Economic Policy Reform and Competitiveness Project (EPRC)

Chemonics
www.eprc–chemonics.biz

Economic and Trade Policy

Demand analysis completed for road-to-rail trans-shipment and logistics facilities in Zamyn Uud. The project completed the demand analysis for the facility, with assistance from international expert Mr. Patricio Mansilla.  EPRC organized presentations of its findings to diverse stakeholders and is in the process of editing and reviewing the report. Findings indicate that a PPP structure is viable.

Customs risk management program. The Mongolian Customs General Administration (MCGA) requested project assistance for the initiation of a risk management program. EPRC held meetings with MCGA to define TORs for a short-term international expert and is currently evaluating CVs for final selection of a short-term expert.

Financial Markets

Completion and submission of confidential report on “Mongolian banking sector consolidation strategy: Immediate actions and structural reforms” to Mongol Bank. The project completed editing and production of a 207-page report for Mongol Bank (BoM) in June. EPRC hand-delivered three printed copies and three electronic files of the report and suggested that BoM hold a meeting of relevant IFIs to present major findings and recommendations and delivere numbered copies of the report to those invited. Throughout the assignment, the project worked closely with BoM bank supervision staff. A final internal debriefing at BoM took place on 29 May.

Banking sector re-structuring. At BoM’s request, EPRC brought back international finance expert Walter Silva to work with project staff and BoM supervisors to develop and implement a plan to restructure the banking sector. Submission of such plan to the IMF by 30 June is a required condition for World Bank/IMF budget support.

Mongolian Corporate Governance Development Center (MCGDC):  MCGDC convened its first general members meeting on 2 June at Khan Bank. The members elected nine board members and approved the Center’s charter and business plan. At the first board meeting on 5 June, the board appointed Mr. Unenbat as the Executive Director of the MCGDC and Ms. Tsend Ayush (an instructor of management at the Institute of Finance & Economics and an MCGDC trainer) as the Center’s general secretary. A group of twenty training specialists attended the training-of-trainers Corporate Governance program from 3-6 June. Participants were from academic institutions, the State Property Committee and Financial Regulatory Commission, leading private banks and other Mongolian public and private sector companies. Instructors delivered the fourteen-module course over a period of four full business days. With EPRC support, MCGDC is working on building the Center’s membership base. MCGDC is also working on obtaining sponsorship from Mongolian companies and international organizations.

Credit Information Bureau (CIB): EPRC facilitated a study tour for Mongolian lawmakers and the CIB legal working group to Singapore in June. The two members of parliament and two CIB legal representatives met with the central bank of Singapore, Credit Bureaus Singapore and DVS bank, a leading consumer and commercial bank, and learned about their experiences establishing Singapore’s first private credit bureau including the required amendments to laws, CIB regulation, the benefits achieved and challenges overcome. The package of laws and amendments to facilitate a private credit bureau in Mongolia is now before select members of Parliament who will sponsor it in the fall session.

Energy Sector Reform 

Tariff reform plan/program status: The Energy Regulatory Authority (ERA) is evaluating requests from licensees for the second electricity and heat tariff increase under the Tariff Reform Plan/Program proposed by EPRC and approved by the ERA. Data shows that tariff increases are needed to continue increasing revenue flows and move enterprises closer to full cost recovery. The ERA currently envisions increases of 18% and 32% for electricity and heat respectively, effective 1 August. This increase will raise the electricity tariff to 80 tugriks/kWh. Full cost recovery is planned by 2012 when the tariff will reach about 108 tugriks/kWh. 

Action plan with Ministry of Mineral Resources and Energy (MMRE): The energy portion of the action plan for collaboration between EPRC and MMRE was agreed upon in June, including short-term priority actions. MMRE is revising the fuel/coal portion of the action plan for EPRC’s review.

Monitoring of potential Cabinet actions regarding the ERA: In a meeting on 17 June, the Cabinet discussed the MMRE review of ERA’s performance since its inception in 2001. Currently the ERA’s budget has only been approved through June 2009. The meeting scheduled for 24 June to reconsider the ERA’s budget for the remainder of 2009 was postponed because the Ministry of Finance wants to review the budget request one more time.

Consensus Building, Public Education, and National Dialogue

Assistance to the General Agency for Specialized Inspection’s (GASI) Press Officer to expand public communication efforts. On 11-12 June, in collaboration with the Press Institute, EPRC sponsored a two-day workshop for GASI inspectors on "Public Relations and Communications.” The workshop was important because it provided a basic understanding of Public Relations and Communications in an effort to build GASI’s capacity to work with and use the media effectively. The Press Institute conducted an evaluation of GASI’s existing public communications mechanisms and practices prior to the workshop, and will conduct a follow-up evaluation six months later. On 19 June, in collaboration with GASI and the Press Institute, EPRC sponsored a one-day journalist workshop to provide information to the media and general public on GASI. Topics covered included environmental inspections and illegal logging, inspections of import and export goods and commodities, inspections in the construction sector, and the legal environment for professional inspections which explained the rights and obligations of inspectors.

 “Mortgage market development issues” roundtable held. In collaboration with the IFC and MIK, EPRC co-sponsored a roundtable on mortgage market issues on 20 June at Ikh Tenger. Participants included IFC housing finance experts, Members of Parliament, MIK board members (commercial banks and Mongol Bank), and EPRC. The project made a presentation on mortgage down payment supplements as a mechanism to increase housing affordability, generating a discussion of means to introduce liquidity into the banking system.

Seminar on “Public-Private Partnerships for infrastructure investment in Mongolia” is planned. EPRC has teamed up with The World Bank Institute, The ADB Institute and the Ad Hoc Parliamentary Committee on PPPs to organize and hold a two-day event on 2-3 July at Government House. The seminar will bring together Mongolian and international experts and decision makers from the public and private sectors to examine, discuss, and learn from best international practices in Public-Private Partnerships (PPPs) for mobilizing private investment for infrastructure projects. The objectives of the program are to: (i) identify priority sectors and potential PPP projects in infrastructure investment in the context of Mongolia’s economic growth trends; (ii) apply lessons learned from international experience to develop an enabling legal, regulatory, and institutional environment to attract private investment and make projects ‘bankable’ by proper risk allocation; and (iii) discuss and develop priority policy actions required in Mongolia to develop an enabling environment for PPP infrastructure projects in the transportation and energy sectors.