BUSINESS COUNCIL of MONGOLIA NewsWire www.bcmmongolia.org

info@bcmmongolia.org Issue 49, December 5, 2008

NEWS HIGHLIGHTS:

Business: Parliament asks Government to prepare both mining agreements by February 1; Risk of

miners deserting Mongolia “high”, says World Bank specialist; “We must be fast and flexible,” says President in Hong Kong; Draft caps foreign share in strategic deposits at 49%; Oyu Tolgoi workforce slashed 40%; Erdenet to follow Ivanhoe in retrenching staff; Khan Bank denies lay-off plans; MP wants pragmatism, not populism; Choosing the best for Tavan Tolgoi; MEC to supply Xinjiang 3 million tons of coking coal a year; Denison Mines to spend more on uranium site; Executive search firm opens office in Ulaanbaatar; Strike at Aero Mongolia continues; MIAT will fly to London from July.

Economy: Budget with deficit of 6 percent of GDP approved; Run of USD jacks up prices, for no

clear reason; Mongolia seeks investors in Hong Kong; Call to boost Turkey-Mongolia trade to USD50 million; New idea on Development Fund money for banks; Copper price shows sudden rise; EBRD says Mongolia will grow no more than 3.4% in 2009; Chinese coal import crosses 3 million tons; World Bank feels China’s imports from Mongolia will not fall; Petrol prices may fall again; Spring meat stock being prepared; Workshop on finer points of foreign trade.

Politics: MPRP wins 36 seats in City assembly, DP 9; M. Enkhbold meets leaders in Doha on

cooperation; State asked to reduce number of employees; Environment Ministry chooses NGO partners; Projects asked to meet deadline; President’s Office gets a chief after one year; Polish President abandons plane frozen in Ulaanbaatar.

NOTICE TO BCM MEMBERS

The final 2008 BCM monthly meeting for Members will be Monday, December 8 at 5 PM at the Open Society Forum. Featured will be a presentation by Arshad Sayed, Country Representative, World Bank – “FINANCIAL CRISIS: IMPACT ON EAST ASIA”. Embassy updates will be presented by Asun Arar, Ambassador of Turkey to Mongolia, and by Mark Minton, Ambassador of the USA to Mongolia. A Mining Industry report will be presented by Do.Ganbold, President and N.Algaa, Executive Director of the MNMA. Ms. E.Sodontogos, Founding Editor, will introduce the new Mining Journal. Recommendations with respect to the Social Insurance law will be outlined by Iva Stejskal of BCM’s Legislative Committee. O.Bolorbat, head of a business unit at Tavan Bogd Food Co., Ltd will discuss the issue of enhancing national standardization procedures and rules. An overview of the Consultative Council of Investment Climate & Private Sector Development will be provided by the Head of its Secretariat, Kh. Amarsaikhan. Teleconferencing will again be available for Members not able to attend in person. Call number is (1-218) 936-7979, access code 771358 to be connected. Cost will be solely that of the long distance call to the above US number. Members who plan to attend the meeting in person or via teleconferencing with questions on these presentations should Email them in advance to info@bcmmongolia.org

BUSINESS

PARLIAMENT ASKS GOVERNMENT TO PREPARE BOTH MINING AGREEMENTS BY FEBRUARY 1 Parliament approved on Thursday the draft resolution prepared by the MPs’ working group on the Oyu Tolgoi and Tavan Tolgoi deposits and instructed the Government to finalize the draft of the two separate agreements before February 1. Earlier, when the draft was discussed on Wednesday by the Standing Committee on the Economy, many MPs had asked for quick Parliamentary approval as delay in finalizing the agreements was losing Mongolia money. Parliament thus agreed with the working group that amendments to the 2006 Mining Law could wait, but investment agreements on both Oyu Tolgoi and Tavan Tolgoi can and should be pursued. The Government wants 34% ownership in the former, gradually raising it to 51%, and in the case of the latter, it will have 51% from the beginning. In Parliament the only dissenting voice was that of Ts.Davaasuren (MPRP) who said, “I have heard that Ivanhoe Mines has raised CAD3.7 billion for these two projects. We are sacrificing our unique wealth because of a financial crisis and because we have no money. Our music will now be played by an orchestra of foreigners.” The man who led the working group, Kh.Badamsuren, told him, “We have heard many stories about how Ivanhoe Mines raised huge sums of money. Our leaders made 286 foreign visits and looked for investors. At the same time the Mongolian state wants to have a share of the mining income. If the state policy and the legal environment are not stable, foreign investors will be confused. So we have to decide once for all. There is no time to lose.” Source: en.News.mn RISK OF MINERS DESERTING MONGOLIA “HIGH“, SAYS WORLD BANK SPECIALIST World Bank mining specialist in Ulaanbaatar, Graeme Hancock, feels the risk of mining companies dumping promising investment projects in Mongolia is "high" as there has been little progress on a workable mining law or tax system. Such risks are particularly high in the copper, gold and uranium sectors, Mr. Hancock said in an interview in Sydney on Monday. "There's no legal framework for uranium mining, and the sector is treading water. The same goes for copper and gold," he said on the sidelines of the Papua New Guinea Mining and Petroleum Investment Conference. "The Government is aware the windfall tax is an impediment for Oyu Tolgoi. It is looking at an alternative tax arrangement, even though this hasn't been discussed at parliamentary level yet," said Mr. Hancock. "Fundamentally the tax system is quite good, except for the windfall." The decision to implement the windfall tax is rooted in public discontent over a tax holiday granted to Centerra Gold's Borroo gold mine, the first significant foreign investment in Mongolia since the late 1970s, said Mr. Hancock. "The next twelve months will be a determining time, and I expect the Government to take a look at the exploration sector," he said, and added, "The number of companies saying they are leaving has been low so far. But the economic downturn is hitting them hard." Governments of resource-rich countries retaining strategic stakes in mines is nothing new, but the size of the state stake and the uncertainty if companies have to relinquish control are of deep concerning to potential investors. On the other hand, the Mongolian Government is worried about foreigners dominating its resources sector. "Mongolia is sandwiched between Russia and China and the Government is worried that its mining sector will end up dominated by China, as has happened with Russia in the petroleum sector," said Mr. Hancock. Source: www.metalprices.com, DOW JONES NEWSWIRES

“WE MUST BE FAST AND FLEXIBLE,“ SAYS PRESIDENT IN HONG KONG Mongolia, sitting on what Rio Tinto Group has said is the world’s largest undeveloped copper-gold resource, is considering faster approval for investments after commodity prices plunged. In an interview on Bloomberg Television in Hong Kong President Nambaryn Enkhbayar has said the Government and lawmakers are discussing the possibility of reviewing projects individually rather than waiting for changes to its laws. “To save time and bring in faster investments maybe we will have to work on particular projects one by one,” Mr. Enkhbayar said. “We cannot afford this to be too slow. We have to be faster and more flexible.” Chinese, Japanese, Russian and South Korean companies have shown interest in investing in Mongolia for coking coal, iron ore and gold, he said.

Source: Bloomberg.com

DRAFT CAPS FOREIGN SHARE IN STRATEGIC DEPOSITS AT 49% The draft amendments to the Minerals Law, as proposed by the MPs’ group, include a provision that says the State will own not less than 51% of any strategic deposits, irrespective of where the funds for the initial exploration came from. Ts. Damiran, an MPRP member of the group, has said foreign companies’ participation should not exceed 49 percent and can be less, according to the draft. The draft calls for amending 10 articles of the 2006 Minerals Law. Mr. Damiran says DP and MPRP members of the group jointly developed the general concept. He claims the term strategic deposit has now been more clearly defined as regards location, resource and utility. Also minerals licenses will be granted after an application is processed at three levels. He also says the minimum 51% ownership will rest not only with the state “but with Mongolians as well”, and adds, “If people want to sell their ownership percentage to a foreign company, the decision will have to be taken by the Government of Mongolia. In order to maintain transparency, that process will be the responsibility of a National Council, with representation from the civil society.”

Source: Business-Mongolia

OYU TOLGOI WORKFORCE SLASHED 40% Almost half the workforce has been slashed at Rio Tinto’s Oyu Tolgoi joint venture project, victims of the global financial crisis and falling metals prices. According to the project’s managing director, about 250 jobs – or around 40% of the workforce – have been cut. Oyu Tolgoi is a copper gold joint venture between Rio Tinto and Ivanhoe Mines. “The project is currently implementing cost saving measures which have necessitated some reductions in the current workforce,” the Dow Jones newswire reported project MD Keith Marshall as saying. The development is in line with earlier comments from Rio of spending cuts and delays at Oyu Tolgoi. Ivanhoe also flagged expenditure cuts at the project in light of progress problems. Last year Rio Tinto acquired a 9.95% stake in Ivanhoe for some USD303 million, with the right to increase its holding to 40% overall. The mining major is now waiting for the investment agreement to be finalized before it chips in an additional payment to boost its stake, with the option to invest a further USD1.5 billion in the project. The project has been hampered by delays in government approvals and significant taxes while, more recently, plunging metals prices have impacted the potential profitability. In a November 14 announcement Ivanhoe said both it and Rio remained ready to restart the completion of the investment agreement, “given a reasonable basis for negotiations”. “In the meantime, the companies are continuing to assess the implications for the Oyu Tolgoi Project and its development schedule as a result of the delays in approval that have been experienced in Mongolia, the sharp declines in commodity prices in recent months and continuing uncertainty in international financial markets,” Ivanhoe said. Source: Dow Jones newswires, Bloomberg.com

ERDENET TO FOLLOW IVANHOE IN RETRENCHING STAFF The Director of the Economic Policy Department of the Ministry of Finance has said they have no official information about retrenchment in mining companies like BHP Billiton, Ivanhoe Mines, and also Erdenet Copper Plant, but have read in the media about such plans. “We assume that this is a policy to reduce corporate expenditure in these difficult times,” he said. Ivanhoe Mines is likely to dismiss 40% of its workers in Umnu Govi aimag and 20% of the staff in its Ulaanbaatar office soon. The total number of workers to go would be 300. They will receive 3 months’ salary when they leave. The situation is different in Erdenet, where, despite fall in copper price, the plant makes a profit from the sale of copper concentrate, and so does not need to fire workers. The Ministry official’s information was that when copper prices were on the rise, some new workers were taken in and these will now be asked to go.

Source: www.olloo.mn

KHAN BANK DENIES LAY-OFF PLANS The vice executive director of Khan Bank, Mrs. Munkhtuya, has denied any decision to lay off workers. However, she said, the bank was considering ways to cut administration costs to accommodate slower growth in the economy and the banking system. Meanwhile, Anod Bank is believed to have decided last Saturday to lay off one-third of its total tellers.

Source: Mongoliin medee

MP WANTS PRAGMATISM, NOT POPULISM Ch. Khurelbaatar, who heads the Parliamentary Standing Committee on the Budget, has said that there is every possibility of changes in the provisions of the 2009 budget approved by Parliament depending on the actual impact of external factors on the economy and on how the global financial turmoil stabilizes. He also said if Mongolia wants to develop further, it should quit relying only on Erdenet and see to it that there are many such Erdenets in the country. For example, there should be no further delay in implementing the Oyu Tolgoi project, which has been pending for two years. Asserting that “personally, I will work and do whatever it takes in order to get these mining projects started”, he appealed to media not to be “influenced by populism, nor to encourage people with silly ambition”, but to disseminate objective information and be guided by practical considerations.

Source: Business-Mongolia

CHOOSING THE BEST FOR TAVAN TOLGOI The Chinese are interested in Tavan Tolgoi more than any other investors. Xing Hua Energy of China could be a strong contender there. However, Chinese investment might run counter to Mongolia’s interests. A Chinese company will try to get cheap coal for China and so will try to sell Tavan Tolgoi coal at a low price. Russia is also interested in Tavan Tolgoi. There are three Russian companies presently operating in the Mongolian coal sector. They do not have much experience in coal mining. Also, Russia is suffering from the global economic crisis, making them unreliable partners. Russia partly owns Mongolia’s biggest companies such as Erdenet Mining Corporation and Ulaanbaatar Railway, and also a uranium company. If we cooperate with the Russians in the Tavan Tolgoi deposit, Mongolia’s dependence on Russia will be increased even more. Japanese and Koreans are also looking for chances to invest in the Tavan Tolgoi deposit. However, they really do not have experience of running such a huge mining project.

Source: Undesnii Shuudan

MEC TO SUPPLY XINJIANG 3 MILLION TONS OF COKING COAL A YEAR Mongolia Energy Corporation will start mining operations in mid-2009 to produce 3 million tons of coking coal a year to meet the growing demand in the Xinjiang Uygur Autonomous Region of China. The coal and energy resources developer currently has 330,000 hectares of concession areas in western Mongolia for coal, ferrous and non ferrous metal resources. The company is believed to have 149 million tons of coal reserves, including substantial coking coal deposits, within its 600 hectares of concession areas at Khushuut in Khovd province. Mr. James Schaeffer, CEO of MEC, said at a press conference last week that the company also plans to increase its coking coal production up to 8 million tons a year by 2012, which will make it the largest coking coal mine in Mongolia. The company's coal mining operation may reach USD151 million in the next two to three years. The company has sufficient resources to support its future development. "We will also look for possible strategic partnerships,” said Mr. Schaeffer.

Source: Steelguru, http://news.mining.com

DENISON MINES TO SPEND MORE ON URANIUM SITE Uranium prospecting will continue in Mongolia even while being cut back worldwide. Denison Mines has announced it will invest an additional USD5 million in its Mongolian Gurvan Saihan uranium site in 2009.

Source: http://www.denisonmines.com

EXECUTIVE SEARCH FIRM OPENS OFFICE IN ULAANBAATAR Pedersen & Partners, a leading international executive search firm with 37 offices in Asia and Europe, has opened an office in Ulaanbaatar. A statement issued by its Toronto head office says, “Many of our clients are already operating in Mongolia and it is critical that we assist them in finding and attracting the best executives, currently working in Mongolia or overseas, to lead their businesses. The opening of the office in Ulaanbaatar also puts us in a position to provide local guidance to companies that are planning to enter the Mongolian market.”

Source: www.pedersenandpartners.com

STRIKE AT AERO MONGOLIA CONTINUES The strike by a section of Aero Mongolia workers is almost 10 days old now with no solution of the dispute in sight. Company officials have not responded to an email from workers asking for talks, and the workers are threatening to “occupy the work place”. D.Yadamsuren, an engineer who is on strike, said yesterday this form of protest is permitted by Trade Union laws. He also said they had been dismissed because they established the trade union, and not because they had done anything illegal or irresponsible. Aero Mongolia hired an engineer from the Netherlands to tide over the problem caused by the strike, and has now extended his contract. Source: en.news.mn

MIAT WILL FLY TO LONDON FROM JULY MIAT will extend its Ulaanbaatar-Berlin flight to London from July 1, 2009. An agreement on this was reached at talks S.Batmunkh, head of the Mongolian Civil Aviation Agency, and B.Erdenebileg, General Director of MIAT, recently had with British officials in London. The MIAT flight will land at Gatwick airport. The British authorities were willing to allow two flights a week, but MIAT decided one would be enough for the present expected demand.

Source: www.news.mn, Odriin sonin

ECONOMY

BUDGET WITH DEFICIT OF 6 PERCENT OF GDP APPROVED The 2009 budget adopted by Parliament last week results in a deficit of 6 percent of the national GDP. Time constraints forced the third and fourth readings to be combined. At the end of the Parliament sitting, Speaker D. Demberel spoke to journalists about the budget and the discussions. He said things had been made difficult this year by the world financial crisis. Parliament “could not expand the scope and areas of state spending very much even though this was essential to economic growth, but instead had to chop and prune much of the projected investment”. Finally, it was decided that next year’s investments will be MNT50 billion more than this year’s. Some members were worried about the deficit but understood that “in the current world situation it is not possible to have a surplus or even balanced budget”. There was hope that the deficit could be met by foreign loans or investments. There were also suggestions for a cut in social welfare allowances like the children’s money to save MNT60 billion but finally MPs decided to keep them as they are. However there was a general demand for a further 10.2 percent cut in state expenditures. Budget accounts have been calculated on the basis of estimates that the price of copper will be USD3,400 per ton, and that of zinc USD1,100 per ton. These together mean corporate income taxes would fall by MNT312.6 billion, and fees for minerals exploration by 27.1 billion MNT. Budget revenues from customs duties will fall by MNT8 billion, from VAT by MNT25 billion, and from excise taxes by MNT3 billion. The Mongolian Development Fund is expected to get MNT45.2 billion. All these figures are based on expectations that work will begin in Oyu Tolgoi, Tavan Tolgoi and Shivee Ovoo during the year.

Source: Ardiin Erkh, Montsame

RUN OF USD JACKS UP PRICES, FOR NO CLEAR REASON The tugrug has fallen sharply against the US dollar in the last few days, with no clearly discernible reason behind the sudden rush to buy USD that has pushed prices up. Commercial banks referred all worried enquiries to the Central Bank. One USD cost MNT1,210 on Monday, rising to MNT1,310 on Wednesday. The Central Bank’s official rate of MNT1,194.90 was of no help for those who wanted to buy USD as commercial banks and currency exchange centers were not selling any. Trading on Wednesday morning began with the Trade and Development Bank buying USD for Tg1,196 and selling for Tg1,245. The Xac Bank rates were MNT1,200 and MNT1,270 respectively while Golomt Bank bought for MNT1,208 but was not selling. In three hours things changed. TDB stopped dollar sale, and Xac Bank raised the selling rate to MNT1,290. All commercial banks and currency exchange centers stopped selling USD at 4:30 pm, while the latter kept buying for between MNT1,295 and MNT1,310. Unconfirmed reports say the Central Bank then stepped in and supplied dollars to commercial banks. They resumed buying and selling on Thursday. The following were the MNT rates for one USD at 11 am Thursday: Buying Selling Golomt Bank 1,210 1,298 Xac Bank 1,210.6 1,290 TDB 1,211.6 1,295 Anod Bank 1,207.6 1,250.3 Khan Bank 1,217 1,250 Source: www.news.mn

MONGOLIA SEEKS INVESTORS IN HONG KONG Mongolia is pushing its commodities companies to sell shares in Hong Kong next year to raise funds, President Nambaryn Enkhbayar has said. The country is seeking investors in Hong Kong, where about USD12 billion of shares changed hands daily last year, compared with an average of about USD200,000 in its home bourse. “Next year will be a very important and crucial year for Mongolian companies to list here,” Mr. Enkhbayar said in an interview in Hong Kong on Tuesday. “Mongolian companies have been planning to do IPOs here, but because of the financial situation of the world market, they've decided to delay.” The landlocked country wants to draw investors to fund its companies' expansion as foreign direct investment to the country rose more than 33 percent to USD500 million last year, of which two-thirds were in mining, according to data compiled by the Asian Development Bank. The planned share sales comes at a time when banks and financial services companies have posted almost USD1 trillion of credit losses and writedowns, and Hong Kong's benchmark Hang Seng Index has fallen 52 percent this year. Some investors are also cutting back on their projects in the former communist country that became a democracy in 1992. Mongolia is counting on its proximity to China which made up almost 70 percent of its investments last year. “Because of the geographical closeness, the Chinese market is the main market for Mongolian companies,'' Mr. Enkhbayar said. “Hong Kong is their preferred place.”

Source: bloomberg.com

CALL TO BOOST TURKEY-MONGOLIA TRADE TO USD50 MILLION Turkish Minister Hayati Yazici told a meeting of the Turkey-Mongolia Joint Economic Commission in Ankara on Wednesday that they aimed to increase bilateral trade volume to USD50 million in the next three years. This volume has risen 90 percent to reach USD12 million in January-September, 2008 when compared to the same period of 2007. He identified leather, construction, energy, jewelry, mining, food and machinery as sectors with potential for cooperation. Mongolian Minister Luimed Gansukh added tourism, agriculture and infrastructure to the list. Source: The Anatolian News Agency, Ankara

NEW IDEA ON DEVELOPMENT FUND MONEY FOR BANKS The Government decided at an extraordinary meeting on Monday to withdraw the present draft law on amendments to the Mongolian Development Fund and submit a fresh draft to Parliament. This new draft calls for the money to be transferred to a State Fund, from where it can then be put in commercial banks.

An agreement between the Central Bank and the Government will set out details about the interest rates and the measures to guarantee security of the deposits. The MNT455.1 billion in the Development Fund is at present kept in the Central Bank at 0.5 percent interest. The Government will be looking for at least 14 percent from commercial banks.

Source: Ardiin Erkh, Montsame

COPPER PRICE SHOWS SUDDEN RISE The price of copper, falling for the last several weeks, suddenly changed course and rose as this week began, going up by USD375 to reach USD3,815 per ton. Depreciation of USD and the increasing consumption of copper in China might have been responsible for the rise. Chinese copper import has increased by 34% compared to the same period of last year. However, the Chilean State Committee on Copper has said the price of copper will continue to go down in the coming months.

Source: Onoodor

EBRD SAYS MONGOLIA WILL GROW NO MORE THAN 3.4% IN 2009 The European Bank for Reconstruction and Development (EBRD) predicts in the just released 2008 Transition Report that the Mongolian economy would slow to 7.3% this year from 8.5% last year, and drop to 3.4% in 2009. The report foresees economic growth in eastern Europe and the former Soviet Union halving in 2009 from this year as the financial crisis and global downturn take their toll. EBRD’s chief economist, Mr. Erik Berglof, said sustained growth in the region’s economy in the early stages of the global crisis was “a testament to remarkable reform achievements”. Currently, Mr. Berglof said, countries like Mongolia face “much less benign international background and outflows of capital from emerging markets” and that “risk aversion and the recession in key OECD economies would test the resilience of transition countries”.

Source: Reuters.com

CHINESE COAL IMPORT CROSSES 3 MILLION TONS Total Chinese import of coal from Mongolia added up to 3,118,000 tons in the first ten months of this year for more than USD176.77 million, up by 29% (yoy) and 143.8% (yoy) respectively. Source: Steelguru, Hulunbeier Daily WORLD BANK FEELS CHINA’S IMPORTS FROM MONGOLIA WILL NOT FALL The World Bank's latest quarterly report on China says its GDP growth rate will be around 7.5% next year, falling from 9.4% in 2008, and its export growth is also expected to be low, at 3.5% next year compared with 11% in 2008. However, the Bank’s Country Director for China (and Mongolia), Mr. David Dollar, feels there is good news for some in terms of the effect of China's slowdown. "China's recently announced stimulus package is good news because it will keep China's growth rate up at a pretty healthy rate. So imports will continue to go into China at a fairly good rate," he has said. "That's good news for countries like Mongolia and Australia that export commodities like copper and iron ore to China. It's also welcome news for countries selling primary products, machinery and parts to China."

Source: Beijing Express

PETROL PRICES MAY FALL AGAIN Mr. Ch.Chuluunbat of the Mineral Resources and Petroleum Authority has held out hopes of petrol prices falling once again around the middle of December. The fall may be as much as MNT400 per liter.

Source: Undesnii shuudan

SPRING MEAT STOCK BEING PREPARED The Government has asked six companies, instead of the usual ten, to keep a reserve stock of 7,000 tons of meat so that prices remain stable next spring. The City Mayor’s office and the Mongolian Meat Producers’ Association are jointly supervising the work, of which almost 60% is over. The total stock will cost around MNT14 billion, of which the Government subsidy will be MNT3.5 billion. The sale price has not yet been decided, but with petrol prices falling, meat may sell cheaper next spring.

Source: Onoodor

WORKSHOP ON FINER POINTS OF FOREIGN TRADE Understanding the finer points of foreign trade was the topic of a recent workshop in Ulaanbaatar. It focused on non-tariff issues in foreign trade and how to understand and implement an agreement on Technical Barriers to Trade (TBT) and another on Sanitary and Phyto-sanitary Measures (SPS). Mongolia currently trades with 114 foreign countries, and in 2007, its total foreign trade turnover exceeded USD4 billion, equaling its GDP. As multilateral agreements become better understood and realized, Mongolia's trade dimensions will increase to overcome its limited domestic market constraints. Trade in animal-and plant-originated products will be very significant and this will have to comply with provisions in the above agreements. Products made from animal-related raw materials, such as cashmere, leather and meat make up 10 percent of Mongolia's total exports and there are considerable possibilities for expansion. China has become a WTO member and is fast opening its markets, whilst Russia's joining the WTO is a mater of time. The workshop focused on trade according to WTO agreements and regulations, with emphasis on human health, plant and animal-related products. Since inter-sector characteristics are inherent in such trade, the workshop was attended by representatives of several Ministries, agencies, universities, NGOs, the private sector, and scholars and experts. Among those who spoke were WTO advisor Joao Magalhaes and Mr. B. Gerel, chief of the National Standardization and Measurement Center. The Center is responsible for providing information on national standards and also for enforcement of 96,000 technical regulations and standards in coordination with 16 countries. Source: Montsame, Mongolia-web.com

POLITICS

MPRP WINS 36 SEATS IN CITY ASSEMBLY, DP 9

The MPRP has been declared winner in 36 seats in the Ulaanbaatar Representatives’ Assembly with the remaining 9 going to the DP. Sunday’s re-election had passed off peacefully, with 65.6 percent of voters casting their ballot, according to the Metropolitan Election Committee. Microbuses were specially requisitioned to carry voters to polling stations. To ensure enough people voted the City Mayor had ordered big markets to remain closed and to preempt any trouble he had prohibited sale of alcohol in shops and restaurants. The ban on alcohol sale did not stop the willing from finding a way, as shown by the fact that 106 people were found too drunk to take care of themselves and were handed over to the police on Sunday. On other days, however, the number is usually twice as large.

Source: www.news.mn

M. ENKHBOLD MEETS LEADERS IN DOHA ON COOPERATION High-level representatives of 192 member-states of the UN, heads of international banks and financial organizations such as the WTO, the International Monetary Fund (IMF), the World Bank (WB) and the United Nations Conference on Trade and Development (UNCTAD) are attending an international conference considering implementation of the Monterey Agreement on development financing in Doha, Qatar. Deputy Premier M. Enkhbold is leading the Mongolian delegation. His speech elucidated the position of the Mongolian Government on the issue. Mr. M.Enkhbold took the opportunity to meet with Hamad bin Jassim bin Jaber Al Thani, the Qatari Prime Minister, who proposed sending Qatari experts to Mongolia in February 2009 in order to co-implement financial and investments projects. Mr.M. Enkhbold also met with Khisham Al-Uakayan, vice-president of the Kuwait Foundation, to explore how the foundation could implement projects in Mongolia.

Source: Montsame

STATE ASKED TO REDUCE NUMBER OF EMPLOYEES Several suggestions from the National Audit Office have been incorporated in the budget estimates for 2009. These include a reversal to the system followed in 2006 and 2007 to calculate revenue from Erdenet, making it mandatory for State-run organizations and agencies to declare their total earnings and put this into the general budget, stricter control over how they spend their allocations

so as not to exceed planned expenditure, and cutting down non-essential items in 597 projects, like new construction, new furniture, mobile phone charges, vehicles, and official trips. In 2000 State workers numbered 90,000 but the number has since increased to 136,000. MPs want this to be drastically reduced, and asked the Government to prepare a report on this by March 2009. Source: Montsame

PRESIDENT’S OFFICE GETS A CHIEF AFTER ONE YEAR L.Amarsanaa is the new head of the President’s Office, a position that has been lying vacant since T.Bilegt left it to become the City Mayor in December, 2007. At the time of a Presidential election, the office head takes a leave of absence and works as the election campaign manager of the candidate from his party, resuming his duties if that candidate wins. L.Amarsanaa was born in Khuvsgul aimag in 1953 and graduated from the Economics Institute in Irkutsk, Russia. He worked as Secretary of the MPRP in 2001 before serving as Ambassador to China from 2001 to 2005. After that he has again been active in the MPRP. Source: en.news.mn

ENVIRONMENT MINISTRY CHOOSES NGO PARTNERS The Ministry of Nature, Environment and Tourism has chosen 11 environmental NGOs with whom to work closely on various issues. Minister L.Gansukh has identified work which can be done better by NGOs. These include conservation of endangered animals and plants, rain and snow water preservation, promotion of paper bags instead of plastic ones, identifying areas damaged by mining, and managing local protected areas. “The Government’s guidelines recommend cooperation between state organizations and NGOs, and we are happy that our Ministry has been the first to do this. With the NGOs’ cooperation we could reform our environmental protection policy and also improve our monitoring system,” said T.Gantulga, State Secretary in the Ministry. The Head of the Ongi River Movement, Ts.Munkhbayar, will lead an 11-member NGO council to monitor the collaboration. “We expect positive changes in the near future,” he said. Source: www.news.mn

PROJECTS ASKED TO MEET DEADLINE The Mongolian Development Fund earmarked MNT10 billion to be spent in 2008 on technical and economic feasibility studies, and preparing blueprints for buildings and construction in 163 projects. As of November 20, work worth only MNT1.5 billion in 29 projects was completed. Another 126 projects under development did not receive MNT7.2 billion allotted to them. There is no information on the status of the remaining 8 projects. The Government has asked all related ministries and other offices in the capital city and provinces to expedite work on the projects so that they are accomplished this year.

Source: Montsame

POLISH PRESIDENT ABANDONS PLANE FROZEN IN ULAANBAATAR President Lech Kaczynski had to hire a Mongolian plane to take him to Japan as his Polish Government aircraft froze over on the runway at the Chinggis Khaan airport in Ulaanbaatar on Wednesday. This was at the end of his two-day visit to Mongolia during which he was awarded an honorary doctorate by the National University of Mongolia on Tuesday for his “contribution to development of democracy and friendship among nations, as well as of comprehensive relations between Poland and Mongolia”. He congratulated Mongolia on its academic achievements. Earlier, President N.Enkhbayar met with Mr. Kaczynski on Monday. Noting that this was the first visit to Mongolia by a Polish head of State since 1990, when both countries shifted to a democratic system, Mr. Enkhbayar stressed “the traditional and mutually beneficial relations” between the two countries that will celebrate the 60th anniversary of establishment of diplomatic relations between them in 2010. Mr. Kaczynski called for increased trade, more scholarships for Mongolian students in Poland, and expanded defence cooperation. Later in the day Mr. Kaczynski held discussions with Prime Minister S. Bayar.

Source: news.poland.com, Thenews.pl, Montsame

_______________________________________________________________________________________________

AN ANNOUNCEMENT

The Rotary Club of Australia needs around USD20,000 to pay for the transport costs of two CT Scanners to be installed at the National Cancer Institute in Ulaanbaatar. The second unit is mainly to provide spare parts whenever necessary. The Club has so far installed and fully maintained a Cardiac Catheter Imaging X-ray Laboratory each at Shastin Central Hospital and the National Cancer Center, as also a CT Scanner at the latter. Business Council of Mongolia plans to set up a fund where BCM members can send donations, and the amount collected can then be donated to Rotary Australia World Community Service, Eastern Region in a specified overseas aid fund account (Mongolian Medical Projects) that is subject to yearly audit.

_______________________________________________________________________ SPONSORS

ECONOMIC INDICATORS

MSE WEEKLY REVIEW

For the week ended November 28, 2008, trading activity on the Mongolian Stock Exchange (MSE)

totaled 1.1 million shares with 30 companies traded. Total market value of transactions was MNT

236.9 million. Total market capitalization of the 358 stock companies listed on the MSE was MNT

562.3 billion, and decreased by MNT 23.4 billion or 3.9% from the previous week.

The Top-20 Index decreased by 81.80 points or 1.3% compared to the previous week closing at

6,292.48 points. The MSE Composite Index decreased by 81.25 points or 2.6% compared to the

previous week, closing at 3,070.81 points.

Most active stocks traded were: Remicon (565,800 shares), Khuh Gan (321,900 shares), Hermes

Center (79,077 shares), Anod Bank (51,400 shares), and Shariin Gol (21,800).

Major share price percentage gainers were: Erdenet Khivs (12.5%), Olloo (11.8%), Suu (11.1%),

Bayangol Hotel (7.9%), and NIC (5.9%). Major share price percentage losers were: Tavan Tolgoi

(21.1%), Mon.Tsakh.Kholboo (11.9%), Genco Tur Buro (10.5%), Buunii Khudaldaa (9.6%), and Teever

Darkhan (8.8%).

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)] Year 2007 Avg. 9.0% [source: NSOM] Year 2007 *15.1% [source: NSOM] October 31, 2008 *27.9% [source: NSOM]

*year over year (yoy)

CURRENCY RATES – December 4, 2008

Currency name Currency Rate

US dollars US 1203.47

Euro EUR 1518.66

Japanese yen JPY 12.96

British pound GBP 1771.33

Hong Kong dollar HKD 155.26

Chinese yuan CNY 174.84

Russian ruble RUB 42.98

South Korean won KRW 0.82

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.