THE
Introduction and Policy Recommendations
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Several foreign born students living in California have completed a study of their home country governments' economic policies as compared to the MIEPA list of policies as outlined above. The study on Mongolia is shown below. The ratings herein are based on the following rating scale:
RATING SCALE
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2005. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
MONGOLIA:
Comparison of Mongolia's economic policies to MIEPA criteria as prepared by native student of Mongolia, Ms. Undrakh Bayasgalan, studying in San Francisco in Spring, 2005.
RATING SUMMARY
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 4.5 13.5 15.0 90%
2 4.5 13.5 15.0 90
3 2.0 6.0 15.0 40
4 1.9 5.7 15.0 38
5 2.5 7.5 15.0 50
6 2.0 6.0 15.0 40
7 2.0 6.0 15.0 40
8 4.5 13.5 15.0 90
9 2.0 6.0 15.0 40
10 4.0 12.0 15.0 80
11 4.7 14.1 15.0 94
12 3.5 10.5 15.0 70
13 5.0 10.0 10.0 100
14 4.8 9.6 10.0 96
15 2.5 5.0 10.0 50
16 3.5 7.0 10.0 70
17 1.5 3.0 10.0 30
18 3.5 7.0 10.0 70
19 3.0 6.0 10.0 60
20 2.0 4.0 10.0 40
21 2.5 5.0 10.0 50
22 3.0 6.0 10.0 60
23 2.0 4.0 10.0 40
24 1.0 2.0 10.0 20
25 1.5 3.0 10.0 30
26 4.0 8.0 10.0 80
27 2.0 4.0 10.0 40
28 1.5 3.0 10.0 30
29 2.5 2.5 5.0 50
30 1.5 1.5 5.0 30
31 2.5 2.5 5.0 50
32 2.5 2.5 5.0 50
33 3.0 3.0 5.0 60
34 1.0 1.0 5.0 20
TOTAL 94.4 213.9 375.0 57.0%
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INDIVIDUAL POLICIES
1. Freedom from internal control 4.5
Mongolian people have freedom of doing whatever they want. Within the country people can move wherever they want and they also can visit to any country and come back without any obligation. Mongolian people has right to choose which government parties they would like to support and they have right to vote. There many independent newspapers and some media sources.
Source: personal
2. Freedom Speech 4.5
Basically today Mongolians express themselves freely without any government and religions ban. Before 1989 freedom speech was not free as today most people were afraid to express themselves freely. 1999 media law bans the censorship of public information and requires privatizing all media sources. However, there is evidence that journalist had been put in to jail. Government authorities said that the journalist reported false information in order to take away someone reputation. It is really hard to say who is lying other than freedom speech is not banned people can express themselves freely.
Source: personal
3. Effective Fair Police Force 2.0
It is really hard to say the police enforcements are fair and effective. Most of the time if you have money you can get away with some small crime unless everyone was watching you while you?re doing something that is illegal. Due to low financial support not all but many police officers are involved in taking of bribery. Many traffic violators already know if they offer money to the police officer most cases they can get away without even getting any ticket.
Source: personal
4. Private Property Rights. 1.9
Before 1990 Mongolia was single party, communist rule, public goods were taking almost more than 90 percent of GDP. This data changed completely after 1990. In 1997 more that 60 percent of GDP were coming from private business. People are started to have something that is their own not for someone else. It seems good that people started to have private properties such cars, houses, and businesses. In 2002 government passed law that allows selling land to the individuals. However, protection of private property of law is very weak and political problem is an obstacle to honest businesses and efficiency. In addition to that, protection of private property is very weak. Unlike other countries, the insurance system is not strong enough to pay the loss; there are no strong insurance companies in Mongolia that people trust to have insurance. If they loose, they loose it all.
Source: http://www.freedomhouse.org/research/nitransit/2000/mongolia/mongolia_el.htm
http://www.heritage.org/research/features/index/country.cfm?id=Mongolia
5. Commercial Banks. 2.5
Currently the banking system is fragile and in serious need of training in banking skills and improvements in the legal and institutional framework. Real lending interest rates are at high levels that jeopardize economic development. The banking sector, with total assets of less than USD $200 million, is small relative to the size of the economy. Currently, 12 commercial banks are licensed. The Trade and Development Bank (TDB), Golomt, and Investment and Technological Investment Bank (ITI) account for 77 percent of banking system assets. TDB and Golomt Bank are the largest and second largest banks, respectively. The government has direct and indirect participation with eight banks. Non-bank financial institutions are at an early stage of development. Banking system is not used everyday usage for average Mongolians because people use cash on almost everything.
Source: http://www.world-digest.com/Guides/mg/
6. Communication System. 2.0
Communication system is provided very differently in rural and urban areas. In urban areas each families have access to home telephones addition to that average of 2-3 cell phones for each families. However, rural areas it is completely different, most families in rural areas do not have home telephones and they have to go certain places to use phone. According to CIA fact book on communication the main line in use 142300, mobile cellular 404000. The network is improving very low-density 6.5 telephones for each thousand people.
Source: http://www.cia.gov/cia/publications/factbook/geos/mg.html; Personal.
7. Public Transportation 2.0
The public transportation in Mongolia is very hard to give higher score. Urban areas of public transportation is very reliable but most of the time it is very crowded. On the other hand, in rural areas there are almost no public transportation other than train and airplane. The public transportation (buses) is the main transportation in rural area. The roads are not well maintained and very unorganized. Outside of the city, there are very limited paved roads.
Source: personal
8. Education 4.5
Like all other socialist countries was Mongolia put education before everything.
School system started to change a little bit with the changing economy. Private schools opened their doors after 1990?s both higher and lower education. Duration of the school year is 10 years. Primary school I-IV, lower secondary school V-IX, and upper secondary school IX-X are the basic education needed by Mongolians. Some people do not continue their education after lower secondary school and it is minimum required education for basic jobs. Most of students continue their education after upper secondary school. Students learn all different kind of subjects when they graduated they have basic knowledge of all sciences. Compare to the American high school graduates Mongolian high school graduates are required to take many different science classes and people do have good knowledge of different subjects.
Source: http://www.wes.org/ewenr/03july/Practical.htm; Personal
9. Social Mobility 2.0
Recent years some companies looking for people who can do the job but still since we started reform in Mongolia the game of who knows who is playing really well in order to get better jobs in Mongolia. Finding good job is kind of hard even tough if the person has ability to do the job or having better education. Knowing people is better than knowing how to do the job. But if the person is really good of course it not impossible to find good job.
Source: Personal
10. Freedom from outside control. 4.0
Mongolia used to depend on almost entirely on Soviet Union (Russia) 80% of the Mongolian trade was with Soviet Union and 15% was with other Counsel for Mutual Economic Assistance (economic organization of other communist states). Because Mongolia almost entirely depended on Soviet Union, the fall of Soviet Union was big hit on Mongolian economy. Mongolian government is now much free than it used to be when Mongolian trade was with Russians. There is no other government can control us from doing what Mongolians want. Many other people think that Mongolians are under control of either Chinese or Russians. Yes, it is true that Mongolia is located in between two biggest countries in the world but we had our independency since 1921.
Source: http://en.wikipedia.org/wiki/Economy_of_Mongolia
11. Foreign currency transaction. 4.7
Togrog is the only legal currency in Mongolia. There is some $ shopping but they are expensive and Mongolians usually do not go there. If you have U.S dollar and any other foreign currency most stores would not accept it unless you are willing to exchange it much lower price than current market price. Who wants to do that? Other than that, foreign currency is exchanged in banks and hotels. In addition, there is black market (it is not really black market in Mongolia because it is not illegal) that people exchange the foreign currency to togrogs or togrogs to foreign currency, that those people do not pay any taxes or does not have to have any paper works to do that.
Source: personal
12. Border Control. 3.5
Mongolia is located Eastern Central Asia. Mongolia is bordered with Russia (3000 km or 1864 mi), China (4760 km or 2958 mi) and very short border with newly independent country Kazakhstan. (150 km or 900 mi) The recent change in Mongolia attracts many foreigners both legally and illegally to Mongolia. There are incidents reported that Chinese citizens trying to bring Chinese passport for Chinese citizens who are residing in Mongolia illegally. In addition to that, Mongolian passports were sold illegally to the Chinese people to use for entry to third country. 50 different cases that foreigners most of them Chinese (23) and Russians (21) caught on bringing illegal drugs in to Mongolia but 90000-100000 and 60000-70000 Russians and Chinese visited to Mongolia in 1998. How many others did not caught like the other 50 I believe there are many more than 50.
Source: http://www.paulnoll.com/China/Asia-Stats/Asia-Mongolia-stats.html; http://gsti.miis.edu/CEAS-PUB/200109Batbayar.pdf#search='Mongolian%20Border
13. Currency 5.0
The first Mongolian paper currency were introduced in 1227 which were called bank note and the first paper currency in the world. In 1925, Mongolian currency adopted the name of tugrog. The currency came in forms of 1, 2, 5,10,25,50, and 100 bills. After the Democratic revolution, The Mongol Bank issued new bank notes that included the picture of Chingges Khan and D Sukhbaatar the national heroes. Those currencies came in forms of 500, 1000, 5000, and 1000 bills. The old currencies still in transactions and only one form currency style in Mongolia. Togrog is the only one national currency used in Mongolia.
Source: http://ubpost.mongolnews.mn/virtualmongolia/currency.htm
14. Cultural, Language Homogeneity 4.8
Mongolians (Khalkha) 94.9 %, Kazakh 5% and others 0.01 % (including Russians and Chinese.) The main language is Mongolian 90% and Kazakh people speak their own language. Older generations of Mongolian know how to speak Russian language but it is not official to learn. Today Mongolians are learning second and third foreign language to help for their career.
Source: http://www.cia.gov/cia/publications/factbook/geos/mg.html; Personal
15. Political Effectiveness. 2.5
Major problem for Mongolian government has been is to reform institutional structure that in way that government and public sectors are able to provide a necessary leaderships and management for the public affairs. Recent years the government?s effectiveness getting much better than it was in mid 1990?s. People are punished by using governments money for their own and getting bribes to make something to work but Mongolia still has long way to get effective government system. When there are disaster the government probably do not have money to help, even they do I am not sure all the money goes to the right place and right people.
Source: http://www.unu.edu/p&g/wga/country/Mongolia.pdf#search='political%20effectiveness%20of%20mongolia; Personal
16. Institutional Stability. 3.5
Institutional Stability is pretty much very stable other the government structure changed to multi party, parliamentary system in early 1990?s and the new constitution become effective. It was the first time for Mongolia democratically elected governors in Mongolian history. The first Mongolian constitution was formed in 1924. Because Mongolia went through huge transition in 1990 some of its institutional is formed not a long ago for example executive branch (July 2000), legislature, and many other institutional system had changed during this time. However, some institutional system still same as when they are formed in early 1900?s such as school system started in 1912 with 47 students.
Source: http://reference.allrefer.com/country-guide-study/mongolia/mongolia79.html; http://www.transparency.org/activities/nat_integ_systems/dnld/mongolia.pdf
17. Honest Government. 1.5
Honest Government !!! It is really hard to believe that Mongolian government is honest. Not because of the government structure but because of the people, who work for government and people we elected that they would do better jobs that former ones. I mean not everyone is dishonest but big part of them. Why? The current situation of Mongolia is creating most people do what best for them not public. According to U.S Department of State, Mongolia ranked in 85 of 145 countries of study that show corruption scale of 3 poor. Entrenchment of bureaucratic and political corruption in Mongolia is growing and serious. Some officials are directing the donor fund for Mongolia to their personal property, refusing to account for donor funds and providing donor sub-contract to close friends and relatives.
Source: http://www.state.gov/e/eb/ifd/2005/42091.htm
18. Common Law 3.5
Most judges rule fairly and impartially, with no evidence of discrimination against any group. The constitution guarantees due process rights, including presumption of innocence, the right to a public trial, and protections against self-incrimination. In practice, due process rights are respected. Judges are nominated by the General Council of Courts, an independent administrative body, and are approved by the president.
There were few complaints about the legal system to the local office of the U.N. High Commissioner for Human Rights (UNHCHR), because most citizens do not know about the organization. Complaints were usually about corruption that allegedly resulted in unfair court decisions.? Bribery is an obstacle to get fair trail for everyone.
Source: http://www.freedomhouse.org/nit98/mongolia.html; http://www.state.gov/www/global/human_rights/1999_hrp_report/mongolia.html
19. Central Bank 3.0
The present banking system in Mongolia is formed around 1990. The central Bank of Mongolia opened its door in 1924 and changed its structure in 1991 into two different systems state Bank of Mongolia and commercial banks. Presently there are 13 banks operating in banking system and six of them partially owned by the government and six of them fully private. Bank of Mongolia issues the Mongolian banknotes and Mongolian government owns central Bank of Mongolia. Therefore, it is hard to say that government does not control the central bank.
Source: http://www.mongolbank.mn/briefhistory.htm; http://www.pam.mn/main4_3_2.htm
20. Domestic budget Management. 2.0
Mongolian government deficit is being big issue. According to the National Statistical office in first quarter of 2005 government deficits were 9.8 billion togrogs. Government budgeted 152.1 billion togrogs total expenditures and lending were 161.9 billion togrogs. According to the international monetary fund 1995-1999 government always had deficit.
Source: http://www.nso.mn/eng/index.php; http://www.imf.org/external/np/sec/pn/2000/pn0010.htm
21 Government Debts 2.5
Until late 80?s Mongolia was very depended on USSR subsides. The fall of USSR stopped the supply to the Mongolia and Russian government wants Mongolians to repay what they have supplied to Mongolia with hard currency. As result of many conferences and 10 year of discussion two countries governments reach to the agreement that Mongolians do not have to pay back 98% of the debts to Russia but remaining 2% have to be paid. It is good news that Mongolians do not have repay Russians but Mongolian government started get more foreign assistance including loans and grants from different countries.
The Mongolians hoped western aid would simply replace the Soviet subsidies; western power initially hoped the aid would be a temporary measure to help Mongolia through a difficult state on the road to a market economy. Mongolians have to repay the aids from for foreign countries someday. It is shame that Mongolian government officials are saying that we got this aid from this country that aid from that country and it will resolve our problem. Maybe it is true some of the aids we do not have to repay but some of them will have to repay. In 2003, Mongolian government debt to foreign countries is rose by 25.5 percent from 2002 to 1 190.0 million which equals 102 percent of GDP The debt of the government is rising a lot.
Source: http://www.seacen.org/newsletter/2003-4thQtr/nbfd-Mongolia.aspx; http://www.unescap.org/pdd/calendar/FFD/doc/Mongolia.doc; http://danielroy.tripod.com/cgi-bin/alternate/mongolia/economy.html; http://www.mongolmessenger.mn/issue/040102.php
22. Economic Statistic 3.0
Statistics found on the internet very seems to very reliable and there are not big difference between statistic found on internet. There are some statistic information both in English and Mongolia but not enough. National Statistical Office of Mongolia publish statistical information monthly yearly depends on type of statistical information. Many well known banks and companies finance Mongolian National Statistical Office.
Source: http://www.nso.mn/eng/index.php
23. Protection of Public Health and Safety. 2.0
The infant mortality rate is pretty because of unequal acccess to the quality health services between rural and urban areas. According to the World Fact Book infant moratality rate 55.45 in 1000 births (estimate 2004)
According to the Human Devolopment Report Mongolia has very high number of tuberculosis cases for developed countries but lesser number for developing countries. In 2002 there were 270 cases in 100,000 people and tuberculosis cases detected under DOTS % 69
The health care system is accessible to everyone and there are certain fees for it but it is not expensive as living in America without health insurance.
Source: http://www.nso.mn/mdg/eng_goals4htm; http://www.odci.gov/cia/publications/factbook/geos/mg.html; http://hdr.undp/org/statistics/data/cty/cty_f_MNG.html
24. High Wage Policies 1.0
Average Salaries in Mongoia is very hard to provide enough. Everyone has to something other than their job to get some extra income to not to live rich but to provide enough. Because there is no banking system like in America everyone has to have cash to buy everything from food to cars. If you don't have money for it , you can not have it. The one good thing is that after 1990 government privilazated the all the apartments to the person, whose name previously was under that apartment like a car title, who used to not own. As result of privilazation many mongolians become owners of thier apartments. Other than that with the low income it is impossible to buy cars and luxury items. however, it seems that everyone has cell phones, color TVs, cars, and many other things would consider expensive even in America. Somehow they mange to get those items even with very low income compares to the U.S
Source: personal
25. Environmental Protection 1.5
The policies of former government urbanization and industrial growth negatively effected of some part of the Mongolia especially capital city Ulaanbaatar. Burning of soft coal in power plant and many individual households make the city air very polluted especially in winter time. Protection of environment is very poor in Mongolia.
Traditions of Mongolian people were very sensitive to the environmental protection within each individual but it has changed with the population growth and industrialization. They care more about themselves than environment. Even tough there is some laws that protects the environment; it does not work very well.
Source: http://www.nationmaster.com/country/mg/Environment
26. Strong Army 4.0
In Mongolia drafting age is 18 and required one year serves Sometimes they can be excused for medical and personal reason. People army, (ground and air forces) Border Guards, Internal Security Forces, Construction Corps Forces, and Civil Defense Authorities are the branches of Mongolian military. Military man power availability ages between 18-49 are 530,594 of the population of only around 2,700000. Therefore it sounds very good but Mongolia has very big land with very scarce population than any other countries in the world.
The other thing is that Mongolia only bordered with two countries but two largest and strong countries in the world China and Russia. Before 1990 military forces probably much better condition than today. If there is an attack probably it would be very hard to protect Mongolia from other countries who are using the western techniques.
640 tanks and weapon holdings 1.350.000 (estimate 2001)
Source: http://www.odci.gov/cia/publications/factbook/geos/mg.html#Military; http://www.nationmaster.com/country/mg/Military; Personal
27. Foreign trade impact. 2.0
Export $524 million
Import $691 million
GDP $4.882 billion
It looks like that foreign trade impact covers only 25% of the GDP. $.524+$.691=$1.215 billions and GDP is $4.882 billions. It is surprising that foreign trade impact only covers the 25% of GDP in Mongolia. Since 1990 Mongolia is very much depended on foreign trade on almost on everything. Most goods in Mongolia is imported from other countries.
Source: http://www.odci.gov/cia/publications/factbook/geos/mg.html; http://www.nationmaster.com/country/mg/Economy
28. Protection of Foreign Currency earning Enterprises 1.5
Because Mongolia went through huge change, many enterprises that earn foreign currencies also had difficult time for the last decade. Many enterprises went through mass privatization and the new government trying to find way to protect those new enterprises. For example, exporting raw cashmere puts the Mongolian cashmere industry out of business because Chinese enterprises able to buy higher price than Mongolian Cashmere enterprises, which accounted for 15% of the Mongolian GDP. Therefore, government put high tax rate of 30% for exporting raw cashmere. However, 50% of the raw cashmere exporters avoided the export taxes. There are now 46 enterprises involved with purchasing and processing cashmere in Mongolia of those 22 of them Chinese enterprises. In 2000 investigations to these companies 15 of them did not have proper licensee and paper work for tax exemption for processing the cashmere in Mongolia.
It seems that government is trying to solve the problem but it seems that they are loosing more money than if they are no ban at all. .
Source:http://mcel.pacificu.edu/easpac/2002/bedeski.php3#26; http://www.vorsim.com/Cashmerereport.pdf#search='mongolian%20cashmere%20export
29. Management of foreign currency budget 2.5
In 2002 exports were $524 millions and imports $691millions. Therefore, in 2002 Mongolia had deficit of $167 millions of dollars.
Exports: livestock, animal products, cashmere, wool, copper, hides, fluorspar and other nonferrous metals etc. (China 46.1%, US 23.2%, Russia 6.7%, Singapore 5.7%, Australia 5.5%, UK 4.2%
Imports: machinery and equipments, food products, fuel, industrial consumer goods, chemicals, building materials etc. (33.1%, China21.5%, Korea 8.5%, Japan 7.9%, Germany 4.7%)
Source: http://www.odci.gov/cia/publications/factbook/geos/mg.html
30. Layers of collective actions. 1.5
Mongolian election layers stops after president (4 years term can reelect one more term) and parliament members (76 members for 4 years term). Prime minister elected by parliament members. There are no further layers of collective action. It is very possible for winning majority party change the government enterprise?s board of directors with their people.
Source: http://www.cia.gov/cia/publications/factbook/geos/mg.html#Govt; http://www.electionworld.org/mongolia.htm
31. Pro business Climate. 2.5
Last ten to fifteen years Mongolian business climate changed completely for anyone who can and could do businesses is become favorable to them. Opening new business in Mongolia is easy. It requires pretty simple steps. However, some Mongolians open businesses but do not actually do anything with their business. (it is very common)
Opening business is pretty easy but continuing the business requires a lot of challenge. In Mongolia there are no loan system works favorable to small business the interest rate is very high. Cash is the only way to finance the business. The other down side for pro businesses is corruption of bureaucracy in all different levels.
Source: personal
32. Government enterprises. 2.5
Many government enterprises do finance themselves but also many government enterprises need government help to be financially secure. For example, energy companies need large subsidies from government. Some of the government enterprises do finance themselves. For example, the water supply of the Mongolia does finance itself.
Mongolia is under mass privatization of government enterprises like all other countries going through mass transition to free-market system. Before 1990 almost all enterprises used to own by government. In January 2001, the Mongolian Parliament approved the "Privatization Guidelines for 2001 - 2004," ?The Guidelines focus on the privatization of Mongolia's largest companies, often referred to as Most Valued Companies? It includes Mongolian Telecommunications Co., Agricultural Bank, Gobi, NIC, MIAT and Mongola Daatgal. Today most big enterprises owned by private parties and foreign investors.
Source: http://www.investmongolia.com/m7.htm; http://biz.yahoo.com/ifc/mn.html
33. International Security Agreements. 3.0
Mongolia has always stood nuclear weapon free zone and Mongolia is free of nuclear-weapon. Mongolia is located between two greatest power of the world China and Russia (the Soviet Union). While China and Russia grew stronger in XVII-XIX centuries, Mongolia's power weakened - turning it from once the center of the largest land empire that mankind has known to an object of international relations. Since world war two there were no military threats on Mongolia.
Source: written by J.Enkhsaikhan: Mongolia's international security and nuclear-weapon-free status; http://www.nyo.unep.org/ga55/res33S.htm; http://www.nyo.unep.org/ga55/res33S.htm
34.Protection of Domestic Enterprises From Government Mandated Costs.1.0
Since 1995 Mongolia did not make any big change on tax regulation on business, tax environment for enterprises is not favorable for business. Too high tax rate, double taxation, and many steps of tax system is burden on many enterprises for business in Mongolia. It could count up to 10 different kinds of tax regulation on businesses. Because of too much tax burden, many businesses tend to report their income falsely.
The vast number of regulations implemented over the past several years, combined with the continuing restructuring of the government, imposes a sizeable burden on business. The U.S. Department of State identifies "corruption in the bureaucracy" as one of the typical problems affecting business development.? Many government workers use their position for their favor. Maybe not all but most of the businesses have to deal with bribery system that is working very well. Even tough bribery is illegal.
Source: http://www.montsame.mn/eng/newsdetail.php?nid=37007; http://www.world-digest.com/Guides/mg/ >
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All the information and conclusions in each country analysis are solely the responsibility of the individual student and have not been verified, corrected, checked for copyright infringement or evaluated in any way by MIEPA or Mike P. McKeever. You are solely responsible for the results of any use you make of the information and conclusions in these studies. Use them at your own risk as interesting supplemental information only instead of seasoned judgements about the policy factors contained herein. Each student has granted permission for his or her work to be displayed here under his or her own name or wishes to remain anonymous and have either created a pen name or used no name at all; if you wish to contact them for any reason, forward your request to MIEPA and the student will be notified of your interest.To learn more about other countries, click to other files here:
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