June 5, 2017 7:33 pm JST
The Future of Asia 2017

Middle-class surge will change everything, Mongolian minister says

Foreign Minister Tsend Munkh-Orgil argues globalization wave is 'unstoppable'

ALEXANDER MARTIN, Nikkei staff writer

Mongolian Foreign Minister Tsend Munkh-Orgil says "nothing good" comes of nations closing their doors.

TOKYO -- Of all the important trends shaping Asia, the rise of the middle class will have the most profound impact, Mongolian Foreign Minister Tsend Munkh-Orgil said on Monday.

Citing an OECD estimate that the middle-class population will surge to 4.9 billion by 2030, from 1.8 billion in 2009, Munkh-Orgil said the figures are "mind-boggling." The change, he said, will have wide-ranging repercussions on politics and globalization.

"It will have a significant impact on every aspect of life for the next 20-30 years in Asia," he told the 23rd International Conference on The Future of Asia, organized by Nikkei Inc. He said the future won't be about cheap labor or resources -- rather, it will be centered on connections and technological innovation.

The 52-year-old said that despite talk of spreading protectionism, Asia will see itself increasingly connected and integrated. "We do not believe globalization will stop or slow down, we believe it is unstoppable."

While describing the wave of political, social and economic changes that have taken place in his nation over the past three decades, Munkh-Orgil said that countries should not try to avoid the risks associated with globalization -- epidemics, terrorism, human trafficking and so on -- by closing their doors.

"We know what happens when nations do that," he said. "Nothing good comes out of it."

Munkh-Orgil said that back in 1990, when the country saw a peaceful democratic revolution, the private sector produced almost nothing. Today, it accounts for 80% of gross domestic product.

In 1990, Mongolia traded with 27 countries worldwide, he said. Now, it trades with 155.

"To say that Mongolia is changing or it has already changed a lot is an understatement," he said. "It's changing so much."

Munkh-Orgil has served as Mongolia's foreign minister since last year. A graduate of the Moscow State Institute of International Relations and Harvard Law School, he also served as foreign minister from 2004 to 2006, and as the nation's minister for justice and home affairs from 2007 to 2008.

He said that despite the transformation Mongolia has been experiencing over the past decades, it still has many issues to deal with. One is a lack of economic diversity, with minerals making up 90% of its exports and China taking up 60% of overall trade.

He said the economy is in need of a revamp. Last month, the International Monetary Fund approved a much-needed three-year, $434 million loan for Mongolia, as part of a broader $5.5 billion financing package also supported by Japan, South Korea, China, the World Bank and the Asian Development Bank.

The resource-rich country has benefited from the commodities boom over the last 15 years or so, but the subsequent commodity price slump, investment outflows and slowing demand in key export markets have dealt the economy a severe blow.

The foreign minister said the government is trying to respond through fiscal consolidation and by bringing the budget under control.

He also said Mongolia is interested in participating in the various regional free trade talks taking place.

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