Saturday, February 7, 2015

Mongolia Brief January 22, 2015

President addresses Mongolia-Czech business forum
By B. Khuder
Ulaanbaatar, January 22 (MONTSAME) In frames of his state visit to the Czech Republic, the leader of Mongolia Ts.Elbegdorj made opening remarks at a Mongolia-Czech business forum which was held Wednesday in Prague.

"At the meeting with Mr Zeman I had noted that the trade turnover between our countries decreased," he said and expressed a hope that his state visit and the forum0 will give an impetus to the bilateral economic cooperation. Then he presented to the business delegates a list of 40 Czech companies that want to collaborate with Mongolia in the economics.
The President also expressed a satisfaction with being the first foreign President to visit the Chamber of Commerce and Industry of the Czech Republic, and said Mongolia will pay attention to these 40 companies, "Mongolia has a big opportunity as well as experience in cooperating with other countries". The 57 representatives of the two businesses exchanged views and information on ways of boosting collaboration. 

Minister of Mining meets Ambassadors
By B. Amarsaikhan
Ulaanbaatar, January 22 (MONTSAME) The Minister of Mining R.Jigjid ran meetings with four Ambassadors to Mongolia.
He received I.K.Azizov, the Russian Ambassador, Wang Xiaolong, the Chinese Ambassador, Christopher Charles Stuart, the Ambassador of the UK, and Shimizu Takenori, the Ambassador of Japan. The Minister exchanged opinions with the Ambassadors on developing mutually beneficial cooperation in frames of the bilateral and multilateral mining collaboration, on the opportunities to realize joint projects and programs of mutual interest, and on increasing investments.
The Minister gave detailed information on Mongolia’s legal environment in mining, geology and oil sectors. He said that a favorable environment has been created for forming sustainable, transparent and accountable mining sphere thanks to the related laws adopted in 2014, which facilitated Mongolia with a definite policy in the sphere of mineral resources.
Mr Jigjid also said that his Ministry is focusing on the immediate and efficient implementation of laws and regulations, on commencing of the license issuance, on attracting foreign investments, as well on providing the investors with adequate information. 

Ambassador of Mongolia to Kingdom of Bahrain Presents His Credentials
January 22 ( A non-resident Ambassador Extraordinary and Plenipotentiary of Mongolia to the Kingdom of Bahrain Mr. Sodnom ENKHBAT presented a Letter of Credence to the Shaikh Hamad bin Isa Al Khalifa on January 20, 2015.
On the occasion of presenting the credentials, the Shaikh of the Kingdom of Bahrain held a meeting with newly appointed envoy and during the conversation Ambassador S.Enkhbat conveyed the greetings of the President of Mongolia Ts.Elbegdorj to the Shaikh Hamad bin Isa Al Khalifa and expressed his efforts to stimulate bilateral cooperation and partnership.
Moreover, Ambassador briefed about Mongolia’s foreign policy, local situation and current economic development and in the frameworks to expand Mongolia-Bahrain relations, he expressed his interest to implement reciprocal high-level visits as well as broaden cooperation in the fields of economy, financing, investment, tourism, education and other possible spheres.
Newly accredited envoy S.Enkhbat to the Kingdom of Bahrain is the Ambassador Extraordinary and Plenipotentiary of Mongolia with residency in the State of Kuwait since April 2013, he also represents Mongolia to the State of Qatar since April 2013, to the Kingdom of Saudi Arabia since April 2014 and to the Sultanate of Oman since April 2014.
Mongolia and the Kingdom of Bahrain have established the diplomatic relations on May 16, 1998.

Working group on elaboration of amendments to the Constitution of Mongolia has met
January 22 ( A working group to elaborate on the draft law to make amendments to the Constitution of Mongolia was established according to an order from the Head of Parliament, and a meeting of the working group was organized today.
The working group consists of Members of Parliament including L.Bold, L Tsog, N.Batbayar, R.Gobchigdorj, S.Bayartsogt, D.Lundeejantsan, D.Demberel, S.Oyun, and N.Battsetseg.
Two years ago, a working group to study whether there was a need to amend the Constitution of Mongolia was established, according to an order from the Head of Parliament. The working group was headed by Deputy Director of the Parliament L.Tsog.
The working group consisted of scholars and researchers, and reached the conclusion that there was a need to make amendments only to some parts of the constitution, and delivered this proposal to several unions and political parties.   
According to the views of the Members of Parliament in the current working group, there is a vital need to correct seven amendments made to the Constitution of Mongolia in 2000.  

Justin Kapla’s hearing postponed
(Ulaanbaatar) Jan 22 ( CEO of South Gobi Sands LLC, Justin Kapla`s primary court hearing started in the morning, but it is reported to be postponed. 
State Prosecutor requested participation of investigators, while defendant requested participation of investigators and witnesses. Moreover, Justin Kapla requested to add more translators. 
Counsellor of South Gobi Sands LLC, Tserenjav was not present at the hearing, due to work in countryside. Thus, hearing was postponed to 29th of February, 2015 at 09am. 
Today, an official from Embassy of US has come to the hearing for observation. 
Justin Kapla, US national, is being charged with tax evasions worth of MNT 35 billion.

Budget amendment discussions continue
January 22 ( A meeting of the Standing Committee on Economics began at 8:00 a.m. today at the Government House. The second discussion of budget amendments for 2015 will be discussed at the standing committee meeting.
The Cabinet has submitted the following issues for amending the 2015 budget: granting allowances for children only to targeted groups and cutting allowances for mothers with the Mongolian Mother's Glory Order whose children have reached 16 years of age, and not to increase pay and pensions in the revised government budget bill for 2015. However, parliament has decided to continue some of the social welfare programs that were considered for cuts.
It has also been decided to allocate an additional 103 billion MNT to the state budget. All these issues were scheduled for discussion at yesterday’s stranding committee meeting but were postponed for today.  
Standing committee on budget meetsMontsame, January 22

Coal Mongolia for the 5th year
January 22 ( Registrations for the COAL MONGOLIA 2015 International Investors Conference and Exhibition started.
COAL MONGOLIA” is an International Conference and Exhibition for Coal Investors and it has been expanding rapidly every year. The primary objective of this event is to bring International Investors into the coal sector of Mongolia; to introduce the most advanced, environmentally friendly technologies in coal mining sector; to create a mutually beneficial partnership that will strengthen Mongolia’s competitiveness in Asian region.
This year's “COAL MONGOLIA-2015” International Conference and Exhibition is celebrating its 5th anniversary and commemorates the 5th anniversary of the first international IPO that attracted the first investment in coal sector and is scheduled for April 9-10, 2015 with the support from the Government of Mongolia
We are inviting you to the “COAL MONGOLIA-2015” to be informed on current coal market, its trends, state policy on coal sector and be a part of discussions of the pressing issues and meet with peers in the coal sector.

Nalaikh District Residents Vote to Develop Their District as City of Mongolia
January 22 ( On January 21, 2015, a poll to vote for developing Nalaikh District of the Capital City as the Nalaikh City was held among residents between 07:00 am and 09:00 pm at the 7th Khoroo of Nalaikh District.
The total population of Nalaikh District is counted as 34,575 residents today and at the voting 19,535 eligible residents were registered, of which 96.1% of 12,180 people or 62,3% of total eligible residents voted to develop their district as one of the cities of Mongolia.
Accordingly, the residents’ request will be discussed at the District Citizens’ Representatives Khural (District Council) and then submit to the City Council.
The initiation to develop the new city was included in the Ulaanbaatar City Development General Plan until 2020 as well as in the Document of Development Trend until 2030 and in the Mayor’s Action Plan for 2013-2016.
Under the Plan, it intends to establish a city park introducing household farming, transport logistics, wholesale trading, food industry, construction material manufactory as well as a pivot for vocational training and acclimatizing a new technology. The studies estimate to expect 65 thousand people of population by 2030.
Moreover, the residents of Baganuur District are also conducting a vote to convert their district as a city, and officials say the voting will be ended at 08:00 pm tonight on January 22, 2015. These two districts are the furthermost located districts of Ulaanbaatar and therefore, its citizens are willing to have their own city status.
Nalaikh district wants to become cityMontsame, January 22

President Elbegdorj Attends WEF Meeting in Davos
January 22 ( President of Mongolia Tsakhia ELBEGDORJ arrived in Davos, Switzerland, to attend the 45th annual meeting of the World Economic Forum which is scheduled from January 21 to 24th, 2015.
The World Economic Forum (WEF) was founded in January 1971 when a group of European business leaders met under the patronage of the European Commission and European industrial associations.
German-born Klaus Schwab, then Professor of Business Policy at the University of Geneva, chaired the gathering, which took place in Davos, Switzerland. The organization was subsequently incorporated as a not-for-profit Foundation.
At this year’s Forum, President Ts.Elbegdorj is accompanied by Minister of Foreign Affairs Lundeg PUREVSUREN and other officials from Mongolia.
Mongolia has always attached great importance to the WEF. Besides active participation in the Forum, Mongolia has successfully co-organized the WEF meetings including: the “Fair Mineral Development” roundtable meeting in 2010, the “Partnering Against Corruption Initiative” roundtable meeting in 2011 and the “Water Secure Future in Mongolia” conference in 2011 respectively. Mongolia joined the WEF’s Partnering Against Corruption Initiative /PACI/ and established anti-corruption network in Mongolia. In 2013, a Memorandum of Understanding on Cooperation was signed between the Ministry of Foreign Affairs of Mongolia and the WEF, and in the scope of this, a roundtable meeting “Strategic Dialogue on Mongolian Development” was held in Ulaanbaatar. 
Mongolian President at WEFMontsame, January 22

ADB to cooperate on establishing public and private sector companies
By D. Tuguldur
January 22 ( City Governor E.Bat-Uul received Robert Schoellhammer, Country Director and Ayumi Konishi, Director General of East Asia Department, Asian Development Bank (ADB) and discussed on further cooperation.
City Governor said: "We are pleased to cooperate on partnership between government and private sectors with Asian Development Bank. The crisis reminded Government to support and cooperate with private sectors.  
By cooperating with private sectors, city will develop more and contribute to economic stability. We are planning to establish corporation in accordance with partnership between government and private sectors. We need technical support from ADB on establishment of corporation."
Ayumi Konishi, Director General of East Asia Department replied: "I appreciate on welcoming us. It is pleasure to say that we will cooperate with flexible conditions on investment in city development. We will cooperate on smart expenditure of investment that is dedicated to development."

Mother and Child Hospital commenced in Sukhbaatar aimag
By G. Ermuun
January 22 ( Sukhbaatar aimag opened its Mother and Child care hospital with capacity of 50 beds, which was constructed with MNT 3,1 billion funded from the state budget.
Opening ceremony was attended by the Deputy Minister of Health and Sports D.Atarmaa and other officials from Sukhbaatar aimag government.
This hospital history goes back to 1942 when it was established as delivery room, which employed two gers and is being upgraded with the new facilities.
Ministry of Health and Sports allocated additional MNT 10 million to provide with necessary equipment and handed over to the hospital management.
Additional funds of MNT 20 million were gifted from the Citizens Council and Aimag Government and Baruun-Urt sum government fully furnished the kitchen.

G.Otgontsetseg landed in Kazakhstan with her coach
By B. Ireedui
January 22 ( We have delivered the news that Judoka G.Otgontsetseg was recruited to become legionnaire at Kazakhstan Judo team.
Although Mongolia Judo team has proposed the joint trainings for G.Otgontsetseg it is reported that she landed in Kazakhstan with her coach.
The reason for rush heading to Kazakhstan is her team members have started their training at the camp.

Mongolia's economic outlook for 2015
By L. Byambaa
January 22 (Mongolian Economy) Global economic outlook
The global economy sputtered to 2014’s end with slightly less economic growth than predicted at the year’s outset. Though the US economy has revived and continues its trending rise, developing countries, Russia, China, and Europe had an unexpectedly low performing year. Expectations for 2015 remain positive, however, with world economic growth projected at 2.2 percent; at 3 percent for the US, 1.4 percent for the Eurozone, and 7 percent for China. While worldwide economic performance forecasts for 2015 are now lower than projections done in early 2014, according to the World Bank, the IMF, and other prognosticators, the current sharp price fall of petroleum products may end up having a generally positive effect on the global economic situation in 2015.
Mongolia’s economy in 2014
Throughout 2014, the government continued to delay negotiations regarding the costly underground expansion financing of Oyu Tolgoi—a multi-billion dollar megaproject and Mongolia’s most important economic contributor for the foreseeable future—deepening the country’s economic vulnerability. The year ended with a combined GDP growth forecasted to be a relatively disappointing 6.5 percent.
The US dollar closed at the highest level of appreciation at the end of 2014. The internal flow of dollars were unable to rise decent levels due to flat export prices on the world market, and the continuing fall in foreign direct investment. Nevertheless, increased copper exports and declining imports offers the foreign trade balance an opportunity to achieve a positive balance.
Inflation, accelerating off and on throughout 2014, is forecasted to have reached 12 percent for the year, due to drops in business activities and market demand, and compounded by a tightened Mongol Bank monetary policy that began in the second quarter in order to curb inflation and stabilize the currency.
Main factors influential to economic trends in 2015
There are several factors affecting Mongolia’s economic outlook throughout the coming year.
• Political stability
• Oyu Tolgoi’s underground expansion financing dispute
• Condition of the financial sector
• External environment
Political instability in 2014 placed a heavy burden on the business sector, by wasting time, delaying decision making on key issues, and postponing financing. This year’s economic performance depends on how consistently Prime Minister Ch.Saikhanbileg’s newly established ‘Solution’ government can function, and on what decisive measures they will take to tackle the current economic difficulties. So far, the current market and the confidence of investors seem only to have weakened. Meanwhile, Oyu Tolgoi’s underground expansion funding is still on hold, resulting in innumerable direct and indirect economic consequences that prevent any rise in investor confidence. Despite the emergence of positive change, such as in the legal environment and tax regime, investors still wait for an Oyu Tolgoi solution and continue to invest their money elsewhere. In the financial sector, the quality of loans and liquidity injection measures of banks and financial institutions may face complications, which if allowed to linger would have a longer-term negative effect on the economy. Any potential challenges or problems would be compounded by the continuing decline of global commodity prices, from a worldwide slackening demand that can be mostly traced back to China. In addition, Russian, regional and international geopolitical instability might pose major risks.
2015 economic performance outlook
An examination of the basic situational and political factors that influence Mongolia’s economy shows that performance is likely to be bad in 2015. Current economic indicators appear weak, and the opportunity to change is barely visible through the country’s murky and bogged-down reality. The states of the current account deficit, liquidity injection and budget gathering, financial sector environment and currency are expected to remain on the negative side. Whereas economic growth in 2013 and 2014 was fuelled by government bonds, that type of financial resource and money flow won’t even provide a spark in 2015. In addition, all government investment orientated money was cut from the state budget for this year. The cumulative effect reduces GDP growth forecasts to 5 percent in 2015, the lowest figure since 2009. And that’s if the issues holding up the Oyu Tolgoi and Tavan Tolgoi megaprojects are solved. If not, growth drops to the world average, somewhere between 2 and 3 percent.
Inflation will rise, affected on the supply side, driven in particular by factors related to currency depreciation, while demand side factors are expected to have a minimal influence. In other words, investment and purchase demands will drop in an environment where the unemployment rate is rising high and consumers’ expectations remain negative, business activation is weakening, and wages and revenues cannot rise. If Mongol Bank undertakes quantitative easing—buying financial assets, lowering their yield, while increasing the monetary base—and supplies the market with money, the inflation rate will rapidly escalate. In any case, the inflation rate will likely exceed Mongol Bank’s targeted rate of no more than 7 percent.
In terms of foreign trade, although Mongolia’s exports are expected to grow, particularly copper, it is still hard for revenue to rise, as export prices are unlikely to increase in the world market. This may not be such a dire problem, as import levels should drop slightly and remain stable, from weakened business and consumption demand. There should be enough room to keep the USD exchange rate from sharp rises. But bad loans, particularly home loans and loans in USD, are of such a poor quality and quantity that they will have an increasingly negative effect.

Arshad Sayed: A deeply disappointing decision for Peabody
By D. Bekhbayar
January 22 (Mongolian Economy) Mongolian Economy magazine interviewed President of Peabody Energy, India & Mongolia, Mr. Arshad Sayed. This is his first interview with the press since Peabody Energy lost the Mongolian government’s tender for the Tavan Tolgoi coal deposit to a group consisting of Energy Resources LLC, Shenhua Energy, and Sumitomo Corp.
In December 2014, Peabody Energy lost its bid for the Tavan Tolgoi coal deposit. There had been an expectation in the community that Peabody’s bid would be selected in the tender, as Peabody has many years of experience operating in Mongolia. As a representative of Peabody in Mongolia, what is your opinion of the selection process?
I think the decision was deeply disappointing for Peabody, because Peabody has been in Mongolia for seven years pursuing to cooperate in Tavan Tolgoi project. I think it is also going to be disappointing for any western investors who are considering to invest in Mongolia in the field of new technology, new processes, new knowledge, and to bring in world class standards in safety and environment.
According to Tavan Tolgoi’s government working group, Peabody’s proposal was submitted alone, without any international or domestic partners. This was seen as a downside in the selection process, as a consortium of three companies ultimately won the tender. Why did Peabody make this decision to not have any joint partnerships in this tender?
I think it’s not appropriate to respond in the press about what was a confidential tender proposal. I’m surprised that the government is choosing to say this publically and do these things. I don’t think it’s good to do that for Peabody, but I can share something that’s open and known for everybody. Since 2010, Peabody has done its best to participate, to come prepared and respond to the government of Mongolia’s every desire, rule, and changes that they’ve had. You’ve had three different governments since 2010, and in each one of them Peabody has responded the best that we could. Clearly Peabody had met the requirements of the government in 2010, that’s why it was selected to participate as one of the six [bidders, in an earlier, later scrapped tender for Tavan Tolgoi. Ed.]; from the six it was narrowed down to three; and then Peabody was asked to participate with the Russian and Chinese companies. But the result was withdrawn by the National Security Council. And that was in 2011. Then in late 2013, we were asked to have discussions with ETT [Erdenes Tavan Tolgoi] and with Shenhua for cooperating in TT project; and we did that in the first half of 2014, where we spent six months having negotiations with the parties. Even though the process was running effectively where the parties were about to sign a partnership framework principles memorandum, suddenly it is halted by the government. Then again we had a change in the latter part of the year, with the government changing. Again the new terms and conditions were given with the Government resolution #268 of August 20th 2014, where the national company would hold 51 percent of the project company, and we were given one month to prepare for that, which was then extended for one month. And only one national company met that criteria for forming a consortium. Like I said in the beginning, it’s not good to negotiate in public, I thought the government will invite us and we’ll talk about it with the other partners, and then there would be a way to form a consortium at the right time. So I don’t think it’s good to have that discussion in the public, in the media, about the tender process. What I would like to suggest is that Peabody’s proposal was mainly about how to create a maximum value for the Mongolian people, and for the Mongolian side. And how that can be done best, whether it’s through a private company or public company through the government of Mongolia; Peabody has always been open to these ideas. But, given the time, given how this process was laid out, there was no room to try and put together anything as quickly in the one or two months’ time as was given.
In this tender, was Peabody unable to reach a working agreement with another private company, despite that being a request of the government of Mongolia?
In 2011, we were asked to work with Shenhua and Russian Railways. We spent time on that. In 2014 we were asked to spend time with Shenhua and Erdenes TT. We spent time on that. Then we were asked to work with Shenhua and Energy Resources in this round of bidding. And in each of these we have always put forward a proposal where we think we will maximize the value of TT. We do not change our proposals for shortcuts, to try and do things differently. We have always tried to make sure that whatever proposal we are putting forward, it is all about maximizing value. In this round, the way the construct is and the framework is, it is still not clear that this will give the maximum value. We wanted to make sure that the proposal that we had and were discussing with ER and with Shenhua—we did not think we had reached a point where we all agreed on what is the common value, and how do we increase the value for the Mongolian side. That’s why we did not reach an agreement and there was no time to reach an agreement.
Experts say that Peabody made a good proposal that had several advantages. These included raising Tavan Tolgoi’s value up to USD 5 billion to 8 billion, a USD 500 million prerepayment and off-take agreement, and the incorporation of environmentally friendly and highly technological mining practices into the project. What are the main differences between your proposal and the consortium’s proposal?
First, I want to be clear—because we signed a confidentiality agreement with the government, we should not be talking about our proposal or their proposal. It is not a good practice to do that. But what I will say is that our proposal has not been different from our proposal back in 2011. It only reflects some changes because of changing market conditions. But the main thrust of our proposal, is really about having a long-term view on how to create value in TT, over the long-term, and make this project a success and make it sustainable. That’s the goal of our proposal. And that’s what we have been trying to push forward. And I’m assuming the other proposals have the same conditions—and if they have them, then they’re good. But if they don’t, then I would question that. I think at the end of the day, we don’t want to talk about whether this proposal is good or that is bad, because I don’t know their full proposal. What is really important is I think the people of Mongolia need to understand these proposals for themselves, to see what is best in their long-term interest, for the people here in Mongolia. I think that’s the main test of the proposals; to see whether this will create value, will it be sustainable, whether it will use the best international practices, will it help diversify your ability to enter different markets, will it create jobs, will it create training opportunities for children and youth in Mongolia, will it give businesses—the small and medium enterprises—a chance to participate, will there be transparency, will there be openness in procurement, will it create a better environment for corporate governance, and will it, at the end of the day, help make sure that Mongolia develops a very strong coal industry.
As there was an expectation in the public that Peabody would be awarded development rights in the final tender, the surprise that followed when Peabody lost has led many to wonder what it was that the government found was lacking in Peabody’s proposal. We are aware of the confidentiality agreement you signed with the government, but could you shed any light whatsoever on the matter?
First, I just want to be clear that Peabody’s proposal, when it’s assessed independently, will show that we have answered every question that the government asked, and we’ve answered these in a way that I think meets or exceeds what the government required. The second is, Peabody’s proposal is meant to do two things: to ensure the commercial success of the enterprise, and the development of Mongolia. This means the proposal had to be medium- and long-term orientated. So we think not just two years or three years ahead, but five years, ten years, twenty years, thirty years—that’s how long we have to think about this project. And so have not tried to do things that are only good in the short-term, or only meant to help one thing or solve only one problem; but rather which look over all these aspects of commercial success and development. To do this we have chosen to adopt the best practices to what we do globally—in financing, in developing, in assessing, in evaluating feasibilities and then in ensuring the implementation; all is done to world class standards. As far as the specifics are concerned, absolutely I would be happy to discuss that, negotiate with the government or whoever else, explain to any party there what the details are specifically.
Insiders say that at the start of 2014 there were negotiations amongst three companies to sign an agreement; however the process stalled, due to the rumor that while Energy Resources was willing to sell its power plant to Peabody, Peabody was unwilling to buy it. Was that the main reason these negotiations stopped?
I don’t think that’s true. That’s all I will say.
Since Peabody has worked on long-term sustainable development ideas for the Tavan Tolgoi project, how would you advise this project to proceed?
We have to start by first understanding that Mongolia has a very different geology; it has a very fragile environment, so you have to be mindful of the environment, and you also have to understand the fact that this is a resource that is precious to the people of Mongolia, so how do you optimize it, how do you maximize the value. Those are the principles first that I would start with. And then I would say, do you use those principles and ensure that you come up with a world-class coal industry, so Mongolia becomes a hub that creates value for Mongolia coal, which is processed on the Mongolian side and then different forms of that are exported, whether it’s energy, whether it’s coal to liquid, whether it’s chemicals? I think that has to be the vision and the starting point. The pieces that will help realize that vision are first, you must have an integrated infrastructure, an integrated deposit, which is what the government is trying to do, so that’s good. By having all the deposits as one, which have a common infrastructure—especially for the use of water, which is very precious in the South Gobi, we are to be very careful about that, how we use it, what is the way in which we can save water, how we make sure to minimize environmental issues there, like dust, and making sure things like that don’t happen. Having an integrated infrastructure plan, and developing in an integrated way, I would say, is one of the first things to realize that vision. Coming to the project itself, I think there are key elements one has to think through on the Mongolian side. The first is: how do you make sure that you know the full value of this deposit, and you can capture that value in the best possible way? Which means, you have to have some form of feasibility; you have to have some form of studies done so you understand the real value of this deposit. And then, how do you make sure that value is captured over time in the best possible way? Then on the production side, I think you have to make sure that you are optimizing the production based on quality and based on market, so that you are capturing high amounts when the market price is high, and you may have to lower production when the market is low, so that you capture most of the value and you’re not simply pushing tonnes out. And which quality to blend from where, which products, how do you brand it as a TT product—these are also very important. Then you have to think about financing. What is the right mix of equity, debt, and other instruments over time, so that you are making sure of a couple of things? One: that you’re attracting more investors, foreign investors, because that’s what you want. More sources of financing. And two: you’re making sure that financing is there for the long-term. Right now what we have is companies are struggling because they did not think in the downturn what will happen; and so they got a lot of debt and they don’t know what to do. So, it has to be financed in a way that is thinking long-term, not just taking from one source or the other source, or one kind to the other kind. You also have to think about what other industries can come out from this. How to support the small industries, the medium enterprises, what’ll be the linkages, and making sure that procurement is transparent, so that people in Mongolia and small businesses can compete and get this kind of contract, so that it’s not just for a few people. I think it’s very important that you think about that, as well as you think about what are the other industries, coal to liquid, coal to gas, etc. As the project becomes successful, in what areas can you diversify that will build on this, coal to chemicals, things like that? I think those have to be thought through over time; but start with the first piece, which supports small and medium enterprises and procurement and transparency. The last piece, of course, is you must never forget the people. Meaning, how do you create jobs for the next generation? How do you provide skills and training so that they become managers and people who are at a high level and position? We have to think about what kind of labor force do you want, what kind of technology do you want to use, how do you want to have them trained, where do you want to have them trained? Those are the very important decisions that I think have to be thought through. As far as our proposal is concerned, I don’t think we have the answers to everything. But I think working with the Mongolian people we can come up with good solutions to all of these things. Some of them we have done in other countries; we have worked in Australia, in the US, in different areas. We think we can bring those practices. And that’s part of our proposal.
In 2011 and 2012, the coal market was very good. But now the coal market is in a downturn, coal prices are low and decreasing. In light of this circumstance, do you think now is the right time for Mongolia to develop the Tavan Tolgoi coal mine?
Very good question. I think this is the right time to start doing the basic groundwork for increasing the value of this deposit. This is the right time to start. How do you do that? One: you start building the supporting infrastructure for this deposit and for this project. You start doing the feasibility and other studies that are needed to ascertain the value of this project. So you understand the coal qualities, the extent of the coal, the seams, so that you know what products will be made, the blending; and continue to do what you are doing right now, which is to do the work that is ongoing. Get the financing in place for developing this deposit in the medium- and long-term. And then as the markets come back, you can choose the time when you think you are right to capture that value, monetize it, and then give it back to the Mongolian people.
Do you think the consortium will develop Tavan Tolgoi in the manner in which you explained?
I would worry about it. I hope that they will take what we are saying and what we have said and implement that. It’s hard to say without knowing exactly their plans, what they plan to do. But I can say with some certainty that the level of experience, the depth of experience, is not there in that consortium, because you have a local and a regional company that has operated either in Mongolia or in China, mainly; you don’t have a company which has operated across the world. So I think it’s a different set of choices and a different set of operations that you will see. They are good companies in their own areas, I’m not denying that. All I’m saying is that if you want a global footprint and a global operator, that’s different.
As Shenhua is a Chinese state-owned enterprise, there’s a view that Chinese government policies will be incorporated into the project development process. If Peabody rather had been awarded development, might there have been clearer business accountability and profitability for the project? How do you see the situation going forward?
First let me say that I think Shenhua is a very good company; it’s a very strong company, it’s a well-known company; we should not try and minimize that. Having said that though, Peabody has 130 years of experience in coal mining in the United States, in Australia, which makes it very different. And the good thing about being a private company is that we don’t have any other objective except to maximize profit for the company. In that way, Peabody is different. We bring different kinds of capabilities. Shenhua’s strength is in the Chinese market, in marketing, logistics and rail. They are very strong. Also Energy Resources is indeed a largest national coal company. Peabody has 130 years of operational experience; very strong global experience in safety, in the environment, in land reclamation which you have seen in Bulgan aimag. So I think we bring a very different set of skills and capabilities which is not the same.
How do you think a Mongolian company and a Chinese state-owned enterprise will work together throughout this project?
We would’ve liked to have been a part of it, so that what we would bring is very strong operational experience—not just contractors, but our own personal experience developing deposits all over the world. By bringing our marketing experience, analytics, all of that, we would be able to share that and make sure we get the best price for TT coal. The same thing for safety and environmental practices, we would have brought the global best practices. So now without us, I don’t know how that will work. I honestly don’t know where they will get it from; maybe they can hire people. We would have been a good complement and a good balance to the other strengths that are there in the consortium.
What will Peabody do now in Mongolia?
I think we are definitely reviewing our Mongolian strategy. We are also considering how we will look at Mongolia, in terms of opportunities. Based on this we will shortly decide on whether we will continue in Mongolia or do something else. Because after seven years being here in Mongolia, I think finally Peabody is feeling like we are a foreigner now. We have always thought we were a part of Mongolia, we became Mongolian, but last month we were reminded that we are a foreign company, and that we should always look at ourselves as a foreigner. To me, that’s the biggest disappointment.
If Peabody is to pursue any other megaprojects in Mongolia, does it have any confidence in the government of Mongolia to do so? And as for other megaprojects in Mongolia, not just in the coal sector, how do foreign companies view those projects now? How would you advise them?
I think if a company like Peabody, which has been here seven years in Mongolia, is told one day “Thank you very much, you can leave now. You have no role”, I think it’s a very harsh decision, it’s a very difficult situation. Other investors, particularly western investors, are going to be very cautious, based on Peabody’s experience. But we, personally, will always wish well for the government here, and for the people of Mongolia. We will continue to support whatever we can. But I don’t think we will necessarily participate anytime soon on any other project.
As the former leading World Bank official in Mongolia for four years, how do you view Mongolia’s current actions to help today’s poor economic situation?
I was very pleased to hear the Prime Minister’s speech in parliament that he gave recently. I think he has correctly diagnosed the situation. And I think part of solving the problem is to first recognize the problem and then accept the problem, and I think he has done that. I recognize that because this is a coalition government, it is not often easy to get consensus. But I think it is important to sometimes push forward policies that may not be liked by everybody but that have to be undertaken; and that is the next step. Because what you have right now is a very sharp slowdown of economic activity in Mongolia and the region, which requires very strong policy actions; and if you don’t do those, the situation can become much worse.
Now the government is trying to implement fiscal contraction policies, in a situation where the debt level is very high. How do you view these actions?
I think I said this before when I was at the World Bank: the number one challenge for Mongolia is cyclicality—ups and downs—and how you come up with a policy that helps deal with this cyclicality. And the answer is always very simple, as it has been before. For any family, you should save when you have more, and spend when you have less. But we often do the opposite, in the family as well as in the government. So when you get more money you want to spend more, and when things come down you want to save more. So I think this has to stop. We have to recognize and learn from that lesson; and say for our fiscal rules, monetary policy and fiscal policy, we must make sure that going forward that we have fiscal space—so you spend when there is a problem, a downturn, and then you save and you put money into your stabilization fund when there is more money in the economy. That’s at the policy level. At the structural level, one of the key pillars of Mongolia’s growth has always been foreign direct investment. And that investment has come down drastically. So you must find ways to make sure that you will continue to attract foreign direct investment, technology, knowledge, that will help grow Mongolia’s economy and increase productivity and keep Mongolia then growing for a long time.
The Tavan Tolgoi project moves on while Oyu Tolgoi project expansion remains stalled. What do you see happening in the near future for Oyu Tolgoi?
There is very little I know about the Oyu Tolgoi project. I think that it is a very important project for the economy, and I sincerely hope that we are able to find a solution to move this forward, because it is such an important project for the country.

President visits Charles University
By B. Amarsaikhan
Ulaanbaatar, January 22 (MONTSAME) The President Ts.Elbegdorj visited Tuesday the Faculty of Mongol Studies at the Charles University in Prague. This University is the first one in Central Europe, founded in 1348, and has the biggest center for Mongol studies in Europe.
Mr Elbegdorj said:"I am glad to visit the Charles University in Prague. I literally feel a positive energy of the scientists, teachers and students of the university. Our two countries maintain friendly bilateral relations that were established by our senior generations. During the socialist times, many scientists and experts would come to Mongolia to participate in the great construction.
"We know that our Czech friends contributed to the development by participating in the geological studies, in construction of hospitals and factories. We know that in terms of economic partnership the Czech were the second after the Soviet Union.
"Our two countries have walked into the universal order of the humanity in the beginning of the 1990’s. Therefore we have common values and historic closeness. I try to support the Mongol studies in the countries I visit."
He also emphasized that the Mongolists should be highly respected as they study the role of the Mongols in the history of humanity, on a scientific basis. The President told the gathered that he brought a gift for the Mongolists of Charles University, and answered some questions. 

Lunar New Year Exhibition to be held in six districts
By D. Tuguldur
January 22 ( Lunar New Year Exhibition is being held annually in six districts. This year, exhibition will start from 23rd of January to Lunar New Year /19th of February/. 
Following places is to host the exhibition:
Bayanzurkh District - Open air markets of "Sky" department store and "Bukhiin Urgoo" /Wrestler's Palace/, "Tenger" wholesale trade center.
Sukhbaatar District - Open air market of Tserendorj street /South of SDS/
Chingeltei District - Independence square, Open air market of "Urt Tsagaan"
Bayangol District - " Lion" tower
Khan-Uul District - "Sky" Department Store, "Nomin" supermarket, "Home Plaza", "Ulaanbaatar Impex" LLC
Songinokhairkhan District - "Silver" trade center, "Suvdan" center
Moreover, the Ministry of Agricultue, Ministry of Labour and City Office are jointly organizing "Made in Mongolia" exhibition dedicated to Lunar New Year. This year, it is planned to hold at "Misheel" expo, "Night Market" and "Dragon" center.

Feasibility Study for Hydroelectric Power Plant in Bayan-Ulgii aimag
By D. Tuguldur
January 22 ( Feasibility Study on Hydroelectric Power Plant planned with funding from the Turkish ZTM on Tavaltain Khavtsal (Tavaltai Canyon) in Nogoonnuur soum of Bayan-Ulgii aimag has been conducted and upon building the power plant, Mongolia hopes to fully supply western region aimags with electricity..
The FS indicates that Turkish side to introduce the efficient technology and develop the Power Plant with capacities of 88,7MW.
State Secretary of Ministry of Energy D.Delgertsogt received the delegation of ZTM officials and Project Coordinator Prof. Turgut Oztas and introduced with the Hydroelectric Power Plant FS.
Moreover, ZTM expressed their interest in taking on the project of Khovd River Hydroelectric Power Plant on a concession agreement basis.  Upon building the power plant, Mongolia hopes to fully supply western region aimags with electricity. ZTM Engineering and Consulting also started creating a master plan for Mongolian hydroelectric power plant development.

Harumafuji D.Byambadorj donated car to II Maternity Hospital
By E. Orgil
January 22 ( Today, D.Byambadorj, 70th Yokozuna of professional sumo donated emergency car equipped for delivery to Second Maternity Hospital.
Emergency car needed when transporting mothers with delivery compilcations to specialized hospitals.
This car equipped with all necessity equipments for emergency to expecting mothers including oxygen metre, blood pressure metre and cardiac monitoring device. 
Second Maternity Hospital used an emergency car, which was donated by D.Dagvadorj 68th Yokozuna in 2007. 
Second Maternity Hospital although it has capacity of 75 beds, currently 130 mothers are receiving treatments. Doctors of Second Maternity Hospital said that even thou occupancy had doubled, the budget allocated are covering only 75 mothers. At the Second Maternity Hospital about 30 mothers give birth in per day.

Logo for Three-Millionth Citizen Created
By B. Amarsaikhan
Ulaanbaatar, January 22 (MONTSAME) Mongolia is expecting its three-millionth citizen this year. The national working group for greeting the citizen, the Ministry of Population Development and Social Welfare, and other organizations have cooperated in the creation of this official logo.
After the birth of the three-millionth citizen, this logo will be utilized free-of-charge on the national products that do not harm food and health security, TV programs, press and media news, articles and handout materials.
The globe on the logo symbolizes a possibility that this special citizen can be born anywhere on the earth. Three people including in themselves one another symbolizes the upbringing of a child in a family and the fact that this special citizen will to always remain as the three-millionth Mongolian for his or her lifetime.
The grain-braided frame symbolizes ever-growing of the Mongolian population. The logo is topped by the national emblem – Soyombo.

Minister Erdene Receives WB Country Manager
By B. Amarsaikhan
Ulaanbaatar, January 22 (MONTSAME) The Minister of population development and social welfare S.Erdene received Thursday the Country manager of the World Bank for Mongolia Mr James Anderson.
They discussed the ways of supporting the low-income people through social care policies. The Minister highlighted his Ministry’s position on the Program on Development Policy (development policy credit), which is being discussed between the Government and the World Bank.
Present at the meeting were also B.Otgonjargal, the State Secretary of the Ministry; L.Monkhzul, head of the Department for Management of Social Policy Implementation; Taehun Lee, a senior economist at the WB; Elena Glinskaya, coordinator; Junko Onishi, senior social security officer; Ch.Tungalag, social security officer.

Stock Exchange News for January 22
By B. Khuder
Ulaanbaatar, January 22 (MONTSAME) At the Stock Exchange trades on Thursday, a total of 97 thousand and 716 units of 17 JSCs were traded costing MNT 23 million 443 thousand and 270.
"Khokh gan” /88 thousand and 558 units/, “Remikon” /5,342 units/, “Moninjbar” /1,000 units/, “Hermes center” /850 units/ and "Makh impex” /400 units/ were the most actively traded in terms of trading volume, in terms of trading value were "Khokh gan” (MNT eight million 428 thousand and 610), "Talkh chikher” (MNT four million and 551 thousand), “Atar-orgoo” (MNT two million and 720 thousand), “Mongol keramik” (MNT one million and 620 thousand) and "Makh impex” (MNT one million and 340 thousand).
The total market capitalization was set at MNT one trillion 394 billion 942 million 672 thousand and 518. The Index of Top-20 JSCs was 14,389.27, decreasing 65.26 units or 0.45% against the previous day.

Number of Orphans in 2014
By B. Khuder
Ulaanbaatar, January 22 (MONTSAME) The number of orphans was 39.0 thousand last year nationwide, and 4,000 or 10.2% of them are half orphans, the National Statistical Committee has reported.
The number of orphans declined by 112 or 2.7%, and the number of half orphans decreased by 408 or 1.2% in the previous year against 2013.
4,200 or 10.9% of the orphans aged 0-4 years old, 8,400 or 21.5% of them--5-9 years old, 13 thousand or 33.3%--10-14 years old, 4,800 or 12.3%--15 years old, 4,400 or 11.3%--16 years old, and 4,200 or 10.7%--17 years old.

Number of Families in 2014
By B. Khuder
Ulaanbaatar, January 22 (MONTSAME) The National Statistical Committee (NSO) has reported that the number of families with six or more members reached 69.2 thousand in 2014, increasing by 2,522 members or 3.8%.
The number of families with four or above members aged up to 18 years old reached 40.3 thousand, increasing 2,914 or 7.8%, whereas the number of single people was 27.1 thousand, declining by 556 or 2.0% in the previous year against 2013. 8,300 or 30.5% of them are aged 60 years old men; and 18.8 thousand or 69.5% of them are 55 years old women.

Hearing on industrial policy proposal carried out
January 22 ( In order to reflect industry issues from a scientific point of view for a state policy document on industrial development, Minister of Industry D.Erdenebat met with scientists yesterday. Previously, this kind of meeting has been organized with members of professional associations of each sector. 
As noted by the Minister, the state policy document on industrial development is being reviewed and will be submitted for discussion in a government session next week. 
As stated and reflected in the state policy document on industrial development, the industrial sector should first of all rely on state support, science and scientific study,  and the private sector, with export orientation as a leading agenda to develop technology and for the production sector to be able to compete on the global market. Development of national industry is a priority issue and regulations and the coordination of trade should be put in place for the development of national industry.           
As reflected in the policy document, the production sector should be developed in three stages: 2015 to 2020, 2020 to 2025, and 2025 to 2030.
Many past discussions have raised the issue of how to develop the industrial sector, but little progress has been made because it was not clear how to launch development.
Minister D.Erdenebat noted that the opinions of scientists and researchers are very important, as it is very important to settle geopolitical issues and the issue of economic dependence. 
The scientists noted, “Previously, industrial policy hasn’t been approved as state policy in an independent way, and always have been put aside.  
"Thanks to the establishment of an independent ministry, now we will have a policy on industrial development and works to be implemented in the middle and long terms have became certain, so as a result, a lot of changes and renovations can be further made.  
"On the other hand, in order to prepare skillful personnel and specialists, we need close co-operation with the Ministry of Education and Science. The industrial sector can be developed rapidly only with skillful personnel and specialists. Frankly speaking, there are no skilled personnel in the industrial sector. Therefore, we should, according to the policy, put as much attention on the issue of the preparation of skilled personnel."
At the end of the meeting, Minister D.Erdenebat emphasized, “The most important reliance and support for the development of the industrial sector is our scientists and researchers. By reflecting your opinions in the industrial policy document, it can be submitted for the discussion to the government session and submitted for approval by the Parliament."  

No cut on children and mother welfare
By E. Orgil
January 22 ( In the afternoon, Plenary session of Parliament held second discussion on Budget Amendment for 2015, Human Development Fund 2015 budget and Social Welfare Fund 2015 budget amendments.
The government proposed on budget draft to cut mother and children welfare. However, Budget Standing Committee proposed to retain mother and children welfare and majority of members in Parliament supported. 
Moreover, the Government proposed not to increase salary, while Budget Standing Committee has not approved and proposed to increase the salary. Today, Plenary session of Parliament will discuss on that issue after Budget Standing Committee meeting. 

New head of Fair Competition and Consumer Protection to monitor fuel prices
By A. Narantsatsral
January 22 ( T.Ayursaikhan, Head of Fair Competition and Consumer Protection Agency conducted open meeting with media. It has been two weeks after he was appointed to the post and have been focusing on the following issues:
1. Monitoring of the companies received soft loans
Companies received soft loans in the scope of the price stabilization policy. The agency is to conduct assessments on soft loan use and its adherence to the laws.
2. Price increase of electricity and heating to be assessed 
Electricity distribution entities have monopoly status. Those entities should receive permission from the agency on increase of prices by the law. In 2013 it increased prices with our permission, but 2014 prices were not negotiated with us. 
Therefore six electricity distributing entities were imposed fine of MNT 189 million and the price increase resolution was annulled. Those entities have appealed to the court and the court hearing is in progress.
The same situation occurs with Heating Plants as well. Therefore, we are to conduct studies on the status of those, which in turn will clarify their market position and possibly resolve the issues between the agency and heating plants.
3. Monitor the reason why fuel prices are not lowering
Prices for oil on international market have declined significantly from USD 740 per ton to USD 340-360, but the fuel price on domestic market is remaining the same and the public has logical expectation for the fuel prices to be reduced, as Mongolia is dependent on oil imports. 
Moreover, fuel importing companies received subsidies from the state as well in the scope of price stabilization program.
The agency is to hold monitoring on operations of those.
4. Downsizing at Fair Competition and Consumer Protection Agency
According to the Government Resolution on downsizing 15 percent of the human resources agency has eliminated 15 positions and currently employs 36 employees.
Moreover, defaults at internal operations are to be eliminated and improved to better serve the public.
Works of the previous management is continued:
1. Commercial bank loan fees 
Many complaints were received at the agency regarding the double fees at the banks labeled as operational cost fees. The case was appealed at the court the initial hearing ruled in favor of the agency claims. The verdicts have been delivered to arguing banks.
If the banks are to appeal again the court hearings are to continue, otherwise banks may have to pay back the fees.
2. Return on equity of commercial banks are higher than average at international market 
Due to the high profits at banks citizens and clients are claiming that it is unfair for them to bear the operational costs. According to the average profits of the banks abroad range at 10-15 percent, while Mongolian commercial banks ROE range higher than 25-30 percent with annual revenues reaching MNT 80-100 billion.
3. Meat price increase
According to the law the agency does not have the rights to intervene to the prices of the individuals. Also meat processing involves four stages and we do understand that entities employ huma resources there. We are conducting studies on possibilites to reducie the meat  prices.
4. Privatization of Circus 
Agency is working on annulling the privatization of the circus to the State Property Committee. But as long as the State Property Committee hasn't responded to our demands we are appealing at court for the annulment.

Offices and schools to open with new schedules
By M. Zoljargal
January 22 (UB Post) All state-run organizations, schools, and kindergartens in Ulaanbaatar will start their operations with revised schedules starting next Monday, following the Ulaanbaatar City Mayor’s Office initiative to reduce traffic congestion during business hours on weekdays.
Starting from January 26, public organizations and government agencies will open at 9:00 a.m., Ulaanbaatar city administration and affiliate agencies will start work at 8:30 a.m., kindergartens will open at 8:00 a.m., while universities and institutes will have their first classes between 9:00 a.m. and 11:00 a.m. A final decision on their opening hours will be made after university administrators come to an agreement on the change.
A total of 1.2 million people live in Ulaanbaatar and 27 percent of them work for private businesses with the same business hours as public services. Twenty-two percent of residents are children studying in general education schools and kindergartens, 14 percent study in universities, while seven percent work for public organizations.
Approximately 70 percent of Ulaanbaatar’s population, or 848,932 people, are on the roads between 7:00 and 8:00 a.m. – all at the same time, which clogs the city’s roads and slows down traffic, reported the Traffic Police Department.
City residents complain that traffic congestion reaches its peak during the opening and closing hours of public service organizations, from around 8:00 a.m. and 5:00 p.m. every day, which makes cars and buses spend an additional 30 minutes to one hour – on average, on the road.
Currently, ministry, agency, and public service offices open at 8:00 a.m. and close at 5:00 p.m. General education schools and kindergartens start the school day at 8:00 a.m., while universities begin classes at 9:00 a.m. on weekdays, according to a government decision made in 2012.
Prime Minister Ch.Saikhanbileg transferred the government’s right to revise the working hours of public organizations to Ulaanbaatar City Mayor E.Bat-Uul, following a proposal from the Ulaanbaatar City Council in December, 2014.
Mayor E.Bat-Uul will issue the ordinance to revise the opening hours and officially announce them on Friday.

Residents tear down garages to make way for kindergarten
By M. Zoljargal
January 22 (UB Post) A new kindergarten opened this week in 19th khoroo of Bayangol District, through a joint cooperation of the government and residents.
The space the kindergarten was built on was previously occupied by private garages of 16 residents in the neighborhood who all permitted demolition of their properties for the public kindergarten.
A total of 135 children aged between two and five live in 19th khoroo and now the kindergarten is ready to welcome 100 preschoolers who used to attend kindergartens of different khoroos.
The kindergarten created 23 new job positions in the khoroo.
The kindergarten’s construction started immediately after the garages were relieved and it was completed in eight months with a grant aid from the World Bank.
Bayangol District is one of the largest districts of Ulaanbaatar, with 32 state-owned and 52 private kindergartens operating in the area. In total, 88 percent of all children in the district are receiving preschool education at kindergartens.

OT reports ore content data and increased efficiency
By Ch. Khaliun
January 22 (UB Post) Oyu Tolgoi (OT) released its report on production for the fourth quarter of 2014, with details on new ore content data and reports of increased efficiency.
The company produced 50,300 tons of copper and 278,000 ounces of gold in the fourth quarter of 2014, increasing copper production by 40 percent and gold by 110 percent, compared to the third quarter of 2014.
An increase in ore resources has influenced growing productivity. The company highlights that they have increased their efficiency, although the company suffered a fire at its concentrator plant in December 2014.
Concentrate sales were reported to be strong as well in the last quarter, exceeding production amounts, and the amount of reserves in storage decreased more than expected.
As of the fourth quarter of 2014, OT’s concentrate production increased by 186,700 tons (39.2 percent), compared to the third quarter of 2014. In 2014, 563,000 tons of concentrate was produced with an average of 26.3 percent copper content.
Production in 2014, in accordance with the metals contained in the concentrate, was 148,000 tons of copper; 589,000 ounces of gold, and 893,000 ounces of silver.
Sales were higher than production in 2014, namely 185,800 tons of copper, 561,000 ounces of gold, and 1,093,000 ounces of silver were sold.
In the last quarter of 2014, OT’s copper recovery rate for the concentrator plant reached 90.7 percent on average. The results were 87.6 to 87.9 percent in the first two quarters of 2014, while in the third quarter of 2014 it reached 89.3 percent.
The gold recovery rate was 78.6 percent, while silver was 71.6 percent in the last quarter of 2014. The increased recovery rate was positively influenced by the growth of ore content in the mines.
Specifically, copper content in the ore was 0.74 percent, gold was 1.46 grams per ton, and silver was 1.65 grams per ton.
OT reports that the copper content in the ore increased by 25.4 percent, gold by 82.5 percent, and silver by 0.6 percent compared to the third quarter of 2014.
This year OT plans to produce 175,000 to 195,000 tons of copper, and 600,000 to 700,000 ounces of gold. After releasing the fourth quarter report, OT’s stock on the Toronto Stock Exchange increased from 3.28 to 3.41 CDN, and was 3.31 CDN at the close of trade.

Meat train on the move
January 22 (UB Post) The Ministry of Food and Agriculture issued a meat export quota for eight companies on Wednesday, after a month’s delay in the tendering process for meat exporters.
The Head of the Department of Coordination for Food Production Policy Implementation at the Ministry of Industry and Agriculture, Ts.Nandinjargal, explained the reason behind the delay. “Companies, and even individuals who have no experience in exporting meat, applied for the tender. It took us a long time to verify their legitimacy,” she said.
The National Commission for Food Safety approved the exportation of 644,000 tons of meat and 2,000 tons of meat for importation in 2015, and the Ministry of Food and Agriculture organized a selection process among meat producers. Baatruud Tenger LLC, Makh Impex LLC, Mongol Makh Expo JSC, ANDM LLC, Mon-Tuva Factory, Bumnomin LLC, Sooton LLC, and EDGS Ltd have been chosen out of 36 companies that applied for the tender on December 12, 2014.
The tender considered adequate sanitary procedures at meat processing plants and appropriate storage of meat in refrigerated warehouses. The majority of the 36 companies didn’t meet these requirements.
In total, the selected eight companies received an export quota for 4,051 tons of meat; 1,676 tons for beef, 2,275 tons for horse meat, and 100 tons for chevon (goat meat). The ministry confirmed that this specified amount will be exported within the first half of the year.
The highest amount of meat exported by Mongolia has been 26,000 tons in a year. Experts noted that Mongolia isn’t capable of exporting 64,000 tons of meat a year as that sort of capacity isn’t currently available in the country. They’ve also affirmed that Mongolian livestock isn’t raised for meat purposes. According to the experts, Mongolia is expected to export meat equivalent to six percent of the amount approved by the National Commission for Food Safety in the first half of 2015.
Domestic meat processing plants did not announce their prices for export meat. On average, if we say one kg is exported for five USD, Mongolia will make over 20,000 USD from exporting meat in the first half of the year, which is approximately 38 million MNT. Other companies that failed in the previous tender selection process will get the chance to receive a share of this money by joining a new selection process, which the ministry said will take place in fall.
Opportunities for exporting meat are increasing as the population of livestock increases in Mongolia. This can be seen from the decision of the National Commission for Food Safety, which approved 64,400 tons of meat for exportation. Meat can become an important export product of Mongolia.
Several experts have recommended focusing the policy towards improving the health of livestock, upgrading meat processing plants, and developing intensive livestock farming. Mongolia is known to have frequent foot-and-mouth disease (FMDV) outbreaks. This makes it difficult to export meat, particularly from eastern regions, where FMDV outbreaks occur regularly. This region has already become the focus of the World Veterinary Association.
Mongolia’s attempt to declare its central and western regions FMDV-free failed when the disease spread throughout Sagsai soum in Bayan-Ulgii Province last year. It’s said that Mongolia has resubmitted a request for recognizing western regions with FMDV-free status.
Head of the Veterinary and Animal Breading Department M.Galbadrakh reported, “Mongolia can declare FMDV-free status if technical meetings are held regularly. A technical meeting has been arranged for this month.”
It will become easier to export meat if western areas are recognized as FMDV-free. The Customs Union Regulatory bodies of Russia, Kazakhstan and Belarus paid a visit to 12 Mongolian meat processing plants. They advised eight plants to upgrade their technology and improve their operations. Once these plants have enhanced their operations, they will be permitted to export meat to member countries of the Customs Union. Overall, Mongolia has over 30 meat processing plants. Operation and equipment of these few plants comply with global standards, according to related officials.
“Plants work at full capacity to export high-standard meat, which has to be processed with industrial methods. Ensuring this regulation increases profit, providing the opportunity to upgrade technology and equipment,” claimed an agriculture sector official.
Many experts in the field believe that development of meat processing plants should be supported through government policy. Intensified livestock farming is undeniably the key to increasing meat exportation. Livestock of Mongolia have small-sized bodies that have adapted to the extreme climate. Mongolian livestock is said to be unsuitable for industrial meat production because they are pastured, which develops their muscles, hardening their meat.
Russians prefer importing beef and horse meat from Mongolia. Statistics show that Mongolia has approximately three million horses and 3.4 million cattle. If around 200 kg of meat is extracted per cattle, Mongolia will have to slaughter 320,000 cattle to supply 64,000 tons of beef. It’s suitable for Mongolia to establish more cattle farms for meat purposes if it is to supply Russia with beef to accumulate much needed foreign currency. Export volume will increase only if cattle with high meat output are bred. Mongolia is capable of selling five million goats but there isn’t a market that can afford it or is willing to buy them. Mongolia will have to use its export quota for 100 tons of chevron wisely.
Source: Unuudur Daily (Issue No.016)

Mongolia braces for the arrival of its three millionth citizen
January 22 (UB Post) Mongolia is eagerly awaiting its three millionth citizen.
A worried looking man asks a nurse repeatedly whether his wife gave birth, outside a registration window at the Maternity Hospital. Another man standing by him asks whether it’s his first child, and tells him to think positively and he might just become the father of Mongolia’s three millionth citizen.
The National Statistical Office announced that the three millionth citizen of Mongolia will be born between January 21 and 26. It isn’t yet clear exactly when the child will be born, but officials assure us that it will be announced swiftly after the birth. A reporting team has been assigned to the State Maternity Hospital No.2 to await the birth of the three millionth citizen of Mongolia.
At the hospital, the nurse at reception was giving some advice to families and women who were awaiting the birth of their children. Some women were even crying with labor pains, while some people were calling their families and friends to share their news gleefully.
“Registration programs were installed on January 18 at all maternity hospitals, including four private hospitals. We are informing the National Statistical Office every twelve hours to notify them about women who gave birth. We set the clocks according to the Agency of Standardization and Meteorology and some rooms are equipped with cameras. When a woman gives birth, we will announce the time of birth audibly and all these processes will be recorded on camera. The three millionth citizen will be made clear only after the National Statistical Office collects all the information and data of birth registrations in Ulaanbaatar, rural areas, and abroad, as well as the information of people who passed away. The official announcement of the birth of the three millionth citizen will be made three or four days after the child’s birth,” said statistics specialist at State Maternity Hospital No.2 R.Lkhagvasuren.
Employees of maternity hospitals must register the name, address, date, and precise time of birth. The electronic clocks that they use daily, have been deemed too inconsistent, so the Agency of Standardization and Meteorology reminded maternity hospitals to use an astronomical clock to register the three millionth citizen. By visiting the website, hospital staff can activate the astronomical clock on their computers and electronic clocks. State Maternity Hospital No.2 set up astronomical clocks all around their hospital.
The government promised 70 million MNT to the three millionth citizen of Mongolia, and 250 children born on the same day will receive three million MNT. Accordingly, women who are expected to deliver this month all hope to give birth to the three millionth citizen of Mongolia.
A mother who recently gave birth said that she and other pregnant women have been under pressure by family members and friends to give birth to the three millionth citizen and make history, in relation to the monetary reward.
“To give birth to Mongolia’s three millionth citizen is, of course, a historic occasion and every woman wants it. But it is a natural thing. Some people see it as a way to make money and receive grants from the state. But when women start to feel labor pain, it won’t matter that much. In my case, I just want to give birth immediately,” said a woman who lives in Songinokhairkhan District’s 30th khoroo.
G.Gerelmaa, who gave birth three days ago, said, “When I was in my fourth month of pregnancy, I heard about the three millionth citizen. Some families were even planning for that. I was thinking of becoming the mother of the three millionth citizen, however, I gave birth to my daughter three days ago. The three millionth citizen might have been born earlier. Maybe authorities are waiting to give the money to their relatives. We really don’t know.”
Rumors that the birth rate has increased since the announcement of the three millionth citizen awards, or  that pregnant women are undergoing surgery to be written in history  are all false, said  R.Lkhagvasuren at State Maternity Hospital No.2.
Source: Undesnii Shuudan

B.Lkhagvajav: If we can’t play by the universal rules, no one will play with us
By B. Narantuya
January 22 (UB Post) The following is an interview with President of the Mongolian National Chamber of Commerce and Industry (MNCCI) B.Lkhagvajav, about the chamber’s future goals and present economy related issues. B.Lkhagvajav, who is considered one of the leading economists in the country, is director of Urbanek LLC, and has formerly worked as an advisor to the Prime Minister of Mongolia.
You became the president of the MNCCI quite recently. How would you evaluate the chamber’s work that was carried out in 2014?
The 19th annual meeting of the MNCCI was held on December 8 and 9, 2014. During the meeting, changes were made to the policies and rules of the MNCCI. Along with policy changes, the administrative management system of the MNCCI was changed as well. These changes reflect the first substantive change in  MNCCI policy in the last 16 years.
Previously, the administration was centered on one person. While making some changes in management, the position of president became necessary, for which I was elected. Also, the vice-chairman, the secretary, and the secretary general were newly elected to their positions.
What led to these changes in policies?
The MNCCI was founded on July 2, 1960. The 55th anniversary of the chamber is this year. In 1996, Mongolia approved the charter of the MNCCI. A year later, in 1997, the organization was formally established. Director Demberel was chosen to be the first director, and directed the organization for 16 years.
During Dembrel’s tenure as director, the chamber did not undergo any significant changes in policy, despite Mongolian society facing many changes throughout the last 20 years. When the chamber was first formed, the economy of Mongolia was based on a centralized economy under a communist regime, with state control over 100 percent of the economy. Today the central budget of the state is equal to 31 percent of GDP.
Now that the policies and rules of the chamber have been finalized, could you tell us about the future goals of the MNCCI? What has the chamber planned and what are its goals in the near future?
The chamber has 25 executive officers and 75 board members. On January 22, a unified meeting will take place among all the officials, during which we will form resolutions. Later on, on January 30, board members will report on the operations of 2014 and approve the general objectives of 2015.
When I was nominated for the position of president of the MNCCI, I promised two things. The first is to have the economic transparency law approved within the first month. I think I’m close to fulfilling this promise. The law will be discussed in Parliament soon.
Secondly, at the moment, the chamber’s building is state property. This building was a gift from the People’s Republic of China but it is listed as state property. This issue is being discussed with Prime Minister Saikhanbileg.
The economic transparency law is my main goal. This law will ensure financial reform as well as capital mobility. Under these financial reforms, many limited liability companies will become joint stock companies. Furthermore, the financial reform process will lead to banking system reform. If the proposed legislation becomes law, these efforts will start this month.
The chamber’s transparency law will be enacted for six months. During this time, all citizens, enterprises, and even the state, must participate in financial reform. Also, issues such as the governance of companies and wealth distribution will be addressed. Single-person companies represent 99 percent of the companies in Mongolia, and because they submit false tax reports, these companies are not able to receive the benefits of company governance, financial mechanisms, banking systems, and capital investment. For this reason, many companies remain small or are removed from the market altogether. Addressing these market failures will be the biggest challenge of the coming six years. These challenges will be the focus of the chamber’s work.
Afterwards, the MNCCI aims to promote free trade and restore the court of arbitration. What creates favorable business conditions? It is when your properties, jobs, and services are protected by the law and the state. Businesses are built on agreements and there must be a court that protects those agreements. In the business sector, the main court that protects agreements and contracts is the court of arbitration. My next goal is associated with the court of arbitration. Just these two projects alone will require more than four years.
Free trade was established hundreds of years ago and it has its own policies, laws, and regulations. A country is able to take advantage of free trade when it is able to follow those laws, policies, and regulations. Unfortunately, on January 1, Mongolia breached these regulations and now many people complain about high taxation for exporting goods to China. If the state approves, Mongolia could export to 11 countries without export taxes.
In your previous interviews you said that wealth creators will provide a way out of the economic recession. From your perspective, is the state getting in the way of wealth creators? Or are wealth creators not working fast enough?
Wealth is created by the private sector, not by state officials.
Since 1992, we faced three big economic recessions, not including the current recession. The state’s fiscal policy has always suppressed wealth creators’ labor, trust in private property, liberalization of prices, and the production of housing, cattle, and capital in the market.
The first stages of the current economic recession began two years ago. But the government didn’t trust its wealth creators. Instead, the government planned to inject money into the market from abroad, which today reduced the MNT’s value by 30 percent. This 30 percent devaluation has rendered the last five years’ profit of all companies in Mongolia, big and small, to zero. The state’s response represents a failure in macroeconomic policy. To mend the situation, the government must trust its wealth creators.
In 2008, the Mongolian economy was rescued by two types of amnesty laws, generating four billion USD. Another four billion USD was generated from the Oyu Tolgoi agreement. These factors contributed to the 17 percent economic growth in 2011. Internal and external investments provided an opportunity to exit the 2008 economic recession.
Last year, 10 trillion MNT was injected into the economy but despite that fact,  micro-economic entities had not yet reached a level of development necessary to take advantage of the stimulus. If these companies had reported accurate balance sheets, the monetary injection would have had a more significant impact.
Mongolia has very few macro-economists, and the few that we have don’t know much beyond theory. Policy makers should be making decisions based on the nine parameters of the macro-economy. These decisions should benefit the people.
Mongolian companies are notorious for maintaining multiple balance sheets, and as a result, are unable to properly take advantage of state stimuli. The economic transparency law will unify these balances and enable them to absorb money.
To run a business, an individual must have knowledge of the economy, law, and investment. Twenty-five years of labor has taught us the value of money. The MNCCI is an organization that protects private property.
The state is often blamed for the condition of the economy. Why were wealth creators silent when the state enacted bad policies?
Because we were busy. Taxation is the privilege of Parliament. Tax payers remain ignorant of the policies of the Ministry of Finance. The state retains the most favorable tax conditions for themselves. Unfortunately, they are enacting policies that force Mongolians to their knees. In 2005, VAT threshold was set at 10 million MNT, affecting companies negatively. Only after 10 years are companies beginning to understand that the VAT was preventing them from becoming wealth creators. For this reason, since 2005, I have been working to provide a favorable legal environment for businesses. According to the constitution, a citizen must be able to have property. Our tax policies and tax system must work together to ensure people can own property and protect that property.
Last year, leaders from our neighboring countries, Russia and China, visited Mongolia. Many development projects were discussed. At the moment, Russia is facing recession and the purchasing power of the Ruble is declining. How is this affecting Mongolian businesses?
These issues are political in nature. It has been 23 years since we entered the global economy. We are communicating with the global economy through our most valuable public commodities, which are natural resources beneath the ground, and the animals and wildlife above it.
In these 23 years, we were not able to allocate these resources through property laws and we aren’t able to protect them through the Criminal Code. Now they virtually belong to a handful of high ranking government officials. The natural resource industry is a game played by few countries in the world. We are entering the game with our gold, copper, and silver. However, Mongolia isn’t ready for the game yet. We don’t have professionals trained in international finance, we don’t have world class accountants, world class lawyers, or world class arbitration judges. We learned that if we don’t have well-trained engineers there are no advantages in owning coal. At the moment, we have poorly trained human capital and no technological resources. Even though the population of Mongolia is small, if we use the proper technology and hire the right professionals, we can rise up.
Our country has disappointed its neighbors. If we can’t play by the universal rules, no one will play with us.
To make decisions concerning the future, we must look at our history. We must learn to look back at least 200 years. Without knowing global economic history, we can’t move forward. Clause 5.6 in the Constitution states that the state must take part in the economy for the well-being of citizens and entities.
What is the single most important thing business owners are demanding from the state to get out of the economic recession?
If financial freedom is given to businessmen, we can get through the economic recession. My goal is based on the economic transparency law and amnesty law. After the economic transparency law is passed, I encourage all businessmen to take advantage of the law immediately. If you use it correctly, all doors for investment will open; you can apply for loans, offer an IPO on the stock exchange, or look for foreign investors.

First bodybuilding and fitness competition of 2015 concludes
By B. Tungalag
January 22 (UB Post) The Shinobu Cup 2015 bodybuilding and fitness open competition took place on January 17, at Marquee 27 Night Club.
The Mongolian Youth Federation, Mongolian United Federation of Bodybuilding and Fitness, and Shinobu Fight and Fitness Club organized the competition through the initiation of world champion of Muay Thai and kickboxing Ts.Amarbaysgalan.
Some 63 athletes from 33 organizations from Erdenet, Darkhan-Uul, Sukhbaatar, and Bulgan provinces, and Ulaanbaatar competed in three categories: top athlete, young athlete and model.
L.Saruulbat won the top athlete category, followed by M.Sumiya and G.Jamts. L.Amgalanbaatar led the young athlete category among 28 athletes, followed by A.Baatar and O.Munkhtulga.
The Shinobu Cup 2015 was held in an entertainment show style.

Ts.Namuun: my aspiration to the arts hasn’t stopped
By B. Baatar
January 22 (UB Post) Mongolian girl band Kiwi is celebrating their 10th anniversary this year. The following is a brief interview with member of Kiwi, Ts.Namuun.
We heard that you recently made your acting debut?
It was not easy to play in a film, but I liked it. I worked with lots of experienced artists.
What was your role?
I want to keep it a secret. People have to watch the film. I think they will be shocked.
The leader of Kiwi, Uka, gave birth recently. Did you share your friend’s joy?
A child brings happiness and joy to life. We were all happy when she gave birth. The baby is very cute.
The ladies of Kiwi are paying more attention to their personal lives now. You may become a mother next?
Every woman is destined to become a mother. I also have my dream life. I will have a wonderful family and start paying attention to my personal life. If God gives me a child, I will definitely accept.
Kiwi is one of the most successful bands in Mongolian music history. What is the secret of this success?
We aimed to show three different faces when established our band. That’s why we became famous quickly. But it is not only that we attracted people with our appearances, we worked hard. We are still releasing songs.
You entered the arts world before Kiwi was established. We heard that you are a professional pianist?
I tasted art when I was six. I entered the Music and Dance College because of my grandfather. I was always with my grandfather in my childhood. After that, I studied at the State University of Arts and Culture. I didn’t take a break from arts. Art is my life.
Do you work as a pianist now?
I didn’t let go of my dream. I want to make use of my profession. Close friends and relatives always tell me not to give up the piano. I will do some piano related pieces, but I don’t know when.
You also studied at Mongol Model modeling agency. Would you have become a model if you weren’t a singer?
Every girl dreams of becoming a model and a beauty quen when they are little; so did I. I entered the modeling world under the training of top model D.Bolormaa. But my aspiration for the arts didn’t stop. My childhood dream was to become a dancer, pianist, singer, and a model. I was blessed with those four things. I am very fortunate.
Fans of Kiwi are always inspired by your distinct styles. Is it hard to be stylish every day?
It is very difficult to wear high heels and dresses all the time. We wear those for concerts, not every day. I usually wear comfortable clothes; I like jeans.

Challenges facing Mongolian orchestras
January 22 (UB Post) Mongolia has had a rich tradition of a national orchestra since the thirteenth century. By a 2005 presidential decree, the Great State Orchestra with 120 members was created. But some of Mongolia’s classical musicians are complaining about the national constitution of the orchestra and ensemble, and say that they lack instruments and professional musicians.
Last year, major Mongolian organizations for classical music celebrated the 90th anniversary of the establishment of a professional orchestra in Mongolia. Famous national and international classical music creations and compositions for ballet were played by musicians of the Mongolian National Song and Dance Academic Ensemble.
General Conductor N.Buyanbaatar of the Mongolian National Song and Dance Academic Ensemble pointed out, “Now the Great State Orchestra has only 65 members. We complete the orchestra with students from the Music and Dance College of Mongolia when we need instrumentalists for concerts. Originally, we planned to take on 14 members for the orchestra every year. It would make up 120 members in five years. Sometimes, we have a tense moment performing with the orchestra because of the insufficient numbers of members.”
He also said, “Some types of flute instruments which are a major part of the orchestra are not played. No one who plays the Ikh flute is prepared in the colleges and universities. Some students who play the Bayalag flute for orchestra joined the Music and Dance College of Mongolia. We bought ten kinds of orchestra instruments for implementation of the presidential decree ten years ago. But, today these are keep in a storeroom.”
Ballets and operas are performed on the stage twice a week, and some musical performances are given in the State Opera and Ballet Academic Theater. State Cultural Merit Worker N.Tuulaikhuu, the conductor of the theater noted, “Our regular number for members is 70 staff. In fact, our 55 staff are over worked. We require 65 more ballet dancers, opera singers and musicians.”
The conductor added, “Last year, two of our staff left for Austria to study the harp through public donations, because the harp has not been played on the stage of State Opera and Ballet Academic Theater in the last 10 years.”
The Philharmonic of Mongolia has similar problems. There are 68 staff and ten instrumentalists missing from the regular symphony orchestra. State Arts Merit Worker Ch.Davaasuren, head of the Philharmonic of Mongolia said, “The philharmonic symphony orchestra performs on stage without wind instruments, and cellists and violinists who play the viola. Also, our collaboration with the Japanese give us some brass instruments, which play a major role in a symphony orchestra.”
Musicians who work for state organizations are paid the same average monthly salary as other civil servants. Now they are afraid of job cuts in relation to the current economic situation. If they are sacked due to job cuts, the Mongolian classical music sector will continue to suffer.
Source: Unuudur

Traveling through the world of Mongolian and international students
By B. Tungalag
January 22 (UB Post) American School of Ulaanbaatar is holding their first art show at Marshal Art Gallery. The purpose of the exhibition is to showcase the hard work of 29 students in grades 10 to 12 over the course of the last semester.
Students in the school’s advanced art course chose themes on which to produce a body of art, including everything from storytelling to celebrities. Eleventh grade student Pandu Ekoyudho chose to work with anthropomorphism. He was interested in the idea of fusing elements of human and non-human figures to create intricately detailed pieces, such as his ink drawing, “Amour de l’Automne.”
The majority of American School of Ulaanbaatar’s student body is Mongolian, and this is reflected in their work as well. “She,” a painting by twelfth grader O.Ariunzaya, was produced to express her love and appreciation for the beauty of Mongolian traditional culture.
Rebecca Mutrux teaches the secondary art program at American School of Ulaanbaatar, and organized the exhibition. Last spring she held a similar culminating show within the school, which gave her students a lot of positive feedback. “I have so many talented students, and while I wanted the community to see what they can do, I also wanted them to realize how gifted they are. Seeing your work framed and hung in an art gallery demonstrates that more effectively than a thousand compliments.”
The exhibition will run from January 21 to 23, with the artists conducting activities for classes during the day. There will be a closing reception Friday evening from 4 to 6, with refreshments and a performance by American School of Ulaanbaatar’s a capella singers.

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