MP T.Ayursaikhan opposes the privatization of certain state-owned enterprises

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Parliament member T.Ayursaikhan

The draft of the 2017 budget includes the privatization of certain state-owned enterprises to generate revenue of 50 billion MNT, but the decision is being opposed in Parliament.

The draft proposes the sale of Mongol Post for 20 billion MNT and the sale of Erdenet Bulgan Electricity Distribution Network for 30 billion MNT.

MP T.Ayursaikhan recently spoke to ikon.mn regarding his views on the proposed privatization of state assets.

During the discussion of the draft budget, you expressed your opposition to the privatization of Mongol Post and Erdenet Bulgan Electricity Distribution Network. Why are you opposed to this?

The postal service should be owned by the government. State secrets and sensitive in-
formation are sent through the postal service. There are also instances in other countries of the postal service being used to cause harm to individuals and businesses. For these reasons, I believe that 51 percent of Mongol Post should be owned by the government and the rest can be privatized. Mongol Post was publically offered before and 34 percent of it was bought for 6.1 billion MNT. That 6.1 billion

MNT is in the Mongol Post account. In addition, Mongol Post owns stamps valued at up to 5 billion MNT. Stamps are as equally valuable as the MNT. Despite this, they are talking about sell it for 20 billion MNT. If the current shareholders fully privatize Mongol Post, it would mean that they would be able to receive 34 percent of the company for free.

What do you think is the reasoning behind trying to privatize state-owned companies that are profitable?

All state-owned companies have the opportunity to work profitably. We need to further improve the profitable companies and transform the unprofitable ones into profitable enterprises. In order to do this, we need to establish a specific contract with the executives of state-owned companies. If the company has a revenue deficit, the executives will be held responsible. We need to establish a contract that states that. There are many people willing to do this job.

The main reason state-owned companies have revenue deficits is because the executives themselves want the company to perform poorly in order to privatize it for themselves.

What are your thoughts on the valuations of the two companies?

I do not believe the price evaluation is accurate. Mongol Post was valued at 20 billion MNT, yet Mongol Post generates profits of 10 billion MNT. Around 6 billion MNT of that is probably used for expenditures. In addition, Mongol Post owns 40 percent of the Central Post Office, 330 buildings in the countryside, 130 vehicles, and has 6.1 billion MNT in its account. Taking all of that into account, the value is not accurate at all.

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