Keynote Speech by Mr. Haoliang Xu: Consultation on Post 2015 Development Agenda: Engaging with Private Sector

17 Jun 2014

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CONSULTATION ON THE POST-2015 DEVELOPMENT AGENDA:

ENGAGING WITH THE PRIVATE SECTOR

June 17, 2014

Keynote Speech

Mr. Haoliang Xu

Assistant Secretary-General, Assistant Administrator and Director of the Regional Bureau for Asia and the Pacific, United Nations Development Programme (UNDP)

Your Excellency Mr. Demberel, Member of Parliament and Chairman of the Mongolian National Chamber of Commerce and Industry,

Representatives of the Private Sector,

Ladies and Gentlemen,

It is a great pleasure for me to be here in Mongolia and initiate discussions with the private sector and SMEs on the post-2015 development agenda.  I commend the UN Country Team to bring together key members of the private sector and to engage in consultations that can foster important partnerships much needed for the planning and implementation of an effective development framework.

Before moving into the discussions on the ongoing process for the future sustainable development goals, let me step back to briefly reflect how the MDGs supported development in Mongolia. MDGs changed the way governments and international community conduct development by giving all stakeholders a structure to development planning and funding. In Mongolia the Parliament adopted the MDGs as development benchmarks in 2005 and then as the framework for the MDG-Based Comprehensive National Development Strategy of 2008-21. Mongolia is one of the few countries to have a 9th MDG on ‘Strengthening Human Rights and Fostering Democratic Governance’ that emphasizes democratic governance and human rights as necessary conditions for the achievement of all the MDGs. There are a total of 24 targets with 67 indicators for the nine MDGs. According to the latest assessment, with some additional effort, Mongolia is expected to achieve more than 70 percent of the global MDG targets by 2015.

In recent years, Mongolia’s economy has been among the fastest growing in the Asia-Pacific region. On average it grew at 9 percent per year in 2004-08, and in double digits during the last three years. Its GDP per capita increased nearly ten times since 2000 and Mongolia is now classified as a lower middle income country.

Nonetheless, 27 percent of the people remain below the national poverty line, income inequality has steadily increased, incidence rate of the spread of tuberculosis is not declining fast enough, and the target of the proportion of people without access to improved sanitation called for in the Millennium Development Goals is unlikely to be met.

These trends convey an important message: economic growth, while critical, is by itself not enough for a country’s development. Through the post-2015 consultations we identify key issues that will be important for inclusive and sustainable development.

Post 2015 consultations in Mongolia in the first round/‘the world we want’

UN Country Team has been supporting preparations for the Post-2015 development agenda in Mongolia with two fold purpose. The first is to ensure that the issues, concerns, and visions of the people of Mongolia are being heard and reflected at the global level to set goals and targets. The second is to ensure that the country is adequately prepared to localize the agenda and effectively implement it by involving key stakeholders.

In this context, the UN supported consultations in Mongolia during 2012-13 to identify and prioritize issues for the future SDGs. Consultations brought together nearly 2000 people from different stakeholder groups across the country including youth, local representatives, the elderly, children, women, and persons with disabilities.  Key findings from the consultations were summarized  in a national report and fed into a global report titled ‘A million voices - The World We Want’ that reflected UN-supported consultations in 88 countries around the world, 17 countries in Asia-Pacific, and opinions from the My World online survey on 11 thematic areas that are being considered for the future development framework. These analyses have informed the work of the High-level Panel of Eminent Persons on the Post-2015 Development Agenda and continue to feed into the formal intergovernmental negotiation process.

The discussions in Mongolia were structured around three thematic areas – the economy, social development, and the environment – all of which are essential elements for sustainable and inclusive growth. It is clear that growth alone is not adequate to improve the human condition – but various social and institutional factors play an important role in overall human development. In addition to that the environment is essential for sustainability and this is especially important for Mongolia in context of the extractive sector being central to the economy.

Let me highlight a few messages that came out from the stakeholder consultations in Mongolia.

  • First, Mongolia is heavily dependent on the extractive sector and exposed to global shocks and commodity price fluctuations. In order to increase resilience from global shocks, economic diversification and development of the private sector and local businesses is essential.
  • As a landlocked country, Mongolia relies on regional transportation networks and neighboring country markets. As such greater accessibility is critical for Mongolia’s economic integration and market access. South-south and triangular cooperation can benefit Mongolia in this respect.
  • With growing urbanization in Ulaanbataar, the country’s inequality has also increased. Growing number of poor in cities, widening income gap, and unequal access to social services undermine social values and limits the full potential of individuals.
  • Greater emphasis on democratic governance, the legal environment, capacity of institutions and human rights will be important in the future.

Post 2015 consultations in Mongolia in the second round/’means of implementation’

As the post-2015 consultations progressed participants were keen not just to express their views on the content of the agenda, but they were also interested in how it will be implemented, including the roles and responsibilities of different stakeholders. This is what initiated the second round of consultations focusing on the ‘means of implementation’. In Mongolia the government is keen to work closely with the private sector and engage them as key partners in the development process. These consultations will solicit inputs, support, and identify specific roles of the private sector in the Post-2015 Development Agenda. It is anticipated that the dialogues will build on the first phase of consultations and further define the channels and mechanisms through which they can be implemented, bringing greater clarity to ownership, capacities, partnerships, monitoring, and accountability. 

Why private sector is relevant for Post-2015?

Why is there interest to engage with the private sector? Over time it has become increasingly clear that both the public and private sector are critically important for sustainable development in the economy. It is not possible for governments to work alone towards addressing issues such as – reducing poverty, creating decent jobs, building green economies, and ensuring sustainable production and consumption. Rather it is very important for the private sector to be involved in the process and work together with governments to build and inclusive society that has equal opportunities for all and ensures sustainable growth.

The Post-2015 Development Agenda presents a historic opportunity for the international community to engage with the private sector in exploring how businesses can best contribute to global sustainability. The development and implementation of the Post-2015 agenda will require an unprecedented level of partnership between business, governments, civil societies and other key stakeholders. It also requires significant capacity, mobilization of resources as well as collaboration and co-investment between stakeholders. The private sector is pivotal in bringing to the table innovative methods and tools for leveraging funding, creating employment, technology, skills development, innovation and research.

Role of SMEs in the Mongolian Economy

Mongolia’s economy is among the fastest growing in the Asia pacific region. In the last two years the country has witnessed double-digit growth in the last three years, to a large extent due to its mineral resources. Mineral commodities account for about 80% of the country’s exports and mining provides around 40% of total government revenues, though the sector employs only 3% of the total workforce. The manufacturing sector contributes only about 11% to the GDP, about half of the mining sector’s contribution.

While growth remains high, the challenge remains whether such growth is creating adequate jobs, and whether the benefits of growth are reaching the majority of the population and leading to improved human development. Reliance on a single sector makes the economy highly vulnerable to global price changes and external shocks that can have major implications for income and employment. Therefore it is very important for Mongolia to diversify production and expand other sectors that can create more jobs and also improve resilience to external shocks.

Small and medium enterprises (or, SMEs) play a vital role in the Mongolian economy. According to recent data, there are 30-40,000 active SMEs providing more that 50% of total employment and comprising 25% of national GDP. SMEs play a major role in local production, generation of economic activities, and value-creation, including providing more and better jobs for the poor. As such, they can be major drivers of inclusive growth and sustainable development. The government of Mongolia places high importance on SMEs and supports it growth and development through various programs and opportunities.

SMEs need to be empowered to become active socio-economic agents for transformational change. This can be done by increasing their access to finance, supporting knowledge exchange, and technology transfer. Large-scale businesses are able to implement better corporate sustainability practices and greener operations that SMEs can learn from. Sharing of information about the use of ICT, e-business operations, energy efficiency can lower costs and enhance efficiency and productivity for SMEs. 

UN’s work to support SMEs

The UN Global Compact supports corporate sustainability in the global economy by working with businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, and environment and anti-corruption. By doing so, businesses help ensure that markets and commerce advance in ways that benefit economies as well as societies. Today with over 12,000 corporate participants and other stakeholders from over 145 countries, it is the largest voluntary corporate responsibility initiative in the world. The UN Global Compact is supporting post-2015 consultations with SMEs to identify the most effective ways to support SMEs to align their business goals with sustainable practices, including local level efforts to help translate universal principles to the SME context. Through its involvement in the Business Call to Action, the organization encourages companies to make conscious decisions to purchase locally, thereby helping communities to grow small businesses and generate new jobs and livelihoods.

UNDP works alongside government partners and the private sector on inclusive growth and business models. We can help to connect local, national, and global actors, and identify approaches which will create value for businesses and break into markets in ways which directly lift the living standards of the poor.

One does not have to go far to seek successful examples. Mongolia’s Khaas Bank started as a UNDP project for which UNDP provided seed funds and necessary technical inputs. It has since successfully transitioned from a microfinance institution to become the fourth largest commercial bank in Mongolia today.

Fiji offers another example. There, UNDP and ANZ Bank worked together to expand commercial banking services. ANZ developed innovative ways of expanding services to new communities and small businesses. To complement that, UNDP supported the provision of financial literacy training, which to date, benefited more than 15,000 Fijians.

Concluding remarks

Mongolia has many strengths, including its relatively young labour force, its abundant natural resources, and a vibrant private sector. With smart policy choices, Mongolia’s future is bright.

While a significant share of the responsibility for creating an enabling environment lies with governments, the private sector has an important role to play in expanding economic opportunities, job creation, and reduction of poverty.

I thank the Mongolian Chamber of Commerce for being a successful champion of the private sector for so many years.

At UNDP, we are committed to supporting Mongolia on its journey to inclusive growth, guided by the country’s own priorities and by our mandate to advance human and sustainable development.

I hope that this consultation will be useful in exploring the options for the private sector to align its mission to the Post-2015 vision, foster innovation, find solutions, and allow for transformational partnerships that benefit the society and economy, as well as drive business success.

Thank you.