PRESENTATION BY MR. BOLD LUVSANVANDAN MINISTER FOR FOREIGN AFFAIRS OF MONGOLIA
Minister for Foreign Affairs of Mongolia H.E. Mr. L.Bold addressed APEC Ministerial Meeting in Bali, Indonesia on October 4-5.
Presentation by Mr. Bold Luvsanvandan
Minister for Foreign Affairs of Mongolia
- Over 20 years ago, Mongolia made a peaceful transition from a centrally planned economy to a market-based economy. Since then, we have built a system with deeply embedded democratic values and market economy rules.
Sweeping reforms were implemented speedily, including financial sector liberalization and massive privatization of state entities. Laws and regulations were changed to create a legal framework to support a market economy. As a consequence, the private sector’s share of GDP now stands at around 80%. Massive mineral deposits have been discovered over the transition period. Mongolia now has a large mineral resource base for increased exports and industrial development.
- As a result of consistent economic policies and driven by the mining boom, Mongolia officially became a “middle-income country” in 2011. In recent years, it is also one of the world’s fastest growing economies. Our economy grew by an unprecedented 17.5 per cent in 2011. The growth moderated to 12.3 percent last year after global economic slowdown weakened demand for Mongolia’s main export commodities. But it is still among the highest in the world.
- Our priority now is to maintain high growth rates and use them to develop a diversified economy that creates value locally. This is potentially within our reach as we have started major infrastructure and industrial development while continuing our mining projects, such as the development of the world’s largest new source of copper Oyu Tolgoi and one of the world’s biggest coking coal deposits Tavan Tolgoi.
- Being an Asia-Pacific country with a growing economy, Mongolia has an enduring aspiration to become a member of APEC, the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific. This is one of our foreign policy priorities.
It was back in 1993 when Mongolia made its official application for APEC membership.
Since then, Mongolia has made important strides, and now fulfills the APEC guidelines for the admission of additional members set out in its 1997 Ministerial Statement on Membership.
- First, Mongolia is located in the Asia-Pacific region. It is landlocked between two APEC economies, China and Russia. The Pacific Ocean is Mongolia’s only gateway to sea.
Mongolia’s being part of the Asia-Pacific region is not just a geographical, but also a political fact. It belongs to the Asia-Pacific regional group in all international fora and organizations, including the UN.
- Equally important is that we actively participate in the major multilateral cooperation arrangements involving the Asia-Pacific region. We are a member of the ASEAN Regional Forum (ARF), Asia-Europe Meeting (ASEM), Asian Cooperation Dialogue (ACD), and an observer in the Shanghai Cooperation Organization. We are also a full Member of the Pacific Economic Cooperation Council (PECC), one of APEC’s three Official Observers. In 2005, Mongolia ratified the Treaty of Amity and Cooperation in Southeast Asia, further strengthening its ties to the countries in the region.
- Our regional agenda is also centered on becoming a dialogue partner of ASEAN and joining the East Asia Summit process, which has become a crucial part of Asia-Pacific integration.
- Second, Mongolia has substantial and broad-based economic linkages with the existing APEC members. In particular, the value of Mongolia’s trade with APEC members, as a percentage of its international trade, is not just relatively high. It is overwhelmingly high. The APEC economies account for 89.5 per cent of Mongolia’s foreign trade turnover and 50.62 per cent of total FDI inflows to Mongolia since 1990.
- If we look at Mongolia’s exports, its main export partners are China, Canada and Russia. These 3 APEC economies make up 96.4 per cent of Mongolia’s total exports.
- The same is true for Mongolia’s imports. Our main import partners are Russia, China, US, Japan and the ROK. These 5 APEC economies account for 76.8 per cent of Mongolia’s total imports.
- The APEC economies also dominate FDI inflows to Mongolia. China, Singapore, Canada, ROK, US, Russia, Hong Kong, Australia and Japan are among our top 12 investment partners.
- Minerals are one of Mongolia’s main export items.
|Main mineral resources
||Approved reserves (2012)
|Copper (thousand tons)
|Coal (million tons)
|Zinc (thousand tons)
|Iron ore (million tons)
|Uranium (thousand tons)
|Rare earths (thousand tons)
|Conventional crude oil (million barrel)
APEC economies are currently the main destination for these commodities. Mongolia will continue to supply commodities primarily to the APEC economies and will substantially increase the supply in the future.
- The above numbers make an overwhelming case for Mongolia’s membership in APEC. Those numbers will also grow further, as we are now expanding our rail and road networks to better connect to the APEC economies. This will also serve the broader goal of expanded trade in the Asia-Pacific region.
- In addition, Mongolia is planning to negotiate economic partnership agreements with many APEC economies on a step-by-step basis. Negotiations with Japan are already under way since 2012.
- Mongolia has the potential to contribute to addressing one of the most pressing issues in the region – energy security. Ensuring energy security is a challenge that requires a comprehensive solution both nationally and internationally. No country in the world is endowed with or has developed all possible energy sources. Mongolia’s Tavan tolgoi, one of the world’s biggest coking coal deposits, could play an important role in regional energy cooperation. According to international estimates, Mongolia coal exports will surpass 30 million tons at the end of 2015, once railway infrastructure is in place. The exports are expected to hit 50 million tons by 2017.
- Third, Mongolia pursues externally oriented, market-driven economic policies.
Foreign trade plays an important part in Mongolia’s economy. Ever since it began its transition to a market-based economy, Mongolia adopted open trade and investment regimes. We acceded to the World Trade Organization in 1997, and accepted all multilateral agreements. On accession, we bound all our tariffs under the General Agreement on Tariffs and Trade 1994. Mongolia grants at least most-favoured-nation treatment to all WTO Members.
Furthermore, we have bilateral trade agreements with 23 countries and bilateral investment agreements with 44 countries. Recently Mongolia and the United States of America signed an Agreement on Transparency in Matters Related to International Trade and Investment.
- Fourth, Mongolia accepts the basic objectives and principles set out in the various APEC declarations, especially those from the Economic Leaders’ meetings.
- Mongolia has started major national infrastructure development. These efforts are primarily focused on the development of transport and transit infrastructure. We are developing 5 transit corridors to APEC economies and implementing large-scale projects to that end, namely:
a) A new railway network that will transport goods to APEC economies along with the current Trans-Mongolia railway.
b) A new road network connecting Mongolia’s northern border point to the south.
c) Gas pipeline (currently at the conceptual level).
d) Oil pipeline (currently at the conceptual level).
e) Electricity transmission level (currently at the conceptual level).
With these transit corridors, Mongolia can become a bridge connecting Europe and APEC and the shortest destination to either of them.
- Fifth, should Mongolia become a member of APEC, it shall produce an Individual Action Plan (IAP) for implementation and commence participation in the Collective Action Plans across the APEC work programme from the time of its joining APEC.
We have already made the first step towards this goal. Guided by the APEC economies’ practice, Mongolia voluntarily issued an Individual Action Plan for Trade and Investment Liberalization in 2000.
- In light of the recent fall in FDI inflows to Mongolia, we have taken some bold steps to reinvigorate Mongolia’s status as one of the frontier markets for investment opportunities. Just yesterday, our Parliament adopted a new Law on Investment, which does not distinguish between domestic and foreign investors and provides long-term stability of tax environment. This particular Law is part of far-reaching package legislation recently submitted by the Cabinet to make the current legal framework more investor-friendly and provide long-term favorable opportunities for investors.
- The case for Mongolia’s membership in APEC goes beyond economic considerations. Mongolia has friendly political and economic relations with every single country in the Asia-Pacific. To support security and stability in the region, our President has come up with an initiative for Ulaanbaatar Dialogue on the Security of Northeast Asia, one of the sub regions of the Asia-Pacific.
- As positive as the above developments are, many challenges persist. The need is stern to diversify Mongolia’s economy. A lot needs to be done to bring our economic development levels in line with those of the APEC economies. But what is important is that we are on the right path. We can best advance on this path as a member of APEC.
At a time when Asia-Pacific countries become more and more intertwined, Mongolia cannot afford to stay outside. We are a landlocked country, which impacts our trade competitiveness. Therefore, Mongolia has a vested interest in all the ‘Three Pillars’ of APEC work, which will help us develop much closer economic ties with our immediate neighbours and other APEC economies.
- On our part, I can assure you that with its growing economy and friendly political relations with every single country in the Asia-Pacific region Mongolia would bring added value to APEC.