ADB Presents First Private Sector Assessment for Mongolia

ULAANBAATAR, MONGOLIA (28 January 2004) - ADB presented a draft survey of Mongolia's private sector today to a public workshop here attended by about 40 stakeholders.

Comments were invited on the Private Sector Assessment, the first such ADB report for Mongolia, from the participants, which included representatives of the Government, local businessmen, and international executives and investors.

The report discusses the role of government in promoting private sector development, and highlights performance and prospects for different sectors of the economy. The document will also provide guidance to ADB in developing its Country Program and Strategy (CSP).

"The private sector has become and will likely remain the main provider of employment in Mongolia, and has a very large role to play in poverty reduction," said Barry Hitchcock, the ADB's Mongolia Country Director, in his opening remarks.

The report highlights the rapid growth of Mongolia's private sector, which now accounts for more than 75% of GDP. All key sectors, including mining, agriculture, banking, and services, are dominated by private businesses. Requirements for further development of the private sector include the:

• adoption of more coordinated pro-business policies by the government;
• rationalization of the tax regime;
• more effective education and training, particularly in accounting and finance;
• improved infrastructure, particularly transport and energy services;
• greater access to financial services for small and medium scale enterprises; and
• development of a professional investment industry.

Since 1991, ADB has contributed to Mongolia's development through $568.7 million in loans and $53.9 million in technical assistance grants. Many of these projects included private sector components.

"Going forward, ADB is dedicated to assisting the Government to develop the nonbank financial sector, particularly savings and credit unions, and insurance and investment firms," said Tom Moyes, Rural Financial Services Specialist, presenting the report's findings. "ADB will also continue to support the development of the accountancy profession. In addition, ADB's Private Sector Operations Division will consider direct equity investments in growing, profitable Mongolian companies."

The Private Sector Assessment was prepared by a team of ADB staff, including Debra Kertzman, Financial Sector Specialist, and Mr. Moyes, both from the Manila headquarters; Nergui Dorj and Darius Teeter of the ADB's Mongolian Resident Mission, and consultants Christopher Knee, Sodnom Bekhbat, and Patricia Lim.