Embed Size (px)
Citation preview
BUSINESS COUNCIL of MONGOLIA NewsWire
www.bcmongolia.org [email protected]
Issue 298 – November 1, 2013
NEWS HIGHLIGHTS:
Business
Mongolia closer to ending OT dispute;
French energy giant signs uranium deal;
GDF SUEZ signs MOU with Newcom for renewable energy;
Chongryon’s Tokyo HQ has business potential Mongolian buyer;
Standard Bank agrees to sell $1bn worth of Asia loans;
Khan Resources takes Mongolia expropriation to arbitration panel;
Japan-Mongolia JV provides concrete for cold temperatures;
MAK and FLSmidth to open new cement plant;
Skymedia rolls out IPTV in Mongolia;
Sinopec to make play on brown coal;
Malaysia explores oil and gas opportunities in Mongolia;
UK West Midland firms told to look at Mongolia for new export opportunities;
Mongolia and Poland sign declaration of cooperation in mining;
USAID opens $400m fund to assist small business;
Khan Bank adds $111m to its funding and capital base;
Japanese bank to open representative office;
Newera reports more positive seismic indicators at Ulaan Tolgoi;
Prophecy Coal to purchase additional Prophecy Platinum shares;
MEC requests extension on convertible note repayment;
Banking and Finance Academy launches online training for SMEs;
Cover Mongolia CEO signs Global Business oath.
Economy
Mongolia climbs four spots on Doing Business index;
EPCRC’s monthly macroeconomic overview for September;
September sees uptick in trade activity;
French firms eye Mongolian resources and contracts;
Mongolia's special relationship with North Korea pays economic dividends;
Mongolia pushing for rail, pipeline links with China, Russia;
Urban development in UB to extend to 2013, says city official;
Heat shortfalls likely this winter, says official;
2013 harvests falls short of domestic demand, says ministry;
International pass flights over the territory of Mongolia is increased by 8.3%;
Mongolia’s construction sector busy – and stretched;
The Mongolian Wild Ass or Khulan is fast disappearing;
YVCC lecture to focus on Veterinary mission work in Mongolia;
Tale of two updates reveal state of mining sector.
Politics
Mongolia aims to remain among countries with lowest tax costs, says official;
Minister gives update on environmental activities;
APTA welcomes Mongolia 7th member;
Chinese president meets Mongolian premier;
Some see example for Pyongyang in Mongolia's transformation;
MPP names new leader;
MNT 590m missing from state organizations;
Nicolas Cage dinosaur skull 'may have been stolen';
Mongolian basketball makes for a slam dunk;
Mongolia holds first X Games;
Mongolians target success on the darts world stage;
Democracy struggles to attract popular support in former Soviet space.
ECONOMIC INDICATORS
MSE Top 20 Index by market Capitalization;
Foreign-listed Companies with Mongolian Assets;
Supermarket Price Comparison - October 2013;
Inflation;
Central bank policy rate;
Currency rates.
*Click on titles above to link to articles.
SPONSORS
Khan Bank
International SOS
Wagner Asia Automotive
Oxford Business Group
Mongolian National Broadcasting
Breakthrough PR
BUSINESS
MONGOLIA CLOSER TO ENDING OT DISPUTE
Mongolia and Rio Tinto PLC have resolved some of the disputes that have stalled the expansion of
their $6.6 billion Oyu Tolgoi copper mine, a Mongolian board member of the venture said.
―Within the last 10 days we could resolve certain issues; we have reduced the state of urgency,‖
Davaadorj Ganbold, one of three Mongolian nationals on the Oyu Tolgoi LLC board.
Rio in July delayed work on the expansion, which is expected to cost about USD 5.1 billion, until
wrangles with the government on funding and other issues are resolved. The saga has taken its toll
on shares of Rio Tinto's majority owned Turquoise Hill Resources, the direct 66 percent stakeholder
in the project, which have fallen 34 percent in Toronto over the year to date. It has also hurt
Mongolia by weakening investor confidence and delaying other projects. Mongolia and its partner
had 30 points of dispute between them. Chief among these have been criticism of cost overruns on
the open-pit operation and objections to the mine being used as collateral for the financing of the
underground portion.
―The construction of the Panama Canal took 100 years,‖ said Ganbold. ―How many companies were
bankrupted? How many people died? How many financial collapses occurred? But finally the project
was completed.‖
On 1 October, Mongolian board members said the number of outstanding issues was down to 15
following discussions with Rio in London, conceding that some Oyu Tolgoi assets could be used as
collateral. Mongolia has also sought guarantees that the mine expansion won‘t be subject to cost
overruns, a reset of Rio‘s management fees to be based on revenues earned rather than money
spent, and a pledge that all money raised against Oyu Tolgoi assets be spent within the country.
Issues related to water use, transportation of the concentrate, exports to China and company
management are closer to resolution, said Ganbold.
Resolving the terms of the USD 4 billion project financing package remains the biggest hurdle as
development of the second phase of the mine relies on another influx of cash. The deadline to
approve the financing comes due on 12 December.
Source: Bloomberg
FRENCH ENERGY GIANT SIGNS URANIUM DEAL
French nuclear energy giant Areva SA has signed a deal with Mongolia's state-owned Mon-Atom to
develop two uranium mines in the Gobi desert, officials say.
Areva said in a statement on Saturday the agreement would create a company that would be 66
percent owned by Areva and 34 owned by Mon-Atom, and that Japan's Mitsubishi Corporation would
take an equity interest. Further details of the deal, which was signed during a visit to Mongolia by
French Foreign Minister Laurent Fabius, were not immediately announced.
Areva, which has had a presence in Mongolia for more than 15 years, said exploration work had
discovered two uranium deposits with estimated reserves of 60,000 tons. Mongolian protesters had
warned before the signing that a deal could lead to the contamination of water resources in the
area.
"We are not against cooperation with France... We support cooperation in between our countries in
all areas," said Selenge Lkhagvajav, one of the protest leaders. "But we just say 'no uranium
exploration in Mongolia', as not having it is the best way to prevent radioactive pollution and
contamination."
Other deals signed on Saturday included agreements on cooperation on farming, culture, sport and
tourism.
Source: Trading Room
GDF SUEZ SIGNS MOU WITH NEWCOM FOR RENEWABLE ENERGY
GDF SUEZ SA signed a memorandum of understanding with Newcom LLC for the development of
future renewable energy projects in Mongolia during the visit by France‘s minister of foreign affairs.
The memorandum is in line with the Mongolian government‘s ambitions to capitalize on the
potential to generate power from the country‘s renewable energy resources. In August, GDF SUEZ,
together with its consortium partners, was confirmed a preferred bidder for the Combined Heat and
Power Plant No. 5 in Ulaanbaatar, for a facility with of the capacity 415 megawatts and a steam
capacity of 587 megawatts under a 25 year power purchasing agreement with the Mongolian
government. Mongolia benefits from outstanding conditions for the development of renewable
power projects with up to 250 sunny days per year and excellent wind potential. Newcom currently
owns and operates the 50-megawatt Salkhit wind farm, the nation‘s first wind development, and is
considering further renewable energy projects in Mongolia.
Source: GDF SUEZ SA
CHONGRYON‘S TOKYO HQ HAS BUSINESS POTENTIAL MONGOLIAN BUYER
The mysterious Mongolian company that recently made a winning auction bid for the Tokyo
headquarters of a pro-North Korean association did so purely for business reasons, its president
claimed Thursday.
Chuvaamed Erdenebat, who heads Avar LLC, told reporters in Ulaanbaatar that its participation
earlier this month in the bidding has ―no links with any governments in Mongolia, Japan, North
Korea and South Korea.‖ The Mongolian firm, little known at home and abroad, won an auction for
the headquarters site and building of the General Association of Korean Residents in Japan
(Chongryon) with a bid of 5.01 billion yen (USD 50.9 million). Chongryon serves as North Korea‘s de
facto mission in Japan in the absence of diplomatic relations between the two countries. Depending
on the situation, the association needs to leave the building and there is a possibility that it cannot
avoid scaling down its operations.
The Tokyo District Court on Tuesday postponed a decision on whether to approve the sale, as it is
apparently examining if Avar has hidden financial ties with Chongryon. Earlier reports said the
Ulaanbaatar address the firm provided did not exist and suggested there were other murky factors
in play. Erdenebat said the 5.01 billion yen will be financed by ―a foreign investment fund.‖
―I will reveal the name of the fund after the Tokyo court makes a decision,‖ the 47-year-old
president said, adding that the Mongolian company took part in the auction through a Japanese law-
related firm.
The court decided in July 2012 to auction the headquarters in central Tokyo as demanded by the
government-backed Resolution and Collection Corp., which is owed about 62.7 billion yen by
Chongryon following the collapse of financial institutions in Japan for pro-North Korean residents.
Source: Japan Times
STANDARD BANK AGREES TO SELL $1BN WORTH OF ASIA LOANS
South Africa's Standard Bank Group has agreed with BNP Paribas SA and others to sell its Asian loan
portfolio worth around $1 billion, according to two sources.
Africa's biggest bank has been looking to sell the loans, which include financing of mining projects
in Mongolia, Indonesia and other countries, according to the sources, who declined to be identified
because the information is not yet public. BNP Paribas has agreed to buy the Mongolian portion of
the portfolio, which represents about $350 million worth of loans, as well as some other loans in
Asia, said one of the sources.
Source: Reuters
KHAN RESOURCES TAKES MONGOLIA EXPROPRIATION TO ARBITRATION PANEL
Canada‘s Khan Resources Inc. is gambling that an international arbitration case in Paris will allow it
to regain control of a uranium project that, it claims, was illegally expropriated by the Mongolian
government, leaving it with nothing but angry investors.
While Toronto-based Khan Resources is only a bit player in the Canadian mining scene, resources
companies with far-flung operations will likely pay close attention to the arbitration. International
commercial arbitration in general, and arbitration cases against governments in particular, are
becoming increasingly popular, to the point they are gaining favor over traditional courtroom
litigation.
―International arbitration is used a lot,‖ said Grant Edey, a former Iamgold chief financial officer
who has been Khan‘s CEO since 2010. ―It‘s being used more often as developing countries get more
aggressive about taking control of their resources.‖
Khan had planned to develop a uranium mine in northeast Mongolia, near the Russian and Chinese
borders, through an effective 68-per-cent stake in the Dornod deposit with state-controlled Russian
and Mongolian partners. In 2009, Khan‘s ambitions fell apart when the Mongolian government
passed a new nuclear energy law that would allow the government to take as much as 51 percent of
the Dornod project at no cost. Khan and a Russian company, ARMZ, would own the rest. Khan says it
wasn‘t offered compensation for the downgrade to minority partner, nor were its mining permits
renewed. At one point that year, ARMZ launched a hostile bid for Khan that went nowhere. Later,
China National Nuclear Corp. did the same. Its bid also failed. Khan shares collapsed, going from
USD 4 (Canadian) to penny-stock status. On Wednesday, Khan traded at only 25 cents a share, giving
the company a market value of USD 16-million.
Stuck in legal limbo, and without control of the Dornod project, Khan launched an arbitration case
against the Mongolian government in 2011, seeking $326-million (U.S.) in compensation. A tribunal
was appointed and the case is to be heard in Paris starting 11 November. Arbitration specialist Yves
Fortier, the former chairman of both Alcan and the Norton Rose law firm, was Khan‘s nominee to
the tribunal.
Source: The Globe and Mail
JAPAN-MONGOLIA JV PROVIDES CONCRETE FOR COLD TEMPERATURES
A Japanese-Mongolian joint venture concrete company said it will continue to provide concrete to
construction companies to allow construction throughout winter.
Aizawa Mongol, a subsidiary of the Aizawa Concrete Corporation of Japan, has brought Japanese
technology to Mongolia to allow construction and insulation work to continue throughout the cold
winter months, when most companies must shut down their operation.
―The factory is working from 2012 and based on the latest technology systems without any
shutdown during the cold weather,‖ said B. Enkhbayar, executive director of Aizawa Mongol. ―The
factory capacity is for 150 cubic meter of concrete per hour for production. Our objective is to
supply client companies with our high-quality mixed concrete during all four seasons.‖
Source: Udriin Sonin
MAK AND FLSMIDTH TO OPEN NEW CEMENT PLANT
Mongolyn Alt Company (MAK) has partnered with Denmark's FLSmidth & Co. for the construction of a
new cement factory scheduled for commissioning in 2014.
The Khukh Tsav cement factory is planned for construction in Dalanjargal Soum, Dornogobi Aimag
for the production of two million tons of cement annually, or 50 percent of cement demand in
Mongolia. The factory could open as soon as next month.
This new factory plus the opening of one in Khutul Soum, Selenge Aimag and other smaller factories
could cut Mongolia's dependence on foreign cement.
Source: Undesnii Shuudan
SKYMEDIA ROLLS OUT IPTV IN MONGOLIA
Skymedia, a subsidiary of Skytel, one of Mongolia's largest mobile operators, is deploying the Entone
Kamai 510 Hybrid Media Player to deliver advanced IPTV services.
Entone's Kamai 510 hybrid media player offers operators a way to roll out IPTV and hybrid TV
services, along with a carrier-grade 5GHz Wi-Fi option for wireless whole-home HD video
distribution. With more than a quarter of the nation's mobile phone market, Skymedia was looking
for new revenue streams. Since 2012, Skymedia has been expanding its DSL and fiber networks to
enable the delivery of video and IP services to a growing population of more than 2.9 million
people.
"Deploying IPTV has its unique challenges," said D Byambatseren, chief executive at Skymedia.
"Offering IPTV services in rugged and remote areas of Mongolia makes quality, stability and support
especially important. Entone has helped us to reduce our CAPEX and OPEX during this IPTV rollout.‖
Source: Rapid TV News
SINOPEC TO MAKE PLAY ON BROWN COAL
Sinopec Ltd., also known as the China Petroleum and Chemical Corporation, has signed a
memorandum of understanding with the Ministry of Mining to build a brown coal gasification plant
in Mongolia.
The plant will have the capacity to produce 15 billion metric tons of gas fuel per year according to
preliminary estimates. In order to produce the target amount of gas fuel, approximately 50 million
tons of brown coal will be required, at the estimated cost of USD 1 billion. Although Mongolia has
abundant reserves of raw brown coal, its potential for export is limited due to its low calorific
content. The gasification plant will produce environmentally friendly gas fuel, that doesn‘t produce
waste, using common brown coal which contributes very little to Mongolia‘s export.
Source: UB Post
MALAYSIA EXPLORES OIL AND GAS OPPORTUNITIES IN MONGOLIA
Nine Malaysian companies participated in the inaugural Oil & Gas Specialized Marketing Mission to
Ulaanbaatar from 1 to 3 October
Among products and services promoted by Malaysian companies were valves, pipes and fittings,
heating, ventilation, air conditioning services, lubricants, original equipment manufacturing
services, technical and engineering training, sub-contracting for scaffolding and insulation services,
engineering design services, as well as drilling equipment and services.
―We got firsthand, ground-level information about the market. This is very good,‖ said A
representative from Innovative Fluid Process Sdn Bhd.
Source: UB Post
UK WEST MIDLAND FIRMS TOLD TO LOOK AT MONGOLIA FOR NEW EXPORT OPPORTUNITIES
Firms in the West Midlands have been urged to consider Mongolia as a new trading partner.
Jonathan Webber, Head of UK Trade & Investment‘s International Trade team Birmingham said the
recent visit by William Hague to the country had highlighted its potential. ―There are many reasons
why the world is suddenly waking up to the opportunities that abound in Mongolia and why West
Midlands companies need to make sure they don‘t lose out,‖ he said. ―For starters, Mongolia is
expected to be the fastest growing economy in the world over the next two decades, with GDP
[gross domestic product] per capita looking like it will more than quadruple by 2020. In 2012 it grew
by 12.3 percent and in 2013 it‘s expected to grow by up to 12%, potentially doubling in 2014.‖
UKTI is holding an ‗Explore Mongolia‘ seminar at Edgbaston Stadium, Birmingham on Thursday
November 14, as part of a series of events organized for Export Week (11 to 15 November).
Contributing to the seminar will be a variety of experts from the British Embassy, Ulaanbaatar, the
Mongolian Embassy, London and UKTI West Midlands. As well as advice for doing business in
Mongolia, firms attending the event will learn why rapid growth–largely in the mining sector– has
led analysts to christen Mongolia the ‗Wolf Economy‘.
West Midlands businesses have been advised to focus on the agriculture, construction, professional,
financial and business services, education and tourism sectors for new opportunities. The Mongolia
seminar is designed to provide firms with briefing on the country‘s business climate and
opportunities. UKTI will also be leading a trade visit to Ulaanbaatar in March 2014 and further
details on how to participate will be available at the event.
Source: The Business Desk
MONGOLIA AND POLAND SIGN DECLARATION OF COOPERATION IN MINING
A Mongolia-Poland Business Forum took place on Monday at the Ministry of Foreign Affairs in relation
to the official visit by the President of the Republic of Poland, Bronislaw Komorowski.
A delegation of representatives from some 30 Polish businesses accompanied President Komorowski,
and heard an opening speech delivered by President Tsakhia Elbegdorj, commending the endeavor.
During the forum participants discussed possible collaboration in the mining sector, especially in
coal mining, and the supply of European standard mining equipment and machinery at low costs.
The parties also discussed the progress of projects financed by credit from the Polish government.
The Mongolian Minister of Mining, Davaajav Gankhuyag, and the Polish Minister of Economy, Janusz
Piechocinski, signed a declaration of cooperation in the mining sector.
The ministries expressed their intent to further economic trade and cooperation by introducing
Polish mining technologies and trading heavy machinery and equipment used in mining. The Polish
representatives also agreed to conduct a professional analysis of mining development and train
Mongolian personnel working in the field.
Source: UB Post
USAID OPENS MNT400M FUND TO ASSIST SMALL BUSINESS
The United States Agency for International Development (USAID) has established a technical
assistance fund of USD 400 million for development of Mongolian small and medium enterprises
(SMEs).
The fund under the Quality Supplier Development Center of the USAID Business Plus Initiative aims
to increasing current offtakes of Mongolia‘s SMEs at least five-times while assisting them in
supplying high quality products to the market. Planned actions were explained at a 30 October
meeting at the National Chamber of Commerce and Industry.
Source: Montsame
KHAN BANK ADDS $111M TO ITS FUNDING AND CAPITAL BASE
Khan Bank LLC announced USD 111 million in new loan commitments, including USD 71 million in
syndicated senior debt and USD 40 million in subordinated debt.
The funds will be used for long term funding to Khan Bank‘s customers as well as the bank‘s capital
base. The facility will be mobilized by International Finance Corp. (IFC), the member of the World
Bank focused on the private sector, and the IFC Capitalization Fund, a global equity and
subordinated debt fund managed by IFC Asset Management Company. IFC will commit a USD 10
million senior loan and the IFC Capitalization Fund, managed by IFC Asset Management, will provide
a USD 40 million subordinated loan to strengthen the Khan Bank‘s capital base.
In addition, IFC has mobilized funding from other financial institutions. The International
Investment Bank has committed a USD 10 million parallel loan. Syndicated loans of USD 31 million
have been committed from institutions including Sumitomo Mitsui Banking Corporation, AKA Export
Finance Bank, DHB Bank (Nederland) N.V., Intesa Sanpaolo S.p.A., ING Bank N.V., and RosEvroBank
JSCB. The OPEC Fund for International Development is expected to contribute another USD 20
million parallel loan.
―We are delighted to continue our strong long-term relationship with IFC whose support has enabled
us to diversify and improve our long term funding base,‖ said Norihiko Kato, Khan Bank‘s chief
executive officer.
Source: Khan Bank LLC
JAPANESE BANK TO OPEN REPRESENTATIVE OFFICE
The Bank of Tokyo-Mitsubishi UFJ, Ltd. has acquired a license to open a representative office in
Mongolia. The Bank of Mongolia gave permission on 10 October.
Source: Unuudur
NEWERA REPORTS MORE POSITIVE SEISMIC INDICATORS AT ULAAN TOLGOI
Newera Resources Ltd. reported on finding from its Ulaan Tolgoi project seismic survey.
The indicated continuation of the prospective strata through Lines E and F gives encouragement
that any coal seams located within the prospective strata would potentially have a strike in excess
of two kilometers. Interpretation of the seismic data collected and modeled for Lines B, E and F
will allow for the optimal location of drill hole ollars for future exploration drilling. Newera is still
awaiting data for seismic Lines A, C and D.
Source: Newera Resources Ltd.
PROPHECY COAL TO PURCHASE ADDITIONAL PROPHECY PLATINUM SHARES
Prophecy Coal Corp. announced its intention to purchase additional shares of Prophecy Platinum
Corp.
Prophecy Coal announced that it in addition to the 17.3 million shares being purchased, as
announced on October 17, the company has accepted an offer to purchase an additional some 1.2
million shares of Prophecy Platinum. Closing of the purchase and sale has been scheduled for
October 30, 2013.
Source: Prophecy Coal Corp.
MEC REQUESTS EXTENSION ON CONVERTIBLE NOTE REPAYMENT
Mongolian Energy Corp. (MEC) has requested more time before repayment on a HKD 466.8 million
(USD 60.2 million) convertible note, due to expire on 12 November.
MEC said it had suffered under a difficult operating environment due to issues including technical
and operational, the sluggish coal market environment, and the political and strategic deposits
issues in Mongolia. The commercial coal production has come to a halt pending, among others, the
construction of coal screening infrastructures in the Khushuut Mine Site and in Xinjiang, China
respectively. Due to setting in of the winter, completion of the dry coal processing system and the
coal washing plant is expected to be further delayed. These will unavoidably postpone the
resumption of commercial coal production to next year, said the Source.
The resumption is also subject to an agreement of moratorium and a debt restructuring.
Source: Mongolian Energy Corp.
BANKING AND FINANCE ACADEMY LAUNCHES ONLINE TRAINING FOR SMES
The Mongolian Banking and Finance Academy (BFA) launched a new online training series, teaching
best practices for lending to small and medium-sized enterprises (SMEs)–SME Financing.
The course will teach loan officers in commercial banks the practical skills required to address the
unique challenges of lending to SMEs. The project works to support small businesses in Mongolia by
providing advice directly to Mongolian entrepreneurs, thereby improving the business environment
and strengthening the organizations that support businesses. Increasing access to finance by SMEs is
a vital part of this effort.
―Qualified loan officers are the foundation of access to finance,‖ explained Matthias Reusing, First
Secretary of the EU Delegation to Mongolia. ―This is a central issue, and an especially challenging
one for SME development in rural areas.‖
Participants who successfully pass the SME Financing course will receive a certificate in SME
lending. According to BFA, there are over 1,000 loan officers currently practicing in the country.
Those who prefer more traditional training methods will be able to take a classroom-based course.
BFA is a training organization owned by several Mongolian banks and dedicated to building skills in
the financial sector. Since the SME Financing course is online, it can be more readily accessed by
loan officers in rural areas that are otherwise difficult to reach due to the country‗s low population
density. BFA‘s teaching method is unique, in that it uses Mongolian trainers to teach international
best practices.
―We feel that our approach is an effective blend of local knowledge and international standards,‖
said Nergui Sandagjav, chief executive officer of BFA. ―This means that we are able to maximize
the impact by offering high quality training at a locally affordable price.‖
Source: European Bank for Reconstruction and Development
COVER MONGOLIA CEO SIGNS GLOBAL BUSINESS OATH
Cover Mongolia founder and Chief Executive Badral Munkhdul signed the Global Business Oath,
initiated by the World Economic Forum‘s Forum of Young Global Leaders, on 18 October at a
ceremony marking Global Dignity Day in Mongolia.
The oath asks that business leaders recognize the need to serve the greater good, the consequences
of actions of those outside their enterprises, and need to balance the interests of different parties.
It also has those who pledge make eight promises, including upholding the laws and contracts
governing conduct, respecting and protecting human rights and dignity of all people, and having no
tolerance for bribery and other forms of corruption.
Source: Cover Mongolia
ECONOMY
MONGOLIA CLIMBS FOUR SPOTS ON DOING BUSINESS INDEX
A new World Bank Group report finds that Mongolia implemented three positive business reforms
between June 2012 and June 2013, making it easier to start a business, deal with construction
permits, and access electricity.
Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises finds that 15
of 25 economies in East Asia and the Pacific made at least one regulatory reform to improve the
ease of doing business. Over the past year, Mongolia eliminated the requirements to get company
statutes and chartered notarized and to register a new company with the local tax office, thereby
making starting a business easier. The country also removed a rule requiring companies to submit
building plans for lower-risk construction projects to the state for technical review. The third
reform involved increasing operational efficiency while lowering the costs of getting electricity
access.
―For the second year in a row, Mongolia has implemented three positive business reforms, which
demonstrates the country‘s commitment toward improving its business environment, particularly
for smaller businesses,‖ said International Financial Corporation‘s resident representative in
Mongolia Tuyen Nguyen.
Source: World Bank
EPCRC‘S MONTHLY MACROECONOMIC OVERVIEW FOR SEPTEMBER
The International Monetary Fund (IMF) has cut its 2013 growth forecast for the Mongolian economy,
the latest World Economic Outlook (WEO) released on 7 October shows.
Gross domestic product (GDP) is now expected to grow by 11.8 percent in 2013, revised down from
the IMF‘s previous growth forecast of 14 percent in April. Economic growth in 2014 is expected to
be around 11.7 percent, slightly higher than the 11.6 percent previously forecast. Of most concern,
GDP growth forecasts for Mongolia in 2015 and 2016 have been slashed. The Mongolian economy is
now expected to grow by a modest 5.8 percent in 2015, down from 7.6 percent forecast in April,
while 2016 growth is expected to be only 3.6 percent, down from 9.5 percent forecast in April.
These cuts to the growth forecasts for Mongolia have been driven by continued uncertainty and
weakness in the global economy, particularly in China. The IMF argues that although advanced
economies such as the US and Europe are gradually strengthening, growth in emerging markets has
slowed. Of particular concern for Mongolia is the rebalancing underway in China from an investment
based economy to a consumption based economy. As demand shifts away from materials-intensive
growth, some commodity exporters could be vulnerable, the IMF noted.
The WEO October 2013 database demonstrates this vulnerability for Mongolia, with expectations for
growth in Mongolia‘s exports dramatically revised down. For instance growth in exports in 2016,
which were previously forecast in April to increase by 22.7 percent, is now forecast to fall by 3.9
percent. Over the longer term, the Chinese slowdown and associated rebalancing of the Chinese
economy could have a dramatic impact on Mongolia‘s economic growth. The IMF has estimated the
impact of a slowdown in Chinese growth from an average of 10 percent during the previous decade
to an average of 7.5 percent over the coming decade on Mongolia. It found that Mongolia‘s GDP
level in 2025 is estimated to be about 7 percent lower than otherwise, primarily as a result of
slower Chinese demand for coal, iron ore, and copper.
Source: Economic Policy Research and Competitiveness Center
SEPTEMBER SEES UPTICK IN TRADE ACTIVITY
The National Statistical Office of Mongolia released 15 October updated foreign trade activity that
showed during the month of September overall foreign trade was higher than that of last year by
1.7 percent.
2013 has come in below 2012 in year-to-date performance by 6.46 percent. Mongolia witnessed a
significant fall in foreign trade activity with both March and April posting 12 to 13 percent
decreases over the previous year. To date, Mongolia‘s exports have fallen by 5.1 percent. Those
products that were exported primarily include coal, copper concentrate, iron ore, unrefined oil,
and gold, all of which made up over 80 percent of total exports. Import into Mongolia over the same
period was also down, posting a 7.3 percent decline. This was primarily dominated by energy
products such as fuel and diesel as well as other consumer goods.
Source: Mongolian Investment Banking Group
FRENCH FIRMS EYE MONGOLIAN RESOURCES AND CONTRACTS
French Foreign Minister Laurent Fabius led the latest foreign investment delegation to visit Mongolia
last Friday accompanied by an array of leaders of France‘s biggest industrial companies.
The delegation is the first French visit on such a scale and arrives hot on the heels of German
Chancellor Angela Merkel who was in Ulaanbaatar last week, signing agreements on coal
exploitation and securing a gas turbine deal for the Siemens group. Mongolia has a vast wealth of
mostly untapped mineral resources including coal, copper, uranium and gold.
The French industrials visiting the country this weekend, include nuclear developer Areva SA,
pharmaceutical multinational Sanofi, and gas companies Air Liquide and GDF Suez, who see big
opportunities as Mongolia continues to develop. Areva, which has been prospecting in Mongolia for
the last decade, is hoping to seal a ―strategic agreement for uranium extraction‖ to feed France‘s
huge nuclear energy sector. Other French firms include Systra (engineering and transport) as well as
satellite manufacturing and deployment companies Arianespace and Tahles Alenia space, who are
hoping for contracts as Mongolia plans to develop 5,600 kilometers of new rail lines and is looking at
acquiring two new satellites.
With 86 percent of its exports going to China, Ulaanbaatar is keen to diversify into new markets
with its ―Third Neighbor‖ (a Mongolian policy aimed at building bridges with countries other than
Russia and China), and in particular with France and Germany. French President François Hollande
is due to cement that relationship further with a planned visit from his Mongolian counterpart
Tsakhia Elbegdorj to Paris in January 2014.
Source: AFP
MONGOLIA'S SPECIAL RELATIONSHIP WITH NORTH KOREA PAYS ECONOMIC DIVIDENDS
When Mongolia's president, Tsakhia Elbegdorj, arrived in North Korea on Sunday—the first head of
state to visit since Kim Jong-un took power—it cemented a longstanding relationship. Other
countries have ties to North Korea, but Mongolia is highly unusual as a democracy enjoying warm
relations with both Pyongyang's authoritarian regime and Seoul government in the South.
"The visit of our president will elevate relations to a new stage," Mongolia's foreign minister,
Luvsanvandan Bold, said. "We want to make a more secure region—more safe and stable—with more
economic development. Of course we have different systems but we shared a common history and
there's a lot of sympathy between Mongolian and Korean people."
Economic links are becoming as important; one key advantage for the landlocked country is North
Korea's access to the sea. This year, Mongolia-listed HBOil bought a 20 percent stake in a North
Korean state-owned refinery. It plans to supply crude oil to the Sungri refinery, based in the special
economic zone at Rason, exporting the products back to Mongolia. Mongolian firms can also benefit
from offering others a route into North Korea.
"Essentially, this HBOil opportunity has provided those foreign investors who specialize in managing
funds in emerging and frontier markets with an opportunity to gain exposure to the DPRK [North
Korea]," said Joseph Naemi, non-executive director of HB Oil.
If Pyongyang approves the processing deal, Sungri could reach full operational capacity by the first
quarter of 2015, he said; the Mongolian oil firm also has exclusive rights to onshore exploration,
development and production of hydrocarbons.
Hiring North Korean workers, however, had proved "a capitalist dream: people work hard, don't ask
for much money and never ever unionize," said Andrei Lankov, an expert on North Korea at Kookmin
University in Seoul. There are around 1,700 such laborers in Mongolia and construction and
manufacturing firms seek more; existing agreements would allow up to 5,000 to work there.
Source: The Guardian
MONGOLIA PUSHING FOR RAIL, PIPELINE LINKS WITH CHINA, RUSSIA
Mongolia has agreed to establish a working group with China to oversee the construction of new
road, rail and pipeline infrastructure connecting the two countries with Russia, a member of a
Mongolian government delegation to Beijing said.
The official, speaking to Reuters on condition of anonymity, said landlocked Mongolia aimed to
become a "transit corridor" to facilitate trade between its two giant neighbors and reduce the costs
of delivering Russian commodities like oil and natural gas to energy-hungry Chinese markets. The
topic was high on the agenda during talks between Mongolian Prime Minister Norov Altanhayag and
his Chinese counterpart, Li Keqiang, last week, according to the official, who is a senior adviser to
Mongolia's economics ministry. Speaking by phone from the Mongolian capital, Ulaanbaatar, he said
the working group would probably be set up soon and that Mongolia was open to allowing Chinese
firms to invest and build the infrastructure.
"Given the capacity that both countries can bring to the table, China is expected to be heavily
involved in terms of financial resources and technology," he said.
A rail link to the Russian far east is under construction and half of a direct rail line into China has
been completed, with the project scheduled to be finished by 2015. The official said that Mongolia's
state-owned railway operator signed a memorandum of understanding with state-owned Aluminum
Corp. of China Ltd. (Chalco) last week on building cross-border railways to help deliver coal.
Source: Economic Times
URBAN DEVELOPMENT IN UB TO EXTEND TO 2013, SAYS CITY OFFICIAL
Ulaanbaatar has completed 71.4 percent of its development plans until 2018, said a city official.
Only 6 percent of the planned worked is still in the bidding process said S. Ochirbat, deputy director
of the department for urban development at the Ulaanbaatar Mayor‘s Office. He said Ulaanbaatar
would employ MNT 900 billion for new projects, with 800 billion to be spent in 2014.
―We received more than 10 thousand projects as an outcome from discussions with Economic
development, Urban Development and Construction, and Finance ministries, and we worked on
classification and selection of projects to be implemented at district, khoroo and khoroolol levels,‖
said Ochirbat. From this, about 1,600 projects will be selected to be implemented from the state
budget.‖
Development plans to run until 2020 and then further to 2030 have already received approval from
Parliament, said Ochirbat. Decentralized city planning and decreasing the volume of traffic were
two main objectives, he said. The mayor‘s office plans to submit a proposal for USD 96 million
worth of development plans, and the Asian Development Bank has committed to loans of USD 224
million for the development of Bayankhoshuu and the Selbe center
―The foreign companies are expressing interest towards the development projects in Ulaanbaatar,‖
said Ochirbat. ―For example, the head of the World Bank recently visited with a team of specialists
who worked on investment opportunities for the city.‖
Source: Zuunii Medee
HEAT SHORTFALLS LIKELY THIS WINTER, SAYS OFFICIAL
Shortfalls in heat distribution will be likely this year, a city heating official reported to the Mayor‘s
Council.
Director of UB District Heating Company R. Khaidav said that it was likely that there would be
irregularities in the delivery of heat to some districts this year. During peak winter months, he said,
it was likely that the 11th and 15th Micro Districts of Khan-Uul District, all of Zaisan, all of
Bayanzurkh District, and the 13th 15th and 16th Micro Districts of Bayangol District would likely
receive less heat than other areas.
Source: Zuunii Medee
2013 HARVESTS FALLS SHORT OF DOMESTIC DEMAND, SAYS MINISTRY
This year‘s harvests will not be enough to meet domestic demand, reported the Ministry of Industry
and Agriculture
The ministry reported the harvest 351,000 tons of wheat, 368,000 tons of cereal, 190,000 tons of
potatoes, 101,000 tons of vegetables and 37,000 tons of oil plants. Officials said that this year‘s
production of wheat and various other vegetables would not meet domestic demand. The only
exception was for potatoes.
The vegetable demand in Mongolia is 190,000 tons, necessitating imports of 70,000 to 80,000 tons
from China this year. Wheat production fell 100,000 tons short of last year due to heavy snowfall
and grazing cattle, said ministry officials.
Source: Zuunii Medee
INTERNATIONAL PASS FLIGHTS OVER THE TERRITORY OF MONGOLIA IS INCREASED BY 8.3%
International passenger flights over the territory of Mongolia would increased by 8.3 percent,
reported the department of air navigation services at the Civil Aviation Authority. The department
reported that 63,387 international and domestic flights would be carried out by 43 different air
carriers flying over Mongolia between 30 October and 30 March 2014.
Source: Info Mongolia
MONGOLIA‘S CONSTRUCTION SECTOR BUSY—AND STRETCHED
Strong demand from both the public and private sectors will keep Mongolia‘s construction industry
busy for the foreseeable future, though the heavy calls on the building trade is stretching resources
and pushing up costs.
According to a World Bank report issued in early 2013, capital expenditure in Mongolia has
experienced a 35-fold increase over the past 10 years, with the construction sector‘s contribution
to GDP expanding by 25.6 percent in 2012, mainly due to a rise in public spending. More than 16
percent of all bank loans went to the construction industry in 2012, the report said, up from 11.8
percent the prior year, while the real estate sector‘s share of lending climbed to 17.3 percent,
higher than mining‘s 14.4 percent.
―Institutions for project appraisal, procurement, contracting and monitoring are currently under
development and are being strained by the rapid increases in the capital budget,‖ the World Bank
report said. The international lender also noted a limited pool of skilled labor and a shortage of
material inputs, which could drive up costs and compromise quality.
The government has moved to alleviate some of these constraints, providing USD 86.3 million in
working capital loans to 60 companies involved in the supply of construction materials, such as
gravel and sand, steel, cement and lime. Industry participants say the government program will
have a significant impact in the sector, with plans to have up to 80 percent of all cement locally
sourced by the end of the year, up from 30 to 40 percent today.
In the housing sector, strong demand is pushing up prices, with a state-backed, low-cost mortgage
loan scheme introduced in June contributing to the upward trend. According to the Bayarsaikhan,
some 33,000 housing units are set to come onto the market before the end of 2014. Demand for
housing is expected to remain high for some years to come, as lower-income take advantage of
inexpensive loans and developers launch real estate projects. While construction companies could
benefit from the substantial need for housing, they are likely to continue facing higher costs for
some time.
Source: Oxford Business Group
YVCC LECTURE TO FOCUS ON VETERINARY MISSION WORK IN MONGOLIA
A veterinarian talking about her experiences working with livestock in Mongolia will speak in the
Yakima Valley Community College‘s (YVCC's) faculty lecture series.
Kelley Denome, a YVCC instructor, traveled to Mongolia in 2011 to provide training to local
veterinarians and nomadic herders with the Christian Veterinary Mission. On 13 November she‘ll talk
about her experience and the culture of the Mongolian herders who make a living grazing livestock
on the move. The lecture will be in the Parker Room on the YVCC Yakima campus.
Source: Yakima Herald
THE MONGOLIAN WILD ASS OR KHULAN IS FAST DISAPPEARING
Decades of international and local collaboration have brought the Takhi or Asian Wild Horse back
from the brink of extinction and reintroduced herds to Mongolia's Gobi desert and grasslands.
However, the country's other wild equine—the Mongolian Wild Ass or Khulan—is fast disappearing. It
was put on the International Union for Conservation of Nature (IUCN) red list of endangered species
in 2008.
"The Khulan (Equus hemionus hemionus) get less attention compared to the Takhi, which is
nationally cherished," says Mongolia-based French ethologist Anne-Camille Souris, who has worked
on wild equine projects such as the International Takhi Group since 2003. "There is research," she
said, "but little action."
Climate change has affected Mongolia's ecosystem significantly in the past two decades. A 2009
climate change reported showed a 19 percent loss of surface water, a seven percent loss of
grassland and 26 percent loss of forest, with "barren land" tripling. Of the 1,800 dug wells in
Dornogobi, only about 1,000 still have water. As a result, Khulan are now perceived as a threat by
herders, who might often assist poachers who sell their meat. According to a national survey, the
market-based economy spurred the rise of poachers—from 25,000 during the socialist days to
245,000 by 2008. Souris, however, says that rather than a threat, Khulan are beneficial to domestic
livestock as they are able to dig under the soil to find groundwater.
Herds on the eastern side of the tracks vanished after the railways were built. And with eight large
mines in the region producing and transporting coal, one road to the border had a reported traffic
of 500 coal trucks daily. The report concluded that the Khulan needed underpasses to travel safely.
The Oyu Tolgoi copper mine plans to build a few such underpasses. However, its principal water
adviser Mark Newby maintains that their current impact is small compared to coal transport. By
contrast, the Tavan Tolgoi coal mine has yet to collaborate on Khulan preservation.
Source: IPS
TALE OF TWO UPDATES REVEAL STATE OF MINING SECTOR
They were two very different updates—one bearish, one bullish. But this week‘s trading statements
from BHP Billiton Ltd. and Caterpillar Inc., respectively the world‘s largest natural resources
company and heavy machinery group, neatly captured the state of play in the mining industry.
BHP‘s quarterly production report showed how mining in 2013 is all about volume and costs. Miners
are trying to produce as much as they can for as little as they can. The company also drew
attention to the USD 2.7 billion of costs it had stripped out of the business in the past year and its
planned 25 percent reduction in capital and exploration expenditure.
―Our rate of expenditure will decline again next year and if our investment criteria cannot be met
in any one project, product or geography,‖ promised chief executive Andrew Mackenzie.
These themes, writ large across Caterpillar‘s announcement, led to a sharp drop in the company‘s
sales and earnings. The company that receives distribution in Mongolia through Wagner Asia
Equipment LLC reported a 44 percent slide in the third quarter earnings. Caterpillar said sales to
the resource industry would drop 40 percent year-on-year in 2013 (it had previously expected a
recovery) and warned that revenues would remain weak in 2014.
That news is welcome to mining investors pushing for increased dividends and share buybacks.
Unfortunately there are still billions of dollars worth of investments of projects and expansions
approved in the boom years that are about to come on stream. And these have the potential to
damage prices. That said, analysts are nowhere near as worried about new supply as they were at
the start of the year, presumably because of robust growth in China. Rob Clifford at Deutsche Bank
said in a report the that price of the iron ore would remain above USD 100 even as 375 million tons
of new capacity hits the market over the next three years.
If they are right, shares in BHP and other miners could enjoy a strong run. But for companies
servicing the mining industry, the opposite is probably true. If Caterpillar‘s results are a guide, the
outlook remains grim.
Source: Financial Times
POLITICS
MONGOLIA AIMS TO REMAIN AMONG COUNTRIES WITH LOWEST TAX COSTS, SAYS OFFICIAL
Mongolia intends on continuing the principles that allows Mongolia to have some of the lowest tax
costs in the world in its upcoming tax reforms, said a tax official.
Mongolia will continue the low-tax policies that helped generate 10 times more tax income in the
last decade, said the head of the budget revenues unit of the Fiscal Policy and Planning department
of the Ministry of Finance, E. Batbayar. He said Mongolia has implemented four out of 10 principles
that make it competitive internationally for tax costs. Private income taxes will remain the same,
he said, in the hopes of encouraging more growth in savings as well as the development of
industries.
―The law is focused only on the improvement of the environment and conditions for implementing
laws, for maintaining and growing investment, for removing ambiguous text that have Caused
disputes, and for making the tax payment process easier and more transparent,‖ he said.
Source: Udriin Sonin
MINISTER GIVES UPDATE ON ENVIRONMENTAL ACTIVITIES
Minister Sanjaasuren Oyun presented information on the accomplishment made by the Environment
and Green Development Ministry.
The minister reported MNT 67 billion in investments for the Clean Air initiative out of a total MNT
92.5 billion to be invested for the reduction of air pollution between 2011 and 2013. For wildlife,
the ministry introduced a five-year ban on the export of falcons, protections of rare mountain goats
and wild sheep that are growing scarce, and the issuance of fewer licenses.
The ministry hopes to collect more fees from water to encourage greater efficiency in water usage,
with similar initiatives for land and wood use. Those fees will go directly to the local
administrations, she said, for the land reclamation. She said her ministry has proposed that the
country remove tax on imported wood as well as land adoption that would encourage tree planting.
The ministry will encourage using cement foundations rather than wooden ones for railroad
construction.
Regarding specific concerns for the so-called Long Name Law that prohibits mineral exploration at
head waters and forests, the ministry has decided that it will allow construction within 200 meters
of water sources and it has canceled the licenses of companies that attained them before 2009.
Under consideration is a proposal to permit short-term activity in the banned areas under strict
supervision to guarantee reclamation work is achieved. Half of reclamation work is to be paid for in
cash to banks with the remaining half to be leveraged against licenses owned for collateral. The
ministry has also developed a database with detailed maps and satellite images to support the
implementations of the law.
Source: Udriin Sonin
APTA WELCOMES MONGOLIA 7TH MEMBER
Mongolia successfully concluded negotiations with all participating States for its accession to the
Asia-Pacific Trade Agreement (APTA) at the close of last week.
The Standing Committee of APTA at its forty-second session reached a consensus officially
welcoming Mongolia as the seventh member of the Agreement. Current members include
Bangladesh, China, India, Lao PDR, Republic of Korea and Sri Lanka.
―The Asia-Pacific Trade Agreement brings inclusive and sustainable development through the
powerful engine of trade,‖ said Noeleen Heyzer, United Nations Under-Secretary-General and
Executive Secretary of the United Nations Economic and Social Commission for Asia and the Pacific
(ESCAP). ―I hope that the APTA as a regional trading arrangement will benefit Mongolia.‖
The APTA is the oldest preferential trade agreement (PTA) among developing countries of the Asia-
Pacific region and the only operational regional trade agreement linking China and India–the two
locomotive sources of economic growth in the region, with a combined consumer base of some 2.6
billion people and dynamic trading nation–and a major market, such as the Republic of Korea.
Between 2001 and 2006, the APTA intra-regional trade share increased by almost 50 percent. The
fourth round of negotiation launched in October 2007, led to tariff concessions over 10,000 items,
compared to 4,270 items under the third round. The current round widens the coverage of
preferences of total tariff lines for each member state and deepens the tariff concessions by at
least 20 to 25 percent of the total intra-regional trade under the APTA.
Furthermore, aiming at comprehensively deepening trade cooperation and integration, the fourth
round of negotiations extended into areas beyond the traditional tariff concessions, including non-
tariff measures, trade facilitation, trade in services and investment for the first time in the history
of the agreement.
Source: UNESCAP
CHINESE PRESIDENT MEETS MONGOLIAN PREMIER
Chinese President Xi Jinping met with Prime Minister Norov Altankhuyag in Beijing on Friday and
pledged to further advance the strategic partnership between the two countries.
Hailing the frequent high-level interactions between the two sides, Xi said China and Mongolia
respect each other's independence, sovereignty, territorial integrity as well as path of
development, looking after each other's core interests and major concerns. Xi said mutual trust and
traditional friendship had been growing in a sustained way over the past years.
Xi said, if the two sides stick to the principle of mutual trust and reciprocity, the China-Mongolia
relationship will surely grow in a sustained, healthy and stable way, which will benefit the people
of the two countries. To further advance the bilateral ties, Xi proposed the two sides should
increase high-level interactions, enhance strategic cooperation, expand the scale and improve the
quality of practical cooperation and expand people-to-people exchanges. China and Mongolia should
communicate more frequently on strategic issues, he said.
As to economic cooperation, Xi said the two countries should give full play to their mutually
complementary advantages and boost cooperation on mineral exploitation and infrastructure
construction and in the financial sector at the same time. Altankhuyag said Mongolia gives priority
to the friendship and reciprocal cooperation with China in Mongolia's foreign policy. Echoing Xi, the
prime minister said the Mongolian side is willing to work together with China to maintain high-level
interactions, expand practical cooperation, increase people-to-people exchanges and enhance
coordination in international and regional affairs to enrich the content of the strategic partnership
between the two countries.
Source: ECNS.cn
SOME SEE EXAMPLE FOR PYONGYANG IN MONGOLIA'S TRANSFORMATION
President Tsakhia Elbegdorj arrived in Pyongyang on Monday with the goal of nudging North Korean
leader Kim Jong-un toward peace and denuclearization, but observers say Pyongyang is unlikely to
embrace Mongolia's model of transformation.
During his four-day visit, Elbegdorj will present his country's history as an example of how to
achieve sovereignty and economic development without relying on the use of force, according to an
official in the Mongolian president's office. The official said Elbegdorj could play the role of neutral
mediator for North Korea and the outside world. The Mongolian capital of Ulaanbaatar has kept
close relations with Pyongyang even after into Mongolia transitioned a market economy and a
democracy after the fall of the Soviet Union in 1989. Mongolia was the second country to recognize
North Korea as a sovereign nation in 1948 when it declared statehood.
Elbegdorj is expected to be the first head of state to meet Jong-un since the North Korea dictator
came to power at the end of 2011. Some experts argue that Mongolia's rapid, mining-propelled
economic growth could serve as a model for North Korea, which has abundant metals and rare-earth
minerals. Emulating Mongolia's development "is the only option North Korea has for digging itself
out of poverty," said Park Syung-je, a North Korea analyst at the Asia Strategy Institute in Seoul.
"Otherwise, North Korea will look the same as it is today in 20 years." But Andrei Lankov, a longtime
North Korea watcher and professor at Kookmin University in Seoul, says the Mongolian example
would be "completely unattractive" to Pyongyang's leadership, as the landlocked country's
transformation in the 1990s included a democratic revolution and the ousting of the communist
regime.
This week's visit coincides with the 65th anniversary of the diplomatic ties between Mongolia and
North Korea. Their relations were chilled after the newly democratized Mongolia moved closer to
South Korea, where a large population of migrant workers and students reside. But their ties have
warmed up since the beginning of the millennium.
Source: Wall Street Journal
MPP NAMES NEW LEADER
The Mongolian People‘s Party (MPP) named Deputy Speaker M. Enkhbold as the new head of the
party at a party assembly on Tuesday.
Enkhbold received 998 votes out of 1,078 party members, with some 83 favoring the former
Committee for Reform movement candidate, T.Ayursaikhan. Enkhbold will take control of
Mongolia‘s oldest party, which ruled Mongolia when it was a one-party state, succeeding U.
Enkhtuvhin.
The 18th MPP Assembly continued on to Wednesday where members elected members to the Party
Conference as well as the Monitoring Committee. It will also be up to party members to confirm
Enkhbold‘s nomination for secretary general.
Source: News.mn
MNT 590M MISSING FROM STATE ORGANIZATIONS
Auditors found MNT 590 million in funds went unaccounted by state organizations in 2012, reported
the Ulaanbaatar Citizens‘ Council.
The missing funds were described as debts and illegal financial transactions. They included MNT 30
billion owed by the Water Authority, MNT 30 billion owed by the public bus organization, and MNT
407 billion in illegal transactions made by high-ranking departments.
The mayor ordered thorough investigations into all the debts and illegal transactions, along with the
appropriate penalties.
Source: Undesnii Shuudan
NICOLAS CAGE DINOSAUR SKULL 'MAY HAVE BEEN STOLEN'
A dinosaur skull bought by the actor Nicolas Cage is at the heart of an investigation into illicit fossil
smuggling involving Mongolian fossils.
The 67-million-year-old skull of a Tyrannosaurus bataar, a close relative of the T. rex, was bought
by Cage in 2007 at an auction in California. By the time the auctioneer brought down his gavel,
Cage had outbid fellow actor Leonardo DiCaprio by phone, paying USD 276,000 for what the Source
described at the time as a ―ferocious-looking addition to his fossil collection‖. However, the skull
was allegedly obtained by IM Chait—an auction house in Beverly Hills–from Eric Prokopi, a self-
described ―commercial palaeontologist‖ who pleaded guilty last year to illegally importing fossils
from Mongolia and China. Prokopi—who was arrested last October after selling a huge skeleton of a
T. bataar for USD 1 million—is now faces up to 17 years in prison.
―Nicolas Cage‘s specimen came from Prokopi,‖ said David Herskowitz, who was the director of IM
Chait‘s natural history department at the time of the sale.
The U.S. Immigration and Customs Enforcement division (ICE), which is now tracking the
provenance of other fossils sold by Prokopi, could seize Cage‘s skull as part of their investigation. At
the time Cage bought it, the skull was the largest ever offered at auction and one of many
extravagant purchases made by the star. According to evidence submitted by Cage‘s former
business manager Samuel Levin in a court case in 2009, the actor also bought three homes, 22 cars,
including nine Rolls Royces, and 47 purchases of ―artwork and exotic items‖ in the same year he
bought the Tyrannosaurus skull.
Prokopi has never revealed how he found his illicit fossils or removed them from Mongolia, but a
large black market in fossils from Mongolia and China–both of which forbid the commercial export of
fossils found within their borders–has operated for years. Martin Bell, the lead prosecutor in the
Prokopi case, claimed in court that fossil trafficking ―far exceeds‖ the current efforts of law
enforcement.
Source: The Telegraph
MONGOLIAN BASKETBALL MAKES FOR A SLAM DUNK
A little more than a year ago, Mongolia put its name on the international basketball map hosting the
22nd FIBA Asia U18 Championship in Ulaanbaatar. The Mongolian Basketball Association has ever
since gone on an ambitious route.
Known worldwide for its expansive blue skies, vast green rolling countryside, wild horses, wresting
and the great Emperor Genghis Khan, Mongolia now wants to be known for something else:
basketball. The Mongolian Basketball Association (MBA), under new leadership since January of this
year, has great expectations for the future basketball. Led by the dynamic Ganhuyag Hutagt as
president with Secretary General Orgil Bathuyag and Special Advisor Eddie Ganbat providing the
necessary support, the MBA is developing ambitious plans to remake the MBA a player on and off
the court in the East Asian and Asian basketball scenes.
The MBA's main project is completely rebuilding from the ground up the National Teams for both
men and women. Undertaking this challenge is the recently hired American coach and consultant
Alan Walls. With 19 years of coaching experience around the world on the youth, high school,
college and professional levels, Walls was the Director of Instruction and Head Coach with Five-Star
Basketball China before landing in Mongolia. The ultimate goal of the project is to transform
Mongolia into a regular participant at the FIBA Asia Championship starting with 2015. Mongolia has
never qualified to compete in the championship.
Source: FIBA Asia
MONGOLIA HOLDS FIRST X GAMES
Mongolia had its first ever X Games Mongolia competition on 19 October at Sukhbaatar Square.
The competition included skateboarding, inline skating, BMX biking, and trail biking events in front
of the monuments of Mongolian national heroes Chinggis Khaan and Damdin Sukhbaatar. At the
competition were 55 competitors competing for gold, silver and bronze medals in categories such as
―Highest Jump‖ and ―Street Freestyle‖ in each event. Custom made trophies were awarded at the
end of the day to the overall best competitors in each sport.
The X Games are ―extreme‖ sport competitions held annually since they began in 1995 in Rhode
Island, United States. This year saw the global expansion of six-calendar events held in Barcelona,
Spain, Munich, Germany, and Foz do Iguacu, Brazil.
Source: UB Post
MONGOLIANS TARGET SUCCESS ON THE DARTS WORLD STAGE
Mongolians have long prided themselves on their prowess in the three "manly" sports: wrestling,
riding and archery. But they are now sweeping to victory in a new field, where sharp eyes are
equally crucial.
"When we began entering darts competitions, people would say: 'How can you guys play? We
thought you lived in gers [felt tents] and rode horses; do you even have buildings?'" said Erdene
Mandakh, president of the Mongolian Amateur Darts Federation. "Now they have stopped asking;
they just see us as competitors. But this is only the start."
Britain's own manly sport takes little room, uses cheap equipment and is suited to Mongolia's fierce
winters, when temperatures can drop to -40 Celsius. Baatar Tsend tried her hand one day and
discovered she was a natural. Soon it became an obsession. "There is nothing bad about darts," said
the 49-year-old, twice national women's champion. "I am in love with darts." Last year she insisted
on competing one day after an appendectomy, despite being unable to stand up straight to throw.
Darts in hand at an Ulaanbaatar leisure center, she analyzed the roots of her devotion.
"Since ancient times our people have been practicing archery and ankle bone shooting," she said.
"They've got great aim, so maybe this is in our genes or something: our special Mongolian genes."
The Mongolian players are also seeking commercial support and new ways of wooing potential
players to supplement the 2,000 already converted. They have promoted the game at the annual
Mongolian scout jamboree and at outdoor events in the snow; through companies and government
departments; and most of all, to their nearest and dearest.
Source: The Guardian
DEMOCRACY STRUGGLES TO ATTRACT POPULAR SUPPORT IN FORMER SOVIET SPACE
How badly do the people of transition countries yearn for democracy? The short answer is: "not very
much."
While the Western press leaps to support any opposition leader that emerges in the still largely
authoritarian countries of Eastern Europe or Central Asia, these figures usually have little traction
with their fellow countrymen. From a report by the European Bank for Reconstruction and
Development (EBRD), the chart shows the demand for democracy in the region, raises some difficult
questions. In Georgia, by far the most democratic country in the former Soviet bloc, just over half
the population (59 percents) thinks democracy is "preferable to any other form of political system.
It's those under the really oppressive regimes in Tajikistan and Uzbekistan that harbor the clearest
desire for representative government (64 percent, 62 percent), although the people of Armenia—
where the regime is decidedly middle of the road—have the deepest belief in democracy (71
percent) in the region.
The results of democracy appear to blight opinion in some countries. Kyrgyzstan, like Georgia, had
a "color revolution" but the economic chaos that has followed appears to have helped depress the
popularity of democracy. At just 38 percent, Kyrgyz citizens give it the second lowest rating in the
region. A desire for peace and order also likely explains why more Kyrgyz (30 percent) are open to
the idea of an authoritarian government than anyone else in the CIS. Russia is the most prosperous
country in the region, but has the lowest propensity for democracy (31 percent) and the second
highest tolerance of authoritarianism (26 percent). Like the Kyrgyz, Russians want peace and order;
and they basically have it from the current system.
The EBRD pondered in a report in 2007 if lunging for full and open democracy from the get go is the
best strategy. "One of the unexpected side-effects of China‘s spectacular emergence… [has
introduced the idea] that democratization in the early stages of a country‘s economic development
can be harmful," it wrote.
Source: BNE
ANNOUNCEMENTS
ONLY 3 WEEKS LEFT UNTIL MONGOLIA INVESTMENT SUMMIT, HONG KONG
Since opening up the registration for the fourth annual Mongolia Investment Summit 2013 in Hong
Kong from 19 to 20 November, organizers have received an overwhelming response from investors.
With the new Investment Law being passed by the Mongolian Parliament last week, we expect the
investor interest for the Summit to pick up even more.
Meet with up to 500 senior level delegates at the Summit and set up one-on-one meetings with
investors and potential business partners all in one place. Mongolia Investment Summit is the only
Mongolian investment event taking place in Hong Kong, the financial deal-making hub of Asia. All
registered delegates will have exclusive access to our advanced Mongolia Invest Online Meeting
Planner which will allow you to see who‘s coming and let you pre-arrange meetings with the other
attendees to make the best use of your time at the event.
BCM is again a supporting partner organization. BCM members will enjoy 15% discount; please quote
Priority Code 695BCM15D during registration. To speak, sponsor or exhibit: Please contact King Tai
__________________________________________
―MM TODAY‖ ON MNB-TV, FRIDAY, 19:00-19:15
BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with
BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is
scheduled from 19:00 to 19:15 tonight. Tune in to watch this program that reports stories from
today‘s BCM NewsWire.
BCM WEBSITES
MONGOLIAN WEBSITE ‗PRESENTATIONS‘ AND ‗NEWS‘ SECTIONS
The ‗Presentations‘ section on BCM‘s Mongolian website can be reached via bcm.mn/itgeluud.
As a key component of BCM‘s Mongolian website, articles from the ‗News‘ section and the
government website Open-Government.mn are regularly updated.
S. Oyun, Minister of Environment and Green Development, presentation at BCM monthly meeting on
May 27 added to Mongolian website, bcmongolia.org/mn/илтгэлүүд.
- Байгаль орчин, ногоон хөгжлийн сайд С.Оюун, Байгаль орчин, ногоон хөгжлийн шинэчлэлийн
бодлого, үйл ажиллагаа, МБЗ-ийн сарын уулзалт 5 сарын 27, 2013
___________________________________________
ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', ‗INTERVIEWS‗, MONGOLIAN
BUSINESS NEWS‘, ‗PHOTO GALLERY‘
On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available:
• Jim Dwyer, Executive Director of BCM – ―Mongolian Economy: Investment
Opportunity/Challenges‖ at the 16th Annual NAMBC Investors Conference, Sept 24, 2013
• Business-mongolia.com: ―Working group‘s conclusion on the economy‖
• Joshua Sunga, Internship Program Director, AIESEC- "Youth Leadership Development" at the BCM
Monthly Meeting Aug 26. 2013
• G. Zorig, Country Manager, Tree Global Mongolia – ―Tree Global Mongolia Overview Presentation‖
at the BCM Monthly meeting Aug 26, 2013
• G. Saruul, Deputy CEO, Mongolian Stock Exchange – ―Securities Law Overview‖ at the BCM Monthly
meeting Aug 26, 2013
• Bilguun Ankhbayar, Chief Executive Officer, Mongolian Investment Banking Group LLC,
―MIBG Review‖, at the MSE-BCM Securities Law Overview Session, July 4, 2013
• Robert Rooks, Director, PwC Hong Kong, ―A brief Overview of Custody Services‖, at the MSE-BCM
Securities Law Overview Session, July 4, 2013
• Anthony Woolley, Senior Associate, Hogan Lovells, ―The Revised Securities Market Law‖, at the
MSE-BCM Securities Law Overview Session, July 4, 2013
• B. Saruul, Director General, Securities Department, Financial Regulatory Commission of Mongolia,
―Securities Markets Law – Path to Market Reforms‖, at the MSE-BCM Securities Law Overview
Session, July 4, 2013
Please note the presentations from each of the BCM monthly meetings.
The ―Mongolia Reports‖ section includes the following:
- ―Monthly Macroeconomic Overview, Sep 2013,‖ by EPCRC
- ―Selected Macroeconomic Indicators; data through October 16, 2013‖ by International Monetary
Fund;
- ―IMF Completes 2013 Article IV Mission to Mongolia‖ by International Monetary Fund;
- ―Mongolia Macro Flash‖, Adrienne Lui, Asia Pacific Economics Research, Citigroup Global Markets
Asia Ltd;
- ―Selected Macroeconomic Indicators for Mongolia, as of June 2013‖ by International Monetary
Fund;
- ―Polit Barometer April, 2013‖ by Sant Maral Foundation;
- ―Market Update‖ by Mandal General Insurance LLC;
- ―Annual Report 2012‖ by International Monetary Fund;
- ―Regional Economic Outlook: Asia and Pacific‖, April 2013 by International Monetary Fund;
- ―Highlights of 2012, Mongolia‖ by European Bank for Reconstruction and Development (EBRD);
- ―Official statement of Oyu Tolgoi LLC in relation to information, data and facts related to Oyu
Tolgoi‖ discussed during open session of the State Great Khural‖, dated 1 February, 2013‖;
- ―Mongolia Investment Climate Statement‖, by the Economic and Commercial Section of the U.S.
Embassy;
- ―Mongolia Foreign Labor Force Ratio for 2013‖ by Hogan Lovells International LLP;
- ―How Mongolia will perform in 2013?‖ by Mandal Asset Management;
- ―Mongolia Business Owner and CFO Survey result‖ by BDSec JSC;
- ―The fiscal regime for mining - a way forward‖ by IMF Fiscal Affairs Department;
- ―Taxes for Expatriates in Mongolia‖ by PricewaterhouseCoopers.
The following interviews are added to Interview Section from the Oxford Business Group, Mongolia
Reports 2013 book:
• B. Byambasaikhan, Chairman, Business Council of Mongolia: ―Talk is cheap‖;
• President Ts. Elbegdorj: ―Diversifying for growth‖
• Jim Dwyer, Executive Director, Business Council of Mongolia: ―Non-mining sectors budding‖;
• Peter Morrow, Chairman, American University of Mongolia: ―Filling in the blanks‖;
• N. Zoljargal, Governor, Bank of Mongolia: ―Sustainable vision‖;
• Gansukh, Minister of Roads and Transportation: ―Accessing new markets‖;
• J. Od, President, MCS Group: ―Building interest‖;
• B. Chuluunbaatar, President and CEO of Monnis Group: ―Climbing the ranks‖;
• Cameron McRae, President and CEO, Oyu Tolgoi: ―Sitting on a copper mine‖.
BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to
Parliament and Government is available for download.
BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business
News‖ before they are all put together each week for Friday's weekly NewsWire.
The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner on November 5.
BCM Football Cup 2013 pictures are posted to the website - http://bcmongolia.org/en/photos/350-
en/album?albumid=200
The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home
page for a consolidated account of the week‘s events.
___________________________________________
SOCIAL NETWORK WITH BCM
The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.
Keep up to date on the latest business deals in Mongolia and how the climate for investment is
improving each day with BCM.
Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-
MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in
the NewsWire with the community.
Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better
business environment in Mongolia today.
Hear breaking news and announcements as they happen when you follow BCM on Twitter at
http://twitter.com/#!/bcMongolia.
We have now 1,744 fans on our Facebook fans page, 1,518 connections on LinkedIn network, and
790 followers on Twitter.
Of course for news information, interviews, event photos, and announcements regarding our
organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn
ECONOMIC INDICATORS
SUPERMARKET PRICE COMPARISON – OCTOBER 2013
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
Year 2009 *4.2% [source: NSOM]
Year 2010 *13.0% [source: NSOM]
Year 2011 *10.2% [source: NSOM]
September 30, 2013 *9.9% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 8.4% y-o-y, Ulaanbaatar city, September 30, 2013
CENTRAL BANK POLICY LOAN RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol Bank]
January 25, 2013 12.50% [source: Mongol Bank]
April 8, 2013 11.50% [source: Mongol Bank]
June 25, 2013 10.50% [source: Mongol Bank]
CURRENCY RATES – OCTOBER 31, 2013
Currency Name Currency Rate
US dollar USD 1,716.28
Euro EUR 2,351.30
Japanese yen JPY 17.45
British pound GBP 2,749.48
Hong Kong dollar HKD 221.37
Chinese Yuan CNY 281.64
Russian Ruble RUB 53.57
South Korean won KRW 1.62
Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is
selected from various news sources. Opinions are those of the respective news sources.
