Friday, December 10, 2010
Third record is that the deficit in this budget will be equivalent to 1/10 of the economy for the first time. Let us analyze each of them in more understandable way. The biggest budget never seen in the history of Mongolia on one hand shows the beginning of rapid economic development of the country. On the other hand, it will be a huge challenge for the governance to pass MNT4.0 billion through the Government. The corruption will get even bigger, leading to expansion of black economy.
The queue of applicants wishing to get a job in government system will get longer and longer and the bureaucracy of government officials will get stronger and stronger. The consumption of government will get more luxurious. Budget of any country is compared to its economy or GDP to measure government’s portion in the economy. This proportion cannot be zero or if there is no government, then chaos will spread and economic creative actions will not create any accumulation or there will be no wealth.
This proportion cannot be 100 percent too. We had experienced it in our recent history. There has been continuing debate about what can be a proper proportion rate in order to make the economy more fruitful and U.S Congressman Richard Keith “Dick” Armey first applied graphics of such proportion and it is called the Armey’s Curve. It is believed that the highest possible proportion of government is that it should not exceed the half of economy. If it does, then it will negatively impact economic growth.
In other words, the government is just like meal. If you undereat or overeat a meal, both diets are bad for your health. Our budget of next year “overeat” by 2 percent reaching 52 percent. Economists claim that 15-17 percent is the most appropriate and proper rate. Does anyone remember that two years ago IMF had rescued our country from real bankrupt by granting a US$290 million credit and that Mongolian Government had pledged to keep budget deficit below 5 percent in order to receive this credit?
Though the European Union demands its member states to keep the budget deficit at 3 percent, Greece and Ireland was about to get bankrupt because their deficit reached to 13 percent and 16 percent respectively. They had to ask credit from abroad to rescue their countries. Mongolia plans to spend MNT4.0 trillion next year, which is more than total budget income by some MNT700 billion, which means budget deficit is about to reach 10 percent of the economy in 2011.
In Mongolia, budget spending must be low and stable. We should not forget that the budget growth is caused by the growth of price of some minerals at international market, which means we did not create this growth ourselves.
Friday, December 3, 2010
Tuesday, November 23, 2010
The government duty is to build a favorable fair-competition environment for private companies and on the other hand to make infrastructure investment through taxes and other levies.
Unfortunately, in today’s Mongolia, the government serves as a tool to make some group of people get richer and richer instead of fulfilling the above duties, further deviating the business principles and its normal operation instead of building favorable conditions for businesses, which led to disappearance of fair and free competition. Finally, ordinary businessmen “buy” their favorable business conditions by corruption. Though the corruption has been spreading in Mongolia and in our northern neighbor, it is different in terms of their concept.
In Russia, the corruption is feudalizing. There, a few number oligarchs has built close links with authorities and became an extraordinary social class, who machinates with authorities to sell Russia’s rich natural resources and who outbids to buy the world’s most expensive real estates. Meanwhile, ordinary citizens of Russia remain poor. However, because Russians can see and sort out who creates and spreads corruption, they have possibilities to clear out and get rid of them under a certain historical conditions.
In case of Mongolia, the corruption is democratizing. The corruption has penetrated deep into every branch of our social life, becoming a basic survival condition for ordinary citizens. All businesses, no matter big or small, are being fed by corruption.
In order to win a tender bid, which is machinated by decision makers, citizens and individuals race with each other to give bribe in each decision making levels. Ordinary citizens fight each other to have even little connection to any part of mineral resources development. A main reason why the corruption is democratizing in Mongolia faster than its society is that every person began to see the corruption as an only opportunity or only approach available to get or acquire what he wants. As the corruption serves as basic conditions for the existence of society in Mongolia, chances to clear out and get rid of corruption system have been disappearing.
If it continues at current speed, we will soon be among the countries, where the corruption is more democratized than society, where authorities in power get richer and richer while ordinary citizens get poorer and poorer. Economic branches are politically and economically controlled by leaders of machinated political parties in power, under such fancy names as coalition or consensus. Meantime, most of population is gradually getting poorer, increasing the number of people isolated from the society.
So far, one generation that only the minority benefit from quality or international standard education is behind us and the power of government is now passing to inherits of those who ruled the country for the past two decades. In a normally developing country, the income of population grows at relatively same speeds and order to ensure it there must be a real political opposition party in the government. In Mongolia, only few people rule and control the whole country and do whatever they want, under the name of coalition or consensus.
On the name of the state, they threat, rob and shoot to death its citizens. It is getting more likely that soon there will be no one left to say against the words ordered by them. Those who are believed to be smart, intelligent, just and wealthy, go abroad in exodus for various reasons and started to purchase real estates in the country, to which they go. In order to stop this sorrowful trend, first we need a strong political opposition party.
Secondly, we need the involvement of well-informed and intellectual citizens capable to affect decision making. In other words, we lack a strong civil society. These two factors are major guarantees for democratizing the society faster than the corruption.
Friday, November 5, 2010
In a normal and healthy economy, changes to these two rates should be made simultaneously and proportionally. The banking sector standing on the floor of a firm savings rate, while being pushed down by the roof of a falling loan interest rate and which living space is getting tighter and tighter, suffers the most fever heat and shaking. Though official number says that there are 65 thousand registered companies in Mongolia, only half of them are active and 80% of this half employs the staff up to twenty persons, according to the National Chamber of Commerce and Industry.
According to a sample survey conducted by the National University of Mongolia, only 40% of active business entities got loan from banks. They don’t want to take loans as interest rate offered by banks is too high. It is indeed not easy to repay the loan with monthly interest rate of 2% and with maturity of one year only. Because the money is very expensive in Mongolia, all big companies capable to bear risk now take loans from abroad. Because of high interest rate business gets into money shortage and grey economy is growing, which are demonstrated by the fact that non-banking financial service has expanded and their monthly loan interest rates have even reached 5-8 percents in recent times. There is no chance for small and medium enterprises, a major composition in Mongolia’s economy, to expand and grow. A number economic reasons support the interest rate to stand high.
The most important three factors are: first fundamental reason is the pressure by ongoing savings interest rate; the second is inflation; and the third is the Bank of Mongolia itself. A main reason for high savings interest rate is that depositors place their money in those commercial banks that offer higher rates.
In other words, the market supply cost is high. These commercial banks, who collected main funds thank to high savings rate, issue loans with high interest to the entities in need of capital, by adding operation costs, risk costs and profit. The other party in excess cash or the depositors place their money for a high but risky profit. As there is almost no capital market in Mongolia, savings interest rate is not expected to go down for a long period.
A key reason why the capital market cannot develop in Mongolia is the lack of credit in Mongolian companies that issued shares and the lack of a mechanism to guarantee the trustworthiness of all information the companies provide. This is beyond the business scope of Bank of Mongolia. Savings’ interest rate must be higher than the inflation rate for the reason that purchasing power can be kept stable provided only that the money saved in bank would be growing higher than real inflation rate at least.
Another key reason for savings’ interest rate remains high is going-up inflation rate. Bank of Mongolia reported that average increase of inflation rate was 6.5% between 2000 and 2004 and 11.5% in following five years. A major factor which makes the inflation rate go high is the Government which is getting more cumbersome.
They recover cumbersome budget expenditures by means of hiking tax on private sector in various ways or forcing mining companies to pay down-payment. Our authorities have converted state budget, which is supposed to be used to manage macro economic policy of the country, into their means of implementing their pre-elections promises and raising their political image. The budget expenditure has been increasing at astronomic speed, while the accountability related to budget spending has been vanishing at higher speed.
This year budget expense got higher than loans to be issued to businesses and the Government is becoming bigger than all businesses combined. The events like elites of two ruling parties amended the Constitution in the way only beneficial to them and parliamentarians obliged to pass law became members of executive governance or the Cabinet, have created favorable conditions for making the Government more cumbersome and for constant increase of inflation rate. Because legislative, executive and all controlling systems are mixed together, the subject to bear responsibility has lost somewhere and few irresponsible bastards have been doing what they want. As result, the price is now fixed not through market ratio of demand and supply but by political decision, leading to failure to control the inflation anyhow. Inflation is the robbery that authorities do from its citizens.
Third reason responsible for high savings interest rate is opportunistic or timeserving policy of Bank of Mongolia. In a country like Mongolia, which has two banking systems or where the central bank is not engaged in business but controls monetary policy, while commercial banks issue loans to businesses, the management of the central bank must pursue an independent policy free from the Government. However, the management of Bank of Mongolia has become representation of an attempt to balance political power of two ruling parties and therefore cannot take independent and proper actions as soon as it gets alert from market.
Authorities of the Bank of Mongolia are the ones who surely know about who is the biggest borrower of all commercial banks and about how the loan repayment is being made. They are the ones who must inspect operation of commercial banks at any time to reveal deficiencies and violations and who must take necessary steps promptly. Because commercial banks are owned by top officials of political parties, who became principal decision maker of the Parliament and the Cabinet, the Bank of Mongolia do not dear to speak out though they are the only one who is well aware of about why the banking sector which is the most affected by politics, still cannot change interest rates. They also have been silent for many years though they first felt the consequences of a cheap political play to distribute cash. But it is good that they started to speak out past few months.
The policy rate of Bank of Mongolia yet cannot affect savings interest rate of a country like us, whose economy is fever-affected. Monetary policy of central bank only influence minor any impact to money supply into real economy. The above three challenges must be addressed in order to reduce loan interest rate and each of three reasons urge Bank of Mongolia and competent government agencies function intelligently and fairly. Above all they remind ruling parties to be responsible.
Do you remember A.Einstein said once that “We can’t solve problems by using the same kind of thinking we used when we created them”?
Friday, October 29, 2010
October 29, 2010
This is one of many things that were lost for residents of Ulaanbaatar City. Conspired government officials have stolen from us not only our lands of kindergarten, playground and other properties of public ownership, pure air and sidewalks but also our right to sleep.
We all no longer talk about how the city is noisy in day times and almost got used to it.
Noises of construction and repair works in every street and every building, of car signals and of hammers smashing down the concrete walls has been increasing day by day, raising the question about how many people cannot sleep because of such noises. Construction of a building almost inches close to your building will continue all night long. Thousands of residents who went to beds after long working day, particularly elders and infants cannot sleep well till the morning. Many of them just call to police because there is nothing they can do. The police line 102 will answer we cannot do anything if there is no direct threat to human safety, please call to 310005. The person on duty, who is on this number, would say: “What can I do on my own, but I will forward to management”. Such scene repeats every night and the days are going by. Unfortunately, there is no mechanism to stop activities responsible for all noises in Ulaanbaatar City, which don’t allow residents sleep well. Don’t hope that the group of people called ‘city parliamentarians’ would care if you sleep or not. They are too busy with their “job” to get an estate or catch up a profitable business while in office. In civilized and democratic countries, there is a special law or regulations regulating the noise in the city.
Noise is classified into the classification of pollution like air and some special requirements are put against it. In most of megacities of the world, car horn is prohibited at night and the trespasser is subject to penalty. It is also restricted to use loud speaker at railway station. Any construction work between 06.00pm and 07.00am hours is totally forbidden. Any and all men who infringes it, is levied high fines so that it never repeats again. The United States Law of Noise Pollution says that any infringement of standard herein is fined US$25,000 per day or is imprisoned up to one year. In civilized countries, early it is legalized to fine for example if loudspeaker’s volume is high audible to neighboring house or street, or audible beyond hundreds of steps.
But today noise standards are expressed in decibel (dB). For instance, human whisper generates 20 dB, normal dialogue between two people in 1 or 2 meters - 60dB, sound of truck - 90dB, gas hammer – 100dB, rock music - 110, take-off by B747 aircraft – 120dB respectively. If it is higher than 130 dB, the ear will pain, further drumhead will be damaged seriously. A WHO research indicated that 3.0% of people dying because of heart diseases due to noise-related stress. A man feels uncomfortable in the sound higher than 45 dB and cannot sleep in the noise higher than 40dB.
Kid’s learning capacity is completely lost in noises above 55 dB, and they even get into stress. Metropolitan residents must take care of such impact of noise and demand city authorities and central government take efficient actions. They are obliged to serve the people. Instead of serving the people, they indirectly support seizure of all of citizens’ rights and properties and are even involved in. Look at these numerous buildings built and being built between two buildings in Ulaanbaatar City.
They build buildings blocking windows of families and sidewalks. Residents first will react with strong protest. They go to all competent organizations, including the government, courts, khoroos and apartment owners associations, and make sensations, in the hope that they will serve for the people’s sake. All organizations will pledge to take necessary actions. Very soon, all parties will get silent because all got what they wanted – the money. Since the money is paid to make residents silent, the owner of building will do whatever he or she wants, but the residents, who sold their comfort for small money, will stay awake whole night saying no complaints no matter how the noise is.
Exactly like this way, your right to sleep is sold and conspired at the end. City authorities, government officials and building owners cannot choke back laughter looking at that residents cannot get asleep at all. Because, they all live comfortably in big houses in mountainsides which they acquired by means of conspiracy by lying the people that mountainsides are part of national park, far from big city’s noise and polluted air. My metropolitans, have a good sleep … if you can!
Translated by P.Shinebayar
Friday, October 22, 2010
October 22, 2010
“Mongolians used to be poisoned with foods, but now we are poisoned with drugs” said the Health Minister S.Lambaa (Unuudur Newspaper. 2010.09.27. Page C3)
Citizens of Mongolia want to know only about why your drugstores are not stopping to sell counterfeit drugs and what you, Mr. Minister, are doing to stop this kind of crime as the highest competent one in charge of population health. You said “Drug control is carried by the State Professional Inspection Agency, but originally the Health Ministry must take control of drugs”. Can Mongolian Government and state-run agencies control themselves? State controlling agencies are all already in entrenchment.
In principal, we, the citizens, don’t care about where is your Government’s controlling and inspection body. The only thing we want and demand is You, as a cabinet member, put a control, no matter professional or devil’s, as soon as possible and stop exploiting your people by counterfeit drugs. If you cannot find out who is the importer of counterfeit drugs, punish such importers and stop this crime immediately, then it would not be useful even if you take control of drugs and set up that new agency as you said.
New seedlings can be planted only after weeds are pulled up by the roots. Even innocent young kids die on hospital beds because hospitals inject counterfeit injections. Wondering if You are in power to stop your subordinate who force patients to buy counterfeit drugs or not?
As Minister for Health, can you publicly announce how many companies are licensed to import medications in Mongolia, when did they get such licenses, on what grounds the licenses are suspended and how many of these licensed companies are linked to current and previous ministers, deputies and to those authorized to issue licenses? The citizens doubt that You can announce all these publicly.
Generally, such kind of information is always open for public in any democratic state. Besides, You are the Minister from the Democratic. If you can, publicize it and the citizens will judge your right and wrong very soon. Carry sudden inspection in drugstores to find out how much of all drugs are counterfeit products and publicly announce by each drugstore. Then expose how these counterfeit drugs came here. There won’t be any trouble to find out it because there is no doubt that the money from counterfeit business always goes to its counterfeit dealers. After that, find out who gave licenses. If it is difficult to know where they came from, talk with customs.
Ask why individuals bring foreign drugs in their hand luggage. Then reveal if they pay taxes or not. Also ask why drugstores do not use price tags on drugs they sell. Ask why drug price is fixed by a drug selling lady, who is able to easily define your purchasing power instantly due to your appearance and look, better than Statistics Office of Mongolia. Deal with all foreign and domestic hospitals and all drugstores, who make superb income from selling the drugs in retail like tobacco.
You, Mr. Minister, and your “colleagues” must have noticed the following while undergoing expensive medical treatment abroad. In a civilized country, it is recommended to refuse from the drug if its package is opened or damaged and, in case of using such drug, the people are warned that the manufacturer will not be responsible for the quality of its drug. Do the authorities care that everything is vice versa in Mоngolia?
If not, please tell us who must care of it. This is not all about medications. The same situation exists for all products, tools, apparatus related to health and everything associated with hospital is counterfeit. Are all these food supplements and herbals are real?
The most of natural supplements and herbals come from Russia. All television channels in this country are discussing that Russia leads in the world by its imports of such counterfeit products. Do we only bring original ones? The only official, who has the competence and authority to expose, publicize and deal with all these, is You.
It is your basic duty to do so. Your previous ministers have not done this and they have not been punished for not doing this. Because political parties in power never charge each other with responsibility. It is always like that “one feudal is replaced by another feudal”. Though you, the politicians, were excited to pass a national program so-called “Healthy Mongolian”, finally it appears that there is no healthy Mongolian. Don’t You and your ministry staff really know that there are a number of successful practices about how to stop counterfeit drugs and medical equipment? Ask the citizens if you cannot find out such best practices.
Minister Lambaa, you are the first person to become a health minister despite the fact you’re you are not a doctor. Minister is not required to be a doctor, it is enough to be a good manager.
Therefore, deal with the half of things written here if you have a desire and willingness to be a good manager. At least start it. Just set a standard.
Maybe the counterfeit drug businessmen altogether would unite their wealth and influence to change you somehow in order to defend their dirty business. But if you manage to do half of this at least, You will easily win next elections again.
Translated by P.Shinebayar