New Di­rec­tor-Gen­eral of ADB’s East Asia Depart­ment Indu Bhushan dis­cusses Mon­go­lia

The UB Post - - BUSINESS & ECONOMICS -

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

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