Sunday, May 25, 2014

The clock is ticking for the government of Mongolia

The Government of Mongolia, which received instructions to intensify and recover the economy in 100 days, is getting to work. The plan for the hundred days was approved on May 9 through Parliament and almost two weeks have already passed, with only 90 days left for the government to fulfill, approve and decide on measures to improve the country’s economy.

The government has divided its projects into six groups. Leaders are aiming to complete several projects such as accelerating production in the mining and minerals sector, supporting businesses, developing the construction and infrastructure sectors, enhancing the economic capacity of province and aimags, increasing foreign investment, and implementing measures regarding monetary policy. A special team including officials from the business and financial sectors are working on research and assessments of how to improve the economy in the near future.

The efforts will focus on a total of 71 issues during the next three months. Obviously, one hundred days is not enough time to complete all the planned work. Three months is short time for the those who work and more than enough time for those who don’t. It might seem impossible to complete so many projects in only three months, but the government has no other option but to try accomplishing its goal.

The primary purpose of this one hundred day effort doesn’t lie in seeing its outcomes tomorrow or next week. Its main purpose is to enhance an economy which has been hobbled for many years and to put the growth of the country’s economy in the right direction.

The following is what the Government of Mongolia has planned to complete and accomplish within one hundred days to strengthen the country’s economy.

1.Support business owners:

- Promote smart consumption, reduce unnecessary import consumption and promote the purchase of Mongolian national products

- Introduce leasing services for equipment, machinery and facilities to promote domestic production

- Develop a program to possess vested state-owned entities and submit it to parliament

- Stop unnecessary state monitoring and inspections and give advice to entrepreneurs

- Create conditions to put land in economic circulation

- Reduce the number of approvals required for the operation of a business and ease issuance procedures

- Establish national insurance cooperation for loans

- Stabilize and intensify operations of the stock exchange

- Increase MNT for CNY exchange deal by 20 billion CNY

- Make amendments to the law on tender bids regarding the quality of constructions and roads

- Begin work to create a VAT system which will stimulate spending

- Develop a draft bill on proprietary rights and submit it for further discussion

- Ease factors which are increasing expenditures and costs for national industries and domestic operations in order to provide them with sustainable operations, provide loans and loan insurance, and support their inclusion in the domestic and foreign bond market

- Collect information from calls to the government’s 11-11 center about business challenges and bureaucracy and take urgent, appropriate measures to address them

- Implement a mid-term program to reduce loan interest rates, make plans to open branches and units of foreign banks, and issue approvals by 2016 in a limited range

- Make economic data open to the public, develop a draft bill on economic amnesty and submit the bill to Parliament for approval

- Renew the quota for foreign laborers and balance their classification

- Develop a draft bill on mobile assets and deposits of immaterial wealth and submit it to the Parliament

2. Increase production in the mining and minerals sector:

- Amend Law on Minerals and approve exploration licenses

- Launch operations at the Asgat silver mine

- Resolve issues around controversial licenses

- Take measures to increase coal export, support beneficial cooperation through the participation of foreign and domestic investors in the Tavantolgoi mine, enhance competitive capacity in the foreign market

- Support gold exploitation

- Launch operations of a domestic oil processing industry

- Make preparations for the Mongolia-China coal gasification industry

- Form a permanent council to strengthen the economy in the Prime Minister’s office

- Accelerate progress at Oyutolgoi’s underground mine and provide policy support from the government

- Form a minerals policy council

- Show policy support for the implementation of non-traditional oil, oil, coal dilution and gasification, and energy export projects and programs

- Clear hurdles and barriers for companies operating in the uranium sector

- Resolve railway and transportation infrastructure issues to enhance compatibility with exports

3. Intensify the construction, industry, and infrastructure sectors:

- Allow state organizations and state-owned entities to buy domestic products directly from manufacturers without arbitration

- Intensify construction of Gashuun-Sukhait and Tavantolgoi rail lines

- Finish border railway construction this year

- Create fuel and energy tax exemptions, improve the investment environment, develop a plan to shift transmission lines and new energy sources for state/private entity partnerships and submit it to the Parliament

- Manage postponed VAT and customs payments for industrial facilities and equipment

- Support incomplete industries in starting their operations

- Support export and build industries to replace imports

- Increase wool and cashmere production

- Increase loans to fund the promotion of SMEs to 100 billion MNT and increase sources of loan guarantee funds

- Activate mutually beneficial cooperation with neighboring countries and stimulate talks to build railways and highways that will connect Russia and China and create petroleum, natural gas and energy transportation infrastructure

- Begin construction of the Baruun-Urt-Bichigt road and improve infrastructure at the Bichigt border point

- Start construction of the Tuul highway in May

4. Strengthen aimag and provincial infrastructure economy:

- Implement the “Street” project in aimags and Ulaanbaatar

- Launch the construction of thermal plants in aimag centers to improve heating supply

- Renew 16 soum centers included in the “New Soum” project

- Establish the first phase of milk processing and production in inter-soum centers

- Connect six provinces (Dornod, Khuvsgul, Umnugobi, Sukhbaatar, Gobi-Altai and Zavkhan) to Ulaanbaatar with paved roads

- Apply international trade status to the Gashuun-Sukhait and Shiveekhuren border points

- Launch and continue the 1,000 Households housing program in aimag centers

- Provide government support for projects and programs implemented in Ulaanbaatar with its own capital

- Make loan interest rates for apartments built in aimag centers seven percent

5. Increase foreign investment:

- Attract investment to the nation’s free trade zone

- Introduce a new debt management system

- Annulment of profit tax for non-banking financial organizations that attract investment greater than 100 thousand USD

- Improve tourism infrastructure: initiate projects to introduce duty-free services, business centers, vacation destinations, and free trade zones

- Create investment funds: activate implementation of the Law on Investment Funds

- Tax exemptions for banks that attract overseas capital

- Launch concession works: create more state responsibility in the Law on Concessions, amend the law to protect national producers and entities and grant them priority

- Increase tourism sector income and promotion within “ITB”

- Attract investment from foreign investment funds and foundations

- Organize partial investment meetings with vested international banks, financial organizations and foreign countries

- Increase number of countries with visa-free travel agreements and create a pleasant visa environment for foreign investors

6. Regarding budget and monetary policy

- Reduce operational budget expenditures by 20 percent and shift to a cost cutting regime

- Provide transparency about government bond spending and trade in the international market, and improve monitoring

- Submit draft bill on development policy planning to Parliament

- Expand the range of operations at the Development Bank and improve governance: increase its independence and amend related laws and regulations to improve the investment environment

- Evaluate the foreign currency exchange rate and state budget funds with new methods and evaluate stability

- Provide budget transparency, create conditions for NGOs and tax payers to put controls on the performance of the state budget

- Prohibit promotions and advertisements through the press and media with the exception of reports from state organizations about their operations, and prohibit “conclusion contracts”

- Decide whether to continue implementing a mid-term program to stabilize basic commodity prices

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