Mongolia President Tsakhia Elbegdorj wants to cut state firms by one-third

President Tsakhia Elbegdorj wants more private investment as well as a sovereign wealth fund

PUBLISHED : Friday, 29 November, 2013, 4:10am
UPDATED : Friday, 29 November, 2013, 6:30pm

The Mongolian government plans to slash the number of state-owned enterprises (SOEs) by one third to encourage private investment and set up a sovereign wealth fund, said Mongolian President Tsakhia Elbegdorj yesterday in Hong Kong.

Mongolia will also enact a law that will discourage companies owned by Mongolian ministers from competing with foreign and private firms, he said.

Competition between Mongolian SOEs and private firms is "not good", Elbegdorj told a Hong Kong Trade Development Council (TDC) luncheon audience that included Hong Kong businessmen.

"The Mongolian government should serve your interests, not challenge your interests. We have to create that favourable environment in Mongolia. In two years, we will have in Mongolia full rule of law," Elbegdorj said.

The Mongolian government plans more laws to foster privatisation and reduce state ownership, said Javkhlanbaatar Sereeter, acting director general of the Invest Mongolia Agency of Mongolia's Ministry of Economic Development. The elimination or privatisation of one-third of Mongolian SOEs will be "a long process", said Javhklanbaatar.

Tsogsaikhan Chagnaadorj, an executive with Eagle Group, a private Mongolian construction firm, welcomed Elbegdorj's plan to privatise Mongolian SOEs.

"It's hard to compete with government companies as they have government funding and monopoly power," he said.

Eagle Group is considering listing on the Hong Kong Stock Exchange within three years, to raise funds to build residential property projects in Mongolia, Chagnaadorj added.

Elbegdorj has held talks with executives of Singapore's Temasek Holdings, on the basis Mongolian plans to set up a sovereign wealth fund like Temasek, .

Elbegdorj expressed hope that his government's dispute with Anglo-Australian mining giant Rio Tinto over the Oyu Tolgoi copper and gold mine will be resolved next month. Oyu Tolgoi is 66 per cent-owned by Rio Tinto's Turquoise Hill Resources unit, while 34 per cent is owned by Erdenes Oyu Tolgoi, a Mongolian SOE. The mine's shareholders are waiting for US$4 billion of project financing to be finalised before a December deadline.

At the TDC luncheon yesterday, Elbegdorj witnessed the signing of two memorandums of understanding (MOU). One MOU was between the TDC and the Mongolian National Chamber of Commerce and Industry, to strengthen economic and trade ties between Mongolia and Hong Kong. Another was between InvestHK and Invest Mongolia, to boost investment between Hong Kong and Mongolia.

"This is the largest Mongolian delegation ever to Hong Kong," said TDC Council Member Benjamin Hung.