By Ariuntuya Nominkhuu and Batbold Otgonbayar
Parties’ platforms contain numerous promises to restore the economy and create new jobs by expanding the heavy industry sector. This year’s elections are taking place against the backdrop of the unforeseen economic crisis caused by COVID-19. Many businesses closed their doors exacerbating the unemployment. Here we compare the platforms of Mongolian People’s Party (MPP), Democratic Party (DP), and the “Right Person Electorate” Coalition in regard to economic issues reflected in their mining policies.
Responding to a Pandemic and its Economic Impact
The Mongolian economy has already suffered with a drop of over ten percent in GDP in the first quarter of 2020 during the COVID-19 pandemic. After the June 24 election we face a big crisis which is somehow pushed aside from public attention during the election campaign. As the crisis is to mainly unfold in the economic arena, we specifically looked into the party election platforms to analyze how they define their policies to cope with the crisis in order to reverse the economic downturn and to overcome the daunting challenge to repay the foreign debt. This follows up on our previous post that focused on proposals for mining policy.
Only the DP and MPP mentioned measures to deal with the challenges caused by the pandemic while other parties and political powers probably omitted such considerations because they do not hope to gain majority of seats in the parliament or do not perceive Covid-19 worth the mention (Монгол Улсын Үндэсний Аудитын газрын цахим хуудас, МАН мөрийн хөтөлбөр хуудас 24 – 2.1.15, АН мөрийн хөтөлбөр хуудас 11-12).
The MPP platform has a general statement that the Party shall
devise and implement a special plan to remove the socio-economic difficulties caused by Covid-19 pandemic, and to restore industry and service sectors, and take measures to compensate the livelihood income of the economic entities, organizatons and people who suffered income loss (Монгол Улсын Үндэсний Аудитын газрын цахим хуудас, МАН мөрийн хөтөлбөр хуудас 24 – 2.1.15).
The DP platform has a parallel section on “Special Policy during Crisis”. Both mentioned maintenance of jobs and special programs to support businesses, but the specific focus of the DP is on the promise to endorse a special program and package of laws on combating the pandemic at the first meeting of the new parliament (Монгол Улсын Үндэсний Аудитын газрын цахим хуудас, АН мөрийн хөтөлбөр хуудас 11-12).
General Economic Policies
The difference goes further in prioritization of the budget items for 2020 and specific planning on saving measures; loans to be provided to individuals and companies in order to overcome the crisis; support to be provided to the salary fund of the economic entities and organizations; tax cuts and etc. In order to raise funds for post-crisis restoration program, the Government promises to immediately issue necessary decisions, permits and concessions to mining and processing industry projects, particularly mentioned are the underground mining at Oyu Tolgoi and oil refinery in Dornogobi aimag.
The three political players compared here have promised to develop heavy industries in the coming four years, which would be something unseen for the last thirty years. The most avant-garde promises in the platforms are unlikely to make it beyond the proposal phase.
Let’s start from more humble proposals. “Right Person Electorate” Coalition wants to prioritize a copper refinery and metallurgical industry by providing VAT and corporate income tax exemptions for the first five years in case of establishment of a coking coal plant, steel plant, or coal processing chemical plant.
The DP promises to restore the metallurgical industry, to transform oil extractors into fuel producers, and ultimately to make the processing industry an economic pillar, a plant which includes its intention to establish steel, cast iron, copper, coal-chemical plants, oil refinery, and a plant to process rare earth elements phase by phase. In particular, they pledge to establish a copper ore refinery based on the Oyu Tolgoi deposit, coking coal-chemical plant based on the Tavan Tolgoi deposit, a metallurgical complex based on iron deposits in the Darkhan-Selenge region, tungsten production, coal chemical plant in Choir, coking coal plant in Gobisumber with an annual production of sixteen million tons, subsequently fifteen million ton cast iron, and a steel processing metallurgical complex.
The MPP promises the largest number of heavy industries involved in deep processing in the mining sector. According to the platform, our country would establish one heavy industry plant every quarter, and at the end of the next four years at least a dozen complexes are to come into operation. Let’s see some examples: oil refinery, Tavan Tolgoi coal-chemical, coking coal-chemical and methane plant, coal preparation plants shall be built to wash thirty million tons of coal, refinery for precious metals, gold, and copper, Baganuur district shall have a plant to produce synthetic gas from coal, Nalaikh district shall have the second “Tavan Tolgoi improved fuel plant”, Dornogobi aimag – iron and iron cast steel smelter, coking coal plant.
In addition, they are to build numerous railways and paved roads along with electricity stations. Again the MPP has the longest list. The list includes all projects that have been already discussed, planned and rejected for years. The DP’s list is comparable to it.
The “Right Person Electorate” Coalition’s list is the shortest but also the most realistic which made it easier to read and accept. They explained their policy which has the goal to build railroads to transport exported coal, increase the share of renewable energy and supply Oyu Tolgoi power from domestic sources, which sound close to home. The coalition platform contains the most unique concept which is to open the legal environment to allow foreign banks operate in Mongolia and thereby reduce the monthly business loan interest rate by one percent. This is a very brave step to address a topic that political powers shun the most.
The new Parliament and their new Government to be established after the elections are to bear unprecedented responsibilities. On one hand, they would face COVID-19 related economic challenges globally and in Mongolia, and, on the other hand, they must establish the new Government according to the amendments to the Constitution that have recently come into force. This entails the task to amend other relevant laws and to ensure the national development through comprehensive and coherent actions. If in the past voters made their choice based on the cash distributed or extravagant promises then this time it is highly likely that they would opt for the most realistic platform.
About Ariuntuya and Batbold
Ariuntuya Nominkhuu is a Journalist (Mining, Business and Economic) and Executive Director of Council for Sustainable Development and Social Responsibility (CSS) Mongolia. @Ariuna_n
Batbold Otgonbayar is a Political scientist and Resource Governance Researcher PhD candidate of German University of Administrative Sciences Speyer and Chairman of the Board of CSS Mongolia. @OBatbold
The Council for Sustainable Development and Social Responsibility (CSS) is a non-profit and non-governmental organization established with the aim of introducing and advancing best international and local practices in sustainable development and corporate social responsibility into the country’s mining sector. The CSS was established in 2015 by initiatives of sustainable development experts, lawyers and journalists.