Former Minister of Foreign Affairs, Head of advisors’ group of World Growth International NGO in Mongolia Ts. Gombosuren is interviewed.
Q – What is World Growth organization? I understand that this organization is a place that gives a lot of advice. What are you advising to us?
A – World Growth is international NGO and non-profit organization. It runs an activity to give advice to world countries, in particularly, poor developing and developing countries. We do not have money to give you. Instead of that, we have world scale ideas and opinions. We have prospects to share these ideas and opinions, as well as, to contribute to the development of your country. World Growth wants to give advice to us in five key directions: Economic Freedom, Rule and Stability of Law, Good Governance, Property Rights, and Environmental Interdependence. They have called it “Mongolia’s Path to Prosperity Project.”They preferred at first the Economic Freedom. They have included the issues on good governance at the second and stabilization of law and its observation at the third. We know that other countries unpleasantly perceive that Mongolia suddenly changes it legislations or does not observe it even though there are good laws. For example, that famous 68 percent tax on sudden profit was terrible. It has startled not only foreigners but also Mongolian businessmen and it should be addressed in the minerals law that Parliament will soon consider. At fourth, we would like to give advice on property rights and at the fifth, about issues on nature and environment observation and protection. In detail, we would like to give advice to make accurate our country’s policy in these five important issues. World Growth Mongolia will carry out these objectives through two major initiatives. First, the World Growth Aimag Partnership Project has recently been announced. This is an exciting new initiative that networks small and medium sized business owners and other community leaders throughout Mongolia. World Growth recognizes that the backbone of the Mongolian economy is small and medium sized businesses and we need to work with them to ensure that Government policies are meeting their needs. Secondly, World Growth Mongolia will soon announce the establishment of the Mongolian Centre for Policy Research. This is also an exciting initiative that will conduct analysis of proposed government economic policies and work with World Growth’s extensive network of influential economists and advisors around the world to ensure that Mongolia’s policy makers have access to the very best information as they seek address Mongolia’s economic challenges.
Q – World Growth has organized a forum last spring. It seems that the forum’s theme was related to mining. I though that time that some people, participated in the forum, understood little wrong about the organization’s objective. I would like to listen to your opinion about it?
A – In April, a forum with the theme of “Effective Development of Mining Sector” was organized. It was a wide measure where former President P. Ochirbat, Members of Parliament and state and government representatives attended. It also hit the newspaper headlines in the society. In general, methods on effective development of mining sector were discussed there. At the forum, any document and statement were not issued and the Government also did not give instruction to do that and this. It aimed to give a definite understanding about world standards on this issue to people, making a broad discussion. According to you, it might raise such tendency to some people. They have rights to be suspicious. In recent time, Mongolians have becoming suspicious. We should understand it in right side. Some were suspicious during the forum that World Growth is lobbying to bring a definite mining company to Mongolia. In fact, there is not such issue. World Growth just talks about Mongolian progress depends on money and finance, the key channel to gain money is mining, thus it must carry out an accurate policy on extraction and exploitation of minerals. We do not say if the license is given to that and this company, the company shall develop Mongolia immediately and other cannot. It is clear that we do not give advice like that now or in the future. I want to be very clear here. World Growth Mongolia is an organization that strongly believes the best way to create prosperity and opportunity in Mongolia is through economic development and job creation. Today’s economic policies are weak and World Growth wants to help to make them stronger so that new and better-paying jobs are available to all Mongolians who want to work.
Q – Money needs to accelerate any country’s development and improve people’s life. As for our country, the mining sector has become the only one sector to raise money. But our politicians have been postponing the issue on exploitation of the wealth by debating each other instead of speeding up the issue. Besides, they have promised a great amount of money during the parliamentary election.
A – One of the worrying things of World Growth is the great amount of money, promised during the election. World Bank and some international organizations have paid their attention to this issue recently as well. In fact, the great amount of money, promised to people, is not available in my country. They have been making a lot of calculation on gaining a lot of money from mining. But they are wasting a lot of time not to carry out this work and raise money. They are debating on the legislations not to reach a solution. But the time will not wait for us.
Q – How much USD are we losing a day? It seems that there was a survey. Was a great number of money heard?
A – It seems that we are losing at least one million USD per day, and it’s probably much more than that. Now it has already increased. Even though we regretted we are losing time, our action is pursuing to the slower step. The current global financial crisis is even more evidence that we are losing time and reason to move forward right away with the right policy. Let’s see back actions. At the same time of previous year, we had new Prime Minister. We had a united understanding that the Minerals Law will be approved and a work will start. They said that. But the dominators have let it pass before the election by debating. Now this issue reached one year old. Recently a working group has been set up for the drat law of this law. They will finalize the draft law and submit it to the Parliament. They were assigned to submit this issue within November 15. This date is coming. But they of course will debate on the issue when it is submitted. If the do not reach a solution, this issue shall be more difficult. People are thinking of that the money, promised to them, shall be given very quickly by enacting the law and extracting the wealth. Now is the time to move forward with the right policy – the People have waited long enough.
Q – That’s true. But it needs to have people understand that to give cash is very risky and it is impossible to give the money in the near two and three years. If we do not, some poor people are borrowing loan by saying that they will pay of the loan after getting the 1.5 million MNT. This is a real example in life.
A – Politicians have faced a difficult condition because they promised a great amount of money. They understand that they can not give cash. If they say to give the money, a lot of papers will be produced. Worthless paper money will be issued. If we do that, Mongolia will completely go bankrupt. Thus, they may not do such action. In general, it needs to have people understand that cash will not be given. It does not need to have people get a bite to eat. It may solve the issue through the way of distributing dividend to every person. Or there may be a form to deposit money little by little by opening bank’s account for them. We should find right form that it must not use this money directly and it must have a condition that the money must be used as transfer for only school and kindergarten’s payment and hospital’s and sanatorium’s fees. It is required for our leaders to explain that it is impossible to implement the issue in the near future. We understand this and we must be patient and think about the big picture and future generations, but that should not slow us down in moving forward with the new law and signing agreements with investors. A lot of time will take when we approve the law, agree with foreign investor companies, these companies start extraction and share profit by covering expenditure. In addition, the issues on infrastructure are not completely solved including energy, water, roads, schools and hospitals.
Q – The main debatable issue among politicians is 51 percent. Mining is property of people; they said Mongolians must own the 51 percent of the property. In fact, the property of people will end any time. Therefore, I think we must not debate about the property that is clear to be finished and instead of that, we must talk about profit from the extracted wealth.
A – I agree with that. In fact, we have packed up ourselves waiting for owning 51 percent. That underground wealth is Mongolian property. No one can take over it. If it is extracted, it will finish any time. Thus, a question is asked that we have been delaying and politicizing this issue for writing that we owned 51 percent in our biography. It does not need to play number and publicize that 51 percent must be people’s property. We must talk like we will give permission of extraction. You should invest, and a half of profits you gained must be ours.” For another word, we should see further away than too many opinions of ownership. Let’s take an example near life. Our rich men are gaining loose profit, doing nothing after renting their real estate, property and apartment to reliable people. This issue is like that. Before the election, they have showed a lot to bring a favorable climate among people. Now they have to stop it. The election has already ended. So, we must think more that what we are going to tie up ourselves. We should think of that what is the condition, first offered to those to beg, and it will be suitable for them. There is a big thing: world standard.
Q – There is another understanding of product sharing besides profit sharing. What is difference between them?
A – Yes, there is a contract on product sharing. Products, extracted from mining, are shared with amount and percentage, which are agreed. Such contract does not need for our side. The reason is that we less experienced in selling mining products in the market, as well as, we do not need to do more when there are “champions”, who have majored in this field. May be, we can not sell it and say to that company to sell it. Finally, we will be suspicious about the company that our product is sold cheaper. As well as, there will be misunderstanding. Therefore, it needs to talk about. Which system will be best for Mongolia – system to share profits or a system to share product? I think we should look at this question closely and find the way that honors the Mongolian Constitution while ensuring that our policies attract the best investors with world class standards. Indeed, it would be quite extraordinary to enter into a product sharing agreement with our mineral realities as those types of regimes usually only apply to oil and gas deposits and very rarely to the minerals that have blessed our land.
Q – But, our politicians have been talking to own 51 percent. If they do, we must make investment equal to the percentage. We do not have the money to invest. Politicians may imagine very easily that they would get loan.
A – Yes, they said. They should get loan to find money to make investment. It means they will have debt again. Since 1990s, we have lent many discount loans for twenty, thirty and as well as 40 years long term through the channel of poor developing country. According to estimation, every Mongolian has a debt of 1000 USD. However, we, Mongolians, can cover it. Because it has very little interest and also we have begun to pay off some of them. When we now make investment to mining, we must get commercial loan according to real rule. Of course, it will have high interest. If we consider the world standard, it requires us to pay off loan in short time except the high interest. They talked at first that two billion USD would be required to exploit Tavan Tolgoi. Now they said it has increased two times. The cost is increasing like that when we lose time not deciding this issue. According to the World Bank the only real option that the Government has to raise the funds needed to meet the promises would be for our shares in Tavan Tolgoi to be sold to investors. Furthermore, this avenue would only provide revenue to cover the cost of these promises of a single year. We must not have new debt. According to our chiefs, there is a lot of money in the world; they will make investment equal to our percentage by borrowing loan. There are many reasons for that. We do not have technology and work force except money. We do not have work force in two meanings. There are not only engineering technical employees to manage an industry and but also professional workers. Therefore, I think that if the two parties were to discuss the 51 percent again then my hope is that they will conclude what we have concluded: it is the wrong path for our country. Our main purpose is to receive more percentage from the profit that will be gained later. We need to spend money on improving society and infrastructure not on investment if we have little money and can find loan. For example, schools and hospitals are in difficult situations. There are a lot of problems such as classes, technology and equipment. A big state police needs to spend money on supporting small and medium sized business. In recent time, an issue on drinkable water has been becoming serious. An issue on food has been also becoming dangerous. There is desertification we must combat against. We need to spend money on these important issues. It is not the job of the investors to solve these important issues for us – if we are to attract the best investors in the world then it is certainly our responsibility to address these critical issues so that the framework of a stable and predictable investment climate is achieved.
Q – What should we do not to make investment and to gain many profits?
A – It needs to find right thinking to do a good business. In general there is world standard to agree by doing business. We should reach a solution to receive some percentage as for owner not spending money. In particularly, to make a product sharing contract with foreign big companies. For doing that, we do not need to prefer only our profit. We must consider their rights and interests. Therefore, we are required to find right standard for that. State and government heads know that we do not have money, work force and technology. They think that foreigners will come in like hungry animals. They tend to imagine that the foreigners will not require any good conditions. Of course, there is not such thing.
Q – We may deal with this issue like we are owners. Besides, there is a mode to “frighten” that we will make the law and regulation.
A – We can make any laws as we are independent country. We can enact laws that are 100 percents for us. If these laws are related to cooperation abroad, it must consider other partner’s rights and interests. However, we bluster that we know what to do on our wealth. It is able for theory. It is able also not to use that. But it does not completely need to mix up right and possibility. Since we can not use the wealth and depend on foreign power, our laws and regulations must consider their rights and interests according to proper rules. I do not talk about issue on giving up. Our laws and regulations must be made in the level not to startle partners.
Q – So, we need to make right choice not to startle partners? What criteria should we require?
A – In recent time, we said to announce a tender. Those, who have sent the most profitable issue, shall win a tender. It must be one of principles to adhere. Other principle is to deal with an issue with state policy. We discuss an issue on having a third partnership. If Chinese and Russian companies offer similar ideas, we should choose the third partner. There is an example that a selection is not made not only preferring the economic profit. Let’s see the oil and natural gas pipes, being set up between Russia and China. If it passes through our country, it will be 1000 km shorter and will have cheap cost. But, it was put round our country. It is political policy. Thus, we must decide right our partner in the frame of political policy. There are some examples. How USA has supported Mongolia since 1990. Now, they are sending 280 million USD from the Millennium Challenge Account to our three sectors. What we have done to receive that. We just have sent military crews to Iraq for several times. Since 1990, Japan has given about one billion USD as non-refundable to Mongolia. What is our help? The Republic of Korea is feeding 10 percent of our population by double counting. It means that our people, working there, send 40-50 million USD to their home land a year. So, how would we deal it? We should think of that. It may dangerous that our biggest interest would go to the connection of any one passing through Tavan Tolgoi and Oyu Tolgoi. Therefore, we must select our partner very right. It must to measure seven and cut one. Big companies from Russia, China, America, Korea, Japan and other countries are waiting for our country’s legislation to make investment. It is important to us to make up to whom.
Q – Did you say to make up to?
A – Yes, there are some international primary principles. It is mutually profitable and equal and etc. One of the things we do not mention and just think of is the issue to make up to. For example, when Kuwait was conquered by Iraq 10 years ago, we united our voice with the USA that Kuwait must be independent. Since then, Kuwait has been dealing with our country well. Kuwaiti Development Fund has granted two big loans. Through one of the loans, roads between Darkhan and Erdenet were laid down. Finally, they promised to give 12 million USD to build up parliament house. Recently they said to give one million tons of raw oil. So, this is mutually profitable and is the ingratiation. Therefore, we need to well think of that what above mentioned country’s company we would make up to. We must think also the previous relation and further future.
Q – There are those, who have ideas that it needs to use Oyu Tolgoi and Tavan Tolgoi like the principle of joint Mongolian-Russian Ore Mining “Erdenet” Factory. What do you think about it?
A – There are those, who are going to imagine like Erdenet. Erdenet is two countries’ state owned joint factory. It is wrong to imagine like Erdenet when Mongolian Government and a private company build a joint factory. Here are many new matters. The opinion to work like that may be received by a company and those, who have poor property and capacity. It means that property is not good, its equipment is also not good and there will have poor profit. One of things we must consider is the protection of nature and environment better than gaining profit. Of another word, restoration must be the best. If a company with poor economic capacity comes, restoration can not be made well. The evidence of this is clear around the world – countries with the strongest economic policies attract the best investors with the highest standards while the countries with the weakest economic policies attract the worst investors with the lowest environmental and labor standards.
Q – Finally, I would like to make one thing clear. What work will the World Growth organize in Mongolia in the near future?
A – As I mentioned earlier, World Growth Mongolia will be working in partnership with the People of Mongolia on two main initiatives that will help strengthen Mongolia’s economy and help to usher in a new age of prosperity for our country. Additionally, they are going to organize an industrial-scientific conference on agriculture later this year or early next year in cooperation with Mongolian farmers, flour producers’ association and Ministry of Food, Agriculture and Light Industry. The theme is “First Year Result and Lesson of Third Campaign of Virgin Land.” They consider that “Third Campaign of Virgin Land” is the beginning of a big objective. There is an idea to give advice to those in provinces and local areas not to state heads and officials. It may establish a contact with those, who are influential in provinces and local areas but not officials, listen to their ideas and opinions, find out what advice needs for them and as well as organize a seminar and a consultation. Now, the important thing is to pay an attention to an issue on developing small and medium sized enterprises in local areas. We will start from that what advice they can give them. Such branches or units have been founded in about 10 provinces. In the future, they have a direction to establish branch units to give advice in all provinces.
Thank you for giving an interview spending your time.
Source from: http://www.worldgrowth.org/newsroom/index.cfm?sec=0&subSec=0&id=188
Related post
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/tny_au_en_uskg_2.gif)
Loading ...