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Events
Prime Minister Oyun-Erdene: We will Implement Unprecedented, Large-scale Reform of State-Owned Enterprises www.montsame.mn
Prime Minister of Mongolia Oyun-Erdene Luvsannamsrai addressed the plenary session of the State Great Khural on January 23, 2025, presenting the draft Law on Improving Productivity, Transparency, and Governance of State-Owned and Locally-Owned Enterprises.
Although the doubling of the Mongolian economy from MNT 43 trillion in 2021 to MNT 82 trillion in 2024 is remarkable, we need to improve the investment and business environment by making transitions in human resources, to artificial intelligence, advanced technology, and green transition, in order to create a new economic structure," noted the Prime Minister.
Premier Oyun-Erdene noted that during its regular session on January 22, 2025, the Cabinet discussed the "Business Friendly Mongolia" Program and approved a Resolution to improve the investment and business environment based on the good practices of diversifying the economy, following the example of Bahrain. The Resolution invites international experts to work in the Economic Council under the Prime Minister, awarding the best experts from around the world to work in Mongolia with gold, silver, and bronze Gerege.
The Premier highlighted that, similar to the E-Mongolia program based on the good practices of Estonia's electronic transition, the Government is researching the investment, tax, and other legal environments of other countries for doing business and is preparing to submit it to the State Great Khural for discussion during its spring session.
Premier Oyun-Erdene stated, “Within an overall goal of improving Mongolia's business environment, the Government is submitting a draft Law on Improving the Productivity, Transparency, and Governance of State-Owned and Locally-Owned Enterprises to the Parliament. Since 2012, the Organization for Economic Co-operation and Development (OECD) has reported that 44 percent of all state-owned companies have experienced management crises due to poor business plans and financial performance, politically influenced appointments, and underperforming personnel. Of the more than 120 state-owned companies operating, only 10 companies generate 85 percent of total profits. 43 of them have been operating at a loss. Notably, draft laws similar to this had been drafted and submitted to the Parliament three times in the past, but the planned reform had failed due to lobbying by state-owned companies.
I am confident that the new 126-member parliament, which is formed from a mixed election system, will be able to fulfill its historic role of reforming the governance of state-owned companies on an unprecedented scale, just as it managed to get major development projects off the ground and move them forward.
With the adoption of this law, the requirements for the governance of state-owned companies will be brought into line with the principles of the OECD (Organization for Economic Cooperation and Development), and mining companies will be organized under the “Erdenes Mongol” consortium and non-mining companies under the “Erchist Mongol” consortium, transferring them to the international management system, and improving the efficiency and value of companies.
Under the law, if state-owned companies do not conform to the principles of the OECD, they will be merged, liquidated, privatized, or reorganized as public service organizations.
With this reorganization, the duplication in structures and functions of state-owned legal entities and their costs will be reduced, and the number of state-owned companies will be halved in the future.
In other words, strategically important state-owned companies, which directly affect national security and should not be transferred to the private sector will be brought into line with the international principles of governance, and other companies will be reorganized under this law."
Published Date:2025-01-24
