For many years, China sacrificed environmental stewardship at the altar of economic growth, adopting a growth-at-all-costs strategy.

The economy-first mentality helped Beijing lift 850 million of its citizens from dire poverty but also made the country the biggest emitter of greenhouse gases.

However, that has been rapidly changing under president Xi Jinping who has vowed to adopt more stringent environmental policies as he seeks to temper the hardline stance that dominated previous administrations. Shortly after Xi Jinping's election in 2013, China introduced the "Green Fence" operation designed in part to improve the quality of the plastics waste coming into the country before following it up two years later with the "National Sword Campaign" that effectively banned the importation of plastics into the country.

Last year, the president reiterated his environmentally friendly stance after he announced that the country had set a firm goal to become carbon neutral by 2060.

And now China has just launched a nationwide carbon trading marketplace in what could become one of its most significant steps taken to lower GHG emissions and achieve its climate goals.

China, which accounts for 28 percent of the world's greenhouse gas emissions, has become the world's first major economy to launch a national carbon emissions trading market.

China's carbon market

Many countries across Europe, as well as some parts of the US, have implemented carbon markets that force companies to offset their carbon emissions by investing in green projects that neutralize their emissions.

For now, China's emissions trading system will cover its extensive power industry, including ~2,000 power generation facilities, which represent about 30 percent of the nation's total emissions. However, over time, the platform will expand to encompass heavy industries like oil, gas, steel, aluminum, cement, and chemicals.

Though undoubtedly ambitious, questions are already being asked about China's new carbon marketplace. For instance, the government plans to allocate emissions allowances for free but will begin to auction allowances "at a future appropriate time". This kind of leeway suggests that Beijing is still wary of the effect that carbon pricing could have on profitability and economic growth.

That said, a survey of market participants indicates that prices are likely to start at around 41 yuan ($6.3) per ton of CO2, rising to 66 yuan per ton in 2025 and 77 yuan by 2030.

That's well below the $50 to $100 range by 2030 suggested by a commission on carbon prices formed in 2017 if the markets and prices are to have any impact on behavior.

Carbon offsets might not work

Though widely used by the developed economies, the efficacy of carbon offsets as a means to control climate change is increasingly being brought into question.

Scientists, activists, and concerned citizens have highlighted how companies are now using carbon offsets as a free pass for climate inaction. The types of carbon offset projects that are implemented are diverse, ranging from forestry sequestration projects to energy efficiency and renewable energy projects. The world needs to lower annual emissions by 29-32 gigatonnes of equivalent carbon dioxide (CO2e) by 2030 to have a fighting chance to stay below 1.5°C. That's ~5x the current commitments by companies, organizations, and governments. We need to lower our GHG emissions by 45 percentover the next decade if we are to avert catastrophic planetary changes.

The sad truth is that trees planted today simply can't grow fast enough to come anywhere near achieving this goal, and the majority of carbon offset projects will never be able to curb the emissions growth if coal power plants and gasoline vehicles continue to dominate.

UNEP has warned that the biggest risk posed by carbon credits is that they tend to encourage complacency. According to UN Environment climate specialist Niklas Hagelberg:

"UN Environment supports carbon offsets as a temporary measure leading up to 2030, and a tool for speeding up climate action. However, it is not a silver bullet, and the danger is that it can lead to complacency. The October 2018 report by the Inter-governmental Panel on Climate Change made it clear that if we are to have any hope of curbing global warming we need to transition away from carbon for good: by travelling electric, embracing renewable energy, eating less meat and wasting less food."

Whereas a carbon offset represents an action that effectively sequesters carbon, RECs are like a property deed representing a part of a renewable energy source, such as a solar or wind farm.

By buying RECs and pairing it with electricity from the grid, companies, and organizations directly support the development of renewable energy infrastructure. RECs provide access to alternative energy sources to areas that do not have the capacity to produce their own renewable energy.

New anti-monopoly rules for China's tech giants were introduced on Sunday.

The guidelines, which formalise draft laws released in November, come as regulators try to crack down on anti-competitive behaviour.

The rules are aimed at stopping China’s e-commerce giants Alibaba and JD.com from abusing their dominant market position.

Specifically, the rules stop e-commerce platforms from forcing vendors to deal exclusively with them.

China’s State Administration for Market Regulation (SAMR) wants to stop price-fixing, predatory pricing and unreasonable trading conditions.

There are also rules against restricting technologies and using data and algorithms to manipulate the market.

The guidelines will also apply to financial technology and payments companies such as Tencent’s WeChat Pay and Ant Group, Alibaba’s payments affiliate.

SAMR said reports of anti-competitive behaviour had been increasing, and that it was facing challenges regulating the industry.

“The behaviour is more concealed, the use of data, algorithms, platform rules and so on make it more difficult to discover and determine what are monopoly agreements,” SAMR said.

Tougher approach

The new rules come into effect as China takes a firmer line against alleged anti-competitive behaviour.

On Monday, SAMR announced it had fined online discount retailer Vipshop nearly $500,000 (£364,000) for unfair competition.

Between August and December last year, the retailer had developed a system to obtain information on brands it and competitors sold, which gave it an advantage.

The regulator said Vipshop used its system to influence user choices and transaction opportunities and to block sales of particular brands.

SAMR is also currently carrying out an antitrust investigation into Alibaba, which it first announced in December.

The investigation followed Ant Group’s decision to drop a planned $37bn share market launch after regulators intervened.

The government of Mongolia is seeking Rio Tinto’s agreement to terminate the deal that underpins the construction of a $6.75bn underground copper mine in the Gobi Desert, according to people with knowledge of the situation.

The ruling Mongolian People’s party and its new prime minister Luvsannamsrain Oyun-Erdene is facing pressure from parliament to replace the underground development plan for the Oyu Tolgoi mine.

But rather than act unilaterally and risk future foreign investment projects in the country, Ulan Bator has asked the Anglo-Australian miner whether it is prepared to mutually terminate the plan and replace it with an agreement that offers better terms, the people said.

The underground expansion of Oyu Tolgoi has been dogged by problems and disputes with the government. The project — Rio’s most important — is already $1.5bn over budget and almost two years behind schedule.

The government threatened last month to halt development, saying the delays had eroded the economic benefits the country had hoped for.

At peak production Oyu Tolgoi will be the fourth-biggest copper mine in the world, producing almost 500,000 tonnes a year from its existing open pit and underground mine. A decision on whether to start complex caving operations must be taken by June. First production is expected in October 2022.

Oyu Tolgoi, the country’s biggest source of foreign direct investment, has created thousands of well-paid jobs and generated almost $3bn of taxes and fee revenue over the past decade.

Signed in 2015, the UDP, also known as the Dubai agreement, put the underground project back on track after an earlier dispute between Rio and the government.

The agreement — and $4.4bn of project financing — was pulled together by Rio’s former chief executive Jean-Sébastien Jacques and the nation’s then-prime minister Chimediin Saikhanbileg.

It set out the fee Rio will receive for managing the project as well as the interest rates on the cash Ulan Bator has borrowed to finance its share of the construction costs.

However, the UDP was never approved by Mongolia’s parliament and has become a focal point for critics who say the country should receive a greater share of the financial benefits from mine.

A parliamentary resolution was passed in December 2019 ordering the government to improve the terms of the UDP.

“The government has to fix the legitimacy issue,” said one person with knowledge of the discussions. “Mutual termination of the UDP would achieve this.”

Rio has already told Ulan Bator it is prepared to “explore” a reduction of its project management fees and loan interest rates, according to documents seen by the Financial Times.

However, it is unlikely to agree a new development plan unless it also addresses some of the company’s concerns. These include a long-term power solution and Oyu Tolgoi’s budget for 2021.

Rio’s negotiations are now being led by Bold Baatar, a Mongolian national who was recently appointed to run Rio’s copper business.

“I acknowledge the government’s wish to improve the underground development plan and I am looking forward to discussing that with them, I hope in a way which promotes investor confidence in the country,” Baatar said in a statement.

The push to replace the UDP comes ahead of presidential elections in June, which the government hopes to win to complete a clean sweep of Mongolia’s hybrid parliamentary-presidential system. The government declined to comment.

Ulaanbaatar /MONTSAME/. It was reported during today’s press briefing of the Ministry of Health that 34 new cases of COVID-19 confirmed after involving 14,978 people in PCR testing nationwide yesterday.

The confirmed cases were identified among close contacts of previously detected cases as well as people who were involved in testing voluntarily. No new infections were recorded in other aimags.

As of today, the total number of COVID-19 confirmed cases in Mongolia now stands at 2,023, with 1,463 recoveries.

Ulaanbaatar/MONTSAME/. “Mongolian-made soccer balls have the potential to be recognized by international standards,” said Stefanie Burry (PhD), Head of the Swiss Cooperation in Mongolia at her meeting with D.Terbaatar, General Secretary and other officials of the Mongolian Football Federation, on February 4.

In Mongolia, the project ‘Mongolian ball’ was launched in 2018 under the motto ‘A Ball for Every Child’. Within the project, yak leather soccer balls are being produced. The ball, primarily designed for children, is at its development level and it can be a quality product and an official game ball.

During the meeting, MFF expressed to support and promote locally made ball from traceable raw materials/yak leather supplied by herder families and certified by Responsible Nomads. Mr. Terbaatar said that the MFF would join hands with the Swiss Cooperation in Mongolia to promote locally made balls in the FIFA and international markets.

Ulaanbaatar /MONTSAME/ On February 1, Chinese foreign ministry spokesperson Wang Wenbin said on regular press conference that China is providing vaccine aid to developing countries including Mongolia.

Wang Wenbin: China has been acting through concrete actions on President Xi Jinping's solemn commitment of making COVID-19 vaccines, developed and deployed in China, a global public good, thus contributing to greater accessibility and affordability of vaccines in developing countries. That's what we've been saying and what we've been doing.

First, apart from Pakistan, China is also providing vaccine aid to Brunei, Nepal, the Philippines, Myanmar, Cambodia, Laos, Sri Lanka, Mongolia, Palestine, Belarus, Sierra Leone, Zimbabwe and Equatorial Guinea, altogether 13 developing countries. Going forward, we will also assist another 38 developing countries with vaccines. We also take an active part in the WHO-led COVAX and provide vaccines through this platform to developing countries.

Second, China supports Chinese companies in conducting joint vaccine R&D and production with foreign partners. Vaccines made by Sinopharm and Sinovac have been exported to countries including the UAE, Morocco, Indonesia, Turkey, Brazil and Chile where clinical studies have been conducted.

Third, China supports relevant companies in exporting vaccines to countries in urgent need that have approved Chinese vaccines and authorized their emergency use. For instance, Serbia has started vaccination with recently imported Chinese-made vaccines. More and more countries are approving the domestic use of Chinese vaccines.

The whole world needs to pull together in order to defeat the pandemic. China will continue to provide in a timely manner, to the best of its capability, vaccines to relevant countries, especially the developing countries, and contribute its share to building a global community of health for all. We also hope the international community will work together to promote the equitable allocation and use of vaccines globally to make sure developing countries have access to and can afford them.

source: Embassy of China in Mongolia

Ulaanbaatar /MONTSAME/. Regarding the appointments of members of the new Cabinet, Prime Minister L. Oyun-Erdene delivered a speech at the plenary session of the Parliament and introduced four goals of his Cabinet.

At the outset of his speech, Mr. Oyun-Erdene highlighted, “Thanks to the decisive measures of 31st Prime Minister U. Khurelsukh, the air pollution of Ulaanbaatar decreased by 50 percent, and the Government reclaimed lost mineral deposits. Moreover, he started the fight for justice and set a new ethical standard in Mongolian politics.”

“Maintaining the continuity of the Government's policy, we will complete major projects that are inseparably connected to the country's destiny, such as the oil refinery, railway projects, natural gas pipelines, the Tavan Tolgoi power plant, and the Erdeneburen hydropower plant.

Our Government is fully aware that it is facing a lot of challenges, including the pandemic, pandemic-related global economic crisis, the problems for businesses, entities and citizens, social unrest, and the politicization around the upcoming presidential election. Therefore, let me briefly introduce four goals of our Cabinet, which will contribute to our country’s future,” said the PM.

Objective 1. A plan to overcome the pandemic within a short time

Mongolia had prevented the spread of the COVID-19 among the community for ten months, but at last, we could not avoid this suffering. Our Government will develop a comprehensive plan to overcome the COVID-19 pandemic and take immediate actions.

Vaccinating the population is our priority. The Government will do its utmost to involve staff working in the frontline, risky groups, and the public in the WHO-approved vaccines in phases within the first 100 days of the Government.

Prompt vaccination will help to overcome the economic and social difficulties caused by the pandemic in a short period. The Government will include in its action plan a comprehensive package of measures as stimulation for the companies, employers, and small and medium-sized businesses that were most affected by the pandemic. We will intensify the repatriation of our citizens abroad based on the recommendation of professional organizations.

Objective 2. A plan to recover the economy

Despite the pandemic outbreak that has not occurred in 100 years, the global economy will likely have a rapid recovery after humankind overcomes the epidemic. Therefore, we must not retreat from our goals of reviving and growing our economy by being binded by our current mindset caused by the pandemic. We have to start preparing for the post-pandemic economy from now on. Even the issues of citizens’ income and employment cannot be fully resolved without economic growth.

“Supposing Mongolia as a family, we annually overspend an average of USD2 billion than we earn, and 93 percent of our family’s earnings come from non-renewable resources such as coal, gold, copper and iron ore.

To put it bluntly, if a scientific and technological solution is found to replace coal, we will not be able to pay salaries and pensions. Therefore, we must not waste any time. We would have no choice but to make bitter, difficult decisions in the economy. The economic structure, which is overly dependent on mining, needs to be changed when the mining sector is strong.

“Therefore, the main goal is to accelerate the development of science, technology and innovation. …The scientific academies and innovation institutes will be coordinated and organized into a unified cluster to commercialize scientific discoveries. The Government will support and partner with national companies that have started successfully competing in the global market for artificial intelligence, fintech and cloud technology during the Fourth Industrial Revolution.”

The National Sovereign Wealth Fund will be established to make mining revenues more profitable and distribute natural resources fairly and equitably. The Fund will have three directions of activity: accumulation, stabilization, and development. Funding for the sovereign wealth fund will come from mining royalty fees, and profits of the state-owned companies, and will be spent on promoting economic priorities and improving livelihoods.”

“The direct profit of the strategic mining deposits will be improved. We will work closely with the Parliament to significantly improve the Oyu Tolgoi agreements and create the conditions for Mongolia to be lucrative rather than be indebted in return for the use of our resources.

As the head of Government, I will prioritize the following sectors of the economy based on the 'Vision-2050' policy. It includes mining, processing industry, food and agriculture, energy, tourism, SMEs, transport and logistics, creative industry and information technology.”

The Prime Minister also explained in a few words why these sectors are pointed out.

“First of all, we need to make our natural resources become value-added. It is necessary to build plants capable of washing coal, smelting copper, refining oil, and processing iron ore. For example, a ton of coking coal at the Erdenes Tavan Tolgoi mine costs USD 63, but its value rises to USD 200 after being transported and washed at Gantsmod port.

Mongolia imports goods worth USD 6.1 billion annually, of which USD 1 billion is spent on oil products. If the oil refinery is commissioned, it will be possible to supply 70 percent and further 100 percent domestically.

To become an industrialized country, we need to solve our infrastructure problems. The construction of the Tavan Tolgoi–Gashuunsukhait and Tavan Tolgoi–Zuunbayan railways will be completed soon. It will save USD 600-900 million a year in transportation costs and increase the total exports by about 30 percent.

Road projects will be sorted by priority. In the first turn, projects connecting border ports and tourist routes will be implemented. It is vital for our landlocked country to develop the transportation and logistics sector as a whole.

Today, we import 25 percent of our energy that takes an average of USD 140 million a year. To reduce this outflow, it is necessary to complete Tavan Tolgoi and Erdeneburen hydropower projects urgently and start the construction work of the Power Plant V.

Every year, the country imports food products worth USD 605 million. Therefore, there is an urgent need to create an entirely new system of import-substituting, export-oriented agriculture and light industry. Also, it intends to build plants to process animal-related raw materials and basic transportation centers in stages.

Throughout the world, tourism would undoubtedly be the sector that will revive the fastest after the pandemic. We need to resolve some issues without delays, such as eliminating the irresponsibility, red tape, and obstacles foreign tourists face while visiting Mongolia, establishing an e-Embassy, issuing e-visas, and liberalizing air transportation.”

The PM also said that a creative economy based on the country’s history and rich cultural heritage would be developed. In this context, the management of the Ministry of Culture will be elevated to a new level, bringing culture, arts and cinematography to the global level and making it economically efficient.

Councils of economy, entrepreneurs and foreign investment promotion will be formed under the Prime Minister. Moreover, a Ministry of Economy and Development will be established, said the PM.

Objective 3. The new system to support the middle class

"The last 30 years gave us many values, such as human rights, freedom, press freedom, a multiparty parliamentary system, and the market economy. Despite all this, the gap between the rich and the poor increasingly grew, resulting in income inequality, the flourishing of the underground economy, and the loss of social justice. It is the harsh truth that 28.4 percent of the total population or about 1 in 3 people currently lead a below-average life. The inclusive growth of the economy should only be measured by positive changes in the quality of life. Yet, the government has not been able to bring such changes to the citizens’ quality of life.

The moving force of society– citizens with average income are currently in quite a bit of a predicament. In order to transition into a completely new system that supports average income citizens and create a society largely consisting of the wealthy middle class, the most important issue is apartments and urban development. In the coming three years, the Government will carry out a project on the construction of ‘Youth I, II, III’ complex apartments with a unified blueprint, resolving the new financing model for income-based apartments by transitioning into the system of a unified savings fund."

"The second important factor in creating a society mainly consisting of the wealthy middle class is quality education. Although the intellectual capacity of Mongolian children ranks 7th in the world, Mongolia ranks 49th for the ability to utilize intellectual capacity, 59th for home-grown talent, and 111th for its know-how. Thus, special focus will be given to matters including comprehensive education in developing into a model Mongolian citizen, proficiency in the use of the Mongolian language and script, the quality of training in urban and rural areas, increasing the competitiveness of universities and colleges by merging them, and the preparation of world-class citizens. A scholarship named after the Prime Minister will be annually announced, and importance will be given to preparing the new generation that is necessary for Mongolia. The cabinet will present the Package Laws on Education Renewal before the spring session of the parliament."

"Cases for cardiovascular diseases and cancer are common in Mongolia. Experts explain the causes for this being due to how citizens are not diagnosed early as well as their unhealthy lifestyles. Thus, we must quickly implement a system that annually involves all citizens in a comprehensive health checkup. In the coming four years, the construction for the National Organ Transplant Center, the National Cardiovascular Center, the Burn Center, and the National Cancer Center will take place. With its completion, it becomes possible to reduce the annual amount of costs being spent on receiving medical treatment abroad–USD 100-120 million by 30- 40 percent. We need a new culture that promotes a healthy, active lifestyle. We need an education system that helps children acquire a proper understanding of the immune system and nutrition comprehensively from a young age.

The time has come for us to correct our unhealthy mindset and create a national culture that fights against obesity. Furthermore, several crucial issues such as the transition from welfare to labor, increasing the participation of women in the labor market, and creating a specialized bank and financing system will be resolved in phases to create a national system to support citizens in the middle class."

Objective 4. Justice and online governance

"Today, our country ranks 111th for its corruption perception. It is apparent that the underlying factor causing this is bureaucracy and the political system filled with corruption. Thus, the work to create a fair justice system where no one is persecuted or wrongfully convicted will be comprehensively supported. Those that wish to indirectly control the state will be faced head-on.

Henceforth, we will aim to reform the corresponding legislation to create the classical parliamentary system in Mongolia by carefully discussing the matter with political parties. By developing laws on the protection of whistleblowers, the financing of political parties, and civil service ethics will be as according to international legal standards and making amendments to the Law on Anti-Corruption, the appropriate legal environment will be created to monitor whether state servants have expenses above their income as well as whether they are incorrectly declaring their assets and income."

"The work to create a “digital” nation will be actively carried out. All forms of public services will be made available through the E-Mongolia electronic platform. In order to have this transition conducted up till 90 percent in 2021-2024, a specialized ministry will be established on digital development. This will not create any more job opportunities—rather, it is the only solution to reducing the overlap of staff at all levels, reducing the numbers by 30-40 percent. Electronic signatures will be introduced, and the privacy of personal information will be ensured through law. As a result, bureaucracy will be reduced, and less time will be necessary in acquiring the services."

"In order to create good governance, the Government will closely cooperate with the “Fourth Estate”–the press and media. Works will be carried out in respect to the citizens’ right to be informed, upholding the freedom of press. Factual information will be given regarding major issues that bring out debate and uncertainty in the public, supporting a more research-based approach to matters and open, transparent cooperation."

"We will openly and actively cooperate with our eternal two neighbors as well as other countries of the world in all sectors. In today’s world of globalization, the national mindset, way of living, and unique features will be valued, protecting our national identity and organizing pro- motional works about Mongolia to the world on the large scale. I also believe that an institute for national policy should be established consisting of all previous Prime Ministers. Our cabinet will continue to implement appropriate, applicable policies that were implemented by all previous governments."

"Citizens are the foundation of the state. It is the duty of a democratic government to protect civil rights. By having it as a requirement for state servants at all levels to be knowledgeable about civil rights, special emphasis will be placed on their sense of duty to serve citizens and protect their rights. A culture to be ethical, humane, disciplined, and assessed based on performance as well as being held accountable for one’s actions at each level will be introduced in civil service."

“I perceive my appointment as the Prime Minister of Mongolia being in the first year of the implementation of ‘Vision-2050’ long-term development policy, which also happens to coincide with the 100th anniversary of the People’s Revolution, and the 30th anniversary of the Democratic Revolution, as a historically significant responsibility.

Just like how our ancestors were able to change the world’s history in 30 years, may our country lead in the region for its social development, economic growth, and quality of life in the coming 30 years,” noted PM Oyun-Erdene.

On Wednesday (3 February), the Mongolian National Emergency Commission took the painful decision to impose lockdown measures again in Ulaanbaatar city during Lunar New Year in order to prevent the spread of COVID-19 pandemic. The total lockdown for a period of two weeks in the city will take effect on 11February or Lunar New Year’s Eve known as “Bituun” in Mongolia. During the period, only types as organisations such as the media, post, food production and delivery will be allowed to work.

Last month, the Mongolian government made a decision not to publicly celebrate the traditional Lunar New Year. However, Mongolians are still preparing for the holiday which is actually a combination of ringing the old year out and the new year in, as well as a celebration when families get together. During a long holiday of Lunar New Year, Mongolians traditionally visit their parents, relatives and friends.

Mongolia confirmed its first case of COVID-19 in March 2020. Its first local transmission was detected in early November, when a woman tested positive after her husband who had returned from Russia finished his 21-day mandatory quarantine.

The incident triggered a nationwide lockdown that was later extended in Ulaanbaatar and two provinces until 11 December, 2020. After that, the Mongolian government reimposed lockdown measures in the capital city, which was the hardest hit by the coronavirus outbreak, from 23 December, 2020 to 6 January, 2021 and extended the strict all-day lockdown until 11 January to curb resurging local cases

Ulaanbaatar /MONTSAME/ On February 5, Deputy Minister of Foreign Affairs B.Munkhjin and Ambassador Extraordinary and Plenipotentiary of the United Kingdom of Great Britain and Northern Ireland to Mongolia Philip Malone exchanged notes on Mongolia’s accession to the Enhanced Framework of the UK’s Generalised Scheme of Preferences (GSP), which is equivalent to the European Union's GSP+.

Mongolia's inclusion in the UK GSP is of great significance in increasing bilateral trade, reducing the country's dependence on mining, diversifying exports, promoting value-added production, and improving product competitiveness.

Ulaanbaatar, January 28, 2021 – Mongolia’s new Civil Service Law is an important step toward building a stronger civil service that is merit-based and politically neutral, but further reforms are needed, according to a new World Bank report.

The report, Towards a High Performing Civil Service: Reform Progress and Challenges, calls on the country to strengthen the stability, oversight, and management of its civil service to help achieve development objectives. It highlights the latest Civil Service Law, which re-establishes the principles of meritocracy and a career-based model, as a major step toward building a better-performing and ethical civil service.

“With stronger legal foundations in place, Mongolia is now better placed to move forward to improve the efficiency and effectiveness of its civil service. This will require determined leadership to make important strategic and technical decisions to curb politicization and reassert professionalism in the civil service,” said Andrei Mikhnev, World Bank Country Manager for Mongolia.

Mongolia’s annual attrition rate in the civil service increased from around 9% in the 2009-2012 period to more than 22% in 2019. Frequent changes of government, together with high staff turnover due to the lack of a meritocratic system, has negatively affected the civil service’s overall capacity to deliver public goods and services efficiently.

The recent revision of the legal framework, with a heavy emphasis on the prevention and reversal of politicization, will be a crucial step in addressing these challenges, according to the report. Once the foundations of merit-based principles are firmer, some flexibility can be reintroduced in the medium to long-term, so the civil service cadre will be able to respond effectively to the demands of politically appointed ministers to the extent appropriate, while being both professionally competent and sufficiently impartial to serve successive governments of different political complexion.

The report notes that the the hybrid role of the Civil Service Council (CSC) as both a supervisor and an implementer could create a conflict of interest, and calls for a review of the institutional mechanisms for managing and supervising the civil service at all levels.

“Once the principle of a merit-based career civil service has been re-established in Mongolia, the Civil Service Council can work in cooperation with the executive government to delegate personnel management responsibilities to ministries, departments, agencies, and local authorities. This will allow the CSC to transition to a more conventional oversight body,” said Alma Kanani, World Bank Governance Practice Manager for East Asia and the Pacific.

The report emphasizes that the professional status of the civil service must be protected through the reinvigorated entrance examination, which allows access only to those, who meet strict professional requirements and in return are obliged to deliver a high standard of service to the public. The successful implementation of the new performance planning system as well as training for civil servants are key to this professionalization.

The report also notes that the number of civil servants has grown by 34% over the past decade (2009-2019). While the associated wage bill is not particularly high relative to international comparators, it is the fastest growing and largest component of recurrent government expenditures. The report argues that increasing staff is not the solution to meeting the demand for services given the country’s geographic characteristics. Instead, more effective management of existing staff through envisioned reforms would be essential to improving productivity and providing better service delivery.

There has been a long-standing need for reform of the pay and grading structure in the civil service, the report notes. The highly fragmented nature of the payroll has prevented the government from obtaining and analyzing data necessary for the reform. Recent and ongoing efforts by the Ministry of Finance to introduce an Integrated Payroll System are to be commended as a major step in addressing the challenge toward establishing a new human resource management information system that uses comprehensive and consistent personnel data.

The report also highlights the need for the civil service to have appropriate incentives for recruiting, retaining, and motivating skilled staff, in particular, through the principle of equal pay for equal work. This will require simplifying the pay system by merging allowances into basic pay, simplifying the grading structure, and benchmarking pay.

Taken together, the recommended actions for the civil service reform constitute a large program of change, the report acknowledges. The enactment of the new Civil Service Law has already committed the Mongolian government to much of this agenda, but further reforms and their effective implementation would be critical to success. In this regard, the World Bank will continue its support to the government towards strengthening its civil service and public sector performance and accountability for increased people’s trust in the government.