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MONGOLIA: PROVINCIAL COMPETITIVENESS REPORT 2013 MONGOLIA ECONOMIC FORUM ECONOMIC POLICY AND COMPETITIVENESS RESEARCH CENTER ÝÄÈÉÍ ÇÀÑÃÈÉÍ ÁÎÄËÎÃÎ, ªÐѪËÄªÕ ×ÀÄÂÀÐÛÍ ÑÓÄÀËÃÀÀÍÛ ÒªÂ DDC 338.9 M-692 PROVINCIAL COMPETITIVENESS REPORT ULAANBAATAR 2014 ECONOMIC POLICY AND COMPETITIVENESS RESEARCH CENTER San Business Center, 9th floor, Prime Minister Amar street 29, Sukhbaatar district, Ulaanbaatar, Mongolia Tel: 976-11-321927 Fax: 976-11-321926 E-mail: [email protected] Web: www.ecrc.mn Facebook page: http://www.facebook.com/ecrcmn Twitter page: http://twitter.com/ursulduhchadvar ISBN 978-99973-63-15-2 © 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. Nor may any part of this publication be included as a reference in any other work without authorization. FOREWORD Dear readers, It seems like only yesterday the Economic Policy and Competitiveness Research Center pub- lished its first report “Mongolia in World Competitiveness” in 2011. And today, we are pleased to offer the second report on Provincial Competitiveness, which employs the same method- ological approach as in “Mongolia in World Competitiveness”. In order for our provinces to achieve local growth and development, it is important to be able to compare them. What cannot be measured, cannot be monitored. And what cannot be monitored, cannot be improved. I am confident that this report will prove to be a valu- able source of information and wisdom for provincial administration and decision makers in identifying policy directions, planning ahead and improving future measures, and facilitating a favourable environment for local people and businesses to further improve their livelihood and revenue. Even though we Mongolians reside on a wide and beautiful plateau, the fruits of development reaches only a small part of it. If our country is to be seen as a single solid body, every cell, every organ should be healthy in order for this body to function properly. Similarly, only when all the provinces, not only the capital city, have their respective competitive strengths, our country will truly stand out on the world competitiveness map. In the past, there have been substantial challenge for provincial development whereby local budgets and decision making were centered in the capital around the state budget. However, we have witnessed big progress in 2013, when those powers were transferred from cen- tral government to local administration and residents. Only when local budget investments are based on public participation, executed with precision and effectiveness, and monitored through all stages, will they be able to contribute to development. However, although public investment is important, we should also not overlook the value of private investment, and neither is more important than the other. I am confident that the time will come soon, where the fruits of development equally reach all corners of our country. With my sincere wishes for success and prosperity, Puntsag TSAGAAN Chairman of the Board RESEARCH TEAM Economic Policy and Competitiveness Research Center Mr. Tsagaan Puntsag, Chairman of the Board Ms. Lakshmi Boojoo, Director Ms. Odonchimeg Ikhbayar, Manager Ms. Tungalag Erdenebat, Head of Research Ms. Delgerjargal Dorjsuren, Researcher Mr. Ganbat Chuluun, Researcher Mr. Otgon-Erdene Khandaa, Researcher Ms. Yesunchuluu Khuderchuluu, Researcher www.ecrc.mn ACKNOWLEDGEMENTS It is my distinct pleasure to greet you through this report. Last year, the Economic Policy and Competitiveness Research Center (ECRC) first initiated and launched a research project to produce a report which realistically measured development level and competitiveness of provinces. Carrying on and continuously improving something is more important that just starting it off. With annual reports, it is now possible to track changes and new developments in provincial competitiveness, to compare provinces with each other, as well as their current and past indicators. Taking this opportunity, I would like to note the support and contribution of organizations and individuals which were pivotal in the production of this annual report. In particular, I would like to thank local businesses for their time and input in measuring the competitiveness of their respective provinces, and local branches of the Mongolian National Chamber of Commerce and Trade for providing the opportunity to meet them. Moreover, the support of GIZ program Integrated Mineral Resource Initiative in printing the report has been invaluable. Last but not least, on behalf of the ECRC team, I would like to thank you, our esteemed reader, for using this report to reflect on your work and wish you the best of success in your future endeavors. Boojoo LAKSHMI Director PARTNER ORGANISATIONS German Society for International Cooperation Integrated Mineral Resource Initiative Mongolian National Chamber of Commerce and Industry Regional Branches MONGOLIA Mongolia Economic Forum ECONOMIC FORUM Statistical data soUrces National Statistical Office Bank of Mongolia PROVINCIAL COMPETITIVENESS REPORT 2013 CONTENTS Abbreviations ...............................................................................................................9 DEVELOPMENT CALLS ........................................................................................... 10 PRINCIPLES OF ANALYSIS AND METHODOLOGY ....................................... 13 PROVINCIAL COMPETITIVENESS SCOREBOARD .......................................... 19 Competitiveness factors .......................................................................................... 20 Overall competitiveness scoreboard 2013 ........................................................ 21 Competitiveness structures ..................................................................................... 27 PROVINCIAL COMPETITIVENESS PROFILES .................................................... 31 STATISTICAL TABLES .............................................................................................117 1 Economic Performance .................................................................................119 2 Government Efficiency ...................................................................................131 3 Business Efficiency ..........................................................................................141 4 Infrastructure ....................................................................................................151 ANNEXES ................................................................................................................175 The fundamentals of competitiveness ................................................................176 Data sources and notes .......................................................................................178 7 PROVINCIAL COMPETITIVENESS REPORT 2013 Provincial Competitiveness Profiles ARKHANGAI ………………………………………… .........32 BAYAN-ULGII ……………………………………… .........36 BAYANKHONGOR ………………………………...…….40 BULGAN …………………………………………….. ...........44 GOBI-ALTAI ……………………………………….. ..........48 GOBISUMBER ……………………………………….. ........52 DARKHAN-UUL ……………………………………….. ....56 DORNOGOBI …………………………………………. .....60 DORNOD…………………………………………….. ..........64 DUNDGOBI …………………………………………... .......68 ZAVKHAN ……………………………………………… ........72 ORKHON………………………………………………. .........76 UVURKHANGAI ………………………………………… ....80 UMNUGOBI …………………………………………… .......84 SUKHBAATAR …………………………………………... ....88 SELENGE …………………………………………….............92 TUV ………………………………………………….. ...............96 UVS ………………………………………………….............. 100 KHOVD ………………………………………………… ...... 104 KHUVSGUL …………………………………………….. .... 108 KHENTII ……………………………………………… ......... 112 8 PROVINCIAL COMPETITIVENESS REPORT 2013 Abbreviations BoM Bank of Mongolia EPCRC Economic Policy and Competitiveness Research Center GDP Gross domestic product MNT Mongolian National Currency (tugrug) NSO National Statistical Office PCI Provincial Competitiveness Index SME Small and medium enterprises VAT Value added tax 9 PROVINCIAL COMPETITIVENESS REPORT 2013 DEVELOPMENT CALLS This second installment of the “Provincial of the impacts of these initiatives as well as to Competitiveness Report” provides us with consider interesting developments taking place the opportunity to not only measure the in the provincial level. competitiveness of different provinces, but also The 2012-2016 Action Plan of the Government to monitor new developments and changes. Last of Mongolia, under the objective titled “A Secure year’s report showed that slow growth and low Mongolian”, includes a goal to Turn provincial development in rural areas were largely due to centers into cities. Starting from 2013, provincial a lack of quality infrastructure, including not only budget powers were expanded, and Local hard (roads, transportation, communications, Development Funds were created. energy, electricity etc.) but also soft infrastructure (healthcare, education etc.). Near non-existent While it is still early too evaluate the results of industrialization and an unfavorable business these projects and programs, annual Provincial environment were other factors delaying local Competitiveness Report will be able to provide development. It was obvious that provinces which substantial information on yearly changes. were able to attract workforce migration with There is still much to do to improve provincial active ongoing mining projects, and consequently
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