Thursday, August 28, 2014

Mongolia Brief August 28, 2014 Part I

Energy Minister Meets China’s Inner Mongolian Delegation
By B. Khuder
Ulaanbaatar, August 28 (MONTSAME) The Minister of Energy M.Sonompil Wednesday received a delegation headed by Mr Wang Yuching, a director of energy company of Chinese Inner Mongolia.

The Minister noted that "this meeting is held after the state visit of China’s President Xi Jinping to Mongolia", during which the leaders of the two states exchanged views on the cooperation in the energy field and concurred to focus attention on establishing a long-term contract for this sector. "It definitely will contribute to our cooperation,” Mr Sonompil underlined.
After this the sides shared views on expanding the collaboration between our Ministry of Energy and the Chinese Inner Mongolian energy company, and consolidated their positions over several issues.

General Customs Authority to Cooperate with USAID
By B. Khuder
Ulaanbaatar, August 28 (MONTSAME) The General Customs Authority (GCA) will cooperate with the United States Agency for International Development (USAID) in modernizing activities for easing the external trade of Mongolia.
A related to it memorandum of understanding was signed Thursday by O.Ganbat, the head of the GCA, and by Mr Richard Chen, the acting USAID Representative to Mongolia.
A realization of the document is to allow the GCA to reduce a pressure over businessmen, to carry out the audit after customs formalities, to implement the risk management and to utilize information technology.
In addition, the USAID will refine an automatic information system of customs, provide the GCA with an opportunity to use a module of customs tariff, give technical assistance to the GCA’s after-formalities audit inspection department, to section of risk management and the IT center. Staffers of the authority will be involved in mid-career training as well. 
With an aim to facilitate the external trade through this document, the USAID will also back the private sector’s participation in all reform activities being run in order to make the customs bodies and actions more effective and transparent, to augment the revenue of state budget, and to save  businessmen' time in performing the customs formalities.

Natural Studies Labs to Open at Schools
By B. Amarsaikhan
Ulaanbaatar, August 28 (MONTSAME) A 700 million togrog worth equipment of laboratories used for natural studies subjects in secondary schools presented to the Ministry of Education and Science by the Government of Japan in a scope of non-refundable aid.
In a scope of our government's last year programme “Innovation policy for improving quality of primary and secondary education”, such labs were given to 100 schools. In future, all schools will receive the latest laboratories, as the Ministry of Education claims.
As known, the Japanese government had decided to grant JPY 200 million (over two million US dollars) of non-project non-refundable aid to our government, and then the parties signed an official note, by which the Mongolians aimed to purchase medical and educational equipment.
This aid promotes developing countries' structural reform policies, reduces a deficit of payment balance, and lets import substantially important products. Since 1991, Mongolia received this aid ten times, which eased our transition to market economy, improved economic structure and decreased foreign trade deficit.

Niigata Mayor Visits Khovsgol Province
By B. Amarsaikhan
Ulaanbaatar, August 27 (MONTSAME) Delegates led by the Mayor of Niigata prefecture of Japan made a working visit in Khuvsgul August 27.
During the visit, the two parties signed a memorandum of cooperation. The delegates also visited a local museum and an archeological site–Deer stones of Uushig in Tuya baga, Burentogtokh soum, and were introduced to the life of a Mongolian herdsman household.
Khuvsgul aims to cooperate and to share experiences with Niigata of Japan in foreign relations, tourism, health, and education spheres.

Benches Installed in City Streets
By B. Khuder
Ulaanbaatar, August 28 (MONTSAME) The city administration Thursday reported that 1,000 benches costing MNT 350 million have been installed in streets of the capital city.
"This will improve the city's appearance and will create a comfort for people, all this work is dedicated to the 375th anniversary of Ulaanbaatar," the city officials say.
Out of these 1,000 benches, differently-styled 400 ones were bought from the domestic producers to support their business and have been located together with garbage bins in the streets such as the Tourists’, the Great circle, the Square of Chingis Khaan and the Ard Ayush street. 

German Mongolist Arrives
By B. Amarsaikhan
Ulaanbaatar, August 28 (MONTSAME) Mongol studies scholar and an administrator of a website, which provides the German with reliable information about Mongolia, Eike Andreas Seidel is here to make some tours and run talks. 
He studies here an impact of globalization, mainly writes about how an exploitation of minerals and uranium affects Mongolia’s population and animals. He has visited Mongolia eight times since 1989, in 2008 started collaborating with Mongolian civil society involved in environment protection.
The scholar had once donated 1,500 euros, collected on the occasion of his 65th birthday, to an NGO of "Medical doctors against nuclear weapon". In the UB city he intends to discuss nuclear issues with related people. 

Intellectual Sports Athletes to Partake in Open Tournament
By B. Amarsaikhan
Ulaanbaatar, August 28 (MONTSAME) Mongolian Intellectual Sports team has headed to Mumbai city of India to partake in Intellectual sports open tournament which will run on August 31.
The 3-people team has been headed by a director of Intellectual Academy of Mongolia, international 2nd class intellectual umpire Kh.Khatanbaatar.
The tournament is supposed to gather some 67 intellectual athletes to have them compete in ten categories of visual and hearing memory tests.
In previous events in Manila of Philippines in June, the team members E.Enkhmunkh won two gold, five silver and two bronze medals, T.Enkhjin--three gold, one silver and three bronze medals, and S.Tsogbadrakh--three gold and one bronze medal. They had won 19 of possible 30 medals, by the team total score they had taken a second place. By memorizing 1,408 ciphers in the category of “Number Marathon”, Tsogbadrakh had broken the world record.

Mongolia-China-Russia economic forum held
August 28 ( The Mongolia-China-Russia Economy and Trade Partnership Forum and Exhibition was held in Erenhot, Inner Mongolia Autonomous Region, from August 19-24, 2014.
The event was carried out to expand economic and trade cooperation and create new markets and partnerships between the neighboring countries.
The Forum and Exhibition was held with theme of “Broad Trust, Innovation Development and Cooperation", with a focus on national manufacturing, an import goods exhibition, project promotion, and a trade fair.
Senior expert from the Infrastructure and Improvement division of the Khan-Uul District Governor's Office D.Baasangarav, Economy and Planning Division expert U.Namuun and expert from the Small and Medium Enterprise Support Center N.Odontungalag attended the forum and exhibition.

First phase of the Auto Trade Complex construction begins
August 28 ( The foundation stone laying ceremony of the first phase construction of the Auto Trade Complex in the 32ndkhoroo in Songinokhairkhan district was held on August 27th.
Sales centers for used cars, parts, and equipment in 34 locations in Ulaanbaatar will be moved out of the city when the parking lot is finished in the first phase of construction. The Auto Trade Complex is part of the Ulaanbaatar Master Plan through 2020 and urban-redevelopment.  Officials believe such a move will be effective for the reduction of air and soil contamination and traffic congestion in the city.
The Auto Trade Complex will feature sales of vehicles, spare parts, tires, oil and lubrication, car insurance services, vehicle diagnostics, license plate number services, tax payment services, leasing services, auto repair, car wash facilities, and advanced driving courses, a driving safety center and a vehicle testing range.
The residential “New City Center” being built for a population of 10,000 will be built near the Auto Trade Complex to encourage residency in the area.
As project operator of the parking and road construction, Eko Togtol LLC, Anandiin Zam LLC, Bat Cubic LLC, and Tegsh Plant LLC were selected and have begun the first phase of the construction. According to the contract, the project operators will complete the first phase of construction by October 1, 2014.

14 mining fields ready for selection
By B. Az
August 28 (Mongolian Economy) The Mineral Resource Authority is ready to announce the first 14 mining areas ready for development in an attempt to overturn last year’s controversial cancellation of 106 mining licenses. Approved areas include six fields in Baynkhongor, three in Dornogovi, one in Dundgovi, Umnogovi, Khovd and Ulaanbaatar. The fields range between 94.49 to 56.098.52 hectares. 
From 2009-2010 the Mineral Resource Authority annulled 106 illegal mining licenses of which some companies have expressed they were honest owners. Now, foreign and domestic investors eagerly await for the Government to make decisions on the relativeterritories for each license. According to the 24 companies possessing illegal licenses, they have invested a total of about MNT 25 billion in early phase development and exploration.
The Law of Mineral Resources has 5 resolutions to annul licenses, while Company Law has 2-3 resolutions that can effect the granting and cancelling of mining licenses. There are no other laws that can have an effect on mining licenses.
“The Mineral Resources Law of 2009 states if a special license has been terminated, cancelled, returned or requested to be reassigned, selection has to be announced,” said Batkhuu B., Director of Department of Policy Regulation and Implementation, the Ministry of Mining. 
“However, the associated companies have neglected that enactment. Thus, the court has decided to announce reselection. Of course, the companies suffered a certain amount of losses. Regulations are being made.” 
According to the regulation, the companies working in the fields must hand in their financial expenses through official statements to an official working group appointed by the Mineral Resource Authority. 
Once verified, selection will be announced where previously involved companies will have superior rights, which means they won’t be charged. Other companies can participate in the selection. However, they have to pay no less than 30 percent of the actual charge. The charge prices will vary depending on the size of the fields. The minimum is about MNT 20 million, while the maximum is MNT 410 million. 

Mongolia trading up
August 19 (Oxford Business Group) In a bid to lower trade barriers and eliminate Customs duties, Mongolia has struck its first major trade deal with Japan, which could pave the way for a broader network of free trade agreements (FTAs) while also boosting its chances of becoming a trade and logistics hub in the years to come.
At the end of July, Mongolia and Japan signed an economic partnership agreement (EPA), which will lift almost all tariffs on goods and services traded between the two countries, according to a joint statement. When the agreement comes into force next year, all Mongolian exports to Japan will be exempt from duties, while Customs will be levied on just 4% of Japanese products coming into the country.
The EPA is Mongolia’s first FTA and should prompt an expansion in mutual imports and exports. Last year, Japan imported just $21m worth of products from Mongolia while exporting $288m, but this is expected to change in the coming years.
“The Economic Partnership Agreement will create a favourable business and investment environment and establish a stable legal framework. I do believe that our two parties can sign and ratify the agreement in the first quarter of 2015,” said Mongolian President Ts. Elbegdorj.  
Pole position
One key element of the agreement is the development of an investor-state dispute settlement (ISDS) framework, which sets out mechanisms for foreign firms operating in Mongolia to seek redress if they believe their business has been unfairly impacted by state policies. In establishing the ISDS scheme, Mongolia hopes that Japanese firms will feel more secure in investing in the country.
There have been concerns in the past that shifts in state policy can leave overseas companies exposed, with changes in the terms governing mining leases being an example often cited. Recent amendments to licensing laws reinforcing the rights of lease holders, along with the ISDS clause in Mongolia’s EPA, suggest it is working to strengthen the country’s appeal as a stable investment destination.
Having been the first to formally reach out to Mongolia with an EPA, the agreement could also propel Japan towards favoured partner status, at least in some fields. With disposable incomes set to grow over the coming years as Mongolia continues to develop its mineral resources, demand for consumer goods, electronics, vehicles and other products should rise sharply.
The EPA could place Japan in pole position to take advantage of any increase in personal spending, while domestically retailers and franchise operators dealing in Japanese goods should also benefit from the lowering of the tax barriers. The advantage gained by Japan could well prompt other countries to step up efforts to open trade ties with Mongolia.  
More FTAs?
While the agreement with Japan has been sealed, more such deals could be in the pipeline. In late May, Mongolian and Russian officials held talks in Moscow to discuss trade ties, according to an online statement by Russian's Economic Development Ministry.
The focus of discussions was the possibility of Mongolia joining the Russian-led Customs Union that has brought down trade barriers between Russia, Kazakhstan and Belarus, with Armenia and Kyrgyzstan also expected to join the fledgling bloc.
According to Alexei Ulyukayev, Russia’s minister for economic development, increased investments by his country in the Mongolian economy, in particular in transport infrastructure, would help facilitate the creation of a free trade zone amongst the countries.
The union, which came into being in 2010 and is seen as a rival to the European Union, has also seen interest from other countries. Ulyukayev said he discussed possible forms of cooperation with the Turkish Economy Minister, Nihat Zeybekci, at the G20 trade ministers meeting in Sydney, in July, with talks focusing on the formation of a free trade zone.  
Corridors of trade
The move towards freeing up trade relations with Russia has been seen as part of Ulaanbaatar’s ongoing strategy to diversify its export markets and maximise trade and business opportunities.
By strengthening ties with Russia, Mongolia would be able to open up a new export corridor to the north as well as boost access to other countries within Moscow’s orbit. This corridor would allow Mongolia to access markets in the booming Asia region and beyond more directly via Russia’s Pacific ports.
Such a corridor could also facilitate imports needed to sustain Mongolia’s development, including the technology and heavy equipment needed to underpin the mining sector, as well as to support the diversification of the economy.
In addition, by reinforcing its own domestic rail network, Mongolia will position itself to be a conduit for trade between Russia and China. This would allow it to benefit from the increasingly close links between the two countries, while also strengthening Mongolia’s own access to expanding markets.
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