Regular Mongolia Economic Forum is about to take place. What makes the forum unique compared to many other discussions and conferences regarding the development of the country?
37 years ago, first-ever economic forum was held in Swiss village of Davos, during which a number influential state heads, business leaders, scholars from all around the world gathered and shared views on global economic problems and challenges.
Such a mechanism of discussion which played extraordinary role in the solution of socio-economic problems entered in Mongolia after 36 years. A new non-governmental organization “Mongolia Economic Forum” was set up this year with the purpose of discuss development strategy and actions being taken to achieve it every spring of the year.
The forum is designed to bring together leaders from the government, business, science and non-government to hold open discussion and debate on urgent issues of the country’s socio-economic development, based on real surveys and evidences. Any democratic society must have such a discussion.
In a non-democracy country, relation and coordination between rulers and the society is like a road with a single direction, which hinders an efficient decision on development to be made.
If a number of important issues like unemployment, poverty and inflation pass many years without proper settlement and get worse and worse, then and under certain circumstances the society undergoes a big blow and the government suffers ‘cataclysm’, as result of which dictators flee from their country leaving it in unrest, and when citizens lose all the property and capital they collected for many years the country suffers both political and economic crisis simultaneously. The most recent case is Tunis.
President Ben Ali boarded a plane leaving his nation; he ruled for 23 years under his dictatorship and flied to many countries asking permission to land. The Saudi Arabia was the only country to welcome his plane to “hand over Ben Ali to his people”. Only real and business-like meetings and discussions that tells bitter truths can boost progress. Agenda of this year’s forum entitled “Together for Development” includes four major topics like human development, development policy, governance and infrastructure. As an example, let me share my imagination about what they might discuss regarding the infrastructure.
Appropriate infrastructure in harmony with macro-economic stability and long-term development strategy build fundamental conditions for stabile socio-economic development. More colossal investment is required in order to develop, mine, sell and increase the value of mineral deposits, which real reserve base has been increasing as result of geological prospecting.
Total amount of investment required for building power plants, auto and rail roads, social and other soft infrastructure facilities across Mongolia is yet to be calculated. As the government officials informed so far, US$800 million is needed for the construction of Power Plant #5, US$500 million for a new airport /it is said that these two projects will be financed by a long-term soft loan granted by Japanese government, US$15 billion for the state-run Development Bank to implement and finance big construction projects /including 100,000 residential dwelling apartments and fighting against air pollution in Ulaanbaatar City, connect centers of provinces by auto road/ and US$5 billion for the development of Tavan Tolgoi Coal Deposit.
Unfortunately, the government of Mongolia does not have such colossal money at present. The government got 100 million dollar out of US$250 million loan agreed to take from the Oyu Tolgoi project and distributed it to each person in cash. Soon they will take the remained amount. Plus to other budget money, they need additional US$6.7 billion to keep their election promises before the 2012 parliamentary elections. In total, US$30 billion is required.
Some part of the total is said to be financed by the state-run Development Bank that will issue bonds under the government security and remained part will be financed in cooperation with private sector. Even a law was passed to enable strong partnership of the government and private sector in order to ease the government burden and provide more engagement of private sector. Under the law, private sector should build the infrastructure at own cost, after which should take back such cost from the government in certain installment.
At the Forum, the parties should hold serious discussion about what has been done and what problems and hardships exist since the law was passed. According to a KPMG survey conducted in five countries that passed similar law, there are five kinds of problems, including difficulties regarding the project financing, bureaucracy in the government, playing politics in prioritizing the projects, mistrust among private sector and the government and corruption. These urgent problems exist in Mongolia.
There is a need to talk with international experts about what actions should be taken in order to deal with these problems in an efficient way. The time has come to review if any particular research was made or not and how they are being settled. Most importantly, we need to decide in every detail what can we do further and what can be the most appropriate and efficient form of structure to function. Otherwise, infrastructure projects cannot succeed and the country cannot develop without infrastructure.
The structure to discuss each of major issues included in the Forum’s agenda is at the final stage of formulation. The success of the forum, further the speed of country’s development will depend on preparedness of business-like manner of attendees.
Translated by P.Shinebayar
Ub Post
January 21, 2011