Bilguun: Minerals royalty may burden entities www.zgm.mn
CEO of BIMG, Bilguun Ankhbayar sat down with the Official Gazette. He believes that the amendments to the Constitution of Mongolia may carry positive change in the economy and the mining sector.
-Parliament recently approved amendments to the Constitution. It enacted Article that stated, “Natural resource is the state and public property.” How will it affect the mining sector?
-I expect positive results from it. As previously stated in the Constitution, natural resources belonged to the state, and now it shall be the wealth of the public as well. I assume there is no negative consequence in it. The key changes in the Constitution have been made to stabilize the investment climate. I believe eliminating overlap of legislative and executive branches is relatively good for solid governance since foreign investors will come to a wellgoverned country. Thus, four members of the Cabinet are allowed to join the Parliament. It is hoped that those who are familiar with the sector will work in the government.
-Change in Minerals Royalty fee is currently in discussion. What is your view on it?
-Well, the case proves that the mining sector is not working properly. Companies pay a portion of their gains from using natural resources for Minerals fee. There is no need to address this issue of whether to pay a royalty or not. Mining companies agree to pay this fee. However, there is a disagreement over whether payments are high or low. Parliament should conclude and make the environment to pay royalty as soon as possible.
-According to the National Statistics Office, Mongolia’s GDP has increased by 6.3 percent in the third quarter. What do you think the main driver of it?
-In 2018, the GDP increase of Mongolia was 7.2 percent. But it decreased by 0.9 percentage point, to 6.3 percent in 2019. There are several factors that may have triggered it to decline. Firstly, export revenue has dropped, especially, prices of copper and coking coal have fallen due to the trade war. Secondly, FDI has declined respectively since the beginning of 2019. Finally, the inflation rate has reached 7.6 percent in the third quarter, but the Bank of Mongolia has set the target level at 8 percent. In other words, it shows the country’s lack of fulfillment on its inflation plan.