World Bank’s Arshad Sayed reflects on his tenure in Mongolia

World Bank Office Country Manager, Arshad Sayed’s four year tenure in Mongolia has been completed and his legacy has seen Mongolia transition from a
livestock-based country to a mineral based economy. He has overcome
obstacles to leave Mongolia a stronger economic position. The interview following highlights his achievements. The Mongol Messenger Editor –in–chief Borkhondoin Indra interviewed the World Bank’s departing Country Manager Arshad Sayed, and asked
him about his time in Mongolia.
MM:-What were your first impressions when you arrived in
Mongolia 4 years ago and what do you remember most?

AS:- First when I came to Mongolia, I thought it was a small place with few people and it seemed very quiet and peaceful and very serene and calm place because I came
in summer in July and August so that was really my impression, very green
and open vast place and very few people. And what I remember most
was that in my second week the Dalai Lama was visiting and I was called to
meet him and he blessed me…and I think back and I look back and say I
was very fortunate.
MM:-You spent 4 years in Mongolia, what do you see as your most important achievement in your time as country manager?
AS:- I think perhaps the most significant achievement is that the bank decided to participate and work in the area of how to get better development out of the mining sector. This has been the area that we had not been engaged fully before. This was an area that was challenging politically.Most of the international agencies
were not involved in this area. So for the bank to engage in it, it was high
risk. But I do think it was well worth it now because the central challenge for
Mongolia going forward is going to be how to develop the mining sector in a
sustainable manner and in a way that benefits most of its citizens—and not
just a few.
MM:-What role do you see for World Bank in Mongolia?
AS:- Mongolia gets a lot of resources and financial support from
bilateral and other multilaterals. It has benefited because it has an open
regime, it has democracy, and it has a lot of good things which attract bilateral
partners and their appreciation for what Mongolia has done. So resources are not the major issue. Yes of course there are bottlenecks because of resources, but that will not be an issue going forward. So, for the World Bank I think one of the most important roles has been and will continue to be to try and develop platforms of engagement, where we bring knowledge, advice and good practice from other countries
so that government of Mongolia and the people of Mongolia can learn from
these experiences and you do it in a way that will bring other partners on
board. So the bank has the ability to bring knowledge and advice and when you share it openly others can also participate and issues can be seen from many different eyes and then you can address pieces of it rather than the World Bank or ADB or other agency trying to solve the problem by itself in a small area. It’s better to look at the big problem and have small pieces of the problem being addressed by different people. So our role is to make sure that we understand the problem in the full context and make a platform for it.In the case of Mongolia we focused on 3 areas: mining, improving lives of poor people in rural areas and third area was really making efforts to ensure that Ulaanbaatar becomes a better place to live in.
MM:-Did you encounter any specific difficulties?
AS:- You know, one of the Ministers also asked me this question
and I was struggling to find an answer because there are many instances
where you do get into discussions and debates, so there have been many of
these situations during the economic crisis, when we had to work with the government and also number of partners. But frankly the biggest difficulty I’ve had in my 4 years was not with the government or clients
in Mongolia. It was within — trying to make the Bank’s bureaucracy
understand what Mongolia is all about and respond better to Mongolia’s emerging needs in a timely manner. So my difficulties were much more on
the internal side within the institution rather than outside.
MM:-How has the World Bank’s focus changed in your time? What are the priorities in the future?
AS:- I think the focus areas that we have been working are right ones so
far. And we want to be careful that we are not spreading ourselves too much.
Because we have small resources and you want to actually get results.
So our role should not be to try to do too many things but do few things
and make sure there are results in that area. Second, we should be engaged
for long term. So we shouldn’t move our priorities too quickly because
everything is changing. Development priorities are for the long term. And
finally we have to also think long term because Mongolia still needs
institutions. Institutions mean capacity development which also means you
have to take time.So the priority has to be broadly similar. Of course we have to fine tune and change things as we see the situation in the country or we see
something different like the economic crisis when it came. We shifted our
engagement from other sectors to focusing on the budget management
and the economic policies. The idea would be that we would have the 3
areas that I have mentioned before which is focusing on the rural areas,
working on Ulaanbaatar and then on mining, particularly how mining
revenue is to be used and how do you spend it.
Alongside these areas we have to focus on several cross-cutting issues.One of them is governance. This is the area, the government, the president, the parliament, everybody has been talking about – how do you fight corruption, how do you ensure transparency, how do you improve the services for people? How do you make sure that
those funds are not misused? Second is environment. Environment has cross-cutting implications; it doesn’t matter if you’re in rural area or urban
area or somewhere else. Environment is very important. This is a heritage
of Mongolia. This is Mongolia’s treasure. And with mining you always have to remember there will be effects on the environment. The question is how do you manage that? How do you ensure that you are always doing it in
a way that the environment is actually well taken care of? And the last crosscutting
area is education – training, skills development. It doesn’t matter again rural, urban, industry, private, public, whatever area – education and improving education standards, the quality of education for all is a major effort and will continue to be.Particularly, if you have trained and skilled people they can find different
industries, different kinds of things which will produce innovation and
produce new jobs and new areas of business rather than depending only on mining sector.
MM:-Environment, governance and corruption issues are still
widespread. How Mongolia should deal with these problems?

AS:- I think Mongolia should fight it in its own way. I think citizens and people here have to take a much more active role. When you see something going wrong, I think it’s important that those voices are heard. From the government, I see
willingness to tackle these issues. I see the President holding citizen’s hall; I
see the ministries now putting up their budget online. But, it’s important now
for citizens to actually look at the budget and say is this money going
to the school that is mentioned in my district? How much money is used for
what purposes? Because the data is there now, the government has made
it available, so what is happening with it? I think there is a two way process
here. One is from the government side of course, which I see the government
is making good efforts to try and promote accountability, transparency,
openness. On the citizen’s side, we need the same kind of pressures to
make sure that the accountabilities are actually happening.
MM:-Have there been tangible outcomes from the World Bank supported policy conferences?
AS:- I think couple of things that come out of these things. First, what is
really important is to bring new voices to the debate. Discussing among
ourselves, whether it is international institutions or government, this is
one set of voices. It is important to bring outside perspective–people
who see things very differently from us and to hear about how they think.
In the mining debate, 2 years ago, in October of 2008, we had Igor Gaidar
from Russia (former Russian Prime Minister) and he said something very
interesting which was that Mongolia should move forward, should be brave about taking the next step on the mining investment agreement. He
also expressed his views frankly on what ought to be the role of the state.
It was interesting because Mongolia has historic ties with Russia, so it was good to know how key policymakers are thinking there about such issues.
Similarly I think, the following year, we had workshop again, and
conference on banking and fiscal responsibility. This year the parliament
has adopted a fiscal stability law and banking law. And you can see that
these kinds of events, if they promote some kind of discussion and debate,
are very useful. Because they make us all think, and part of the challenge of
these conferences is that there will be no immediate result tomorrow but it
makes you think differently. So I like to believe that having these kinds of
conferences, where you bring good people from outside who don’t have
— you know, any selfish interest — except good ideas, who are objective
and knowledgeable, I think can be very useful. But more importantly,
what’s happened is the government of Mongolia has now adopted this as their
own platform. So you see economic policy conference now hosted by the government of Mongolia and private sector. This is a terrific achievement and actually this sets the tone if you will for how these things should be
done. So I was very happy and very proud to see that the government of
Mongolia organized at the beginning of this year, the economic policy
conference which was covering many of the issues which I think all Mongolians should be concerned about.
MM:- How have they improved Mongolia’s economy and good governance?
AS:- I think we’ve covered that.Because I think the economy has
recovered and what you are seeing is some of the tough measures that were
taken in 2009 are helping the economy now. So you had to for example,
increase in the interest rates which I know was not very popular. You had
to limit the size of the deficit, reduce government spending, many of these
measures are not easy, and you had to reduce the social welfare spending.
But having done that what it allowed was to make sure that you were able
to bear the shock of the external circumstances, basically the drop in
commodity price, it made it easier to manage that shock. Now because the
commodity prices are going up, does not mean that you have to go back
to the same things you were doing before, but really to try and make sure
that next time around when the shock comes you are better prepared. And
the way you prepare better by making sure that you are saving more, you’re
spending on priority issues and you’re continuing to grow your economy
in different ways. So it’s just not dependent on mining. And in terms of governance I think I’ve already answered.
MM: -How did the economic crisis affect Mongolia? What direct results has it had on people of Mongolia? Is it in the past or is it still continuing?
AS:- I think the economic crisis exposed number of weaknesses that
were there in the Mongolian economy. One of the first weaknesses was the
fact that Mongolia was too dependent on exports of commodities. So when
commodity prices collapsed, exports become less, which means it will
hit the economy. Second area that it affected was the budget. The budget
was based on increased revenues coming from copper and from other
commodities. When that fell, same thing —the budget had to go down.
Foreign exchange, same thing, again you had external account deficits
and part of the problem was your exchange rate at least in our view, was
not flexible, so it could not absorb the shock, so when the economic crisis
hit you found countries like Australia, Canada, Chile and others who were
commodity exporters, their exchange rate depreciated, Mongolia’s did not.So artificially trying to keep it up made the shock worse. On the social
welfare side too, the spending was in line with what were windfall — high
revenues — and when the revenues went down you had to start thinking
about whether or not you want to continue these kinds of social welfare
programs which are not targeted which are not necessary. And of course, you
had to think in terms of the poor, who were hit very hard. The laborers, the
day laborers, the rural folks, people who are herders, all of them had their
income crunched down and this came at the same time as high inflation. So
for the poor person, it was a double hit, one because inflation was high
therefore they could buy less, second your income had gone down. Both these factors meant that the economy was really hit hard and the poor were hit hard and this was a real challenge. Now as you look today what the government did in terms of actions it took were the right steps. Are we out of the crisis yet? I don’t think so. And
I think globally also nobody can say that whether the crisis is finished. Is
it going to be V-shaped, is it going to be W, or is it going to be L-shaped,
we don’t know. This is really the challenge here that we must prepare
for any kind of scenario. And we should not just expect that everything
is in the past now and everything will be good in the future. The lesson from
the economic crisis is that we need to be much better prepared because
we were not prepared as well as we should have been.
MM:- What do you believe the government needs to do to avert crisis like this in the future?
AS:- I think the best it can do is to make sure that you have a
good stable macro-economy. Which means, making sure your budget and
spending is in line with what is a long term trend in terms of revenues. If
you have more money, you save that money, and you spend it in times of
crisis. On the monetary side, you are keeping inflation low and currency
from appreciating too much. Then you want to make sure that you
are keeping a stable banking sector and there are lots of banking issues
that should be addressed. The new banking law provides the ways to do
that. This is important so that you are able to provide credit to the people
who need it. Today unfortunately, that’s not happening. So for people
who want to start businesses, who are small owners, that credit is not
coming easily. Macro-economy also means that your inflation should be
low, because otherwise if I cannot know what the inflation rate is in 6
months, I cannot plan my business, I cannot know how much to spend
today, at what price I will bring my imports from other countries, will that
go down, will that go up. It leads to a lot of uncertainty. So inflation has also
has to be stable. I think you also need to starting thinking about the role of the private sector and what are the barriers to the private sector growth. Why is the
private sector not growing? What are the things that come in the way of the
private sector? I think those are the issues that government should remove
so there are not hurdles, so they are not coming in the way, but actually
moving the private sector forward. It’s very important to make sure that
as you think of the government’s role and what the government has to do
you are also thinking what the role of private sector, because ultimately the
private sector is the engine of growth not the government. So if you take on
too much on the government side and you take on a whole lot of things and
government starts doing everything then somebody will be doing less
and that’s the private sector – and the private sector will get hit. So I
think it’s good to be careful as you go about this balance between public
and private and to recognize that the private sector is the engine of growth
and should be kept up.
MM:- What do you think about 70,000 MNT which government is giving to citizens?
AS:- I think this is a debate that Mongolians need to have, but I think
we are all very clear that I think adding additional cash into the economy at the
time when the inflation is increasing is not the best policy. You can provide it
in installments, you can do it overtime, or you do it in formal services and
other things, helps to reduce that. Because inflation by the way is a
tax that everybody pays and nobody collects. People need to understand
this and this tax hurts the poor the most. One hand you might get
money, but if the value of the money is becoming less tomorrow because

of inflation, then there’s no point in giving the money. So it’s important to
recognize that inflation is eating into the value of the money. So if you give
money away at one hand and you take it from the other inflation is working
the same way.
MM:- What’s your opinion on social policy of government?
AS:- Our role is to make sure that we are providing objective analysis
and we provide our own objective assessment but what needs to be done,
how it has to be done, in what way should we implement it, is really up
to the citizens of Mongolia and the government of Mongolia. So our role
is to make sure that we are neutral in all of this. Now, as we did that we
were very clear that because you want to reduce poverty it makes most sense
to target your money towards the poor rather than giving in to everybody.It makes a lot of sense to try and make sure that there is some form of targeting and increasing the support for the poor, so instead of giving them less, you give them more, so they can actually do something with that money, and maybe reduce those who
don’t need it. And that’s really the kind of debate that needs to be had
in the country. Should we be going about this way, if we want to reduce
poverty? Should we not focus on the poor and give them more money
instead of trying to give less money to everybody.
MM:- There is a lot of money coming to Mongolia, but there is no
decrease in poverty, why?

AS:- We will see the new study that we are doing; it will come out in
a few months, maybe in September that poverty is actually going down. And this is a big difference I think.When I came I also wondered about
this issue. I see many more buildings, more cars, more apartments, and more
people with cell phones. In rural areas also, I see more animals, more things
out there, and more consumer things – why is poverty not going down?
But then I realized that there might something that we might have done
in terms of methodology, so the team looked at how we have done – and the
team has come to an understanding that there maybe a misunderstanding
on how we have calculated poverty. And this will be addressed in
September and it will show that poverty actually did come down from 2002 to 2007; this is before the crisis to 2008. Now, what happened after the crisis, we don’t know, but during this period poverty certainly went
down. It depends on how you want to look at it. And that’s something that national statistical office of Mongolia and other researches will have to look.
In my own sense, looking at the data that I have seen so far gives me the
encouragement that I think poverty has come down. It is a matter of now,
verifying this with good data and making sure that’s the case.
MM:- So it’s not a real poverty similar to African countries and some Asian countries?
AS:- Every country has to define what their poverty level is. I’m not
ideological on that at all. I really believe that you have to decide who
the poor are. It’s not for somebody outside to say this number is the right
number. But whatever number you use you should use that every year.
Then you have a consistent poverty line. Now if you look at this way that
you are using the same number same calculation same method every year
then you see that poverty has come down. I think the problem has been
that in our calculations of the poverty line we change the method. Because of
this, this 2008 poverty number cannot be compared to 2002. But if you use
the same methodology for 2008 as you do for 2002 then you find that poverty
is down. That’s the problem.
MM:- Comparing the city and rural areas and countryside, where do you see more poverty?
AS:- In ger areas in the city the poverty is very high. And it’s not
surprising because they have come into the city because they have
nothing. They don’t have the assets, they don’t have animals, they don’t
have anything and they find a way living here just off earnings and wages
and they’re doing work. So for them I think the poverty level is high. And
of course in the rural areas, the soum centers you find poverty.
MM:- How many aimags did you visit?
AS:- With the exception perhaps of two, Sukhbaatar and Dornod I think I may have visited all.
MM:-Did you count how many kilometers did you drive?
AS:-I think I’ve driven to every place. From north to south to Gobi then to
the western steppe, Altai Mountains, and all the way up to Selenge, and also
Huvsgol and border there, in the east except for Dornod.
MM:- What was your favorite place in Mongolia?
AS:- Huvsgol, it makes you feel very calm. When you go there you
get a sense of nature being preserved and nature being in harmony with
everything that’s there. Of course, there too much construction is going
on. But still you could feel that you’re part of nature. And that really is a
unique feeling, and you sense that in a way we’re all part of the nature and
part of the earth.
MM:- What aimag was most affected in terms of environmental
damage?

AS:- It’s very hard to say that, but I do think areas where uncontrolled
mining is going on are particularly at risk. So, areas in Dundgobi, Umnugobi,
and others, the migratory patterns of animals, of herders are changing –
because of settlements, traffic, and transportation. I think you have to
watch more carefully, particularly, in Gobi where you have 100 ton trucks
going on unpaved roads, creating the kind of dust that you have, which
frankly is very harmful. There is a grave environmental danger in the
future if we don’t quickly address the infrastructure issues.
MM:- When you visit the same aimag after 4 years, what differences
did you see?
AS:- I think Umnugobi and Dundgobi, you see major changes,
first time I went there I think it was October 2006, there wasn’t anything
like a hotel to stay. No you go; there are so many more places. There’s a
lot more things happening. There are karaoke bars, clubs and all of those
things. Some are good influences some are things you must be concerned
about. The services, the road, the cars, the need for electricity, the need
for water are going to increase. So you see this tension now, already, the
people are demanding more services, better services.
MM:- When you meet the herders, how do you communicate with these people?
AS:- I do still use interpreters; I’m beginning to understand a lot
better, what the person is trying to convey. Even if my interpreter makes
a mistake, I can sometimes catch that mistake. So when I asked this herder
what you think of the investment agreement, you know, do you agree
with this agreement, should Mongolia go forward with this? And his response
was, of course, he said. In any negotiation both the sides must win.
So when he said this the interpreter interpreted it incorrectly and I could
sense that what he was saying was different. So when I asked again, he
said with a twist, he did say that both sides should win, but his hope was
that the Mongolian side is getting a better deal!!
MM:- What Mongolian holidays did you celebrate, like White
Month?

AS:- White Month, because I think my first time I came here and I
met a family near Tuv aimag, which I’ve kept in touch, very nice family
and because I get my butter from them. So they’ve been very generous
to me. I enjoy White Month, because I get to meet families like theirs and
learn about their histories – of having sons or grandsons who are wrestlers…
or seeing pictures their grandfathers going hunting.
MM:- Can you speak Mongolian? What about Mongolian songs and dances?
AS:- Unfortunately, no, I wasn’t able to learn the language. Dancing,
I tried myself!! Not very successful though….
MM:- What about culture? What is your favorite Mongolian music or song?
AS:- In my very first visits to a restaurant, I listened to a throat singer.
And I have liked that. And then of course hearing the Morin Huur.


I am Mongolia Where do I belong?
I come, Where,
came different worlds,
started the march of conquests
a new age began
Why this crossroad?
I have withstood, the
ravages of armies,
greed of neighbors,
fury of gods
Why do I struggle?
I have within me, more
riches than others know
treasures than one can find
beauty than can be seen
Why do I falter?
I gave birth, to
nations
kings and princes
a steady passage of modernity
Oh, Do not
Pity, Or
worry
shed tears
rush in judgement
For I am Mongolia
And I have a date with destiny
A destiny that began with Burkhan
Khalduun
– Arshad Sayed
July 22, 2010

Source:Mongol Messenger Newspaper of Montsame news agency
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