Mongolia Brief July 8, 2014 Part II
French
Assembly member visits
Ulaanbaatar,
July 8 (MONTSAME) A French delegation led by Jerome Chartier, a member of the
National Assembly of France, is visiting Mongolia these days.
Invited by
N.Battsereg MP, a chairman of the Mongolia-France inter-parliamentary friendship
group and head of the "Justice" coalition's parliamentary faction,
the delegation arrived in Ulaanbaatar on Tuesday to pay the official visit
until this Saturday.
The guests will
make tours to project sites of the international airport in Khoshigt Valley, an
intensive livestock farm in Bayanchandmani soum (smaller administrative unit)
of Tov province and "Khotol Cement and Lime" LLC in Selenge aimag.
Ch.Mongondalai
to traverse 5,500 km
Ulaanbaatar,
July 8 (MONTSAME) A Mongolian man suffering from impaired hearing and speaking
has completed nearly a quarter of his bike tour planned all through the western
part of the country.
Ch.Mongondalai
began his tour to the mountainous part of the country from Ulaanbaatar on June
7 to cover 5,500 km. The tour, intended to promote cycle sports to the youth,
had a break in Darvi soum (smaller administrative unit) of Khovd province on
July 7. The brave man traversed some 200 km from Altai town of Gobi-Altai
province to Darvi soum in two days.
The Young
Bicyclists Club of the Mongolian Youth Federation, where Mongondalai has a
membership, is supporting this tour, along with many donors, including
Cannondale shop staffers who gave Mongondalai a GT Avalanche bicycle.
Ensemble
performs “World-known Mongolian Folk Art” concert
Ulaanbaatar,
July 8 (MONTSAME) The National Song and Dance Ensemble is planning to perform
the "World-known Mongolian Folk Art" grand concert every day until
July 15.
The
performances are dedicated to the Naadam Festival, celebrating the 93rd
anniversary of the Mongolian People’s Revolution and the 808th anniversary of
the Great Mongol Empire.
The fully
renewed program of the concert includes the bests of the Mongolian folk, music
and dance performances.
The
Naadam-dedicated concert has become a pleasant add to the summer program of the
Ensemble that includes "Wonders of Mongolian Art" concert that
launched on June 15.
Mongolia
Data Shows Growing Economic, Financial Risk
July 8 (Fitch
Ratings) Fitch Ratings-Hong Kong/Singapore-08 July 2014: Recently released
Mongolian foreign-reserves data confirm that economic and financial stability
is under pressure, says Fitch Ratings. Mongolia has largely failed to build
adequate fiscal and external buffers against commodity price volatility to
which its economy is becoming increasingly exposed. Exceptionally loose fiscal
and monetary policy amid a challenging external environment is exacerbating
external accounts which are already weak, and adding to financial risks.
Mongolian
central bank data through to end-May 2014 show gross foreign reserves falling
by 27% to USD1.6bn, from USD2.2bn at end-2013. As a result, reserves now
provide only 1.8 months of external payment coverage, well below the 'B' range
median of 3.2 months. It is also likely that the headline figure is being
bolstered by foreign drawings under swap arrangements with other central banks.
According to the Bank of Mongolia's latest statistical bulletin, "foreign
liabilities" stood at USD960m, which suggests that net reserves could be
as low as USD540m.
The Bank of
Mongolia announced on 7 July that it has agreed with the People's Bank of China
to extend its CNY10bn (USD1.6bn) swap facility for a further three years, and
that discussions are in progress for a possible doubling of the arrangement.
The renminbi swap is a meaningful source of external liquidity support - even
though the renminbi is not a convertible currency - because Mongolia sources
about 30% of its imports from China. However, the swap offers only short-term
liquidity support, and does not address the underlying drivers of deterioration
in Mongolia's economic performance and credit profile.
Economic policy
has been highly expansionary since key commodity export prices begun to fall
amid a general slowdown in China. The World Bank estimates the public sector
deficit to have come in at 10.9% of GDP in 2013 owing to off-budget spending,
despite a Fiscal Stability Law which is supposed to limit deficits to 2% of
GDP. Monetary policy has also been extremely loose, with the Bank of Mongolia
cutting its policy rate by 275bp since end-2012 while increasing funding to the
banking system by MNT3trn (17% of GDP).
Weakening external
accounts combined with expansionary monetary and fiscal policy have fed through
to the Mongolian currency, which has depreciated by 10.1% against the US dollar
year-to-date, following a 17.6% decline in 2013.
The result is
that macroeconomic performance continues to deteriorate with rising inflation
and slowing growth, despite the extensive stimulus. A significant challenge for
raising economic activity (and improving external finances) is the slowdown in
foreign direct investment (FDI) since the end of construction for the first
phase of the multi-billion dollar Oyu Tolgoi copper mine. FDI inflows have
fallen by 64% yoy in the first five months of 2014, contributing to the
elimination of the capital/financial account surplus of the balance of payments.
The beginning of the second phase of construction at Oyu Tolgoi is likely to
provide a significant boost to foreign-capital inflows and broader economic
activity. However, Fitch feels that ongoing disputes between the government and
the mine's developers could push an agreement pushed back into 2015.
This, combined
with the weakening currency, will put additional pressure on both the sovereign
and other domestic borrowers which have relied heavily on foreign-currency
lending. The aggregate NPL rate fell to 5.1% in May, from 5.3% at end-2013,
while total NPL growth came to 95% yoy. This indicates that pressures remain on
the financial system, a full year after the failure of the country's
then-fifth-biggest lender, Savings Bank, in July 2013.
Contacts:
Andrew
Colquhoun
Senior Director
Sovereigns
Fitch (Hong Kong) Limited
2801 Tower Two, Lippo Centre
89 Queensway
Hong Kong
Senior Director
Sovereigns
Fitch (Hong Kong) Limited
2801 Tower Two, Lippo Centre
89 Queensway
Hong Kong
Justin Patrie
Senior Director
Fitch Wire
+65 6796 7232
Senior Director
Fitch Wire
+65 6796 7232
Media
Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com;
Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com.
The above
article originally appeared as a post on the Fitch Wire credit market
commentary page. The original article can be accessed at www.fitchratings.com.
All opinions expressed are those of Fitch Ratings.
German
Foreign Affairs Minister begins visit
July 8
(news.mn) On 6th July the Minister of Foreign Affairs of Germany began his
official two day visit to Mongolia, meeting with Mongolian Minister of Foreign
Affairs, L.Bold.
German Foreign
Minister Frank-Walter Steinmeier and Minister L.Bold exchanged views and held
successful discussions in a friendly atmosphere.
It was decided
during the official talks that Germany would expand cooperation with Mongolia,
especially in mining, minerals, trade and economic relations, development,
transport, infrastructure, construction and education.
Mongolian
organizations were invited to attend the international tourism exhibition in
Berlin in 2015, "TR-2015". It was also mentioned that Germany would
continue to help Mongolia with youth training programs and with advanced
technology.
The visiting
German Foreign Minister Frank-Walter Steinmeier also met with Mongolian
President Ts.Elbegdorj and attended talks on Monday, with both sides vowing to
boost bilateral cooperation in various fields.
The President
stated "To continue this tradition, our two countries collaborated to open
a new institute of minerals and technology in Nalaikh district and the most
important thing is an investment in the educational sector."
Steinmeier
added that Germany is willing to push forward relations and cooperation with
Mongolia in economy, environmental protection, environmentally-friendly
technology and renewable energy.
Water
Tariff Increase
July 8
(Mongolian Economy) The Water Supply and Sewage Authority of Ulaanbaatar
increased the price of water supply. Water tariffs are now 48 mungu per liter
to those who are connected to the main grid of water supply. For sewage, the
price is now 24 mungu.
The government
facility set up water fees for Mongolian families in Ulaanbaatar, who now have
to pay MNT 2500 each month, which equals 83 mungu per day. In the provinces of
Baganuur, Nalaikh, and Tuv, families are required to pay MNT 1800 every month.
Entities and industries located within Ulaanbaatar are also subjected to these
fees. For clean water supply, they pay 91 mungu to MNT 1.2. For sewage, they pay
60 mungu to MNT 1.5.
For the past
four to nine years, the water supply tariff did not change. This in turn
affected the normal operation of water supply and service quality negatively.
In 2012, the Water Supply and Sewage Authority of Ulaanbaatar faced a deficit
of MNT 11.1 billion. This year, they hope to decrease the deficit by 70%
through the rise in prices and tariffs.
Mongolian
Economy issues at the Library of Congress
July 8 (Mongolian
Economy) For one month, 15 journalists visited Washington D.C. for a language
and journalism training program. One of these journalists was our editor, D.
Bekhbayar. During her one month stay, she visited the Library of Congress,
which was established in 1800 with a legislation of USD 5,000. It is the oldest
federal cultural institution that holds over 32 million cataloged books. It is
also home to the largest rare book collection in the world.
Within the
Library of Congress is the Asian Book Fund that contains a section dedicated to
Mongolian books. This section contains Mongolian books of literature, culture,
business, tourism, economics and the ancient history of Mongolian kings. In the
rare book collection of Mongolia, which was established in the early 20th
century, 80 books have been contributed to the library. The first two books in
this collection were brought by American scholar and diplomat, William Woodhill
Rockhill, after he made a trip to Mongolia between 1893 and 1901.
The Library of
Congress receives Mongolian books through one of its branches located in New
Delhi. Each month, it receives 30 books, or 400 books per year. M.
Saruul-Erdene, a teacher at the Asian Book Fund, works as a Mongolian language
teacher at the foreign language department of the United States. She is
currently working to archive the books in the Mongolian section and to create
online accessibility. Before she came along, this portion of the Library
Congress was almost shut down due to a lack in workers to sort through the
collection.
D. Bekhbayar
added recent Mongolian Economy magazine issues to the Library of Congress.
B.Munkhtur
is Winner of 2014 Uriankhai Archery Tournament
July 8
(infomongolia.com) The 2014 National Naadam Festival, dedicated to the 2,223rd
Anniversary of the Mongolia's First Statehood, the 808th Anniversary of the
Great Mongol Empire and the 93rd Anniversary of the People's Revolution, has
started with Uriankhai style archery tournament and winners were announced on
July 07, 2014.
In this year’s
Uriankhai Archery Tournament over 160 contestants have competed, where resident
of Buyant Sum, Khovd Aimag, B.Munkhtur won the Tournament with absolute records
of hitting arrows out of 30 released and becomes a two-time champion in this
category.
Winners of the 2014 Uriankhai Archery
Tournament:
I place:
B.Munkhtur, Mergen* (Wise Shooter) of Uriankhai style, resident of Buyant Sum,
Khovd Aimag, and shooter of “Monbet” team
II place: D.Munkhgerel,
two-time champion of Uriankhai Tournament, resident of Altantsugts Sum,
Bayan-Ulgii Aimag, shooter of “Aldar” Sport Committee and sponsored by Gem
International Company
III place:
Ts.Baasankhuu, Sport Master of Uriankhai style, resident of Sagsai Sum,
Bayan-Ulgii Aimag, shooter of "Khuch" Sport Committee and sponsored
by “APU” Company
IV place:
D.Chuluunbat, resident of Duut Sum, Khovd Aimag
V place:
L.Munkhtsooj, resident of Munkhkhairkhan Sum, Khovd Aimag
D.Chuluunbat
and L.Munkhtsooj winning the 4th and 5th places are qualified titles of Sport
Master of Uriankhai archery.
Today on July
08, the Buryat style archery tournament commences and winners will be named
tomorrow.
* Mergen - mon.
wise, sharpshooter, marksman; a top title of Mongolian traditional archery and
knucklebone shooting games.
Made
in Mongolia
July 8
(Mongolian Economy) The Government of Mongolia decided to invest MNT 1 trillion
to local industries after their announcement “Let’s Produce in Mongolia.” Out
of this investment, the agriculture sector received MNT 267 billion. The
Government hopes that this money will be able to correctly regulate the trading
of raw materials, process leather and hide, keep prices at a stable level,
increase the production of value-added products and increase employment. This
will help revive and develop the sector dedicated to leather and hide
production.
Currently,
there are 25 processing manufacturers of leather and hide and 187 industries
that develop finalized products from these raw materials. Two of these
industries are foreign invested. The Government is investing MNT 110.4 billion
from the Samurai bond through commercial banks to fund projects revolving
around animal skins and final production industries.
10.3 million
pieces of leather and hide have been processed. Of these 10.3 million, 25.8
percent were produced in Mongolia to create finalized products. Of the rest,
around half of them were partially processed at the first level, and the other
half went to China as raw material and processed at the first level. 40 percent
of these products are exported to ten different countries including Italy,
Spain, Turkey, and South Korea. The remaining 60 percent are used locally as
souvenirs, bags, clothes, shoes and uniforms for army, police and emergency
personnel.
Every year, raw
material reserves total MNT 150 billion. 25 percent, or MNT 38 billion, go to
national Mongolian producers. 75 percent, or MNT 112 billion, are bought by
local and foreign traders to export as raw materials to be processed at the
first level. The Ministry of Industry and Agriculture released data that shows
the country lost MNT 800-900 billion worth of final products locally due to
high levels of exports. Parliament passed measures to support herders and
manufacturers in 2012 to combat the loss of revenue.
The Government
issues a bond worth MNT 140 billion which will allow soft loans to be granted
to national Mongolian producers of final products and deep processed products.
Little by little, by 2017, the Government is obliged to move all leather and
hide manufacturers to a new zone and will create soft loans with an interest
rate of less than seven percent per year. Through this, MNT 110 billion will be
borrowed to increase the circulation of capital in order to buy raw materials.
Another MNT 30 billion will go towards technological renovation.
With the
investment from the Government, people are hoping to get 200 more manufacturers
of leather and hide products, especially within the countryside, to make more
finalized products such as bags and shoes. They also hope to create 25,000
jobs, thus increasing employment levels. If Mongolia is able to process MNT 150
billion each year, Mongolia can expect sales to reach MNT 1 trillion. Mongolia
is currently targeting countries such as China, Russia, and those in the
European Union as its main exporters of leather and hide. Exports equal USD 450
million. In addition, there will be another MNT 202 billion in taxes within the
budget.
President
Ts.Elbegdorj to Visit Japan on July 21-22 and Expected to Participate in Invest
Mongolia Conference Tokyo 2014
July 8
(infomongolia.com) The Frontier LLC is organizing a special edition as series
of Invest Mongolia Conference, and this time the July Invest Mongolia
Conference will be held in Tokyo, Japan on July 23, 2014.
This special
edition will be hosted by Frontier LLC in the scope of the Mongolia’s Presidential
visit to Japan, which is expected on July 21-22, 2014, where over 120 distinguished
leaders in both political and business fields from Mongolia are visiting Tokyo
together with the President Ts.Elbegdorj.
In the
frameworks of the July Invest Mongolia Conference 2014, sub-meetings focused on
“Investment Climate in Mongolia”, cooperation opportunities in mining sector
with Japan, current situations at Erdenes Tavan Tolgoi and Oyu Tolgoi mines,
real estate market in Mongolia as well as topics on bank and financial
institutions and infrastructure will be touched upon.
In the
“Investment Climate in Mongolia”, Minister of the Cabinet Office of the
Government of Mongolia Mr. Chimid SAIKHANBILEG, Chairman of Invest Mongolia
Agency Mr. Sereeter JAVKHLANBAATAR, Deputy Minister of Economic Development Mr.
Ochirbat CHULUUNBAT will be participating as Speakers. Also, in the meeting
themed on mining sector, Deputy Minister of Mining Mr. Rentsendoo JIGJID, CEO
of Erdenes Tavan Tolgoi Company Mr. Badarch ENKHBAT, CEO of Oyu Tolgoi Company
Mr. Davaadorj GANBOLD and in the meeting themed on real estate commerce in
Mongolia, CEO of Asia Pacific Investment Partners Mr. Lee M. Cashell and Chief
Investment Officer of Golomt Bank Mrs. Luvsandorj BOLORMAA, and in the infrastructure
sub-meeting, President of Mongol CEO Club Mr. Tsevegmid TUMENTSOGT will be
delivering remarks.
Frontier LLC is
organizing the Invest Mongolia Conference annually since 2007 and Invest
Mongolia Conference in Ulaanbaatar will be taking in upcoming September,
besides Invest Mongolia Conference in Tokyo in December 2014, which will be
held for consecutive second year.
Therefore, at
the conference, organizers prepared the program focusing on Investment Climate,
Governance of Mongolia and specific industries and projects which are feasible
for Japanese investors and hoping that the President Ts.Elbegdorj will attend the
Tokyo July Conference on this occasion and answer to the questions and requests
by the experts and industry leaders in Japan.
Moreover, InfoMongolia.com
is collaborating with Frontier LLC as a media partner until the end of this
year.
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