Ulaanbaatar city DISTRICT COMPETITIVENESS REPORT 2019 ДАА-330 ННА-65 U-33

ULAANBAATAR CITY DISTRICT COMPETITIVENESS REPORT 2019

Ulaanbaatar. 2019

ECONOMIC POLICY AND COMPETITIVENESS RESEARCH CENTER

San Business Center, 9th floor, Prime Minister Amar street 29, Sukhbaatar duureg, Ulaanbaatar, Mongolia

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ISBN 978-99978-4-403-3

© All rights reserved. No part of this publication may be transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system. CONTENTS

FOREWORD...... 4 3.1 ...... 44

GREETINGS...... 6 3.2 ...... 52

ABBREVIATIONS...... 8 3.3 BAYANGOL...... 60

RESEARCH TEAM...... 8 3.4 BAYANZURKH...... 68

PREFACE...... 9 3.5 NALAIKH...... 76

3.6 SONGINOKHAIRKHAN...... 84

3.7 SUKHBAATAR...... 92

01 PRINCIPLES OF ANALYSIS AND 3.8 KHAN-UUL...... 100

METHODOLOGY...... 14 3.9 ...... 108

3.10 ULAANBAATAR CITY...... 116

1.1 PURPOSE OF THE RESEARCH...... 15

1.2 MEASURING DISTRICT COMPETITIVENESS...... 16

1.3 DATA SOURCES...... 19 04 STATISTICAL TABLES...... 122

1.4 SURVEY SAMPLING...... 20

1.5 COMPETITIVENESS INDEX METHODOLOGY...... 25 4.1 QUALITY OF LIFE...... 125

4.2 LIVING ENVIRONMENT...... 134

4.3 SAFETY AND SECURITY...... 148

02 DISTRICT COMPETITIVENESS 4.4 GOVERNANCE...... 157

SCOREBOARD...... 28 4.5 ECONOMIC PERFORMANCE...... 166

2.1 OVERALL DISTRICT COMPETITIVENESS INDEX....30

2.2 COMPETITIVENESS FACTOR INDEX...... 31 05 APPENDIX...... 170

2.3 COMPETITIVENESS SUB-FACTOR INDEX...... 36

5.1 DISTRICT COMPETITIVENESS CRITERIA...... 172

5.2 CHARACTERISTICS OF THE SAMPLE...... 192 03 DISTRICT COMPETITIVENESS PROFILES...... 42 EPCRC DISTRICT COMPETITIVENESS FOREWORD REPORT 2019

004 FOREWORD

I am pleased to present you Urbanization is the population the second Ulaanbaatar District shift from rural to urban residency, Competitiveness Report during the leaving the living condition of the celebration of Lunar New Year. migrants on the edge constantly. It is a complex movement which The first Ulaanbaatar District requires government regulation. Competitiveness Report played an Even though the city population is important role in acknowledging increasing and settlement areas where they are among other are expanding every year, main districts. Thus, this year’s report is competitiveness factors such as focused more on changes which quality of life, living environment, occurred to districts since the safety and security and governance previous report. are not performing well. Critical problems such as traffic congestion, As of now, 45% of the population air pollution and sufficiency of reside in Ulaanbaatar city where children’s playground, health urbanization has been accelerating in services, schools and kindergartens the last years. What is urbanization? have seen many different EPCRC DISTRICT COMPETITIVENESS FOREWORD REPORT 2019

005

Khoroo and districts of the Ulaanbaatar city, a place where people go to fulfill their dreams, must be equipped with comfortable living and working environments, economic opportunities and a good governance that can be a role model.

parliament and government’s faces role model. District administration, up until now without any solutions. efficient cooperative initiatives, planning, participation, solutions The main reason that rural residents and monitoring are essential factors leaving their hometowns and to develop the city. Let’s build our migrating to the city is to improve dream city by competing together! their quality of life. To put it simply, they migrate to the city to make their dreams come true. However, a different reality sets in once they move to the city.

Khoroo and districts of the Ulaanbaatar city, a place where Tsagaan Puntsag people go to fulfill their dreams, Chairman of the Board must be equipped with comfortable living and working environments, economic opportunities and a good governance that can be a EPCRC DISTRICT COMPETITIVENESS GREETINGS REPORT 2019

006 GREETINGS

The Economic Policy and target our programs, analyzing Competitiveness Research Center governance challenges and is producing some of the most solutions, considering the business important research in Mongolia environment being faced by today to help us better understand entrepreneurs, and trying to design the nexus between governance and activities to support improved local development. Both the Mongolia governance. The availability of data Provincial Competitiveness Report collected and designed based on and the Ulaanbaatar District sound social science principles is Competitiveness Report are critical critical to any objective analysis of contributions to our understanding complicated issues like governance of how a range of factors, including and economic growth potential. governance and policy making, are intersecting in ways that shape Ulaanbaatar remains a symbol of Mongolia’s potential for economic both the great potential of Mongolia growth. and the many challenges created by the rapid changes taking root The Asia Foundation has drawn on throughout the last three decades. these reports in our work in a wide Expanding wealth, improving range of ways. We have consulted services for residents, emerging them when deciding where to pockets of innovation and creation EPCRC DISTRICT COMPETITIVENESS GREETINGS REPORT 2019

007

are visible throughout the city. At promoting growth in Ulaanbaatar. the same time inequality is rising, challenges to quality of life in the The District Competitiveness Report ger areas persist, and problems of is structured around five areas traffic as well as air pollution have of inquiry: quality of life, safety not yet been fully addressed. and security, living environment, governance and economic The persistence of these great performance. This comprehensive challenges remind us of the approach to competitiveness will, need for good governance and over time, give us an important effective policy to make sure that record of how the city has Ulaanbaatar can capitalize on its developed and changed, and how advantages and opportunities. policies implemented have actually Success in doing so will depend impacted residents. This data should both on the efforts of the Mayor and be of great interest to researchers, the Municipality level, but also the officials, NGOs and the citizens of effective performance of the nine Ulaanbaatar. The Asia Foundation is district governments. The District proud to have been able to provide level of government in the city is some support to the EPCRC to often both underappreciated and gather and present this data for all under scrutinized. For that reason of the wide range of potential uses. the District Competitiveness Report I wish all you reading this report the is helping to include districts in the best of luck as you turn the data into conversation about governance and action.

Mark Koenig Country Representative, Mongolia The Asia Foundation EPCRC DISTRICT COMPETITIVENESS Abbreviations REPORT 2019

008 ABBREVIATIONS

EPCRC Economic Policy and Competitiveness Research Center

GDP Gross Domestic Product

LFS Labour Force Survey

NGO Non-governmental organization

NSO National Statistical Office

PSU Primary Sampling Units

SME Small and Medium enterprises

UBED Ulaanbaatar City Education Department

UBHD Ulaanbaatar City Health Department

UBSD Ulaanbaatar City Statistical Department

— Not available

RESEARCH TEAM

Economic Policy and Competitiveness Research Center

Mr. Tsagaan Puntsag Chairman of the Board Ms. Lakshmi Boojoo Director General Ms. Odonchimeg Ikhbayar Deputy Director Ms. Tungalag Erdenebat Head of Research Mr. Ganbat Chuluun Researcher Ms. Yesunchuluu Khuderchuluu Researcher Mr. Zolbayar Enkhbaatar Researcher Mr. Otgon-Erdene Khandaa Researcher Ms. Khulan Jamiyandorj Researcher

Mr. Otgochuluu Chuluuntseren Advisor Ms. Oyunbileg Delgersaikhan Consultant Mr. Enkhbaatar Ichinnorov Consultant EPCRC DISTRICT COMPETITIVENESS PREFACE REPORT 2019

PREFACE 009

The word, urbanization is is proving that urbanization understood as development, is accelerating. However, it is advancement and renovation. We important to define urbanization do not see urbanization as a mere correctly, measure it realistically population shift from rural to urban and in a multifaceted way in order residency. Urbanization is regarded to evaluate the effectiveness of as a higher living standard and the urbanization. This is the main more opportunities. purpose of “Ulaanbaatar City District Competitiveness Report”.

Compared to two years ago when In Mongolia, how is this the study of district competitiveness very phenomenon known as started, the population of Ulaanbaatar city increased by 2.7%, urbanization defined and reaching 1.4 million and 386,000 what effects is it bringing? Is households.2 urbanization bettering people’s lives and helping them to reach their dreams? Ulaanbaatar city overall competitiveness index is 0.557 Urbanization is a necessary factor points, increased by 7% from the in the process of a country’s development. In Mongolia, 67.2% 2017 study.

of the total population lives in the The competitiveness index is graded urban area and 45.3% or one in every with points 0-1, the closer it gets to two people lives in the capital city, 1, the better the competitiveness is. Ulaanbaatar. Furthermore, 95.1% of Looking at the five main factors of the population of Ulaanbaatar lives Ulaanbaatar city competitiveness, in the central six districts.1 economic performance and quality The fact that the majority of the of life indexes are showing relatively population is concentrated in good results, getting more than Ulaanbaatar city, which is only 0.3% 0.6 points. On the other hand, of the total territory of Mongolia,

1 Statistics on Population of Mongo- 2 Statistics on Population of Ulaan- lia, 2017, National Statistics Office baatar city, 2015, 2017, Statistics of Mongolia Department of Ulaanbaatar EPCRC DISTRICT COMPETITIVENESS PREFACE REPORT 2019

010 PREFACE

ULAANBAATAR CITY OVERALL COMPETITIVENESS INDEX, 2019

1.0

0.8 0.624 0.623 0.6 0.552 0.557 0.508 0.490 0.4

0.2

0 Economic Quality Safety and Governance Living Overall performance of life security environment index

safety and governance indexes less than 500,000 MNT.

are at around 0.5 points and living It can be seen from the report that environment is evaluated with less hospital workload is still heavy than 0.5 points. regardless of the quality of health ... and education services, hospitals

Without a doubt, the crux of the and school environment compared Mongolian economy is concentrated to those in the rural area. In addition, in Ulaanbaatar city. 64.2% of the even though the secondary school total business entities operate in enrollment yielded good results, the the capital city, constituting to the kindergarten enrollment rate was 64.7% of a total GDP.3 According to not sufficient. the result of district competitiveness As of 2017, 78% of children from report, even though economic 2 to 5 attend kindergartens. concentration is high and people’s Also, the pupil-teacher ratio of expectation towards the changes in public kindergartens is high. (The the future living standards is high number of students per teacher in Ulaanbaatar, unemployment is 38) Even though the availability rate and price pressure on living of kindergartens and schools is standards are still high. 39% of the increasing, it is not fast enough to overall households have income catch the population growth rate.

How safe and secure city is 3 As of 2017, National Statistics Of- Ulaanbaatar? In comparison to the fice of Mongolia EPCRC DISTRICT COMPETITIVENESS PREFACE REPORT 2019

011

number of population, criminal traditional ger in 20074)

offences in Ulaanbaatar city is Respondents provided a middle higher than that in rural areas. Also, rating to an optimality of city the criminal offences increased planning. The fact that indicators and the number of crimes solved such as green space, children’s decreased compared to the study playground and pedestrian two years ago. However, the youth road yielded insufficient results engagement in criminal offences influenced the evaluation. is in a decreasing trend. Also, Compared to the previous study’s respondents evaluated if the current results, accessibility of activities from legislative system treats everybody khoroo and districts has improved, fairly and equally with 3.8 points following the advancement in which is a very poor result. khoroo and districts’ e-governance One of the conditions to live and information transparency. safely is to live in a healthy and ... clean environment. However, the residents of Ulaanbaatar city are not Thus, from one side, urbanization living in a healthy environment. It is is accelerating as the population proven by the fact that indicators of the city and its density increase. such as air pollution, public littering However, in terms of quality of and noise pollution received low urbanization, the reality does not evaluation. match how it should be as living standard should not decrease One of the main advantages based on the population density, of urbanization is to create a and opportunities to choose should convenient living environment. As not be limited. of now, 44% of the total households in Ulaanbaatar city is living in apartments with centralized and independent engineering system It is true that urbanization opens and 27% of them lives in Mongolian up opportunities for people to traditional ger. Most interestingly, choose better living standards. this indicator has not changed much from 10 years ago. (26% of the total households lived in Mongolian 4 Statistical Yearbook of Ulaan- baatar, 2007, Statistics Department of Ulaanbaatar EPCRC DISTRICT COMPETITIVENESS PREFACE REPORT 2019

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However, it is not inclusive. It constantly and focus more on the concludes that the main issue is weaknesses of indicators. to make the positive impacts of urbanization inclusive and develop competitiveness sustainably in the We want a city, full of long term. opportunities for everyone to ... live satisfied, not a city with full Three levels can be developed of problems due to population based on differences between concentration. competitiveness of each district. These are:

• districts which have relatively high competitiveness such as Khan- Uul, Bayangol and Bayanzurkh (competitiveness indexes are more than 0.510),

• districts which have average com- petitiveness such as Chingeltei, Sukhbaatar, Songinokhairkhan (competitiveness indexes are be- tween 0.46-0.51),

• remote districts such as Baganuur, Nalaikh, Bagakhangai (competitiveness indexes less than 0.46).

In other words, it can be said that the competitiveness of districts are distinct from one another.

In order to better the competitiveness of Ulaanbaatar city and eradicate the competitiveness differences of districts, it is important to measure report result EPCRC DISTRICT COMPETITIVENESS PREFACE REPORT 2019

013 01PRINCIPLES OF ANALYSIS AND METHODOLOGY Purpose of the Research

The main purpose of the research is to measure the competitiveness indices of all nine districts of Ulaanbaatar according to a diverse set of criteria, to determine strengths and weaknesses as well as the most pressing challenges that each of the districts are facing.

This report aims to provide municipal and district level policy makers with reliable information, and a handbook which would be useful reference in shaping future development policies, plans and long-term development models. EPCRC DISTRICT COMPETITIVENESS PRINCIPLES OF ANALYSIS AND METHODOLOGY REPORT 2019

016 MEASURING DISTRICT COMPETITIVENESS

Competitiveness is a multifaceted Modern cities are not just defined concept. As a field of study it by high-rise buildings or by being is contributing to the theory of centers of industrialization and economics by including not only services. Countries are increasingly economic indicators, but also emphasizing the importance of other ‘non-economic’ factors prioritising human development when measuring the development and providing healthy, safe and progress of countries and regions. convenient living environments. In other words, when measuring Additionally, an increasing number national, provincial and district of environmentally friendly ‘green level competitiveness, a broad list city’ and ‘smart city’ related research of criteria, consisting of economics- and studies are underway. related and also non-economics- In order to provide citizens with related factors, are used. opportunities to be healthy, well Ulaanbaatar district educated and to have a stable competitiveness is measured income, city authorities must based on this concept and the most focus on building comfortable relevant and inclusive indicators are living environments with good chosen for the purpose of compiling infrastructure. One can say a comprehensive study. that a good quality of life and living environments result from Cities and districts are rapidly the combination of effective developing and evolving day by governance, a favorable business day. Therefore, the study of a city’s environment and high economic competitiveness has to keep pace performance. as well.

Prioritizing human Convenient living Good infrastructure development environment and safety EPCRC DISTRICT COMPETITIVENESS PRINCIPLES OF ANALYSIS AND METHODOLOGY REPORT 2019

017

Within this research, district Safety and security covers a total competitiveness is measured of 30 criteria including safe living according to quality of life, living environments and greening of the environment, safety and security, city. governance and economic There are 31 factors in performance: altogether the five “Governance” including district main factors. Each of these five budget, institutional frameworks main factors are divided into 15 and societal frameworks. sub-factors, and over 150 individual criteria. And the 11 economic factors include district economic performance, There are 29 criteria under the employment and the business quality of life section, including environment. household livelihoods, and the quality and availability of health and Please refer to the Appendix for the education services. list of criteria.

Living environment includes a total of 49 criteria, like urban planning, image of the city, urbanization, apartments and houses, surroundings and culture.

Competitiveness Criteria of District and City

Urban Ease of doing Efficient High economic culture business governance performance EPCRC DISTRICT COMPETITIVENESS PRINCIPLES OF ANALYSIS AND METHODOLOGY REPORT 2019

018 5 MAIN FACTORS AND 15 SUB-FACTORS OF DISTRICT COMPETITIVENESS

QUALITY • Standard of living 1 OF LIFE • Health • Education

LIVING • Urbanization ENVIRONMENT 2 • Basic infrastructure • Culture

SAFETY AND • Safety SECURITY 3 • Security • Healthy environment

• Budget GOVERNANCE 4 • Institutional framework • Societal framework

ECONOMIC • Economy PERFORMANCE 5 • Employment • Business activity

Please refer to the Appendix for the list of criteria. EPCRC DISTRICT COMPETITIVENESS PRINCIPLES OF ANALYSIS AND METHODOLOGY REPORT 2019

DATA SOURCES 019

The Ulaanbaatar District Competi- Statistical data enabled us to analyze tiveness Report utilized two kinds of the status of competitiveness during data sources: a given period of time (for example, during the past year) whereas 1. Official statistics (hard data) survey data represented qualitative 2. Household surveys (soft data) data that cannot be easily measured or compiled. Survey data validated Around one third of the 150 criteria some of the hard data results. As come from hard data and two the survey results are more recent thirds from responses to household and better reflect the present surveys. Note that some background situation, there is no time lag, which data in the hard data section was is often a problem with hard data not included in the computation of that sometimes shows a “picture of the competitiveness rankings. the past”.

Please refer to the Appendix for the list of criteria. EPCRC DISTRICT COMPETITIVENESS PRINCIPLES OF ANALYSIS AND METHODOLOGY REPORT 2019

020 SURVEY SAMPLING

The household survey was carried research. As the margin of error and out among randomly selected design effect of the main criteria of households from all nine districts the District Competitiveness report of Ulaanbaatar. Two-stage, simple 2017 were at the predicted level, random sampling was conducted. it was assumed that the sample The sampling design is defined by size and design do not need to be the same principle as the previous changed.

SAMPLING The sampling frame consisted of population was the population of FRAME Ulaanbaatar households, who are Ulaanbaatar city as recorded at the the end users of city and district level end of 2017. public services. The target survey

POPULATION AND NUMBER OF HOUSEHOLD OF ULAANBAATAR, BY DISTRICTS, 2017

NUMBER OF HOUSEHOLD POPULATION Baganuur 8,514 28,787 Bagakhangai 1,196 4,100 Bayangol 58,756 221,384 Bayanzurkh 94,971 336,932 Nalaikh 10,547 36,911 Songinokhairkhan 86,212 322,458 Sukhbaatar 38,272 138,047 Khan-Uul 47,202 169,726 Chingeltei 40,548 159,051

Ulaanbaatar 386,218 1,417,396

Source: NSO

SAMPLE SIZE A simple random sampling meth- the sample size given that all house- odology was used in order to deter- holds had the same level of proba- mine the sample size. The following bility of being chosen in the simple formula was used in determining random sampling.