[Herald Interview] Mongolian PM wants to use Busan as outlet for trade corridor

Mongolia wants South Korea's largest port city, Busan, to become an integral part of a trade corridor for the landlocked country, its Prime Minister Luvsannamsrai Oyun-Erdene told The Korea Herald in an interview Friday.

Mongolia currently relies on the sea ports of Russia and China to import foreign goods and sell products to other countries. This means international sanctions imposed on Moscow and Beijing, as well as port lockdowns due to internal policies like zero-COVID, often led to freight bottlenecks for Mongolia as well.

This has spurred Mongolia to look for other options. Busan is one of the most likely candidates, given its strong ties to both Tianjin and Vladivostok, which are connected with its trading cities, like Altanbulag and Sukhbaatar bordering Russia, and Zamiin-Uud on the border with China.

If shipping through China's Tianjin port became less viable, Busan, for example, could be used as a logistics hub. This would help increase freight shipment to and from Vladivostok, Russia, and vice versa, and also reduce the risk of goods getting stuck.

"I believe Busan could serve as a sea gate for Mongolia," Oyun-Erdene said through an interpreter as he wrapped up his state visit leading the delegation.

"Plans are under review to create a research team to continue our cooperation with Busan as a sea transit open for Mongolia."

In this vein, more private-sector influx of Mongolian workers and businesses into Busan could help Mongolia better capitalize on its potential to become a new logistics point on the sea route.

Against this backdrop, the 42-year-old career politician stressed a need to put the two countries on an equal footing in terms of visa-free travel, adding that the current visa conditions for Mongolians might be a hurdle for doing business in Korea.

"A visa exemption for both countries is an important step to cementing a strategic partnership under a current geopolitical setting," Oyun-Erdene said.

Mongolia in June 2022 began allowing South Koreans to enter and stay without a visa for up to 90 days. But Mongolians are still required to have the short-term visa issued unless they are in public duties, they are in transit or they travel to specially designated areas like Jeju Island and Yangyang, Gangwon Province.

"The principle of reciprocity in visa policies should be in place to ensure the free travel between Mongolia and Korea," Oyun-Erdene said.

"A mutual visa exemption (for short-term travelers from both Mongolia and South Korea) is crucial to steering clear of barriers in terms of exchanges of ordinary travelers, private-sector businesses and investors from both countries."

Oyun-Erdene also said legal support to Mongolian residents in Korea should be sufficiently provided, calling this key to an increased people-to-people exchange within a legal framework.

Nearly 16,000 Mongolians were estimated to have been living in Korea without a legitimate visa as of 2021, according to the latest data by the Justice Ministry here. These accounted for over 40 percent of all Mongolians staying in Korea at the time.

Usually, Mongolians' illegal status was due to overstaying their visa, or working somewhere not permitted by their visa.

Talks are underway between Seoul and Ulaanbaatar to assist undocumented Mongolians living in Korea with visa or paperwork issues, Oyun-Erdene said.

Also in the pipeline are plans to set up a Mongolian state-run call center for those illegally living in Korea. Mongolia is also considering increasing the workforce in Mongolian consular offices in order to tackle delays in the visa process.

"I hope there would be a specific outcome for more people-to-people exchange to be within the legal framework," he said.

Fighting corruption to be investor-friendly

Mongolia's economy is highly dependent on mineral exports. It is home to rich reserves of copper, rare earths and other minerals, mainly used for electric cars and robots, as well as electronic components like semiconductor chips.

Mongolia has long been vulnerable to corruption by those with licensing power in the government, as the country had gone through a rapid democratization since 1990. Mongolia in 2022 was ranked 116th out of 180 countries in Transparency International’s Corruption Perceptions Index, with a score of 33 points out of 100, down by two points compared to the previous year. Korea was ranked 31st, on 63 points.

Mongolia beginning this year renewed anti-corruption commitments with moves such as amending the whistleblower protection law and protection of politically exposed persons. Fighting corruption is a must to assure foreign investors of safety, Oyun-Erdene said

"Mining takes up about 93 percent of the nation’s total exports (by value)," Oyun-Erdene said, referring to a 2022 figure of exported mineral products, natural or cultured stones, precious metal and jewelry.

"This is what makes transparency in licensing (mining site developers) and attracting investors, along with anti-corruption initiatives, more important than ever."

As the weeklong state visit to Seoul led to an agreement to hold an annual ministerial regular meeting of Seoul and Ulaanbaatar on the rare earths supply chain cooperation, investor inquiries in Korea followed, according to Oyun-Erdene. The delegation hosted a "Welcome to Mongolia" event in Seoul. It was the first such event to be organized in a foreign country, inviting some 200 Korean entrepreneurs and 100 Mongolians.

Korean investors at the event showed interest in Mongolia’s environment and legal protection framework for investors there, as well as the support measures and incentives, Oyun-Erdene said.

"I will make sure to have these matters addressed promptly," he said.

Oyun-Erdene also vowed to protect investors' legal interests, primarily with a new agency designed to attract foreign investment and develop trade under the Mongolian Ministry of Economy and Development.