Interview Transcript, Altantuya Tseden-Ish in conversation with Ann Apps

Interview Transcript, Altantuya Tseden-Ish in conversation with Ann Apps

ICA Asia and Pacific

Ann Apps: Thank you so much, Santosh, and welcome Altantuya. We are absolutely delighted to have this chance to interview you tonight. I'm sure that the audience is very keen to learn about cooperative law and then cooperative movement in Mongolia. We want to hear about those law reforms, but we also want a little background to those law reforms. So before we begin our discussion about the cooperative law in Mongolia, I've got two preliminary questions and I'm hoping that you might indulge me. Firstly, very few of our listeners will have ever travelled to Mongolia. I would love to go to Mongolia, it's on my list so hopefully one day I can come and visit. But I'm hoping that for the benefit of the audience, the listeners tonight, that you might describe your country a little bit so that we can have a verbal picture of the landscape and the people and the lifestyle in Mongolia, and of course, to hear a little bit about the influence of coops on that lifestyle. My second request, you can go straight from one question to the other, is a little bit about your own story, the history of your involvement with coops, and the cooperative movement in Mongolia and how you became involved in this law reform process.

Altantuya Tseden-Ish:  Thank you very much and it's my pleasure to be here and to be interviewed by you, Miss Apps and talk about my country and the law reform that is happening here. So, first of all, Mongolia is a small country, and we share borders only with Russia and China, to the north with Russia and to the south with China. So we're sandwiched between two large countries. But by surface area, Mongolia is not a small country; we are 19th in the world. So it's a huge land, but by population we are one of the smallest, so we have only a 3.3 million population in this big land, which is around 1.5 million square kilometres, so it's a huge land and very small population. Mongolia is very popular for our nomadic lifestyle so people still have nomadic and semi nomadic ways of life; these families are the carriers of our culture, of our traditions. Livestock breeding in the main agricultural sector in Mongolia, eue to the harsh, very cold climate. Mongolia has 70 million heads of livestock, so we have sheep, goats, cattle and horses, which are very important. And then also we have camels so we have this humped Bactrian camel. Mongolia is also very popular for its Goby desert, which is found in the South of the country where the dinosaurs bones are found, so it's very popular destination for the tourists, and to the west we have the Altai Mountains, which are very high mountains and where many of our ethnic groups are living. We have many, many different ethnic groups, but the majority of the population is made up of Khalkhs but also we have Kazakhs and the other ethnic groups. When everyone think about Mongolia they think of the steppe, the vast territory, the eternal blue sky and nomadic people still horse riding, so all this is true. Until now, so many nomadic people still use horses as a transportation means, but now the motorbikes and cars are taking over the duty of the horses. Horse racing is a very popular type of the sport in Mongolia. And one other very unique feature is that Mongolians still live in gers. The ger is the felt tent, and many people know yurt, but I think yurt is the more Russian name. In Mongolian, we call it ger. So nomadic families they live in a ger, which is very easy to carry, very easy to put up and take off. So you just fold everything, you move to the next destination, you put it back and your house is ready so this is all about Mongolia. And it's a landlocked country, the second largest landlocked country after Kazakhstan, so we don't have access to the sea. And that’s both an advantage and a disadvantage. And we have huge steppes so many tourists just came here to travel the abandoned land, which is naturally very beautiful, untouched. 

Personally, I have been with the cooperative movement for more than a decade, so I joined the National Association of Mongolian Agricultural Cooperatives in my 20s as an international relations staff member so I can speak Russian and English, and I still work there currently. I started my journey in the cooperative movement as international personnel, and then later I fell in love with the cooperative movement. What the cooperative movement is and what cooperatives can do for the people and how a cooperative can build a better world it kind of interested me so I started to learn more about cooperatives, so I took short courses in the country and also abroad, so I went to Japan, India, China and Malaysia to learn about the cooperative structure and movement of those countries.

And during this time, I made a career so I got promoted to the position of head of the International Cooperation Division and then in 2012, when I was still very young, I was elected as the vice president of the National Association of Mongolian Agricultural Cooperatives. Last year I was also elected as Vice Chair of the Mongolian Cooperative Alliance so I'm working in two associations, but both in the same movement. At the National Cooperative Alliance we are working more on the consolidation of the voices of the different cooperative sector and advocating for the common interests and rights for the agricultural cooperatives. We mainly work for rural development, and protecting the interests and rights of the farmers and herders. So, this is how I started and continued my journey in the cooperative movement of Mongolia. And I've been involved in the reform of the law of cooperatives since 2013 but the current law that has just passed was based on a draft that was developed back in 2007. We have been advocating and lobbying and it has been a long journey for us to submit it to the Parliament of Mongolia and only in 2019 we could do so. As the vice chair of the National Association of Mongolian Agricultural Cooperatives, I was a part of the working group who prepared the draft.

Ann Apps: Thank you so much that's great we now have a bit of a vision of the landscape and the people and we're very glad to hear that you fell in love with cooperatives, because it's something that it gets into your blood and it's great to hear that you have that passion in your blood for coops. So, just to give us a bit of an idea before we start talking about the low reform, can you explain a little bit about cooperatives in Mongolia? So what sort of coops are very common, what sort of sectors do they exist into some are some sectors much stronger than other sectors and so on. And, most importantly, what were some of the problems that they were facing that made the movement think it was time for law reform?

Altantuya Tseden-Ish: Yeah, so currently in Mongolia, we have around 4,600 cooperatives registered and some of them they're working sustainably and some of them on and off. So it depends on the cooperative business type. And most cooperatives are in the service sector. Around 34% of the all registered cooperatives are in the service sector; 13.8% are in agriculture sector. So, the majority of the largest cooperatives are agricultural, herders’ cooperatives and also credit cooperatives, we call them savings and credit cooperatives, their number is not big but membership is a big so they are a growing sector in the cooperative movement, and, of course, they also face some difficulties and now they have their own law to regulate only these financial cooperatives separately from the other cooperative sectors and their membership is growing, and also the savings and credit cooperatives, they should have a special license from the financial regulatory commission of Mongolia, because the financial services sector is a very sensitive issue, especially when people put their money in savings. That's why the government closely monitors and regulates the activities of the savings and credit cooperatives. For the other cooperatives, we have a just one cooperative law. So mainly cooperatives are in agriculture sector, the largest one, in the service sector, the number of the cooperatives is high but membership wise they're small, at less than 50 members per cooperative, for some of them it's only 9,10 members. Herders’ cooperatives are the biggest; the smallest ones have around 80-200 members and over. So membership wise and business wise I can say that agricultural cooperatives and saving and credit cooperatives are the largest sectors, developed in Mongolia. 

Ann Epps: So the you've just mentioned that there's a special law for financial cooperatives and there is another law, which covers all other types of cooperatives, whether they're agricultural or consumer coops. So this recent law reform was it only for that other law or was the law reform for the savings and loans cooperatives as well? 

Altantuya Tseden-Ish: the basic law to regulate the cooperative sector is the law on cooperatives of Mongolia. So the base [legal framework] for these financial savings and credit cooperatives is our main law, and then based on that they drafted their savings and credit cooperative law. Now they want some amendments and reforms in their legal environment as well based on that, newly passed law. But they are quite independent. Of course, the principles are the same but they cover quite a large number of the population so they really need this separate regulation, especially because they have this special license.

Ann Apps: So the new law that came in May this year. Can you give me just a broad idea of some of the changes to the law, was it a complete rewrite of the old law or was it a tweaking of fixing up of the old law or is it quite different?

Altantuya Tseden-Ish: The new law aimed to fix the old law so we kept a lot of provisions from the old law, but some provisions made the regulations clearer or more detailed, because the former law had been adopted in 1995. So we looked at the cooperative development during these years and what legal challenges they currently faced and we tried to add more to the former law and address certain aspects within it. So it's based on the former law, but many chapters were added to it. So, the first change we made was the terminology used in the law. For example, with regards to reserve funds, we have a description of what the reserve fund is. So to change this aspect we also amended the law to reflect Mongolia’s tax law, which had been changed in 2020. Under the current tax law reserve funds are considered a risk fund so we had changed this and we explained in the terminology part of the new law what is the risk fund and how each can be formed and where it can be used so these kind of descriptions can be found in the law for the first time. The law clarifies what are the services to the members. We tried to clarify in the terminology part what are the cooperative management and cooperative members, so we tried to make it clear how cooperatives should pay for the services to the members if they use any services from their own members so it can be paid in or added to the share, or it can be paid in cash, or how cooperatives can pay the members, or how they can sell members’ products or market their products. They are the kind of definitions and descriptions that are now inscribed in the newly adopted law. So the new law made everything clearer not only for the cooperative members and management, but also the tax office as well, for when they deduct tax from a cooperative’s total income. Otherwise, the taxation office would be eager to tax all the revenue a cooperative is earning.  We tried to make them differentiate between the cooperative payment to the members, which should be tax exempt, because it's not the cooperative’s income, it's a members income but at the moment, the tax office doesn’t reflect this difference so we're trying to also make it clear for the government authorities which deal with cooperatives. And that is a big success of our law so we tried to define the cooperative specific features, and also in the law.

Government support is very important so we also added a new chapter on the rights and the responsibilities of the government, and the rights and responsibilities of the local authorities because cooperatives mainly operate in rural areas, so explained what the village governor can do to promote cooperatives, how they can support them, or how they can implement the government’s different legal papers and resolutions and regulations. 

And then we also introduced a new chapter on cooperative associations, so any cooperative sector can voluntarily establish its association. We really want that all cooperatives be member of the sector associations, and that's how the cooperatives can grow together, they can join their voices together, and also they can know that the management information system will be appropriate. So, then the government will know where the cooperatives need assistance and where the growth is better. So exchange some good practices so that's why we also added a chapter on the cooperative associations and gave some rights and responsibilities as well. So, the main responsibility of the cooperative associations is to provide continuous training to the members and their cooperative development, and also to assist cooperatives to grow so the other provisions are just related to fixing, touching up and adding more regulations.

Ann Apps: A couple of things come out of what you were talking about: the first was the taxation or accounting issue. And that is problem a problem not just in Mongolia, but also in other countries so it's interesting to think about. Do you feel that the process of putting through the law reform was beneficial for coops in the sense that, while you were trying to get this law reformed through Parliament you were discussing some of these issues with government ministers and so on? Did you feel that there was an education of those ministers in terms of them finding out more about cooperatives because there was a process of law reform going on? Can you tell me a little bit about that? Did that happened, and do you think it was beneficial?

Altantuya Tseden-Ish: When we talk about the cooperative law reform many ministries and officials from the government offices, they don't understand the specific nature of the cooperatives. That's why the process was an enlightening one for them.

The working group was formed by lawyers who are members of parliament and some ministries, as well as the Taxation Office and cooperative movement people so it was a quite a diverse group. So when we were discussing the legislation clause by clause there were a lot of issues raised because they didn’t understand the nature of the cooperatives. So, being in the working group was an enlightening experience for those people, looking at what is the cooperative, and who benefits from the cooperative and why cooperatives exist, and why we need this specific regulation. Sometimes we would have a half a day debate just to include one line in the law, or we would have a one-hour debate. We faced a lot of challenges when teaching them what is the cooperative and why this regulation is specifically needed for that. When we talked about the taxation they would especially ask why cooperatives should be tax exempt. [They would say] The other business entities pay their tax and you’re in the same sector. You are in agriculture and the other companies are also in agriculture. And then we had to explain why we needed a specific legal reform so it was an enlightening course for those people, and it was a big responsibility for us as well. There were many good questions that had came up when we were working in the cooperative sector we could not explain the issues properly. And that's why I asked Santosh for help on two occasions to know how to defer certain things, and what the other countries legislations’ had said. And then Santhosh sent us different reports from the different legal research papers so we also used those to help us answer the questions from the working group members. Before presenting [the draft law] to Parliament we established our lobby group in Parliament. So, first we asked [told] the lobby group members about cooperatives and then they influenced the other members of the Parliament.

Ann Apps: That's a fascinating point because I was doing some research about the idea that you need a policy champion. You need somebody who's inside the government to champion the law reform process, no matter what it is. The idea that you had a group of people that you were taking to and educating so that they could fight for you or lobby for you is really interesting. I love the idea that the whole process of law reform is also about educating the government ministers so that they understand more about coops. 

Altantuya Tseden-Ish: Yes, it was, and of course, it was a very long process and not an easy one. During that time some ministries and ministers and ministry personnel also changed. So, we had to start from the beginning again, having to talk to them and educate them about cooperatives. 

Ann Apps: You mentioned the role of peak bodies [apex] or the role of secondary and tertiary associations. Am I correct in saying that under the law reform process it is mandatory for coops to belong to a secondary association? Is that the situation under the new law, that wasn't there under the existing law?

Altantuya Tseden-Ish: No, it wasn't there under the existing law. We now have around 4,600 cooperatives, but if you look at the membership in the professional associations in the sector associations, then only 1/3 of those cooperatives are members. So, it means that 2/3 are outside the movement, they're developing on their own maybe somehow their voices are also missed, and some challenges they face are also missed. The other thing is because the government really wants to support cooperatives, they really need this data on the cooperative sector, the up to date data. We can give them the data and studies and research only on our members. There are a lot of cooperatives, which are not members, and then if the government really wants to develop this information and management system for cooperatives, it really needs all of them to join the associations. For the government it's easy to work with the associations to which all cooperatives belong, and through their associations they can promote and support cooperatives. That was the idea behind this change and we looked at different countries’ cooperative development and in the early stage of development there is always government support, in terms of the policy and also in terms of the business and finance as well. So at the moment cooperatives are just developing on their own and the growth is not enough. But the government sees potential particularly in rural development where cooperatives play a very important role. That's why they want all cooperatives to join the national or maybe provincial associations and through those associations they want to support cooperatives. 

Ann Epps: Was there any pushback from the cooperatives themselves, were there any cooperatives that said ‘No we we'd rather be independent. We don't want to have to join a secondary association’, or with they're quite supportive:

Altantuya Tseden-Ish: They're quite supportive, but at the moment in Mongolia, we have five associations which are actively working: one in agriculture, one in the consumer cooperatives sector; two in the service sector, and one in the credit union sector. But now new cooperative sectors are emerging, for example transport cooperatives, they're becoming quite popular in rural areas because they enable traveling between the rural places in a very efficient way. So there are only five associations at the moment very actively working at the national level and maybe we cannot reach all that cooperatives in every corner of Mongolia. After the cooperative law started being enforced some cooperatives called our associations and they asked where we were located, what we did so they had never heard about us. So these kinds of reactions were predominant among cooperatives. At the moment, no cooperatives say that they don't want to join secondary associations or maybe national associations. 

Ann Epps: We have a quick chat yesterday about this but I'd like to hear a little bit more about the topic. We talked about the demographic and how there's a growing demographic of younger people, but they're perhaps not so inclined to join cooperatives and I was just wondering whether the law reform process, addressed this issue and if there were any ideas about how younger people might be bought into the cooperative movement. 

Altantuya Tseden-Ish: Yes but not enough in my opinion, because Mongolia is a very young country. And Mongolia is a very cold country in winter and we are located in a very high level from the sea so that's why our country life expectancy is not so high.

It has been increasing in recent years but still the life expectancy rate is not that high compared to that of other countries. And then in Mongolia we think that people who are under 35 years old are young. Looking at the demographic features of Mongolia, almost 60% are people are under 35 years old. And then 1/3 of them are youth [between 0-14 years old], so young people from 15 to 34 years old it's almost two thirds of the population so it's a very young country. If you look at the membership of the cooperatives, they are quite old organisations so it's mainly very elderly people who join, and the movement doesn't encourage young people to join them. That's why we're doing a lot of advocacy saying that cooperative education should start in secondary school so they can learn what a cooperative is, or at least in higher educational institutions they should teach you about cooperatives. 

For example, if you go to universities or colleges they teach you about companies and corporate businesses but they don't teach you about cooperative businesses, and then many young professionals don't understand what a cooperative is so they think a cooperative is an organisation for the elderly people, or for farmers, or for the vulnerable groups. So it's a very common misunderstanding in Mongolia that that cooperatives are not for the educated young people. That's why we have been advocating for so long that at least higher education institutions should teach co-operative besides the corporate business model. We didn't succeed this time, but we will touched upon this but in the future, hopefully people will understand what a cooperative is. So, this is still a challenging issue for us. 

Ann Apps: It's a challenging issue for all of us and it's interesting to hear that for me because I think there's a growing sense, a growing movement around the idea that we really do need to focus on cooperative education in schools and tertiary institutions so that young people understand the model because they're only understanding one model at the moment and that's the problem. That takes us to that problem of a one size fits all business models. We sometimes say, this is a problem of isomorphism that everything seems to be built on the idea of one business model the company business model and clearly you've already touched on a couple of areas where that's an issue in Mongolia, the taxation department doesn't understand the notion of surplus for example, because presumably nobody in the taxation department learned about cooperatives when they were at university, and why their income should be treated differently. So, I just wonder if there are any other areas in Mongolia where other laws, taxation law being a good example, but other laws like, for example, in agriculture do you have any difficulties with competition law? Are there any areas of competition law that impact on agricultural coops in Mongolia?

Altantuya Tseden-Ish: Yes, because when we talk about the agricultural cooperatives, then we always talk about the fair competition and fair trade because we have quite a lot of very wealthy and rich middlemen already there. They control their value and supply chain and they don't let the herders or their cooperatives to be a part of this supply chain. And that's why in our association we always face problems with government bodies with other associations so it's a conflict of interests, we always say that the producer organisations or farmer organisations, they're an important part of this supply chain and an important part of this value chain, but they only look at them as mere producers of the raw materials, but we say to them that they are the main producers of the food, the main producers of the raw material for the processing factories. So we really fight with this middlemen-dominated supply chain. And now we are trying to work with the agricultural commodity exchange of Mongolia, which is a government owned body, so we really try and explain that they should treat cooperatives as one of their players, so they should let the cooperatives come to the exchange, sell their products and go away. 

For agricultural communities this is not a process that enables them to have the same product every day. In the livestock sector in spring you will have Kashmir, which is the goats’ wool. And then, in summer you will have sheep wool, and then meat comes and so the products are seasonal. 

We really wanted cooperatives when the Kashmir [season] comes [to be able to collect] the Kashmir from the herders and then sell in the agricultural commodity exchange and go, and so it's the easiest way to kind of solve this issue, but at the moment because the agricultural exchange is not properly working the middleman are dominating. And then they don't let cooperatives and processing factories deal with each other. This chain is broken that's why the fair trade and fair competition in the agricultural sector in impossible at the moment, especially when we also see some international middlemen come into Mongolia when the Kashmir and wool and meat season come. Because Mongolia is popular for natural, organic livestock, foreign middlemen also come from the neighbouring countries and then they buy the products. And that's why we are really fighting against this current supply chain and we really want to treat farmer organisations and agricultural cooperatives as one important part of this chain.

Ann Apps: We’ve merged through a number of different things we've talked about the broader context and then we've talked about particular issues like accounting and taxation, which is sort of nitty-gritty issues, the broader issue of educating people so that they understand the difference and the importance of law reform process, educating people about costs particularly within the government, government ministry and we've talked about the fact that because coops are always battling against a one size fits all model that we have come up against problems and things like not only taxation but competition law in supply chain that we've just talked about. The last area that I wanted to hear from you is your experience. I guess this is an important thing. It's great when you achieve law reform that's really exciting. You mentioned something to me yesterday on implementation, and the difficulties of implementing a new law particularly in the current situation where we have lockdowns, and not as much direct access to your farming members, for example. So I'd love to hear a little bit from you about some of the challenges that you experiences when implementing a new law.

Altantuya Tseden-Ish: The first challenge is that we need to promote the law not only among our members and the cooperative members, but also to the local authorities and government offices. Like you said, to the taxation office, we should promote what changes were made in our law, and due to our law what  amendments were done to the taxation law and how we should explain it, how we should implement this law in practice. And then the other thing is that we also need to educate the people who work in state registration offices across the country, because they are who register and dissolve the co-ops. And then with regards to the registration and dissolvent of the cooperatives, we also made quite a few changes, because we have some fake cooperatives in Mongolia, especially in the agriculture sector where we have these middleman. We tried to avoid these middlemen the government also took some measures to [encourage farmers to] quit these middlemen businesses. So then they [the middlemen] started to establish cooperatives, kind of a one person-owned cooperatives, but herders don't know this and becomes victims so that's why we really want to start the promotion and implementation of our law from the registration office and from the registers, who are across the country. In Mongolia we don't have a special, nominated coop register. So there is only one person who deals with the registration of all entities and organisations, and that's why we will start from them, and then we will try to teach them the specific features of the coops and when they will register cooperatives how they should work and differ [from other businesses to determine whether] it is a fake co-op or a real co-op, a real initiative with real people, or just one person who just names other people, and establishes a cooperative for their own sake. So we will start from them. And then, of course, we will try to reach the taxation office and the Ministry of Finance, and we really want the new accounting regulation for the cooperative, where they can show the specific business on their cooperative and that’s going to be quite challenging because it's very difficult to deal with the taxation office and Ministry of Finance. When the Parliament of Mongolia passed the cooperative law the resolution said that the Ministry of Finance should lead this Accounting and Taxation reform for the cooperative. 

And then of course, region wise, we will start to promote our law, among co-ops. We started from the Western Region but the involvement of the people while they are online quite challenging, again, still they are trying, and when we start the promotion we're trying to involve as much as possible, the governors of the villages and provinces, the persons who are in charge of the SMEs and cooperatives, and also the people who are working closely with the cooperative moment. So, getting there may be a long process but we started from the western region, at the beginning of the next month, we are planning to go to the eastern region, if this pandemic situation allows us. 

We are going to organise a big event in the eastern part of Mongolia to promote new law, then a lot of online course, workshop and meetings. We are also preparing a new manual for the [implementation] of the new law, so we're not only going to print out the law but we are going to try to explain what is in the new law, and how it should be implemented [by cooperatives] on their own. And then, we are trying to explain [everything using] very simple language so that everybody can understand. So that's what we are doing at the moment. But implementation is of course, difficult. 

Ann Apps: Thank you so much. It’s been very, very interesting talking to you and there are many, many countries around the world that are looking at reviewing their legislation. Right now we know quite a few countries that have started this process and I think there’s a lot that you’re saying to our audience, perhaps even the fact that it takes as long as it does to do the job properly. I think it's something that everyone needs to understand that the process takes a great deal of patience and hard work and commitment. So I'm just wondering as a takeaway message what is your takeaway for those people who are involved in cooperatives or different countries around the world who are just beginning this process, what would you say to them?

Altantuya Tseden-Ish: I would really like to say to them that, of course, every country has their own, very specific problems and issues. First of all, you have to look for your own and choose the problems that the cooperative sector faces Second, I think that international legislation research papers are very handy. The International Labour Organization has this guideline for cooperative legislation and the then there is also the legal committee of the ICA. You have a lot of studies and research papers. We went through them so I think this comparing with different countries’ legislation, and how they regulate certain issues is very important because we don't want to make mistakes. It will take a long time before the next reform or amendment so that's why I really want to say that you have to look at different countries’ legislations. We looked at Japan’s and Korea’s, and then we looked at Hagen Henrÿ’s research papers, and then we also had an online meeting with Dr. David Sedic who is located in the USA, and he also was a professional who worked on the Central Asian countries cooperative legislation especially former USSR countries so we also consulted with him, and the consultations with different legal experts gave us some good ideas. The initial draft we submitted was 50-60% changed and it's been a long process, you need to be very patient and then you will succeed. It took us more than 12 years.

Ann Apps: Yes. I think it's a good lesson. The process needs to be an ongoing one almost, if it takes you another 12 years to do again. 

Altantuya: That's why we try to learn alot from the other countries’ legislation.

Ann Apps: Fantastic, I have enjoyed listening to you tonight so much and I learned a lot from you. I know a lot more now about Mongolia and Mongolian cooperative, it seems to me that a lot of the problems that you face that shared problems which is really interesting that all around the globe. So we have much to learn from you and we're very delighted to have this chance to have a conversation with you. Su Thank you very much for your time tonight.

Altantuya: Thank you very much for inviting me for this first interview in the series. I would say that when situation in the world calmed down, please welcome to regalia and we are very happy to show you around and show you also our cooperatives.

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