On January 20, the second Ulaanbaatar Procurement forum was organized at Shangri-La Hotel to support the city’s economic development, protect the interests of businesses, boost collaboration between the state and private sector, and to support the development of a pleasant business environment in Ulaanbaatar.
The main goal of the 2016 forum was to discuss major development projects that are going to be implemented this year, and to exchange views on cooperation opportunities with the private sector in procurement for these projects.
At the opening ceremony of the forum, Mayor of Ulaanbaatar E.Bat-Uul underlined that because this year’s forum was organized before any procurement arrangements were made and before any development work commenced, the forum created favorable conditions for advancing the state and private sector’s cooperation.
E.Bat-Uul noted, “Relations between the state and private sector are unequal. When the private sector is working on a development project under state order and wants their money back, the state is not able to pay them back. Because of this problem, the private sector owes great debt to banks. The private sector is afraid to appeal to the courts to collect their money, because they are afraid that the state will not give them any more work. The city administration has started taking certain measures to resolve these issues. Particularly, if the state cannot repay the private sector on time, the city administration will become responsible for their debt interest payments and losses. This provides possibilities for balancing relations between the two bodies. You [the private sector] need to appeal to the courts to recover your losses. You need to be brave to protect your rights.”
The Mayor also highlighted that interest in Mongolia from foreign investors is increasing. He said, “UB has resources worth 100 billion MNT. This is ger area land. If we open possibilities for citizens to participate in the economy by collateralizing their land, Mongolia’s economy will steadily grow until 2040. However, because of not taking this issue into consideration and not taking any measures, around 86 percent of ger area residents are affected by poverty.
“Because foreign investors have noticed that land is a precious thing, the World Bank, Asian Development Bank, and other international organizations are interested in making investments in Mongolia. We are fully capable of repaying their investment. We need to take advantage of and use our opportunities,” emphasized E.Bat-Uul.
The Deputy Mayor in charge of finance and economic affairs, B.Bataa, said that city affiliated organizations delivered proposals for 530 development projects totaling 847 billion MNT. He added that the city administration studied the proposals and estimated that 426.9 billion MNT can be spent on development work to be carried out this year, 84 billion MNT of which will come from the state budget, 120 billion MNT from the Development Bank of Mongolia, 18.9 billion MNT from the Regional Development Fund, and 203.5 billion MNT from the city budget.
“This year’s development will be directed at creating a healthy and safe environment for citizens, with a focus on roads, infrastructure, and environmental protection. This year’s procurement is enriched with ‘green’ concepts. Projects being proposed by the private sector need to be contemporary, advanced, innovative, environmentally-friendly, and must utilize energy-saving green technology,” added Bataa.
B.Bataa highlighted that international financial organizations are trusting in UB’s development. He underlined that Asian Development Bank is going to invest 280 million USD in projects for ger area redevelopment and public transportation. The European Bank for Reconstruction and Development will make investments in the city without guarantees from the Government of Mongolia. Bataa added that a negotiation is being carried out with investors for establishing a water treatment plant with a capacity for treating 30,000 cubic meters of water, which is required for industrial parks planned for construction in Emeelt and Argalant.
“Investors also reported that they are ready for making investments in waste recycling projects. This shows that Ulaanbaatar has become a reliable partner for international organizations and the domestic private sector,” noted B.Bataa.
Officials concluded that the forum was helpful for determining what development the city’s financing should be focused on. Forum attendees believe that as the state is openly announcing investment and procurement issues, collaboration between the state and private sector will improve.
The Ulaanbaatar Procurement Forum took place in the presence of over 1,000 representatives from domestic businesses, international banks and financial organizations, and foreign ambassadors.