Forest Industry—Mongolia
Forests occupy only 8.1 percent of Mongolia—a total of 17.5 million square hectares. Most forest reserves are pine, birch, and other conifers and are located in the northern uppermost corridor, which borders Siberian Russia. Forests are found mainly in Selenge Aimag (province), but also in the northern provinces of Bulgan, Khubsgul, and Hentii, and even in the Gobi Desert to the south near China. Although small, Mongolian forests provide ecological balance, soil protection, and water collection. As of 1997, total forest resources were 1.337 billion square meters, with an annual growth rate of 5.6 million square meters.
Mongolia's first forest utilization/preservation law was passed in 1940; from 1970 to 1990, 1.7 million square meters of forest were cut annually; 270,000 hectares of forest were destroyed by fire, and another 70,000 hectares were lost to insects and diseases. At the end of the Socialist era in 1990, there were twentythree small state-owned wood-processing companies. With the complete privatization of these companies in the past decade, in 2000 there were about fifty shareholding companies, mainly exporting nonprocessed wood to China. This represents about 6 percent of Mongolia's total industrial output. According to the Mongolian Ministry of Nature and Environment, Mongolia's few wood-processing plants have cut down almost half of the national timber resources over the last few decades and, if the pace continues, in seventy years Mongolia will have no forests.
The Mongolian government is concerned about deforestation and believes that the export of nonprocessed wood has an adverse impact on the price of domestic wood products. At the beginning of 1999, the government began limiting nonprocessed wood exports and imposing timber export taxes under the National Program on Forests. Nevertheless, the amount of exported timber in 1999 exceeded the limits set by Ministry of Nature and Environment. The government, to discourage additional logging, imposed a tax of 150,000 tugrik ($1,500) per cubic meter of export timber. Also, a reforestation plan has been implemented: in 1999, young trees were planted over 6,000 hectares, and projects with foreign export partners are under development. The tax policy on timber has hurt an already-declining local industry. Many workers have lost their jobs, especially in Selenge Province. Wood-processing factories have gone bankrupt because the tax policy on timber has decreased Chinese market demand.
The Mongolian government is promoting development in three areas of the forest industry: (1) production of tincture for medicinal use, powdered vitamins, and oils from conifers and pine resins; (2) production of construction materials, cut board, and tree particle board; and (3) production of furniture and birch floor and construction materials.
Further Reading
Government of Mongolia. (1998) "Agro-Industry Investment Project Profiles." 24–26 June.
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