Mongolia Brief July 1, 2014 Part III
Khurd to perform Best Hits before Naadam
July 1 (UB
Post) To celebrate their 20th anniversary, Mongolian rock band Khurd is about
to perform a concert titled “Best Hits of Khurd” before Naadam Festival, on
July 10 at Misheel Expo Center.
During the
concert, “Black Box” collection, golden record, t-shirts, and accessories of
the band will be sold.
String Club is
organizing the concert with Khurd band.
As the name
suggests, the band is expected to sing their hit titles, including songs about
their country and its people, which they find beauitful.
Khurd has
previously toured around foreign countries, including the USA, Canada, China,
and South Korea, to perform for Mongolians living abroad.
Khurd is
considered the first band to have introduced the heavy metal genre into the
Mongolian music landscape.
Japanese designer presents clothing to singer D.Bold
July 1 (UB
Post) Japanese designer Chizuko Yahagi made jacket by material of Japanese
traditional clothes kimono for Mongolian State Honored Artist singer D.Bold.
Singer D.Bold
wrote in his social media, “Designer Chizuko Yahagi sent me a present. She
presented me a jacket made of Japanese traditional costume kimono. She
expressed that she is favoring my Mongol Pop genre and wished me luck. I am
very exciting because people of Japan is supporting my work. I wish her all the
best. Mongol Pop genre will be popular in the world someday.”
Mongolia wins 11 medals at Asian School Cross Country Championship
July 1 (UB
Post) Mongolian athletes won 11 medals – three gold, four silver and four
bronze – at the 2014 Asian School Cross Country Championship.
The
championships kicked off at Zuunmod soum, Tuv province on Saturday, where over
70 young runners from Mongolia, China, Hong Kong, Macao, Malaysia and Russia
competed against each other in four competitions. Three of the four gold medals
went to Mongolian athletes.
The
championship had two age divisions: 14 to 15 and 16 to 17 where athletes
competed in 3,000, 4,000, 5,000 and 6,000 meter races.
Member of
Parliament and vice director of the Mongolian Athletics Federation (MAF)
B.Ganbaatar, executive director of MAF Ch.Zorigtbaatar, secretary general of
the Mongolian National Olympic Committee J.Otgontsagaan and administrators of
Tuv Province attended the opening ceremony and handed medals, certificates and
trophies after the results were announced.
Mongolia ranked
first through the team score, followed by Hong Kong and Macao.
Large Mongolian basketball delegation attends Continental Cup
July 1 (UB
Post) Mongolia’s largest group of basketball players, comprised of 60 young
players and their coaches, headed to the United States on Sunday to compete in
the 2014 Continental Cup International Youth Sports Festival from July 3 to
July 6 outside of Cleveland, Ohio.
Five basketball
teams will take part in the U15 (15-years-old and under) boys and girls and U13
boys divisions this year.
Mongolia seizes 16 medals at 2014 Asian youth chess championship
July 1 (UB
Post) Young Mongolian chess players flaunted their skills at the 2014 Asian
Youth Standard, Rapid and Blitz Chess Championship for age groups six, eight,
ten and twelve. The eight-day long competition ended on Saturday and Mongolia
seized 16 medals in total.
Mongolia won
five gold, five silver and six bronze medals in blitz, rapid and standard chess
categories.
B.Enkhlen of
Baganuur District, who played in the girls U6 division, and Khangarid Sports
Club’s player B.Mungunzul in the girls U10 division, excelled in the
competition and were crowned Asian Youth Chess Champions.
J.Tsedenragchaa: Excessive governmental regulation should be stopped
July 1 (UB
Post) The following is an interview with
Chairman of the Mongolian Association of Securities Dealers (MASD)
J.Tsedenragchaa, highlighting important aspects of the Mongolian stock market.
Security trading at the Mongolian Stock
Exchange (MSE) dropped drastically recently. How is this effecting brokers and
dealers?
In the last two
years, brokers received less work. There are several reasons for this.
The work to improve the MSE’s technology began in 2011, when Mongolia
established the Master Service Agreement with the London Stock Exchange. The
technological upgrade wasn’t completed due to faults made during the
establishment of the agreement. The legal environment must be able to
accommodate technological innovations. Mongolia is now improving its legal
environment. The renewed version of the Securities Market Law and Investment
Fund Law was adopted. However, the technological and legal reforms are
inconsistent.
The market
shrank and opportunities for brokers to provide services decreased due to stock
planning, incomplete technological bases, and inconsistent technological and
legal reforms. Around 1,000 specialists were given the right to work at the
MSE. They’re all very capable. However, some of them had to leave the stock
exchange. All brokerage companies are working at a loss.
The Financial Regulatory Committee
authorized licenses to operate as brokers for around 90 companies. How many
employees of these companies are members of MASD?
There are 74
brokerage companies at the MSE and 48 of them are members of MASD. Our members
are doing strenuous work. Our association is a member of the Asia Securities
Forum.
What was insufficient in the MSE’s reform
that led to the decrease in opportunities for companies?
The Mongolian
National ECM LLC developed the previous MSE program, the e-Clearing Program
used by the Mongolian Securities Clearing House and Central Depository
(MSCHCD), and the internal registry program of brokerage companies. These
programs operated consistently with one another. After technologies were
reformed, brokerage companies couldn’t open accounts. The T+0 billing system
was changed to T+3 and stopped functioning with its basic principles.
Basically, the technological innovation wasn’t completed.
Exchange
technology consists of three systems: trade, brokerage, and settlement systems
after trade. The settlement system after trade has four functions, namely
saving, clearing, billing and risk management. When MSE technology was
renovated, only the savings system from the four functions were introduced.
Now, the MSCHCD uses the Millennium Depository System for savings. The
e-Clearing System is used for clearing and billing. Some operations have to be
done manually since the automatic connection of the two systems wasn’t made.
Nineteen percent of the work for settlement after trade is executed with the
Millennium Depository and 81 percent with the e-Clearing System. Also,
brokerage systems have a special function for securities trading. Securities’
trading starts and ends with the brokerage system. The front office system of
the brokerage system registers securities trading orders and does the
transaction. Then, the transaction is completed with the back office system,
the system for registering and billing. The brokerage system wasn’t actually
changed. Now, the association is working with ECM LLC.
How much of the premium do brokers receive?
On average,
around two percent. Percentages of the MSE, MSCHCD and Financial Regulatory
Committee are included in this, meaning that brokers are eligible to get a
small portion. The commission for brokers is dropping each year. The MSE had
trades worth 93 billion MNT in 2013. Brokerage companies got
approximately two to four million MNT in trade commissions. Trade commissions
are the principle income of brokerage companies.
Even with this small income, how do brokers
continue operating without going bankrupt?
Broker-dealer
companies with licenses and management are restricted from having other income
besides their principle work. Most brokerage companies profit from developing
projects and giving advice.
Aren’t there too many brokerage companies
in Mongolia’s small financial market?
The Master
Service Agreement with the London Stock Exchange gave the impression that
Mongolia can operate in both domestic and foreign stock markets. Furthermore,
distributing the stocks of Erdenes Tavan Tolgoi to the people and the decision
to release an IPO contributed to increasing the number of brokerage companies
considerably. Before establishing the Master Service Agreement and announcing
that Erdenes Tavan Tolgoi shares would be traded in domestic and foreign stock
exchanges, there were around 40 brokerage companies operating in Mongolia.
After the announcement, this number increased to 100. Lately, many companies
are proposing to terminate their licenses.
The legal reform for stock market is still
progressing. After the reforms, what’ll change in the market?
The legal
reform is a main factor for developing the stock market. It needs to be done
correctly and create a legal environment which supports the market’s
development and opens new opportunities. There are around 20 laws that affect
the stock market directly and indirectly. Their inconsistency with each other
is rather obvious. For instance, the Securities Market Law and Civil Law have
different contents about properties. The Securities Law allows the double
listing of securities in foreign and domestic stock exchanges. However, there
are many doubts about the Law of Mongolia on State Registration of Legal
Entities. It’s impossible to work efficiently in a legal environment limited to
only Mongolia. The Mongolian law and legislations related to the stock market
should become consistent with international legal standards. If this doesn’t
happen, Mongolia will not be able to enter integrated marketing communications.
Excessive governmental regulations should also be reduced. The government
should regulate only necessary aspects and leave out things that the market can
regulate by itself. It shouldn’t be too bent to one side.
Why isn’t the stock market in Mongolia
developing?
It’s connected
to weak policies. You can say that there’s absolutely no policy. In
international markets, stock exchanges are becoming an entertainment
organization. We need to compete in marketing products and bring in the best
products to stores. Stock exchanges are uniting in order to decrease the cost
of services and improve competitiveness. It’s evident that the MSE will
eventually be dragged into this competition. Mongolia will lose its market and
products if marketing, management, human resources, and basic infrastructure
are poor. While the world is making these changes, the Mongolian stock market
hasn’t had a policy for 20 years. Long-term strategies need to be defined and
documents with development approaches and policies should be developed and approved
at the parliamentary level. After routes are defined, organizations
participating in the market should cooperate in developing and implementing
plans and programs to develop the market.
Mongolia doesn’t have all the
infrastructures for the stock market. What sort of work is being done to
further this development?
The stock
market infrastructures consist of exchange, security payment, billing, saving,
and broker and dealer companies. Currently, Mongolia doesn’t have an
independent clearing organization. Therefore, bonds, derivative financial
instruments, and exchange markets aren’t developing. Clearing decreases the
risks related to trade and payment. In the new Securities Market Law, clearing
is defined as, “Center for trading and settling securities.” MASD sees that
this infrastructure should be made based on the Central Bank. Also, there
aren’t any custodian banks in the Mongolian stock market. A custodian bank is
an organization that keeps securities and funds of investors. It’s the
fundamental part of investment funds that gives information related to
investors’ shares and tax calculations. Mongolia started implementing the
Investment Fund Law. Yet, there’s no news of investment funds being established
or coming into Mongolia.
This may be to
prevent fund investments in Mongolia’s economic conditions. In the law, the
MSCHCD and trade banks can get a custodian license. Due to economic situations,
commercial bank ratings have dropped and it became difficult to acquire a
license. Domestic banks must meet the requirements of global custody. Our
organization initiated a project to establish a custodian bank based on the
MSCHCD as it is approved by the law. Since the MSCHCD is a governmental
organization, investors will trust it. The MSCHCD is a member of the Central
Bank which is in the RTGS system.
Mongolia didn’t
use tax stock dividends and exchange rate difference profits. Mongolia started
to tax after the law expired. The Hong Kong Stock Exchange completely exempts
taxes of this kind. In Japan, if a citizen makes a large investment for a
certain period of time in the securities market, they are exempted from tax.
Large stock exchanges give tax rebates to attract investors. Investors will not
be attracted to Mongolia because it taxes them. In order to attract them,
Parliament should approve a law that exempts tax from securities and stock
dividends and exchange rate difference profits.
What should Mongolia do to develop the
stock market?
The stock
market is a bridge to economic development so it should be fine to compare it
to a bridge. The Mongolian stock market is similar to an old wooden bridge that
was handmade. It’s essential to build a sturdy metal and concrete bridge made
after a considerable amount of research and engineering solutions. At the moment,
only pedestrians are able to cross the current wooden bridge. In other words,
“retail” investors. We need to build a bridge for heavy vehicles and create the
conditions where investment funds and banks can enter the Mongolian stock
market.
Source: Unuudur
http://mongolnews.mn/w/53143
Flower Center 4-way intersection opens
July 1 (UB
Post) The T-junction in front of Flower Center on Peace Avenue reopened as a
four-way intersection on Friday, becoming the first completed road project out
of 12 planned “Street Project” intersection renovations in 2014 coordinated by
the Ministry of Economic Development.
To make it a
four-way intersection, a 0.45 kilometer road was constructed going south across
the fence of the Winter Palace of the President of Mongolia, which is
state-protected property, connecting it to Seoul Street and the road behind
Bayangol Hotel, on a two billion MNT budget.
The
intersection joins Peace Avenue, Seoul Street and Chinggis Avenue, and
officials are expecting a reduction in traffic congestion in the area.
Projects to
expand the city’s busiest intersections into four-way thoroughfares were
completed at 18 locations last year with Chinggis Bond financing to improve
traffic flow.
Prime Minister
N.Altankhuyag officiated at the opening and said, “Street Project developments
will be found wherever there is traffic congestion, excessive use of petrol and
worthless wastes of time.
Expanded
intersections in Zuun Ail and Enebish Avenue (through the third and fourth
micro-districts) will be launched [this] week.”
Citizens demand public voting on amendment to the Land Law
July 1 (UB
Post) Three ordinary Mongolian citizens, L.Bayarsaikhan, Ch.Munkhbayar and
O.Lkhagvadorj, organized a peaceful demonstration at Central Square on Friday,
opposing the amendment to the Land Law concerning usage and ownership approval
for foreign nationals for 60 years. The demonstrators set forward a demand to
hold a public vote on the amendment to the law.
Extensive
coverage on this topic can be found at http://ubpost.mongolnews.mn/.
Government works with private sector to provide cheaper food to the public
July 1 (UB
Post) Tenger Plaza opened its new trade complex at the cost of an 8.7 billion
MNT loan from the budget of the Program on Stabilizing Main Commodity Prices, a
joint program of the government, Central Bank of Mongolia and the Ministry of
Industry and Agriculture.
Government
officials and Tenger Plaza administrators highlighted that the main purpose of
the complex is to provide the public with meat, meat products and baked goods
at lower than average market prices by purchasing meat and flour directly from
the original vendors without having to pass through the hands of several
vendors who increase prices along the way. The plaza is located near the
Amgalan traffic circle in Bayanzurkh District.
Prime Minister
N.Altankhuyag reported that the government is working to establish similar
trade complexes with high capacity storage facilities in every district so that
residents will have easy access to reasonably priced food throughout the year.
Minister of
Industry and Agriculture Ts.Tuvaan also reported, “Four to five storage markets
like Tenger Plaza will be established in Ulaanbaatar in the near future in
order to keep basic commodity prices affordable.”
He also added,
“A total of 50 percent of the total 8.7 billion MNT loan is on soft-loan terms,
as the government plans to support storage expansions nationwide.”
The plaza was
constructed with the cooperation of the government and over 70 private sector
businesses, small and medium enterprises, and individuals. It covers 11,460
square meters with a two-story building and a parking lot for over 300 cars.
Around 10,000 customers can purchase 25,000 types of goods at the complex.
The new complex
has a meat processing factory with the capacity to prepare and pack 20 to 30 tons
of meat per day, while its vegetable processing factory can receive, clean and
pack up to ten tons of vegetables per day. A meat product factory and a bakery
are also located in the complex.
The government
launched the Program on Stabilizing Main Commodity Prices last year and
received 116 storage construction proposals. Thirty-three businesses were
approved and qualified to apply for loans. Of these 33, 23 received 74.9
billion MNT in loans, and as a result, the food storage capacity of Ulaanbaatar
has increased by 40,000 tons.
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