Tuesday, 11 September 2012

Unearthing the Potentials in Indonesia-Mongolia Cooperation

co-written with Junianto James Losari

Come on, admit it. When hearing about Mongolia, you would probably picture the famous Genghis Khan and his nomadic warriors riding to glory, plundering cities across Central Asia. Also, you would probably picture cold steppes, dotted with herds of horse or sheep. In one corner, there would be the iconic, round-shaped tent – called “ger” – with smoke coming out from its top.

Well, Mongolia remains home to vast grassland plains. Horses and sheep are visibly plenty, and many Mongolians still prefer to live in gers, even those in the country’s capital, Ulaanbaatar. But to picture Mongolia only from this perspective would be grossly misleading.
Under the blue Mongolian Skies, near Ulaanbataar, late 2008
In the last ten years, the Mongolian economy has experienced dramatic progress. In 2011, its GDP growth reached 17.3%, the second highest in the world. And in 2010, it registered a 37.3 % industrial production growth rate, the highest in the world.

Much of this growth has been fueled by the mining sector, which by 2011, accounts for more than 80% of Mongolian exports, almost 16% of its GDP. The biggest of these mining projects was launched with Australian and Canadian investment in Oyu Tolgoi. Meanwhile, other big projects include the one in Tavan Tolgoi, predicted as the world's largest untapped coal deposit.

Seeing these trends, it is not surprising that Mongolia has been compared to Qatar or Brunei; countries with a small population, but bestowed with abundant resources. The strong economic growth has spurred income increases among the general population. Even civil servants enjoyed a 50% pay raise last year, as the country’s poverty rate was reduced by 9.4%.

With a population of only 2.8 million, a literacy rate of 98%, and 70% of its university students female, the prospect for a more balanced socio-economic development seems promising. In addition, the elite are sending their children to study abroad, and some, such as Harvard-graduate President Tsakhia Elbegdorj, have returned to take up prominent positions in the public and private sectors.

There remain questions about equal distribution of such new-found wealth. But there is no doubt about the arrival of a new class, with growing demands for food, electronics, motorcars, property, and luxury items. Brands like Burberry and Louis Vuitton have opened up shops in Ulaanbataar. And when the choices are lacking, many of the country’s nouveau riche go on “shopping day-trips” to Beijing or Hongkong.

In the past, Mongolia was important for its geographic position as a buffer between the Soviet Union and China. As a land-locked country, it has suffered alienation from the international community. However, with the advent of reforms and democracy, as well as the desire to be part of today’s globalization, Mongolia is now on the path towards greater regional and global recognition.

These days, the international community is being lured by the country’s economic achievements. China and Russia remain as Mongolia’s major trading partners, but others are also rapidly raising their stakes in the Mongolian economy. These trends have converted Mongolia into one of the upcoming “Asian Tigers”, and one of the 3G (Global Growth Generators) countries capable of reshaping the world economy in the next 40 years.

A 3G country itself, Indonesia is definitely no stranger to Mongolia. Diplomatic relations between Indonesia and Mongolia have existed since 1956, the year when President Soekarno visited Ulaanbataar. Since then, leaders of both countries have exchanged visits, the last being Prime Minister Nambar Enkhbayar’s trip to Indonesia last year.

However, such historical ties have not translated into economic ties, as bilateral trade in 2011 only amounted to US$6 million. Among ASEAN member countries, Indonesia is Mongolia’s 8th largest trading partner. And trade cooperation with ASEAN only comprises about 2% of Mongolia’s overall.

Nevertheless, the future may not be as bleak as pictured by present statistics. As a country heavily dependant on foreign products, in 2010, 69% of Mongolia’s imports came from either China or Russia. Therefore, the Mongolian Government has placed importance on diversifying their import sources.

Mongolian officials have expressed hope that Indonesia would provide palm oil and refined oil to Mongolia. Other trading opportunities include agriculture, food and pharmaceutical products. There are also potential participations in the development of infrastructure and energy projects in Mongolia.

At a time of global economic uncertainty, highlighted by weaker demands from the West, exploring non-traditional markets like Mongolia would be beneficial in the short and long runs. The Malaysians are already jumping on this opportunity, identifying potential cooperation in the real estate, infrastructure, IT, and education sectors. As the largest economy in Southeast Asia, maybe it is time that Indonesia also steps up its efforts in Mongolia.

Such efforts may take the shape of MoUs in trade and two-way investment cooperation. And while friendship associations already exist, there is also a need to establish a more structured bilateral chamber of commerce to promote and ensure the continuity of such cooperative efforts.

Last week, President Susilo Bambang Yudhoyono visited Ulaanbataar for three days en-route to the APEC Summit in Vladivostok, Russia. While highlighting the historical ties and the potential economic cooperation between Indonesia and Mongolia, the visit was mostly aimed at strengthening interactions and cooperation at the people-to-people level.

During meetings with Mongolia’s top leaders, President Yudhoyono reaffirmed the commonalities existing between the two countries. As developing countries, looking to reap the benefits of globalization and build a sustainable development with equity. As democratic countries, striving for better living standards at home and harmony with neighboring countries. 

Indeed, the biggest barrier to overcome is the limited knowledge that one has of the other. If most Indonesians prefer to picture Mongolians as nomadic tribes, one could only guess at the images Mongolians would conjure of Indonesia and its people. There must be a change in the way both sides perceive one another. And that change may be on its way.

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