OBG talks to T. Badamjunai, Minister of Food, Agriculture and Light Industry

Interview: T. Badamjunai

What legislative changes are necessary to increase international aid and investment in the sector?

BADAMJUNAI: Some 74%, or 115.5m sq km, of land in Mongolia is referred to as agricultural common-use land; furthermore, we have 40m heads of livestock. Therefore, we put great importance on integrating our relative comparative advantages with techniques, technologies and financial resources of agriculturally developed countries to fulfil our potential and increase investment in the sector by developing mutually beneficial cooperation. Over the years the government has paid particular attention to improving the legal environment for investment and providing governmental and policy support for agricultural producers.

Certain provisions which offer incentives for foreign and domestic investments are reflected in Mongolian laws on tax, Customs and foreign direct investment. Specifically, in reference to its resolution, the government considers the cultivation of wheat, flour, fruits, sugar beet and plants for oil; livestock forage; and intensive livestock husbandry for the production of milk, meat and other meat products to all have significant priority. The government helps enterprises to ensure their investments by providing Customs and value-added tax advantages for imports of heavy machinery, new technologies and other equipments brought to the agricultural sector. This indicates there is substantial possibility to increase investments in our sector. Meanwhile, we will work towards proper management of investment policies to increase economic efficiency.

Which industrial segments are best placed to attract foreign expertise and funding?

BADAMJUNAI: Given that Mongolia is a member of the World Trade Organisation and the UN Food and Agricultural Organisation, among others, we have liberal trade policies and, in particular, export and import rules for food and agricultural raw materials. Both our neighbours are large importers of food and agricultural raw materials, and these are significant markets for us. Therefore, given our agricultural potential and raw material resources, attracting investments for developing export-driven industries is significant.

Currently, we are working to develop agro-processing industries such as the processing of meat, milk, leather and other raw materials of agricultural origin, by introducing leading technologies and practices from foreign countries. To achieve competitive success we must implement and introduce quality and international standards in our agricultural and light industrial sector, specifically those for which compliance is necessary to enter European markets.

Which Mongolian sectors are best equipped to increase their presence in the export market?

BADAMJUNAI: Products of livestock origin, such as cashmere, leather and meat, are best placed to compete internationally, as well as in neighbouring markets, are cashmere and leather products. On top of that, all of Mongolia’s agricultural products are ecologically clean and are considered organic, meaning they have the capability to compete at a global level. Meat from our pastoral herds is considered ecologically pure, for example. We have become self-sufficient in key agricultural areas and can offer those products globally.

What support does the government provide to small and medium-sized enterprises (SMEs)?

BADAMJUNAI: Since 2008, substantial progress has been made with respect to providing financial support to SMEs. In 2006-08, MNT3bn ($2.34m) of concessional loans were allocated to SMEs from the state budget, whereas in 2009-10, we increased this to MNT60bn ($46.8bn), and in 2011 loan support has been further increased to MNT210bn ($163.8m). Additionally, we have issued MNT150bn ($117m) of bonds.

The government has also introduced tax benefits for the import of new agricultural technologies, equipment and machinery, and SMEs are also exempt from Customs and value-added tax until the end of 2012.