Mongolia country brief
Australia established diplomatic relations with Mongolia in 1972. Bilateral engagement accelerated following the introduction of democratic and free-market reforms in Mongolia in the early 1990s. The focus of the relationship to date has been on development assistance and commercial activities in Mongolia's resources sector.
Mongolia opened an embassy in Canberra in 2008. Mongolia's first resident Ambassador, His Excellency Mr Tserendorj Jambaldorj, presented credentials to the Governor-General on 30 October 2008. In 2007, Australia appointed an Honorary Consul in Ulaanbaatar and, in 2008, Australia moved its diplomatic accreditation to Mongolia from Beijing to Seoul. Australia's current Ambassador to Mongolia (resident in Seoul), Mr Sam Gerovich, presented credentials to the President of Mongolia on 17 August 2009. In February 2011, Prime Minister Gillard announced that the Australian Trade Commission (Austrade) would open a trade office in Ulaanbaatar to serve the needs of Australian business.That office has been established and upgraded to an Australian Consulate-General which opened in Ulaanbaatar on 30 March 2012.
In February 2011, the then Prime Minister of Mongolia, HE Mr Sukhbaatar Batbold, visited Australia as a guestofgovernment. His delegation included several Mongolian ministers, parliamentarians and businesspeople. Prime Minister Gillard welcomed Prime Minister Batbold as the first Mongolian Head of Government to visit Australia since the two countries established diplomatic relations. The leaders witnessed the signature of four bilateral arrangements:
- a Memorandum of Understanding on vocational education cooperation aimed at helping Mongolia build the capacity of its mining workforce, and encouraging the exchange of students, staffand information on education systems, qualifications and recognition processes between vocational education institutes and universities;
- a Memorandum of Understanding to promote agricultural development and the sharing of information and agricultural technologies, with the aim of improving livestock and crop production in Mongolia;
- a Memorandum of Understanding between the two governments to foster the exchange of information on cabinet secretariat operations and on enhancing transparency and public access to information; and
- a Memorandum of Understanding between the Australian Academy of Science and the Mongolian Academy of Sciences to promote the exchange of ideas and the review of collaborative opportunities in scientific fields of common interest, such as geology, water resources and agriculture.
Other high-level contact has included meetings in December 2010 and June and December 2011 between the thenMinister for Foreign Affairs, Kevin Rudd, and the Mongolian Minister for Foreign Affairs and Trade, Gombojav Zandanshatar, in Bali, Budapest and Vilnius. In September 2008, the thenPrime Minister Rudd met with thenPrime Minister Sanjaa Bayar in the margins of the United Nations General Assembly.
At head-of-state level, the thenGovernor-General Bill Hayden visited Mongolia in 1994 and Mongolia's first democratically elected President, Punsalmaagiin Ochirbat, visited Australia in 1997. Australia's Foreign Minister visited Mongolia in 1994 and 2007, and Mongolia's Foreign Minister visited Australia in 1993.
There have been a number of parliamentary visits. In 2009, two delegations from Mongolia led by Members of Parliament visited Australia, and a group of four Australian Members of Parliament from the Australia-Mongolia Parliamentary Group visited Mongolia. In 2010, a delegation of Australian Members of Parliament visited Mongolia and ten Mongolian State Secretaries visited Australia. In January 2011, the Speaker of the House of Representatives led a delegation to the Asia Pacific Parliamentary Forum hosted by Mongolia. In September 2012, the House of Representatives Regional Australia Committee visited Mongolia.
People-to-people links between Australia and Mongolia have firm foundations. The Mongolia-Australia Scholarship program has allowed more than 240 Mongolians (and their families) to study in Australia and has created a vibrant network in Mongolia of alumni of Australian universities, many of whom have become influential Mongolian parliamentarians, officials and businesspeople. Business is deepening the people-to-people links, with about 690 Australians currently resident in Mongolia and some 45 Australian companies maintaining a presence there.
Bilateral trade with Mongolia is modest but increasing rapidly, with two-way merchandise trade totalling $47.5 million in 2011-12 (up from 32.9 million in 2010-11). This is comprised mostly of Australian exports of civil engineering equipment, measuring instruments, additives for mineral oils, vehicle parts and other machinery, equipment and tools used in Mongolia's mining industry. There is significant commercial interest by Australian companies, and significant trade and investment potential, in Mongolia's minerals and energy sector. Companies with importantAustralian operations are active in Mongolia, including Rio Tinto and Leighton Holdings, and Australian companies hold mineral leases in Mongolia. Australia's principal imports from Mongolia are vegetables, telecom equipment and parts, and floor coverings.
To help promote the successful and sustainable development of Mongolia's minerals and energy sector, Australia provided practical assistance worth $750,000 to Mongolia in 2008-2010 to help build local capacity and legal expertise in mining policy and law. Australian geological, drilling, mining software and environmental management companies are increasing their involvement in Mongolia.
Since 1995, Australia has provided more than $81 million in aid to Mongoliawith significant expansion in the last two years. A longstanding focus of Australia's development cooperation program with Mongolia has been on human resource development through the provision of scholarships. The Mongolia Australian Scholarships Program is highly regarded by Mongolia as an effective capacity-building instrument for government agencies. An expansion of the program announced in February 2011 has seen the number of scholarships increase from 28 to 38 per year from 2012.
In October 2011, Prime Minister Gillard launched the Mining for Development Initiative to help developing countries to translate their resource endowment into significant, sustainable benefits for all their citizens. From 2012, Australia is partnering with the World Bank to support local authorities managing groundwater resources in the South Gobi, a prime mining area which is also home to people following the traditional Mongolian nomadic way of life.
From 2012, the Australian Government is partnering with UNICEF to improve water, sanitation and hygiene facilities for around 7,800 rural children in the north-west of Mongolia, with a view to increasing their school attendance rates as well as improving health. The new facilities in 24 schools and kindergartens will also benefit some 840 teachers and staff. Over 150 Australian volunteers have been sent to Mongolia since 1998 (48 in 2011-12) including the Australian Youth Ambassadors for Developmentwho carry out assignments in public health, environmental engineering and business development.
Australia has also assisted Mongolia in response to specific events. In June 2009, Australia contributed $5 million to a World Bank-managed fund to assist Mongolia in handling the impact of the global financial crisis (see also Economic Overview). In early 2010, Mongolia suffered extreme winter conditions following a drought. The severe weather, locally referred to as the dzud, caused the death of more than eight million stock and threatened the livelihoods of Mongolian herders. Australia provided $1.7 million in assistance to Mongolia that financial year in response to the problems caused by the dzud. An assessment of the impact on Mongolian herders and the economy can be found in the World Bank's March 2010 Economic Update for Mongolia.
Mongolia held its first democratic elections in 1990 after 70 years of Soviet-style single-party rule. Members of the State Great Hural (Parliament) and the President are both elected for fixed four-year terms (but on different electoral cycles). Executive power is shared by the Parliament and the President. The Cabinet is appointed by the Prime Minister. The President is the Commander-in-Chief and holds the power to veto legislation, although this can be over-ridden by a two-thirds majority in Parliament. Presidential candidates must be nominated by a party represented in the Parliament, but the President is technically non-partisan and must renounce party membership before taking office.
There are two major political parties: the Mongolian People's Party (MPP), formerly the Mongolian People's Revolutionary Party,which evolved from the communist single-party government, and the Democratic Party (DP) which grew out of Mongolia's 1990 democracy movement. In the five parliamentary elections held since the 1992 Constitution came into effect, power has alternated between the two major parties, or the two parties have together formed grand-coalition governments. Two new parties successfully contested the June 2012 parliamentary elections: a breakaway group from the MPP led by former president Enkhbayar, which took on the party's old name of Mongolian People's Revolutionary Party (MPRP), and the Civil Will / Green Party.
The 28 June parliamentary elections led to the formation of a coalition government comprising the DP, formerpresident Enkhbayar's MPRP and the Civil Will / Green Party. Four seats are still to be determined, as a result of two candidates not reaching a required minimum of votes and as a result of electoral irregularities in two other cases.
In the most recent presidential election, held on 24 May 2009, the outgoing MPP President Nambaryn Enkhbayar was defeated by the DP's Tsakhia Elbegdorj. President Elbegdorj was sworn in on 18 June 2009.
Agriculture, primarily herding, was the traditional basis of the Mongolian economy, and is still important, contributing about 20 per cent of GDP and providing around 60 per cent of national employment. However, the mining sector is booming and services and industry have overtaken agriculture in terms of value. Services now account for some 49 per cent of GDP and industry for 29 per cent (including mining with 25 per cent).
Mongolia's economy is small, with GDP (current prices) for 2012 forecast by the IMF to be US$10.9 billion, a significant increase from US$8.5 billion in 2011 and 6.2 billion in 2010. A third of the population lives below the poverty line. Exports are the major driver of the economy. The value of goodsexports is equal to about half of nominal GDP and over 90 per cent of exports are minerals and resources.Major exports are copper, gold, coal and greasy cashmere wool.
Mongolia's economy recovered strongly from the Global Financial Crisis, driven at that stage by high commodity prices and strong demand from China. China remains Mongolia's largest trading partner, accounting for around 86 per cent of Mongolia's export revenues, predominantly copper and coal, and 44 per cent of imports. Increasing numbers of Chinese workers are providing labour in Mongolia.
The government currentlyfaces the challenge of managing a booming economy. Gross fixed investment reached almost 50 per cent of GDP in 2011 and foreign direct investment was US$5 billion in the same year. Inflation reached over 14 per cent in July and government expenditure, which represented close to 43 per cent of GDP in 2011, is expected to increase this year.
Mongolia's GDP was projected to grow by approximately 17.2 per cent in 2012 and the IMF has predicted double-digit growth for the remainder of the decade.
Mongolia's development has been hampered by its landlocked position, extreme climate, a lack of infrastructure and an uncertain regulatory environment as the country worked to transform itself from a Soviet satellite to a free-market democracy. But its location, abutting a rapidly growing China, has now also become an advantage.
Australian companies are well placed to assist in the development of Mongolia's resources sector. In October 2009, the Mongolian Government signed a US$6 billion investment agreement for the massive Oyu Tolgoi copper and gold mine with Rio Tinto and Canada's Ivanhoe Mines. Production is expected to commence in 2013. Leighton Holdings Limited also has extensive interests in Mongolian mining, including a contract to provide mining services to a tenement of a major coking coal deposit, Tavan Tolgoi.
Updated September 2012