Mongolia Brief September 12, 2014 Part IV

Mongolian delegation to visit Russia

By N. Khaliun

Ulaanbaatar, September 12 (MONTSAME) At invitation of the Chairman of the Constitutional Court of Russian Federation V.Zorkin, a delegation led by Mr.J.Amarsanaa, the Head of the Constitutional Court of Mongolia, will pay an official visit to Moscow September 15-20.

The delegation will hold official meeting with Mr Zorkin to exchange views on expanding of the cooperation and relations between the Constitutional Courts, meet with members of the Constitutional Court in order to share views on the judicial activity, a contribution and experience in a formation of the constitutional rights, on tendencies and development of national and international laws. They also plan a business meeting with the chairman of the Russian Supreme Court Vyacheslav Lebedev.  

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Stock exchange news for September 12

By B. Khuder

Ulaanbaatar, September 12 (MONTSAME) At the Stock Exchange trades on Friday, a total of 14 thousand and 797 shares of 20 JSCs were traded costing MNT five million 755 thousand and 625.60.

"Genco tour bureau” /12 thousand and 636 units/, “Arig gal” /508 units/, “Merex” /487/, “E-trans logistics” /410 units/ and "State Department Store” /240 units/ were the most actively traded in terms of trading volume, in terms of trading value were "Material impex” (MNT two million 257 thousand and 600), "Arig gal” (MNT one million 168 thousand and 630), "Genco tour bureau” (MNT one million 036 thousand and 452), "Talkh chikher” (MNT 331 thousand) and "Mon-it buligaar” (MNT 240 thousand).

The total market capitalization was set at MNT one trillion 611 billion 073 million 501 thousand and 268. The Index of Top-20 JSCs was 15,748.49, increasing 90.86 units or 058% against the previous day.

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Minister of Education receives the Nanjing 2014 medalists

By B. Amarsaikhan

Ulaanbaatar, September 12 (MONTSAME) The Minister of Education and Science L.Gantumur received Thursday the pupils who succeeded in the Nanjing-2014 Youth Olympics.

The Minister congratulated them on their sports skills and on winning medals among the athletes from 204 countries. 

Sports master of free-style wrestling, B.Dulguun won a silver medal in the Youth Olympics and had the Mongolian flag glorified at the podium. She competed in women’s 46kg category of free-style wrestling in the second Youth Olympics this year, defeated rivals from Bulgaria, Algeria and Venezuela at a run and was defeated by Kim Sonyan from DPRK at the final with 5:9 points.

Five Mongolians took part in the tournaments, M.Ankhtsetseg was ranked at fourth, Ts.Khulan at seventh, and N.Angirmaa at eighth.  

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Speech by President Vladimir Putin at First Formal Trilateral Meeting between Heads of State of Mongolia, Russia and China

September 12 (infomongolia.com) On September 11, 2014, following the President of the People's Republic of China Xi Jinping's statement, the President of the Russian Federation Vladimir Vladimirovich Putin has also delivered a speech on Mongolia's proposal on hosting "Ulaanbaatar Meeting" during the first trilateral meeting between Mongolia, Russia and China held in Dushanbe, Tajikistan.

In his speech President V.V.Putin said, “Mr. President, we are grateful for your initiative to meet in this format, and I am sure the President of the People’s Republic of China will confirm this.

We have recently visited Mongolia with great success. My visit was timed to the 75^th anniversary of the Battle of Khalkhiin Gol. I would like to note in this connection that Russia and China bore the brunt of the attack from both Nazi Germany and militarist Japan. The events of those years are close to our hearts, despite the fact that they occurred over 70 years ago. Mongolia actively helped the Soviet Union during the Great Patriotic War and we will always remember that.

Next year we will be marking 70 years of Victory in the Great Patriotic War. I already had the pleasure of inviting the Presidents of the People’s Republic of China and Mongolia to visit Moscow during these gala events. I would like to confirm my invitation.

Naturally, the geographic proximity of Mongolia, Russia and China help us implement beneficial long-term projects in infrastructure, energy and mining. We have things to discuss and we find it important, feasible and useful to establish a regular dialogue.

I would also like to thank Tajikistan for giving us the opportunity to meet in this format today.

First of all, let me speak a few words about the international situation. We all strive to strengthen stability in Central and Northeast Asia. We should consider the form of the three-party meeting. Also, Mr. President Xi Jinping suggested some solutions and in this regard the meeting between the heads of state of the three countries can be organized during the SCO Summit, which is regularly hosted in one of the SCO member-states’ cities. The next Summit is scheduled in Ufa city of the Russian Federation in July 2015.

I think it is a quite feasible solution to co-organize three-party meeting at Deputy Foreign Minister-level proposed by President of Mongolia. The implementation of this initiative also raises the tripartite meeting’s value and we need to develop the organizational issue at Foreign Ministries-level.

Also, our future perspective of joint cooperation is considered on organizing joint works based on modernization of the UBTZ (Ulaanbaatar Railways JSC) and its parts stretched on Russian and Chinese territories. We are also acknowledged about Silk Road Project and it can be tied up with other Russian projects. Moreover, the Steppe Road exists.

It is possible to transmit power lines through the territory of Mongolia, if the Chinese and Mongolian sides are interested. We can collaborate in the projects of environment protection, health care, agricultural and environmental spheres and our affiliated ministries and organs are suggesting to conduct a narrow studies on these matters, after which, it might be decided based on economic benefits and other calculations.

Our three-party meeting is a symbol of auspicious being organized during the SCO Summit. We, all member-states of the SCO, believe that our Mongolian friends would make its decision to become a full member of the Shanghai Cooperation Organization.

Thank you".

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Regaining Credibility

September 14 (UB Post) Institute of National Strategy article series

Mongolia’s ability to attract third neighbor investors and financiers to support funding of it’s huge development agenda has deteriorated. Providers of capital are seeking answers to two basic questions while considering lending or investing in Mongolia.

1. Is the Government of Mongolia supportive of an empowered private sector and is it proactively resolving business disputes?

2. What is the winning strategy that will turbocharge the economy?

Opinion by Cameron McRae

“In the Democratic Transition, Mongolia committed to three fundamental reforms: respect for human rights; open, democratic government; and an economy led by the private sector, not dominated by domestic or foreign state-owned companies. Mongolia’s support for human rights and political participation is beyond question. Where Mongolia has struggled is in the third reform: developing an independent, private-sector economy. Our Six-Point Plan will advance Mongolia rapidly to this goal of developing competitive industries that create jobs. With government’s focused leadership, we are confident that business will create the growth and employment that Mongolia needs.”

This is the closing paragraph from a paper written by six Mongolian business leaders, myself and an international bank, aided by McKinsey and the Economic Policy and Competitiveness Research Centre (EPCRC), Mongolia, that was presented to President Elbedorj in August 2012. The report was titled “A six-point action plan for Mongolia: Enabling business to create employment and growth”.

The six-point action plan (6PAP) thesis was that with government creating an enabling environment and proactively supporting private sector businesses, both domestic and international, then business would attract international finance and investors-partners for high quality projects which would fuel sustainable growth.

From a strategic perspective 6PAP recognized the continuing importance of agriculture, the upside from tourism, some potential viable areas of downstream processing, the potential for exporting power and the prospects for a mining service sector. This was not meant to preclude strategic consideration of other areas of economic endeavor but rather to focus attention on where Mongolia may build a competitive position relatively quickly.

The six pillars of 6PAP

Pillar 1. Stabilizing the economy

The reality is that government debt continues to rise quickly, credit lines are shrinking and becoming much more expensive. Balance of payments deficits continue and FX cover has dwindled to three months. Given the state of the national finances it is difficult for the GoM to continue stimulating the economy with large QE measures alone. Encouraging stimulatory programs driven and funded by the private sector, to build a stronger Mongolian economy takes the pressure of the GoM balance sheet.

Pillar 2. Create policy and regulatory stability

Mongolia has had a history of political populism and unpredictability towards international investors, and in particular towards the flagship OT project. While the OT dispute remains unresolved it is salutary that the GoM’s PR engine is now much less populist and more balanced in how it deals with the issues of supporting investment, both international and domestic. Resolution of the OT dispute in a way that is seen to honor the existing agreements will be very well received by the major banking institutions and international investors.

Pillar 3. Reduce GoM’s role in business and streamline bureaucracy

The parliament is debating the concept of not owning and over-managing the economy, which is understandable since Mongolia was once part of a strict communist regime. The reality today is that the GoM cannot afford to adequately fund government companies, or buy into new ventures (such as strategic mining deposits), and the track record in running SOE’s without political interference and to international standards is poor.

Pillars 4 and 6. Develop a prioritized and fundable infrastructure plan PLUS deliver critical infrastructure projects

The 6PAP recommended a) a short list of priority projects be developed and intensively supported through all stages of development, and b) that projects pass a “market needs test” and can be commercially funded.

The 6PAP targeted five critical development areas:

A. Power and heat generation
B. Power and heat transmission
C. South Gobi to China rail links
D. Urban roads and airport
E. Water sector

Pillar 5. Stabilize and strengthen the mining sector

Finalization of a competitive and world-class mining policy and the ensuring legal changes is critical and long overdue. This is work in progress and it is imperative that the GoM gets this 100 percent right. Mongolia is seen as a frontier mining economy and it needs to be extremely competitive in all stages of the mining process to ensure that international companies and financiers support “high standard” junior, mid and large scale exploration and mining.

INS Commentary

Senior leaders are thinking deeply about the Mongolian situation. They know that advancing Mongolia’s economy requires access to international capital, best technologies, and to the right business partners.

To attract these essential components to Mongolia is no simple job, especially when the developed world is working through its own economic challenges and the developing and frontier economies are all fighting to attract any available capital and investors. Remember, the world is made up of over 200 countries – all fighting for credibility and access to the limited global capital pool.

Changing a country’s destiny is not an overnight or one-year task; it requires a clear vision, unfaltering dedication, and the strength of conviction to see the execution of that vision. Fortunately, some significant steps have been taken but show stoppers also remain in place. Now it is critical that the government, business associations and international experts consult, collaborate, and execute strategies and policies that position Mongolia as a competitive and reliable frontier investment destination.

More importantly, a new populism needs to take hold in Mongolia; whereby Mongolia is promoted as a country preparing to be a world-class economy, comprising highly competitive businesses and a business enabling government sector.

Winning the confidence of banks, investors and world class companies should be the highest priority for the political parties of Mongolia.

The complete version of Article 2 in the INS series can be found at http://nationalstrategy.mn/

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First Mongolia-Russia-China trilateral meeting held during SCO Summit

By Ch. Khaliun

September 14 (UB Post) Mongolian President Ts.Elbegdorj attended the 14th summit of the Council of Heads of the Shanghai Cooperation Organization Member States and hosted the first trilateral meeting of the three state heads of Russia, China and Mongolia, in Dushanbe, Tajikistan.

Below are excerpts from the President’s speech opening the meeting and his proposal for continued discussions through the Ulaanbaatar Dialogue:

“I extend my gratitude to you for participating in the current trilateral meeting of the heads of state organized at the initiative of Mongolia… Today we have gathered to discuss issues related to organizing the high-level ‘Ulaanbaatar Meeting’ aiming to enhance mutually fruitful trilateral cooperation between Mongolia, the Russian Federation and the People’s Republic of China.

“Mongolia’s initiative to organize a trilateral high-level meeting of the heads of state in Ulaanbaatar is to develop long-term, friendly and neighborly relations with Russia and China. There are a number of issues concerning infrastructure and transit transportation, which need to be addressed by trilateral discussions, as the three countries border with large territories… Mongolia is able to have an outlet to the sea only through the territories of its neighboring countries. Mongolia sees itself as the shortest and the most secure transport infrastructure hub for Russia to exit from Europe to Asia and for China to exit from Asia to the European market.

“At today’s meeting, Mongolia is proposing the following three issues to discuss, exchange opinions and reach a consensus. First, exchange views to reach common consensus on the above mentioned basic principles on organizing the trilateral meeting in Ulaanbaatar, between Mongolia, Russia and China.

“Second, implementing the ‘General Intergovernmental Agreement on Developing Cooperation in Railway Transit Transportation’ signed between the governments of the three countries during the visits of President Xi Jinping and President Putin, and organizing a trilateral working group meeting in Ulaanbaatar this year. Also, there is an opportunity to organize such tripartite working group meetings to study the opportunities to stretch the “Western Corridor of Natural Gas” through Mongolian territory.
“Third, I would like to request Mr. Xi Jinping and Mr. Vladimir Putin’s support for Mongolia on joining the Asia-Pacific Economic Cooperation (APEC) as a member-country, during the APEC Forum in November 2014. To prepare for the high-level Ulaanbaatar Dialogue, I would like to propose an initiative to schedule an annual Deputy Foreign Minister meeting between the three countries and organize the first meeting in Ulaanbaatar this year. I hope the first trilateral high-level meeting will successfully take place in Ulaanbaatar, intensifying trilateral cooperation and partnership between the three countries. I am confident that our fruitful cooperation would contribute not only to the people of our three countries, but also to development in the region.”

President Putin and President Xi Jinping gratefully accepted President Ts.Elbegdorj’s initiative. Putin said, “My visit to Mongolia was timed on the 75th anniversary of the Battle of Khalkhin Gol. I would like to note, in this connection, that Russia and China bore the brunt of the attack from both Nazi Germany and Imperialist Japan. The events of those years are close to our hearts, despite the fact that they occurred over 70 years ago. Mongolia actively helped the Soviet Union during the Great Patriotic War, and we will always remember that.

“Next year we will be marking 70 years of victory in the Great Patriotic War. I already had the pleasure of inviting the presidents of the People’s Republic of China and Mongolia to visit Moscow during these gala events. I would like to confirm my invitation.

“Naturally, the geographic proximity of Mongolia, Russia and China help us implement beneficial long-term projects in infrastructure, energy and mining. We have things to discuss and we find it important, feasible and useful to establish a regular dialogue.”

Putin added that he hoped Mongolia would decide to become a full-fledged member of the SCO.
President Xi Jinping proposed building an economic corridor linking China, Mongolia and Russia and put forward the proposal on the sidelines of the 14th SCO Summit.

The “Silk Road Economic Belt” initiative, proposed by Xi during his visit to Central Asia last year, eyes a revival of the ancient trade route linking China with Central Asia and Europe.

China believes that the three countries can dovetail the Silk Road Economic Belt initiative with Russia’s transcontinental rail plan and Mongolia’s “Prairie Road” program, and jointly build a China-Mongolia-Russia economic corridor.

The Chinese president called on the three sides to strengthen traffic interconnectivity, facilitate cargo clearance and transportation, and study the feasibility of building a transnational power grid. Xi also suggested that the three countries beef up cooperation in such areas as tourism, think tanks, media, environmental protection, and disaster prevention and relief. The three countries should deepen cooperation within the framework of the SCO, jointly safeguard regional security, and achieve common development, said the Chinese leader.

On international cooperation, Xi noted that the three countries need to jointly safeguard the basic norms governing international relations; advocate a new security concept of mutual trust, mutual benefit, equality and collaboration; and jointly promote the political resolution of international disputes and pressing issues.

China supports Mongolia’s participation in regional affairs, said Xi, inviting Mongolia to participate in the activities that China and Russia plan to hold next year to commemorate the 70th anniversary of the victories of the World Anti-Fascist War and the Chinese People’s War of Resistance Against Japanese Aggression, as well as the 70th anniversary of the founding of the United Nations.

Noting that the three countries are good neighbors and partners, Xi said the trilateral summit is of great significance to deepening mutual trust, promoting win-win cooperation among the three parties, and pushing forward regional cooperation in Northeast Asia.

President Xi Jinping added that China supports Mongolia’s bid to join APEC, Mongolia’s initiative to host the Ulaanbaatar Dialogue, and appropriate participation in Northeast Asian mechanisms.

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