UNCTAD-Mongolia

investment policy review MONGOLIA
everyday nomadic life (UNDP, 2009). Improved SME
access to finance is an important component of the
support package required to establish and grow
small successful tourism businesses.
6. Finally, there is an opportunity to increase the fiscal
contribution of the “travel and tourism” sector to
central revenues, currently limited at 0.7 per cent of
GDP, and ensure that they benefit the populations
in the location where the actual value generations
take place, including the districts that host the ger
camps.
At the national stakeholders’ workshop where this
draft report was discussed, in March 2013, the MCST
reported that it has started implementing several of the
above recommendations.
5. Promoting niche market programmes
The livestock industry, encompassing meat, cashmere
and leather, is extremely important for a diversification
strategy for Mongolia since it supports large numbers
of vulnerable, dispersed nomadic herders and rural
communities and has significant job creation and
economic growth potential. These sectors, and
especially cashmere and meat which are the focus here,
have been researched extensively by international donor
organizations (UNIDO, 2006 and 2011; UNDP, 2009;
USAID, 2007), and the ambitious programmes which
they propose are highly desirable. Implementation is,
however, long-term, highly costly and demanding in
terms of human resource capabilities. To make progress,
smaller scale initiatives are recommended here which
can attract foreign interest, and by demonstrating
success can be the launch pad for wider programmes.
The central problems which are recognized in research
on the livestock industry concern, first, improving the
quality of the raw materials through better standards
and production facilities; and second, improving
branding and international marketing, with the required
improvements in these areas impacting the entire value
chain.
In the case of meat, the challenges begin at the quality
end, including poor quality assurance in meat plants,
unsatisfactory meat handling from the meat plant to
the market, and a single price paid for meat products
regardless of quality specifications. The latter is
exacerbated by a shortage of people who understand
meat quality specifications for demanding international
markets, so severely limiting marketing opportunities.
The recommendations are wide-ranging, including
upgrading standards of meat plants, enhancing
veterinary standards, and improving processes of
production, handling, transportation and ultimately
branding and marketing. There are proposals for the
use of “Geographical Indications” (GIs) to build the
reputation of Mongolian meat as natural and ecologically
friendly (UNDP, 2010). The requirements for registration
as GIs, while demanding are, however, the least of the
challenge: the key is: 1) to ensure that adequate quality
control systems are in place to back the GIs; and 2) to
market the brands, which is an extremely costly and
long-term exercise.
In respect of cashmere, there are proposals for a
somewhat similar industrial strategy for the niche
products of cashmere, yak hair, sheep wool, and camel
hair. This is based around improving product quality,
closing the technological gap in the processing of raw
materials and, backed by a strong brand, aggressively
promoting the products internationally (UNIDO, 2011).
Recommendations begin with improving the quality of
the raw material by empowering the herders, through,
for instance, promoting regional cooperatives; and
then the provision of support to producers through
high-level testing laboratories and research institutes.
Competition from China means that Mongolia has to
enhance its own image, with a country brand being
developed associated with specific characteristics of
Mongolian cashmere. This would be associated with
the proposed establishment of an international design
institute in Mongolia, and by a series of international
marketing initiatives.
Recommendations
The proposals recommended above are basically
supported by this review. Integrated value chain
programmes for meat in particular but also cashmere
are necessary if the sectors are to achieve their potential
in rural development and poverty reduction, as well
as in international trade. The principle that Mongolian
producers of these livestock-related products should
be recognized for their quality and unique identity
in international markets is accepted. Timescales are
lengthy for such ambitious programmes, however, and
very substantial funding will be required. Moreover
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