Four key themes for Mongolia’s future

The history of my country, Mongolia, has been similar to our terrain – highs as monumental as our mountains, and flatter periods not too different from our rolling plateaus. This is what one would expect from a country with such a long and rich past. But today I can say that we are ready to scale new heights.

Armed with the recommendations from the Forum’s Scenarios for Mongolia project, we have been carrying out bold reforms. So what are they? I would loosely divide them into four areas: stability, transparency, collaboration and diversification.

Stability

In this year’s Global Competitiveness Report, policy instability was ranked as the fourth biggest barrier to doing business; government instability was ranked second. It is clear from these findings that one of the main ways to attract foreign investment is to provide a stable environment for companies. Businesses want predictable and non-discriminatory regulations, and they want to do away with unnecessary administrative bottlenecks.

It is this type of stable environment that we have been seeking to create for investors through our reforms.

Transparency

Each year, the World Bank publishes its Doing Business report, which measures business regulations and how they are enforced. This year’s report identified transparency as one of the most important factors for those looking to invest in a country: “An institutional environment characterized by openness and transparency is of central importance.” Transparency is something that we have been taking very seriously in Mongolia.

Around a year ago, we launched a “smart government” initiative aimed at improving the quality of governance and public administration, and making it easier for those wanting to invest in our country. As part of this initiative, we adopted a budget transparency law – we call it the glass account law. Under this law, public officials must make their expenditure public within seven days of making the spending decision. It invites greater responsibility and openness.

Another example of how we are trying to increase transparency in decision-making is our moratorium on the creation of new state enterprises and limits on government commercial activities. One-third of existing permits and licenses have been eliminated, one-third of them were shifted to private institutions and professional organizations, and the remaining one-third will be made available online.

Collaboration

According to the Forum’s research, “Mongolia’s future depends on engagement with its neighbours.” We are well aware that in a globalized world, no country can succeed in isolation. This is why we have also been actively developing international relations with our neighbouring countries and beyond.

The recently concluded transparency agreement with the United States is one example of this, as is the accord to sign an economic partnership agreement with Japan.

On top of that, in 2014, we held the first ever tri-partite summit with our two immediate neighbours, Russia and China. The summit, which focused on how we can resolve many important economic issues, was an opportunity to boost our relations with these two important countries. It will also lay the groundwork for developing trade relations with our third neighbours.

Diversification

Thanks to our wealth of natural resources and our young and educated population, Mongolia has huge potential. Over the past few years, we have been one of the fastest growing economies in the world. We have the 10th largest reserves of gold, copper and coal. We have more than 51 million livestock and are the second biggest supplier of raw cashmere. We have great opportunities for cooperation in the field of geology, mining, renewable energy, agriculture and tourism.

But as the World Economic Forum noted in their Scenarios for Mongolia report, turning all this potential into reality depends on diversification. We agree. That’s why in 2014 we considerably shifted our inbound investment to non-mining industries such as agri-business, healthcare, manufacturing and tourism. We’ve also diversified in terms of the geographical sources of inbound investment, which now includes South Asia, North-East Asia and the EU on top of our traditional investors from North America and Australia.

This year we plan to carry on with this process of diversification, with an emphasis on manufacturing, and will continue to encourage all types of investment – from portfolio investment to project financing – as well as honouring public-private partnerships.

Looking ahead

All of these reforms are aimed at making Mongolia a country more appealing to investors. Investing in a country takes substantial effort from businesses, and they calculate their risks prudently. Risks associated with confidence, rule of law and the political situation of a host country are of major concern.

We are a democratic country that respects freedom, human rights, the rule of law, accountability and openness. The reforms we have put in place are aimed at securing and reinforcing these traits and sending out a clear message to the international community: “Mongolia is open for business.”

Author: Tsakhiagiin Elbegdorj is the President of Mongolia.

Image: A ‘ger’ camp is seen near Kharkhorin in Mongolia August 20, 2006. REUTERS/Nicky Loh