This proposed knowledge and support technical assistance (TA) seeks to support the Government of Mongolia with the preparation of an evidence-based regional private sector development policy document and the capacity building of rural private sector. The TA is aligned with the 2019-2021 Country Partnership Strategy for Mongolia and included in the country operations business plan, 2019-2021. The proposed TA will assist Mongolia in formulating an effective private sector development strategy for the eastern region of Mongolia under the Mongolia Sustainable Development Vision 2030 (SDV) and the Mongolia Regional Development Concept (MRDC).
|Project Name||Unleashing the Private Sector to Drive Inclusive Growth in Eastern Mongolia|
|Project Type / Modality of Assistance||Technical Assistance
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Gender Equity and Mainstreaming
Governance and capacity development
Private sector development
|Sector / Subsector||
Agriculture, natural resources and rural development / Agricultural policy, institutional and capacity development
Public sector management / Economic affairs management
|Gender Equity and Mainstreaming||Some gender elements|
|Description||This proposed knowledge and support technical assistance (TA) seeks to support the Government of Mongolia with the preparation of an evidence-based regional private sector development policy document and the capacity building of rural private sector. The TA is aligned with the 2019-2021 Country Partnership Strategy for Mongolia and included in the country operations business plan, 2019-2021. The proposed TA will assist Mongolia in formulating an effective private sector development strategy for the eastern region of Mongolia under the Mongolia Sustainable Development Vision 2030 (SDV) and the Mongolia Regional Development Concept (MRDC).|
|Project Rationale and Linkage to Country/Regional Strategy||
The Parliament of Mongolia approved the MRDC in 2001, which was intended to be implemented over three stages: (i) 2001-2005; (ii) 2005-2010; and (iii) post-2010. The objective of the MRDC is to reduce increased population density in a small number of economic and political centres, promote industrialization, and enhance socio-economic equality between urban and rural areas through optimal utilization of the country's lands, natural resources, crop farming, livestock, and intelligence capacity. Accordingly, the Government of Mongolia established regional secretary offices in five regions: (i) the western region; (ii) the Khangai region; (iii) the central region; (iv) the Ulaanbaatar region; and (v) the eastern region.
The Cabinet Secretariat and the National Development Agency (NDA) are responsible for long-term planning of regional development and facilitating coordination among 21 aimags or provinces. In a 2018 NDA assessment of MRDC implementation, it concluded that the progress rate is only 30-40% for the first two stages, and eight regional economic centres were not developed as planned in the RDCM. The Cabinet Secretariat and NDA is currently working to update the RDCM and relevant policy and regulatory documents because the current RDCM is outdated in comparison to the current development needs of Mongolia and the amount of time elapsed since its approval in 2001.
The implementation of actions to be taken under RDCM was hindered largely by frequent changes of Mongolia's Government and fiscal constraints. Regional secretary offices in five regions were abolished in 2013 due to state budget cuts. Mongolia did not prepare any evidence-based regional development policy prior to the Western Mongolia Private Sector Development Policy supported by the ADB TA9066-MON: Fostering Value-Added Activities in Western Mongolia TA which was completed in 2018. Moreover, the current RDCM emphasized the selection of one aimag center as a single pillar of each region in rural areas, and each rural region was chaired by a particular pillar aimag's governor. This institutional arrangement for regional development reduced incentives and accountability of aimags to coordinate with each other.
The Government of Mongolia requested ADB to support private sector development in the eastern region of Mongolia comprised of the three aimags - Dornod, Khentii, and Sukhbaatar, as a follow-up to the success of ADB's previous support in western Mongolia. Eastern Mongolia's economy is heavily dependent on only three sectors: mining, animal husbandry, and services. Although the three eastern aimags have considerable untapped resources of minerals, animals, fish, and crop farming, the region's contribution to Mongolia's economy is minimal. For instance, eastern Mongolia produces little more than 5% of national gross domestic product, yet accounted for 18.3% of its land area and over 15% of its livestock.
The three eastern aimags are among the most underdeveloped and isolated. The poverty rate in eastern Mongolia stood at 43.9% vis- -vis the national level of 29.6% in 2016. The region's unemployment rate was 7.3% in Q3 2018, higher than the national average of 6.9%. Population density is low in eastern Mongolia at 0.7. Despite these challenges, there are some positives as the 2018 aimag economic competitiveness assessment ranked Dornod, Khentii, and Sukhbaatar 9th, 11th, and 13th out of 21 aimags, respectively for infrastructure development.
The economic potential of the eastern region offer opportunities for economic growth under the right policies and institutions. This will require an increased focus on (i) the development of infrastructure, (ii) the technical expertise required by the private sector, and (iii) good governance. It will be important in the TA to identify and categorize priority sectors of the region's economy, formulate the proper method to exploit untapped local resources, and promote information-sharing and coordination among aimags. A proper private sector development policy needs to be designed based on empirical evidence. However, the aimag governments lack the specialist human resources and financial capacity needed to support private sector development. Their ability to prepare a regional private sector development strategy and to plan and evaluate its implementation is insufficient.
|Impact||The Objectives of The Mongolia Sustainable Development Vision 2030 And the Mongolia Regional Development Concept|
|Description of Outcome||Readiness for value-added activities in private sector development in the three eastern aimags (provinces) enhanced|
|Progress Toward Outcome|
|Description of Project Outputs||
The aimags' economic competitiveness and potential assessed
The eastern Mongolia private sector development strategy formulated
Regional agribusiness cluster model(s) designed
Coordination and information sharing for economic development among the three eastern aimags strengthened
|Status of Implementation Progress (Outputs, Activities, and Issues)|
|Geographical Location||Eastern Aymag, Hentiy Aymag, Suhbaatar Aymag|
|Summary of Environmental and Social Aspects|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design|
|During Project Implementation|
|Responsible ADB Officer||Enerelt Enkhbold|
|Responsible ADB Department||East Asia Department|
|Responsible ADB Division||Mongolia Resident Mission|
|Concept Clearance||17 Apr 2019|
|Fact Finding||13 May 2019 to 13 May 2019|
|Approval||28 Jun 2019|
|Last Review Mission||-|
|Last PDS Update||01 Jul 2019|
|Approval||Signing Date||Effectivity Date||Closing|
|28 Jun 2019||-||-||31 Dec 2021||-||-|
|Financing Plan/TA Utilization||Cumulative Disbursements|
|600,000.00||0.00||25,000.00||0.00||0.00||0.00||625,000.00||28 Jun 2019||0.00|
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|Title||Document Type||Document Date|
|Unleashing the Private Sector to Drive Inclusive Growth in Eastern Mongolia: Technical Assistance Report||Technical Assistance Reports||Jun 2019|
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