How are we setting Mongolian How are we setting Mongolian long term development policylong term development policy

Prime MinisterPrime Minister’’s Offices OfficeUlaanbaatar 2007Ulaanbaatar 2007

CONTENTSCONTENTS

1.1. How are we setting Mongolian How are we setting Mongolian long term development policylong term development policy

2.2. Midterm objectives of Mongolian Midterm objectives of Mongolian national development strategynational development strategy

Main target of the NDSMain target of the NDS

The main purpose of the National The main purpose of the National development strategy is to estimate and development strategy is to estimate and determine the projections of Mongolian long determine the projections of Mongolian long term development policy. For instance:term development policy. For instance:

Economic development;Economic development;

Human development;Human development;

Technical progress;Technical progress;

Improving governance etc.Improving governance etc.

Priority objectivesPriority objectives

National development comprehensive policy National development comprehensive policy includes approximately 120 priority includes approximately 120 priority objectives.objectives.Approximately 600 actions have to be taken Approximately 600 actions have to be taken in order to implement priority objectives until in order to implement priority objectives until year 2021. If we separate it by each year year 2021. If we separate it by each year and sector 3and sector 3--4 objectives must be 4 objectives must be implemented for each year and sector. implemented for each year and sector.

How is NDS reflected and estimated its How is NDS reflected and estimated its policy harmonizationpolicy harmonization

2021Over 600 actions to be implemented

Gro

wth

All this actions must be aimed at accelerating country All this actions must be aimed at accelerating country economic growth. But some of them aimed for the medium economic growth. But some of them aimed for the medium term strategies like pensions and social welfare issues. term strategies like pensions and social welfare issues.

The specification of MongolianThe specification of Mongolian’’s minds mind--setset

There have global common understanding about There have global common understanding about concept of integrated policy or policy concept of integrated policy or policy harmonization. harmonization. However, according to us as MongoliansHowever, according to us as Mongolians’’ mindmind--set set the concept of policy harmonization could be the concept of policy harmonization could be perceived as a perceived as a ““bundle of arrowsbundle of arrows””..In other words, depending on our values, tradition, In other words, depending on our values, tradition, development stage and our minddevelopment stage and our mind--set we may set we may perceive some of the particular concepts such as perceive some of the particular concepts such as ““comprehensive development policycomprehensive development policy”” from a from a different perspective. different perspective.

Needs assessment to implement the Needs assessment to implement the comprehensive policycomprehensive policy

In order to implement NDS policy, its In order to implement NDS policy, its needs assessment has been estimated needs assessment has been estimated based on following two methods: based on following two methods:

Needs assessment estimation based on Needs assessment estimation based on MDGMDG’’ss;;

Needs assessment estimation based on Needs assessment estimation based on real sector development;real sector development;

Needs assessment based on the Needs assessment based on the implementation of implementation of MDGMDG’’ss

First, we have determined the actions in order to First, we have determined the actions in order to implement implement MDGMDG’’ss in 2015;in 2015;Secondly, we have estimated the needs Secondly, we have estimated the needs assessment for those activities;assessment for those activities;To estimate these assessments UNTo estimate these assessments UN’’s specialists s specialists have provided assistance, and trained number of have provided assistance, and trained number of MOF staff with corresponding models and MOF staff with corresponding models and methods; methods; It is estimated that the total of $US14 billion is It is estimated that the total of $US14 billion is required in order to implement MDGrequired in order to implement MDG’’ s within next s within next 15 years.15 years.

Needs assessment estimation based on Needs assessment estimation based on real sector developmentreal sector development

Industrial sector Industrial sector $US15.5 billion$US15.5 billionEnergy sector Energy sector $US 1.7 billion $US 1.7 billion

Transportation sectorTransportation sector $US 1.3 billion$US 1.3 billionAgricultureAgriculture $US 3.5 billion $US 3.5 billion EnvironmentEnvironment $US 1.5 billion$US 1.5 billionTotal sourceTotal source $US 21.8 billion$US 21.8 billion

HEAVY INDUSTRY DEVELOPMENT PROGRAM OF MONGOLIAHEAVY INDUSTRY DEVELOPMENT PROGRAM OF MONGOLIA

2.2. ““INDUSRIAL CAPACITY INDUSRIAL CAPACITY IMPROVEMENTIMPROVEMENT”” PROJECTPROJECT

1.1. ““MINING AND HEAVY INDUSTRY DEVELOPMENT MINING AND HEAVY INDUSTRY DEVELOPMENT PROGRAMPROGRAM”” PROJECTPROJECT

2.1.2.1. ““УУЛУУЛУУРХАЙУУРХАЙ--ХҮНДХҮНД

ҮЙЛДВЭРҮҮДИЙГҮЙЛДВЭРҮҮДИЙГӨРГӨЖҮҮЛЭНӨРГӨЖҮҮЛЭНХӨГЖҮҮЛЭХХӨГЖҮҮЛЭХ

НЭГЖНЭГЖ ТӨСӨЛТӨСӨЛ””

3.3. ““УУЛУУЛУУРХАЙУУРХАЙ--ХҮНДХҮНДҮЙЛДВЭРИЙГҮЙЛДВЭРИЙГДАГАСАНДАГАСАН

ЖИЖИГЖИЖИГ ДУНДДУНДҮЙЛДВЭРИЙГҮЙЛДВЭРИЙГХӨГЖҮҮЛЭХХӨГЖҮҮЛЭХТӨСӨЛТӨСӨЛ””

1.1.1.1. УУЛУУЛ УУРХАЙУУРХАЙ--МЕТАЛЛУРГИМЕТАЛЛУРГИ--ХҮНДХҮНД

ҮЙЛДВЭРҮЙЛДВЭР ХӨГЖҮҮЛЭХХӨГЖҮҮЛЭХДЭДДЭД ТӨСӨЛТӨСӨЛ

1.2.1.2. УУЛУУЛ УУРХАЙУУРХАЙ--НЭМҮҮНЭМҮҮӨРТӨГӨРТӨГ ШИНГЭСЭНШИНГЭСЭН

ҮЙЛДВЭРЛЭЛҮЙЛДВЭРЛЭЛ ХӨГЖҮҮЛЭХХӨГЖҮҮЛЭХДЭДДЭД ТӨСӨЛТӨСӨЛ

1.1.11.1.1 ““УУЛУУЛУУРХАЙУУРХАЙ--ХАРХАРМЕТАЛЛУРГИМЕТАЛЛУРГИ--ҮЙЛДВЭРЛЭЛҮЙЛДВЭРЛЭЛХӨГЖҮҮЛЭХХӨГЖҮҮЛЭХ

НЭГЖНЭГЖТӨСӨЛТӨСӨЛ””

1.1.2.1.1.2. ““УУЛУУЛУУРХАЙУУРХАЙ--ӨНГӨТӨНГӨТ

МЕТАЛЛУРГИМЕТАЛЛУРГИ--ҮЙЛДВЭРЛЭЛҮЙЛДВЭРЛЭЛХӨГЖҮҮЛЭХХӨГЖҮҮЛЭХ””НЭГЖНЭГЖ ТӨСӨЛТӨСӨЛ

1.2.1.1.2.1.“ТАВАНТОЛГОЙ”НЭГЖТӨСӨЛ

1.2.2 1.2.2 ““БАРИЛГЫНБАРИЛГЫНМАТЕРИАЛМАТЕРИАЛ””НЭГЖНЭГЖ ТӨСӨЛТӨСӨЛ

Needs assessment capital sources by Needs assessment capital sources by categories:categories:

Domestic Source:Domestic Source:–– Public sector source:Public sector source:

Current expenditure up to 20 percent of GDPCurrent expenditure up to 20 percent of GDPInvestment expenditure 5Investment expenditure 5--12 percent of GDP12 percent of GDP

–– Private investmentPrivate investmentExternal source:External source:–– Public sector sourcePublic sector source–– Private investmentPrivate investment

Need to attract foreign direct Need to attract foreign direct investmentinvestment

The role of FDI is vital where development The role of FDI is vital where development objectives are aimed high, objectives are aimed high, According to the development experienceAccording to the development experience’’s s of other countries, the FDI has played a of other countries, the FDI has played a crucial role for accelerating its development, crucial role for accelerating its development, Therefore, we will follow a policy to increase Therefore, we will follow a policy to increase foreign direct investment by creating an foreign direct investment by creating an investment favorable conditions. investment favorable conditions.

To implement the comprehensive To implement the comprehensive policy:policy:

To integrate and harmonize previously To integrate and harmonize previously approved, currently effective medium term approved, currently effective medium term policy documents with NDS policy; policy documents with NDS policy; To improve the capacity of civil servants;To improve the capacity of civil servants;To assign development policy, planning To assign development policy, planning and implementation tasks for and implementation tasks for corresponding organizations;corresponding organizations;To presume NDS policies as a base for To presume NDS policies as a base for political campaigns; political campaigns;

A condition for implementing a policy:A condition for implementing a policy:

In order to implement an approved NDS In order to implement an approved NDS following conditions must be created:following conditions must be created:–– First of all, we must dispose the traditional and old First of all, we must dispose the traditional and old

thinking and start to perceive the issue from a different thinking and start to perceive the issue from a different angle,angle,

–– To support private sector by promoting the public To support private sector by promoting the public willingness to run their own businesses, willingness to run their own businesses,

–– To reduce the government intervention for the economy To reduce the government intervention for the economy and to develop a private sector based economy,and to develop a private sector based economy,

–– To constantly improve business favorable environment To constantly improve business favorable environment and investment climate.and investment climate.

The outcome of the NDSThe outcome of the NDSAssuming that we are able to create the above mentioned Assuming that we are able to create the above mentioned condition and solve all current issues and by implementing condition and solve all current issues and by implementing NDS policies in 2021 we can see the following some NDS policies in 2021 we can see the following some results: results:

PopulationPopulation 3534.6 thousand3534.6 thousandAverage life expectancyAverage life expectancy up to 72 up to 72 Maternal mortality rateMaternal mortality rate (per 100000 birth)(per 100000 birth)--55Infant mortalityInfant mortality (every 1000)(every 1000)--1313School enrollmentSchool enrollment 9595--100 percent100 percentPoverty Poverty below 10 percentbelow 10 percentGDP per capitaGDP per capita approximately $US12.000 approximately $US12.000

Preparation process is still going onPreparation process is still going on……

Document of the NDS not yet finalized, process is Document of the NDS not yet finalized, process is going on.going on.Draft of the NDS submitted to the President of Draft of the NDS submitted to the President of Mongolia.Mongolia.Public and NGOPublic and NGO’’s actively participating and s actively participating and sending to Government they proposals of the sending to Government they proposals of the national development policy.national development policy.WeWe’’re received several interesting proposals from re received several interesting proposals from National Democratic Students Union and National Democratic Students Union and proposals from proposals from ““Civil movementCivil movement”” NGONGO’’s. s.

Two. MidtermTwo. Midterm objectives of objectives of Mongolian National development Mongolian National development

strategystrategy(FY(FY20082008--20122012))

2.1. MAIN ECONOMIC INDICATORS 2.1. MAIN ECONOMIC INDICATORS OF COMING NEXT YEARS OF COMING NEXT YEARS

1.1. 1.1. Midterm objectives targeted to develop Midterm objectives targeted to develop real sector GROWTHreal sector GROWTH

To commence to explore To commence to explore OuytolgoiOuytolgoi, , TavangoltoiTavangoltoiand and TumurteiTumurtei mines by private sector investment;mines by private sector investment;To commence initial production of petroleum To commence initial production of petroleum through distilling oil, processing brown coal;through distilling oil, processing brown coal;To construct power plants in Central region, to To construct power plants in Central region, to provide all provide all soumsoum centers, herder households with centers, herder households with reliable source of energy;reliable source of energy;To develop irrigated agriculture, intensified To develop irrigated agriculture, intensified livestock;livestock;

……continuedcontinuedTo found industrial parks for processing livestock products To found industrial parks for processing livestock products through attracting private investmentthrough attracting private investment

To build infrastructure for exploration of mines, for instance, To build infrastructure for exploration of mines, for instance, OuyOuy--TolgoiTolgoi, , TavanTavan TolgoiTolgoi mines mines : :

To intensify road construction for connecting with Millennium To intensify road construction for connecting with Millennium Road and Asian Auto Road networks. Road and Asian Auto Road networks. : :

To renew auto roads crossed in Ulaanbaatar, to eliminate air To renew auto roads crossed in Ulaanbaatar, to eliminate air pollution pollution ::

To continue housing projects for population.To continue housing projects for population.

Estimated resources of some big mine Estimated resources of some big mine

7.0 7.0 саясая..тнтнCoalCoalТаванТавантолгойтолгой

9.9.1.0 mill1.0 mill..tonntonn хүдэрхүдэр, , …… тнтн UUUraniumUraniumМардайМардай8.8.

14.8 14.8 саясая..тнтн хүдэрхүдэр, 186.4 , 186.4 мянмян..тнтн Pt, Pt, 245.8 245.8 мянмян..тнтн ZnZn

Zinc, PlatinumZinc, Platinum, , УлаанУлаан7.7.

240.0 240.0 саясая..тнтн хүдэрхүдэр, 1.3 , 1.3 саясая..тнтн Cu, Cu, 48.2 48.2 мянмян..тнтн MoMo

CopperCopper,,molybdenummolybdenum

ЦагаанЦагаансуваргасуварга

66

24 24 саясая..тнтн Cu, 720 Cu, 720 тнтн AuAuCopper, goldCopper, goldОюуОюу толгойтолгой5.5.229.3 229.3 саясая..тнтн Fe Fe IronIronТөмөртэйТөмөртэй4.4.31 31 саясая..тнтн FeFeIronIronБаргилтБаргилт3.3.

3.5 3.5 саясая..тнтн хүдэрхүдэр, 226.2 , 226.2 мянмян..тнтн Pt, Pt, 123.3 123.3 мянмян..тнтн ZnZn

Zinc, PlatinumZinc, Platinum, , ЦавЦав224.4 4.4 саясая..тнтн FeFeIronIronХустХуст уулуул11

ResourceResourceKind of minerals Kind of minerals Name of Name of

minemine

1.2. 1.2. Real sector developmentReal sector development

5.05.05.05.05.0CPI (12 month, end of period)

2617.62229.01880.41621.01295.2GDP per capita (US$)

3070.52610.22199.71894.61510.7GDP per capita (thous. togrogs)

13.625.323.419.412.3Real GDP growth (%)

20122011201020092008

1.3. 1.3. Social measuresSocial measures

To enhance agricultural production, to supply To enhance agricultural production, to supply population with pure water, to support irrigation population with pure water, to support irrigation work for grazing land;work for grazing land;To improve an access to educational To improve an access to educational organizations, and condition to educateorganizations, and condition to educate, , to use to use more foreign aids to create professional training more foreign aids to create professional training organizations;organizations;To improve nutrition of population, to intensify To improve nutrition of population, to intensify immunization, and to fight against HIV &AIDS, immunization, and to fight against HIV &AIDS, tuberculosis;tuberculosis;

1.4. 1.4. Public FinancePublic Finance

-3.7-3.7-4.0-3.4-3.2Overall budget balance

2.32.32.33.14.2Current budget balance

31.931.931.231.033.1Current expenditure

4.44.44.34.75.6Capital expenditure

38.038.037.637.640.7Total expenditure and net lending

34.234.233.534.137.3Current revenue

34.334.333.634.237.4Total revenue

(in percent of GDP)

20122011201020092008

2.2.2.2. Needs assessment and Needs assessment and financing financing

Current expenditureCurrent expenditure**

**-- it based on needs assessment estimation by task forces of line it based on needs assessment estimation by task forces of line ministries, adjusting by approximate index on wage, price ministries, adjusting by approximate index on wage, price increasesincreases

0.0

500.0

1000.0

1500.0

2000.0

2500.0

3000.0

Current expenditure, potentiality, in billion togrogs

Current expenditure, needed, in billion togrogs

Current expenditure, potentiality, in billiontogrogs

996.5 1185.2 1403.9 1728.0 2063.3

Current expenditure, needed, in billiontogrogs

1117 1253 1565 1938 2466

2008 2009 2010 2011 2012

Capital expenditureCapital expenditure

**-- it based on needs assessment estimation by task forces of line it based on needs assessment estimation by task forces of line ministries, adjusting by approximate index on wage, price ministries, adjusting by approximate index on wage, price increasesincreases

0.0

1000.0

2000.0

3000.0 Capital expenditure, potentiality Capital expenditure, needed

Capital expenditure,potentiality

225.1 241.4 259.3 317.8 379.5

Capital expenditure,needed

1300.5 1492.6 2164.0 1907.2 1830.5

2008 2009 2010 2011 2012

Needs of the resources by kind of sources Needs of the resources by kind of sources

5.00%5.0%9.0%9Infrastructure10.00%10.0%10.0%8Gender

20.00%20.0%10.0%7Housing20.00%30.0%20.0%6

Pure water, hygienic construction

34.00%33.0%33.0%5Environment

32.00%34.0%34.0%4Malnutrition0.00%50.0%50.0%3Income poverty

20.00%30.0%50.0%2Health

10.00%30.0%60.0%1Education

Ratio of private sector

To be financed from foreign aids,

assistance

Budget income, the ratio to be financed from concessional

loan

Priority/ by

sequence

Even though infrastructure development is Even though infrastructure development is important, the more emphasis is taken place on important, the more emphasis is taken place on social sector, so there is a need to postpone its social sector, so there is a need to postpone its financing.financing.

To finance as if mentioned above, in Mongolia To finance as if mentioned above, in Mongolia about $US250 million grant would be needed. about $US250 million grant would be needed.

It is important to finance investment, with optimal It is important to finance investment, with optimal level of external and internal borrowing and not level of external and internal borrowing and not contradicting debt sustainability. contradicting debt sustainability.

……continuedcontinued

2.2.3. 3. Policy consistency, directions to implement Policy consistency, directions to implement objectives, measures of nearer forthcoming yearsobjectives, measures of nearer forthcoming years

To amend some legal conditions that already reflected in To amend some legal conditions that already reflected in NDS,NDS,

To amend some needed changes in budget planning and To amend some needed changes in budget planning and coordination. To improve correlations between National coordination. To improve correlations between National Development Strategy and annual budget,Development Strategy and annual budget,

To implement big projects that should be financed by private To implement big projects that should be financed by private investment,investment,

To manage optimally current expenditure and to increase To manage optimally current expenditure and to increase capital expenditure year to year,capital expenditure year to year,

Thank you for attentionThank you for attention

Examples of some Examples of some industrial centersindustrial centersERDENET mining ERDENET mining –– ERDMIN ERDMIN –– copper industry with chemical methodology copper industry with chemical methodology –– ММolybdenumolybdenum factoryfactory–– Plant for copper concentrate Plant for copper concentrate –– Copper melting industry Copper melting industry –– Final production industryFinal production industry

DARKHAN METALLURGY CENTER DARKHAN METALLURGY CENTER –– Iron ore industryIron ore industry–– Melting industry Melting industry –– Medium size industry of final productsMedium size industry of final products

OUY TOLGOI OUY TOLGOI -- TAVAN TOLGOI TAVAN TOLGOI --TSAGAAN SUVRAGATSAGAAN SUVRAGA

–– Copper concentrate factoryCopper concentrate factory–– copper industry with chemical methodology copper industry with chemical methodology –– InreachedInreached coal factory coal factory –– High grade coal factoryHigh grade coal factory

Projections Projections forfor developing Mongolian road network for years 2006developing Mongolian road network for years 2006--20212021

Projections for preparing Mongolian regional Projections for preparing Mongolian regional energy networkenergy network

Map of mineral resources of the MongoliaMap of mineral resources of the Mongolia