Mongolia Brief December 24, 2014 Part III
State's
highest awards presented
December 24
(news.mn) President Ts.Elbegdorj issued a decree and presented public figures
who have achieved success in politics, culture, sports, education and
agriculture with state awards today, December 24th.
At the
ceremony, President Ts.Elbegdorj also awarded Mongolian leaders with the Order
of Sukhbaatar, Order of the Red Banner Of Labor Valor, Order of the Red Banner
of Military Valor, and the Order of the Polar Star.
President
Ts.Elbegdorj congratulated award recipients and addressed the audience:
“Celebrating
the 103rd anniversary of the Restoration of National Liberty and
Independence Day, these leading figures in their fields, who have exhibited
leadership, achievements, and endeavors, have been awarded state awards and
titles in the great ceremonial hall with the State's Nine White Banners, the symbol
of Mongolian independence and sovereignty.
"These
days, Mongolians mark 25 years of historic opportunities to enjoy the values of
the freedom to think, create, to be the owner of our own fate, and to unite.
"I am
delighted to pay respect to representatives of the thousands of hardworking
people who make efforts for the country's development, prosperity and freedom.
"Among
these public figures who have been rewarded are veteran dendrologist at the
Capital City Governor's Office B.Chimid (State Environmental Merit
Figure); 2014 World Judo Champion G.Boldbaatar, 2014 United World Freestyle
Wresting World Championship gold medalist S.Tserenchimed, bronze medalist of
the 2012 London Olympics S.Nyam-Ochir, and GM of chess B.Munguntuul (State
Merit Athlete award recipients); political and social figure, economist
Ts.Loohuuz (State Merit Economist); publisher of Open Door Newspaper,
journalist B.Ganchimeg, singer Ts.Siilegmaa, freelancer Ai.Tumur-Ochir and head
of the Union of Mongolian Artists, singer of Sound of Bell N.Enkhbayr, Gamma
Agency photographer S.Tsatsralt, and Editor of Montsame Ts.Surenjav
(State Merit Figure recipients); artist of the Mongolian Military Song
and Dance Academic Ensemble Ch.Bayarmaa (State Merit Artist); artist of the
State Academic Theatre of Opera and Ballet Ts.Munkhbold, khuumii teacher of
Mongolian State University of Arts and Culture B.Odsuren, and artist Sh.Choijil
(State Cultural Merit Figure recipients); director and doctor of Songdo
Hospital B.Boldsaikhan (State Merit Doctor); and obstetrician of the
State First Hospital B.Oyungerel (State Merit Health Guardian Doctor).
Mongolia’s
Nuclear Energy Agency Closed-Down
December 24
(infomongolia.com) On December 23, 2014, the Ministry of Mining hosted a
"Transparent Mining" press conference and during the meeting the
following report was presented.
- According to
structural changes made in the Ministry of Mining, the Legal Department was
dissolved and due to recently issued ordinance to reduce the total number of
Government Agencies and its affiliated employees by 15 percent, the existing 74
employees were cut by 15% and now the Ministry of Mining operates with a staff
of 66 personnel.
- The Nuclear
Energy Agency is closed-down and thus, 8 officers in charge of radioactive
minerals were moved to another affiliated organ.
- As of
November 2014, Mongolia’s production of copper concentrate compare to November
of 2013 increased by 35.7% or 254.5 thousand tons, molybdenum production by
5.6% or 191.3 tons, gold by 25.1% or 2.1 tons, iron ore by 32.8% or 1.8 million
tons, fluorspar by 60.8% or 126.0 thousand tons, and crude oil production by
49.1% or 2.3 million barrels respectively.
- As of
November 2014, coal export increased by 5.1% or 822.6 thousand tons, gold by
14.1% or 1.0 ton, crude oil by 39.7% or 1.8 barrels and copper concentrate by
two-fold or 667.1 thousand tons.
- In the first
11 months of 2014, a total 1 trillion and 75.4 billion MNT (Tugrug) was budgeted
into state account from mining industry alone.
- In the first
11 months of 2014, Mongolia imported a total of 1.1 million tons of petroleum,
of which 90.8% from Russia, whereas Rosneft supplied 63%. The retail prices for
all grades in Mongolia were constant in the past two years and authorities are
studying and negotiating to keep stabilized further.
Mongolia
banks under pressure
December 24
(oxfordbusinessgroup.com) Banks in Mongolia are facing weaker profits this year
as one of Asia's fastest growing economies cools, triggering a downpour of
higher borrowing costs and an increase in non-performing loans, while credit
rating agencies are watching the banks' vulnerability to China's continued
economic slowdown.
Recent
downgrades in Mongolia's credit rating following falls in commodity prices have
piled more pressure on the banks by increasing their cost of borrowing in
overseas markets. The devaluation of the tugrik, which has lost about a quarter
of its value against the US dollar since the start of 2013, has also pushed up
the price of new foreign currency loans as well as the cost of servicing
existing loans.
Despite the
gloomy outlook, banks in this mineral-rich country are working to regain some
momentum by beefing up their retail operations. The newly appointed prime
minister Ch. Saikhanbileg has promised to clear the way for the delayed second
stage Oyu Tolgoi mining project, a $5bn investment that would help reinvigorate
the economy.
Credit downgrades hit banks
The spate of
ratings cuts on Mongolia are cooling the appetite for lending to private-sector
banks. Standard and Poor’s (S&P) cut its long term sovereign credit rating
from B+ to BB- in April amidst concerns over the health of the economy and
dwindling foreign reserves. Moody’s has also flagged its concerns, cutting its
assessment of Mongolia’s sovereign standing in mid-July to B2, a ranking which
denotes high credit risk and maintained its outlook as negative.
Like S&P,
Moody’s cited Mongolia’s strained external liquidity position as well as the
government’s expansionary monetary and fiscal policies, including providing
liquidity injections to the banking system. It also warned that Mongolia is
vulnerable to any further slow down in the Chinese economy and a reduction in
raw materials exports, which would add pressure to domestic growth and
liquidity.
A third agency,
Fitch Ratings, set a negative outlook for Mongolia’s banks, though it noted
domestic lenders have a limited direct exposure to the mining sector because
their capital levels are not strong enough to advance big loans. However, any
prolonged downturn in the mining industry will impact the overall economy and
the banks' loan portfolios.
Weaker outlook
Positive
revision to Mongolia's credit outlook is unlikely for now with prices of key
commodities coal and copper still weak. Economic growth stood at 7% in the
first nine months of the year after the economy expanded by 12.3% in 2013,
according to a National Statistical Office (NSO). In October, the World Bank
lowered its growth forecast for Mongolia this year to 6.3%, down from the 9.5%
it had predicted in July.
As a result of
the contracting economy, banks are likely to see the performance of their loan
books deteriorate further. Data issued by the NSO in November showed that
outstanding loans stood at MNT12.8trn ($6.8bn) at the end of October, up 1.8%
or MNT222bn ($118.2m) from the previous month and up 22.4% or MNT2.3trn
($1.2bn), year-on-year, noting that the pace of non-performing loans (NPL) – up
2.7% to MNT606.3bn ($322.8m) month-on month – being added to the banks’
ledgers was quickening.
At the start of
the year, Moody’s placed three Mongolian banks, Khan Bank, Trade, Development
Bank of Mongolia and XacBank, on negative outlooks, citing risks from rising
bad loans, slower economic growth and a deteriorating operating environment.
There is also
concern about the cooling of the local property market. House sales in Mongolia
are significantly down on last year with apartment sales down to a level five
times lower than in 2013 according to some estimates. With banks having
extended credit to construction firms and developers, an increase in unsold
real estate could drive NPL rates further.
G. Ganbold, CEO
of Golomt Bank, said the property slowdown may require banks to adjust their
risk exposures in certain areas. “One potential problem area is construction
and real estate,” Ganbold told OBG. “We faced a big boom in 2011 and 2012, and
now there are many unfinished projects or finished developments that cannot
find buyers.”
Hope from Oyu Tolgoi, retail banking
Despite the
weakening outlook, Mongolian banks still see potential for expansion in some
areas. Khan Bank CEO, Norihiko Kato, sees growth in retail banking,
particularly card and ATM services. “On the whole, there are opportunities to
be had and while the banking sector may not grow as quickly as it has in the
past few years, its expansion will continue to outpace that of the overall
economy going forward,” Kato told OBG.
There are also
hopes the government will clear some of the logjams that have held up major
foreign investment projects, in particular the Rio Tinto project in Oyu Tolgoi,
which has the potential to account for a third of GDP when fully up and
running. Ch. Saikhanbileg said on being appointed, in mid-November, his main
priority in office would be to invigorate the economy.
Onlooker agree
it is the most pressing issue that needs to be solved. “If Saikhanbileg does
not move quickly to resolve the Oyu Tolgoi impasse and stem the decline in
economic growth, investors may choose to stay on the sidelines until after the
2016 elections,” said Marius Toime, a projects partner at international law
firm Berwin Leighton Paisner in a Financial Times column.
Best
Countries for Business 2014: Mongolia
December 24
(infomongolia.com) American business magazine “Forbes” for the consecutive 9th
year released the Best Countries for Business by grading 146 nations of the
world.
The 2014
ranking of these states were determined on 11 different factors: property
rights, innovation, taxes, technology, corruption, freedom (personal, trade and
monetary), red tape, investor protection and stock market performance, where
each category was equally weighted.
The data came
from published reports from the following organizations: Freedom House,
Heritage Foundation, Property Rights Alliance, Transparency International,
World Bank and World Economic Forum.
The best
country for business this year is Denmark, which ranked No. 1 three straight
years between 2008 and 2010.
Europe
dominates the top 25 with more than 70% of the entries. These countries score
well almost across board on trade and personal freedom, as well as innovation
and corruption.
The
Asia-Pacific region landed five locales on the list with the U.S. and Canada
making up the final components of the top 25.
The U.S. ranks
No. 18 this year, down four spots from 2013. It is the fifth straight year of
declines for the world’s largest economy.
African nations
make up 60% of the bottom 10 with high levels of corruption, red tape and taxes
registering as major issues.
Guinea, which
is at the center of the Ebola breakout, brings up the rear at No. 146.
Mongolia is
ranked at the 63rd place for Business with its GDP Growth - 11.8%, GDP/Capita -
5,900 USD, Trade Balance as -32.7% of GDP and with total population of 3.0
million people.
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