“Everybody in Mongolia has just one goal: development”

N. Ariuntuya talks to Canada’s Ambassador to Mongolia Gregory Goldhawk about bilateral relations and the direction he sees them taking.

Mr. Ambassador, how did you come here?

I joined the foreign relations service of Canada in 1981, and have served in many countries in almost in all continents.  I have worked mostly in trade relations and was assigned to the USA for a long period of time. Immediately before coming to Mongolia, I was posted in Thailand.
I am here with my wife and a daughter who is 9 years old and has made many friends in her new school. My wife is actively interested in Mongolian arts. We are happy here and have no complaints at all, even though we came from plus 30-degree country to a minus 30-degree one.

You have not been long here, so your first impressions must still be fresh. What were they like?

My first impression has been that Mongolia is changing with incredible rapidity. This is seen not only in the economic sector, but everywhere else also. The most clear indication of this is given by all these cranes on construction sites that you can see right on the way to town from the airport. Bangkok is also a growing city, but things there are not a fraction of what is happening here at an extraordinary pace.

How is Mongolia different from the other countries where you worked?

I would say the atmosphere of rapid change is what distinguishes Mongolia. Everybody I talk to, from a high ranking state official to a small scale entrepreneur, gives me the feeling that the country has just one goal: development. I feel fortunate to be present here at this very interesting point of time.

Where have you been in Mongolia?

Unfortunately, I haven’t had time so far to visit your beautiful countryside. In the coming months, I plan to do so and also visit Canadian companies working there.

Canada was the first country in North America to establish diplomatic relations with Mongolia. How have bilateral relations been in the 37 years since then and how do you see the future?
Canada has always wished to contribute to Mongolia’s development. Our Embassy here was opened two years ago and will help expand bilateral relations.  

Canada has a large presence in the mining sector of Mongolia. Are there other areas of cooperation?

The potential is there in many sectors, particularly in trade, finance, and in peacekeeping. Of course, the mining sector will continue to be the priority sector. For Mongolia it is the gateway to development, and Canada is the second largest investor in Mongolia, with most of the investment in the mining sector.
I anticipate investment in other sectors as well, such as contracting work, and education, especially in vocational training. Specialized professionals are needed in the mining sector and their training has to be taken up seriously.  Another potential sector is agriculture, where our similar climate will help introduction of advanced Canadian technology. I mention these two sectors as examples, but there are many other opportunities.
    
What strikes you most in the investment environment here? What is the gest problem for foreign investors? What are the risks for them?

Representatives of foreign companies, not only Canadian, feel that that the uncertainties in the legal environment continues to be gest challenge for those keen to invest and work in Mongolia. Of course, they will work according to the laws of the land, but a sustainable and stable legal environment is essential to make long-term plans for profitable investment. This is a most important issue.

Take the “law with the long title”. Its amuity creates problems. Companies accept the need to protect the forests and river basin areas, but the way to do this has to be clearly stated.  International companies respect and implement the laws of the countries where they operate but each country has its own laws so the companies want to be clear on what is expected of them and what not. Confusion does not help.

Lawmakers here acknowledge this. In the early 1990’s, foreigners were provided with the most favorable conditions in order to attract investment. However, the end of the decade saw a shift towards a policy to somewhat restrict the operation of foreign investors, resulting in shrinking opportunities and difficult conditions for them. I understand that now work is under way to have laws that will be mutually beneficial for Mongolia and foreign investors.  It is natural that the expansion in mining calls for changes in the legal environment. Canada has had a similar experience, especially with regard to environmental protection.

I agree with Mongolian leaders that development nurtures inherent risks. Along with economic prosperity and greater income, it can also have some negative effects, affecting the country’s identity, cultural heritage and traditions. There could be financial risks as well. These should not be ignored or underestimated.  Your President and many others know that a bad system poses dangers in the long run.

What has Canada’s experience been with foreign investment?

We have encountered problems. There was a time when we feared the country was losing control of its resources but in general, Canada has always encouraged foreign investment because we saw that the positive results outweighed the negative. It created jobs, increased tax revenue, and utilized resources.
Mongolia similarly needs foreign investment to reach a stage in economic development where there are enough jobs for all. I have noticed that most of the employees of Canadian companies here are Mongolians, including in executive positions. Mongolians could invest in Canada in the future. I recently read of a Thai investing USD2.3 billion in Canada, in the oil sector. There are many Asian countries investing in Canada now, something that was unimaginable a few years ago. There is no reason why Mongolians too will not invest in Canada.

What steps should Mongolia take for its economic development?  

First, it is important to have a favorable legal environment to attract foreign investment. Then there has to be a well-trained work force.  It is also necessary to develop the transport infrastructure, covering roads, the railway and flights. I’m glad the Government is promoting public-private partnership, which Canada also has.
Mongolia has natural resources and a market for them. What I said above will connect the two, and lead to development and prosperity.

What do you think of Prime Minister S.Batbold’s comment that Mongolia can adopt many things from the Canadian model of development as the two countries have similar climate, natural resources, population density and geopolitical location?

He was right. Canada has reached a certain level of development, but there are still things we can learn from other countries. The similarities he mentioned are there and they lead to similar problems. Canada also began with mining and natural resources deployment but as of today, 75% of our exports are final products. This is what Mongolia, too, should strive for.

Tell us about Prime Minister Batbold’s visit to Canada.

I think it was very successful on many fronts. Most Canadians did not know a great deal about Mongolia and the visit was instrumental in generating widespread awareness of Mongolia’s political and economic potential.  Apart from political leaders, the Prime Minister met representatives of many companies and attended two very well-attended meetings of businessmen in Vancouver and Toronto. There were so many people at the Vancouver meeting that I had difficulty finding a seat. So many people learnt about Mongolia’s development plans through the Prime Minister’s address which presented Mongolia’s potential and outlined how and why it was important for Canada to cooperate with Mongolia.  

How many Canadian companies now work in Mongolia? How many of them are in the mining sector? Who are the gest ones?

According to your official statistics, there are over 90 registered Canadian invested companies. This figure includes joint ventures with Chinese, Russian and Korean firms. There are 29 companies registered in the mining sector, but some of them are yet to start operating.
The major ones are Ivanhoe Mines, its subsidiary SouthGobi Resources, South Gobi Sands,the uranium exploration company Cameco, Centerra Gold of Boroo Gold, Erdene Resources and many others. There are many small companies. We must not ignore the many exploration companies as there can be no development without exploration.  