Tavan Tolgoi Cash Scattered in the Wind

Trans. by E.Khishigjargal

The law on the Human Development Fund, passed by the government in 2009, authorized the establishment of a national company to hold state-owned shares of strategic reserves and evenly distribute dividends among citizens. According to this, all companies holding state-owned shares of strategic reserves were merged to create Erdenes MGL, now Erdenes Mongol LLC.

This company currently owns 100 percent of Erdenes Tavan Tolgoi JSC, 100 percent of Erdenes Oyu Tolgoi LLC, established based on the state's 34 percent ownership of Oyutolgoi, 75 percent ownership of Baganuur JSC, 90 percent ownership of Shivee Ovoo JSC, and 51 percent ownership of Erdenet Factory LLC, to name a few.

Other companies owning strategic reserves will join Erdenes Mongol in the future. This law created favorable conditions for each Mongolian citizen to receive the benefits of our vast resources. Unfortunately, even after six years, this law has still not been fully implemented and is in a "frosty" state. Prime Minister Ch.Saikhanbileg stated that if the long expected Erdenes Tavan Tolgoi investment contract, prepared by the working group appointed by the government, is approved by the parliament, every Mongolian citizen will be able to receive 100,000 MNT from the deposits of the investor consortium.

This is great news for people living in today's society and useful for activating financial markets. But one thing economists fear is the use of the assets to deal with day-to-day needs and distribution in cash, repeating mistakes made in the nationwide distribution of 21,000 MNT for each citizen. If this proposal made by Prime Minister Ch.Saikhanbileg is passed, 180 billion MNT in dividends from 1.8 million shareholders will be focused. A handout of 100,000 MNT per citizen will help a family for a short period, but will it be beneficial to the economy of the nation?

When the 21,000 MNT was first handed out, the people did not know or foresee the debt it would put the country in. At that time, people hoped to become like Saudi Arabian nationals, who receive monthly cash benefits from their natural resources. Unfortunately, over 600 billion MNT was scattered around with no real investment, leaving debt for generations. This is not the fault of the people, as we did not ask for the cash in the first place. Even though the money was handed out by the authorities, the consequences must be borne by the people, who are tightening their belts to the point of...