Notes from the Field

Mongolia: Asia’s Economic Standout Feels Weight of Corruption

February 6, 2013

Mongolia’s economy is booming, with growth trajectories showing it will be one of the world’s fastest growing economies again this year. It is consistently advancing in global rankings on governance and investment climate. Thanks in part to the passage last year of the new Law on Conflict of Interest, Mongolia moved 26 spots from 120 to 94 in Transparency International’s 2012 “Corruption Perceptions Index,” and up from 88 to 76 in the World Bank’s “Ease of Doing Business Index.”

These are impressive and tangible markers of progress, especially considering Mongolia’s nascent democratic institutions and legal system. However, when you talk to people from the civil society and business sectors in Mongolia, you often hear a more nuanced and less rosy side of the story. The new report, “Study of Private Perceptions of Corruption,” commissioned by The Asia Foundation and conducted by Mongolian NGO Sant Maral Foundation, shows that the perception among Ulaanbaatar-based Mongolian businesses is that there are significant steps still needed to curb corruption in Mongolia. The study captures the experiences of 330 members of the business community in their interface with government service providers, and within their own business service sector.

Mongolia corruption survey

According to the report, over 17 percent of large businesses (with transactions of more than 200 million Tugriks, or $144,000) spent over 50 percent of their time overcoming non-productive obstacles, such as obtaining or renewing licenses, facing temporary prohibitions, and navigating an unstable regulatory environment . The 11 percent of businesses able to overcome these obstacles have been able to accomplish this by using 25 percent of their company resources.

Similarly, 16 percent of respondents reported they had observed instances of corruption in the last month, and nearly 50 percent reported they had personal knowledge of corrupt transactions in the past seven months. A total of 75 percent of businesses reported they “always” or “often” encountered corruption in public tenders and contracting. Construction is the top sector in which corruption was most widely witnessed.

In fact, there is a strong commitment among state and non-state actors to work together and improve coordination to combat corruption. Surprisingly, despite the government anti-corruption efforts such as the enactment of the Freedom of Information Law (2011) and Conflict of Interest Law (2012), and presence of the Independent Authority Against Corruption, an overwhelming number of respondents from the business community (73 percent) reported they have little or almost no knowledge of government anti-corruption efforts. Only 2 percent reported that these anti-corruption efforts are very effective. Eighteen percent said they were somewhat effective.

The survey is intended to serve as a baseline to track progress on combatting corruption in Mongolia and to identify what needs to be done to ensure that the government’s anti-corruption efforts reach the levels of society and business where it matters the most.

Parliament has a key role to play in this fight if it can provide the much-needed oversight over the performance of key anti-corruption actors in government and hold them accountable. Last month, 12 parliamentarians from across all political parties held a press conference to announce the reconvening of the Mongolian chapter of the Global Organization of Parliamentarians against Corruption, a voluntary organization of parliamentarians from around the world seeking to promote transparent and accountable governance. Last week, four parliamentarians attended the GOPAC Conference in Manila where they were introduced to the importance of strong leadership, creating a robust legal environment, and the critical role civil society can play in the fight against corruption. They also had the opportunity to network with potential allies and like-minded members of Parliaments from more than 65 other countries. With the Mongolian GOPAC Chapter now reconvened, there are high expectations of what the Parliament will focus on, and the Mongolian people are hopeful it will play a more active role in countering corruption.

The Study of Private Perceptions of Corruption was funded by the United States Agency for International Development (USAID), as part of The Asia Foundation’s Strengthening Transparency and Governance in Mongolia (STAGE) project, which aims to strengthen democratic governance by building a more transparent and accountable regulatory and legislative environment while promoting principles of checks and balances. Read more about the program.

Meloney C. Lindberg is The Asia Foundation’s country representative in Mongolia, Basanta Pokharel is the Foundation’s chief of party for the STAGE project in Mongolia, and Tirza Theunissen is program and operations manager. They can be reached at mlindberg@asiafound.org, bpokharel@asiafound.org, and ttheunissen@asiafound.org. The views and opinions expressed here are those of the individual authors and not those of The Asia Foundation.

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