G. Tsogtsaikhan, researcher of the Open Society Forum and general Director of the Asian Initiative Institute titled the research, “The Need for and Significance of Establishing a Minerals Fund,” and gave a presentation followed by discussion at the Open society forum’s meeting hall on Thursday.

“Mongolia has some funds related to its minerals but the laws are very crude and the current government’s policies can’t protect the economy and already has resource course signs,” said R. Badamdamdin, DP Member of Parliament.

Mongolia approved a new law on a Governmental Special Fund in August, 2006 and today the Parliamentary session is approving the rules for managing the properties and expenditures of Mongolia’s development fund.

Mongolia’s development fund’s resource is said to be financed by the windfall profits tax on gold and copper sales. According to the law 33 percent of this fund is to be spent on social care, 33 percent to support small and medium business and one third if there is a lack of state income.

S. Avirmed, Doctor of Geology said, “The main goal of the current fund of Mongolia and Tsogtsaikhan’s proposal fund’s goals are very different from each other. The current fund is spending all the money when the price of gold and copper are high in the international market.”

“Tsogtsaikhan’s research says that we should establish future capital from current minerals and would spend the money only to protect the economy.”

“The main goal of the research is how Mongolia should keep the mineral resources correctly for the future and what is a good way to improve the current economic condition and furthermore how Mongolia can save the economy from Dutch disease and resource course signs,” Tsogtsaikhan told Moninfo Thursday.

According to the results of this research the Mongolian economy is dominated by mining. In particular the economy is dependent on just two minerals’ prices.

For example, the economic structure deficiencies caused just three sector’s data covers 65 percent of the Mongolian economy (mining, animal husbandry and trade), the report says.

“Mining makes up 70 percent of exports and just 4 percent of those exports are final products.

The Mongolian economy is weak, caused by its vulnerability, deep effects and long revival. Law capacity to take advantage of opportunities caused the Asian Foundation, World Bank and IMF to consider that the Mongolian economy has law absorption capacity. And they are reducing the loan numbers, US$60 million in 1995 and was reduced to US$20million,” the report said.

“If the Mongolian government pursues the policy to protect the economy and use correctly the mineral resources, we should establish a minerals fund and I proposed three minerals funds: Minerals savings fund, minerals development fund and minerals stabilization fund. I proposed a draft law on a new structure of these funds as well,” Tsogtsaikhan said.  

The sources of the funds for savings and development funds’ sources would come from all types of taxes, and payments from oil, gold and copper companies. As for the stabilization fund the source could be additional taxes from changes in the world market prices, he said.       

“I made this research for five months and it is based on other countries’ experiences and global current tendencies for how to correctly use the natural resources and the best international fund laws,” Tsogtsaikhan said.