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2011-03-03




Speech of Tsakhia Elbegdorj, President of Mongolia at Mongolia Economic Forum



Ladies and Gentlemen,

It is a great pleasure to open the second day’s session of Mongolia Economic Forum. Spring is coming to Mongolia. The good time when all species grow and make fruits comes. I am very much delighted that our civil society, government, private sector, scholars, researchers and investors are actively participating in the forum. Forums and discussions on Mongolia’s development need to take place more frequently. Because reform and change are not one time process, rather it is a progress. Thus to sprint our development, Mongolia has to pace together with the world by adapting to ever changing global environment.

Mongolia has a free and open society. Everybody knows that Mongolia’s politics and economic system are the most liberal and free ones in this region. An advantage of a free society is that it nourishes new ideas and good ideas always appear. There are possibilities for creation and new ideas are realized in a free society. There are possibilities that every idea and invention of individuals are possible to be realized in a free society. Government has duties to assist its people to realize their innovative ideas. Generally the duty of a government is to serve its people and to realize new ideas of the people. Atmosphere for this should be created. The main duty of a government in a free society is to serve the people. My favorite phrase is that government is the continuity of people, but not people are the continuity of government. Government is not a creator of privileges. In an open society government creates an environment that nourishes new services. Citizens exist not for the sake of a country, the country exists for the sake of its citizens. People do not exist for government, instead government exists for people. Therefore our government’s main duty is to serve our citizens.

This economic forum’s another key responsibility is to determine the prospects of this year. According to lunar calendar, this year is a Rabbit Year which Mongolians consider as a good year. The year is soft for the elder and children. Rabbit sprints. Thus it is important that this year’s priority issues at decision making level as well as for the people of Mongolia are to be discussed within the framework of the views of this forum and the accords of the forum are to be realized as large scale decisions and work. Therefore this forum is vital. This year power will transfer to citizens when power is transferred to local governments. The most discussed issue during the sessions of the forum is development. It has been discussed that developing our people are the key objective of Mongolia’s development. Further we need to think again what is needed to develop a person, and what kind of persons develops. The answer is a person develops when the person has rights. Without rights it is impossible to talk about human development.
Without transferring rights to people it is impossible to talk about people’s participation. In a country where its government, its leaders and its president think on behalf of the people, there is not any space for human development.

When the power of local government transfers to people, there will be possibilities to create wealth. For example rural citizens can define the pasture capacity of the territory of their soums (villages) and aimags (provinces). “If the number of animal stock exceeds the capacity, the owners need to pay tax. I can initiate this tax proposal and submit it to the village parliament, tax will be adopted and the tax collection work will begin. I should participate in this.” If there is such understanding and environment, people will participate. Wealth is accompanied by participation. Vital issue is to transfer the right of participation to people.

Let us give the right to decide the issue of real property tax to local governments. Let people participate in setting tax percentage and which things are to be taxed. Percentage, size and fluctuation of income tax are set by the Parliament in our country. Let us give the rights to set the percentage within the fluctuation range and implement that. Let us have rules how people can create or participate in creating wealth in their neighborhood. People may wonder what I am talking about here. I am talking about rules of cities, villages and provinces. Local people should discuss and adopt the rules. For example, people can have rules that note if an investment is made to a village’s territory, the people of the village may participate in the decision making in the following way. “The investors should introduce us the local people their plan to develop our village and province.” If their plan is adopted by the people, the investors can proceed further. If the right to participate is given to citizens, this type of economic forum will take place in each village, province and place. Certain results will come out of the forums. As the President of Mongolia, I support new proposals and initiatives. A new award for new creations has been adopted. Every province, village, and city need to discuss new creations in their areas and select the top ones through public discussions of citizens. The selected ones should be announced nationwide as well as to the local area. Nomads have a disadvantage. They do not like to build and leave a creation. We have dismounted from our horses just yesterday. That is why this mind has been preserved in our minds.

Now we should become a nation that builds and creates. To become such a nation we need to give this initiative and rights to our citizens. We should give the rights by law. It is wrong that the Members of the Parliament of Mongolia receive and divide 76 billion tugrugs one by one billion and discuss about developing local areas. This means that using their privileges of decision making, the Members of the Parliament take the right to invest in the local area to themselves and distribute the investment. It is wrong that the Members of the Parliament conduct this business through companies they know. We should get rid of this wrong practice. We should correct these matters those have been being criticized by people and citizens as not appropriate. However I think that the government listens, makes decisions and learns from its mistakes. This forum has been successful because the right to participate was given to our government organizations, investors, business people and citizens. Not only right to talk but also right to realize what they discuss should be transferred to local government and local citizens.

Tax paid by citizens is not water that is poured into sand. Whether you are investors or businesses, you need to pay tax and that is it. If they pay tax, the people and citizens should have rights to monitor effective spending of collected tax. In this case in collaboration with the people, the government can jointly make effective investments. Tax payers should ask and demand “We pay tax in billions and where does the tax go. Let us use the money paid for tax to develop the local area.” I think individual income tax was created to have the economic base of that demand.

Thus taxpayers should transform into partners for development. Taxpayers should be not only taxpayers but also co-creators of development, initiators of new ideas, and co-worriers for the development of our country. If anyone has a good proposal or initiative, please recommend it through the Members of the Parliament those represent your constituency or the President. My main duties are to mediate good initiatives those form in Mongolia to realize and to assist to realize them as much if possible. I am ready to collaborate for any proposal to develop Mongolia by drafting necessary laws. Our government has the same aspiration. I think the Members of the Parliament have the same thoughts, I think.

Next idea is about mineral resources issue. Mineral resources have become the priority of politics, economy and social life of the country. We need to think why the issue has become so important. Mineral resources businesses leave the most vivid marks by both direct and indirect meanings. This is not only by the meaning of leaving traces after taking mineral resources by ladles for excavators. Mineral extraction leaves its traces to the development of the country and the history of the people. Since Mongolian society is open, everybody worries about relating to mineral resources. There is a criticism that notes everybody has become “miners.” While everybody does not become miners, we all should worry about the mineral resources.

Mineral resources should leave traces of pride in development of Mongolia. Traces of development and progress should stay clear. But mineral resources should not leave wounds and marks of wounds. Particularly the wound should not be a wound that frequently deteriorates. We do not want this to leave traces of conflicts and fights. After the extraction of mineral resources it should not leave the traces of chasing interests, big money or fights for them. The traces should be creation, construction and building and something those are useful for people. The mineral resources business should leave traces of creation and construction those have white traces, I think.

People have begun to talk. An understanding has begun to exist that mineral resources is real money, profits and businesses. On the other hand there is phobia to be afraid of and be careful of mineral resources. Fear arises that Mongolia is going to be considered as “lots of things.”
The key idea that I try to say is that now it is time to make changes in mineral resources sector today. Changes will be made in the sector. The world has been making this change. What kind of change I am talking about, you may wonder. I am talking about responsible mining here. Investors, government and we all need to think about this. In my understanding responsible mining is transparent mining.

I am talking about mining with a long term program directed towards society and which will influence the development of citizens and local development. Mining sector should be not only a sole extractor of mineral resources but also the one that leaves profit to the country, gives new development opportunities and creates business and economic micro-environment.

Mongolia has many heads of animal livestock. Before snow storm dzud occurred, the heads of animal livestock reached 50 million. Now 33 million heads of animal livestock have been counted. High-technology that processes animal originated raw materials to make final products and possibilities should stay here for us. Investors, government and people should demand this.

We would like to process animal originated products and export the products to countries wherever the products are needed. Accompanying the high technology, newly built infrastructure should stay in Mongolia. Mongolia should have good infrastructure namely road. We have talked about new village centers for two years. Bigger investors, please make initiatives to finance and give guarantees to those projects. Let us reform all 330 village centers, and they would have new schools, new hospitals, new outdoor sports facilities and new local government buildings with new services. Each year we invest in the buildings of villages and every year those buildings collapse. Each year budget is required for these. We have worked like this for 90 years. Let us stop this. Let us collaborate to solve this. Let us change the villages to have showers with hot water installed and same conditions as urban areas. Why there should be two parts of Mongolians, Ulaanbaatar’s Mongolians and frontier Mongolians. Please collaborate on eliminating the differences of rural and urban living conditions.

Mineral resources’ issue is not only an economic issue, it has become a social and political issue also. Mineral resources leave their traces not only on soil, but also in the hearts of people. Therefore cooperation and collaboration on issues those are wished and longed by local people are needed to attract the hearts of the local people. This can be said as a new mining sector. A change is coming to the mining sector. New clusters should appear following mining businesses. New services should appear.

Industrialization should be talked the most about. In accordance with these new types of mineral sector activities, new types of collaboration should appear. It should be clear that the basis of environmental protection and green economy be put and economy should develop. It should begin from creating renewable energy sector also. Making contracts and collecting taxes and royalties should not be the only concerns of decision makers concentrating on profits only.

In other words, Law on Mineral Resources will fully change this year. I think the law will be amended by the Spring Session of the Parliament. The stoppage of the exploration licenses’ extension was set on April 30. The amendment to the law will be made around that time. Some people here may say that they are getting this information for the first time. We have been talking about this for 10 years. During the discussions of ten years we have warned you during talks. Talks will continue on this now. The things I have just mentioned should be included in the Amendment of Law on Mineral Resources. Mongolia is putting an objective to have new Law on Mineral Resources when the Spring Session of the Parliament concludes. These changes will be reflected in the new law and the government policy of our country. Mineral resources environment will be improved. We see each change to the sector not as one to faint from, instead a factor that improves condition. Good changes should be made.

These expectations should be reflected in all discussions. Last year’s forum brought results. The Prime Minister has already talked about the results and I am not going to repeat those results here. I read competitiveness report of Mongolia recently. A competitiveness center has been established in Mongolia and issued a special report. This is vital. We know that everything that has competitiveness has ability to live. We should have our own standards and measurements. We should know at what level we are progressing on. At what level the progress of our country is going on comparing to other countries with similar development level. We should put objectives that note we are at this level this year and next year we will come to that level.

Let me tell you about a big change in Mongolian politics in the near future. In 2012 the Parliamentary elections will take place. This time of next year Mongolian politics will be heated reaching the highest degree. Our politicians, Members of the Parliament and the President learned a big lesson. We all have understood that it is wrong to give certificates promising a big amount of cash. This is good news. The main topics of next year’s elections campaigns will be industrialization, construction, formation, and civil society and how to improve Mongolian society, protect environment, and develop new economy. Government policy that supports people those work and create will be developed. The draft of the Amendment to Elections Law that has been accorded is has been ready for adoption. There should not be any promises of cash distribution during presidential, parliamentary or local elections again.

Political lesson comes afterward. This time the lesson comes four years later. Now it needs to be realized as real work. Next important issue is justice. If there is not any fair implementation of law, equal treatment of the rule of law, and if law enforcement agencies and institutions do not pay attention to these, then all talked about issues on justice will become nonsense.

Justice is a social wealth. This is not a topic that is talked about by the President or a group of people only. Justice is the biggest foundation that will create social wealth. Every citizen of society should win from justice. I criticized some Members of Parliament that they work fast as racing horses for issues related to power and finance, but they work too slow as sheep herding horses on the issues of justice and local government power.

Government initiates and can initiate many things. Mongolia joined the Extractive Industries Transparency Initiative. Mining businesses those have followed the criteria of transparency initiative has good results. This transparency understanding should become a common understanding of public. Also our country joined the United Nations’ Anti-Corruption Convention. In addition, recently our country joined the Partnering Against Corruption Initiative of the World Economic Forum during the World Economic Forum Annual Meeting in Davos. The partnership has a meaning. The initiators of the initiative are not government but private sector. The initiative has a meaning to become an example for governments by making private sector open and pure one with right leadership and to become an example for governments to follow. By some surveys of today there is corruption in government. There is corruption in private sector too. When we see what private sector and civil society talk about are grand scale topics but based on tiny interests such as monetary interests or insignificant thoughts rooted in the mind of being upset owing to being left out of the topic. It is important to discuss this topic too.
On this matter, the President of Mongolia and the Office of the President will make efforts. Next month we will organize this type of discussion and forum on judicial power. At that forum civil society and judicial institutions sit together and openly and publicly discuss about what are their understanding about judicial power and justice. It will help us to understand each other. Without these open discussions we do not understand each other, I think. The topics should be added. Let us discuss about what should be done to make Mongolia a transit hub. Let us discuss about topics such as what Mongolia should do to make the country financial, travel, green economy hubs and the centers of new initiatives and proposals.

Let us discuss a topic on South Gobi’s economy. That discussion can take place in South Gobi. Similar type of discussions can take place in Bayan-Ulgii and Dornod provinces. Similar discussions should take place in Zuun Kharaa, Khar Khorum. By these, the discussions can take place all around Mongolia during the whole year. One time discussion for two three days can not bear the results we want, I think. Last year from this podium Hernando de Soto talked about property rights and registering properties. This topic has been forgotten and has been randomly mentioned. I wish the Government of Mongolia to pay special attention to this topic. The government signed Memorandum of Understanding on the topic. That memorandum may stay as a memorandum only. We need to discuss the results of the main topic of this year’s forum.

I appreciate all participants of this forum. You see what the government can not see, and listen to and let the government to listen to what it can not listen to itself. I understand that the days when the government ears are open have been continuing. Government is listening to you. Also you are listening to the government. In reality, government should be open. If initiatives and proposals those arise at this forum are realized, Mongolian society will become well. Since Mongolia’s society is open, I believe that the path our government and our people are following is improving. Every Mongolian has understood that they are not the tools of the government or a political party policy. Past 20 years every Mongolian has understood that he/she himself/herself is the determiner of this policy. This is the key success. Open states properly use their mineral resources. For example European countries particularly Norway achieved success thanks to their openness. We should not be decision makers for ourselves, instead we should implement instructions and guides the people give us. By doing this, Mongolia will progress on open right path for mineral resources. Our country’s development will follow the right path. We can organize open discussions and everybody starting from the leaders of the government can participate in the discussions and we from all corners of the world make efforts to realize the issues discussed and accords from the discussions. We do not hide our shadows and we see our disadvantages and advantages.

I wish the best success for the forum.