Kh.Narankhuu: We, Mongolians, have not been able to come to one perspective

At this time, MMJ interviewed MP Kh. Narankhuu. He worked as the Director General of the Mongolian-Russian JV Erdenet and then late 2007 joined S. Bayar’s cabinet as Minister for Trade and Industry. As Minister, throughout the first half of 2008, he worked closely with the working group on amendments to Minerals Law. Therefore, we had an open discussion with MP Kh. Narankhuu on the draft investment agreement as well as the other pressing issues facing our economy today.

The Parliament created a working group last November. The group headed by MP Kh. Badamsuren prepared the draft of recommendations for the Parliament. The recommendations actually recommend that the investment agreement be in line with the existing Minerals legislation. However, throughout this March, the Standing committee meetings have been critical of the draft investment agreement and alternative proposals have been coming up. Why does the position of the Parliament changes so suddenly?

The working group that was created last November gave general guidelines to the Government on negotiating the agreement. The Parliament approved and Act accordingly. We give general guidelines, let the Government negotiate with the investors along the current valid legislations. If some changes are really necessary, then the government can come back to the Parliament with one or two amendments to legislations.
 
The project should be valued not only in terms of taxes but also in terms of other positive aspects

For example, the term of the agreement was negotiated with the investor in line with the clause 30 of the Minerals law. However, the Government that followed the Parliament guidelines is being criticized now and it looks like the term of the agreement may be even re-negotiated?

Personally, I do not want to discuss in detail any particular clauses of the draft agreement. Rather, I would like to point out some general ideas or principles. First of all, an important aspect that should be borne in mind while considering or criticizing the draft investment agreement are the changes that took place in the world economy, and especially in the environment where mining companies operate. In other words, just in a year’s time, the situation with the world’s economy had drastically changed. The times, where economy, and especially mining, was booming is over and we are in the midst of the real crisis and may not have even reached the bottom of this crisis. In these circumstances SMEs are facing tough times and are shrinking everywhere.  For example, in Japan, which is a major exporting country, the exports shrunk by 53% in just a year. Half of the items that the country produces cannot be sold anymore. This means that half of the export-oriented companies have either gone bankrupt or their revenues have halved. Of course, the demand for raw materials needed for the production goes down accordingly.

Please subscribe to our journal to read more.