State-owned companies to be restructured
- By Misheel Lkhasuren -
- Mar 12,2021
During its weekly meeting on March 10, Cabinet discussed the restructuring of state and local owned enterprises and organizations.
Minister of Finance B.Javkhlan reported that Cabinet aims to solve the issues of long-running unprofitable, loss-making and costly state-owned companies within the first 100 days of its operation.
The minister said, “As of today, there are 339 state and locally-owned enterprises. Particularly, there are 107 state-owned enterprises and 232 locally-owned enterprises. The financial and other indicators of these companies were analyzed and their structure was divided into four categories. In particular, there will be four categories: companies that can operate normally, companies that are at risk or in need of further restructuring, companies that are attracting attention and their losses are likely to increase, and companies that are in trouble.”
“As of the end of 2019, the total balance sheet of 339 state and local owned companies reached 37 trillion MNT and made a profit of 1.5 trillion MNT. However, 1.1 trillion MNT of the total profit came from Erdenet Mining Corporation and more than 440 billion MNT from Erdenes Tavan Tolgoi. Other companies are operating at a loss of over 230 billion MNT. Therefore, these companies will be restructured into three areas in terms of ownership,” he said.
In the near future, state and local companies will take the following measures.
• The Government Agency for Policy Coordination on State Property shall monitor and record state property of companies.
• The procurement and investment of all state-owned and locally-owned companies will be regulated by the Law on Tender.
• Government Resolution No. 43 will be implemented by all state and local owned companies, and the transition to austerity mode will be carried out.
• To provide effective management and reduce the number of heads.
• To announce strategically important companies to the public, and continue their operations in a 100 percent state-owned manner.
• To liquidate and merge companies that have been operating inefficiently and at a loss for many years.
• Up to 34 shares of state-owned legal entities will be traded on the open market through the Mongolian Stock Exchange, depending on the area of activity and financial efficiency.
The finance minister noted that in 2016, 34 percent of Mongol Post was sold to the public. As a result, their rating has increased by three to five times.
11.8 BILLION MNT TO BE SPENT ON YOUTH EMPLOYMENT TRAINING
Cabinet approved the Training Youth for Employment Project. As part of the project, 1,000 young people aged between 18 and 34, who have been out of work for the last three months, but are willing to change their lives, will be offered a month-long skills training courses with a grant of 1 million MNT.
The project is aimed at supporting young people in having a job and income by promoting healthy and active lifestyles and providing career guidance. Around 11.8 billion MNT, required for this year’s project will be earmarked from the Employment Promotion Fund within the budget of the Minister of Labor and Social Welfare.
Moreover, employers and employees who provided those involved in the project with a stable job within a year will be given an incentive equaling one-year social insurance contribution or 21 percent of annual minimum wage. The funds necessary for this plan will be annually earmarked in the state budget from 2022.
Province and district labor and welfare service departments, the Family, Youth and Child Development Agency and its departments will be in charge of the registration for the project.
The director of the General Agency for Labor and Welfare Services will approve the guidelines for registering and interviewing applicants and selection. Participants will be tested for COVID-19 and undergo a medical examination and afterwards will be brought to the training site.
Cabinet ordered general budget governors to consider provisions on youth employment when establishing agreements with companies and organizations selected to carry out budget-funded projects and other activities.
In Mongolia, 31 percent of the population or 46 percent of the working age population are young people aged between 15 and 34. Statistics show that 51 percent or roughly 47,000 of the 92,000 unemployed people in the country are young people of ages 18 to 34.
BILL ON MINERALS EXCHANGE TO BE DEVELOPED
During the meeting, Cabinet instructed Minister of Mining and Heavy Industry G.Yondon and Minister of Finance B.Javkhlan to develop bills on sovereign wealth fund and minerals exchange.
These aim to collect benefits from underground wealth to the Sovereign Wealth Fund and achieve fair and just distribution to every citizen of present and future generations.
In connection with the necessity to valuate mineral products in line with international market value, increase their benefits and take control on related sales and revenues, Cabinet deemed it is essential to have a legal framework for minerals exchange.
Mining and extractive industries make up 22 percent of Mongolia’s total GDP, 71 percent of foreign direct investment and 94 percent of exports.