Draft Law on Public Procurement to Prioritize Quality-Based Criteria

Politics
b.unubold@montsame.gov.mn
2025-05-06 14:34:37

Ulaanbaatar, May 6, 2025 /MONTSAME/. The 5th Meeting of the Economic Development Board under the Prime Minister of Mongolia was held on May 5, 2025. The meeting discussed the draft Law on Public Procurement and the draft Law on Amendments to the Law on the Development Bank of Mongolia.


Chief of the Cabinet Secretariat of the Government of Mongolia Uchral Nyam-Osor presented the concept of the draft Law on Public Procurement. Cabinet Secretariat Uchral emphasized that the current Law promotes low-price competition, which has led to poor-quality procurement practices. To resolve this, the new draft Law prioritizes quality-based selection criteria. Additionally, environmental and social impact indicators will be incorporated into tender evaluations. Furthermore, tenders with estimated costs of up to MNT 10 billion will not require financial guarantees, allowing 99 percent of Procurement Tenders to proceed without such requirements. The draft Law also includes a provision whereby the Government will not request information already in its possession. Procurement processes will be conducted digitally using Artificial Intelligence. Legal disputes will be resolved by an independent council based on international standards and majority decisions.


Members of the Board shared their views on the draft Law on Public Procurement. Tur-Od Lkhagvajav, President and Chairman of the Board of Directors of the Mongolian National Chamber of Commerce and Industry (MNCCI), commended the inclusion of numerous private sector proposals in the draft Law and stressed the need to further advance digitalization in government procurement processes. Davaadalai Batsuuri, Economic Policy Advisor to the President of Mongolia, underlined the importance of refining provisions that promote patriotic procurement and support specific segments, including persons with developmental challenges. Batsaikhan Purev, President of Shunkhlai Holding, proposed revisiting the provision that sets the minimum cost threshold for mega projects at USD 36 million.



At the Meeting, participants were also briefed on the proposed draft Law on Amendments to the Law on the Development Bank of Mongolia. Once at risk of default with nearly half of its loan portfolio classified as nonperforming loans (NPL), the Development Bank of Mongolia has since repaid over MNT 10 trillion in debt. In October and December 2023, the Bank settled USD 500 million in Eurobonds and JPY 30 billion in Samurai bonds on time, fulfilling its obligations to international investors. Furthermore, the proposal suggests transforming the Development Bank into an export-import-oriented bank and increasing its capital base. The Bank’s strategic focus will be directed toward supporting economic diversification and boosting exports, with priority sectors identified as renewable energy, agriculture, environmental protection, mining, transport, logistics, and manufacturing. The Bank will not rely on 100 percent state-funded financing; instead, project initiators must contribute at least 15 percent of total costs. A new legal framework is being developed to ensure transparency in loan issuance and project selection to prevent past mistakes.


Members of the Economic Development Board also gave feedback on the proposed reforms. Gankhuyag Chuluun, Chairman of the Mongolia Economic Forum, stressed the need to improve the Bank’s risk management and governance to minimize political influence. Odjargal Jambaljamts, CEO of MCS Holding LLC, noted that co-financing Development Bank Projects with International Financial Institutions (IFIs) would enhance oversight.


Prime Minister of Mongolia Oyun-Erdene Luvsannamsrai highlighted the importance of incorporating private sector input into the draft Law on the Development Bank of Mongolia and stated that the Government supports transforming the Bank into an export-import-oriented EXIM Bank. The Premier noted that the draft Law on Amendments to the Law on the Development Bank of Mongolia would soon be submitted to the State Great Khural of Mongolia. Prime Minister Oyun-Erdene emphasized that discussing economic and financial matters through the Economic Development Board, followed by deliberations at the levels of Parliament and the Cabinet, represents a sound and commendable practice. The next meeting of the Economic Development Board will comprehensively discuss issues related to social insurance and taxation.

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