A striking example of how a short-sighted, populist decision—made solely to appeal to voters ahead of an election—can cause lasting damage to a country’s economy, public interest, and sectoral development is the now-repealed Law on Customs Tariffs and Customs Duties.

A little over a year ago, the State Great Khural (Parliament) and the Government passed this law under the pretext of supporting herders and rural citizens during the challenging winter and spring seasons. The aim was to supply them with cheaper flour and animal feed by exempting these imports from customs duties. However, subsequent governments and parliaments delayed reversing this decision, letting it linger until the end of the first quarter of 2025, when it was finally repealed. A great deal unfolded in the political sphere in the interim.

The bill to repeal the customs duty exemption was initially submitted in late January 2025 by J.Enkhbayar, the Minister of Food, Agriculture, and Light Industry. During its first reading in parliament on May 16, the bill failed to gain majority support and was rejected. But shortly after, the government resubmitted it under an expedited procedure, and on June 25, it was finally passed. This law, which had been “protected” across two successive Cabinets led by L.Oyun-Erdene, was ultimately repealed under the new administration formed by Speaker G.Zandanshatar.

Citing the emergence of monopoly and oligopoly in the flour sector, Speaker D.Amarbayasgalan defended the need for government intervention through tax policy. Members of Parliament who had previously rejected the bill later reversed their stance, coming together in majority support to prioritize the domestic market and national industries. As a result, customs duties on imported flour, wheat, and livestock feed have now been reinstated.

The events that unfolded over the past year in the agricultural sector—set in motion by this temporary customs exemption—laid bare some deeply entrenched issues in our society: why Mongolia struggles to develop, how inconsistent and uncoordinated government policies and decisions are, how poorly grounded in research and planning those decisions can be, and how political leaders—especially those in high office—often sacrifice the national interest for personal or electoral gain. This episode revealed, with stark clarity, how blind decision-making becomes in the heat of election season.

Grand start, pitiful ending 

The initial push to exempt certain products from customs duties came from none other than the then-Chief of the Cabinet Secretariat and current Speaker of Parliament, D.Amarbayasgalan, who claimed to have “seriously considered” and even initiated the draft legislation.

As some readers may recall, in the spring of last year—right before the elections—there was a surge of criticism and attacks targeting domestic flour producers. Leading that charge was the chief of the cabinet secretariat himself. Agencies tasked with market oversight and consumer protection, such as the General Authority for Fair Competition and Consumer Protection (now the Anti-Monopoly Agency), joined the fray, amplifying the narrative by claiming, “Flour producers collude to raise prices four to 12 times over the span of a year. The price of flour and animal feed has increased by 78 percent over the past three years.” Riding the wave of public discontent fueled by such statements, politicians rushed to introduce the law under an emergency procedure, and it was swiftly passed with overwhelming support.

Yet, when the bill to repeal this very law was submitted—again under an emergency procedure—more than a year later, not a single official or agency came forward to echo the earlier alarmist rhetoric about price hikes or industry collusion. The very politicians who once passionately insisted, “The state must fight price inflation,” or “We can’t protect the domestic market at the expense of consumers,” were now completely silent.

Even Speaker D.Amarbayasgalan, widely recognized as the main architect of the customs exemption law, offered only token resistance to the repeal, seemingly to avoid political embarrassment. The rest remained entirely disengaged.

This silence reveals the underlying truth: the original decision—claimed to be aimed at supporting herders and rural citizens—had already fulfilled its political purpose ahead of the elections. Once the votes were cast and public attention shifted elsewhere, the law was quietly discarded.

They profit, we pay

In recent weeks, certain politicians and journalists have been actively promoting a message on social media stating that the agricultural sector grew by 35.6 percent in the first quarter of 2025 and that Mongolia is gradually recovering from the severe zud conditions of the 2023–2024 winter and spring. The timing and focus of these claims—highlighting only the first quarter despite the second half of the year already beginning—appear to serve two key purposes: to spotlight the government’s launch of the “Atar IV” cultivation campaign and to glorify the ministers and officials who worked to reinstate customs duties on imported flour and wheat.

Yet, on the ground, reality paints a far less optimistic picture. The agriculture sector has neither fully emerged from the aftermath of the zud nor begun to recover from the damage caused by the customs duty exemption. According to the Ministry of Food, Agriculture, and Light Industry, the zero-duty policy led to the closure of four domestic enterprises over the past year, while the remaining flour mills are now operating at just 20 to 40 percent of their capacity. Import dependency has surged past 40 percent, cultivated land area has decreased by over 50,000 hectares, and crop yields have dropped by 30 to 40 percent. Overall, the sector is estimated to have suffered losses amounting to around one billion MNT.

During the parliamentary debate on the bill to repeal the duty exemption, several lawmakers emphasized that Mongolia had lost an estimated 60 million USD—about 216 billion MNT—because of the policy. That is no small amount. But more importantly, this figure likely understates the full impact. When factoring in lost opportunities, reduced production efficiency, and the fragile conditions for nurturing domestic businesses in a small economy like Mongolia’s, the actual damage may far exceed that number.

This entire episode serves as yet another example of how poorly calculated, politically motivated decisions—designed to win short-term approval from voters—can end up causing long-term harm to the country. While those in power walk away with the political gains, it is ordinary citizens and vital industries that bear the cost.

Belated realization

From the very moment the law was passed, some in the private sector voiced clear opposition. One business owner, for example, predicted early on, “This law won’t last more than a year. Its purpose is obvious, and it’ll be gone soon. But as the saying goes, ‘a guilty man will kill to hide his shame’—those who pushed and passed it will stubbornly defend it for a while. The longer they delay its repeal, the more damage it will do to the rest of us.”

Looking back now, that statement rings strikingly true. When the repeal bill was first submitted earlier this year, Parliament rejected it at its initial hearing four months later. But that delay appeared more strategic than accidental—it created space for the government to reintroduce the bill under an emergency procedure, seemingly to mask political embarrassment and manage public reaction.

Rather than admitting their mistake, many politicians appeared to fear public criticism and tried to avoid accountability. So, when the bill was reintroduced under the pretext of an urgent need, it was quietly approved—this time with minimal resistance, as if the legislators had no choice and were simply bowing to external pressures.

For the politicians, this delay provided just enough time to defend a reckless policy and pretend they were taking a more measured approach. But for those working in agriculture—especially crop farmers—these were the most critical months of the year. As soon as the bill to repeal the law was submitted, they pinned their hopes on it. They prepared manpower, readied their machinery, and waited anxiously for a resolution. But while they watched politicians posture and hesitate, the spring planting season slipped by—wasted.

Many are now left wondering why the law wasn’t repealed sooner if this was how things were always going to end. Some go further, arguing that the government itself destroyed the market for domestic farmers and crippled flour producers, and therefore has no right to complain in the coming years if the harvest declines or domestic supply falls short.

And they’re right. The politicians whose decisions cast a shadow over the planting season have no grounds to whine about the consequences. The damage has been done—not to them, but to the farmers, the producers, and the future of the sector they claimed to support.

By D.CHANTSALMAA