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  • Writer's pictureErik Versavel

How Mongolia can become richer

Mongolia Weekly speaks to Erik Versavel about his experience living and working in Mongolia. Erik is a banker and after more than 30 years working in banking in a number of developing countries around the world, he gives an unfiltered assessment of the economic opportunities and risks facing Mongolia as the country moves further into its fourth decade of democracy.

Erik points to a number of Mongolia's economic strengths, including well-known sectors such as mining, as well as the country's unique position between Russia and China, and emerging sectors driven by increasing education rates, particularly among Mongolian women and young people.

"A large portion of the population is also well-educated and intelligent. In particular, the majority of university graduates are female and are smart, skilled and dedicated. This human potential is a real strength," says Erik.

Democracy, he argues, is the foundation for these strengths. However, during four years working in Ulaanbaatar, Erik also formed a view of the obstacles in the way Mongolia's economic development; namely, the problematic entanglement of politics and business.

"Mongolia has a lively democracy," he says. "But the problem is that it doesn't really impact the economic and social development of the country in the way it could.

"Mongolia needs to make sure it preserves its democracy. And the country needs to look at how politics and business are interwoven – many businesses are owned and built by politicians. That is not a healthy situation. As a result of that, there is monopolistic thinking in business, which is not helpful either.

"A different view of how businesses should be run – healthy competition, lack of interference from politics – would make it much better."

Erik points to the ownership of large mining companies as an example of this problem: "Several large mining companies are basically state-owned. Of course, the business leadership is not sufficiently independent from politics. These companies are milked – it's just not healthy. It's not delivering what it should be."

Part of the solution, in his view, is to change the perspective of ordinary Mongolians to make the political ownership of large corporate entities unfeasible in the court of public opinion. Another part is to improve the public view of foreign investment.

"People say this arrangement is social security for politicians. That mindset would have to change," he says. "It would also benefit Mongolia to have a more open mind to foreign investment. Mongolia needs financial resources to achieve things at greater scale.

"To deliver foreign investment, Mongolia needs political leadership that protects those investments and does not try to benefit from it disproportionately."

"I've spent plenty of time in countries like Mongolia with similar problems," he explains. "I don't mean to say that these countries need to be like Singapore – I argue that if politicians manage properly and put the country first, the whole country can become better off.

"People live in distress in many countries. That is so unnecessary. If politicians better managed business and economic decisions, people would be happier and live better lives." Erik has written of his views and experiences in Mongolia in a book titled Mongolia: Cracks in the Eternal Blue Sky, which outlines how developing economies like Mongolia can progress and become more prosperous.


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