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Zoljargal: Government’s decision threatens investment

Systematic changes by government risk politicizing the professional field of mining

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Batsaikhan.S /ZGM

Mongolia’s leading economists have expressed their views at a forum on business environment of Mongolia late last week. The Official Gazette sat down with Zoljargal Jargalsaikhan, Executive Director of the Mongolian Coal Association on the occasion. He addressed that the negative outcomes of the unstable policy will burden professional organizations.

-How will the government’s decision to revoke a number of mineral licenses affect the economy?

-It will not affect the mining sector in the short term. Mongolia’s coal companies have enough capacity to produce a sufficient amount of coal but the production is only limited by China’s import. Mongolia’s income from coal will not be affected significantly. But these systematic changes risk politicizing the professional field of mining and may undermine the efforts made by the private sector in the last 30-40 years. This may lead to lack of foreign direct investment in the private sector in 5-10 years. In other words, the government alone will be able to control FDIs. Current licensing issues of private entities will become a serious social problem in the future.

-Enterprises whose rights have been violated have been criticized that they couldn't unite to reach their voice. For example, does the Mongolian Coal Association protect the interest of the companies in the sector?

-Mongolian Coal Association is a professional organization that represents companies in the sector. We submitted our proposal on the government’s revocation of licenses to the relevant authorities. Also, we are working to have relevant regulations amended, and to open up new opportunities to carry out our business operations.

-Could you please mention an example of the inapplicable rules?

-Of course. Recently, numerous licenses have been canceled due to environmental destruction in Umnugobi province. However, some companies amongst them had not started their operation. The government’s decision must be followed by the procedure. Inspection agencies should review and the decision shall base on it. Otherwise, investors will not be interested in Mongolia, since legal stability is crucial amidst every other aspect.