“We Cannot Make Decisions by Assigning People Through Politics”
The following is an interview with Deputy Director at the Development Bank, L. Bolormaa.
-The Development Bank is now one year old. What has been the progress and productivity of the bank throughout this year?
-The Development Bank did a lot in the past year. We have released bonds to that represent Mongolia. In March 21, 2012, we released five-year term bonds worth USD 580 million at the interest rate of 5.75% in the Singapore Stock Exchange. They were successfully traded to American, Asian and European investors.
The interest rate of 5.75% is very low. Previously, we had the chance to release the bonds in both 2010 and 2011. If it had happened in those years, Tavan Tolgoi would be in full economic circulation and the industrial development we are talking about today should have progressed a lot more. Nevertheless, we should appreciate what we have done; we have traded our bonds successfully. We have successfully widened our partnership with prominent financial organizations worldwide.
-Are the Development Bank’s operations independent from politics?
-From the beginning, the bank set its foundations so it could be allowed to work independently and separately. This was valued and appreciated by our investors.
I have two things to say on this. With elections coming up in a month, there are signs of politics being involved with the DB. There is no need to bring politics into DB no matter what. The DB is a financial organization that represents Mongolia to the world, and if politics gets involved this would negatively affect our operations. This should be taken into account and we should respect the rights and benefits of the whole nation.
Secondly, to maintain its stability, a bank should support and fund reliable and profitable Government and non-Government operations and projects. But right now, we have the downside of only accepting and funding Government projects. In the future, this may negatively affect the DB. We are currently discussing funding profitable non-Governmental, private projects that promises to yield profit.
For example, operations at MIAT and the Fifth Thermal Power Plant, although not in included in the Government resolution, are sure to contribute to economic growth. But our assistance to them is limited by the policies and jurisdiction set for our Bank. In the future, I think the Government should relieve these limitations for the sake of the stability of the DB.
-It is said that “the DB is paying USD 98,000 daily and claiming tons of losses.” Is this true?
-When the DB released the Government-guaranteed bond, we made a contract with the Ministry of Finance. By this contract, the Ministry of Finance then made a contract with the Central Bank (Bank of Mongolia) and had a duty to set an interest rate for our bond. Currently this duty is not yet implemented yet. By law, the DB has the right to distribute its unallocated wealth to any profitable operation. But because of this contract, our rights are being limited.
If the problems concerning the limitations – which we and several other commercial banks are discussing – are resolved by the Ministry of Finance, we can make up for the interest rate losses. Generally, any country deals with financial needs this way.
Once a nation is establishing and developing an internationally recognized bank, it should have good management, backed by policies that ensure its stability.
-Are there any election effects on the DB?
-Looking at any developed country, the effects of elections on the citizen population is not very big. Singapore and Switzerland are examples. I wish Mongolians were less involved with politics and instead developed our professions and specializations. A person must perfect oneself. Recently, a specialist at the bank, while discussing a topic on how to stay away from politics said “Fix yourself up, then your home, then the State.” But young people are immediately seeking politics. Maybe it is easier, or is more important.
But today, the appointment of a political party has caused a stalemate in our economic growth. It is right for a victorious party to define the State’s economic development strategy, but it is essential that specialists and more skilled, specialized individuals are appointed to administrative positions. It means that we cannot make decisions by assigning people through politics. We have to demand answers and assistance from the professional people.
-How can Mongolia’s growth statistic be measured?
-In the end, a nation’s growth rate and progress is reflected in any citizen’s personal income and living standard.
-In your view, when we look at Mongolia’s future, what are we looking at?
-I see a very welcoming future for Mongolia. We ourselves will create a brighter future.
Firstly, Mongolians are sitting on a large amount of mineral wealth. Our economy will benefit if we make the right decisions on the extraction and production of mineral resources. Secondly, it is right to have Mongolians’ knowledge lead its development. Although the experiences of other nations are important, the final decisions are to be made by us Mongolians.
Also, new jobs and employment opportunities are important. With increased employment, the nation’s income will increase, and with increased national income, the salaries and wages will increase at the same time.
-The Development Bank is now one year old. What has been the progress and productivity of the bank throughout this year?
-The Development Bank did a lot in the past year. We have released bonds to that represent Mongolia. In March 21, 2012, we released five-year term bonds worth USD 580 million at the interest rate of 5.75% in the Singapore Stock Exchange. They were successfully traded to American, Asian and European investors.
The interest rate of 5.75% is very low. Previously, we had the chance to release the bonds in both 2010 and 2011. If it had happened in those years, Tavan Tolgoi would be in full economic circulation and the industrial development we are talking about today should have progressed a lot more. Nevertheless, we should appreciate what we have done; we have traded our bonds successfully. We have successfully widened our partnership with prominent financial organizations worldwide.
-Are the Development Bank’s operations independent from politics?
-From the beginning, the bank set its foundations so it could be allowed to work independently and separately. This was valued and appreciated by our investors.
I have two things to say on this. With elections coming up in a month, there are signs of politics being involved with the DB. There is no need to bring politics into DB no matter what. The DB is a financial organization that represents Mongolia to the world, and if politics gets involved this would negatively affect our operations. This should be taken into account and we should respect the rights and benefits of the whole nation.
Secondly, to maintain its stability, a bank should support and fund reliable and profitable Government and non-Government operations and projects. But right now, we have the downside of only accepting and funding Government projects. In the future, this may negatively affect the DB. We are currently discussing funding profitable non-Governmental, private projects that promises to yield profit.
For example, operations at MIAT and the Fifth Thermal Power Plant, although not in included in the Government resolution, are sure to contribute to economic growth. But our assistance to them is limited by the policies and jurisdiction set for our Bank. In the future, I think the Government should relieve these limitations for the sake of the stability of the DB.
-It is said that “the DB is paying USD 98,000 daily and claiming tons of losses.” Is this true?
-When the DB released the Government-guaranteed bond, we made a contract with the Ministry of Finance. By this contract, the Ministry of Finance then made a contract with the Central Bank (Bank of Mongolia) and had a duty to set an interest rate for our bond. Currently this duty is not yet implemented yet. By law, the DB has the right to distribute its unallocated wealth to any profitable operation. But because of this contract, our rights are being limited.
If the problems concerning the limitations – which we and several other commercial banks are discussing – are resolved by the Ministry of Finance, we can make up for the interest rate losses. Generally, any country deals with financial needs this way.
Once a nation is establishing and developing an internationally recognized bank, it should have good management, backed by policies that ensure its stability.
-Are there any election effects on the DB?
-Looking at any developed country, the effects of elections on the citizen population is not very big. Singapore and Switzerland are examples. I wish Mongolians were less involved with politics and instead developed our professions and specializations. A person must perfect oneself. Recently, a specialist at the bank, while discussing a topic on how to stay away from politics said “Fix yourself up, then your home, then the State.” But young people are immediately seeking politics. Maybe it is easier, or is more important.
But today, the appointment of a political party has caused a stalemate in our economic growth. It is right for a victorious party to define the State’s economic development strategy, but it is essential that specialists and more skilled, specialized individuals are appointed to administrative positions. It means that we cannot make decisions by assigning people through politics. We have to demand answers and assistance from the professional people.
-How can Mongolia’s growth statistic be measured?
-In the end, a nation’s growth rate and progress is reflected in any citizen’s personal income and living standard.
-In your view, when we look at Mongolia’s future, what are we looking at?
-I see a very welcoming future for Mongolia. We ourselves will create a brighter future.
Firstly, Mongolians are sitting on a large amount of mineral wealth. Our economy will benefit if we make the right decisions on the extraction and production of mineral resources. Secondly, it is right to have Mongolians’ knowledge lead its development. Although the experiences of other nations are important, the final decisions are to be made by us Mongolians.
Also, new jobs and employment opportunities are important. With increased employment, the nation’s income will increase, and with increased national income, the salaries and wages will increase at the same time.
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