THE PROJECT
Economic Policy Reform and Competitiveness Project
Activity duration: September 2003 - June 2011USAID Contract No.:438-C-00-03-00021-00
Our purpose
To support Mongolia’s efforts to accelerate and deepen the policy liberalization process and promote increased competitiveness of the Mongolian economy to achieve broad and sustainable, private–sector–led economic growth.
Our goals
1. Accelerate and deepen the policy reform process in Mongolia
2. Promote increased competitiveness in the Mongolian economy.
Our vision
Support the competitive participation of Mongolia in the world economy.
Our strategy
- Continuation of the development, maintenance, and implementation of sound, market-oriented macroeconomic, trade and investment, sectoral, and microeconomic policies that promote sustainable and equitable economic growth
- An enabling business environment and regulatory framework that fosters competition and attracts foreign investment and best business practices
- The development of private sector businesses and clusters focused on supplying the demand of target export and domestic market niches capable of turning and maintaining comparative advantages into competitive edges
- Continued national dialogue on building a national consensus to put Mongolia on the world map supported by government transparency and good governance business practices
Situation and solution
Among transition economies, and more broadly among lower GDP per capita countries, Mongolia has achieved remarkable progress in setting the foundations for a democratic, open–market economy. Since the breakup of the Soviet Union in 1989, the country has implemented broad economic and political reforms, changing from a state–controlled to a market–driven economy where the private sector now accounts for more than 70 percent of GDP. With the most difficult tasks of a democratic transition largely completed, Mongolia now needs to focus on a second stage of economic policy reform measures to improve its competitive participation in the world economy and provide for broad–based, equitable, private–sector–led economic growth. EPRC is assisting Mongolia in:
- Economic and trade policy. To: (a) improve the economic and trade policy environment; and (b) strengthen its trade capacity.
- Energy sector reform. To: (a) improve coordination of national energy sector policies; (b) make the energy sector regulatory environment more transparent, market-oriented, and efficient; and (c) improve commercial orientation and practices of energy sector state-owned enterprises.
- Financial markets. To: (a) strengthen the enabling legal and regulatory environment for business and finance; (b) strengthen corporate governance; and (c) facilitate transactions to improve the competitive environment of selected markets.
- Consensus building, public education and national dialogue. To: (a) improve public disclosure; (b) support mechanisms of public dialogue and citizen input on the enabling business environment; and, (c) strengthen coordination and cooperation with partners, foreign investors, bilateral, and multilateral organizations.
Results as of December 2009
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New tax laws. Worked closely with Ministry of Finance, Mongolian Tax Authority (MTA), Parliament standing committees, and representative private sector associations, to assist with the formulation of competitiveness–based tax reform objectives, model draft laws, economic and fiscal impact analyses, raising awareness and engagement of the public, training of tax inspectors, revision of tax forms and regulations, and information campaigns about the new personal income, corporate income, VAT, and excise tax laws that became effective on 1 January 2007; impact analysis of the new laws one year after enactment, done jointly with MTA show measurable positive impacts.
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Ranking of Mongolia in the World Economic Forum's Growth Competitiveness Index. As National Partner, had Mongolia ranked in 2005 for the first time and worked with The Open Society Forum to become WEF’s National Partner since 2006.
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Development of national programs for a single electronic window (SEW) for foreign trade facilitation and transit. Assisted multi-agency working groups and private sector stakeholders in developing national programs for a SEW, transit and logistics competitiveness to facilitate trade; programs are currently under implementation.
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Secondary mortgage market development. Assisted ten private sector banks and The Bank of Mongolia (BoM) with creation of the Mongolia Mortgage Corporation (MIK) and its first purchase of mortgages in November 2007. Since then, MIK has completed nine transactions purchasing primary mortgages for a cumulative total of US $ 10.2 m.
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Development of a private sector credit information bureau. Developed draft enabling legislation for a private sector-led credit information bureau (CIB); helped fifteen commercial banks, two nonbank financial institutions and the Mongolian Bankers Association (MBA) establish the “Credit Information Center LLC” (CIC). Shareholders’ capital subscription was U.S. $ 256,125 as of 21 September 2009.
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Banking sector restructuring and consolidation. Performing banking sector assessments quarterly at the request of BoM; currently providing assistance with re-structuring and consolidation.
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Informal economy national survey. Completed national survey of shadow and informal economy of 19,000 households in partnership with National Statistics Office and the Open Society Forum.
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Tourism: Successful promotion of Mongolia as a tourist destination in the North American, European, and Japanese tourist markets.
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‘Routes to Market' program. Assisted cashmere product manufacturers in gaining access to and meeting requirements of higher value-added international markets.
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Energy regulation. Developed and implemented Uniform Chart of Accounts (USOA) compliant with International Financial Reporting Standards (IFRS); assisted Energy Regulatory Authority (ERA) with establishment of Audit Department, public hearing procedures, negotiation and monitoring of licensee performance agreements, and tariff development; initiated monthly meetings of GoM shareholders, regulator, and international donor community to develop consensus on priority policy issues, improve inter-institutional coordination and consistency of agencies’ practices and regulations.
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National multimedia ‘Open Talks'. Designed and implemented Open Talks program of national television and radio, Internet chat server, open telephone lines, and SMS text messages where citizens dialogue with government and private sector decision makers on issues such as economic policies, taxes, housing finance, railroad transportation and logistics.