PREMIER ADDRESSES CONFERENCE
Ulaanbaatar, Mongolia /MONTSAME/ On Wednesday, S.Batbold PM addressed the international conference themed "Avoiding the Resource Curse: Managing Extractive Industries for Human Development".
S.Batbold expressed his gratitude to Ms. Helen Clark, UNDP Administrator, for co-hosting this event and for taking part in the Celebration of the 50th Anniversary of Mongolia's membership to the United Nations.
“Mongolia has chosen a path to the market economy and plural democracy two decades back. This twin reform process was cemented by adoption of the country's democratic Constitution of 1992 and expression of free will of the people in 5 parliamentary and 4 presidential direct elections. At the political reform level, we achieved a strong parliamentary system of governance, multiple political parties and multitude of civil society organizations, and free competitive elections. At the socio-economic level, we created different forms of private sector-led industries, privatization of the state-owned enterprises, housing and land, and at present about 70 percent of Mongolia's GDP is generated by the private sector," he said.
Following Mongolia's 2008 general elections, the two major political parties have formed a Coalition Government in order to provide greater political stability in the best interests of the country's social and economic strategic development goals. Moreover, the term of office of this current Parliament and Cabinet coincided with the major financial crisis that hit both developed and developing countries.
He underlined that the global financial and economic crisis affected Mongolia's economy through collapsing mineral prices in main export commodities and sharp drop in external demand. In addition, natural disaster and consequent events of winter have exposed Mongolia's inherent ecological and economic vulnerabilities and reinforced the urgent need for economic diversification and structural reforms as well as for sound fiscal policy framework to prevent effects of potential shocks.
“As a result of unprecedented and comprehensive policy response to crisis by Mongolian Parliament and the Government in collaboration with foreign donors and partners, severe consequences of the crisis were avoided and Mongolia's economy is recovering rapidly from late last year thanks in part to improving external conditions.
"Having recognized the urgent need to address these crises the Government of Mongolia took several necessary actions both at policy and practical levels to reduce its severe impacts on the population. Let me brief about some of them:
First of all, with a view to ensuring food security and supplying domestic food demand the Government of Mongolia has initiated a nation-wide campaign 'Third National Crop Rehabilitation Drive'. As a result of this 3 years nation-wide campaign, Mongolia is expected to supply all domestic demands of the major staple food products by the end of this year. Our goal is not only to become self-sufficient in major foodstuffs, but also to export these products in near future.
Secondly, financing these policies will be a challenge. Our Government will continue working with our development partners and seeking their assistance, especially to offset our vulnerability to external shocks and the disadvantages of our land-locked location. Domestic resource mobilization is crucial, and therefore we set up a Human Development Fund. Revenues and royalties from the mining industry will be pooled and used to support health and education and other social services along with our efforts towards economic diversification. "Thirdly, the newly passed Fiscal Stability Law is another tool that we will use to effectively manage the revenue inflows from our mining wealth in a transparent and responsible way and mobilize resources for combating poverty.
Fourth, last year, our Government took a decision to channel more investment into vocational schools to provide training for thousands of rural youth to prepare them for jobs in mining, road and construction.
Five, in terms of environmental protection, a legal framework is being developed to stop license issuance in ecologically sensitive areas and to cancel previously issued licenses with a provision of compensation to license holders,” S.Batbold stressed.
He pointed out that as a consequence of these measures, taken by the Government, unemployment ratio decreased up to 8,7% from 37% in 2008, and the latest statistics show us the GDP growth reached up to 6% in 2010 and estimated GDP growth is around 20% in 2011 respectively. GDP per capita is estimated to reach 3000 USD. According to the World Economic Forum's Global Competitiveness Index, Mongolia is now ranked at 100 out of 134 countries. "Our goal is to turn Mongolia into a highly competitive country in this region - in terms of taxation, legal and foreign investment environments," he underlined.
“In addition, we are proceeding with reforms in banking and financial sectors, as well as improvement of the business environment. To reach these goals, we must introduce internationally-accepted standards in all sectors, including not only commodities' and materials' standards, but also new standards related to laws and regulations, technologies and mindsets. A historic opportunity is drawing closer for us. Investors' interest in Mongolia is growing at an unprecedented pace. Although we are landlocked, we are surrounded by globalized world markets. More mines and associated infrastructure, processing and manufacturing industries, as well as a service sector, are yet to be developed,” he said.
The Premier emphasized that targeted industrialization and improved competitiveness must be the basis for Mongolia's 21st Century sustained development and inclusive growth policy. This new policy will focus on developing sustainably and responsible use of the country's rich mineral deposits, based on the mega-projects such as "Oyu Tolgoi" and "Tavan Tolgoi". It will in turn will generate a national wealth to be distributed fairly in order to create a more just and inclusive society in the country.
“We also need to develop value-added processing industries together with service sector projects based on mining sector supply-chain enterprises. That will provide a wide range of business opportunities to develop Small- and Medium-sized Enterprises. These in turn will provide greater job opportunities for Mongolians," he said.
"Our efforts are directed at building a knowledge-based economy and development-oriented equal opportunities for all Mongolians. We see the natural resources beneath our soil not as mere consumption sources, as these should turn into intellectual wealth of the Mongolians. Our goal is to have every Mongolian educated and empowered with necessary knowledge and technical skills.
"Today, Mongolia's capable human resources must decide on their own development for this new century. Thus we setting a goal to bring the secondary education system and its standards to the levels of leading nations, integrate vocational and tertiary education with labor market requirements, and ensure that every graduate has a job.
"We need to give proper attention to creating a people-friendly health system. Here I do not only mean an ideally suitable health system, but also a correct social policy that will encourage healthy physical development,” S.Batbold stressed.
“Human development is at the heart of the policies and activities of my Government. It is indeed striking to see that how often developing or underdeveloped countries blessed with oil or other natural resources have failed to grow more rapidly or generate more wealth than those without. This is the global phenomenon known as the 'Natural Resources Curse'. There is a huge difference between countries that have used their natural resources wisely and those that have suffered from this 'curse of wealth'. Such differences stem from
the fact that if there is better or poorer governance and whether there is or no respect for the rule of law.
Hence, strengthening our democratic governance, promoting transparency, accountability and responsiveness will be the key priority for the Government, as exemplified by our endorsement and active participation in the Extractive Industries Transparency Initiative (EITI) and the Open Government Partnership (OGP),” he went on.
“Everyone is well aware and has much to say about civil service corruption and bureaucratic burdens. It is said that corruption is the phenomenon of a failed state. I sincerely believe that the rule of law is a universally recognized path to creating a state that maintains zero tolerance towards corruption. A law must be a precise norm and barometer for all actions in our life. The goal of applying new standards is therefore of utmost importance when drafting legislative acts to conform with internationally recognized norms and universally accepted principles.
"For the sake of brevity, I define my Government's policy as 'the twining of development for the people and people for the development,” he said.
He believes that Mongolia has a bright future and that there are good opportunities for our people to live happy lives in this beautiful country. The PM is also confident that this two-day event will provide a venue for frank and open discussion, exchange and consideration of ideas on the relevant policy questions and options for Mongolia and other similar nations with rich natural resources on how to make the best of them, how to overcome the consequence of the Natural Resources Curse and achieve the good socially-oriented economic performance.
S.Batbold expressed his gratitude to Ms. Helen Clark, UNDP Administrator, for co-hosting this event and for taking part in the Celebration of the 50th Anniversary of Mongolia's membership to the United Nations.
“Mongolia has chosen a path to the market economy and plural democracy two decades back. This twin reform process was cemented by adoption of the country's democratic Constitution of 1992 and expression of free will of the people in 5 parliamentary and 4 presidential direct elections. At the political reform level, we achieved a strong parliamentary system of governance, multiple political parties and multitude of civil society organizations, and free competitive elections. At the socio-economic level, we created different forms of private sector-led industries, privatization of the state-owned enterprises, housing and land, and at present about 70 percent of Mongolia's GDP is generated by the private sector," he said.
Following Mongolia's 2008 general elections, the two major political parties have formed a Coalition Government in order to provide greater political stability in the best interests of the country's social and economic strategic development goals. Moreover, the term of office of this current Parliament and Cabinet coincided with the major financial crisis that hit both developed and developing countries.
He underlined that the global financial and economic crisis affected Mongolia's economy through collapsing mineral prices in main export commodities and sharp drop in external demand. In addition, natural disaster and consequent events of winter have exposed Mongolia's inherent ecological and economic vulnerabilities and reinforced the urgent need for economic diversification and structural reforms as well as for sound fiscal policy framework to prevent effects of potential shocks.
“As a result of unprecedented and comprehensive policy response to crisis by Mongolian Parliament and the Government in collaboration with foreign donors and partners, severe consequences of the crisis were avoided and Mongolia's economy is recovering rapidly from late last year thanks in part to improving external conditions.
"Having recognized the urgent need to address these crises the Government of Mongolia took several necessary actions both at policy and practical levels to reduce its severe impacts on the population. Let me brief about some of them:
First of all, with a view to ensuring food security and supplying domestic food demand the Government of Mongolia has initiated a nation-wide campaign 'Third National Crop Rehabilitation Drive'. As a result of this 3 years nation-wide campaign, Mongolia is expected to supply all domestic demands of the major staple food products by the end of this year. Our goal is not only to become self-sufficient in major foodstuffs, but also to export these products in near future.
Secondly, financing these policies will be a challenge. Our Government will continue working with our development partners and seeking their assistance, especially to offset our vulnerability to external shocks and the disadvantages of our land-locked location. Domestic resource mobilization is crucial, and therefore we set up a Human Development Fund. Revenues and royalties from the mining industry will be pooled and used to support health and education and other social services along with our efforts towards economic diversification. "Thirdly, the newly passed Fiscal Stability Law is another tool that we will use to effectively manage the revenue inflows from our mining wealth in a transparent and responsible way and mobilize resources for combating poverty.
Fourth, last year, our Government took a decision to channel more investment into vocational schools to provide training for thousands of rural youth to prepare them for jobs in mining, road and construction.
Five, in terms of environmental protection, a legal framework is being developed to stop license issuance in ecologically sensitive areas and to cancel previously issued licenses with a provision of compensation to license holders,” S.Batbold stressed.
He pointed out that as a consequence of these measures, taken by the Government, unemployment ratio decreased up to 8,7% from 37% in 2008, and the latest statistics show us the GDP growth reached up to 6% in 2010 and estimated GDP growth is around 20% in 2011 respectively. GDP per capita is estimated to reach 3000 USD. According to the World Economic Forum's Global Competitiveness Index, Mongolia is now ranked at 100 out of 134 countries. "Our goal is to turn Mongolia into a highly competitive country in this region - in terms of taxation, legal and foreign investment environments," he underlined.
“In addition, we are proceeding with reforms in banking and financial sectors, as well as improvement of the business environment. To reach these goals, we must introduce internationally-accepted standards in all sectors, including not only commodities' and materials' standards, but also new standards related to laws and regulations, technologies and mindsets. A historic opportunity is drawing closer for us. Investors' interest in Mongolia is growing at an unprecedented pace. Although we are landlocked, we are surrounded by globalized world markets. More mines and associated infrastructure, processing and manufacturing industries, as well as a service sector, are yet to be developed,” he said.
The Premier emphasized that targeted industrialization and improved competitiveness must be the basis for Mongolia's 21st Century sustained development and inclusive growth policy. This new policy will focus on developing sustainably and responsible use of the country's rich mineral deposits, based on the mega-projects such as "Oyu Tolgoi" and "Tavan Tolgoi". It will in turn will generate a national wealth to be distributed fairly in order to create a more just and inclusive society in the country.
“We also need to develop value-added processing industries together with service sector projects based on mining sector supply-chain enterprises. That will provide a wide range of business opportunities to develop Small- and Medium-sized Enterprises. These in turn will provide greater job opportunities for Mongolians," he said.
"Our efforts are directed at building a knowledge-based economy and development-oriented equal opportunities for all Mongolians. We see the natural resources beneath our soil not as mere consumption sources, as these should turn into intellectual wealth of the Mongolians. Our goal is to have every Mongolian educated and empowered with necessary knowledge and technical skills.
"Today, Mongolia's capable human resources must decide on their own development for this new century. Thus we setting a goal to bring the secondary education system and its standards to the levels of leading nations, integrate vocational and tertiary education with labor market requirements, and ensure that every graduate has a job.
"We need to give proper attention to creating a people-friendly health system. Here I do not only mean an ideally suitable health system, but also a correct social policy that will encourage healthy physical development,” S.Batbold stressed.
“Human development is at the heart of the policies and activities of my Government. It is indeed striking to see that how often developing or underdeveloped countries blessed with oil or other natural resources have failed to grow more rapidly or generate more wealth than those without. This is the global phenomenon known as the 'Natural Resources Curse'. There is a huge difference between countries that have used their natural resources wisely and those that have suffered from this 'curse of wealth'. Such differences stem from
the fact that if there is better or poorer governance and whether there is or no respect for the rule of law.
Hence, strengthening our democratic governance, promoting transparency, accountability and responsiveness will be the key priority for the Government, as exemplified by our endorsement and active participation in the Extractive Industries Transparency Initiative (EITI) and the Open Government Partnership (OGP),” he went on.
“Everyone is well aware and has much to say about civil service corruption and bureaucratic burdens. It is said that corruption is the phenomenon of a failed state. I sincerely believe that the rule of law is a universally recognized path to creating a state that maintains zero tolerance towards corruption. A law must be a precise norm and barometer for all actions in our life. The goal of applying new standards is therefore of utmost importance when drafting legislative acts to conform with internationally recognized norms and universally accepted principles.
"For the sake of brevity, I define my Government's policy as 'the twining of development for the people and people for the development,” he said.
He believes that Mongolia has a bright future and that there are good opportunities for our people to live happy lives in this beautiful country. The PM is also confident that this two-day event will provide a venue for frank and open discussion, exchange and consideration of ideas on the relevant policy questions and options for Mongolia and other similar nations with rich natural resources on how to make the best of them, how to overcome the consequence of the Natural Resources Curse and achieve the good socially-oriented economic performance.
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