Wednesday, February 12, 2014

The integration of Mongolia into global financial flows

    I usually do not like to comment on another's piece of work, but for this one time I like to say about this point "While the lack of research capacity to support decision-making has been lamented in the past, it has become glaringly obvious in the current discussions of governance structures, construction budgets and the integration of Mongolia into global financial flows. A radical investment into such analysis capacity and into governance structures directly involving the Mongolian people may be one of the few solutions here."

    I have worked in Mongolia previously and well aware of the many agencies that are assisting Mongolia in terms of research and more research. Personally, I like research but this maybe excessive especially when these research are often done remotely and without complementing those on the ground. A good example that I read recently was a paper about the future of the meat industry and was written by someone who came to Mongolia for 3 days to give a seminar and his main suggestion was to follow-up with Australian style cattle farming not fully grasping that Mongolians have no idea of land ownership as versus land rights and ancestry law to provide for freedom of animal movement. Mongolian cattle are free to roam the entire country from North to South following the seasons and therefore its beef are tough because those cattle are feed with real grass not synthetic food. I digressed, the current debacle that Mongolia is facing are two folds. While external economic factors do play an important role (and I leave this for the experts to do more research to fix their own governance issues), the main culprit here is the Mongolian politicians themselves. They had overpromised by bribing for votes leaving nothing at all for the next government to work with from day one. No research is needed to reach this conclusion as this is common knowledge. When the new government came it, they replaced most of the current heads with their own people (usually from the same province). There is a learning curve which means all the businesses have to relearn who are their new principals and vice-versa, hence nothing get done for the next 12 months to allow them to settle in. Understandably the Mongolians are reserve when dealing with foreigners especially Chinese. No marks for guessing why even though for some unknown reason, Mongols consider Manchus and Hans to be the same. The current government needs to consider how to extract more $$ to get mileage for their own promises to their people during the election (its a face thing too). Again no guesses from whom. If RT does not want to play because of some IA then it is RT's prerogative but they still need to negotiate with the current government. Will foreigners abandon Mongolia because of less friendly investment laws ? My response is no as Mongolia will need to consider the consequences as well, they need to improve their own infrastructure (roads/power) and to provide for a growing younger generation who are quickly adapting themselves with the western ("english") world instead of old russian (even though most would prefer Korean TV soaps). There will be compromise (deals) and JVs are already in the pipeline to tap into rich resources which China and the rest of the world are hungry for (read Japan and Korea and as far as Indonesia). Mongolia's attitude in terms of governance, budget and global financial integration are similar in many respects to other developing countries (Malaysia is the most prominent. Malaysia even trained Mongolians Anti-Corruption Officers which is an irony). They have the appearance but lack the will and compulsion to act on them. Again no amount of research can solve these issues. The only cure is time and lessons to be learned (better to have tried and failed then not at all). Just like any foreigner, I find Mongolians are eager to learn about the outside world to meet their internal challenges (example over half a million still live in Gers ("tents") at the outskirt of UB without much sanitation), they have short term views because they are at each other throats trying to lineup their pockets (particular when in a coalition). When they are not fighting, they are pretty savvy businessmen (not the Abe Lincoln type). Politically, Mongolians are ferocious inline with their history (take no prisoner other than to fight for them like a trained warhorse). They had their first political assassination at the dawn of their democratic reforms so there is no love between the many political factions other than a common desire to rule Mongolia like many of their counterparts in developing countries (I must admit at least the Mongolians are better educated though - in order to be a Member of Parliament they have to gain at least a recognised University degree). They are meat eaters and frowned on those who prefer vegetarian, liken them to animals. Need I say more on how to deal with them ? Research is great but seldom do they meet practice. Give them time, they are still planning to return to China (symbolically the famous Gengkhis Khan statue (affectionately known as grand-daddy to all mongols) looks to China for a good reason). BTW in case you need to ask, Mongolians' view of the world remain the same during their grand-daddy's time (stretching from China to the steps of Europe). When you are negotiating with them, give them respect, not more research. As the Chinese used to say giving respect is free and will return even more.

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