B.Enkh-Amgalan: Several economically significant infrastructure projects are underway

The Mongolian Economy magazine spoke with B.Enkh-Amgalan, the Minister for the Road and Transport Development, about major development projects and policies implemented by the Ministry in the last four years.

-How would you evaluate the policies and projects implemented by the Ministry of the Road and Transport Development in the past?

-In the past, the Ministry of Road and Transport Development (MRTD) proposed amendments to the law relevant to the transport sector and various infrastructure projects. To mention a few examples, in total 1,917.5 km paved road and 2,427 meters of the bridge was built with an aim to connect 17 provinces, 95 soums and five ports of entry with the capital city in the last four years. It is a remarkable achievement that the length of the paved road has reached 7,227.5 km which constitutes 48.4 percent of the highway network.

Furthermore, we relaunched the railway projects which did not meet their goals the first time. For instance, it has been a year since the MRTD has started the construction of the 414.6 km railway that links the Tavan Tolgoi coal mine located in Tsogttsetsii Soum of Umnugovi Province with the Zuunbayan Station of Ulaanbaatar Railway JVC. This railway will give us an opportunity to make use of the mineral deposits of strategic importance within a 30 meters radius including Tsagaan Suvarga, Kharmagtai and Manlai mines. The MRTD has been placing the utmost importance to this railway project as it might lead to an increase in the mineral export volume and economic development of those regions. Moreover, I am honored to announce that the construction of a 27 km railway of an oil refinery has been completed.

With regard to the air transport sector, under the discount loan from the Government of Japan, the new Ulaanbaatar international airport with the capacity for three million passengers to travel through was built in Khushig Valley in the Tuv Province. In short, in the transport sector, the MRTD has successfully implemented several economically significant infrastructure projects which produced remarkable results.

-Did the Parliament approve the key amendments to the laws regarding the transport sector? How would you assess the impact of the amendments in the sector?

-Over the past years, the MRTD has been working on a series of amendments to the law in the transport sector. For instance, the amendments proposed by the MRTD to the Highway Law were approved by Parliament. First of all, I would like to mention the impacts of the revised law and its corresponding procedures on road transport. Under the revised law, the guarantee period of road repair by a contractor is set to be three years. Following the adoption of this provision, the quality of services provided by the contractors has improved.

Moreover, the Procedure for Revenue Accumulation and Distribution of the Road Fund has recently been enforced. According to this procedure, 20 percent of the excise tax imposed on imported vehicles, tolls, fines for violations of Traffic Law or Highway Law, transit charges and a certain amount of the tax which is imposed on gasoline and diesel fuel will be deposited into the road fund. As a result, the MRTD will have a financial capacity to perform routine maintenance and repair of highway networks. In addition, to ensure a better regulatory environment, the MRTD has introduced the draft of the Law on Road Transport and Law on Maritime Transport. Besides, in the next few months, the Parliament is expected to approve the revised Civil Aviation Law and Law on Railway Transport proposed by the MRTD.

-Compared to other sectors, the transport sector requires massive investments. Do you think there are sufficient funds in the budget for allocation to the transport sector?

-You are right. The projects implemented in the transport sector indeed require massive investments. In the previous years, we were able to secure the necessary funding mainly through foreign loans and aids and investments from the government and private companies. For instance, the government investment, foreign loans and aid to the transport sector between 2016-2019 amounted to 2.3 trillion MNT. To break it down, the government spending amounted to 459.2 billion MNT, foreign loans and aid amounted to 1.7 trillion MNT and the loan from the Development Bank was 106.2 billion MNT. Due to government budget constraints, the MRTD will strive to attract more investments from the private sector in the future.

-Could you share any information regarding the progress of the ongoing projects including the project to connect all 21 provinces with the capital city?

-In Mongolia, 57.8 percent of goods and 65 percent of people use roads as a means of transportation. In 2020, the Ministry is working on the implementation of 123 projects such as the construction and repair of 1,902.79 km paved road and 1,373.62 meters iron-concrete composite bridge at 27 locations owing to the investments from the government, private companies and foreign institutions. Among these projects, the 520.5 km paved road and 762.9 meters of the iron-concrete composite bridge are expected to be completed this year.
Formerly, the Ministry was focused on reducing the cost as much as possible, but now the Ministry began putting more weight on the quality and duration. In other words, we are aiming to build all roads in accordance with international standards. Thereby, to connect the new Chinggis Khaan International Airport with Ulaanbaatar, a 32.2 km freeway which meets international road standards with three lanes in each direction was opened last year.

Furthermore, to improve access to the highway network and reduce heavy traffic, the construction of the Traffic Police overpass, 250.2 meters long Yarmag Bridge, 321 meters long Tuul River Bridge, 289.4 meters long iron concrete composite Sonsgolon Bridge and the repair of existing bridges were performed in a short time and opened in 2019.

The busiest routes in the АН-3 of Asian Highway Network, the 204.11 km long Ulaanbaatar-Darkhan route and 20.9 km long Ulaanbaatar-Nalaikh route are under repair and extension.

Also, in order to connect western regions with the capital city, the construction of 67 km road in Tosontsengel-Uliastai route and 126.7 km road in Bayankhongor-Altai route are in progress. The above projects officially started in 2019 under the loan agreement signed with investor organizations. It is important to mention that the MRTD is pulling all the stops to complete all ongoing projects by the end of 2020.

-You are one of the people who initiated the policy to liberalize civil air transport. Could you provide us with information on the policy progress?

-Mongolia has signed an aviation agreement with more than 40 countries and Agreement between the European Community and the Government of Mongolia on certain aspects of air services. Under the agreements, Mongolian airlines are permitted to fly to 95 cities and have the possibility of flying to more than 100 cities upon request. Moreover, Mongolia has signed codeshare agreements with 15 countries to allow customers to book flights under one carrier’s code. Currently, MIAT State-Owned Joint Stock Company is providing flights under three foreign airline codes to five destinations and planning to further increase the number of destinations to 52. At the moment, there are four Mongolian airlines and six foreign airlines offering international flights to 17 and to six destinations respectively in Mongolia.

Liberalization means to ensure fair competition. Hence, we need to put the necessary regulation in place to allow airlines to enter the air transport sector freely and prevent the formation of monopolies. When foreign airlines started providing flights from Ulaanbaatar to Seoul, Hong Kong and Busan, the ticket prices dropped by 20-32 percent. On the other hand, it is important to be a little bit cautious of opening the market as it might hurt or even push local airlines out of business. Hence, we need to strengthen the competitiveness of national airlines before fully opening the market to big international players.

-Could you tell us about the big projects in the rail transport that are going to be implemented in 2020? Also, how would you define the policy of the rail transport sector?

-Several large scale construction projects that carry historical significance are under implementation. In the past, the MRTD aimed at carrying out construction projects that could boost the mining sector. The rail infrastructure projects are highly costly and time-consuming. Within the scope of the new oil refinery, the MRTD was able to complete a 27 km long railway construction project by exploiting its internal resources to the fullest extent.
We are making good progress on the construction of the 414.6 km railway on the Tavantolgoi-Zuunbayan route. Moreover, we are planning to finish the railway project in Tavantolgoi-Gashuunsukhait route and start the construction of a railroad on the Zuunbayan-Khangi route. Under these projects, Mongolia will be able to export minerals from the Gobi region and have access to seaports through China. By exporting minerals to other countries, Mongolia will benefit financially.

-The Government of Mongolia has a revenue derived from leasing national flags to cargo ships. Our readers know that your long-term goal is to own a cargo ship flying the Mongolian national flag. What is necessary to turn that goal into a reality?

-The revised Maritime Law of Mongolia was referred to the Government and has been submitted to the Parliament. A Mongolian national has the right to own a vessel and engage in marine activities. On the other hand, there is a need to lay the foundation of the maritime transport sector by providing maritime education and training in Mongolia. In the future, we will eventually need a crew to start providing maritime transport services with a vessel owned by Mongolia. In other words, Mongolia will have an opportunity to export mineral commodities to other countries through seaports of our two neighboring countries and even via Italy, North and South Korea. It will certainly boost foreign trade and accelerate the economic growth of Mongolia. I am delighted to share that the delegates from Mongolia are discussing the use of the Genoa port with Italian authorities.