Mongolia Economic Forum: Building Credibility through Provincial Competitiveness Data

For years, Mongolia’s economy outpaced most of the world, riding a mining boom to double-digit growth that peaked in 2011 at 17.5 percent. But since then, the economic tide has slowly turned, with growth dropping to 12.3 percent in 2012, 11.7 percent in 2013, and 7.8 percent in 2014. The Asian Development Bank predicts that economic growth will slow again this year, to a dismal 3 percent, before rebounding slightly to 5 percent in 2016.

Falling global commodity prices bear part of the blame for Mongolia’s declining growth, but another factor is lack of investor confidence. Foreign direct investment in Mongolia fell 58 percent in 2014 according to the World Bank, due to conflicts over mining agreements and licensing, and investor insecurity over the stability of the regulatory framework.

On April 2 and 3 in Ulaanbaatar, Mongolia hosted the sixth annual Mongolia Economic Forum (MEF), under the theme, “Building Credibility.” In his opening speech, Prime Minister Saikhanbileg called building trust among investors more important than ever to reviving Mongolia’s economy. He was echoed on day two by President Elbegdorj, who called for Mongolians to recognize past mistakes and work together to build consensus on the nation’s future.

A special session on the second day focused on competitiveness, particularly in local and regional economic development. The panel, moderated by distinguished Mongolian journalist B. Oyunchimeg, included L. Enkh-Amaglan, MP from Khuvsgul; Governor J. Batsuuri of Sukhbaatar province; Jean-Francois Lengelle, project manager of the OECD Eurasia Competitiveness Program; and Meloney C. Lindberg, country representative of The Asia Foundation.

Following a presentation on Mongolia’s overall competitiveness by presidential Chief of Staff P. Tsagaan, chair of the Economic Policy and Competitiveness Research Center (EPCRC), the discussion turned to the results of the latest Mongolian Provincial Competitiveness Survey, recently conducted for the third time by the EPCRC with support from The Asia Foundation. The survey uses 180 criteria to rank Mongolia’s 21 provinces or aimags in four main categories: economic performance, governance efficiency, business efficiency, and infrastructure. The survey combines statistical data with the results of questionnaires distributed to the private sector by the EPCRC in collaboration with local chapters of the Mongolian National Chamber of Commerce and Industry in each province.

This year, for the first time, results of the Provincial Competitiveness Survey have been made available online, on a new website developed by EPCRC and The Asia Foundation. Visitors can now compare economic competitiveness between all 21 provinces using easy-to-read graphs and tables. “Economic data can be quite dry and difficult to digest,” said Lindberg during the session. “The website, for the first time, makes the data accessible to all in an easy-to-understand way, thereby enhancing transparency and providing an important basis for evidence-based advocacy, policy, and public-private dialogue by the local private sector and local governments.” The Mongolian Provincial Competitiveness Survey is one of many economic governance indexes that the Foundation supports across Asia to promote private sector development.

The second day of the MEF also featured a session on economic development in the capital, Ulaanbaatar, which accounts for more than 60 percent of Mongolia’s GDP. Capital City Governor and Mayor Erdene Bat-Uul delivered a presentation on the Ulaanbaatar Economic Development Strategy, launched in 2014 with support from The Asia Foundation. In a major shift from traditional top-down economic planning, city authorities spent a year on a series of structured dialogues with representatives from the private sector, civil society, academia, and the national government to develop a vision for Ulaanbaatar’s future.

An executive committee and five sub-committees met over the course of six months to discuss the challenges and opportunities in each of five areas: growth and development; infrastructure and transportation; finance and taxation; health, education, culture, and tourism; and intergovernmental relations. The resulting economic development strategy lays out a vision for Ulaanbaatar until 2030, with clear long-term, mid-term, and short-terms goals and the steps needed to achieve them. The Asia Foundation is currently supporting the city’s Economic Development Agency in implementing the strategy, which includes establishing an Ulaanbaatar Economic Development Corporation to attract and professionally manage foreign investment.

As Mongolia faces economic challenges, the sixth annual MEF showed that the government recognizes the need to rebuild its credibility. Going forward, policymakers at all levels must continue to make positive changes based on the survey results and the Ulaanbaatar Economic Development Strategy, so that Mongolia will once again become an attractive destination for foreign investors.

Gantulga Ganbaatar is a program officer and Tirza Theunissen is the deputy country representative of The Asia Foundation in Mongolia. Amy Warren is a program associate in economic development at the Foundation’s headquarters in San Francisco. They can be contacted at [email protected], [email protected], and [email protected]. The views and opinions expressed here are those of the individual authors and not those of The Asia Foundation.