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Mongolian Ambassador Baasanjav Ganbold expressed hope that negotiators from his country can sit down with Korean representatives soon to begin talks for a free trade agreement.
The proposal came amid Asian country's attempts to diversify its trade relations with countries other than its two key partners — China and Russia — as a counterbalance.
If the trade pact is signed, Korea will be the second country to have such a pact with Mongolia, following Japan.
"As Mongolian ambassador to Korea, I hope that the two countries can sign the Economic Partnership Agreement (EPA) as we signed it with Japan earlier this year," Ambassador Ganbold told The Korea Times at the Korea Trade Investment Promotion Agency (KOTRA) in Seoul on Feb. 25.
"Compared with other countries, for example China, I believe Koreans have no reason to be concerned about the pact with Mongolia because the two economies are complimentary."
Korean farmers fear that the Korea-China free trade agreement, which the two sides concluded last year, would drive them out of business once it goes into effect.
Ganbold was optimistic about EPA negotiations sooner or later, saying that the Korean government responded positively to his offer to start talks to discuss the pact.
Japanese Prime Minister Shinzo Abe and Mongolian President Elbegdorj Tsalchia signed the EPA in January, after the two countries began talks in 2012.
The Japanese parliament is expected to ratify the pact soon as there are no outstanding issues that concern the Japanese people. Once this is done, the pact may go into effect within this year, according to experts.
Mongolia has striven to diversify its diplomatic and economic relations with a variety of countries. Such an effort is seen as the country's balancing act to reduce its heavy reliance on its two neighbors— China and Russia.
"I think that the EPA, if effective, will make it easier for Korean investors to do business in resource-rich Mongolia," Ganbold said. "On the Mongolian side, we need advanced technology from South Korea to develop our mineral resources and achieve economic growth with fewer emissions."
He made the remarks on the sidelines of the Korea-Mongolia investment forum organized by the Mongolian Embassy in collaboration with the KOTRA.
The two sides organized the event to commemorate the 25th anniversary of the establishment of diplomatic relations between the two countries.
Economic slowdown
More than 200 Koreans, mostly small-business owners and those who plan to invest in Mongolia, attended the forum and asked questions to the Mongolian ambassador regarding the country's business environment.
Ganbold mentioned about a set of measures his government has introduced in recent years, including tax benefits and measures to improve transparency in business practices there, to attract foreign investors.
Some investors presented worries about a slowdown in growth of the Mongolian economy in recent years.
Mongolia had achieved double-digit economic growth in the past decade. In 2011, it achieved 17 percent economic growth, compared with a year ago. But the rate has more than halved last year with a 7.5 percent of growth rate.
Ambassador Ganbold said the falling growth rate was the result of falling global demand for natural resources, his country's main export item, and economic slowdown of China.
He admitted domestic policy failure was also partly responsible for the falling growth rate.
Lee Jae-young, executive director of the Russian and CIS Europe Team at the Korea Institute for International Economic Policy in Seoul, was optimistic about the Mongolian economy.
He mentioned about the dramatic rebound of the Russian economy in 1999, a year after the country defaulted on its debt following the financial crisis.
"In 1998, many foreign companies, including Japanese businesses, pulled their businesses from Russia following the Ruble crisis. Korean conglomerates such as Samsung and LG didn't respond quickly to the crisis because executives of those companies hesitated whether they should pull their companies from Russia or not and as a result kept operating there," he said.
"The Russian economy rebounded and achieved economic growth a year later. In the 2000s, it achieved 7 percent average growth. This benefitted the Korean companies based in Russia because demand for their products soared and every Russian loved them."
Lee's remarks indicated to some people that the Mongolian economy will grow faster again as it has implemented a set of reform measures to attract more foreign investment.
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