Otgonbayar L: Policy regulating competition should be flexible and sensible
We had an interview with Mr. Otgonbayar L, who earned master degree in Competition law and Innovation law in University of Edinburgh, Scotland, Great Britain and returned to the country, on legal reform in Mongolia, especially investment environment, industrialization, and policy regulations on competition and competitive advantages.
-Hello, can you introduce yourself to our readers, please?
-Hello, my name is Otgonbayar Lkhamsuren. I am Executive Director of Legal Policy law firm. I have worked as a lawyer for 10 years including professor at law school, legal advisor in commercial bank, legal advisor in insurance company, senior lawyer and head of legal department in telecommunication company. I have been working as an advocate for 8 years.
–I heard that lawyers specialize in criminal, civil and administrative laws. How about you?
-I am a lawyer and an advocate who is getting specialized in business, competition and innovation law. Although lawyers can be categorized as criminal lawyers, civil lawyers and etc according to traditional category as you said, the era we are working in requires more specific specialization and skills from lawyers. All the period that I worked as a lawyer integrally connected with innovation and competition law. I was working as a lawyer of the bank in a totally new trend, new standard and new legal environment when the banking sector was blooming and competing with new technology, products and services after the reform in banking sector. I was professionally managing quite a number of important projects and investment agreements and negotiations when information and telecommunication sector was actively developing. They were all “for the first time in Mongolia”. A necessity to specialize in competition, innovation and investment was derived as new challenges were challenging us and our country’s legal environment as well when market competition became fierce. It is true that you are automatically guided by your goal and destiny when your work becomes hobby. I had an opportunity to study in a program specializing “Competition law and Innovation” in Law school of University of Edinburgh in Scotland, Great Britain and earned degree in this specialization.
–Could you please introduce Legal Policy law firm? What is the main difference of your firm from others?
-The distinction of our firm from others is that our firm specializes in certain legal sectors. Legal Policy is a relatively young firm founded in 2008, but is highly ambitious. Our policy is to contribute to the development, innovation, industrialization, technology and infrastructure development of our country and to provide services based on methods and experience satisfying actual demand of market. I am thankful that energetic young people who graduated foreign and local universities joined our firm. Taking this opportunity, I would like to say that Bar system and law firms have been started to be established with the proper concept since 2013 within the scope of legal reform that is intensively implemented in Mongolia. So our guys and Legal Policy could be written as one of the pioneers in the history.
–Law firm is a relatively new concept in Mongolia. What does this business do?
-It’s been only over 20 years since the concept “Company” emerged in Mongolia. Afterwards, the successful companies just started to have “legal advisors” in the late 90s and the beginning of 2000. I am one of those first legal advisors, too. When I was first hired as a legal advisor by Golomt bank, there was only one lawyer in Bodi and Golomt. Later, another person was hired and we handled all legal activities of those companies for quite a number of years. We used to develop all types of contracts and regulations and conduct all types of legal activities. However, it is not possible that one person can be specialized in many sectors and on the other hand, one company is not able to hire many lawyers who specialize in different sectors. Special knowledge and skills are required for working on major agreements and negotiations and working in higher level. A procedure of getting legal investigation conducted by independent lawyers is common in investment practice. Thus, the demand for specialized people who do this will automatically emerge. Consulting service business satisfying this demand is the business that is operated by law firms. The market necessarily requires specializing in a product or a service and being distinguished from the others. Specialized and independent lawyers’ cooperative and law firms are established by this demand.
–What major projects is Legal Policy law firm working on?
-To name from the major projects, we are successfully working as a legal consultant cooperating with International law firm Taylor Wessing on “Sainshand industrial complex” project. It is an amazing project for its scope and economic significance towards diversifying our economy, such as steel plant, iron ore plant, separated iron plant, coal aerating plant, copper smelting plant and coking plant. Our firm not only develops contracts and legal documents and provides consulting, but also conducts research with the purpose of demonstrating bigger frame of scene on how to stably develop industrialization and how to improve legislations on it in Mongolia.
–You are working on industrialization legal environment. So what legal environment is needed to develop industrialization in Mongolia?
-If everyone is asked if industrialization is needed, he/she will say yes. We have given a special input depending on geographic location, neighbors and development level. For instance, there is an industrial monster in the south of us. We need to create legal environment consistent with this input. The solution is high technology and competitive advantage. We will domesticate, get and learn high technology from foreign countries because it is not an issue that can be solved by normal way like locally selling khuushuur. Therefore, it is necessary to create condition to develop and implement agreements for intellectual property, patent policy and technology meeting international standard.
Most successful examples of developing industrialization are around South East Asian countries. Japan –Wide scope of operation with a centralized and complex concept of the ministry called as MITI, Singapore – consolidated policy of President Lee Kuan Yew, Korea – policies for continuous support to major companies of Park Chung Hee. When we look at what factors they had for legislations, it was creation of a mechanism with a vertical and consistent support providing unified understanding, consistent policy and necessary power. It provides capability to improve speed and performance. Although it is true that international organizations believe these countries of South East Asia are not very good examples for governance, there was no dictatorship, but were trust and policy support for Japan’s example. Appropriate and definite policies create clear condition for investors. Furthermore, many conditions as single point system and clear and precedent tax environment are necessary for manufacturers. Improving competitive advantage starts from properly assessing oneself.
-Let us talk about legal environment in Mongolia. It is said that investment environment has become worse in Mongolia in recent years. What is your opinion on it?
-Although negative news on investment environment is broadcasted through media, the news is short of professionals’ voice. Actually it should be mentioned that major steps have been implemented by the government for policies supporting investment in recent years. A new mechanism called as Stabilization certificate has been created consistent with investment scope and size. This is a big progress. Major projects created jobs and small and medium plants intended to create a system providing opportunity to supply them. Therefore, it is necessary to learn and promote law on investment. Actually, nowadays businessmen listen to advices from experts and lawyers more than media news. Smart government and policies to support private sector are important for businessmen. I wish this idea becomes law, principle and culture. Our country is becoming a country whose legal environment supports the businessman if he/she makes effort to legally operate. There is a lot to learn and improve for a country which is developing.
– Not only improving investment environment, but also improving something does not mean approving large number of legislations. What do you think of it?
-Yes, issue is not solved by approving legislations. According to Dr. Lawrence Lessig, professor at Law School of Harvard University, there are four things regulating any social relations and human behavior. First one is norms and culture of society. Second one is law. Third one is market and fourth is architecture. First two are reasonable. Also, market automatically impacts our behavior and decisions. The most interesting one is architecture. Of course, law is society’s engineering architecture, but there is architecture different than the one on paper. We should pay attention to it. It is a concept involving material and non-material solutions affecting formation of space solution, human behavior, culture and concept. For instance, government authorities of Federal Republic of German government locate in Berlin. However, Federal constitutional court is in Karlsruhe. This is an architectural solution for this institution.
There is no desk in the hall of Great Britain’s Parliament. We can see that the architectural solution here is only to have discussions and make speeches. There is no need to have “button” arguments, to play candy crush and to read newspapers on desk. There is an architecture that only professionals need to work in media sector in developed countries. There is no space for contents with intellectual property right violations and logically unsatisfactory news as the broadcasting cost is high. Architecture, with a norm that the speech needs to be accurate and brief within a very short time, has been set. A witness is questioned, in a closed cabin that only judges can see his/her face, at the trial in western countries.
On the contrary, defendants are questioned looking at their family. Victim centers are usually located in a corner or a place where the door faces to the back in western countries because it is a solution that is clearly designed knowing that victims of violation do not have courage to walk in a big building situated in public or by road side. So, architecture of society is important. To summarize, arrangement considering all four norms of society – culture, law, market and architecture – shall be effective and complex.
–Is transparency also important, or is it not? Can it exist in our country?
-It is a very broad topic. Open culture includes ideology and movement. For instance, there is an understanding that an intellectual property is accepted and more protected by being disclosed. You cannot say any similar idea is a theft when you hide your creation in box or library. Of course, there should be closed things. Transparency and open culture are important for public activities and resolutions. It is important that public authorities need to possess a culture to learn from the mistakes, to accept mistakes, to openly discuss and to leave in writing as they experience more. Recently, I have carefully read the reports of Euro commission that is about how European Union responded to historical economic crisis. They have culture that they know they are ethically responsible for their future generation and they write without hiding their mistakes and successes.
-What do you think of policies and activities implemented by the Authority for Fair competition and Consumer protection as a person who specializes in Competition law?
–Magnai O is the person who made the public understand the importance of this organization. New Law on Competition was approved and got close international standard by the effort of previous management and international organizations. Quality modification is becoming necessary for institution and law. Law on competition is always criticized by businessmen in Europe and the USA. It is even called as “antitrust” in America. I made research and wrote presentation and articles on issues of competition law during financial and economic crisis and competition policies for developed countries.
Based on present Authority of Fair competition and Consumer protection, I understood that the Authority for Fair competition and Consumer protection should introduce present law concept to the public and get their present policy discussed in public. On one hand, the authority seems an issue for some sector businessmen and on the other hand there are many things that should be developed in order to reform, replace the architecture of some sectors and make it fair and competitive. Law on Competition has just started to be implemented. It is the right time to have discussion. Competition regulation cannot be removed because there is a research that shows fair system for competition enhances confidence in investment. Moreover, it is one of the criterions in the Business environment report issued by World Bank every year.
Researchers emphasize that it is important to sensibly evaluate market environment and to flexibly implement the law based on it when implementing competition law. On the other hand competition organization is an organization that makes its decisions considering two contradictive factors as long term right and interest of consumers and the demand for business and innovation to develop. OECD emphasized that having extreme view of one side, especially consumer side, is harmful to economy and the organization’s destiny. Policy on competition focuses on maintaining discipline and implementing law on one hand and on the other hand providing ease to enterprises and deregulating market in order to protect competition system of market.
– Thank you for an interesting interview. I wish you and your team success.
-Thank you. I wish you success, too.
Interviewer: Khurelkhuu Ya