Along with privatizing 12 state properties, the Government plans to establish several liability companies this year. The Erdenet factory, Mongolrostsvetment, Energy Resource, Khushuut and Oyutolgoi will offer shares to the public. This was disclosed at an open conference titled “Establishment of liability companies and raising money” that was organized by the Mongolian Stock Exchange.

Tavantolgoi shares will be sold in international and domestic markets while the new companies planned to be set up include Mongol Metallurgy LC based on Darkhan, Khuder, Eroo metal deposits, Erdenet Copper LC and Mongol Copper LC based on Erdenet Factory.

R.Sodkhuu, director of the Mongolian Stock Exchange, said the mining deposits are the valuable capital of Mongolia. Raising money to develop the economy may be a new concept for Mongolians, but it has been practiced elsewhere for more than 500 years. Sodkhuu also said selling shares to the public should not be restricted to the mining sector, and liability companies with Government capital will be set up in the agriculture and health sectors also. A Mon-Taria-Concern will be established jointly with the Ministry for Food, Agriculture and Light Industry, and a hospital with the Ministry for Health. Among other companies planned this year are Mongol Erdes, Mongol Erchim and Mongol Infrastructure.

As for the sale of bonds, Sodkhuu said bonds primarily set the interest rate. Bank interests will depend on the interest rate of Government bonds. Bond also protect the economy in times of crisis. “A Government does not sell bonds to save troubled banks,” he said.

 “Bonds are sold to prevent risks, plug budget deficits and guard against company bankruptcies. If we don’t sell bonds, we lose our big clients. Thus, the Government is planning to sell MNT500,000 to MNT1 million worth of bonds,” added R.Sodkhuu.

The Ministry for Mineral and Energy supports the idea of establishing liability companies, saying it is possible to establish them in exploration and production fields. The most important thing is to find reliable partners.

Other participants at the conference said setting up liability companies takes too much time. Some raised concerns whether it is a good idea to privatize one company in order to establish a liability company. Some wanted the Government to do nothing in haste. S.Avirmed said privatizing 26 percent of the state’s 51 percent ownership of Erdenet was a very risky move.