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CAREC Federation of Carrier and Forwarder Associations

PPD as policy advocacy tool (Mongolian case)

Monday, 20 October 2014 00:00

Building PPD and - vitally important too - listening and negotiating compromises, is one of the best ways for governments to learn about private sector’s problems and adjust their policies to ensure the sector’s growth and development. Dialogue is also a way for firms to foster a good business climate to help their operations.
The participation of private firms and business community, who is play a crucial role in the creation of national wealth in designing and implementing public policy is critical, if the government is to improve transparency, quality and effectiveness of their policy. Similarly, private sector obviously has an interest in being involved in economic policy making.

Unfortunately, such dialogue is not very organized and sometimes barely exists in many countries, particularly developing and emerging countries. During the last 23 years of democracy in Mongolia, interaction between government and private sector is in beginning stage and there has been an ever-increasing demand for intensifying PPD in Mongolia. Working to reach this goal, MNCCI successfully implemented policy advocacy activities and hereby present some of them.

The Public and Private sector Consultative Committee as a mechanism for consultation between firms and government:

For countries like Mongolia that has no traditional democratic mechanisms, PPD can be seen as a partial substitute for democracy. In order to build balanced, effective and long-lasting PPD, MNCCI has initiated it at macro and micro levels, trying to find the appropriate form for each level.

At macro level, Public and Private sector Consultative Committee was established in 2006 with an aim to include private sector voices in the government decision making process. The Minister of Finance, on behalf of Government and the Chairman of MNCCI, on behalf of private sector chair this committee. Other members are equally represented on both sides from ministries and government agencies as well as business and professional committees. The members of the Committee meet quarterly and discussed problems to be solved and pay to attention. The committee is in charge of implementing the National Strategy on Private Sector Development which was distributed in 2011.

In order to promote PPD at the local level, sub-committees were established also at provincial levels, All 21 provinces have such committees functioning within the Governor’s office.

Each district of Ulaanbaatar also has a Business council in order to cooperate with district governor offices. Results of such efforts can be seen from Bayan-gol district, which has become the best district to have such exemplary effort.

Under MNCCI, there are 44 sub-committees which specialize in sector specific PPD. These sub-committees are most active players in voicing their opinions and interests in legislative and other state processes.

“Salt and Sugar” approach as a tool to improve legal and business environment:

As a main representative of the private sector in Mongolia, MNCCI engages in regular PPD to create more opportunities for private enterprises, to reduce state interference in the economy and improve political support for free market.

In order to implement this goal, MNCCI initiated 3 principles of regulation prioritization and succeeded to include them in the government regulations.

1 principle: Trust the market and market self regulation.
2 principle: Create conditions and empower “quasi-regulation” from business organizations such as Chamber of commerce and industry, Employer’s Association and other business professional associations.

For this propose, MNCCI has drafted a comprehensive document in 2010 entitled “Transferring some state functions into the private sector” and submitted to the Government. As a result of this initiative, several ministries and agencies transferred some, but not important, function to the business associations. Now, we are working on the draft law to delegate some state functions to the private sector.

3 principle: Unless the first and second principles are proven not to work or inefficient failures, only then government regulation should be adopted, but after making sure that it will not create burdens and obstacles and will not be “government failure”

The success factors are insistency, initiative, commitment, practice, awareness –raising campaigns from private sector side, and an individual approach to each and every government ministry or agency by using “Salt and Sugar” approach.

“Salt” means being strong critics of corruption and bureaucracy and excessive regulations. For example, MNCCI designed an index called “Red tape perception index” based on surveys among the business community. It ranked ministries and agencies by Red tape and had strong influence and impact on government organization’s service quality, attitude and behavior towards business environment. Also, MNCCI conducted several surveys such as Business confidence index, Business environment index, Snapshots of the Mongolian economy and business as a tool both for policymakers and business leaders.

The “Sugar” refers to MNCCI awards and recognizes government agencies and policymakers for their performance in the field of good governance, trade facilitation and business environment. Such awards are Good governance award, Economic freedom award / experience of US Chamber of Commerce/ etc.

Results and lessons from Chamber’s activities on PPD:

- State policy on Public Private Partnership was adopted by Parliament of Mongolia in 2009

- Concession law was adopted in 2010

- Private sector development strategy was adopted in 2011

- By initiative of MNCCI, Government announced 2010 as the year of Business environment reform and taken following measures: 

  • 113 special licenses were cancelled;
  • 10 licenses were transferred to NGO and private sector;
  • 78 legal holes were corrected.

- Green economy and green business context was reflected in government policy and as a result the following projects, programs ere being implemented:

  • Program “Transfer from Brown economy to green economy”;
  • Export development program;
  • National tourism program;
  • Single Electronic Window national program.

- Sustainable development was included as one of the main function of Prime Minister

- New Ministry, called Ministry for Nature and Green Development was established

- Organic Mongol program was initiated and implemented by the Chamber jointly Government and other organizations

- As a legal reform is an ongoing process, Chamber initiated “ Cleaning up unnecessary laws and regulations”

- Mongolia’s ranking by World Bank”s Doing Business index was improved from 88th in 2012 to 76th in 2013. By Corruption Perception Index of Transparency International, Mongolia’s ranking was also decreased from 120th in 2012 to 94th in 2012. There is a working group included all parties of private and public institutions with an aim to improve Mongolia’s business environment.

- MOU were signed between government and private, business organizations

What were lessons from Chamber’s experience:

  • PPD is a new terminology in Mongolia facing many challenges. Firstly, perception of PPD at the government and private sector level is inadequate.The private sector is more committed and has taken more initiative leading to actions than the Government.
  • Training materials, advocacy brochures, and other materials should be developed and distributed to overcome limited understanding of PPD and its benefits.
  • Creating necessary legal environment is only half the battle. Implementation will not always immediately match expectations , so clear accountability mechanisms must be provided.
  • Don’t wait. Initiate, insist, push, take co-leadership as business advocacy is not only the Chamber’s job, it is stakeholders based job.
  • Establish and maintain a regular and sustainable mechanism for PPD
  • Implement PPD in all sectors of society
  • Clearly define the cooperative framework with the governmental organizations
  • Incorporate PPD as a tool for dealing with complex socio-economic development issues
  • Draw on the best practices of international PPD
  • Train and prepare individuals for a specialization in PPD. This should be done with special attention and support from the State (most importantly in financial terms)
  • Stakeholders are not born, they are created. Therefore focus more on building a stakeholdership equally as building capacity. Involve the business community, especially SMEs, as much as possible. Also involve mass media so that they can be informed in concrete terms and supportive to what your Chamber is doing. Consider government and its action as a kind of imperfect solution model where business voices are never seriously heard. Therefore a “trust and verify” principle is needed to what Government says and does, otherwise your Chamber will become a kind of “good boy” or “good information source” for the government. Never forget that you are building equal partnership, not “assistantship”.
  • Contact directly, without waiting for government intermediation, with international agencies as “country ownership” does not mean “government ownership” but “stakeholders’ ownership”.

  • Source: Mongolian National Chamber of Commerce and Industry (MNCCI)