Mongolia Brief September 2, 2014 Part III

Secretary-General of National Security Council of Turkey Pays Official Visit to Mongolia

September 2 (infomongolia.com) Representatives of National Security Council of the Republic of Turkey headed by Secretary-General and Governor Muammer Turker are conducting an official visit to Mongolia on September 02-04, 2014.

This visit is significant in the scope of the 45th anniversary of the establishment of diplomatic relations between Mongolia and Turkey.

During the visit, Governor Muammer Turker will hold a bilateral meeting with Secretary of the National Security Council of Mongolia Ts.Enkhtuvshin discussing all relevant topics between the Councils and touch upon issues on regional and international concerns.

Also, Secretary-General M.Turker will pay a courtesy call on the President of Mongolia Ts.Elbegdorj and to meet Foreign Minister L.Bold.

Deputy Minister of Health J.Amarsanaa Expresses Gratitude to Arjia Rinpoche, Head of Tibetan Mongolian Buddhist Cultural Center

September 2 (infomongolia.com) As part of his Charitably Projects, the Head of Tibetan Mongolian Buddhist Cultural Center in the United States, Arjia Rinpoche has successfully accomplished a project to construct a Hospital for Children with Blood Disease and Cancer in Ulaanbaatar (Cancer Care Treatment Center for Mongolian Children), where a grand opening ceremony was held on August 28, 2014.

On September 02, 2014, Deputy Minister of Health J.Amarsanaa received in his office the honorably Arjia Rinpoche to show his respect and profound appreciation for invaluable contributions in Mongolia’s health sector, particularly, helping Mongolian families whose children suffer from cancer.

During the meeting, Deputy Health Minister noted, "I experienced this project with great enthusiasm. I would like to express my many thanks again for your holy deeds initiating to fundraise campaign and donating the Cancer Care Treatment Center for our future generation in the meantime of current Mongolia’s economical and fiscal crises. Following your experience, we will implement a project to build a hospital to fight children dental caries regardless of the state budget”.

Today, Arjia Rinpoche accomplished and has been implementing other Charitable Projects as follows:

- Earthquake Relief Project to helping victims of the earthquakes occurred in Jiegu, Tibet (Qinghai Province)

- The Multi Education Editing Center (MEEC) to publish the Golden Rays Sutra written in Tibetan and Mongolian languages

- Libraries for Children of Tibetan Refugees in Dharamsala

- The Tofu Project to provide for large scale tofu production at Tibetan monasteries in exile

- Monastery Medical Project for Tibetan monks living at Tashi Lhumpo Monastery in South India who suffer from stomach problems.

Mongolian Academy of Sciences and National Research Council of Italy to Continue Scientific Cooperation

September 2 (infomongolia.com) Mongolian Academy of Sciences (MAS) and National Research Council of Italy have established a Memorandum of Understanding on Cooperation in Ulaanbaatar on September 02, 2014.

In the frameworks, parties will collaborate in archaeology, paleontology, physics, society, biology, medicine and geological spheres.

The two organizations first established a Memorandum of Understanding in September 2000, then an Agreement of Cooperation in 2003 and the latter document was renewed by inking a Memorandum of Understanding in 2010. In the scope of the document signed, parties have been partnering over 10 years to study Khunnu (Xiongnu) era archaeological findings under the management of Prof. Bruno Marcolongo.

Since 2010, MAS and University of Molise have conducted joint excavation and research on a grave site refers to the Khunnu period found near Rome, where some Mongolian experts were practiced there.

Promising start for the new academic year

September 2 (UB Post) Mongolian President Ts.Elbegdorj welcomed the 2014-2015 academic year by hosting a television lesson on Monday, under the topic “Productive Education – Productive Citizen: Education – For every child’s benefit”.

His sixth TV lesson about being productive and selfless was broadcast across the country through MNB, USB, HD Mongol, and Education channels at 10 a.m.on September 1.

This year, students of Future Complex High School and School No.12, as well as the Minister of Education and Science L.Gantumur and teachers who implemented a new elementary education program, attended the lesson.

To commemorate the new academic school year, Speaker of the Mongolian Parliament Z.Enkhbold attended the opening ceremony of the 2014-2015 academic year at the Construction and Polytechnics College of Mongolian University of Science and Technology, and Prime Minister N.Altankhuyag attended the opening of Secondary School No.92 in Bayanzurkh District. Deputy Prime Minister D. Tegbishdagva and Minister of Education and Science L.Gantumur also gave speeches at School No.9 and School No.35 respectively.

Eighteen brand new schools, 45 kindergartens and 24 school dormitories were commissioned for the new school year and 59,352 children were registered for grade 1.

In the new academic year, every school across the country will be using a new elementary education program, which focuses on developing the talents and skills of children and providing a proper education in ethics. Two million copies of 95 textbooks and over 100 copies of 65 books were newly published for the elementary education program.

PM attends opening of the new academic year at School No. 92

September 2 (UB Post) Prime Minister N.Altankhuyag attended the opening ceremony of the new 2014-2015 academic year at School No. 92 on September 1.

School No. 92 was established in 1991 and has a new school building this year. Over 1,700 children attend this school and it has successfully implemented the “Skill” program. Over one thousand students from the school are training in 16 different clubs and have made many artistic and athletic achievements.

During the ceremony for the opening of the new academic year, PM N.Altankhuyag presented gifts to 10th grade student B.Garidmagnai, who earned a silver medal in the Asia Cup International Chess Tournament; 2014 graduate Ts.Buyanjargal, who got 800 points on the university general admission exam and is enrolled at Mongolian National University; and 1st grade student G.Buyanjargal, who is starting her first year of school.

The Prime Minister pointed out that the school enjoys success in a wide range of teacher, child and parental cooperation. “School No. 92 is a model school for this kind of cooperation. Planting trees around the school with parent’s involvement and cooperation in skills education for children is heartwarming,” underlined the Head of Government. N.Altankhuyag told the students to study hard, not for good grades, but for developing themselves and trying hard, reading more to become good people in society.

The Office of Media and Public Relations of Parliament reports that a total of 59,352 children are newly enrolled in primary education. This is the highest number recorded in the past 20 years. The Chairman of the Department of Strategy and Policy Planning of the Ministry of Education and Science B.Nasanbayar reports that this year primary education will be provided according to a revised program throughout the nation.

Dangerous food coloring content found in domestically manufactured products

September 2 (UB Post) The Ulaanbaatar City Specialized Inspection Agency (UCSIA) reported on Monday that it found contents of three food additives banned in the United States and Hungary, in food products manufactured and sold in Mongolia.

Domestic bakeries, dairy farms and meat products manufacturers are using E123, E127 and E952 food additives for coloring, said agency officials. The UCSIA has issued official demands to manufacturers to cease the use of the harmful additives. The agency warned that the names of the manufactures that use the unauthorized food coloring will be revealed if they do not comply with the demand.

Officials highlighted that the warned companies include several of Mongolia’s major food manufacturers.

Currently, 80 out of 97 types of food additives used by Mongolian manufacturers are not included in the list of permitted additives, in accordance with the Food Additives General Standards.

The agency inspected 30 types of food additives used for 274 types of food products, seasonings used in 65 public food chains and restaurants, as well as 43 types of products retailed by food additive importer companies.

The three additives reportedly cause liver malfunctioning, poor fetus development and asthma. Permitted food additives are used for flavoring, processing food and for extending expiration dates of food products.

Foreigners interested in investing in Mongolia investment fund

September 2 (UB Post) Below is an interview with B.Dolgorsuren, director of the New Financial Products and Services Division at the Financial Regulatory Commission, about investment funds.

How many regulations following the Investment Fund Law will be approved? Are there any regulations already approved and started taking effect?

Nearly twenty regulations following the Investment Fund Law are expected to be approved. Currently, five regulations for establishing an investment management company and establishing an investment fund are in effect. The remaining regulations, such as regulations for accounting and regulatory funds, are being drafted with technical help from the World Bank. We invited specialized foreign consultants to cooperate on preparing regulations, such as regulations for establishing an investment fund or an investment management company and accounting. Therefore, regulations we release are in conformity with international standards. In short, an investment environment familiar to foreign professional investors is being created. Trust is vital for the financial sector, for the sector relies on trust, operates on trust, and improves based on trust. Since each and every regulation is in conformity with global standards, it’s indisputable that investors will start to trust doing business here.

Since an international standard investment environment is being created, both foreign and domestic investors must be conveying interest. How many companies so far have proposed establishing investment funds?

According to the Investment Fund Law, only an investment management company has the right to establish an investment fund. Presently, two legal entities have obtained investment fund management licenses from the Financial Regulatory Commission and started operating. They have been conducting research for establishing their investment funds.

Are there any difficulties for establishing an investment fund?

There was one particular difficulty when investment funds started operating. It was custodian activity. In association with Mongol Bank, we resolved establishing a custodian bank in the financial market. The relevant regulation is approved. The very first license was granted to Golomt Bank in accordance with the regulation. This means that financial sector infrastructure creation has begun. Hence, a custodian bank can be adopted in Mongolia from now on. To conclude, at the end, a legal environment for investment funds has been created.

It’s been said that meetings with foreign investors regarding investment funds had been organized?

Yes. Japanese entrepreneurs are interested in it. A special meeting with them had been organized. Entrepreneurs from Hong Kong had a meeting with us too.

Did foreign entrepreneurs suggest any amendments to the Investment Fund Law?

Some regulations are not approved yet. There is an issue regarding dual registration. Foreign investors are eager to know how to register in Mongolia. We will cover these issues in detail in the regulations. There are not any significant obstacles other than these.

Are foreign investors interested in directly establishing their investment funds and to start working?

The Mongolian economy has some issues, such as being affected by the financial crisis following the global crisis and its small size. Foreign investors chiefly note one point, that Mongolia will not always be in crisis as it is presently. There is an obvious interest among them in establishing their investment funds, even in small size, prior to future economic growth. Since there would not be much space left in the Mongolian financial market for others after the entrance of a few big investors, foreigners are highly interested in investing in Mongolia.

Will there be any positive repercussions on the economy in coming years once the necessary regulations are finalized and investment funds are established?

We expect to attract a huge amount of foreign investment through investment funds. Mongolia has its own unique qualities. Not every citizen has savings and is accustomed to playing the capital market. It’s a country that does not have expendable funds. Therefore, we see investment funds as a new means to attract foreign investment. Professional investors come through investment funds. Following them, their technologies, policies and management comes. Hence, Mongolians will have an opportunity to learn.

Some specialists say that establishing big funds with state participation is not a proper solution. Instead, an environment for establishing numerous private funds should be created, and private funds should be spontaneously developed. What is your opinion on this view?

In any case, the state must have some degree of regulation on investment funds. This does not mean the state should establish every fund. It’s not only about supporting the financial market. We see the possibility for improvements in other sectors such as mining, agriculture and construction.

Are you emphasizing state participation in sectors relevant to state security, such as energy?

You could say that. The Mongolian financial market has one unique aspect: inactivity and lack of trade are not due to legal environment flaws. It’s all because privatization had been conducted in an eccentric way from the beginning. Ownership of privatized companies were taken by a few families who are reluctant to sell shares they accumulated. Secondly, shares of state-owned companies are not sold on the stock market. The companies are merely registered there without any activity. A solution to activate these companies is privatizing and trading their shares through a public through stock market. If we succeed with it, investment funds will come to Mongolia.

What are the benefits ordinary citizens would receive from an investment fund? Currently, the only thing people seem to understand is that their money will increase at a higher rate than savings in commercial bank.

That‘s right. People understand it accurately. The Mongolian financial sector has become a bank oriented financial system. Almost 80 to 90 percent of it depends on banks. The Financial Regulatory Commission prepared the Financial Sector Renovation and Development Program and submitted it to Parliament. I just explained the content of the program above. We are aiming to privatize and split family-owned companies into public owned companies and standardize public property-based companies such as Skytel and Mobicom to sell a certain portion of its shares to the public. State-owned companies, especially mining companies, ought to be privatized. A certain amount of shares of mining companies whose reserves had been estimated with state funds ought to be traded with the public. Public shareholding would result in improved supervision. The state would obviously hold shares in strategic sectors. But ten to twenty percent of shares should be owned by the public.

Will everything you just mentioned be overseen by regulations?

Regulation means law. Of course, certain laws might be amended. There are issues such as exemption from surplus value taxation. Investment fund is chiefly a means to attract investment. Secondly, management to attract investment ought to be created.  Thirdly, following investment funds, other capital markets ought to be developing. I’m alluding to stock market expansion due to investment funds and further privatization due to stock market growth. Considering these points, it’s an indisputably huge policy.

Representatives of financial sector organizations of Asia-Pacific Economic Cooperation (APEC) member countries are supervising in Mongolia for the first time. Can we understand that functions of these organizations are similar to that of financial regulatory commissions in Mongolia?

Market regulatory organizations from APEC members countries have arrived. You can say that representatives of these organizations with the same rank as a financial regulatory commission have arrived. A five-day seminar on government regulations of investment funds is taking place. Investment funds are a brand new concept for us. We are aiming to mutually exchange experience and learn from the mistakes and findings of countries which have twenty years of experience with investment funds. Countries with development like ours, such as Sri Lanka and Laos, have arrived as well. We have so much to learn from these countries as well. We aim to mutually exchange research we have conducted. From Mongolia, Mongol Bank and the Ministry of Finance are also attending, in addition to the Financial Regulatory Commission. Government policy on investment fund regulation ought to be united. Mongol Bank, the Ministry of Finance and the Financial Regulatory Commission ought to be looking at investment funds from the same perspective. And they are attending the seminar for that purpose.

What did leaders of APEC member countries’ markets say on the first day of the seminar?

First of all, we heard the experience of Australia, which has the leading financial market in this region. Korea experienced considerable growth through its investment funds. We also heard Korea’s experience. Pension funds of these countries are separately developed as investment funds.

Source: Udriin Sonin