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    The ABCs of a Market Economy


    © International Trade Centre, International Trade Forum - Issue 4/2004 

    Photo: Mongolian National Chamber of Commerce and Industry Succeeding in the global economy is not child's play. Yet in assisting Mongolia to gain business know-how, ITC has played a pivotal role in helping the country's firms understand how to "play ball" and leap free of trade constraints.

    In the early 1990s, the break-up of the Soviet Union launched landlocked Mongolia into a world without borders. Faced with a new economic order, Mongolia's nascent private sector and trade institutions needed to move quickly from free market theory to practice. ITC, a long-standing trade development partner, provided practical help and guidance.

    "ITC taught Mongolia the ABCs of a market economy," says Sambuu Demberel, Chairman and Chief Executive Officer of the Mongolian National Chamber of Commerce and Industry (MNCCI). In the 14 years since Mongolia became a market economy, this former home of the 13th-century empire of Genghis Khan has struggled to find a way out of the strict centrally planned system under Communism.

    Since the 1990s, Mongolia has introduced major economic reforms; it also joined the World Trade Organization in 1997.

    Yet, challenges to participating in trade remained. Mongolia's exports are mainly primary commodities. But a series of natural disasters in the mid-1990s and a downturn in world prices of copper and cashmere stalled economic growth. The agricultural sector declined. Mongolia still has an infant business sector. Manufacturing and trade account for only a sixth of the labour force.

    While continuing many reform policies, the current government has focused on social and public-order priorities. Its leaders, however, are aware of the need to fast-track export development and formulate export-oriented policy with the best knowledge available.

    "In the early years of transition, in spite of theoretical textbooks about the market economy, Mongolians seriously lacked the knowledge and business experience to adapt succesfully to the new economic system," recalls Mr Demberel, who is also Economic Adviser to the Prime Minister. The National Chamber of Commerce and Industry, which he heads, has been acting independently for 12 years and is the main business representative body. "Thanks to ITC coaching and publications such as business guides, periodicals, handbooks and technical materials, we at the MNCCI learned much about the market economy."

    He describes ITC's materials as "a fantastically rich resource of business knowledge" which MNCCI has been using "to provide the newly established private sector with all related practical information […] substantially influencing the faster maturation of the private sector of Mongolia." Thanks to its increased capacity, the MNCCI's efforts include:

    • Adapting materials in ITC publications to produce 50 business education texts and developing a business training curriculum.
    • Conducting the first-ever survey of the horsemeat market, based on the methodology published by ITC.
    • Developing a National Plan of Export Promotion using an ITC methodological guide.
    • Providing export promotion guidance.

    Developing public-private partnership

    Most notably, says Mr Demberel, using ITC's approach, there have been improvements in Mongolian business-policy advocacy: "Namely, an effective public-private sector partnership mechanism." The government set up a Government-Private Sector Consultative Committee, giving equal representation to the public and private sectors. "Now this committee is operating actively, thus ensuring stakeholders' involvement in the policy-making process," he reports.

    Drawing from the example of ITC's Executive Forum meetings in Montreux, Switzerland, in collaboration with the government, MNCCI organized its first Business Grand Forum on the theme of Business for Development in April 2004. Over 2,000 business executives attended from all over the vast country (1.5 million square kilometres) situated between China and the Russian Federation. The Prime Minister and Minister for Finance and Economy as well as administration heads from customs, state inspection, standardization and taxation agencies attended the forum.

    As a result, the cabinet approved a government resolution aimed at creating a more favourable business environment in Mongolia. The resolution incorporated business views and addressed business concerns. Its main features covered: ensuring the expansion of the public-private partnership mechanism; establishing a Mongolian Trade Facilitation Committee to promote trade; and setting up a Customs and Tariffs Committee to provide "one-stop" services to the business community, cut down bureaucracy and control anti-business legislation.

    Building business skills

    Mr Demberel also credits ITC publications with spurring the creation of Mongolia's first business-education training centre in commercial and foreign trade operations. Called the Foreign Trade and Business Training Centre, its practical curriculum is based on ITC materials. MNCCI specialists help train students at the centre and give them access to MNCCI's computer facilities and library.

    MNCCI has had a long relationship with ITC, with activities funded by various donors. Seeing the anniversary articles in ITC's magazine reminded them of Jacqueline Rigoulet of ITC, who "taught us our first lessons in trade promotion and the design of effective trade promotion programmes, and contributed much to strengthen our institutional capacities and human resource development".

    Today, ITC's Trade Maps are cited as a service that has provided "useful insights" to help MNCCI create and develop new trade support services to the export community. It has also benefited from the trade trends and insights provided by ITC's quarterly magazine, the Trade Forum, and by participating in its World Tr@de Net and E-trade Bridge programmes.

    Writer: Peter Hulm 

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