Enhancing Northeast Asia and Mongolia Economic Cooperation Through Transport Network Development

Enhancing Northeast Asia and Mongolia Economic Cooperation Through Transport Network Development

ERINA REPORT No. 111 2013 MAY Enhancing Northeast Asia and Mongolia Economic Cooperation through Transport Network Development D. Gotov, Professor, School of the Mechanical Engineering and Mathematics, Mongolian National University of Science and Technology (MUST) 1. Introduction: % in 2010, and is being spurred by the development of NEA cooperation. As is well known, Northeast Asia large copper, coal and gold mining projects. High GDP is a home to the 4 of the world's major powers, 2 of the 5 forecasts are based on (i) continued strong flows of foreign permanent members of the UN Security Council and 2 of direct investment, which has more than doubled between the largest economies of the world. It is also a home to one 2010 and 2011; (ii) continued rapid expansion of the mining of the world's hottest flash points. The situation in the sub- sector, especially coal; (iii) public investment being raised region remains fragile, although it is relatively stable, on by a factor three; and (iv) strong consumer demand due to the whole thanks to the determination and efforts of the the disbursements of cash to the citizens ahead of the 2012 countries of the sub-region. elections. This area of the world includes countries with very diverse political and economic conditions. The basis of an Figure 1.1 GDP growth, Mongolia international economic cooperation framework could be a combination of rich mineral resources of Mongolia and investment capital and advanced technology from Japan and South Korea, as well as a considerable pool of workforce from China (PRC) and North Korea. Priority should be given to the development of those economic relations which involve the countries concerned directly into international cooperation. Cooperation between the countries in the region should be based on the principles of reciprocity, sovereignty, territorial integrity, non-interference into internal affairs and removal of restrictions in trade and economic Source: Mongolian Statistical Yearbook, 2011 cooperation. The coal sector has become the fastest growing sector, Table 1.1 Mongolia's foreign trade surpassing copper exports in becoming the top export Export Import earner for the country. The PRC, the largest thermal coal 2009 2010 2011 2009 2010 2011 consumer in the world, remains the only destination for Total 1888 385.1 2 908 502.2 4 780 350.5 2 137 673.5 3 200 053.3 6 526 882.4 coal from Mongolia. It is expected to grow even faster in NEA 1 414 023 2 499 662.6 4 449 328.7 794 553.8 1 355 282.5 2 851 436.7 the near future when large coal mining projects start DPRK - 25.5 - 47.1 798.5 740.0 production. At US$ 11.3 billion, Mongolia's external trade ROK 15 458.1 30 519.9 1 896.1 155 102.2 181 781.9 350 648.5 grew 3.8 times in last 5 years (see table 1.2). Amount of PRC 1 393 906.7 2 466 265.5 4 400 735.7 538 582.6 970 976.0 2 007 572.2 import is 39% higher than the amount of export. Taiwan 94.0 182.0 10.0 3 768.4 5 238.1 8 966.5 Japan 4 564.2 2 669.7 10 694.6 97 053.5 196 488.0 483 509.5 Figure 1.2 Share of GDP, Figure 1.3 Share of GDP, Source: National Statistical Office, Mongolia Mongolia Eastern aimags Mongolia's foreign trade is mainly carried with NEA countries (see table 1.1). Mongolia believes that the development of multilateral cooperation in NEA is of special significance for the economic development, strengthening cooperation and mutual confidence among the countries of the sub-region. 1.1 Mongolia's Macroeconomic Review The economy of Mongolia did return to solid growth in 2011. Growth for 2011 has reached 17.3%, up from 6.4 Source: Mongolian Statistical Yearbooks 34 ERINA REPORT No. 111 2013 MAY Equipment, machineries and electrical appliances are Table 1.2 Foreign Trade of Mongolia over the last the most imported products as the accelerating economy 10 years, Million US$ requires fuels for growth. On other hand, led by coal, Year Exports Imports Trade mineral products account for most of the export. As of Russia PRC Others Total Russia PRC Others Total balance 2011, 92% of Mongolia's total export went to PRC and 32% 2002 48.09 220.5 255.57 524 237.63 167.7 313.64 690.74 -166.78 of the total import came from the same country. 2003 41.2 287 287.7 615.9 265.4 196.3 339.3 801 -185.1 2004 20.6 413.9 435.2 869.7 341.9 257.2 422 1,021.1 -151.4 2005 27.9 514.2 523.5 1,064.9 417.9 307.3 459.3 1,184.3 -119.4 2. Infrastructure capacity review 2006 45.1 1.050.2 447.5 1,542.8 547.8 365 422.2 1,435.0 107.8 2007 58.5 1,411.4 477.3 1,947.2 745 568.9 753.9 2,061.8 -114.6 2.1. Transport sector of Mongolia 2008 86.3 1,635.9 812.3 2,534.5 1,242.3 898.7 1,103.5 3,244.5 -101 The transport sector in Mongolia is divided over four 2009 68.2 1,393.9 423.3 1,885.4 772.8 538.6 826.3 2,137.7 -252.3 modes - railway, roads, air, and inland waterway. As can be 2010 82.7 2,466.3 359.5 2,908.5 1,096.7 970.9 1,132.4 3,200.0 -291.5 seen in Table 2.1 in freight transport, the railway is the 2011 95.9 4,400.7 283.9 4,780.5 1,595.9 2,007.6 2,923.1 6,526.9 -1,746 Figure 2.1 Transport Networks of Mongolia Source: Ministry of Roads, Transport, Construction and Urban Development, Mongolia Table 2.1 Summary Transportation Statistics for Mongolia 2007 2008 2009 2010 2011 Freight (Thousand tones) 23,281.6 23,904.4 24,729.7 29,415.9 43,956.6 By Rail 14,072.6 14,646.9 14,164.5 16,753.2 18,327.4 By Road 9,207.1 9,255.7 10,563.8 12,610.2 25,635.3 By Air 1,887.2 1,847.0 1,369.3 1,641.6 2,930.9 Freight (Million TKM) 9,030.2 9,051.4 8,981.3 12,106.4 16,300.2 By Rail 8,360.7 8,261.4 7,817.0 10,286.7 11,382.2 By Road 661.9 782.1 1,160.7 1,834.0 4,910.3 By Air 7,720.6 7,926.5 3,666.7 4,169.5 7,708.6 Passengers (Million) 209.9 231.6 232.4 250.7 296.2 By Rail 4.5 4.4 3.1 3.5 3.8 By Road 205.0 226.9 229.0 246.7 291.8 By Air 0.4 0.4 0.3 0.4 0.6 Passengers (Million PKM) 3,263.1 3,607.3 3,173.1 3,607.4 4,696.1 By Rail 1,406.4 1,400.5 1,003.1 1,220.0 1,400.1 By Road 869.7 1,215.0 1,535.9 1,480.2 2,321.8 By Air 987.1 991.9 634.1 907.2 974.1 Source: Mongolia Statistical Yearbook 2011, National Statistical Office, Ulaanbaatar 2011 35 ERINA REPORT No. 111 2013 MAY dominant mode both in terms of tones and tone-kilometers. growth in vehicle ownership in Mongolia since 1990. The With the historic significance of mining industries in largest growth was observed in private car ownership, Mongolia, the railway has been the primary mode of which grew at an annual average rate of 23.43%. This is transport for the heavy and bulk freight. Given the poor followed by publicly-owned cars, which grew at an average condition of the roads, the high cost of air transport, and the annual rate of 18.85% during the same period. limited range of the waterways, the railway has had little Rail network. One of the primary weaknesses of competition in freight transport from other modes. As railway transport in Mongolia is its limited coverage. The shown in Table 2.1, the majority of freight traffic in railway network extends only 1,815 km, principally in the Mongolia is handled by the railway (approximately 86%). north-south direction connecting to the Russian and Chinese The rail share is very high compared to other Railways, respectively. The Mongolian main railway line developing countries, where highways carry the majority of passes through Ulaanbaatar, and connects the Chinese rail the freight traffic in terms of tones (e.g. in PRC highways system in the south with the Russian Trans-Siberian line in carry 76.5% of freight traffic whereas railways only carry the north, a distance of about 1,400 km. The transport 13.1%). This can mainly be attributed to the bad conditions network in eastern Mongolia, which also shows the of the highways in Mongolia. Choibalsan-Ereentsav rail line, is presented in Figure 2.1. Road network. Mongolia's road network overall The second rail line in Mongolia is in eastern Mongolia. (including both state and local roads) totals approximately This line is 237.6 kilometers long, is broad gauge, and runs 49,000 kilometers, connecting 21 major cities and towns from Choibalsan to the border with the Russian Federation and 160 smaller villages (soums and bags) (Figure 2.1).

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