, and China is being solved through trilateral talks. This major regional development work is not only a project of great significance for the country’s economy, but also it will open a new page for economic cooperation with our two eternal neighbors and has an important role in joining the cooperation integration. The country can develop an integrated transport and logistics network to connect domestic and international markets and improve its transit transport agreements for efficient use of transport infrastructure, thereby developing transport and logistics as a key economic sector.
I would like to ask more casual questions as our interview is nearing its end. There are a couple of good news I most recently heard about Mongolia. One is that air pollution in the country’s capital, Ulaanbaatar, has been reduced by 50 percent in a year and the other is about the country’s removal from the “grey list” of Financial Action Task Force (FATF).
Thank you for the question. The Government of Mongolia has been finding solutions to major issues. It can be said that we could solve the issues as reflecting the science-based definition of the causes of the problems into government policy.
The achievement of the 50 per cent reduction in air pollution is the result of Prime Minister U.Khurelsukh’s bold decision. In other words, the suggestion on the research-based solution to switch from raw coal to refined coal made by the country’s academy of sciences and scientists has been realized. We will put great emphasis on housing construction and infrastructure extensions as the medium term solution.
The country had been added to the “grey list” for its poor solution of financial crimes. We got removed from the list in less than a year by making a realistic assessment of the problem and taking certain measures. In fact, Mongolia is taking numerous measures to combat corruption and develop good governance. There are also actions relating to judicial reform. I am pleased that our being removed from the “grey list” thanks to past advancements, was a good news to FATF and our partner organizations.
The last question is about the COVID-19 that has been shaking the world. The World Health Organization has reiterated that Mongolia is one of the countries with the best management fighting against COVID-19. It is the fact that your country achieved 10 months with no local transmissions of the disease when the coronavirus spread in your two neighbors and across the globe. What is the secret behind it?
There is no such thing as a secret. Most importantly, the country’s small population and low population density have been advantage to us. Moreover, local transmissions were prevented for 10 months as Mongolia promptly shifted to movement restriction regime as soon as the pandemic started to spread across the world. The Government is still actively working to curb the spread of the disease. We have the hope that the problem will not get out of control. The reason of the hope is that the country has family health centers. In other words, we will be able to vaccinate the population with promptitude when the vaccine becomes available.
Lastly, I would like to express my sincere wish that 2021 will be the year which the mankind successfully overcomes the COVID-19 and my hope that the global economy and “normal life” that plunged due to the coronavirus will accordingly show sharp recovery and growth.