New Director-General of ADB’s East Asia Department Indu Bhushan discusses Mongolia
Indu Bhushan, the new director general of the Asian Development Bank (ADB)’s East Asia Department recently visited Mongolia. Having been appointed to his position in October, Bhushan will lead ADB’s engagement in China, Hong Kong, South Korea, Mongolia, and Taipei China. During his recent visit to Mongolia, he sat down with gogo.mn to discuss cooperation between ADB and Mongolia moving forward.
First off, let’s talk about the Country Partnership Strategy (CPS) between Mongolia and ADB. At what stage is it in?
ADB is a long-term partner for Mongolia. It has been 25 years since ADB first worked together with Mongolia. In this period, projects costing two billion USD have been implemented. The number of projects that have been implemented exceed 300 and they have been in various sectors such as transportation, energy, banking and finance, health, and education.
Beginning this year and until 2020, ADB will be investing 1.2 billion USD in Mongolia. This mean’s that the amount of funding annually is three times more than what it was before. Moving forward, special attention will be paid to transportation, energy, banking and finance, and society. ADB approved its three main focus areas in Mongolia.
First is the sustainable high-level economic growth in Mongolia. In order to achieve this, economic diversity must be ensured.
Secondly, ADB wants to make sure that every Mongolia citizen benefits from this economic growth. The third and final is the implementation of projects aimed at ensuring sustainable economic development.
In addition, ADB has a project aimed at reducing air pollution. Air pollution not only affects society but also is detrimental to the economy.
Which project is being implemented to reduce air pollution?
The project to reduce air pollution has three separate components. The first one is only concerning the reduction of smog and exhaust from vehicles. The bank is in the process of drafting rules and procedure to support the reduction in vehicle exhaust and improving fuel quality.
In addition, the smog coming from ger districts will be a focus of the project. Residents in the ger districts must be encouraged to use better alternative sources than coal. If a more sophisticated form of heating is used, there is the possibility to decrease air pollution in areas with high population densities. But also, in order to decrease air pollution, high population density areas must be decreased.
The Mongolian government recently issued an 800 million USD bond on the international market. What is your position on this issue?
The news that Mongolia issued a bond on the international market was very well received by ADB. This is a signal that investor confidence in Mongolia is high. These investors are interested in supporting the Mongolian government’s reform policy. The Mongolian economy grew by 5.3 percent in the first half of the year. This is also another positive sign. But our optimism is not only limited to this year, we are optimistic about the Mongolian economy going forward.
What risks is Mongolia vulnerable to? Business owners have said that the business environment is not favorable enough. What risks does Cabinet have?
In my opinion, the business environment is improving. The economic situation coupled with the action of Cabinet has created positive expectations.
The price of the main export product of Mongolia and key economic performer, coal, is expected to decrease. What is your opinion on this?
The main issue that arises in the Mongolian economy is diversification. It is inevitable that mining will be a major factor for the economy. But in the mid to long-term, Mongolia will be required to diversify its economy.
ADB will support Mongolia in its efforts to diversify its economy. The bank is focusing on infrastructure projects to improve information communication in Mongolia, while also paying close attention to the development of a key economic sector, agriculture.
By expanding relations with its neighbors, Mongolia will have the opportunity to attract investment in sectors outside of mining. In this aspect, ADB is also supporting the development of eco-tourism.
What is ADB’s expectation of Mongolia’s economy in 2018?
Most likely, growth in the macro economy will be strong. ADB forecasts that Mongolia’s economic growth will be at three percent in 2018.
However, this growth is dependent on many factors and there is always the possibility that growth will exceed three percent. For instance, the price of coal and commodities in general have a large effect on the economy.
Indu Bhushan, director general for ADB’s East Asia Department