OBG talks to Sambuu Demberel, President, Mongolian National Chamber of Commerce & Industry

Interview: Sambuu Demberel

How is the government supporting cooperation with the private sector? What else can be done?

SAMBUU DEMBEREL: Public-private dialogue, collaboration or cooperation is a long and tireless process. Without regular and meaningful consultation with the private sector it is not possible to make successful and effective policies, regardless of the industry. Such consultations should be done not only at the national level, but also at every soum (district) and aimag (province) in Mongolia. It is a way to meet each side’s needs on common ground using open communication and dialogue.

Mongolia has been trying to move in this direction for several years, but we can now say that the private and public sector are engaged in this process, which will require a continuous commitment and a common vision and target of economic and social progress.

To what extent can Mongolia’s industrial base benefit from the country’s mining activities?

DEMBEREL: We must ask ourselves, do we want impressive economic growth, no matter the costs? Will mining be a driver of qualitative growth or only quantitative? Achieving high double-digit GDP growth is an accomplishment. But this might result in non-inclusive growth, which excludes certain parts of society from development and creates disparities. Therefore, it is still good if we achieve 8% or 10% growth with a very active non-mineral private sector. This will create jobs outside of mining, broadening the expertise and skills of our work force. It is not just about quantity, but also quality of growth. Mining in Mongolia should be a catalyst for other sectors to prosper. Additionally, wealth generated from mining should be distributed equally among other areas such as education and health, which in the end has a real impact on Mongolian society.

How can industrial development help reduce socioeconomic disparities between urban and rural areas?

DEMBEREL: Socioeconomic disparities add social tension and create poverty in regions across the country.

Mongolia has been trying to reduce these differences for several years, and over the past years there have been a number of laws passed to move in this direction. For example, the recently adopted investment law gives preference and incentives to investments in rural areas, which should help to channel investments to different parts of the country.

Another way to help develop rural areas is by giving each aimag more economic freedom to decide on key issues. We need a gradual decentralisation process for both the local governments and the local private sector. However, we must also bear in mind that there should be a balance between social needs and economic efficiency. Local leaders should ensure the participation of the people in key decisions and make the process transparent. With the right policies in place, and with local authorities having more freedom to decide for themselves, we will see more industries flourish in rural areas, more investments and more economic development outside Ulaanbaatar.

The government plans to reduce the number of state-owned enterprises (SOEs) by one-third. What productivity gains will this bring to industry?

DEMBEREL: Having many SOEs in Mongolia reflects a lack of trust in the private sector. It also makes for inefficiencies and red tape, and in some cases the managerial expertise of the staff might not be as extensive as in the private sector. Having less SOEs would increase the productivity and competitiveness of our industries.

Mongolia needs an intensive privatisation programme.

Another means to increase productivity and efficiency is for the government to act as a general contractor for strategic SOEs. In such cases, the government can deal and contract directly with domestic or foreign private investors, which would take care of the company’s main operations with a high level of standards.

Besides achieving greater productivity, this would also limit an excessive government intervention in the business environment, and by extension, in the economy.