BCM JANUARY 2021 MONTHLY MEETING RECAP 

The Business Council of Mongolia’s (BCM) Monthly Meeting was held online on 28 January 2021 using the Zoom platform, with BCM Chairman and CEO of Erdenes Oyu Tolgoi Mr. Ts.Tumentsogt hosting for an audience of around 85 people.

The theme of the first Monthly Meeting of 2021 was “Mongolian economy during the COVID-19 Pandemic: 2021 outlook, government actions, members’ concerns and ways forward.”

2020 was a difficult year for all around the world, and Mongolia was no exception. Mongolia’s economy contracted by 7.3 percent in the first three quarters of 2020, and the budget deficit grew. 
The government headed by U.Khurelsukh also resigned recently, and Khurelsukh’s Chief Cabinet Secretary L.Oyun-Erdene was appointed as the 32nd Prime Minister of Mongolia.

This Monthly Meeting featured speakers who provided us with insight into how various countries have handled the COVID pandemic and the measures taken by the respective governments on the economy.

First up, Mr. Randolph Koppa, Vice Chairman of the BCM and Executive Vice Chairman of Trade and Development Bank, gave us a brief overview of the situation in Sweden. Mr. Koppa had been travelling abroad in March of last year, and has not come back to Mongolia due to the ongoing border closure. 

The Swedish approach featured a partial lockdown, and never really had a complete lockdown. The people have been good as far as social distancing, avoiding large gatherings and inter-generational meetings. Social isolation is helped by the fact that 45 percent of Swedes live alone. 

Sweden is known as a country with high tax rates as well as deep social safety nets, so it is no surprise that its government has undertaken several economic measures to address the COVID downturn. For example, businesses that have had to curtail operations may qualify to receive funding from the government for 70 percent of salaries to laid off workers. They have also offered zero percent interest SME loans, soft loans to support exports, and discounts on social insurance.

Mr. Koppa noted that when it comes to Mongolia, FDI and foreign funding is crucial, and conditions are favorable at the moment as interest rates are low. In addition, new types of jobs, such as in green energy, should be fostered to replace jobs that have been permanently lost.

The second speaker, H.E. Mr. Lkhagvadorj Tumur, Ambassador of Mongolia to Singapore, delved into how Singapore has handled things. Tourism is one of the pillar sectors of Singapore’s economy, taking in about 18 million tourists per year prior to COVID. From China alone, 40 to 50 thousand tourists used to arrive daily. The government has implemented a program to retrain people who have lost work due to COVID, by helping them transition into other sectors. For example, airline workers can transition into the medical or hospitality field.

Singapore’s government has passed a series of economic stimulus packages equivalent to about 12 percent of GDP. The government may provide 25-75 percent of salaries for laid off workers. Principal payments on loans have been postponed, and utilities credits have been given to households. Some of these measures should sound familiar as Mongolia has also taken similar actions. As of the fourth quarter of 2020, the economy contracted about 3.8 percent, but GDP is expected to recover to 4-6 percent growth in 2021.

Our third speaker was Mr. Choo Yonh Shik, Associate Professor at Chung Ang University in Seoul, South Korea. Korea has had three COVID waves, in February, August, and November. The epicenters of the first two waves were relatively clear, but this third wave is worrisome in that it is unclear where its origins are. The government has set up walk-through and drive-through screening and testing facilities, with 180 facilities around the country. 

2020 GDP is forecasted to contract 1.1 percent, and the growth forecast for 2021 is at around 3 percent. A total of USD 67 billion in various supports for society have been approved. The government also announced the “K-New Deal” – featuring major investments in infrastructure, high tech industries, and support for SMEs. The government plans to spend around USD 560 billion from the national budget, with 60 percent being allocated for the first half of 2021. The professor noted that some economists are rather concerned about the mid-to-long term effects of such major capital injections, as it carries the risk of high inflation, as well as sovereign debt risks.

Member of Parliament Mr. T.Dorjkhand was scheduled to be the final speaker, but was called to an urgent matter of parliament at the last minute, and Ms. B.Munkhsoyol spoke in his place. Dorjkhand is the sole MP from the National Labor Party (NLP) in parliament. The NLP has made some recommendations to the government regarding the current situation. The Bank of Mongolia made historic cuts to the policy rate in 2020, as well as ramping up child benefit money to MNT 100,000 per child per month. The child benefit money will be provided until July, at which point it will be reduced to MNT 20,000 per month. The NLP believes such a sudden, steep decrease is not optimal, and that the government should instead gradually lower the amount in phases. Ms. Munksoyol also noted that the NLP welcomes any ideas from the BCM regarding policy directions the government should take.

More information from the Monthly Meeting can be found from the links below:

1. Editor's full notes (English)
2. COVID-19 Singapore Measures (Mongolian) - Ambassador Lkhagvajav Tumur
3. K-Quarantine (English) - Prof. Choo Yonh Shik