Mongolia's border checkpoints now have a minister in charge of them. This minister does not have her own ministry, office, and even budget. The success or failure of the MPP in the next parliamentary elections will depend on the performance of this minister.
For the rest of the period, no matter how many railroads are put into service and no matter how many hundreds of trillions of MNT of thefts are discovered, if inflation does not fall and the national currency does not stabilize, it is doubtful that the Oyun-Erdene government will get good marks. Every time he announces the start of the fight against a large criminal group, protesters come to his door because the prices of consumer goods have soared, their supply has shrunk, and economic hardship is directly felt by households.
It is clear how this is happening and how to fix it. But it is not clear who can fix it. Because, as he said, it has to do with external factors, and not up to us. Frankly speaking, the main reason is the stable operation of the border crossings, especially the openness and capacity of the Zamyn-Uud checkpoint. In addition, if we open a few border points for exports, such as Gashuunsukhait and Shiveehuren, the problem will mostly be solved. However, we are not even able to repair and modernize our own border checkpoints with financial assistance from a neighboring country.
Priority is Erlian
The project to build and expand the capacity of Zamyn-Uud infrastructure to international standards is funded by a 201-million-yuan (75 billion MNT) grant from the Chinese government. The work, which began in 2019 and should have been completed two years ago, will finally be finished this July. The problem will not be solved by improving Zamyn-Uud alone. It will only be solved if the two governments come to an understanding.
It has been several years without the Erlian border crossing being used. But in the future, we should do our best, including praying that it will not be closed again. The rapid increase in cases of Covid-19 infections after China loosened its quarantine measures raised fears that the world might close its borders again and impose strict restrictions. If that happens, Mongolia's economy will be affected the most.
The exact reason for the rise in prices of all goods and services over the past three years is only that foreign trade has declined due to China closing its border. Zamyn-Uud is Mongolia's largest import terminal, with 40% of all passengers and 76% of passenger vehicles passing through this border point. But this works only if Erlian is open….
Roads before railways
If I say this, I might sound like an enemy. Mongolia has a total of 46 border points, including 39 road, three rail, and four airports. Twenty-nine of these are on the border with Russia and 13 are on the border with China. 14 of these are international and 11 are bilateral. However, 70% of imports go only through Zamyn-Uud, as the infrastructure and customs facilities of other border checkpoints are poorly developed.
Zamyn-Uud's biggest advantage is the railroad. According to statistics, over the past three years both rail and road freight traffic have declined, but not stopped. But the movement of passenger trains and automobiles have practically stopped. However, the rise in domestic prices has reached its highest level since the period of transition to the market. It can be concluded that Mongolians are still engaged in shuttle business between China and Mongolia. This is understandable, since large enterprises are concentrated in Ulaanbaatar and cannot reach remote regions.
The government plans to build a number of railroad checkpoints, as reflected in its railroad policy and policy documents called Vision 2050.
But they are export-oriented, and it will take time for them to become fully operational. (The Gashuunsukhait railroad is not connected to the Chinese railroad, and a trans-shipment terminal needs to be built at the border.) The cost of their construction is also high. However, it would be a great "blessing" for traders from the western and eastern regions if the road checkpoints could be put into operation in a short period of time. Taking a broader view, these checkpoints are important in order not to disrupt the supply chain in the market.
According to a survey of landlocked countries by the Asian Development Bank, the nearest seaport from Mongolia is 1,700 km away, while the same seaport from Almaty, Kazakhstan, is 3,380 km away, but the cost of transportation is half as much. The government believes that the reason for this is due to the capacity of the border point, and on the other hand, we can say that unmet demand is the main factor that raises the price. Costs can be reduced by opening up other channels to meet demand. One option seems to be road checkpoints.
On the other hand, the checkpoints currently used are not always connected to paved roads, and those that are connected to paved roads are not always accessible. In this regard, we cannot ignore the fact that large trucks, which are the main means of export, have a negative impact on the environment, destroying pastures and generating dust.
Although there is no agency, let alone a Ministry of Border Checkpoints, the minister is very close to a lot of money. One of the key goals of the 2030 New Revival Policy is to revitalize border crossings, and significant investments should be made to expand capacity and improve infrastructure of border points.
According to policymakers, the main factor limiting the development of our country is the poor development of border checkpoints and the lack of infrastructure. Therefore, within 10 years it is planned to increase the number of border checkpoints, expand their capacity three-fold, and double the railway network.
The answer is not yet completely clear, and the question remains how and where to raise funds to finance these developments. So far, the government says it will be done through public-private partnerships, but judging from past experience, there are hardly any good examples of cooperation on such large projects without complaints and delays.