What did Mongolians have twenty years ago? Now look at what is in our possession today. Look at the things we own, cars we drive and goods we can purchase in stores. Also, take a look at the hundreds of new buildings, factories, schools, service centers and restaurants in the capital city. This country has never had as much capital as it has today and Mongolian customers have never been offered this wide variety of choices before.Then, who do we owe for all this? What sector of the economy do most Mongolians work in? The answers to these two questions are the same: the private sector.
Then, what did the government do? It has been twenty years since Mongolia stepped onto the path of democracy and market economy after discarding its communist system, the failed and impracticable ideology of which argued for the abolishment of all private property and supported collective ownership of society.The government is still not able to fully acknowledge the private sector’s role as the main driving force of economy. Although the Mongolian government supports the value-creating private sector with their words, their actions have lately been quite the contrary.
The government must only be involved in matters that cannot be accomplished by the private sector. However, granting unfair privileges in state tenders to businesses that belong to or associate with them and having goods and services supplied to state-owned companies using their advantage, the government has eliminated free competition and is already sunk in corruption.This is what the government has done.
The latest clear example is the progress and means of funding of large projects being carried out in western provinces where the Prime Minister recently paid a visit and went over the projects.
Mess created by government
Executives of political parties that held the ruling power have always been serving their own interest and protecting their associates rather than devoting their efforts to public interest and property. It is good that political forces led by the Democratic Party, which has the majority of seats for the first time ever, are starting to clean up this mess piled up for twenty years.
However, their attitude catches one’s attention that, when carrying out this cleanup, they are making an attack on the whole private sector instead of starting their work by holding the culprits accountable for their actions first.
This attitude of theirs was first noticed just before the election when they revised the Foreign Investment Law. Even though the revision was originally intended to restrict ownership of foreign state-owned companies only, it ended up counting banking and finance, media and telecommunications, plus minerals as sectors of strategic importance, thus restricting ownership of any foreign company in these sectors to 49 percent or less unless approved by the government.
Foreign investment has basically stopped coming into the country since this law, which brought a sharp turn in the policy Mongolia had been pursuing for economic liberalization, promotion of free trade and foreign investment attraction, came into existence. A decline in private direct investment from “third neighbors” has hit domestic business hard and is having a negative impact on currency rate of tugrug.
The new city administration started their work by interrupting daily operations of private business in order to reduce the traffic jam caused by land permits that were so carelessly given out by the former administrations, buildings and fences blocking main roads and sub roads, weak infrastructure planning and its poor implementation. Banning people’s use of their own vehicles on certain days is a measure only taken in countries under dictatorship.
The latest clear example of an attack being made on the private sector is the decision made by the city council (Citizens’ Representative Khural of the Capital City) last week. This decision requires the private businesses to get a permit from the government if they decide to sell their land and buildings that they own. This rule applies to real estate located in 1300 hectares area that covers the entire downtown.In order to stop the land speculative trade that had been done with direct participation from the authorities, they are punishing the overwhelming majority who always operated in compliance with relevant laws and rules. This is a case of violating private property.
It is not even stated clearly how and when the permits will be granted. This rule has disrupted normal business operations and, especially, dealt hard blow to property management of both domestic and foreign companies who are following every law and rule when taking part in the business.
The funniest thing is that the Mongolian People’s Party, which exercised the right to manage the capital city for twenty consecutive years and created this mess, was demanding to extend the area from 1300 hectares to twice as much and keep control of all business operating there.
How should it be understood that, failing to hold the wrongdoers who got wealthy by encouraging land trade in the city responsible for their unlawful actions, they are making attacks on people and the entire private sector?
On the other hand, those representatives who were trying very hard to have this decision made might already be studying the best locations and planning their ways to steal in the name of the government.
Capitalism
Majority of Mongolians today have fully understood that, even though capitalism is not the best, it is the most efficient system mankind has ever tried. Therefore, Mongolians are supporting the private sector.
Claiming to be fixing the mistakes of the past, the government has turned the private sector into a “scape goat” and tends to direct social attention to the mistakes made by the minority of the private sector and to impose greater pressure, fines and taxes on them.
There are, of course, companies as well as individuals that pose threats to social safety and violate laws. If the entire private sector is punished instead of holding those criminals accountable, who will create the social wealth in the end?
Who will build factories, buildings and other real estate all over the country? Who will construct those private hospitals that keep us healthy and comfortable? Who is going to prepare, make and deliver you goods and services we use every day? Who will create values on which the government imposes taxes so that they can spend it on their luxury?
Why do the companies that employ dozens, hundreds and thousands of people have to suffer for the irresponsible operations from only a few others that buy and sell counterfeit goods and medical drugs?
Due to the above actions from the government, negative signal solely is being provided to foreign and domestic markets, possibility to conduct normal business operations ceases to exist and, most importantly, value creators are losing their faith.
In the name of granting the right to use every property located downtown and to transfer their ownerships, they are actually restricting it by creating new, unclear rules, which discourages investors from investing in the real estate market of Mongolia and produces a bad influence on market assessment.
As value of companies that conduct real estate business decreases, it is becoming harder for them to attract additional capital from foreign and domestic markets. This is interrupting the normal flow of economic circulation.
If the government cannot support the private sector, it should at least not cause them any problems that could interrupt their normal operations.
Unite, the private businesses of Mongolia
Translated by B.AMAR