M.Enkhsaikhan: Mongolia’s next government will face challenges beyond anything before

Trans. by B.DULGUUN


The following is and interview with Minister of Mongolia and Head of the Mongolian National Democratic Party (MNDP) M.Enkhsaikhan about timely political issues.


MNDP has decided to participate in the upcoming election with the Motherland Party, founded by Erel Group’s President B.Erdenebat. Why did MNDP decide to do this?


I’m personally meeting with other political parties as the head of MNDP to discuss issues related to participation in the upcoming election. I’ve always established coalition whenever I took part in an election. The Democratic Union Coalition, Motherland Democratic Coalition and Justice Coalition all participated in elections successfully. These are indications of my miniscule effort. I’m trying to establish a much bigger coalition, the Great Coalition, based on these experiences. This sort of requirement has arisen. It’s better to unite several parties into a coalition rather than holding an election with just two parties. I believe that this is what we need now. It’s a timely requirement.

The economy is in bad shape and the country is on the verge of becoming a bankrupt nation. It’s clear that the government after the elections will encounter hardships and difficulties never seen before in the history of Mongolia.

The new government will have to confront the key issue of bond and debt repayment. Precisely at this time, the government needs to become more professional. The current situation show that Mongolia will need to establish the Great Coalition for political stability. The future of the nation will become vague if people who can’t manage to do things on their own are elected instead of major political parties. MNDP is working to make a custom out of the joining of parties into a coalition.  Our attempt to create a coalition much bigger than previous ones is part of this work. Time will show whether or not the coalition will be established.


How will MNDP compete in the election this time? Your party is also considering joining hands with the Justice Coalition or Mongolian People’s Party (MPP). Hasn’t the Democratic Party also proposed running in the election together?


As mentioned before, I believe that a much wider ranged coalition is consistent to the interests of Mongolia’s future. MNDP is ready to collaborate with every political party. Finding faults from a party and chasing them out of the cabinet is against our party view and principle.


The Tavan Tolgoi mega project is an important topic attracting attention from the public and politicians as it is extremely significant to the society and economy. In general, how are Tavan Tolgoi issues progressing?


There are two projects related to Tavan Tolgoi. The power plant project is progressing well. A Japanese investor was selected for it. The project has proceeded to the stage where issues are being organized and negotiated in more detail according to technical and commercial tasks given before. The project team plans to finalize matters related to the investment agreement within May.

As for the coal mining project, it has lost some time. The project has been postponed due to unfavorable market conditions. It clearly shows that things can turn into trouble if not completed in time.


In general, how are mega projects of Mongolia coming along? What is obstructing their progress?


Mega projects require their own methodology and funds. Mongolia doesn’t have many mega projects. Instead, it has many mega dreams. Funds amounting to at least three percent of the total project investment is required for preparation work. If we consider mega projects as a project requiring investment of more than a billion USD, 30 million USD will be spent on the preparation work. Not even the private sector can generate this sort of large sum of money, let alone the state.

The biggest difficulty for starting mega projects is money. Then, overjoy and excitement wrecks mega projects. Mongolians are capable of making fantastic films that can turn a mega project into a mega dream. We haven’t learned to complete mega projects yet. Besides, it doesn’t seem that the private sector has learned to work properly. There are tons of reasons for the delay if we keep listing like this. Mega projects can be considered as an independent lesson.


During such a difficult economic time, are there opportunities for generating financing for projects?


Foreigners have categorized Mongolia as a risky country and are even more scared to invest in Mongolia because Mongolia’s economy degraded and our credibility diminished. At the moment, our nation’s ability to generate capital is very poor. Setting the correct economic policy and improving indexes will become the first step for attracting investment and becoming a nation that develops rather than accumulating debt. The situation will not improve if we continue to be extravagant and not value investors. Economic pragmatism is what Mongolia needs the most for creating opportunities that enable us to cooperate with foreigners while protecting our interests.


Mongolia is scheduled to start bond repayment from 2017. It’s certain that it will be difficult. Is there any way to facilitate the difficulty?


We will not be able to repay our debt if we continue in our current way. We will have to take another loan to make sure the nation doesn’t go bankrupt. In my opinion, it’s necessary to work more closely with the International Monetary Fund. We have to join the Standby Program and take out a cheap loan. This will probably be the first problem the new government will face after the election. Mongolia could have joined this program a year ago. There’s an estimation that the economic loss from not joining Standby Program equals nearly 100 million USD.


In the past, you said that Mongolia has a potential to become the largest coal supplier in the world if Tavan Tolgoi project is successful. However, economists have been saying that it’s fruitless to depend on coal. Can you comment on this?


Coal price has fallen in the market. It seems like it will not recover anytime soon. It’s not time to be worrying about the future when we’re concerned about what to do with the coal we have now. Had the Tavan Tolgoi project advanced forward, our economic difficulty would have been less severe. Unfortunately, it didn’t happen. It’s not that great to personally feel the severity of the economic difficulty. Actually, I’ve been supporting the state so that it would predict this sort of thing in advance and take preventive measures. But we weren’t able to do so.


In your opinion, which sector should Mongolia rely and focus on? What is the correct development direction for our nation?


Mongolian politicians say that the traditional industry is the foundation to development whenever the election draws nearer. It’s essential to support agriculture, but selling meat, leather and wool will not develop the mining sector. Revenue from agriculture is merely sufficient for food. Of course, it’s good for Mongolians who manage livestock, but the majority of the population live in cities and urban settlements. The main sector to develop would be mining if we want to improve the livelihood of everyone, including herders. Afterwards, we can support agriculture with the money from mining.

Even meat prices fall when the mining sector degrades. The traditional industry falls. It’s necessary to learn from our mistakes in the mining sector and reform mining governance. There are ready materials and recommendations for this. I’ve only pinched on this topic. I hope that people participating in the election pay attention to this matter.


What measures should be taken to overcome the current economic difficulty?


There are 53 countries in the world known to be rich in natural resources. The term rich isn’t used to indicate that these countries are wealthy. Countries are labeled “rich in resources” if more than 20 percent of their total export volume consists of mining products, according to the International Monetary Fund. It actually means that the nation isn’t rich and wealthy but dependent on mining. Estimations indicate that underground minerals in a square meter area of a country rich in natural resources is worth 25,000 USD. Mongolia’s resource doesn’t even reach one USD for this indicator.

We call underground deposits “natural resources” when in fact, it should be considered as a resource after it is mined and proves to be useful to people’s lives. Mining underground deposits require considerable amount of money. Mongolia doesn’t have that much money. Not to mention that technology and equipment are essential as well. This is exactly why countries race to find foreign investment. Yet, this sort of concept and understanding is very poor here in Mongolia. Mongolia might face the risk of forever staying in the dark if we don’t change the way we think. We must change our attitude so that we can recover the economy.


Some economists believe that economic difficulty will continue until 2023. Other economists say that Mongolia will be able to attain its own position in the mining industry as well as capital by the time the economic difficulty ends if we continue mining. What do you think about this?


It’s good that Mongolian economists are thinking about ways to change mining governance and are looking for solutions for correcting the system. I agree that Mongolia has potential to learn from its mistakes and advance forward.


Source: Undesten.mn


Short URL: http://ubpost.mongolnews.mn/?p=18882

Posted by on Mar 18 2016. Filed under Prime Interview. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

1 Comment for “M.Enkhsaikhan: Mongolia’s next government will face challenges beyond anything before”

  1. It is interesting how he dodged economic questions and could not even bring himself to mention Oyu Tolgoi, the country’s largest Mega Project, a mine that will soon require the support of the government for final underground mine approval.

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