The document provides a summary of business, economic, and political news from Mongolia. It discusses several topics, including the Prime Minister prioritizing work on two large mining deposits, a Japanese company obtaining rights to explore three uranium mines, five companies being chosen to conduct oil exploration, and a Mongolian bank partnering with American Express to enable its cardholders to access the bank's ATM network. It also mentions the appointment of a new Central Bank President, plans to import more fuel from Kazakhstan, and a mining company selling its metals division to another company.

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmmongolia.org
info@bcmmongolia.org
Issue 52, January 9, 2009
NEWS HIGHLIGHTS:
Business: Work on mining deposits a priority, says Bayar; Marubeni obtains first rights to three
uranium mines; Companies chosen for oil exploration; Erdenet output to go to Russia
from now on; PM urges banks to be patient with defaulting herders; All board
members of Anod Bank under police scanner; American Express chooses Golomt Bank as
partner; SouthGobi sells its metals division to Ivanhoe; Malaysian firm scraps deal to
buy coal mines in Mongolia; 25 companies chosen for ADB loan to help create national
brands; S. Korea signs MOU with Mongolia on methane.
Economy:L. Purevdorj appointed Central Bank President; “I quit to uphold the Bank’s
independence,” says Batsukh; Expected fiscal deterioration led to rating agency’s
decision on Mongolia; China and Mongolia agree to settle trade accounts in RMB, if
desired; Plans scrapped for budget airline to Mongolia, among other places; Mongolia
to import more fuel from Kazakhstan; Mongolia to buy Chinese fruits worth USD140
million; US agency offers Mongolia funds to curb methane emission; Czech doors closed
on Mongolian workers; China gifts building to MNCCI.
Politics: Bayar says he will not run for President; President noncommittal about seeking another
term; Speculation rife on Presidential hopefuls; Ministers draw up plans to revive
Mongolia-Russia military ties; Government approves 42 agencies, 5 of them new; New
vice ministers appointed; MPRP elects new General Secretary; Compensation for July 1
losses a complex issue: Nyamdorj; MP unhappy expenses do not fall; Ulaanbaatar
mayor gets four deputies.
BUSINESS
WORK ON MINING DEPOSITS A PRIORITY, SAYS BAYAR
At a meeting with journalists as part of the program to mark 100 days of the government, members
of the Cabinet restated their commitment to industrialization, stabilizing the banking system, and
getting the economy going. The Prime Minister said, “Our two parties’ decision to join hands in
forming a government has been proved right. The unity is needed to tackle substantial economic
and social problems. Our present priority is to start work on the two large mining deposits.
Preliminary negotiations are under way and we should be prepared with our offer before February
1.”
Mr. Bayar referred to the difficulties posed by the volatile economic situation worldwide, and
hoped foreign investors would continue to be interested in Mongolia’s mineral resources.
Source: en.News.mn
MARUBENI OBTAINS FIRST RIGHTS TO THREE URANIUM MINES
Marubeni Corp, Japan's fifth-biggest trading company, has obtained first rights to conduct
feasibility studies in Mongolian uranium mines. A company spokesman has said the success of
Marubeni, set to become the first Japanese firm to acquire stakes in uranium mines in Mongolia,
comes at a time when demand for the nuclear fuel is expected to rise as China goes through a
nuclear building spree to boost clean energy use. Marubeni aims to obtain stakes in 2009 in three
mines in Mongolia, the spokesman said, including Dornod and Gurvanbulag, developed by Canadian
firms Khan Resources Inc. and Western Prospector. The company aims to start production in 2012,
he said. It is unclear how much Marubeni will pay to hold stakes in the three mines, as well as for
their development costs. Mongolia, whose uranium mines were abandoned after the collapse of the
Soviet Union, sits on about 2 percent of the world's uranium reserves.

2. Source: thomsonreuters.com
COMPANIES CHOSEN FOR OIL EXPLORATION
The first Government meeting in the New Year, held on Wednesday, chose the successful bidders
for tenders to explore petroleum fields. Product sharing agreements will be signed with the
successful companies after the choices and the agreements are ratified by the National Security
Council.
Several new features will be incorporated in the agreements. For example, the State’s share of the
products will be more, a minimum of USD100,000 will have to be paid to the Government if the
license is transferred, the Mongolian employees hired will have to be paid at rates equal to those
for foreign employees, and Mongolian skilled workers should be considered first when hiring.
MCS Holdings LLC has been chosen to explore the Borzon-VII field, the Chinese-invested Zon Hen Yu
Tan LLC for Galba-XI, Shunhlai Energy LLC for Sulinheer-XXIII, and the Swiss-invested DWM
Petroleum AG LLC will work on Tsagaan Els-XIII and Zuunbayan-XIV.
Source: Niigmiin toli
ERDENET OUTPUT TO GO TO RUSSIA FROM NOW ON
Erdenet, the Mongolia-based copper mining joint venture that is 49% Russian-owned, will ship its
copper and molybdenum concentrates and alloys to Russia from next year, Mr. Alexei Aleshin, first
deputy director of the Russian Technologies (Rostekhnologii) Corporation, said during a recent visit
to Ulaanbaatar. Rostekhnologii manages Russia's stake in the joint venture. Mongolia's Government
owns the other 51%. Mr. Aleshin said Rostekhnologii planned to make a significant contribution to
the mining enterprise's development, buying state-of-the-art equipment for it and putting new
products on line.
Erdenet will start to ship copper, molybdenum and titanium alloys to Russia in 2009. It currently
sells most of its output to China. Erdenet produces some 530,000 tons of copper concentrate and
3,000 tons of molybdenum concentrate from 25 million tons of ore per year. Russia is also mulling
involvement in two new projects in Mongolia: the Tavan Tolgoi coal deposit and the Oyu Tolgoi
copper-gold deposit.
Source: Daily News Bulletin, Moscow; Interfax
PM URGES BANKS TO BE PATIENT WITH DEFAULTING HERDERS
Senior officials of Khan Bank and Mongol Post Bank who called on Prime Minister S.Bayar on Tuesday
to discuss problems posed by some herders’ failure to repay loans were advised to be patient and
considerate as herders were facing special economic hardship now. D.Batsaikhan, Deputy Executive
Director of Khan Bank, rejected some herders’ complaint to the media that the bank was seizing
animals from defaulters. Mr. Bayar requested the bank officials to formulate a more flexible policy
for the herdsmen, and offered government cooperation in easing the present difficult situation.
Khan Bank says 57,200 or 16.7 percent of its total creditors are herders. Even with the low price of
wool, cashmere, and leather last year creating financial problems for most herders, only 2.3
percent of the bank’s borrowers have not been able to repay loans on time. The amount of
outstanding loans in the name of 781 herders stood at MNT 2 billion on December 31, 2008. “We
understood the situation and took several measures to ease the loan repayment schedule for
herders in distress,” said Batsaikhan. In many cases, the loan period was extended and no extra
interest was charged, benefiting some 1,600 herders who owe the bank MNT2.5 billion.
The Mongol Post Bank has revealed that around 30,000 herders who borrowed MNT40 billion from it
are still in arrears with their repayment.
Source: Ardiin Erkh, Montsame
ALL BOARD MEMBERS OF ANOD BANK UNDER POLICE SCANNER
The net in the Anod Bank investigation is now being cast wider, to include all 15 members of its
executive board. Three top officials – E.Gur-Aranz, D.Enkhtur and N.Davaa – have been in police
detention since December 11, but now the Department of Economic Offences in the State
Investigation Agency is satisfied that every member of the board was connected with
misappropriation of the bank’s funds.
Some of them are believed to have anticipated the investigation to turn their way and to have
taken measures to transfer their assets in other names to avoid detection. The inspectors working

3. on the case are confident of success, however, and have been able to locate, identify and seize
some of the misbegotten property.
The assets of the three in jail have already been confiscated.
Source: Ardiin Erkh
AMERICAN EXPRESS CHOOSES GOLOMT BANK AS PARTNER
A partnership with American Express has made Golomt Bank the exclusive merchant, acquirer and
processor of American Express transactions in Mongolia, enabling AmEx cardholders to access the
Golomt Bank ATM network throughout the country. "We are delighted that American Express
selected us as its exclusive partner in Mongolia. American Express enjoys the reputation of a
pioneer and is still the most prestigious of all service providers in the global card business. Some
weeks ago, we launched Mongolia’s first EMV Chip Card bringing the highest standards of global
security and efficiency to the nation's card market. Today, we are commencing the acquisition
business of American Express through our branch, electronic and merchant networks. It is almost a
decade since Golomt Bank pioneered the launch of charge and credit card banking in Mongolia, but
we do not rest on our laurels, and remain committed to offering our clients the very best electronic
and physical banking and financial services products as we remain at the leading edge of banking
technology," said Mr. John Finigan, CEO of Golomt Bank.
Source: www.ecommerce-journal.com
SOUTHGOBI SELLS ITS METALS DIVISION TO IVANHOE
Mr. Peter Meredith, Chief Executive Officer of SouthGobi Energy Resources Ltd., has revealed that
the company has sold, subject to regulatory approval, its Metals Division, consisting of certain base
and precious metals properties in Mongolia and Indonesia, to Ivanhoe Mines Ltd. for USD3 million.
The transaction will enable SouthGobi to focus on its principal business of coal production,
development and exploration. In connection with the sale agreement, the company has established
a credit facility with Ivanhoe, which allows it to obtain advances from Ivanhoe to an aggregate
maximum of USD30 million. The credit facility is for a one-year term with a one-year discretionary
extension, is unsecured and carries an interest rate equal to LIBOR plus 7.5 basis points.
SouthGobi commissioned an independent valuation report and then engaged an outsider to
negotiate the sale. "We believe the sale of the Metals Division represents excellent value to
SouthGobi shareholders and positions SouthGobi to continue its evolution as a stand-alone coal
mining company," said Mr. Meredith.
Source: Marketwire, www.southgobi.com
MALAYSIAN FIRM SCRAPS DEAL TO BUY COAL MINES IN MONGOLIA
Greenfield Chemical Holdings, a unit of the Malaysian developer Mulpha International, has scrapped
an agreement to buy WinFame Investments, owner of two coal mines in Mongolia, because demand
for coal has become “uncertain”.
Source: bloomberg.com
25 COMPANIES CHOSEN FOR ADB LOAN TO HELP CREATE NATIONAL BRANDS
Of the 200 companies and entrepreneurs that applied for loans totalling USD10 million from the
Asian Development Bank (ADB), 25 have now been selected, and the necessary agreement signed
for the loans to be disbursed. Half the loan amount will be distributed through commercial banks
with branches in the countryside. The companies are registered in various parts of Mongolia and are
mostly in the cashmere and leather processing sectors, as well as some sea buck thorn growers.
Mr. T. Dorjkhand, Vice Head of the Loan and Aid Policy Department in the Ministry of Finance, told
newsmen that the initial focus of the program would be on improving management and
administrative skills, with ADB staff training these entrepreneurs on how to access the best
cashmere and then deliver it directly to manufacturers. The program would run for three years or a
little more and the goal is the creation of national brands. If necessary, the Mongolian Government
will continue to support these brands even after the project’s completion.
Source: Zuunii medee

4. S.KOREA SIGNS MOU WITH MONGOLIA ON METHANE
South Korea and Mongolia have signed a memorandum of understanding (MOU) on joint
development of coal bed methane (CBM) gas. According to the South Korean Ministry of Knowledge
Economy, the MOU was signed in Ulaanbaatar between South Korea's Gas Corp. and Mongolia's
Ministry of Mining and Energy. Under the deal, South Korea will develop CBM gas resources in Tavan
Tolgoi, 540 km south of the Mongolian capital, which is estimated to hold 5.07 billion tons of coal.
The MOU is significant because it could allow similar agreements in uranium, copper and other
resources, said a South Korean official.
CBM, created by buried coal, has similar characteristics as natural gas and causes less pollution
than coal and oil.
Source: Xinhua
ECONOMY
L. PUREVDORJ APPOINTED CENTRAL BANK PRESIDENT
With 54 of the 58 MPs present voting for him, Parliament on Thursday approved the nomination of
Mr. Lhanaasuren Purevdorj to be the next President of the country’s Central Bank, in succession to
Mr. A. Batsukh who resigned on December 31.
Mr. Purevdorj’s appointment was never in doubt after the MPRP group in Parliament had chosen
him on Wednesday over Mr. D. Molomjamts by a thin majority. On Monday the group had decided to
accept Mr. Batsukh’s offer of resignation, after a first meeting had failed to reach a decision. By
law the Speaker has to suggest to Parliament the name of a new President of the Central bank, and
Mr. D. Demberel asked his party MPs to choose between Mr. Purevdorj and Mr Molomjamts. The DP
group had said it would accept the MPRP choice if allowed to nominate the vice president of the
Central Bank, but some time during the proceedings it said it was no longer interested in selecting
anybody.
Mr. Purevdorj was a Member of Parliament during 2004-2008 and was Head of the MPRP Tax
Working Group in 2006. He attended the Trade Technical School, the Mongolian National University,
the Academy of Social Sciences in Russia, and the Institute of International Monetary Fund in
Vienna. An accountant by training, he is a Ph.D in economics and served as chairman of the State
Property Committee, first deputy minister in the Trade and Cooperation Ministry, vice minister for
Finance, and as a State general tax inspector.
Source: Ardiin Erkh
“I QUIT TO UPHOLD THE BANK’S INDEPENDENCE,” SAYS BATSUKH
The resignation of Mr. A.Batsukh, President of the Central Bank, submitted to Parliament on the
last day of the year, caught everybody unawares and caused widespread confusion in the political
world. Another person to submit his resignation was Mr. D. Bayarsaikhan, head of the Financial
Regulatory Committee. Neither would reveal what prompted their decision but it is believed that it
was in reaction to criticism of their actions relating to the scandal in Anod Bank in particular, and
financial instability in the Mongolian economy in general.
A Mongolian newspaper, Undesnii Shuudan, quoted Mr. Batsukh as saying that he had decided on
the step “to maintain the dignity of his office”. He wanted “to uphold the independence” of the
Central Bank which was not “meant to become a tool of any political party or individual”. He said,
“We did a lot for the economic stability of Mongolia, but some people do not see it that way and
present facts exactly opposite of what we do. Even the state did not support us.”
In a subsequent conversation with a journalist from Odriin Sonin, Mr. Batsukh was more forthcoming
and said he had been pained and surprised to find that “some people blamed me for anything that
went wrong in the economy” all through the two years that he was head of the Central Bank. He
felt there was a deliberate and sustained effort to misguide the public about the Bank’s purpose,
role, activity and policy. Admitting that an inflation rate of 34 percent was unacceptable, he
wondered if anybody had “given a thought to why this had happened”, instead of laying the blame
at the Central Bank’s door. He said, “It has taken our politicians one year to understand the
connection between unproductive expenses and inflation. They have also realized that uncontrolled
lending and unchecked money supply were major factors behind the inflation. But I doubt how

5. much our politicians really understand. How could they have adopted a budget with a deficit of
MNT395 billion?”
Pressed to answer what exactly had led to his offer of resignation, Mr. Batsukh said, “When I found
that some people wanted to trace every bad development to me and the Central Bank, I decided to
help the Bank retain its reputation by removing myself from it. I do not want the people to lose
their trust in an institution because of sustained misinformation. I decided to resign to put an end
to that.”
Source: Ardiin Erkh, Niigmiin toli
EXPECTED FISCAL DETERIORATION LED TO RATING AGENCY’S DECISION ON MONGOLIA
Explaining its revision of outlook on Mongolia to negative from stable (briefly reported in an earlier
issue of this newswire) Standard & Poor's Ratings Services has said, "The rating action reflects the
risk that Mongolia's fiscal and debt credit metrics could see substantial deterioration in the event
that the recent steep fall in the price of copper is not countered by prompt corrective fiscal
measures." The 2009 budget targets a deficit of 6.1% of GDP, with apparently no attempt to curb
increases in social transfers, salaries, and an ambitious capital expenditure program despite the
expected revenue shortfall. Even though this may be covered by drawing on accumulated fiscal
savings held in a special fund, a deficit target of this magnitude appears to signal the Government's
inability or unwillingness to adjust spending plans in response to changing economic conditions. As
such, Mongolia's strong fiscal performance over recent years and the attendant improvement in
public debt ratios could be jeopardized.
The revision in outlook to negative also incorporates the potential additional fiscal pressure posed
by growing contingent liabilities in the banking system. With credit growth running at more than
60% year on year against inadequate risk management and lending practices, the recent passage of
a 100% deposit guarantee, the approval by cabinet of a USD500 million capital injection into the
banking system, and the Central Bank's takeover of one of the top five banks indicate that the size
of contingent liabilities posed by the banking system, as well as the chances of some of it being
realized, have risen.
Source: News Release – McGraw Hill Companies
CHINA AND MONGOLIA AGREE TO SETTLE TRADE ACCOUNTS IN RMB, IF DESIRED
Despite its closed capital account and the lack of easy exchange of its currency, China is working to
set up a trade payment system using RMB, and has signed an agreement on free choice of bilateral
trade settlement currency with eight neighboring trading partners. Wu Xiaoling, former vice
governor of the People’s Bank of China, has said that China signed an agreement with eight
neighboring countries, among them Russia, Mongolia, Vietnam, and Burma, according to which
signatories have the freedom to choose the settlement currency in bilateral trade between them.
Analysts believe this is a first step in RMB becoming an international reserve currency.
Source: www.Chinastakes.com
PLANS SCRAPPED FOR BUDGET AIRLINE TO MONGOLIA, AMONG OTHER PLACES
Tiger Airways of Singapore has scrapped a plan to establish a budget carrier with South Korea's
Incheon city due to the worsening global economic situation and regulatory problems in South
Korea. Tiger Aviation, which runs Tiger Airways, planned to start the South Korean joint venture
with five Airbus A320 planes servicing domestic routes as well as destinations in Japan, China,
Russia and Mongolia. Tiger Airways is 49 percent owned by Singapore Airlines.
Incheon city, west of Seoul and the site of the country's main international airport, originally
planned to apply for a licence in September 2008 and launch the joint venture by the end of the
year. The city and its affiliates would have owned 51 percent of the joint venture while Tiger
would have held 49 percent.
Source: SYS-CON Media Inc.
MONGOLIA TO IMPORT MORE FUEL FROM KAZAKHSTAN

6. Mongolian consumers have been disappointed at fuel prices not falling according to expectations
raised by decreasing global rates and by Russia reducing fuel export taxes. However, according to
Mr. D. Amarsaikhan, head of the Oil Supply Regulation Department, Kazakhstan is providing further
help to Mongolia’s plans to reduce its dependence on Russian petroleum. Some 150,000 tons of
fuel products will be imported from there this year, more than originally planned. Mongolian annual
demand is estimated at 700,000 tons.
Source: www.news.mn
MONGOLIA TO BUY CHINESE FRUITS WORTH USD140 MILLION
Among the major deals made at a recent winter trade fair in China’s southernmost province of
Hainan was one on fruit exports to Mongolia, worth USD140 million. Contractual deals fetching
altogether USD2.6 billion were signed, USD1 billion more than in the previous fair. A total of 4.44
million tons of farm produce, including tropical fruit, aquatic products, poultry and flower, were
sold at the annual fair, which registered more than 3,300 visitors from 40 countries and regions.
Source: www.xinhuanet.com
US AGENCY OFFERS MONGOLIA FUNDS TO CURB METHANE EMISSION
The United States will provide Mongolia and 18 other partner countries in the Methane to Markets
program with funds to implement projects to capture and sell methane gas. Operating through the
U.S. Environmental Protection Agency, the partnership offers Mongolia the opportunity to develop
businesses to capture escaping methane gas from coal mines and from herds of cattle. The grant
money is to be used to purchase equipment and train staff. The program has the potential in the
next seven years to annually reduce methane emissions by 50 million metric tons of carbon gases –
equivalent to planting 55 million acres of trees or recovering 500 billion cubic feet of natural gas.
The agency expects to award up to 40 cooperative grants ranging from approximately USD100,000
to USD700, 000. The Methane to Markets partnership is an international initiative to reduce global
methane emissions by promoting capture-and-use projects in oil and gas systems, coal mining,
landfills, and animal waste management. A wide variety of institutions are eligible, including
national governments, universities, and public or private non-profit organizations in Methane to
Markets Partner countries that include China, India, Kazakhstan, the Republic of Korea, Mongolia,
the Philippines, Poland, Russia, Ukraine, and Vietnam.
Source: Azom.com
CZECH DOORS CLOSED ON MONGOLIAN WORKERS
Beginning January 1, the Czech Republic has stopped allowing Mongolian workers into the country.
Figures from 2007 showed 7,500 Mongolians legally working in the Czech Republic. In 2005 that
number was 1,900. Government officials in Prague say the world financial crisis has shrunk the
Czech labor market, and far fewer jobs are now available for foreign workers. Previously, foreign
workers helped fill some 150,000 jobs left vacant, but recent reports indicate 380,000 Czech
citizens are unemployed.
Source: Montsame
CHINA GIFTS BUILDING TO MNCCI
A new office building, built with Chinese funds to house the Mongolian National Chamber of
Commerce and Industry (MNCCI), was formally handed over to Mongolia on December 5 at a
ceremony attended by the Chinese Ambassador and Mongolian Government representatives. In his
speech of thanks, Minister of Finance S. Bayartsogt said the building stood as a symbol of Mongolia-
China cooperation and friendship, and would help the MNCCI create better conditions for the
development of Mongolian entrepreneurship. The 5-story building includes a training center and an
exhibition hall, cost USD4.2 million and was completed in 19 months.
Source: People's Daily Online, Onoodor
POLITICS
BAYAR SAYS HE WILL NOT RUN FOR PRESIDENT

7. Prime Minister S. Bayar has made it clear he will not be contesting the presidential election this
year. He told a team of TV reporters, “I am happy with what I am doing as Prime Minister, and wish
to do the best for the country in that position.”
Source: Ardiin Erkh
PRESIDENT NONCOMMITTAL ABOUT SEEKING ANOTHER TERM
Talking to journalists at a year-end get-together, President N. Enkhbayar said he had not given any
serious thought yet whether to seek another term as head of state. “I have held all the top
positions in the country, and have no hankering left for any particular office. I shall continue to
serve the people, irrespective of the position I hold. Whatever success I have achieved in my public
life has been because the whole nation supported me,” he said. Asked about his views on whether
Mongolia should shift to a Presidential form of government from the present parliamentary system,
President Enkhbayar said, “The external form is not so important. What really matters is that
whoever governs in whatever system should exercise power with responsibility and restraint.”
Recalling the events of July 1, he said he had initially been reluctant to declare a state of
emergency but when the Prime Minister and the police chiefs made a second request, he agreed.
That helped control the situation which would otherwise have spread to the whole country. Even
though he was certain he did the right thing and that “most people supported my decision”, he
admitted it was a time of great strain. “Those four days for me were like four years, helping my
wrinkles deepen and my hair turn gray.” Asked why he was not using the presidential prerogative to
pardon all those convicted by courts of crimes related to the July 1 events he said, “I personally
feel the women and the children should be pardoned. But there is a big difference between what I
want and what I can actually do. The President can issue pardons only after a careful review of
every individual case. This can be taken up only when court procedures are completed.”
Turning his attention to the financial crisis, he said a bank that goes bankrupt because of bad
management should take some responsibility for its failure. “I think we should have a special body
or agency which will evaluate and apportion responsibility. Also important is to have a clear sense
of priorities to be followed during the financial crisis and I believe the Government does have such
a list,” Mr. Enkhbayar said. He expressed disappointment that circumstances have led to the loss of
so much valuable time in beginning operations on big mining deposits and cited the Erdenet model
as the most appropriate for mining investment agreements. He also favored a new list of
environmentally strategic deposits.
Source: en.News.mn
SPECULATION RIFE ON PRESIDENTIAL HOPEFULS
The presidential election promises to be the biggest event in Mongolian politics in 2009. Only
political parties represented in Parliament are allowed to put up a candidate, and speculation is
already rife on who will be nominated by which party.
Prime Minister S. Bayar has been categorical in disclaiming any interest in being the MPRP
candidate, increasing the chances of the party choosing President N.Enkhbayar for a second term.
Mr. N.Bagabandi, who served two successive terms as President from 1997 to 2005 and has since
kept himself in the public eye as a contributor to a newspaper, is also known to be not averse to
standing again.
It is almost certain that the DP will choose between Mr. Ts. Elbegdorj and Mr. E. Bat-Uul. Civil Will
Party leader S. Oyun has announced she will not be a candidate. If a Civil Movement coalition
candidate is among those finally declared winners from the 25th constituency, it will also have a
right to put up a candidate. In that case, the “pro-democracy” votes will be split, improving the
prospects of the MPRP nominee.
Source: www.news.mn
MINISTERS DRAW UP PLANS TO REVIVE MONGOLIA-RUSSIA MILITARY TIES
The traditional military cooperation between Mongolia and Russia, under strain in the last few
years, is on course to be revived. A meeting between the Mongolian Defense Minister, L.Bold, and
his Russian counterpart, A.E.Serdukov, on December 29 in Moscow decided on several measures to
activate the process.
The recently concluded Dakhan-1 joint exercise for international peace keeping activities was
dubbed a success and will be repeated next year. Similar joint trainings will be organized on
combating terrorism and fighting natural disasters. Apart from more Mongolian soldiers attending

8. advanced courses in Russia, young Mongolians will be enrolled in cadet schools there, and technical
personnel will be made familiar with Russian defense equipment. Steps will also be taken to
improve the knowledge of the Russian language among Mongolian troops, and the 70th
anniversary
of the Khalkha river victory over Japan will be appropriately celebrated.
Source: www.news.mn
GOVERNMENT APPROVES 42 AGENCIES, 5 OF THEM NEW
A new structure of government, approved on December 24, has brought down the number of
Government agencies from 65 to 42. Of these, 30 will have implementing authority and the other
12 regulatory responsibilities. The reduction will lead to 330 civil servants losing their job, at a
savings of approximately USD2 million a year. Some earlier agencies have been split, some have
been merged with one another, and 5 new ones created. Henceforth all agencies will be financed
by the state budget, including those which earn money. Their revenues will now be transferred to
the state budget. This uniformity will lead to better cohesion and productivity, it is hoped.
A list of some of the agencies is given below, showing who is in charge of them:
The Prime Minister
1. Central Intelligence Agency (Regulatory)
2. State Development Agency (Regulatory)
3. Nuclear Energy Agency (Regulatory)
4. State Property Committee (Regulatory)
5. Information Communication Technology Agency (Regulatory)
The First Deputy Prime Minister
1. Intellectual Property Agency (Implementing)
2. Standardization and Measurement Agency (Regulatory)
3. Fair Competition Agency for Consumers (Regulatory)
The Deputy Prime Minister
1. General Authority for State Professional Inspection (Regulatory)
The Ministry of Finance
1. General Tax Office (Implementing)
2. General Customs Office (Implementing)
The Ministry of Justice and Internal Affairs
1. General Office for State Registration (Implementing)
2. Agency for Foreign Citizens and Naturalization (Implementing)
The Ministry of Foreign Relations
1. Foreign Investment Agency (Implementing)
The Ministry of Environment
1. National Agency of Meteorology and Environment Monitoring (Implementing)
2. Water Agency (Implementing)
3. Forest Agency (Implementing)
The Ministry of Social Welfare and Labor
1. General Authority for Social Insurance (Implementing)
2. Human Development and Employment Agency (Implementing)
The Ministry of Minerals and Energy
1. Energy Agency
2. Minerals Agency
3. Oil Agency
The Ministry of Food, Agriculture and Light Industry
1. Agency for Small and Medium Industry (Implementing)
Source: Ardiin Erkh
NEW VICE MINISTERS APPOINTED
Thirteen vice ministers began work on December 25, a day after they had been named at a
Government meeting. There has yet been no agreement as yet on the vice minister for the
Legislation and Internal Affairs Ministry. Some of the vice ministers are listed below:
Ministry Name of the ViceParty Previous job

9. Minister
Foreign Affairs B.Bolor DP Leader of Piara Mongolia
project
Food, Agriculture and
Light Industry
Kh.Zoljargal DP
J.Saule MPRP President’s Office
referent
Minerals and Energy N.Ariunsan DP Vice director of State
general tax office
T.Enkhtaivan MPRP Former vice minister for
Fuel, Energy
Social Security, Labor D.Nyamkhuu DP Representative of MCRA
Finance T.Ochirkhuu MPRP Former MP
Nature, Environment,
and Tourism
D.Idevkhten MPRP Former MP
Source: en.News.mn
MPRP ELECTS NEW GENERAL SECRETARY
Mr. U. Khurelsukh, a former MP, was elected the new General Secretary of the MPRP, at its recent
plenum, with 70 percent of those present voting for him. There were two other candidates. Mr. Ts.
Sukhbaatar got 26 percent of the votes, and Mr. G. Shiilegdamba, a former Nature and Environment
Minister, 4 percent.
Mr. Khurelsukh is credited with setting up the Mongolian Democratic Socialist Youth Federation, the
party organization for young people that prepares the new generation of MPRP workers.
Source: Ardiin Erkh
COMPENSATION FOR JULY 1 LOSSES A COMPLEX ISSUE: NYAMDORJ
Mr. Ts. Nyamdorj, Justice and Interior Minister, has revealed that work has begun on preparing a
comprehensive law on paying compensation to victims of the July 1 events. There are four different
types of sufferers who have to be paid. First, there are the policemen who received injuries, then
there are the families of those who died, third are the businesses whose property was damaged,
and lastly, there are the innocent citizens who got injured. It will require MNT13 billion to pay all
the compensation if such a law is passed but, said the Minister, the State did not know where that
big an amount would come from. “The situation is complex, with innumerable claims for
compensation,” he said.
Source: en.News.mn
MP UNHAPPY EXPENSES DO NOT FALL
Mr. N. Ganbyamba, MP, who has been spearheading a campaign to reduce Government
expenditure, is distressed that administrative expenses still exceed MNT one trillion. Expenses on
transportation in Ministries and Government organizations, on salaries, and on office requirements
were expected to be cut but have actually been increased. An earlier decision to do with fewer
vice ministers and deputies has been overruled. Mr. Ganbyamba blames all this on “catering to
party interests” and foresees “expenses going up at the cost of the country”.
Source: www.news.mn
ULAANBAATAR MAYOR GETS FOUR DEPUTIES
The Ulaanbaatar Mayor now has four deputies. One of them, to be known as the First Deputy Mayor
will be in charge of finance; another of social development; the third of construction, city
development and infrastructure; and the last of industry and ecology. The Mayor’s Office will have
five departments, Administration; Engineering network; City, public economy; Food, trade, and
service; and Environmental pollution and Waste management. The number of staff in the office has
been fixed at 40. There will also be 28 executing agencies. This apparently goes against the
Government’s avowed aim of decreasing the number of workers in order to reduce expenses, but
was found necessary to provide better and faster service to citizens.
Source: Ardiin Erkh

10. SPONSORS
ECONOMIC INDICATORS
MSE WEEKLY REVIEW
For the week ended January 2, 2009, trading activity on the Mongolian Stock Exchange (MSE)
totaled 44,400 shares with the stocks of 18 companies traded. Total market value of transactions
was MNT 19.1 million. Total market capitalization of the 358 stock companies listed on the MSE was
MNT 517.1 billion.
The Top-20 Index increased by 22.11 points or 0.4% compared to the previous week closing at
5,596.18 points.
Most active stocks traded were: Genco Tur Buro (17,800 shares), APU (11,500 shares), and Khuh
Gan (7,700 shares).
Major share price percentage gainers were: Monnoos (10.0%), APU (8.9%), and Khuh Gan (6.0%).
Major share price percentage losers were: NIC (6.2%), Makh Impex (4.8%), and Gobi (4.0%).
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 Avg. 9.0% [source: NSOM]
Year 2007 *15.1% [source: NSOM]
November 30, 2008 *24.2% [source: NSOM]
*year over year (yoy)

11. CURRENCY RATES – January 8, 2009
Currency name Currency Rate
US dollars US 1309.73
Euro EUR 1777.43
Japanese yen JPY 14.01
British pound GBP 1950.38
Hong Kong dollar HKD 168.93
Chinese yuan CNY 191.72
Russian ruble RUB 44.92
South Korean won KRW 1.01