Interview by Charlie Rose, Bloomberg TV
September 30, 2010
CHARLIE ROSE: Sukhbaatar Batbold is here. He is the prime minister of Mongolia. The country is approximately the size of Western Europe but has a population of less than three million. Today it is on its way to becoming a dynamic emerging market economy. It`s one of the last places on earth that has huge untapped mineral reserves, including coal, copper, gold, and uranium. It is currently developing the world`s largest copper- gold mine.
The IMF says the nation will be one of the fastest-growing economies of the next decade. It`s also about to open a stock exchange. The prime minister has been in New York for the United Nations General Assembly and other meetings. I`m very pleased to have him here at this table for the first time. Welcome.
SUKHBAATAR BATBOLD: Thank you.
CHARLIE ROSE: You also are a very successful businessman and have been a foreign minister, and so it`s a pleasure to have you here.
SUKHBAATAR BATBOLD: Thank you, thank you.
CHARLIE ROSE: Tell us about Mongolia. It`s a place of history.
SUKHBAATAR BATBOLD: Yes.
CHARLIE ROSE: It`s between China and Russia.
SUKHBAATAR BATBOLD: Yes.
CHARLIE ROSE: And -- tell us.
SUKHBAATAR BATBOLD: I think this country has got the -- for one hand really big history. We have 800 years of establishment of the Mongolian empire a couple years ago. So we have 800 and beyond that.
CHARLIE ROSE: A couple years ago you marked the 800th year since the establishment of the empire.
SUKHBAATAR BATBOLD: Yes. But we are going to mark also 100th anniversary of the liberation movement for Mongolia next year. And we are also marking this year the industry of democracy and the market economy and transition which we have started in 1990.
So we have different anniversaries, which means we have a rich history. And, I think the country is doing now, and we do have a lot of challenges. But after 20 years of this new system, we are about to define how we should go further and what would be the best thing for us and best model or best way to -- for this country and after the transition for 20 years.
We had quite an interesting but challenging 20 years. And now this is a good time, and especially with given strength and advantages we have like rich mineral resources and strong neighbor -- China as a market and opportunity.
And as emerging market I think this would be sort of advantages Mongolia has got a strong possibility to develop. And now we have the challenge and especially for my government, we have a coalition government. And how do we deal with these advantages and also the certain difficulties or challenges which might come from mineral development, this would be the issue for us.
CHARLIE ROSE: What do you expect Mongolia`s growth rate to be over the next five years?
SUKHBAATAR BATBOLD: For this year we have -- despite the losses in agriculture, we had a very strong winter. We lost almost one-fifth of our total animals and animal husbandry, and we do still have about almost eight percent of GDP growth for this year we are anticipating.
And the growth estimates for next five years we are going to have -- we are expected to have growth about 10 percent per annum.
CHARLIE ROSE: So double digits next year?
SUKHBAATAR BATBOLD: Yes, double digits for the next year.
CHARLIE ROSE: Give us a sense of where the market is for the minerals you have in Mongolia.
SUKHBAATAR BATBOLD: We have a lot of mineral resources and we are already number four exporter of coal to China. Number four. We are with existing copper plant producer. We are quite serious exporter of copper to China.
And another major project, the copper-gold project, we would easily double and triple this export to China. So I think there are huge potentials.
Ad there is a big project, a big coal deposit, and if that comes to production I think we will be probably one of the serious exporters of copper and coal and gold to China. And on top of that we have new commodities to export to China, iron ore, and we do have some prospects to oil and gas and quite serious reserves of uranium.
But the important thing is yes, there are commodities and the market in Southeast Asia, China, Japan, Korea, and other countries. But the thing is as we are a landlocked country, we have a lot of sort of costs and these transit costs are equal almost 10 percent of our GDP. And we basically export raw materials to China and other countries.
And we encourage from my government now to look at them downstream and adding the value and processing so that we put more priority to these for the industrialization and adding the value of which will save the cost of transit goods, which will create the job, which will create more value. So that`s the thing we would like to encourage.
CHARLIE ROSE: So you`re opening a national stock exchange?
SUKHBAATAR BATBOLD: Well, we have a basic sort of infrastructure of local stock exchange. Unfortunately that was not really the one that we wanted to have in terms of operation and management and infrastructure.
So with this wealth of the mineral resources, we -- I think we thought we should have the proper functioning local stock exchange in order to provide an opportunity to the local companies and to the citizens of Mongolia to get the benefit and to have access to those mineral assets.
So far major internationals are listed on international stock exchanges and they do not come to Mongolia. So we would like them to have a listing with local stock exchanges and in international stock exchanges. So to do that we have to invite international management.
CHARLIE ROSE: Have you said that London Stock Exchange is most likely to win the bid?
SUKHBAATAR BATBOLD: This will not be up to the government to say really the final thing, because the decision as I say is up to the independent body of management and the property committee, so that they will decide.
But the London Stock Exchange is a strong candidate because London is more of a mining specialized stock exchange, and equally that their stock exchange is also really important. So I think this will be a decision to be made by the independent part.
CHARLIE ROSE: Mongolia is a big country, small population, lots of mineral resources.
SUKHBAATAR BATBOLD: Exactly.
CHARLIE ROSE: It`s developing market system. It`s got enormous opportunity. It`s got a predicted double digit growth in its GDP. What`s the problem?
SUKHBAATAR BATBOLD: The big problem with what we have is how do we manage this wealth? And for now this is the expectation of what we`re talking here, advantages. The still high rate of unemployment --
CHARLIE ROSE: What`s the level of unemployment?
SUKHBAATAR BATBOLD: About four percent or five percent. But it`s -- it`s just officially reduced to -- the ones who have officially -- there are quite substantial number of populations who are not registered yet. And in terms of poverty level, we are above 35 percent, above 35 percent. So it`s a very high poverty rate. So we need to make and channel this wealth to combat the poverty --
CHARLIE ROSE: To eliminate the possibility of social tension?
SUKHBAATAR BATBOLD: Absolutely. And for that we are working with international financial institutions and others to see which would be the best thing for us to do.
CHARLIE ROSE: What`s the economic model? Is it more like the United States? Is it more like China? Is it some hybrid?
SUKHBAATAR BATBOLD: That`s a very good question. After 20 years of transition, we are trying to define which would be -- where we are and which would be best model for us. And we have seen the Chilean model, because Chile is a mining company. We have seen some of the things with Alaskan fund, and we have seen the Norwegian fund and the modern European model.
And I think what we are looking now is also Canada. What Canada has achieved is very interesting for us, because although there is a big difference, but there are a lot of natural similarities between Mongolia and Canada -- cold countries, large territories, smaller populations relatively, mining is a key, and agriculture, and cold and next to major neighbors like China or America or Russia, and a lot of things --
CHARLIE ROSE: So you`re leaving here to go meet with Prime Minister Harper, yes?
SUKHBAATAR BATBOLD: Yes.
CHARLIE ROSE: And so what is your question for him? What do you think works?
SUKHBAATAR BATBOLD: The question is we`d like to see the success -- I mean, the good things. We don`t want to reinvent the wheel in many things. We`d like to learn from others good experience in mining, infrastructure, housing, and agriculture.
So we would like to learn from their experience, but we would like to do it together and win together from the cooperation between Mongolia and Canada. I would like to propose him in quite a serious form a corporations especially in terms of development.
CHARLIE ROSE: My impression is, just knowing you in a very short time, knowing of your background, a bit about your country, is that you are here in New York and on your way back with lots of questions. You`re saying to people we know what our opportunities are.
SUKHBAATAR BATBOLD: Yes.
CHARLIE ROSE: We`re open-minded about figuring out how do we maximize those opportunities to take care of our people.
SUKHBAATAR BATBOLD: Exactly.
CHARLIE ROSE: And not make mistakes.
SUKHBAATAR BATBOLD: Exactly.
CHARLIE ROSE: So tell me what your experience is so we can go to school on it.
SUKHBAATAR BATBOLD: Absolutely. And for that what we have done for now is we have the -- the Mongolian parliament has passed a new law on the budget stabilization. And we do have in place the law on human development fund.
So we would like the excess revenues from the mining, we would like to put to the stabilization fund, and this we use them under certain conditions. If we do get commodity crisis and other crisis, we keep them and make them to happen.
On the other hand we use part of these cash revenues and royalties through the human development fund, which will enable to benefit all our citizens with health care, education, housing, and to some cash allowances also for social welfare.
So I think that`s the thing what we are going through now and would like to see what others are doing good in that sense and to compare it and to possibly affix it to the better sort of way.
CHARLIE ROSE: Is it easier for tourists to come to Mongolia?
SUKHBAATAR BATBOLD: That`s a good question, because it`s nice to come to Mongolia, because we have nice sort of land and history and rich history and culture and people.
CHARLIE ROSE: Great fishing, people tell me.
SUKHBAATAR BATBOLD: Fishing and hunting and everything, but lacking is infrastructure.
CHARLIE ROSE: So that`s a problem right there. That`s an opportunity and challenge.
SUKHBAATAR BATBOLD: Opportunity and challenge.
CHARLIE ROSE: Build the infrastructure.
SUKHBAATAR BATBOLD: So we are going to build, because of the mining door opens and others, we have major plan to make infrastructure building. We have thousands of kilometers of railway, big housing, and roads connecting the mines and tourist places, and, most importantly, the power.
CHARLIE ROSE: What kind of power you want to get?
SUKHBAATAR BATBOLD: We do have a strong basis for coal, uranium, and gas.
CHARLIE ROSE: Nuclear.
SUKHBAATAR BATBOLD: Nuclear. So those are the ones.
CHARLIE ROSE: Are you building nuclear?
SUKHBAATAR BATBOLD: We are not building.
CHARLIE ROSE: Are you entertaining the idea of nuclear?
SUKHBAATAR BATBOLD: Not at this moment, but we are working quite closely with the different countries, with France, with the United States, with Japan, with Russia, with China, because we have so many reserves of uranium. And we would like to make firsthand to go on the first stage to learn and to make it this basic.
Then the second phase or third phase, we will go to maybe nuclear power. But for now it`s early, we have a lot of resources in terms of energy. Mongolia is, interestingly enough, the richest wind tunnel in the world.
CHARLIE ROSE: So wind power could be a huge --
SUKHBAATAR BATBOLD: Wind power could be a huge opportunity for Mongolia for exports to China, because they`re putting probably the biggest demand China is for this wind power.
CHARLIE ROSE: You can probably learn more about the cutting edge of alternative energy sources like wind and solar as well as a rapid development of infrastructure from China as much as any place in the world, right?
SUKHBAATAR BATBOLD: Yes, absolutely.
CHARLIE ROSE: And are they willing to help you?
SUKHBAATAR BATBOLD: They are very much interested to work and they`re willing to help.
CHARLIE ROSE: They`ll exchange their knowhow for your minerals.
SUKHBAATAR BATBOLD: Absolutely. But we don`t mind.
CHARLIE ROSE: Of course not.
SUKHBAATAR BATBOLD: If it is mutually beneficial we should compensate each other, because they have demand, we have supply in that sense.
CHARLIE ROSE: We can make a deal.
SUKHBAATAR BATBOLD: We can make a deal.
But we would like to encourage others to come, especially our friends, the United States, Japan, Korea, Australia, European Union, to come and invest and to make a certain balance.
CHARLIE ROSE: Do you have any kind of relationship with North Korea?
SUKHBAATAR BATBOLD: Yes, we do have.
CHARLIE ROSE: Do you have influence with them?
SUKHBAATAR BATBOLD: To say "influence" is a little bit sort of are difficult. But what we have is we good relations with them. And we do our embassy in Pyongyang. We do have cultural exchange events. And we do have economic sort of commissions and trade commissions to work together.
And we would like to contribute to this relation within the six party talks or beyond the six party talks. And we have conveyed a number of meetings, bilateral meetings between North Korea and other countries in the region. So we have that kind of special relations, and we try to keep this channel warm.
CHARLIE ROSE: National security concerns -- do you have any? You have a standing army.
SUKHBAATAR BATBOLD: We do have a standing army in a certain limited way. But the thing is we do not have a major political and territorial and other problems, for instance with our neighbors.
CHARLIE ROSE: So you have no territorial conflicts with either China or Russia? Everybody`s happy with the borders?
SUKHBAATAR BATBOLD: Yes. Everybody is happy with the borders.
CHARLIE ROSE: Right.
(AUDIO ENDS)
And this in fact has been cemented with a new sort of checking and sort of a -- How do you call it? Cross-border checking and we have registered thing things. I think this is quite clear what we have with them and we respect each other`s sort of systems. They do respect the system, what we have, the democratic and -- System what we have there and we do understand and respect the system what is we have. And we`d like to just benefit and work together with them.
CHARLIE ROSE: what`s your position on Taiwan?
SUKHBAATAR BATBOLD: This is a very internationally known approach. We accept and we do support the policy of one China.
CHARLIE ROSE: like the United States?
SUKHBAATAR BATBOLD: Like the United States. Like any member states of the United Nations.
CHARLIE ROSE: when you`re not running the country, what`s the most fun thing for you to do in Mongolia?
SUKHBAATAR BATBOLD: For me the fun is probably sports. I like playing basketball and tennis.
CHARLIE ROSE: basketball.
SUKHBAATAR BATBOLD: Basketball and tennis with my friends and socializing with my family. And I think most importantly in Mongolia and what I have seen, especially this summer, is going the countryside like you said, fishing. Is.
CHARLIE ROSE: everybody goes --
SUKHBAATAR BATBOLD: This is a unique and fantastic thing to go on the country side to see how beautiful is my country, how different is the landscape. Because it`s a vast and big land.
CHARLIE ROSE: even though there`s no infrastructure, do you want people to come to Mongolia?
SUKHBAATAR BATBOLD: Absolutely. Because as you earlier mentioned this is one of the untapped and wildest country in terms of nature so I think it would be really interesting. On top of that, I think we would keep and maintain traditions out of our nomadic culture. So this presents something present to the western world.
CHARLIE ROSE: well, you`ve got great American friends like John Mack and bill weld so you`re doing something right.
SUKHBAATAR BATBOLD: Absolutely. Thank you. We do have many good friends from United States and in fact this week for U.N. week was quite important for us because the basic multilateral firms we did have unique opportunity to have good promotion events for Mongolia, especially for business environment and also bilateral meetings with many other dignitaries. So what we have found is growing and strong interest to Mongolia and most importantly support from our friends.
CHARLIE ROSE: thank you for coming.
I know you have to leave the country and safe travel and look forward to coming to Mongolia.
SUKHBAATAR BATBOLD: Thank you, please, do come to Mongolia. I especially invite you to co.
CHARLIE ROSE: watch out, I`ll come. (laughs) any golf courses over there?
SUKHBAATAR BATBOLD: Yes. In fact we have one.
CHARLIE ROSE: one? You only need one. I think if you come to Mongolia you better spend your time fishing and hunting.
SUKHBAATAR BATBOLD: You can try different golf courses. It would be interesting for you. Wow, this is a cold country.
CHARLIE ROSE: thank you very much.
SUKHBAATAR BATBOLD: Thank you. Words alone aren`t enough. Our job is to listen and find ways to help workers who lost their jobs to the spill. I`m iris cross. We`ll keep restoring the jobs, tourist beaches, and businesses impacted by the spill. We`ve paid over $400 million in claims and set up a $20 billion
END
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