The Mongolia Economic Forum (MEF) was founded in 2010 to set up a platform where the government, private sector, civic society, and scholars could have discussions on the most pressing development topics. At the time, the MEF was set up as an NGO under registration number 9071012038 by S.Batbold, who was then Prime Minister, P.Tsagaan, Advisor to President, D.Zorigt, Minister of Mining, Yo.Otgonbayar, Minister of Education, Culture, and Science, S.Bayartsogt, Minister of Finance, J.Zandanshatar, Minister of Foreign Affairs, Ch.Khashchuluun, Head of National Committee on Development and Reforms, D.Tsogtbaatar, Secretary of Ministry of Foreign Affairs, and MPs including Ch.Saikhanbileg, D.Enkhbat, and S.Oyun, and private sector representatives that included Ch.Gankhuyag, Head of Tenger Financial Group, and D.Jargalsaikhan, Chief Executive of Xacleasing. The charter of the organization states that the Prime Minister would act as the Chairman of Board of Directors while other members would take part as individuals rather than in the capacity of their formal roles.
Outcome of the forum
With the exception of 2017, all MEFs were led by the government. The event has been funded by the public budget, private sector support, and participation fees. Each MEF was organized under a specific theme and took place in the government house. The forum does not make decisions but has provided policy recommendations and calls for action on the topics that were discussed.
There have been changes to the forum leadership every time the cabinet had a reshuffle. We have seen five Prime Ministers within the space of eight years. Although the forum has seen significant improvements as an event, we have been underwhelming in putting words into action and reporting on their implementation.
A key measurement of MEF’s success would be Mongolia’s economic competitiveness. In order to enhance our competitiveness, there have to be quality improvements on the following three areas:
- Protection of property
Property rights are the foundation of a market economy. All properties, private or public, must be equally protected. In 2010, Mongolia was ranked in 88th place out of 179 countries in terms of its economic freedom in a report prepared by the Heritage Foundation, which studies market economies and property rights among other economic areas. In 2018, Mongolia was ranked in the 125th place out of 180 nations, meaning we fell back 37 places.
In the last eight years, Mongolia has seen its state-owned assets grow even more. Although the mining industry has found a dominant place in the economy, the state-owned companies have been running deficits in most cases, and have been feeding on the capital that was supposed to be used to resolve challenges in the society. The authorities and decision makers have been stealing from the land owned by the public, including in the Bogd Mountain passes, Zaisan, Yarmag, and Tuul River areas. It is as if we need to protect our environment from the Ministry of Environment itself.
Many corruption cases find their way in the media, however it has now become normal for them to fall silent after some time. The powerful few are not abiding by the law, and the rule of law is being compromised. It has been a long time since our judicial branch grew dependent on politics. Our legislative, executive, and judicial branches are no longer providing checks on each other, making it impossible to find balance in governance. One fourth of MPs are serving as cabinet members, who are commonly known as ‘wearing double deels’. In addition, the two largest political parties who have had the ruling power one after another no longer have any difference in the ideologies they pursue as a political party.
- Freely set prices
Prices, which are supposed to be the essence of a market economy, have been set by the government instead of the market. As the government grows bigger, we see free competition shrink and corruption flourish.
Prices of consumer products and how they change are always a good measure of how much faith is put in an economy. If the risk of losing your possessions to robbery or exposing your property is high, people are more likely to hide what they have. But money delivers its value when it is put into circulation. Whether the system is fair and free of corruption or not can be seen from who is setting the prices and how.
Prices that are set by market supply and demand act as signals for economic players, including investors and customers, to make decisions. These signals have to be realistic to allow people to see where surpluses or shortages are in the market.
The price setting or restricting measures taken under the name of protecting the people and supporting businesses are ultimately what enables the authorities and decision makers to steal and embezzle funds.
Mongolia is seeing a growing number of populists who advocate for controlling the prices of consumer products and protecting the people from the rich but carry a hidden intention to make personal gains.
- Public governance
Mongolia’s economic decline originates from politics rather than the economy. According to the corruption perception index produced by Transparency International, Mongolia scored 2.7 points out of 10 and was ranked 116th out of 178 countries in 2010. In 2017, our rank was 103rd out of 180 nations, scoring 36 points out of 100.
A corrupt country experiences unstable economic development, continuing economic declines, weak competitiveness in the private sector, extended gap between the rich and the poor, and increased expenditure on defense costs.
When wealthy businessmen are increasingly involved in politics, free competition in the respective industries ceases to exist. Today the alcohol, tobacco, mining, construction, and banking sectors are in the hands of lawmakers and the authorities. When competition is removed from these key industries, foreign investment will not come in.
It took 25 years on the path of democracy and a number of election rounds for Mongolians to realize that corruption is a cancer to our society, the biggest shackle to our development, and its source is political parties and their financing.
Given the corruption in political parties, Mongolia’s public governance has also grown corrupt because the same political parties carry on the corruption when they take over the ruling power. The government lacks capability and stability while law enforcement organizations have become dependent on politicians. The freedom of the press is also weak today.
The current MPs are well aware that the laws on election, political parties, and public service need to be revised and amended. However, they are just sitting tight and buying time. It has become sufficiently evident that these laws lack comprehensive, clear clauses on processes, outcomes, reporting, oversight, and accountability. Because of these loopholes, political parties are able to collect large amounts of financial capital and pay them back by misusing their power and by abusing public tenders as soon as they have the power to do so.
Our government is being led in turn by political-business groups who differ from each other only by the amount of money they made for their political party. These groups are referred to as ‘factions’ within and across political parties.
The balance of power between these groups is lost and restored depending on who paid what to their political party and how profitable they became after being appointed to senior positions. When the balance is lost, the government gets replaced and the next faction obtains the ruling power.
Only when the public understands and discusses these three issues and imposes transparency on the government and elected officials, can Mongolia’s economy become competitive. Until then, the MEF will continue to play its part, maintaining this platform of dialogue, organizing the forum every year and doing work in between the events.
Marking the Mongolia Economic Forum that took place on 21-22 May 2018s
Trans. by B.Amar