./.WORLD TRADE
ORGANIZATIONWT/ACC/MNG/12
11 May 2001
(01-2452)
Original:  English
MONGOLIA:  ACCESSION COMMITMENTS
Communication from Mongolia
Privatization Program of Mongolia During 1997-2000
The Permanent Mission of Mongolia to the United Nations Office at Geneva and other
International Organizations, pursuant to paragraph 35 of the Report of the Working Party on theAccession of Mongolia (WT/ACC/MNG/9), forwards herewith the report on the developments in
Mongolia's programme of privatization.
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Compared to the privatization program of 1991-1996, during 1997-2000, the privatization
process was more rapid and enterprises and assets were privatized through cash sale.  In previous
privatization process, payments of privatized assets were mainly made by investment vouchers
distributed to the public.
During this period, the SPC privatized 910 enterprises and commercial properties and
generated Tug 41.8 million (US$1=Tug 1,000) for the state budget.  Please see Table for the list of
enterprises and commercial properties  privatized during 1997-2000.
Most enterprises were privatized under the auction method.
Depending on the enterprise and assets, we used the public, limited and sealed-bid auction
method.
Small enterprises with up to 50 employees and commercial properties were privatized under
public auctions.  In total, 448 enterprises and real estate were sold under this method, generating
Tug23.5 billion for the state budget.
Large enterprises with more than 50 employees were privatized under the sealed-bid auction
method.  This included 72 fully and partially state-owned enterprises, sale of which generated
Tug15.3 billion for the state budget.
Due to the importance of nomadic animal husbandry to the Mongolian economy, and the
traditional nomadic way of life-significant part of  the population, numerous branches of the veterinary
clinic were funded by the state.  During 1991-1993, the Government privatized about 20 million heads
of livestock to herders and the Government started privatizing branches of the veterinary clinic to the
veterinarians under the limited auction method in 1998.  In total, 332 branches of the veterinary clinicwere sold, generating Tug331 million to the state budget.
As a result of the privatization process, by the year 2000, the state property dominated
economy of 1990 was transformed to a private sector dominated economy.  This is the main
consequence of privatization process.WT/ACC/MNG/12
Page 2
Currently, agriculture, animal husbandry, construction, food, transportation, mining, trade
procurement and service sectors are fully privatized and transferred to private ownership.
While in 1990 the private sector share of GDP was only four per cent, by 2000 this number
increased to 72.3 per cent (excluding informal sectors).  Please see graph 1.  As of the end of 1999,
private sector composition of GDP by major industries was as follows:  agriculture, 98 per cent; trade,90 per cent; manufacturing, 49 per cent; transportation, 17 per cent; communications, five per cent;
energy, zero per cent and state service sector, 12 per cent.
Currently, the air transportation, communications, energy and state service sectors remain
state-owned.  This is related to the fact that over 20 companies called Most Valued Companies
(MVCs), that are strategically positioned in the country's economy, remain owned by the state.
The newly established Parliament and Government recently approved the Privatization
Guidelines for 2001-2004.  These Guidelines provide the acceleration of the privatization process,privatizing MVCs, restructuring energy, communications, air and railway sectors and begin
privatization in 2001, and privatizing most MVCs by 2004.
In addition, the above-mentioned guidelines include establishing legal environment to
restructure and commence privatization in health, education, culture and arts and science sectors.
The Government of Mongolia's privatization policy of 2001-2004 is to attract significant
foreign investment.  The Government decided to privatize most MVCs under the international open
tender method and is already taking assistance from one of the largest consulting firms in the world in
this process.
Graph 1.  Private sector share in GDP
01020304050607080
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Private sector share
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