Mongolia's Government Inspection Reforms: Boosting Business-Friendly Environment
The government decided to dismantle the General Agency for Specialized Inspection (GASI) by January 1, 2023, in an effort to reform and streamline government inspections in the private sector.
GASI, a Byzantine agency with roughly 1,600 workers around the country, would be absorbed by line ministries, according to the cabinet chief. GASI's 800 inspectors will be moved to their respective ministries, while hundreds will be laid off. This is a major government inspection reform.
Despite the importance of government inspectors in assuring corporate compliance with laws and safety standards and safeguarding the public from harm, GASI has a bad reputation for being one of the most corrupt government bodies.
According to Cabinet Chief Amarbayasgalan, abolishing the high-handed GASI would be the first stage in a series of reforms to create a more business-friendly climate in Mongolia.
Implementing government inspection reforms for better business operations remains problematic. Mongolia ranks 110th out of 180 countries on the corruption perception index and 81st out of 190 economies in the World Bank’s ease of doing business survey. The doing business index retreated since 2014 from 59 to 81. This shows how it is difficult to create a business-friendly environment.
The most difficult aspect for businesses in Mongolia is securing construction permits, which require a lengthy evaluation procedure from several regulators and agencies. It's debatable whether mere reorganization would have any effect on inspection reforms.
Amarbayasgalan is now striving to establish a new internal audit agency within the Cabinet Secretariat under him to ensure that all government agencies become more business-friendly.
The efforts of Amarbayasgalan are closely aligned with Prime Minister Oyun-Erdene's goal of halving the number of business licenses by 2024 and digitalization of most government services, including licensing, via the popular e-Mongolia program.
Furthermore, Prime Minister Oyun-Erdene asked the justice ministry this week to table a modification to the investment law that takes into account views from the business and investor communities as part of his New Recovery Policy.
The most common issues identified by investors were contradictory judgments by central and local governments over mining exploration licenses, as well as hefty tax assessments on income from license transfer.
The Justice Minister listed examples from 2012 to 2022 in which officials harassed investors by leveraging state power and imposing exit bans on foreign investors. It is hoped that it will serve as a good lesson for officials to change their attitude toward investors.