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http://zgm.mn/post/1419/

War against West

​Rumors about foreign investors dismantling Mongolia’s economy are nothing new​

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http://zgm.mn/post/1419/


THE FIRST WAR AGAINST THE WEST

Rumors about foreign investors dismantling Mongolia’s economy are nothing new. There is even a history of one of our mighty neighbors conducting such an operation before they established total political and economic control over our country. In the beginning of the 20th century, Mongolia proclaimed their newly regained independence and announced that Chinggis Khaan’s steppes woke up from their slumber. The world became interested in Mongolians, who were quietly sleeping under the Manchu or Qin rule for several centuries. In general, that was an interesting period when the world was set in motion and the kindling of two great wars that will change the political map of our planet several times started smoking. Christian priests headed by Frans August Larson, who later received a title of Duke from Bogd Khaan, came to Mongolia. Danish farmers, such as Henning Haslund-Christensen, and others moved to Khuvsgul aimag to start a modern livestock breeding and trade firms. Many other countries began operation in Mongolia; for instance, a foreign-invested company called “Mongolor” mined gold and the famous Roy Andrews’ expedition astonished the world with dinosaur eggs found in the Gobi dessert. Along with state flags of the Great White Tsar of Russia and the Chinese Republic, flags of many countries such as the USA, Sweden and Denmark could be seen around the capital of our country.

Since half of Mongolians were herding livestock and the other half were monks, no one was providing the nation with necessary goods. Nobody forbid Mongolian to engage in such works, but Mongolians themselves were not much interested in businesses. Trade and commerce were regarded as an inferior job, and Mongolians disdainfully regarded that “traders are one step away from becoming a thief” and “a spirited thief is better than a soulless merchant”. The “spirited thieves”, who stole livestock, were respected as noble outlaws and the real men. That is why only foreign traders provided Mongolia with three import goods they needed, namely, tea, tobacco and textiles. The traders also bought wool, fur and hides, which were plentiful, from Mongolia so a mutually beneficial business was flourishing. Out of 103,019 puu (1 puu16.3kg) of camel wool, 783,00 puu of cashmere, 979,512 puu of sheep wool transported from Mongolia to Tianjin in 1912 and 122,123 puu of camel wool, 43,231 puu of cashmere, 1,036,629 puu of sheep wool imported in 1913, the majority of camel wool was shipped to England and all of sheep wool went to the USA. Russia bought both wool and cashmere, as well as livestock. For instance, a total of 98,000 cattle were exported to Russian Empire in 1913, 67,700 in 1914 and 80,000 in 1915. “Non- Russian” phrases, such as Machinery Manual and “miles per hour”, shows that a part of Mongolian language remained as witnesses to the fact that technology was first introduced to these steppes from a different place.

Century-old doctrine of condemning foreign investors for potential exploitation is reviving

As such, Mongolia forged relations with the rest of the world, becoming a part of the changing world. In present terms, it was, to a certain degree, a globalization and with each passing days, Mongolia was shaping into a typical independent state with diplomacy of that time. However, the Soviets, who set up their total control upon the Mongolian government by mid-twenties, started a war against foreign capitals in Mongolia. That was the beginning of the first war against foreign investment. Let us see from the history how Soviets wrote about it in their “made up” story for Mongolians. In the history of revolution, it is mentioned that ”…in addition to the oppression over Mongolians, Western Europe and American capitalists conspired with greedy China to rob the country”. Is it not a familiar slogan? It reminds me of slogans against present Oyu Tolgoi, Tavan Tolgoi and Boroo Gold. Both state and civil movements against foreign investors have spread out.

At first, they forbid investors from hanging up their national flags, then froze their bank accounts and lastly, expelled the owners from the country. The last foreign investor left the country in 1928. Just like the phrase “there is no other God than Allah”, only the Soviet economy dominated Mongolia after that. A day later, private properties of Mongolians themselves were confiscated and nationalized under the excuse of “confiscating assets of feudal lords”. If Larson’s property had been confiscated, it might have led to a dispute between Russia and Sweden or Russia and America, which would have delay the exertion of robbing resources off of Mongolia. If the herds of Danish farmers had been given to collective farms, it might have led to a quarrel between Russia and Scandinavian countries and would ultimately make it difficult to take livestock from Mongolia. However, such problems were avoided by conducting a campaign on “chasing away foreign investors” by the hands of Mongolians. That was the beginning of a Red terror against the Mongolian economy and the Mongolian people. As a result, Mongolia lost all of their private properties, a strict limitation was imposed on small amount of properties one could own and one in every five adult males was killed.

THE SECOND WAR AGAINST THE WEST

A decade before the end of the 20th century, the socialist system collapsed on its own. Mongolia had an opportunity to regain their economic and political independence. In my personal view, main achievements of democracy in our country were that, first, the Government of Mongolia no longer had to ask another country to make a decision and, secondly, Mongolia’s economy was free from the control of a single country. In almost three decades into democracy, many foreign investors came to our country, which is making an effort to become a part of the globalized world and striving to reach the standards of modern independent state. Besides, numerous mineral deposits with rich resources were discovered throughout the country. Mongolians’ tradition of inviting skilled people to do the job that we are unable trails back to the ancient times. Households without a man to slaughter a sheep, used to ask their neighbors to do the job and cooked them a breast-bone or gave them the sheep’s leg as a reward afterwards. Aside from collecting dung and ruthlessly cutting wood, Mongolia had limited experience in energy production sphere; thus, the mining industry was established on the back of the Soviet investment in the 20th century.

• Soviets avoided potential disputes with Western countries through a campaign on "chasing away foreign investors" by the hands of Mongolians.

• Aside from collecting dung and ruthlessly cutting wood, Mongolia had limited experience in energy production sphere; thus, the mining industry was established on the back of the Soviet investment in the 20th century.

• The fact that the “hatred towards foreign capitals” excluded our two powerful neighbors seems suspicious.

However, in modern mining, it is inevitable that we cooperate with modern companies and give them the “breast-bone or leg”. Unfortunately, in recent years, the century-old doctrine of condemning foreign investors for potential exploitations is reviving and spreading further. There were rumors about books that detailed the methods of exploiting Mongolia’s economy. Some even cited from the book. Well, there are lots of different books. If these people read the Koran, they would probably say “it is written in the book that there are no other Gods than Allah” and destroy the Gandan temple and break the Megzedjanraiseg statue. An open window lets in fresh air, as well as flies. Since no one would want to suffocate in order to keep off flies, one would open the window and be ready with a fly-swatter. Since anybody can walk in through the open door of Mongolia, one needs to be vigilant and that is what the state is working for. Is the fact that the main objective of the war against foreign investors in Mongolia is directed at Western countries, specifically American and Canadian investors, a sign of history repeating itself? It feels like the fact that the “hatred towards foreign capitals” excluded our two powerful neighbors seems to be proving this point.

I am not saying it is wrong, I am just saying that this exclusion seems suspicious. Chinese companies account for the majority of foreign investments with Government approval set by a certain law on foreign investment. But how many companies with Chinese investment can you name? While there are a lot of general rhetorics about Chinese invasion and a danger of assimilation, do you know of any civil movement against 100 percent Chinese-invested companies or joint ventures? Do you at least know the names of Chinese companies that are using strategic deposits of iron ore, zinc or oil in our country? Have you ever heard about one person, let alone a movement, who protested against a Russian company called the Altan Dornod Mongolia, which dug out all the gold from the Zaamar mountain and then demanded USD 500 million from the state? Have you considered the reason why people are protecting Mongolia’s economy from Western investors and not holding a grudge against Chinese or Russian investors? Do you know the history of foreign investors in Mongolia getting expelled from the country as “exploiters”, so that only one foreign country could possess our country? Like it or not, but such questions are raised every time I think about topics such as “economic hit man” or “foreign exploitation” that are replacing the search for the assassin of Zorig Sanjaasuren.

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Ulaanbaatar city competitiveness index rises 7 percent

District competitiveness index released

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The Economic Policy and Competitiveness Research Center (EPCRC) disclosed the results of research on district competitiveness, which was conducted for two years since 2017.

In this survey, the overall competitiveness index of Ulaanbaatar city was valued at 0.557 points. KhanUul, Bayangol, and Bayanzurkh districts are leading the Competitiveness ranks, while the isolated districts, including Baganuur, Bagakhangai, and Nalaikh stands at the bottom. The purpose of this study is to measure and evaluate the competitiveness of Ulaanbaatar city and its nine districts, and to create a comprehensive database that provides citizen participation. The competitiveness of districts is measured by 150 criteria in five categories, namely quality of life, environment, safety, governance, and economy.

The competitiveness index is rated from 0 to 1. For example, Ulaanbaatar's competitiveness rate is about 0.5 points, which is relatively competitive or moderate.

Ulaanbaatar's overall competitiveness increased by seven percent compared to last year. Experts emphasize that our country's key driver in retreating competitiveness is governance issues. "The Governance remains unstable. Not only the authorities but also the structure is unstable. In the past three decades, structural organizations of all ministries have changed 2-6 times. Mongolia is facing a crisis of instability. Names, addresses, policies, and personnel are all sensitive. It is not hard to fix it. Although people have changed, the policy should remain the same,” remarked the head of the executive board of the EPCRC.

The survey concludes a difficult economic situation in remote districts. Therefore, it is important for local citizens to have access to public services. This survey can be used by district and city governors. Experts emphasized that the study will be the basis for district planning. Deputy Governor of the Capital City said that the division will be divided into two sub-districts to build a new committee to bring public services closer to citizens.

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Former President Enkhbayar Nambar calls for terminating Oyu Tolgoi contract

Former President denounces OT claiming it fraud

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The third President of Mongolia Enkhbayar Nambar has made a special guest appearance on the “Uncensored Talk” program of C1 Television channel. Among the range of discussions, one particular topic raised a public resentment as the former President displayed enmity towards the Oyu Tolgoi (OT) agreement, claiming it a fraud. The public has been criticizing the late President for intentionally slandering the major international-level investment that was established under the Law of Mongolia at an instruction of certain people.

Mr. Enkhbayar told the show, “The OT agreement was established because the then-Prime Minister Bayar Sanjaa persisted on concluding the deal. I, on the other hand, was an outcast in the National Security Council. But the council’s decision required a 100 percent vote to be valid. We were unable to conclude the OT agreement because I was against it. Therefore, they had only one option of ousting me for the agreement. I lost the election in 2009 and later in October, the OT agreement was effective immediately.”

“Only a single structural change was made in the National Security Council at the time. The then Parliament Speaker Demberel Damdin and Prime Minister Bayar Sanjaa were still in office. The only adjustment was that Elbegdorj Tsakhia was in place of Enkhbayar Nambar. The OT agreement was ratified without an obstacle at once that year,” said the former President, expressing strict opposition against the project.

The OT ’s total cashspent in Mongolia totaled USD 8.7 billion in 2018

The Government of Mongolia, Ivanhoe Mines, and Rio Tinto signed the deal in 2009 with the Mongolian Government holding 34 percent stake of the OT.

The public agrees that the OT arrangement was the best deal for Mongolia’s long-term sustainable development, future prosperity, and financing upcoming achievements. Over the last decade, a massive new era of mining investment has begun in the Gobi desert in Mongolia. Out of them, the largest and most succesful project is the Oyu Tolgoi. The company is now the biggest taxpayer in Mongolia and its impact on the country’s economy is already visible. For instance, the OT expended USD 6.5 billion in investment and operational costs between 2010 and 2013, while Mongolia’s gross domestic product stood at USD 11.1 billion with total revenue of USD 2.7 billion in 2016.

The OT’s total cash spent in Mongolia totaled USD 8.7 billion in 2018. Furthermore, the company paid USD 322 million on taxes, fees, and other payments, USD 439 million on national procurement last year, and is employing over 17,000 workers as of today. The OT also continues to lead internationally with its operational safety and increased its copper and gold output in 2018, overperforming their production plan.

In addition, the business community has expressed concern over potential harm of such populist statements to the future of the project, which will ultimately drive out investors that are interested in Mongolia and tarnish the country’s reputation among foreign investors.

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Standing committee passes bills on foreign loans

Standing Committee on Budget discusses agreements with international organizations

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Parliamentary Standing Committee on Budget discussed the bill on the Government’s rights to draw loans from foreign countries and international organizations, and passed the General Financing Program between the Government of Mongolia and the Asian Development Bank (ADB) and the draft amendment on the general agreement and conditions between the Mongolian Government and the Government of the Republic of Poland.

The Government has negotiated with the ADB to cooperate on finance, agriculture, education, health, and agriculture in 2017-2020. In this context, USD 334 million will be allocated to Mongolia. The fund will be used in five projects including vegetables, border services, irrigation, regional roads, and free economic zones.

Plus, the European Bank for Reconstruction and Development (EBRD) offered to grant loans up to USD 300 million. The loan will have a maturity of 10-16 years with a moratorium of three years. Up until today, the EBRD has invested 99 projects that amount to EUR 1.6 billion and the financing of this project was directed entirely towards private sectors.

However, Mongolia will use the current loan to build the road from Darkhan to Ulaanbaatar. The road will have four lanes and two lanes will be constructed by the ADB and the remaining two lanes will be built by the EBRD. The spending of remaining funds is still unclear, but the Finance Minister Khurelbaatar Chimed said that the total amount of fund will USD 300 million.

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Parliament’s irregular session opens

Order list includes tax package, procurement and minerals laws

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The Parliamentary irregular session commenced with 81.3 percent attendance yesterday.

Reading the final wording of the bills that were adopted at the end of the fall session, including the revision to mining exploitation fee, tax package, and replacement of several authorities of law enforcers, Parliament Speaker Zandanshatar Gombojav remarked, “The 2018 fall session of the Parliament has been interrupted for a while. The irregular session is starting due to piled up bills on the order list that need to be resolved immediately. In terms of natural resources and territory, Mongolia is one of the leading countries; however one out of three people are poor. For instance, the debt pressure that will come in the next few years is likely to affect the economic security of the country. Since the social transformation in 1990, Mongolia has been hit by a crisis due to the irresponsibility of authorities and uncoordinated laws and regulations. Therefore, it is time to unite and consolidate our power for Mongolia.”

He then called for Parliament members to cooperate in three directions:

“First, to strengthen Parliamentary governance and implement reforms. Implementing the provisions of procedure rule on improving the discipline and accountability of Parliament members is unique for this session. In addition, a working group responsible for revising the procedure rule, introducing international standards, and revising the Parliament’s strategic plan, has been established. Secondly, to amend the Constitution. Parliament is in charge of ensuring equality of state power by adding amendments to the Constitution, ensuring the independence of the judiciary, and conducting administrative and territorial reforms. They will discuss it at the spring session. Thirdly, implementing parliamentary oversight functions. The lack of parliamentary oversight has led to a Government crisis; thus, it is important that we ensure human rights and justice,” addressed Mr. Zandanshatar.

At the Irregular Session, the Parliament Speaker has ordered to discuss the following bills.

• General Tax; 

• Corporate Income Tax; 

• Personal Income Tax; 

• Procurement of Goods, Works, and Services from State and Local Funds; 

• Minerals; 

• Appointment of the General Staff of the Armed Forces; 

• Consent to the deputies of the General Prosecutor General; 

• Appointment of the Head and Deputy Head of the Independent Authority Against Corruption.