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Government looks to provide accommodation for every citizen

Interview - March 14, 2014
With the Mongolian construction industry growing at an average rate of 2.5 times year by year, contributing to and keeping pace with the country’s rapidly growing economy, it is one of Mongolia’s important sectors. In an interview with United World, the Minister of Construction & Urban Development, Bayarsaikhan Tsevelmaa, explains how the government is pursuing policies in order to maintain and facilitate high rates of growth by attracting foreign investment, and ultimately helping provide Mongolians with a greater number of homes and improved infrastructure
We want to get a broader context, we looked at the GDP growth in recent years, 17% in 2011, 12% in 2012 and I’m just wondering what do you consider are the key factors behind this growth and how this growth can be sustained?

The main sectors that are contributing to our GDP growth are mining, construction and agriculture. The construction sector has been growing 2.5 times year by year. There is a certain decline in the mining sector due to the mining related product prices. The growth of the economy can’t be inferred as quality growth. So we are changing some policies in order to attract more foreign investment.

In terms of the country’s foreign trade, the import value exceeds the export with a negative trade balance. Thus, we are pursuing a policy to substitute import goods in the construction sector. So the policy regarding the economic growth will be stable and encourage both local and foreign investors. In 2014, we expect the pace of the economic growth to be close to that of 2013.

As for this year, we heavily focused on the road network for the 6 provinces and infrastructure engineering structures. Only in Ulaanbaatar, approximately 200 billion MNT of investment was made for the Ger district re-planning and construction projects. Pursuant to the real estate agency report, a total of 18,000 new apartments in Ulaanbaatar and 3,000 new apartments in provinces have been registered as of October 25th 2013. According to our research, this number will be doubled by next year. Starting from June this year, we started providing 8% mortgage loans, which actually started in 2003 and a total of 28,000 citizens took 850 billion MNT worth of loans up until June last year. Since June this year, a total of 17,000 citizens converted their high rate mortgage loan to 8% and approximately 9,400 citizens have issued requests for a new mortgage.

Next year, we are working to implement infrastructure engineering and apartment projects in more provincial areas.

For those people who have access to loans, are you collaborating with any financial institutions to facilitate the loans?

Currently, the commercial banks are issuing the loan. Previously, there was a special entity in charge of loan issuance. Also, The Mongolian Ipotek Corporation was established to issue securities and trade loan packages on the secondary market. We are working to collaborate with Social Insurance funds, foreign investors and other sources.

How do you feel financial service companies coming from abroad can best participate in the mortgage market here, in order to create loans for a variety of people?

At this moment, Bank of Mongolia is acting as a buyer on the secondary market. In the future, we are taking a policy to encourage foreign investors to act on the secondary market.
I wonder, regarding the construction within Ulaanbaatar, what is the balance of priorities in terms of real estate, housing and infrastructure including roads and public transport?

There is the general planning of Ulaanbaatar until 2020. Within this planning, as there are lots of Ger districts, we are pursuing a policy to move the Ger districts into construction apartments and expand the road transportation system and build highways to avoid traffic jams and also a feasibility study of a metro is in process within this task.

Also, Ulaanbaatar city is highly concentrated in an “A” region. Thus we are planning to create 8 regions and finance the first 6 regions through the financing of the Asian Development Bank. In order words, people can get all types of public services from the regions without coming into the city center.

…In a ring around the city?

Khaniin Material, Selbe and Amgalan areas. There are also satellite cities of Ulaanbaatar such as Bagakhangai, Baganuur and Nalaikh, in which general planning is being done.

As long as the population is concentrated here in Ulaanbaatar, they are producing more pollution because of the coal heating. We interviewed Dr. Oyun, from the Ministry of Green Environment a few weeks ago. She noted that the air quality was reduced by 12 percent last year. It still needs a lot of work but it has been reduced. I’m just wondering what would be the exact plan of the construction and development that your Ministry is conducting to improve air quality especially within Ger districts?

Ulaanbaatar city was planned for 500 to 600 thousand dwellers. But in the last years, due to migration from urban areas, the city currently has more than 1 million dwellers. As a result, we emphasize the importance of developing not only Ulaanbaatar city, but also other cities around the capital city including Darkhan, Baganuur, Choir and Zuun Mod.

I wanted to ask, what are the key objectives of this master plan up until 2020? What are the economic opportunities present in this construction development and quality of life?

Almost 60% of the total dwellers in Ulaanbaatar city live in Ger districts. Those living in Ger districts lack infrastructure and reliable electricity supply. Thus, we are constructing an infrastructure project called “Ikh Toiruu” to surround the city with a 110 KW electricity line. In addition to it, a new construction is being built and we are working to connect Ger districts with water sewage and encourage them to have small house-apartments in their own areas. It is also necessary to build hospital, schools and kindergartens in accordance with the master plan. Also, at the moment, public and private services are lacking. Public transportation development and industrial zones are also stated in our general plan. For example, leather-processing plants will be moved out of the city.

As you are the most authorized person in plans to develop, grow and connect UB, can you please launch a statement regarding Mongolian plans to reach its potential to the audience of USA Today?

Everybody has a right to own an apartment. Thus it shall be a government policy to provide an apartment to its citizens. In this framework, we introduced mortgage loan and further working on renting-apartment project. In order to do this, it is necessary to lessen the construction sector seasonality by introducing new building technologies and transfer the construction standards to euro-standard. We are also pursuing a policy to encourage construction material manufacturing, cement and re-bar factory are first, and substitute imports. Behind this task, the government is trying to provide accommodation for every citizen and high employment rate is the main focus.