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ADB Loan to Help Mongolia Overhaul TVET to Develop Skilled Workforce

ADB News, Ulaanbaatar, 17 December 2014 - The Asian Development Bank (ADB) has approved a concessional loan of $25 million to help Mongolia promote jobs through an overhaul of its technical and vocational education and training (TVET) system in three priority sectors—agriculture, construction, and road and transportation.

“Employers in these priority sectors face a shortage of skilled workers while the workforce is unable to take full advantage of opportunities created by investments in areas such as building, road and railway construction, and modern technology in agricultural production and processing,” said Asako Maruyama, an ADB Education Specialist. “The project will support the government’s reform initiatives in TVET and secondary education to better prepare the country’s labor force.”

The rapid growth of the Mongolian economy in recent years has changed the employment structure and demand for skills. The three priority sectors generated almost 46% of employment in 2012, but the supply of skills has not responded flexibly to labor market demand. As a result, only about 56% of TVET graduates found jobs in 2012, while national unemployment was running at 8.2%. The unemployment rate among youths aged 20-24 exceeded 17% in 2012.

The project—in collaboration with employers and industry and professional associations—will support the establishment of an industry-driven TVET system in the three priority sectors. Among the planned activities, the project will support sector subcouncils, industry and professional associations, and employers in setting standards for TVET programs and courses, establish accredited assessment and certification centers, upgrade training equipment and facilities for at least 20 TVET providers, and strengthen industry partnerships with selected TVET providers.

It will also establish training systems for TVET managers and teachers and 30 independent senior secondary schools which will offer occupation-oriented technology elective courses; and develop a credit transfer system between senior secondary education, tertiary education, and TVET.

The project will directly benefit young students who generally come from poorer families and adult students who are unemployed or looking for better job opportunities in selected TVET institutions. It will also provide all 8th and 9th grade students—almost 100,000—in junior secondary schools with career information to help them make informed choices between TVET programs and senior secondary education.

ADB’s loan comes from its concessional Asian Development Fund, carrying a 25-year term, including a grace period of 5 years, and an interest rate of 2.0%. The Government of Mongolia will provide counterpart financing of $3.59 million.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region. In 2013, ADB assistance totaled $21.0 billion, including cofinancing of $6.6 billion.


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