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.
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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.