Office of the President of Mongolia AT THE INITIATIVE OF THE PRESIDENT OF MONGOLIA

1. Office of the President of MongoliaAT THE INITIATIVE OF THE PRESIDENT OF MONGOLIA “FROM A BIG GOVERNMENT TO A SMART GOVERNMENT” NATIONAL CONSULTATIVE MEETING Presentation by President of Mongolia Tsakhiagiin ELBEGDORJ Government House November 16th, 2013

2. 2 Introduction • Usually such meetings start in the morning. Today, we are starting in the afternoon. I wish it is always morning in our Government. Therefore, this “From a Big Government to a Smart Government” National Consultative Meeting is being convened. • This meeting has brought together a broad spectrum of people – decision makers, businessmen, local governments, media, academia and NGOs. • We have established a working group with the representation of political parties, researchers, NGOs and the general public Purpose: • The topic of our meeting today is our key challenge, our common trouble. This is not a concern of only the Government, or of the Cabinet, or of any one particular party or an individual. This is a Mongolia’s ordeal. • We are all seen as one whole – Mongolia, the Mongolian government. • Why is everyone concerned for Mongolia? Why do the people, including young and old, male and female, talk about the government? Because that very person is a constituting cell, a building block of Mongolia, of the government. Everyone holds a stake in the country, in the government and everyone sees his or her own role and participation. That is why we have convened this national meeting with as broader as possible representation. One: Mongolia– compared to other countries. Let us compare Mongolia to other countries. How competitive is Mongolia today?

3. 3 Measurement of competitiveness Economic Policy and Competitiveness Research Center in cooperation with Global Competitiveness Centre produces Mongolia’s Competitiveness Report annually.

4. Methodology of Analysis of Competitiveness 4 Ukraine Russia Bulgaria Slovenia Кazakhstan Mongolia Slovak Republic Korea Mongolia compared to 14 countries Qatar Mexico Thailand Malaysia Singapore Peru Chile 2010 • Statistics • Survey • 4 main factors • 329criteria 2011 2012

5. 5 Qatar Singapore Malaysia Mexico Thailand Korea Chile Peru Kazakhstan Russia Slovenia Bulgaria Mongolia Ukraine Slovak Republic Singapore Qatar Chile Malaysia Kazakhstan Korea Thailand Peru Mexico Bulgaria Russia Slovak Republic Mongolia Slovenia Ukraine Average: 56 Average: 56 0-100, points

6. 6 Singapore Malaysia Qatar Thailand Chile Korea Kazakhstan Slovak Republic Peru Mexico Mongolia Russia Ukraine Slovenia Singapore Korea Malaysia Slovenia Russia Qatar Slovak Republic Chile Kazakhstan Mexico Bulgaria Thailand Ukraine Peru Mongolia Average: 55 Average: 56 0-100, points

7. 7 Qatar Singapore Korea Slovenia Slovak Republic Russia Chile Mexico Malaysia Bulgaria Kazakhstan Peru Thailand Ukraine Mongolia Korea Malaysia Thailand Singapore Mexico Qatar Slovenia Peru Chile Kazakhstan Slovak Republic Ukraine Bulgaria Russia Mongolia 97,350 Average: 5 Average: $24,204 At purchasing power parity, USD Diversification of the economy, 0-10 points

8. 8 Russia Korea Mexico Singapore Qatar Thailand Malaysia Kazakhstan Chile Peru Slovak Republic Ukraine Bulgaria Slovenia Mongolia Qatar Singapore Korea Slovenia Russia Slovak Republic Kazakhstan Malaysia Chile Mexico Thailand Bulgaria Peru Mongolia Ukraine Average: $126billion Average: $8,229 USD USD billion

9. 9 Singapore Chile Qatar Korea Slovenia Slovak Republic Malaysia Mexico Russia Peru Thailand Kazakhstan Bulgaria Ukraine Mongolia Russia Korea Singapore Thailand Mexico Malaysia Chile Peru Ukraine Kazakhstan Qatar Bulgaria Slovak Republic Mongolia Slovenia 499 Average: $115 billion Average: 66 Institutional Investor magazine, 0-100points USD, billion

10. 10 Singapore Russia Mexico Chile Thailand Korea Malaysia Kazakhstan Ukraine Slovak Republic Bulgaria Peru Qatar Slovenia Mongolia Korea Russia Mexico Malaysia Singapore Chile Thailand Qatar Peru Kazakhstan Ukraine Slovenia Bulgaria Slovak Republic Mongolia Average: $137 billion Average: $286 billion USD, billion USD, billion

11. 11 Singapore Qatar Malaysia Chile Kazakhstan Peru Korea Mexico Thailand Bulgaria Slovak Republic Ukraine Russia Slovenia Mongolia Malaysia Chile Qatar Singapore Slovak Republic Korea Kazakhstan Thailand Bulgaria Mexico Ukraine Peru Slovenia Russia Mongolia Average: 5 Average: 4 Threat to business activities, 0-10 points Effectiveness of implementation, 0-10 points

12. 12 Singapore Malaysia Kazakhstan Thailand Mexico Slovenia Russia Qatar Ukraine Slovak Republic Chile Korea Bulgaria Peru Mongolia Singapore Malaysia Qatar Chile Kazakhstan Korea Mexico Thailand Peru Slovak Republic Ukraine Bulgaria Russia Slovenia Mongolia Average: 5 Average: 6 Readily available, 0-10 points Hindered/supported by the legal environment, 0-10 points

13. 13 Singapore Qatar Malaysia Slovak Republic Korea Thailand Slovenia Kazakhstan Mexico Chile Peru Bulgaria Russia Ukraine Mongolia Russia Korea Malaysia Singapore Thailand Mexico Qatar Chile Peru Ukraine Kazakhstan Bulgaria Slovenia Slovak Republic Mongolia 56,848 Average: 15,117 Average: 6 Number of passengers carried by main companies, thousands Is/is not adequate and efficient, 0-10 point

14. 14 Qatar Singapore Slovenia Korea Slovak Republic Malaysia Chile Mexico Kazakhstan Russia Bulgaria Ukraine Thailand Peru Mongolia Qatar Malaysia Ukraine Slovak Republic Thailand Kazakhstan Slovenia Bulgaria Russia Singapore Peru Korea Chile Mexico Mongolia Average: $655 Average: 19 USD per capita Ratio of students to teaching staff

15. 15 Business Environment Analysis:World Bank (2013)

16. 16 Two. What potentials do we have? 1990-2050

17. 17 Population Growth

18. 18 Life Expectancy

19. 19 GDP Growth 2050: $734 2040: $243 2030: $82 2050: $380 2040: $150 2020: $50 2030: $60 2020: $40 2050: $69 2040: $43 2030: $27 2020: $22 2013: $11 1990: $3 Average aggregate growth 5% 10% 12%

20. 20 GDP per Capita Growth 2050: $104,885 2040: $44,074 2030: $18,812 2050: $54,286 2020: $14,708 2040: $27,201 2030: $13,811 2020: $11,687 2050: $9,795 2040: $7,728 2020: $6,350 2030: $6,139 2013: $3,849 $1,293 Aggregate average growth 5% 10% 12%

21. 21 Investment Ranking AAA AA A BB 2013 2020 2030 2040 2050

22. 22 Mongolian Development Goals

23. 23 Three: GOALS. National Consultative Meeting Purpose: 1. How to develop our economy? 2. How to mend our government? If we fail to clarify our mission or goals, people’s confidence in government will not increase. Why do people’s trust and confidence in government erode? Depends on government performance. Our government… This is our performance • For twenty four years we were on horseback. The time to dismount and speak out has come. If our horse is fatigued, let’s change the horse. Imagine we are on-board of an airplane that needs to be fixed. Let’s talk today about what needs to be fixed. • Sound of alarm to Stop- it’s been long since it started ringing. Because it is an open society, in Mongolia we hear so much noise and sounds here and there, yet amidst that noise we must distinguish the sound of an alarm. We must hear it. Once we hear it, we must stop and come to senses and realize what we are doing. Does not deliver its promises, disordered, decisions are unstable Lacks unified policy, Lacks responsibility, Lacks control Lacks shared commitment, Lacks research, Lacks systemization

24. 24 Cost of populism Some Statistics • Over the past one year we inflicted to ourselves a loss of 1.5 billion $ or 2.5 trillion MNT. • In 2013, the state budget is about to record a deficit of 1-1.5 trillion MNT. • We owe 1 trillion MNT to our Human Development Fund. • The government debt stands at 8.4 trillion MNT or 49.5% of GDP. (Australia 24%, Chile 10%) • If we want to bring 2013 FDI to the level of 2011, we must double the FDI (Oyutolgoi investment excluded). • Mongolia’s GDP is17trillionMNT or 10billion $.

25. 25 Some Statistics • 2014 fiscal expenditure is estimated to be 7.3 trillion MNT, which is 41.1%. • If Chinggis Bond(1.5 billion $) and the Development Bank’s 600 million$(combined 3.5 trillion MNT) to be added, fiscal expenditure would reach 10.8trillion MNT. This would mean that the fiscal expenditure to GDP ratio might jump as high as 63.5% • When investment shrinks, production and services contract. As production and services contract, income dries up. Since there is no earning, no income, people’s lives aggravate. Government is not capable to compensate for it. • Ordinary people are hurt the most. Everyone falls into a debt trap. Jobs, businesses are not guaranteed. • I mentioned earlier that in a period of slightly more than a year, we lost 2.5 trillion MNT. This is a cost borne by the people of Mongolia. From a baby in the cradle to an elderly on pension – every single Mongolian paid a cost of 863 thousand MNT. This is a number reported by the Mongolbank. • I briefly define it as the “cost of populism.” “The crying out loud is done by the populistswhile the cost is borne by the people”

26. 26 QUESTIONS • Is the Mongolian government a big government? • Yes • No • Don’t know • Is the Mongolian government a smart government? • Yes • No • Don’t know • Government expenditure in GDP: • Under 30 = normal • Over 30 = abnormal • Over 40 = wasteful, big...

27. 27 Reasons the government grows big • Knowledge, technological progress do not enter the Government (trying to resolve the pressing issues by mere structural and mechanical expansion of the staff) • It is profitable, beneficial to work for the government (by issuing permits and licenses, interfering into business and economic lives, by arbitrary setting norms.) • There are many honest public officers. And among them there are many politicians and political officers. • As of today, there are 1164 licenses and special permits at the national level.(When inspectors come to count the licenses, they disguise them under different names and submit only few. Asking for sheep, inspectors are pointed at goats.) • There are many ways to benefit from the government. Just to take an example, our ministers employ advisors. Some do not have one, while some have 3-4 advisors. There are 24 advisors working for the ministers. Some appoint their close friends or relatives as advisors. And those advisors are turning the government into a real mess. The advisors take charge of everything and are omnipresent – they run the public, business and financial affairs. Some ministry officers fear of them as of the most dangerous persons. And when an issue comes up and the minister will have to be held accountable, the advisor is fired. Such lawlessness is taking wider rooms in the government bodies. • A Nobel prize winner once warned that running a government can never be identified with running a company. • Sometimes we hear that well before a director of a state owned company is even appointed, the company is forced to purchase goods from companies that either belong to officials or where the ultimate beneficiaries are high ranking officials. When appointing the executive management of a state owned enterprise, the skills and qualifications are ignored. And very often, the appointment decisions are made based on the appointee’s willingness to feed the minister’s private interests and businesses. Everybody knows about this. In that way, the government is ravaged. • In a country with assailant into wealth a government, the people are impoverished. We may not let it happen when the government collects the cream, and the people fight on the left-overs. And this is the secret of why people remain poor while the economy is growing. The government is dashing into wealth snatching it away from people. • Lack of unity and cohesion in the government work.(The government turns into a fire extinguisher, and officials live like feudal lords.) • Being a minister, an official in the government is not an insignia of a privilege. Minister of defense is in charge of providing for defense. Energy minister is in charge of energy policy. It is not an entitlement to power. Drawing an analogue with an orchestra, ministers and officials are simply musicians playing different instruments. We cannot ask a flute player to play a violin. So if you are violinist, play your violin; if you are a flute player, play the flute. “In a country with assailant into wealth a government, the people are impoverished. We may not let it happen when the government collects the cream, and the people fight on the left-overs. And this is the secret of why people remain poor while the economy is growing.”

28. 28 Do you interact with the government? • No60 % • Sometimes 30 % • Always8 % What do the businessman want from the government? • Not to interfere 42 % • Stability 34 % • Support 21 %

29. 29 What do the businesses want? • Legal environment (stable, equal, transparent) • Taxation environment (competitive, optimal, predictable, plannable) • Government (not interfere into business, helps at the times of need, does not have any conflict of interests- does not compete with the businesses) • Businessmen are the oppressed class in the Mongolian society. There is a whole system to oppress the business sector . Pressure of inspectors, then pressure of officials to purchase their companies’ goods and services. Then the pressure of law enforcers. And when they talk to businesses, they speak in the name of the government, of the officials. We must stop this. “Businessmen are the oppressed class in the Mongolian society today”

30. 30 The ills in the government • “The government is everywhere, the government decides everything.” • “Accountability is not a big deal, this is something we can fool around with.” • “The one who becomes an official acts as he/she pleases.” • “Research, theory do not matter if you have experience.” • “An election program must only be liked by the voters.” • “If the government does not own assets, some others will benefit. ” • “Decision makers care only for today free of problems, tomorrow does not matter” • It is unacceptable of politicians’ to think of the voters only during the election race, and after the election, care only of themselves. • The government which tries to do everything for you, in fact, deprives you of everything. “It is unacceptable of politicians’ think of the voters only during the election race, and after the election, care only for themselves. The government which tries to do everything for you, in fact, deprives you of everything.”

31. 31 Four: About Smart Government Which path should Mongolia go? • Rule of Law • Smart government • Open, inclusive, safe society What does an open and democratic government do? • Provides for security • Serves the citizens • Upholds and enforces the law

32. 32 Exigency to move to a smart government • This is consistent with our goal to build a humane, democratic society. • Circumstances, environment, attitudes are changing. • The public demands the government to be smart. • In the new century, elements, features of the past century, even of the past year are outmoded. • Some 8 years ago, we launched an “e-Mongolia”. Today we are just being forced to talk about smart Mongolia, smart government. • This attitude is becoming a predominant, common trend. The UN has started producing the Smart Government Index. • A new generation has arrived. Those small children of the 90s are adults who make up new Mongolian families. Mongolians have a tradition to assemble a new ger, build a new home for their children who form their own families. Following this tradition, we must renew our government for our new generation.

33. 33 How to distinguish a smart government? • Offers services regardless of spatial and time constraints, • Laws and regulations are precise, operations uphold standards, an integrated database is a must, • Supports its citizens to develop skills, be ethical, creative and proactive, • Provides the most optimal solutions to emerging issues, emerging demand, • Must be capable of doing its work in the most efficient manner. We can identify a smart government by a picture. Today, public officials sit in offices with big doors and behind the walls. In a smart government, officers see each other, they are like dispatchers. A smart government needs only dispatchers who can see and check the managers. I heard that Ulaanbaatar municipality is having its job scheme developed by Mobicom. The capital city is developing its integrated database. Behind “integrated” we see efficiency. A lot of earlier duplicated functions will be performed through one single integrated system, integrated network. Many countries and cities are moving to smart systems. There is a system “Cloud”, “Uul” in Mongolian. So our city run by Bat-Uul will move to a city of Pan-Uul, Pan-Cloud. “Pan” translated into Mongolian means united and integrated. You all know how much progress and efficiency was brought by inventing “conveyers” in early 20th century. Production and services expanded tremendously.

34. 34 Objectives of a smart government • The smartest governance. • The safest society. • The most effective services. There are many recipes for government’s success In my opinion, smart government’s success recipe is to serve a human desire to live a decent life. • Smart government is a government of paper work (rules, research, analysis) • Smart government is a government of high technology (network, dashboard, experts) • Smart government is a government with skilled people This is not new to us. Mongolian government was the smartest, was the most capable government. Mongols established horse postal stations, today’s information network. We are talking about bringing back all those best practices which we once had in place. • Smart government is not about you becoming smarter beyond your ability. Use just the technological progress. Do your job efficiently. “A smart government is a unity of skilled people, high technology and search, and of laws and rules ”

35. 35 The phases of the decision making process in a smart government • Primary phase - monitoring: (Information, statistics, ideas) • Second phase - analysis: (Reports, research, planning) • Third phase – synthesis: (Solution alternatives, projections, decisions) • Why am I saying “Smart”! A smart person is ethical. A smart government is responsible. • Being smart, ethical and responsible is respected by people. “Smart person is honest. Smart government is earnest.”

36. 36 Fundamental principles of the policies and actions of a smart government • Rule of Law, openness, citizen participation • Cooperation of public organizations, citizens, local government • Policy to support inclusive and stable economic growth • Inclusive economic growth =Every household, every citizen benefits from it • Database, research, service. • A smart government rests on the juncture of three times. It carries the best from the past, meets the needs of the present and is visionary about the future. “A smart government cannot be devised by hand-drawn sketches. It is built of lessons learnt, technological progress, and smart citizens.”

37. 37 The structure of a smart government • Unit for enforcement and implementation of laws and regulations • Research and development unit • Service provision unit • Operational support unit (contracts, leasing) • What services and products can the government purchase by contracts and leasing? • Furniture, office buildings, cars, computers, cleaning, food • An office building, car can be rented. • Black tower: Sell the black tower upon one condition that the government would rent some spaces there. All the government agencies could rent a space there. • Printing house: In the place of the ruins of the printing house, build a new building and let all the ministries rent space there (except Ministry of Defense and Ministry of Foreign Affairs).Once the government starts renting , they will learn of the problems and miseries of others who rent. Once the government starts living the same life the economy will come revive. Once the government starts renting more, the governmentwould either increase its budget or use less space. • Advantages of contracts and leasing (salary, insurance, expense are all borne by the lesser. The government will not waste taxpayers’ money.) “Who will oppose moving to the new structure? Only the beneficiaries from the old structure will.. We will transform. Mongolia will have a smart government”

38. 38 Five: Time to decide has comeENOUGH IS ENOUGH!(Enough of conferences, meetings, forums, talks, papers, research, frustration...) What do we need now? Action Decision Implementation

39. 39 LAW Core ideas About licenses and permits • Stop creating new licenses, • Licenses should be initiated by law, • Do a permit census and registration of licenses, announce to public • Sort, invalidate, transfer licenses, • Approve laws and the list of licenses to be approved by the Parliament (on national and public security) • In 2004, I tore apart licenses. If a license earns a rent, earns a profit to an official, more & more of them will be created. Therefore, let us fight not against the weed itself, but with the soil it grows on. Let us remove the soil, let us cover the soil with cement, with concrete. • Let us move to the private sector those officials and offices which issue licenses. Let them set up an entity which issues licenses. They may be given some privileges during the first three years of operation only. • The government has already started the process, yet on site, in real life, it is not implemented. When law requires 2 things, officials require 20 things. • A law is our rule and because officials are arbitrary setting norms beyond laws, we do not make any progress on this front. There should be a procedure telling an official, an officer how he or she should work without surpassing the law.

40. 40 LAW • Core ideas About restricting government’s business operations • Prohibit establishing new state owned entities. • Establish state owned enterprises by law. • Separate the Board of Directors of the state owned enterprises from public service, adopt the best corporate governance models. • Explore and use other means of investment and financing, call IPOs. • Discuss the performance reports of the state owned entities every year at the Cabinet and Parliamentary sessions. • Reorganize the structure of the State Property Committee to conform with international benchmarks and standards. • There are 101 state owned companies in Mongolia and they employ 47653 people. • A smart government is not a government which runs businesses. “ErdenesTavanTolgoi” should be a company of paper work, not a business to transport coal. “A smart government leads, serves. It rents.” “If a government wants to get rid of its ills, first get rid of your business affairs.”

41. 41 • Core ideas LAW About glass account To be enforced by all government organizations, state owned entities and companies, All fiscal expenditure decisions above 1 million MNT shall become open, Within 72 hours, your expenditure decision will have to be posted on the website or your information board, Prescribe in the law, the official’s accountability provision for the failure to enforce his or her duty by law. “Many are annoyed with the government and politics. But they are interested in how taxpayers’ money is spent.”

42. 42 LAW • Core ideas About government investment • Stop the government investing in projects which the private sector can implement, and let us stop owning an equity by debt. • Approve the list of investments that the government must finance (i.e. electricity and heat transmission lines) • Give other investments at the discretion of the local governments and citizens, to be decided and disbursed through the Local Development Funds. • If law or contract do not provide otherwise, let the investor pay for the current expenditures of the built facility. • Only in matters of special need, the government own shares, not equities. “Oyutolgoi’s 34% has proven to the fullest that the government does not need to own equity”

43. LAW 43 • Core ideas About government procurement (tender bids) • Spend government budget for the purchase of only domestically produced goods and services. • From the start till the end, this process has to be open and transparent to the public. • Let public, local communities openly discuss and decide government's purchase. • Set profitability and other criteria for the government and announce them. • We must be aware of the wholesale principle. If a school needs to be rehabilitated in a soum, needed materials will have to be purchased from outside. If we are to fix all schools of one entire province, establish a plant locally. • It has become so easy to build a facility, and apartment building for instance, construction companies say. Private businesses and shops just rush to them offering everything a constructor company might need – some want to supply cement, some – windows and doors, some can do the insulation, electricity, some want to provide furniture. • If the government really starts operating this way, it will no longer be called bad names – corrupt, shady, gluttonous etc. “People are asking for their rights they are deprived of. People are asking for their rights to sell their products to government, and the right to do what they can do.”

44. LAW 44 • Core ideas About development goals, and its implementation and regulation This goal must be: 1. Measurable2. Achievable3. Understandable • Let all government organizations and officials fill in statements before they make a decision • Whether the decision is consistent with laws and regulations, • Whether the decision is consistent with Mongolian development goals, • Whether the decision is economically, financially and socially beneficial. • Have a provision that the law must contain provisions about the ways and means the election candidates, both parties and individuals, envisage in their platforms to ensure the implementation of the Mongolian Development Goals (auditing and election bodies to control compliance), • Let the Parliament and Cabinet discuss at least once a year the implementation of the Mongolian Development Goals, • Amend Mongolian Development Goals once every 5 years. Statement is a paper left after every decision made. The statement must be open to public. These statements will be a basis of comparison and assessment. This is government’s memory. Bad or good, it is still a teacher. The decisions and statements should be a guide for the next generations of public servants. This model is already now being put in place. Judges at primary instance have already started filling out such statements before they start a case. Lately, the Supreme Court has become a source of disappointing, ears-burning news. Supreme Court is growing fond of invalidating cases involving big sums of money, or people commanding huge stocks of money. Although the Supreme Court is an independent entity, its decisions are sources of guidance for people of Mongolia. Court punishes and at times excuse corrupted officials. Although the situation is changing we have to make a groundbreaking change in the fight against corruption. There is a saying “like father, like son”. Therefore, we need to work with the “root”, with the source, with the origin. Let us make our government smart, immune to corruption and red-tape.

45. 45 • Core ideas LAW About Mongolian Development Institute (MDI) Provide by law for the independence of the MDI, set the criteria for its researchers and scholars Establish MDI on the basis of the Center of Strategic Studies and the National Development Institute Mission of the MDI: To do research, make assessments, Provide policy counseling to the policy makers on Mongolia’s long term development, The main fault of our decision makers is making arbitrary decisions, led by emotions, mood, whatever spontaneously comes to their mind first. “Research is one thing the government needs the most. Decisions are unstable, ineffective and lead to wrong and bad consequences because the government has no research”

46. Main idea LAW 46 About public service A smart government needs smart public servants. • Appoint the public servants on merit-based principle. • Restrict new appointments in the public service. • Let public servants leave the office if they do not meet the criteria. • The government is not a nursery of bureaucracy and sanatorium for bureaucrats. • Pays and remunerations shall be based on performance and citizens’ satisfaction. • Only the best, the honest, the skilled should work for the government. • All in all, there are 161612 public servants, and there are some 47653 people working for the state-owned entities. “A smart government needs smart public servants.”

47. LAW 47 Main idea About the decisions of government organizations and officials, registration and control thereof • Regulate, limit, and legalize the decision making authority • Register and make the decisions open to public • Clarify the accountability system and set a deadline to make the decision official • In a smart government there is no room for high-handedness. A smart government is open, inclusive and regulated. “Only an open, inclusive and regulated government can be a responsible government.”

48. 48 Main idea LAW About the structure of the government and state administrative organizations Prescribe by law the structure of the government to be capable and lean consistent with the principles of a smart government, Eliminate the duplicated positions in the government organizations Pen it down in the law that the system will be stable, that it will be maintained for at least 10 years Law can be amended by the two thirds of Parliament members In 1911, we had 5 ministries. In 1998- 9 ministries. Now in 2013, we have 16 ministries. Some adjustments in the government must be automatic, have time limitsand boundaries. In many aspects, the government can be identified with an airplane. An airplane must not carry extra weight. The duties of the crew members are clear, set, ordered; landing and taking off have strictly set timelines. It provides for an utmost care for the security; adheres to rules and orders, strictly upholds laws and regulations, 1 flight attendant per 30 passengers, etc. An airplane has a dashboard that works well. It is either replaced or repaired upon completion of light time limit.

49. Six: Immediate actions Ask yourselves: 49 One. Do we need all these? • Ministries, agencies, departments, units…? • Directors, officers, advisors, experts…? • Houses, offices, cars, furniture…? Two. Must we? • Does the government need to engage in all of these? Three. Why? • Why can’t all this be delegated to others- to non-governmental organizations, professional and trade associations, companies, local governments, citizens? • All in the government must ask these questions from themselves. Some would say that they need to be here, that it is provided by law. We will change, renew, invalidate the law. • Let us do the way we do when doing away with licenses and permits. • Most importantly, the government must start the work with itself. The reluctance of the government to cut expenditures of and reduce itself has long besieged the government. An official cuts everything but not his/her own expenditures. This is a behavour that is redundant. In the Mongolian government, an average official incurs 3 million MNT cost a month. Cars, fuel, office, electricity, heating, just name it. It even exceeds 3 million MNT. If we get rid of just one official, we will be able to pay the child money to 150 children. • This is not difficult, just look at it as an opportunity, as something we must do, as something doable. Let us look at it as a way to develop our economy as a business. Now all our researchers have a job, have a project to work on. Here we have ICT companies, please bring in your ideas, proposals. “The essence of any reform lies, in fact, not in implementing new ideas, but in getting rid of the old.”

50. Immediate Action What tasks will the Parliament undertake? An integrated comprehensive system of open Parliamentary hearing, auditing and control, and accountability must be established. The accountability system encompassing the suspension of full powers, release and dismissal from official position of officials appointed by Parliament, President and the government needs to be practiced. The Parliament may not ratify a deficit budget. The fiscal stability law must be strictly enforced. Fiscal discipline must be tightened. If you look at the budget as a target, the Parliament must have hit 10 marks. Did you hit at least 7? The right to initiate laws on budget and fiscals must exclusively be given to the government. The government procurement and administrative costs must be frozen for some time. We must have laws regulating government bonds, credits, their disposal, spending, servicing. We now have Chinggis bond, a topic that we like to talk about a lot, Development Bank, and the whole stock of other issues deserving attention. Before you spend money, have the law in place. Chinggis bond will have to be repaid in four years. Development bank not to turn into nest of bad assets. Control on the Central Bank must be tight, gold and currency reserves’ optimal ratios must be kept and increased. The Parliament must establish in its structure a sub-committee to support government reform and economic growth. Issues surrounding international and investment agreements should be raised only at the proposal or initiative of the government. By law, we must prohibit a public and political official to negotiate an investment agreement. “If you look at the budget as a target, the Parliament must have hit 10 marks”