WILL PRIME MINISTER AND CABINET CLEAN UP MINING?
Prime Minister U.Khurelsukh’s recent promises to actively combat injustice and corruption in mining, coupled with the Minister of Mining D.Sumiyabazar’s move to temporarily suspend issuance of mining licenses, have sent a clear message of reform to the mining sector.
Will the Prime Minister and his Cabinet be able to implement the much needed reform or is this just more of the same populist rhetoric that politicians use to appease voters?
Coming out of the gates after being appointed as Prime Minister in early October, U.Khurelsukh made it clear that his Cabinet would work for the people. The Prime Minister underlined that he intends to form a “people’s” government which will make decisions to protect the rights of the Mongolian people and improve lives, adding that his government’s core policies will focus on people development to create a “wealthy” middle class in years to come.
“I want to be a premier who pursues the recovery of the nation’s economy, improves people’s lives, strengthens discipline in the state apparatus, fights corruption seriously, and brings people who broke the law to justice,” said U.Khurelsukh.
One of the ways that the Prime Minister intends to create a wealthy middle class is his Cabinet’s stated goal to transform the nation’s underground resources to “valuable assets over ground”.
This has led to some optimism among the Mongolian people, who have for a long time now perceived the mining sector as corrupt and grown to resent many foreign mining companies operating in Mongolia. As a result, resource nationalism has been on the rise, especially after the Oyu Tolgoi agreement.
Cabinet has been smart to publically state its intention to focus on mining as it has become a major criterion for the people to grade the performance of Cabinet. Politicians and political parties that base their platform on cleaning up the mining sector and even resource nationalism have found success among voters.
U.Khurelsukh has made it clear that his Cabinet will actively fight injustice and corruption that has affected the issuance of resource licenses during discussions in Parliament. The Prime Minister underlined how injustice in this issue has caused resentment and outcry from the Mongolian people.
However, many people see U.Khurelsukh and his openness to foreign mining companies and international organizations as the embodiment of Mongolia’s shift from strong resource nationalism to a more pragmatic way of thinking. Ensuring responsible and sustainable mining has become a focus in contrast to the fear mongering of foreign mining companies by certain political groups that has been prevalent in the past.
In politics, public perception is everything, as it is a key factor influencing the policy of politicians, especially in mining. Prime Minister U.Khurelsukh knows that perception is vital in politics and in the case of Mongolia. The public perception of mining is at the forefront. For U.Khurelsukh, that starts with the first step in mining, the issuance of mining exploration and operation licenses.
“The current system basically gives away land and mining licenses to only a few companies and individuals, who own them by the hundreds. Those companies and individuals sell their licenses and land through loopholes such as transferring and gifting, which allow them to avoid taxes. Cabinet will be focusing on stopping this system,” U.Khurelsukh said.
The Prime Minister believes that by reforming related legislature, a more transparent and open system which sells land to businesses and individuals through auctions will be set.
Cabinet is reportedly in the process of drafting a bill to regulate land trade and resource licenses, which will help increase revenue to the state budget by 36 billion MNT by 2018.
The new bill being drafted by Cabinet includes improvements to the registration system for keeping track of land owners, profits from land, and transactions and transfers. Through this, Cabinet will impose taxes on transactions of land or resource licenses. Failure to register and attempt to hide activities will result in the revocation of land or resource licenses.
Cabinet has been able to launch a concerted effort, with the Prime Minister’s addresses to Parliament and Minister of Mining D.Sumiyabazar’s first move as minister to temporarily suspend the issuance of mining exploration licenses.
The Ministry of Mining said that the issuance of licenses will continue in late November, which confirms that at least in part, the move to suspend the issuance of mining exploration licenses was intended to send a signal to both the mining sector and the Mongolian people that change is coming.
Whether the Prime Minister and his Cabinet will be able to follow through on that promise is still up in the air. Only time will tell if Prime Minister U.Khurelsukh’s Cabinet will be the “breath of fresh air” that some people are hoping for in the mining sector.