Mongolia Brief March 25, 2014 Part II

Mongolia Economic Forum highlights scenarios for Mongolia through 2040

March 25 (UB Post) Mongolia’s biggest event on economic issues, the Mongolia Economic Forum, launched on Monday for the fifth time at the State Palace.

The two-day event was opened by Prime Minister N.Altankhuyag, who remarked, “Last year, the forum discussed the creation of unique Mongolian brands, but this year, it will emphasize production in Mongolia with the slogan, ‘Let’s create in Mongolia’.”

During his speech, he outlined projects planned by the government to increase production and diversify the economy. He noted that the government has planned to spend one trillion MNT on industrialization programs, to produce building materials, leather and woven clothes, and on the food industry and mining.

“Today, the nation is rarely manufacturing final products. Mongolia imports 88 percent of its commodities, and over 90 percent of exports are raw minerals. Unless we change this, Mongolia will continue to face economic hardship and resource tension will rise,” he said.

“The Reform Government has declared this year as the year of production, and the government will work to implement consistent policies to eliminate bureaucracy and burdens that get in the way of doing business,” N.Altankhuyag added.

While last year’s forum focused heavily on the mining sector, especially coal, along with the agricultural sector to create brands to represent Mongolia, this year’s conference focused on industrialization and production to replace imported products, as well as other aspects of the economy, such as employment, education and training, and green development.

The Mongolia Economic Forum is the largest platform for the government, private businesses and experts to discuss and reach solutions to major economic issues, but some participants felt that due to the time constraints of the events, their proposals and criticisms were not heard.

“Every year the issue of time constraints is talked about and participants are given limited time to voice their thoughts, which hinders the productivity of the forum. We waste time talking about how little time we have instead of focusing on the statements made by the attendees,” said one participant at the event.

There were some criticisms of the state and how little progress had been made since last year. A number of business operators in Mongolia voiced their concern that the panelists’ explanations for economic hardships such as depreciating currency value were not true.

“Business operators don’t believe the state’s explanation for depreciating exchange rates. We suspect behind-the-scene dealings and corruption. Small and medium enterprises will grow this nation, but while some have received subsidies and state support for decades, other sectors don’t receive anything from the state,” said an agricultural business operator.

Scenarios for Mongolia

At the World Economic Forum, scenarios for Mongolia were outlined and touched on at the Mongolia Economic Forum.

In the scenarios, it was highlighted that China’s policies and development will have a major impact on Mongolia’s economic growth, as it is Mongolia’s main trade partner.

By 2040, it is expected that China will lead the way regionally in introducing green policies, pioneering new technologies, and cleaner production processes. To introduce greener policies, China will have to accept more modest economic growth as a trade-off for more sustainable development that includes social stability and improved environmental quality.

As this transition unfolds, Mongolia will experience a hard time selling its main minerals, as environmental and social costs will rise and demand will fall.

“China’s electricity prices are beginning to undergo very slow reform. However, it seems that the government is feeling its way in trying to reform what is a sensitive issue. In order to achieve a more sustainable development path, however, this is a crucial area in need of reform. Coal needs to pay its way, and renewables should receive increased support to help them compete in the energy market,” said Huw Slater, researcher at Australian National University, with a focus on Chinese climate change policy.

“Recently, coal prices have been falling due to oversupply. China’s electricity prices are centrally mandated by Beijing, and instead of allowing the prices that are already-subsidized, coal-fired power generators are allowed to sell their electricity to fall proportionately. They have allowed coal power to become relatively more expensive in comparison to the renewable alternatives.”

Slater also emphasized that although the leaders of China are bent on sustainable development, the vested interests in state-owned energy companies continue to have a huge influence behind the scenes.

“The central government has begun to try and de-emphasize the importance of local GDP growth as the traditional marker of local government success, and instead identify other objectives, including environmental ones. However, many of these new priorities are not easily quantified or realizable in the short period of time which local leaders hold their posts before moving on. This means that GDP remains a high priority in most areas, with serious consequences for air, water and soil pollution.”
He added, “The current central leadership, and Premier Li Keqiang in particular, have placed a high priority on sustainable development. The test of their success, however, will be how effective they are at breaking down the influence of vested interests which benefit from the existing carbon-intensive and polluting development path.”

Link to article

Wood species and crafts museum to open in Mongolia

March 26 (UB Post) “Let’s Plant Tree at Your Home” television program has initiated a project to establish a wood species and crafts museum in Mongolia.

In total, 8.2 percent of Mongolian territory is covered by forests. However, most Mongolians know only few species of trees such as larch, fir, pine, poplar, cedar, aspen, saxaul and spruce.
But there are over 200 species of trees in Mongolia which are abundant source for a wood focused museum.

In addition, the Mongolian state announced that it will soon conduct a nationwide forest cleaning and forest census. The cleaning is in demand as 76 percent of all forests in Mongolia are covered by dead, degraded and damaged trees which are preventing healthy growth of young and healthy trees.

The forest cleaning will also benefit the project as various species of trees that were cleaned from the forests can be used for the museum repertoire.

“Whoever is interested in lending a helping hand is welcome to take part in the project, and we will accept proposals and donations from personal wood collections,” reported the team.

The following is a brief interview with the initiator of the project, B.Batbold who is a member of “Let’s Plant Tree at Your Home.”

-It is interesting to think about a wood species museum. What do you hope from the museum?

-It’s been 90 years since Mongolia started managing forests under state policy. Yet most of us don’t know the species of trees that grow around us. It is indeed a shame because there are a lot of trees that even bloom like Sakura in spring in our country. We are planning to open the museum to let the public, especially kids, learn about mother nature and link them closer to ecology.

-Are there other countries that have such museums? Where will the woods and artifacts for display be collected from?

-Korea and the USA have wood-focused museums. We have a great source as there are over 200 species of trees in Mongolia. We can use fallen trees, branches and leafs for producing wooden crafts without wasting any money on purchasing raw material. People with wood collections can also contribute to us.

-How is the preparation progress currently? There must be a lot of issues to resolve before opening a museum.

-We are discussing possible locations for the museum such as the National Garden Park and Botanical Garden, and the Central University Campus that is currently under construction at Baganuur District.

We will include not only woods, but also photos and introductions about trees will be available.

Furniture, toys and Mongol gers made of wood will also be displayed.

If we resolve location issues, the museum can open within this year.

Link to article

Consultative meeting of Mongolia and Switzerland

March 26 (UB Post) The third annual Consultative Meeting of the Ministries of Foreign Affairs of Mongolia and Switzerland was held in Bern, Switzerland on March 24.

Vice Minister of Foreign Affairs D.Gankhuyag led Mongolian representatives and Swiss Federal Department of Foreign Affairs Assistant State Secretary for Asia Pacific, Beat Nobs, led Swiss representatives.

During the meeting, the two sides exchanged their opinions about current processes and the future of relations and cooperation between Mongolia and Switzerland. They also spoke about regional and multilateral issues.

The sides highlighted the successful development of cooperation in the politics, art, humanities and development sectors, while discussing the events and activities for the 50th anniversary of diplomatic relations between Mongolia and Switzerland. During the anniversary, both sides will organize various events of culture, exhibition and business meetings.

They discussed obtainable steps to develop economic cooperation and trade. In particular, Mongolia emphasized the importance of cooperation in developing trade and economic relations by searching for opportunities to work together, and proposed the establishment of a Mongolia-Switzerland Commission on Economic Cooperation.

The sides expressed their satisfaction with the implementation and results of programs carried out in Mongolia by the Swiss Agency for Development and Cooperation. The Swiss Agency for Development and Cooperation is aiming to reduce centralization, improve the educational system and professional education in rural area, develop agriculture, and provide food security in coming years.

Mongolia congratulated Switzerland for assuming leadership of the Organization for Security and Cooperation in Europe (OSCE) this year and expressed its hope to expand and develop cooperation with the OSCE. Both sides agreed to mutually support each other within the UN and other international organizations.

Link to article

Mayor E.Bat-Uul speaks on UB’s current developments

March 26 (UB Post) On March 17, Ulaanbaatar governor and City Mayor E.Bat-Uul, gave the public and the press information about construction work which will be implemented this year. We spoke with him for more details about this work.

-When will the implementation of the Smart Ulaanbaatar project start? How much money will be spent in total?

To explain this project in a few words, we are giving citizens and entities the option to manage their work from their home or office. Therefore, companies do not need to lose time when participating in tenders. In other words, city services will be transferred to an online system. The Smart Ulaanbaatar project will be implemented through 2020. Maybe, there is a misunderstanding among the public that it will start tomorrow. This project will be implemented in three phases. In total, 14.3 billion MNT will be needed.

-The city’s new administration building will be built in a suburb. How much money will be spent on this building? How will you decide on the location of current city administration buildings?

There are 548 state services available to citizens. Primarily, 56 services will be online. In order to set up the online system, we are focusing on solving infrastructure issues. Thus, the state services will be received at the khoroo level. For the new centers, the cost is not clear now. Halla Group of the Republic of Korea will build the center from its own capital. But after it is built, the city administration has to pay back the debt through their financing in three years. From the Korean side, the general assessment of financing has already been received, but not yet finalized. In connection, nine city administration buildings will be released and privatized. Our president issued a decree and ordered the organization of the privatization work for Khangarid Palace primarily. Organizing work will be held for the agencies of government going into the palace.

-People are saying that the city’s pure water safety is threatened. How is the city administration taking this issue into account?

Permission for building construction has already been given to the building companies and their wells are out of the pure water protection zone. As the Water Regulation Authority said, they take the pure water resources from a depth of 170 meters and there is no threat of the water becoming contaminated. There is no need to build construction on our pure water reservoir. Thereby, the order was issued. Unfortunately, the order failed at the Administrative Affairs Tribunal.

-The construction companies have not been meeting standards for building work. Recently, one person died due to the irresponsibility of Max Group. What kind of measures are going to be taken against these companies by the city administration?

Last July, the city administration issued the Occupational Safety Ordinance. According to this ordinance, guilty parties will take responsibility. Moreover, companies have to submit their budgets, but they do not do this. As a result, damage and accidents occur. Even if we say there must not be any technical failures, they use the back door.

For example, in Orkhon Town, they installed waste pipes without getting official permission. If they won’t inlet the pipe by paying five million MNT, the environment will be destroyed and the waste could cause infectious disease. Many people think that if they have money they can do anything they want. Cooperating with Mobicom Corporation, we have created a new application that can be used for checking a company’s building license. To use it, consumers have to direct their phone’s camera at the building site and their phone will tell them whether the company has a license, technical and heat permission, who it belongs to and other information.

-What measures will be taken for buildings that are not ready to use, waste time and need to be torn down? Is there any possibility of registering all the buildings in the capital’s boundaries?

First of all, when we demand that companies tear down and they do not accept this demand, we take the buildings as our property and tear them down. All those projects are monitored. About the buildings that are more than 17 floors, the Ministry of Construction and Urban Development will take considerations.

-The Commons of Songino Khairkhan District suggested that the district be divided into two parts. Will the city administration support this?

The Great Khural will solve Songino Khairkhan District’s issue. The Great Khural solves issues such as the division of the districts and delimitation. The issue to divide Songino Khairkhan District has not been delivered to the city administration officially.

-Distributing plastic garbage bags causes another debate. Citizens want to see the city build new kindergartens and schools instead of distributing plastic bags. How will you solve this issue?

Distributing plastic bags will be continued in the future. If people throw their waste in the streets, there are not any measures to handle this problem.

-Has the waste bag budget increased to 4.5 billion MNT3? Why has it increased?

The budget has increased. The number of households to receive plastic bags increased and it led to an increase of expenses. From October 2013 to the first quarter of 2014, for the production of 33.3 million plastic bags and their distribution to 317,131 households, 3.1 billion MNT was spent. But this year, 335 thousand households will receive the plastic bags, and 4.5 billion MNT will be spent to distribute bags from April 2013 to the end of the year.

Link to interview

S.Batbold: Mongolian economy can grow rapidly for the next 20 years

March 26 (UB Post) The Mongolia Economic Forum was held from March 24 to 25. The following is an interview with former Prime Minister and member of the Mongolian People’s Party S.Batbold about the forum and Mongolia’s economic development.

-Why was the Mongolia Economic Forum established?

-There’s no place where development policies are discussed and agreed on with the public. Discussing development policies with a small number of people including MPs, governors and heads is deficient. It’s also wrong to do populism and make policies out of most discussed or voiced subjects. We need to approach the matter in a more reasonable, researched and scientific manner with participation from scientists, researchers, entrepreneurs and economists. We need to set a standard that will include ideas from international institutions that work with Mongolia, including international banks, financial institutions, representatives of investors and the public in governmental policies. To determine development plans for next year or the medium-term, and further for the long-term, we established the Mongolia Economic Forum. It was decided that we would emulate the Davos World Economic Forum.

-Were you able to set the standards to listen to the necessary people when determining governmental policies?

-I believe that the first meetings were beneficial to the society.  It became an orientation for us. We opened our ears and received pluralistic opinions. There were more improvement and new aspects in the last two year’s forums. For instance, a discussion about Mongolia was held in Davos and that scenario is to be introduced in the upcoming forum.

The drawbacks are that from the observations from the last two year’s economic forum, it was directed towards one side – the authority. There’s a deficiency in promoting it to the public, to make it more open and give access to counter forces and innovators.

-Do you think that the state really listens to the people before?

-It’s insufficient to listen to opinions of the people once in a meeting and cast them away. During our time, we submitted ideas to include participation from civil society when determining policies and developing legal frameworks for them. According to this, the government issued a document for civil society to adhere to the policy. Meetings and discussions were organized for this.

Economic development and other big issues should be decided based on substantial research, analysis and calculations, not just on populism. As a result of the prolonged attempts to introduce this principle, if the economy had a minus indication in 2009, starting from 2010, it was slowly rising and in 2011, it reached up to 17 to 18 percent increase. It intensified in 2012. However, it indicated only 13 percent last year. Measures and decisions made during the previous government were seen as the foundation of stable long-term growth of economics.  The World Bank, International Monetary Fund, World Economic Forum and institutions that conduct research for competitiveness made evaluations that Mongolian economy is stable for long-terms and will increase by 15 percent on average. Evaluations show that the economy can grow rapidly for the next 20 years.

-What is the current economic growth rate?

-The growth rate is currently slowing down. The economic growth of 17 to 18 percent became 11 percent now. This indicated that growth rate has fallen.  There is growth to a certain degree. The speed slowed down, not growth. Substantial risks and challenges for further prolonging of growth can be observed.

-To increase sustainable growth rate, what kind of solutions do you hope to accomplish from this year’s economic forum?

-I hope it starts from ordinary things. Decisions of the government should be more close to the reality and more focused on giving feedbacks and results. The government should utilize its lever mechanisms including taxes, loans, quota and permit system to give correct, fair and open support to sectors that are trying to create employment. If not, business entities are decreasing their employment. Companies no longer employ new staff and are decreasing the amount of staff and salary. The previous government intensified vocational training centers and employed a lot of workforces from the centers to business entities. Now, there is no other choice but to decrease expenses through dismissing employees and reducing the number of local governments. This is a very realistic example of financing of business entities of today. The current conditions seem to be rather difficult. I do understand. During this difficult time, with dropped MNT exchange rate, in order to help and show a little bit of support to the people, we must increase salaries and pensions.

It’s nice to say big numbers of economic growth rate at macro levels. What’s most important is to calculate how that big sum is going to affect families and how it impacts their lives. It should stick to the people. Governmental support should be practical and economic growth should be allocated fairly to the society. With this principle, we increased salaries and pensions by 2.5 times for the last four years. However, pensions haven’t increased to levels we’ve discussed, neither has anything been implemented for salaries.

-Do you agree that there are substantial external reasons for the tough economy?

-I do, there are external substantial forces at large. In the world market, the price of mining products has relatively decreased. There are corresponding growths and declines. Now it’s reviving and the right approaches are being observed. American and European economics have started to revive. This isn’t difficulty only seen during this government. There were economic crisis in 2008 and 2009. It wasn’t easy at the time. Now, there aren’t external difficulties or challenges worse than those times.

-During the “united government,” apart from Oyu Tolgoi, Mongolia was supposed to repay 350 million USD worth of loans in the form of coal to China’s steel giant CHALCO by the end of 2013. It seems that it still hasn’t been completely repaid?

-It was a contract that was to finish within 2013. It was possible. This contract wasn’t made by the government. It was made within legal frameworks and world market price and formula boundaries by state industrial enterprises. As for the government, they only provided for human development funding sources with the revenue from mines in accordance to decisions made by the parliament. We didn’t say that it was an excellent contract. We can’t deny that there were areas that could’ve been improved. However, after election, talks about politics and economics were circulating. The deadlines were prolonged and a lot of time was taken.

-This government is actually said to have significantly more funds than the previous cabinets. When it has funds, why is the economy troublesome and workplaces decreasing, and why can’t they find financial sources for supplementary pension and salary?

-They say that the previous government left debts. In spring 2012, we launched bonds and handed over 580 million USD to the current government. The current government created Chinggis and Samurai bonds and the Central Bank of Mongolia gave three trillion MNT to the Price Stabilization Project. The government gave securities of one trillion MNT to domestic market. Apart from that, they made swap contracts with neighboring countries. From this, there are plenty of funds and financial sources. Spending money from bonds outside of the State Budget isn’t correct legally. Three trillion MNT given by the Central Bank to stabilize prices should also be recorded within the State Budget.  The World Bank and International Monetary Fund have noted this and are warning to make adjustments. This must be rectified.

Instead of criticism for spending of these financial sources more transparently, many are criticizing the fact that it is used on projects to support their policies and companies. Direct investment to the country has declined. From this, you can see the lack of policies for investments. Mongolia only thinks of external sources when they hear of investments. There are domestic investors too. Construction, agriculture, small and medium enterprises and all sectors needs support from investors. We need to hasten road construction, railway, energy and industrial projects and increase involvement of the private sector. We need to show investors that governmental policies are more comprehendible, stable, competitively, reliable, long-term and that they can trust the government. We can give this trust through fair activities and just policies. Wrong decisions and mistakes of the government will lose their trust. We need to always concentrate on this.

-The main role of opposing parties is to correct and fix mistakes of authorities through criticism. Why isn’t your party fulfilling its obligation?

-I do admit that our party isn’t adequately fulfilling its obligations as an opposition. There are factors in the legal framework that don’t allow us to fully conduct opposing works. MPs from our party haven’t had a union for around a year. Additionally, even now, we’re unable to fairly and righteously enter the Standing Committee. A third of the MPs are members of our party. Yet, when we go to the Standing Committee, we only take up to a fifth or a tenth. Only two members are seated in the Standing Committee with 20 members. The rest aren’t in the Standing Committee, and instead they established a Complaint Standing Committee. They tell us that we can voice ourselves in any Standing Committee but we want to exercise our rights to oppose decisions. We are in a situation where we are limited by the legal environment.

Still we are expressing our position as the opposition. There are criticisms that it’s insufficient and weak. We do have places where we lack knowledge and can’t do populism effectively.

We are limited even in media environments. We think that it’s more beneficial if we voice ourselves based on substantial and researched facts in order to keep policies fair and correct.

Link to interview

B.Batgerel wins bronze at Judo Grand Prix in Georgia

March 26 (UB Post) The Judo Grand Prix was held in Tbilisi, capital of Georgia, from March 21 to 23. Mongolian judoka and International Sports Master B.Batgerel won a bronze medal in the men’s 66 kg division.

B.Batgerel had a bye in the first round and defeated a Georgian judoka. At the semi-finals, he was beaten by Russian judoka Kamal Han-Magomedov. He defeated Georgian judoka Tristan Peikrishvili and Kazakh judoka Yeldos Zhumakanov at the match for bronze.

Mongolia was represented by nine judokas.

Mongolian judoka A.Batzul placed fifth in the women’s 57 kg division and Ch.Azzaya placed seventh in the women’s 52 kg.

A total of 191 judokas from 24 countries participated in this year’s Judo Grand Prix.

Link to article

Ariunaa Suri showcases her collection at Mercedes Benz Fashion Week in Tokyo

March 26 (UB Post) Mongolian designer Ariunaa Suri presented her collections at the Mercedes Benz Fashion Week in Tokyo, on March 22.

This was her second time taking part in the event that defines future trends of the fashion world. This time, her show mainly focused on men’s wear made of pure linen materials. Mongolian models Ch.Subedei, Ts.Michihdmaa, S.Tugs, Yu.Baljidmaa and I.Tugsuu wore her designs to songs of The Lemons rock band of Mongolia from their new album.

The Mercedes Benz Fashion Week is held twice a year in the world’s fashion capitals, during which, the trends for the next season are born from the latest collections that are unveiled. The Mercedes Benz Fashion Week Tokyo is hosted by the Japan Fashion Week Organization and held on March and October.

Founder and Chief Designer of the brand, Ariunaa Suri is a Mongolian designer whose passion is creating fashion for individuals and unique people. The brand was established in 2011.

Ariuna has worked as a creative designer in Berlin after her 10 year study and research on clothing in Bremen, Germany.

For her designs and collections, she urges assimilation of the Mongolian nomadic ethic with Western style and reflecting it in the mixed soft hues by organic fabrics such as wool, cashmere and leather of live stocks from the steppe of wild weather.

Ariuna Suri’s brand principle is “Mystery of In-Between.”

According to her philosophy, we are a dweller between the West and the East where the culture, lifestyle and history of art are divergent.

The inspiration of the outfits is rooted in Mongolian traditional extraordinary costume’s unique pattern, elements and motivation.

Also the punk urban looks of her FW14/15 Collection is mixed with slight themes, Nomadic Ethic and Western styles by neutral and the intermediate colors in the natural fabrics.

The sense of freedom in the collection is inspired by wild nature of Mongolian endless steppes and exotic tradition of non-sedentary nomads.

Link to article