1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmmongolia.org
info@bcmmongolia.org
Issue 66, April 24, 2009
NEWS HIGHLIGHTS:
Business: OT agreement has been politicized, says MP; MPs wish to study new report on Oyu
Tolgoi; Advisor clarifies details of Speaker’s talks with Ivanhoe team; Local people
want mining to begin at Oyu Tolgoi, says former province governor; MP seeks details
on uranium licenses; Shenhua’s oblique hint that it is making progress on Tavan
Tolgoi; Offer letter mailed to Western Prospector shareholders; All uranium mines to
be inspected; Former World Bank VP joins Khan Bank board; Most farm sector credit
to be routed through Khan Bank; Rio ready to scrap Chinalco deal if shareholders
oppose it; “Our firms lack management skill in overseas deals,” says China’s
regulator; Rio’s Albanese says Chinalco pact good for Australia; Ulaanbaatar Railway
will sell public shares.
Economy: With loans coming, mining agreements lose urgency; Bayar visits port city, mine,
factories in China; The global downturn lands with a zud on Mongolia's nomads; IMF
puts losses from crisis at USD4 trillion, sees no ground for optimism; The answer to
Mongolia’s present woes lies under the ground, says Morrow; 21 companies get land
from Chamber in Altanbulag; U.S.-Mongolia business forum in June to focus on
energy; Government wants changes in insurance laws; Area under logging extended
to curb illegal timber trade; MSE officials attend meeting in the Philippines.
Politics: MPRP pledges homeland bounty and “humane, law-abiding and just” society; DP
platform stresses justice, freedom, democracy; Much to learn from China’s economic
recovery policies, feels Bayar; Making Ulaanbaatar more expensive only way to halt
migration, says city official; MP resents “inappropriate references” in ethics draft;
Time for political rehabilitation extended until 2011; TV film being made on people
of Mongolian ancestry; High officials found with fake academic certificates; Avoiding
military service may cost more; Party MPs donate MNT1 million each for new MPRP
building; Mongolia favored as a center of regional cooperation.
MEETING NOTICE TO BCM MEMBERS
The next BCM monthly meeting for Members will be Monday, April 27 at 5 PM at the Open Society
Forum.
We are pleased to announce our feature will be a 2009 PRESIDENTIAL ELECTION PANEL moderated
by BCM’s Vice Chairman, Mr. L.Sumati, Director of Sant Maral Foundation, Mongolia’s leading
political pollster. The MPRP candidate will be represented by Mr. G.Tenger, Head of the party’s
Foreign Relations Department. The Democratic Party candidate will also be represented by a top
party official. Both candidates’ platforms will be outlined and the panelists will be available for
questions. Please follow these Q&A procedures for the Election Panel - Members who plan to attend
the meeting in person or via teleconferencing with questions for the Presidential Election panelists
should Email the questions in advance to info@bcmmongolia.org.
Also presenting will be Dr. Mandar Jayawant, Frontier Investment & Development Partners –
“Private Equity in Mongolia - Unleashing the Full Potential of Mongolian Businesses“. Ambassador of
Japan in Mongolia, Mr. Takuo Kidokoro, will review Mongolian-Japanese bilateral relations. Mr.
N.Algaa, Executive Director, Mongolian National Mining Association (MNMA), will provide an update
on key developments in the mining sector.
2. Teleconferencing will again be available for Members not able to attend in person. Call number is
(1-218) 936-7979, access code 771358 to be connected. Cost will be solely that of the long distance
call to the above US number.
BUSINESS
OT AGREEMENT HAS BEEN POLITICIZED, SAYS MP
MP Ch.Khurelbaatar, a former adviser to the Prime Minister and State Secretary of the Ministry of
Finance and now Minister of Fuel and Energy, has said the Oyu Tolgoi agreement is no longer an
economic issue but has become a pawn on the political chessboard. “Some people would like to
keep the game running,” he said. He agreed that some details in the draft needed further
checking, clarification, and correction but felt even after this was done, there would be delay
before Parliament discussed and ratified this important agreement.
Asked about the gradual rise in global copper prices, Mr. Khurelbaatar said these were flashes in
the pan and everything is too fluid to make any prudent future projection. He also had little hope
that the recession in the economy would improve any time soon.
Source: www.business-mongolia.com
MPs WISH TO STUDY NEW REPORT ON OYU TOLGOI
Both party groups in Parliament discussed the draft agreement on Oyu Tolgoi this week. The Head
of the MPRP group told reporters that they have learned the advisor to the Speaker of Parliament
has made an economic reassessment of the Oyu Tolgoi project based on proposals and
recommendations by various international organizations. Members of the group want to study this
reassessment before discussing the draft agreement again. The group is worried about the backlog
piling up in Parliament, but wants the draft to be approved in the present session, after MPs’
concerns have been met.
The DP group discussed the draft for the fifth time, and said it wants more time “to review each
provision and article in depth”. Mr. D.Odkhuu, head of a working group set up by DP to review the
draft, has said while he sees “no possibility” that the party will approve the draft in its present
form, there is general agreement on the need to adopt an agreement so that mining may begin and
that his party’s MPs hope the investors will realize the legitimacy of the suggestions they make and
agree to changes.
Source: Odriin sonin, Zuuni Medee, Ardiin Erkh
ADVISOR CLARIFIES DETAILS OF SPEAKER’S TALKS WITH IVANHOE TEAM
Clarifying some details of the talks earlier this month between Parliament Speaker D.Demberel and
an Ivanhoe Mines delegation led by CEO John Macken, Mr. D.Davaasambuu, Advisor to the Speaker,
has said Mongolia did not intend to place any obstacles to any agreement that would be favorable
and beneficial to both sides. He said the Speaker had said at the meeting that the interest rate on
the USD1.7 billion credit to be taken by Mongolia from the investors, to be adjusted against future
dividends on its 34 percent equity, was too high. “The country will face a risk if over a long period
of time dividends are to be used to repay the loan and the interest,” the Speaker had said, urging
lower interest rates. Mr. Macken said the issue could certainly be reviewed. “This means that the
investors accepted the proposal positively,” Mr. Davaasambuu said.
Mr. Macken did not dispute that “such a big project needs a copper smelter”, but said it could be
built some time later, and not right at the beginning. He referred to his own long experience in
mining and to the reputation of the investing companies and urged the Mongolian side to have faith
in their capacity to run “such a large operation”, and to “provide them with an opportunity to be
Mongolia’s partner on its way to prosperity”, according to Mr. Davaasambuu.
The Speaker’s Advisor said the management skills of the investing companies would play a key role
in using the international commodity market to the best interests of Mongolia.
Source: Onoodor
3. LOCAL PEOPLE WANT MINING TO BEGIN AT OYU TOLGOI, SAYS FORMER PROVINCE GOVERNOR
A former Governor of Umnugovi province and presently leader of the NGO, Responsible Mining, Mr.
S.Sumiya has said people in the area of Oyu Tolgoi want work on the mine to start without delay.
They are disappointed that they are not represented in the negotiations, “while the vested
interests of a group of people do not allow the draft agreement to be endorsed”. Umnugovi
residents, he said, join the local administration and NGOs in hoping no further obstacles would be
put in the way of mining work to begin. They look forward to jobs being created, and a power
plant, railway and roads being constructed, as all this “means not just economic progress, but also
improved education and healthcare opportunities”. He also expected a substantial part of the
revenues from Oyu Tolgoi to be spent on regional development.
Mr. Sumiya, however, wanted the agreement to carefully address the myriad social and
environmental problems that will inevitably crop up from such large-scale mining work. He thinks
earning revenue from “utilizing Mongolia’s own natural resources” makes more long-term economic
sense than “begging for credit from abroad”. Such heavy borrowing “is a wrong choice” and will
“trigger a crisis again in the future”.
Source: Undesnii Shuudan
MP SEEKS DETAILS ON URANIUM LICENSES
MP P.Altangerel has sought clarification from the Prime Minister on media reports that Canadian-
invested Western Prospector was negotiating with the Nuclear Energy Corp of China to sell its
shares in the Gurvanbulag uranium deposits. The MP is concerned that after Parliament demarcated
this and two other deposits, at Mardai and Dornod, as vital for national security, and for the
economic and social development of Mongolia, these fell “under national ownership and State
protection”, according to the Constitution.
He said he also wanted to know how licenses for these three strategically important deposits,
explored with state funding, had been issued to various companies. He had also sought all details
about such agreements on uranium deposits in Mongolia, finalized or under negotiation, with
Russian, French, Canadian, or Japanese companies. Uranium is closely related to national security
and people had a right to more information on state policy on its exploration and on nuclear
energy.
Source: www.business-mongolia.com
SHENHUA’S OBLIQUE HINT THAT IT IS MAKING PROGRESS ON TAVAN TOLGOI
China Shenhua Energy Co Ltd, the nation's top coal producer, said on Monday it would see some
progress this year in its negotiations with the Mongolian Government to purchase the Tavan Tolgoi
mine. Company Vice-President Wang Jinli said the deal still hinged on the Mongolian offer, without
elaborating. Shenhua is among several miners including BHP Billiton and Peabody Energy that have
expressed an interest in the Tavan Tolgoi coal mine. The thermal and coking coal mine currently
has small-scale coal operations. It is worth more than USD5 billion, a source with Shenhua has said.
Shenhua earlier this year started building a railway line to transport coal and copper from Mongolia.
The 354-km rail link starts at the company's Wanshuiquan station in the Inner Mongolia autonomous
region, and ends at the border town of Ganqimaodu. It will be able to transport 60 million tons of
coal and copper from Mongolia each year when completed by 2011. The railway forms part of plans
by China and Mongolia to develop the Tavan Tolgoi mine, sources at the company said.
Source: www.Xinhua.net, Bloomberg.com, Montsame
OFFER LETTER MAILED TO WESTERN PROSPECTOR SHAREHOLDERS
Western Prospector Group has announced that First Development Holdings Corporation, an indirect,
wholly owned subsidiary of CNNC International has mailed its previously announced offer to acquire
all of the issued and outstanding common shares of Western for cash consideration of CAD0.56 per
share. The mailing of the offer and take-over bid circular was accompanied by the circular of the
Western board of directors, in which the Western board unanimously recommends that the
shareholders accept the offer. The offer is open for acceptance until May 21, 2009, unless
withdrawn or extended.
4. Western Prospector's main interest is the Saddle Hills uranium project near Dornod in eastern
Mongolia, and in particular in the Gurvanbulag deposit. A definitive feasibility study released in
January showed Gurvanbulag was barely viable economically, on the basis of producing 700 tons of
uranium per year from 6900 tons of uranium reserves, but it is only 100km from China. Mine
development cost would be about USD280 million.
CNNC International, which is offering to pay USD25 million in its bid, is a 74% subsidiary of Hong
Kong-based CNNC Overseas Uranium Holding and, through it, of CNNC's SinoU.
Source: www.westernprospector.com, World Nuclear News, The Asia Miner
ALL URANIUM MINES TO BE INSPECTED
The Nuclear Energy Office, which recently suspended licenses held by Western Prospector at
Gurvanbulag, has said it will inspect all uranium deposits in the country to ensure that license
holders are following terms. Violators will be penalized.
Source: en.News.mn
FORMER WORLD BANK VP JOINS KHAN BANK BOARD
Mr. Jamil Kassum, who worked as Vice President of the International Financial Corporation
responsible for worldwide investment, and also as World Bank Regional Vice President for East Asia
and the Pacific Region, has been appointed to the Board of Directors of Khan Bank. Mr. Kassum’s
vast experience of international development banking, equity investment, and lending operations
will strengthen the bank, only recently adjudged the best bank in Mongolia. “The new appointment
reinforces our Board with strong business and emerging market banking expertise. Together with
our current Board members, they position us very well for the future,” said Mr. J. Peter Morrow,
Chief Executive Officer of Khan Bank.
During his stint with the World Bank, Mr. Kassum was responsible for a USD60 billion sovereign
lending portfolio and all policy advisory operations in 22 countries in the East Asia and Pacific
region, including Mongolia, which he visited several times. He was back here this week, meeting
officials at the Central Bank, the World Bank, the IFC and other investors and donor institutions in
Mongolia to discuss pressing banking, finance and economic issues.
Mr. Kassum’s appointment comes as Khan Bank reports after-tax earning for 2008 of MNT 22.3
billion, 11% above the 2007 figure.
Source: www.khanbank.com
MOST FARM SECTOR CREDIT TO PASS THROUGH KHAN BANK
The Ministry for Food, Agriculture and Light Industry recently signed an agreement with Khan Bank
which asks the bank to follow a credit policy that will not put pressure on herders, cultivators and
small and medium industries and to help entrepreneurs with business information and advice.
Minister T.Badamjunai said Government credit to the farm sector would mostly pass through Khan
Bank.
Source: www.news.mn
RIO READY TO SCRAP CHINALCO DEAL IF SHAREHOLDERS OPPOSE IT
The new chairman of Rio Tinto has said he will meet 25 major shareholders in London next month,
and will be prepared to scrap a USD19.5 billion tie-up with China's state-owned Chinalco if they
looked certain to oppose it. "I would trust we are not going to put a proposal to shareholders if we
think there is any chance of it actually being voted down," Mr. Jan du Plessis told reporters. “I will
go out of my way to find out what people really think and what people really feel,” Mr. Du Plessis
said Monday after he was elected chairman to succeed Mr. Paul Skinner at the company’s general
meeting in Sydney. A date has not yet been set for the vote by shareholders on the proposal by
Chinalco.
Major Rio investors have complained that the deal favors one shareholder over others. Under the
plan, the Chinese group would buy stakes in Rio's iron ore, copper and aluminum assets and spend
USD7.2 billion on convertible debt that could double its Rio stake to 18 percent. But, ahead of a
5. vote expected in July, some are starting to recognize the deal may be the best option to slash Rio's
debt. Mr. Du Plessis fended off a barrage of speculation at the meeting that Rio was readying a
"Plan B" in case it fell through. “We are as committed to pursuing the Chinalco transaction as we
might have been two months ago,” he said. “It is quite important to keep in mind although financial
markets have improved slightly, of course the real economy is pretty much where it was two
months ago and arguably possibly in an even worse state.”
Source: Reuters.com, Bloomberg.com
“OUR FIRMS LACK MANAGEMENT SKILLS IN OVERSEAS DEALS,” SAYS CHINA’S REGULATOR
China's state-run firms' biggest challenge when making overseas acquisitions is a shortage of
managerial expertise, not money, the country’s chief regulator of state assets said on Sunday. Mr.
Li Rongrong, head of the State-owned Asset Supervision and Administration Commission (SASAC),
said at the Boao Forum on Hainan Island that the net profits of State-run enterprises in March rose
26 percent from a year earlier and 86 percent from the previous month. However, "money is not
enough for acquisitions," Mr. Li said, adding that many Chinese bosses do not understand the legal
risks of foreign acquisitions.
A flurry of Chinese state companies and private businesses are seeking overseas buyout
opportunities as the market values of many Western firms have tumbled during the global financial
crisis. Mr. Li also advised Chinese firms to pay close attention to stimulus measures offered by
foreign governments and take those into account as they evaluate whether to invest overseas.
"These efforts will significantly affect our businesses," he said, predicting that the global financial
crisis may end more quickly than people expect, as its most striking characteristic is its ever-
changing nature.
Source: Reuters.com
RIO’S ALBANESE SAYS CHINALCO PACT GOOD FOR AUSTRALIA
Rio Tinto Chief Executive Officer Tom Albanese has said Australia has a large stake in the outcome
of the proposed USD19.5 billion investment from Aluminum Corp. of China, “There is currently an
opportunity for Australia to position itself for a mutually rewarding relationship that could define
the next few decades,” he said in speech notes prepared for the company’s annual shareholder
meeting in Sydney.
The deal faces scrutiny from Australian politicians because the bailout plan would hand partial
ownership of some mines and plants to a state-owned Chinese firm. Shareholders are calling for an
alternate proposal. “By facilitating a deeper engagement with China, including by allowing
substantial inflows of capital, we could forge stronger and more enduring export markets,” Mr.
Albanese said in the speech notes. “The Australia-China relationship is critical for both countries
and Rio Tinto supports efforts that will bring the two countries closer together.”
Source: Bloomberg.com
ULAANBAATAR RAILWAY WILL SELL PUBLIC SHARES
A decision was taken last week for Ulaanbaatar Railway to go public. Both the Russian and
Mongolian shareholders of the joint venture company agreed on details of the initial public offering,
but decided not to reveal them as yet.
Source: Onoodor
ECONOMY
WITH LOANS COMING, MINING AGREEMENTS LOSE URGENCY
Nearly USD1 billion in foreign loans and grants have eased budgetary pressure and given the
Mongolian Government breathing space to negotiate huge mining contacts. The country has taken a
series of external loans this year, after the global financial crisis caused the price of its commodity
exports to plunge even as domestic banks sharply reduced lending following a period of rapid loan
growth. At least in the short term, that leaves the Government less dependent on revenues from
6. mining contracts to address the country's immediate needs.
In the longer term, the Oyu Tolgoi and Tavan Tolgoi mining projects currently under negotiation
will be vital to landlocked Mongolia's ability to repay the loans, as well as maintain its
independence from its two giant neighbors, China and Russia. These countries are already the
biggest source of loans, although Mongolia has also sought money from other lenders in line with its
"third neighbor" policy of keeping China and Russia at bay.
The International Monetary Fund this month approved a USD229.2 million loan package to Mongolia,
tied to measures to keep the budget deficit within 6 percent of GDP. The Asian Development Bank,
the World Bank, Japan and Australia have together pledged a total of another USD165 million. A
Russian loan for USD300 million is earmarked for Mongolia's agricultural sector, which employs 37
percent of the population. Local media said the loan, sealed during a March trip by Prime Minister
S.Bayar to Moscow, is tied to Russian access to prime Mongolian uranium reserves, which were
recently nationalized. Mongolian media also reported the finalization of a USD300 million, 25-year
loan at 3 percent interest from China for road and railway infrastructure. That loan was originally
pledged in 2003. Media reports now say more money could be forthcoming from the Chinese, mostly
in sector-specific loans.
Negotiations for the Oyu Tolgoi copper-gold project and Tavan Tolgoi coal project have dragged on
for years, outlasting the commodity boom as Mongolia sought the revenues that eluded it with
previous mining projects. A presidential election in May could further delay political approval of the
deals. "While the Government will have to repay the loans over time, there is no real urgency to do
the mining deals because of these borrowings," said Mr. Arshad Sayed, country manager for the
World Bank in Mongolia.
Source: Reuters.com
BAYAR VISITS PORT CITY, MINE, FACTORIES IN CHINA
During his visit to China last week, Prime Minister S.Bayar took time off from his busy schedule of
talks and meetings to go to two places that hold promise for Mongolia’s economic recovery. In
Tianjin, a municipality in northern China, a memorandum was signed pledging to strengthen
economic ties and expand the fields of bilateral cooperation. Trade volume between Tianjin and
Mongolia surged 47.5 percent year on year to reach USD61 million in 2008. Mr. Bayar said Mongolia
hoped to draw on the experience of Tianjin in ocean transportation and port management, intensify
cooperation in infrastructure construction and mining, and expand personnel exchanges.
Mr. Bayar also visited Ordos in the Inner Mongolian Autonomous Region to see the working of a coal
liquefaction plant of Shenhua Corporation, a coal mine and a cashmere factory. The Shenhua
management wants to set up a similar plant in Mongolia.
Source: www.Xinhua.net, Montsame
THE GLOBAL DOWNTURN LANDS WITH A ZUD ON MONGOLIA’S NOMADS
Falling demand for cashmere among recession-hit shoppers in the West is cutting into earnings
among nomadic herders in Mongolia, whose goats produce the soft fiber used in high-end sweaters,
scarves and coats. The result: herder loan defaults. Mongolians are calling the current situation a
financial zud, invoking a local term for unusually harsh winters that devastate herds. The credit
crisis on the steppe has root causes similar to those of the subprime mess in the U.S. Some herders,
betting on continued strong cashmere prices, borrowed more than they should have, and spent the
money on the Mongolian equivalent of conspicuous consumption: motorbikes and solar panels to
provide electricity for their tents. Banks, looking to cash in on rural prosperity in the good years,
didn't pay enough attention to risk management and lent too freely, some bankers say.
Pressuring herders to sell animals and moving to foreclose on other collateral are last resorts. "We
try our best to have flexible policies," says Mr. Daimaa Batsaikhan, deputy chief executive of Khan
Bank. He said the bank's own forecasts for cashmere prices last year were "inaccurate" and that the
bank has changed its risk-management practices. He says his bank and other lenders have been
working with herders. Khan Bank says it has restructured 7,000, or nearly 11%, of its outstanding
herder loans, essentially extending the time borrowers have to repay. Ultimately, though, the
money lent to herders is "money deposited by other Mongolians," the banker says, and it is the
7. bank's responsibility to protect their interests. Many banks have cut back on new lending. And a
flood of forced sales has helped drive down prices for animals, skins and meat.
In recent years, commercial banks started competing to extend credit to herders, who typically
earn significant cash just twice a year -- in the spring through cashmere and wool sales, and in the
autumn through sales of animal skins and meat. The money helped families get through the times in
between, usually at a cost of between 2% and 3% in interest per month. Troubles began when
demand for cashmere started falling after the U.S. slipped into recession in late 2007. By last June,
the price for cashmere in Mongolia had fallen by more than 33% from a year earlier. Prices have
dropped further. Herders who have sold their herds to repay loans have struggled to find other
sources of income.
Source: www.wsj.org
For the full story in The Wall Street Journal, please visit BCM website, Articles/Reports on
Mongolia.
IMF PUTS LOSSES FROM CRISIS AT USD4 TRILLION, SEES NO GROUND FOR OPTIMISM
With the global economic downturn deepening and confidence in the financial system still elusive,
the International Monetary Fund (IMF) estimates that banks and other financial institutions face
aggregate losses of USD4.1 trillion in the value of their holdings as a result of the crisis. In its global
financial stability report, released Tuesday, the fund estimated that financial institutions would
have to write down an estimated USD2.7 trillion in loans and securities originating in the US from
2007 to 2010. That estimate is up from USD2.2 trillion in the fund’s report in January, and USD1.4
trillion last October.
The financial crisis “is likely to be deep and long lasting”, the report said, noting that global
financial stability has deteriorated further since its October report, especially in emerging markets,
particularly in Europe, where banks face more write-downs and may require fresh equity, even as
businesses seek to refinance debt. The authorities “have been proactive in responding to the
crisis”, the fund said, but “policies are being challenged by the scale of resources required”. The
fund also cast doubt on recent market optimism, noting that in spite of “some improvements in
short-term liquidity conditions and the opening of some term funding markets, other measures of
instability have deteriorated to record or near-record levels”.
The report has become a closely watched barometer of the severity of the crisis, in which the fund
has taken a leading role, dispensing more than USD55 billion in loans. Leaders of Group of 20
nations agreed in London this month to provide about USD1 trillion in new funding for the
organization.
Source: www.nytimes.com
THE ANSWER TO MONGOLIA’S PRESENT WOES LIES UNDER THE GROUND, SAYS MORROW
In a recent interview with FinanceAsia, Mr. Peter Morrow, CEO of Mongolia's largest bank, Khan
Bank, noted that the problems facing Mongolia have come in a group, with inflation at the
forefront. "Our economic problems are different from those in many other places," he says. "We
don't have a financial crisis -- our banks are generally OK. The inflation resulted in negative real
interest rates. Because we had loan and deposit rates in the high-teens and inflation over 30%,
people started taking their money from the banks and spending it. So the banking system lost about
10% of its deposits in the last half of 2008. New lending came to a halt. The banks couldn't expand
loans -- so, for example, the construction industry ground to a halt. We've now started growing
again, but nowhere near the level that we were seeing before."
The other main problem relates to trade. A sharp drop in the price of cashmere last year seriously
impacted the rural economy. And then there was the bursting of the commodities bubble. Even
though key resources have more than halved in price over the past year, commodities remain the
economic fix. "The Government knows full well that this is the only answer to their problems," says
Mr. Morrow. He compares Mongolia's wealth under the ground to that of other countries with small
populations like Kuwait and Brunei. "It's not just copper. There is oil, gas, coal, iron ore and
uranium."
The largest major project currently underway, on a scale that it will be long-term enough to see
8. through a succession of commodity cycles, is the Oyu Tolgoi project. By some measures it will
become the world's largest copper and gold mine. As a project worth USD5 billion, it is equivalent
to an entire year's worth of Mongolian GDP. "So Mongolia is one of the only countries in the world to
have a second GDP ready to go -- the building will take three years and cost about USD200 million
to USD300 million a month."
Source: http://www.financeasia.com
21 COMPANIES GET LAND FROM CHAMBER IN ALTANBULAG
The Mongolian National Chamber of Commerce and Industry has distributed the 40 acres of land it
was allocated in the Altanbulag free trading zone among 21 companies. Some of them will transport
Chinese goods to Russia. The Chamber Secretary, E.Oyuntegsh, has expressed the hope that the
free trading zone will make a great contribution to the Mongolian economy by linking three
countries.
Source: www.news.mn
U.S.-MONGOLIA BUSINESS FORUM IN JUNE TO FOCUS ON ENERGY
The Fourth U.S.-Mongolia Business Forum will be held on June 9, jointly hosted by the U.S.
Department of Commerce, Mongolia's Ministry of Foreign Relations and Trade, Ministry of Mineral
Resources and Energy, the Foreign Investment and Foreign Trade Agency, and its Embassy in the
USA. The Forum will provide valuable information about commercial opportunities in Mongolia, and
give companies a chance to meet potential business partners. Its focus will be on the energy sector,
with special emphasis on coal mining, coal and methane power production, oil extraction and
processing, renewable energy, and nuclear energy.
Among the speakers will be Mr. Gary Locke, U.S. Secretary of Commerce, Mr. S.Batbold, Mongolian
Minister of Foreign Relations and Trade, Mr. Kh.Bekhbat, Mongolian Ambassador to the U.S., senior
Government officials from both countries, and representatives of U.S. and Mongolian business
communities.
Mongolia is in critical need of new energy infrastructure development and new energy sources.
Mongolia has abundant coal deposits, which is the major source of energy as well as a cause of
severe pollution problems. Mongolia's Government is encouraging the development of renewable
energy, such as hydro, solar, and wind energy, and has an ambitious goal for broad-based
renewable energy development. Mongolia also has substantial oil reserves and is one of the richest
countries in terms of uranium deposits, making it an attractive locale for the development of
nuclear energy.
Source: Montsame
GOVERNMENT WANTS CHANGES IN INSURANCE LAWS
The Head of the Government Office, Minister B.Dolgor, has submitted draft changes to the
insurance law in force since 2004. The Speaker will now decide when, and if, these will be
discussed by Parliament. There are 16 licensed insurance companies in Mongolia, most of them
connected with banks in ways direct or indirect. The draft seeks to offer some additional protection
to insurers against financial risks by specifying how and where the insurance companies may not
invest their corpus. Also, the Financial Regulatory Authority will fix the minimum amount the
insurance companies must hold in reserve.
Source: Odriin sonin
AREA UNDER LOGGING EXTENDED TO CURB ILLEGAL TIMBER TRADE
The Ministry for Nature, Environment and Tourism has permitted logging in 1.5 million square
meters this year, more than double the area authorized last year. Minister L.Gansukh said the
earlier restriction had proved counterproductive, as illegal felling could not be controlled, and the
Government also lost taxes from timber production in about three million square meters.
To put a halt to uncontrolled destruction of forests by loggers, the ministry will keep a strict watch
on them this year. Eight provinces with forests have established a separate department to make
9. sure that only licensed organizations cut trees and their operations will be monitored at every
stage.
Source: Ardiin Erkh
MSE OFFICIALS ATTEND MEETING IN THE PHILIPPINES
CEO R.Sodkhuu and Foreign Relations Advisor J.Choinkhor are representing the Mongolian Stock
Exchange (MSE) at the four-day General Assembly of the Asia and Oceania Stock Exchanges
Federation in the Filipino city of Sebu. They will present a report on the financial and economic
situation in Mongolia and the activities of MSE. They will also take the opportunity to meet with
representatives of other stock exchanges with which MSE has cooperation agreements and try to
establish such relations with other stock exchanges as well.
Source: Montsame
POLITICS
MPRP PLEDGES HOMELAND BOUNTY AND “HUMANE, LAW-ABIDING AND JUST” SOCIETY
The motto of the re-election platform of President N.Enkhbayar, the MPRP candidate, is
“Strengthen the Power of Peace, and Let the Bounty of the Homeland be Provided”. Its goal is the
establishment of a “humane, fair, law-abiding and just society” and it is structured on three
cardinal principles, each then divided into subsidiary programs. The three are “Responsibility and
Honesty”, “A Civilized and Peaceful Society”, and “A Progressive and Productive Economy”.
The success of the first depends on the development of three components: Appropriate state
structure, a service-oriented State, and a State functioning with the “highest sense of
responsibility”. The platform promises to ensure the spread of “glasnost and openness”, calls upon
the people to “intensely participate in the affairs of the government and the state”, and pledges to
“improve the election system”. Principles of “national solidarity and security” will be strengthened,
and “justice will be guaranteed to the public without bureaucracy and corruption”.
Public services will be “friendly, fair and adequate” causing the people less expenses and
inconvenience, and will be run by “skilled professionals”. Graduates from “domestic and foreign
universities with doctorate and master's degrees” will be encouraged to join the state services.
Fewer “special permissions” will be issued and “a new system of registration and information”
introduced, giving the public “opportunities to control the activities of judicial, prosecution, and
law enforcement bodies”. Citizens will be motivated to develop “belief and trust” in “a new
Mongolia to be recognized in the world”.
A “free general medical service” will be considered, and education in both secondary schools and
higher centers “will meet international standards”. A legal, ethical, and informed environment will
be created where “people can live free of fear, along with family, organization and staff”.
Ecological balance will be restored and enforced, air and water pollution reduced, and soil erosion
checked.
National security will be strengthened and an “active foreign policy” promoted. The National
Development Strategy will be implemented and GDP per capita raised by supporting growth of
livestock-based national production and encouraging small and medium-sized enterprises. A
“national program on mineral resources" will be implemented so that “a bounty of the homeland
can be distributed among the people”, and they can be “provided with apartments, and their
education and skills improved”, leading to full employment. The capital city will be made
environment-friendly and turned into a business and tourism center. At the same time satellite
centers will be promoted in the main regions.
Source: Montsame
DP PLATFORM STRESSES JUSTICE, FREEDOM, DEMOCRACY
Releasing his platform for the presidential election the DP candidate, former Prime Minister Tsahia
Elbegdorj, last week pledged to be “a guardian of democracy, freedom, and independence” and
said he would “always respect the interests of the Mongolian people and listen to their voices”.
The platform says if he is elected President his performance would be guided by five principles.
10. The first of this is “establishment of justice”. Mr. Elbegdorj said there is at present “no justice in
Mongolia as the laws that govern the people do not apply to high officials and 80 percent of the
total national wealth is in the hands of only 10 percent of the population”. This inequity is aided by
bureaucracy and corruption, and “without their elimination there will be no development”, the
platform said.
The second guiding principle is “supporting rural and regional development through
decentralization of political and economic rights and powers”. People “who buy national products”
would be rewarded and Mongolia will “export good products, not good manpower”.
The platform sees the President as “the soul mate of the people” who are suffering from
"unemployment, poverty, fear of the economic future, and destruction of nature” and promises
adoption and implementation of “effective eco-friendly policies”. Calling the President “Mongolia’s
face to the world”, the platform says only “a stable Mongolia, unwavering in its commitment to
democracy” will earn the honest admiration of “the world community”.
Source: Montsame
MUCH TO LEARN FROM CHINA’S ECONOMIC RECOVERY POLICIES, FEELS BAYAR
Prime Minister S.Bayar returned home on Sunday evening after a busy five-day visit to China,
holding talks with leaders, attending conferences, and visiting places. This was Mr. Bayar's first
official trip to China after he took over as Prime Minister in November 2007.
He met his Chinese counterpart Wen Jiabao on the sidelines of the 2009 session of the Boao Forum
for Asia (BFA) in south China's Hainan Province, and both reiterated that the two countries would
make joint efforts to deepen bilateral relations. Mr. Wen said China planned to take the 60th
anniversary of the establishment of diplomatic ties with Mongolia as an opportunity to boost the
bilateral relationship to a new high.
Mr. Wen suggested establishment of a sound mechanism for cooperation, and wanted priority to be
given to cooperation on infrastructure construction, mineral resources exploitation, and to financial
cooperation, so as to achieve common development. He offered continued assistance to Mongolia
within China’s capacity. Mr. Bayar said closer cooperation with China was important for Mongolia to
tackle the current global financial crisis, and expressed interest in developing border ports to
handle more trade, not just between the two countries, but also with other Asia Pacific countries.
Thanking China for all its help, Mr. Bayar said it was important for Mongolia to make full use of
previous loans and aid, particularly the USD300 million loan on easy terms. The two Premiers also
attended the signing ceremonies for bilateral cooperation documents in mineral resources, food
safety and finance sectors.
Earlier, in an interview with the news agency Xinhua during the Boao Forum, Mr. Bayar called
Mongolia “a good friend” of China and said “the policies and measures China has taken to handle
the financial crisis are worth learning for other countries of the world including Mongolia". He
hoped the forum would turn out to be the platform where “solutions to the crisis" would be found.
He believed “economic and trade relations with China are at their best ever level in history, and
will continue to progress”.
In Beijing, Chinese Vice President Xi Jinping told Mr. Bayar that working together to advance their
relationship "would benefit the two peoples" and identified the three principles that underline the
growth of friendly and strong neighborly relations. These were, “first, respect for each other's
independence, sovereignty and territorial integrity; second, genuine commitment to enhancing
bilateral relations; and, third, treating each other's development as an important opportunity to
increase cooperation”. Mr. Bayar said China's efforts to cope with the international financial crisis
“strengthened Mongolia's confidence in surviving difficulties”.
Source: www.chinaview.cn, www.xinhua.net, www.news.mn
MAKING ULAANBAATAR MORE EXPENSIVE ONLY WAY TO HALT MIGRATION, SAYS CITY OFFICIAL
The Ministry for Nature, Environment and Tourism has revealed figures that show 54.7 percent of
the 470,000 acres of land in Ulaanbaatar has turned into desert, without nutrients for plant life to
survive. The volume of garbage has been increasing by 10-15 percent yearly, and 70 percent of the
waste cannot be recycled. An ecological disaster is looming.
11. Deputy Mayor Da.Ganbold has said that usually living expenses in capital cities are higher than in
the rest of a country, but Ulaanbaatar is the cheapest place in Mongolia, one reason why people by
the thousands keep coming here. The city is growing under its own momentum, unregulated and
unplanned. The Government has no power to stop the migration from the provinces as a Mongolian
citizen has the right to live anywhere he wants. The only way open to the Government is to make
Ulaanbaatar economically unattractive for migrants. “Only by raising power and water charges, can
we tackle the threat to the ecology,” he said.
Source: www.news.mn
MP RESENTS “INAPPROPRIATE REFERENCES” IN ETHICS DRAFT
Lively debate marked the several discussions of a draft resolution on MPs’ ethics by the Standing
Committee on State Structure in the past few days. Ts.Davaasuren criticized the draft for
containing “inappropriate references”. He singled out the clause saying “Office furniture must not
be used for personal interest” and wanted to know if there was any MP who was guilty of this.
The draft would not allow MPs to receive gifts, travel expenses and other financial support from any
source without prior permission from Parliament, but two MPRP members, J.Sukhbaatar and
D.Lundeejantsan, said MPs often needed to travel to places and there would be nothing unethical in
someone else paying for their trip. The committee finally agreed to rephrase the formulation to
indicate that they would not receive travel expenditure from others if the travel could in any way
“influence their political judgment and decision”.
Another point in the draft referred to making promises. S.Lambaa said it is usual “for us to promise
many things to our constituents. We say we shall give gers, other presents, money. Before Tsagaan
sar many of us distribute cakes. Now every MP is receiving letters from many voters where they are
asking for the promised money.”
Source: en.News.mn
TIME FOR POLITICAL REHABILITATION EXTENDED UNTIL 2011
Parliament has approved a draft law to extend the time to pay compensation to victims of political
repression in the socialist days, and their formal rehabilitation. This is the fourth time the period
has been extended. The process started in 1999 and has so far cleared about 29,000 citizens. The
present extension will deal with 6,600 more people, and their cases will be settled by December 31,
2011. Several MPs voiced concern that the time may not be enough for disposal of all the cases. The
work will be entrusted to a committee formed for the purpose, the General Intelligence Authority
and the State General Prosecuting Agency.
Source: www.news.mn
TV FILM BEING MADE ON PEOPLE OF MONGOLIAN ANCESTRY
A National Television film team has left for Turkmenistan for work on its projected series “World
Mongol Family” about people with Mongolian ancestry living in other countries. The team has
already traveled to the Buriyat and Khalimag Republics in Russia, to Khukhnuur in China, and to
India and Afghanistan. Turkmenistan has about 6,000 people of Mongolian descent. After filming is
done in some other countries, finishing work will be given to the documentary in 9-10 parts.
Source: Ardiin Erkh
HIGH OFFICIALS FOUND WITH FAKE ACADEMIC CERTIFICATES
The Agency Against Corruption has found that two high-ranking officials hold their position on the
strength of false academic certificates. One even has a new identity.
The Head of the City Road Agency was known as Batmunkh when, at age 17, he came to
Ulaanbaatar in 1981 from Uvs aimag. He applied for a new ID in the name of Bat-Erdene. He had
actually finished only Grade 7 of secondary school, but he procured a fake secondary school
certificate as well as graduation certificates from the University of Agriculture and the University of
Finance. With the help of these his rise in life was quick. The Agency also found he had used state
money for his own purpose. The Governor of Songinokhairkhan district of Ulaanbaatar,
12. Ch.Saikhanbayar, submitted false certificates of having qualified for the Master’s degree from the
State Administration and Management Institute.
Source: Ardiin Erkh
AVOIDING MILITARY SERVICE MAY COST MORE
Explaining the draft law on payment to the state in lieu of military service, Minister for Defense
Lu.Bold has said that the amount of money sought is to be increased by 30 percent. He said military
service is a citizen’s constitutional responsibility and it is a matter of regret that the number of
people who are not fulfilling it and also not paying the financial compensation is on the rise. Last
year 1,400 eligible men were exempted from military service on payment of the compensation,
double the number in 2007.
Source: Onoodor
PARTY MPs DONATE MNT1 MILLION EACH FOR NEW MPRP BUILDING
Construction of the new MPRP building is likely to start soon after all 45 MPs from the party donated
MNT one million each to a fund for the purpose. Ordinary party members have also contributed. The
building was damaged during the July 1 incidents.
Source: en.News.mn
MONGOLIA FAVORED AS A CENTER OF REGIONAL COOPERATION
Some 40 scholars from 23 countries including Japan, South Korea, Germany, the United States,
China, Russia, Canada, Kazakhstan, Uzbekistan, Finland, Switzerland, Sweden, Italy, Israel, and
Turkey attended a conference on "Central and Northeast Asia’s security dimensions: Ulaanbaatar-
New Helsinki" in Ulaanbaatar on April 20 and 21. Several Ambassadors to Mongolia were among
those who attended the conference, jointly organized by the Institute for Strategic Studies and the
George C. Marshall Center for Security Studies.
The conference took note of Mongolia's neutral and friendly-to-all foreign policy and discussed the
possibilities of it becoming the center of regional cooperation. Views were also shared on the
security challenges faced by Central and Northeast Asian nations.
Source: Montsame
NEW MONGOLIAN LAWS
The following amendments to current Mongolian laws were published in recent weekly Government
Bulletins. Unless decided otherwise by Parliament, the laws take effect ten (10) days
after publication.
Bulletin Date Law
04.06.2009 Amendments to "Law on General Taxation"
Amendments to "Law on Excise Tax"
04.13.2009 Amendments to "Law on State Budget for 2009"
Please visit BCM’s website, Legislative Committee, for a summary of new Mongolian laws.
BCM members who wish complete versions of the laws in Mongolian language are welcome to call or
email the BCM office (11-332-345; info@bcmmongolia.org) to arrange for a convenient pickup.
ANNOUNCEMENT
BCM is pleased to announce that Mongolian National Broadcasting is cooperating with BCM on “MM
Today", its English News show aired each Friday evening. Tune in tonight from 10:15-10:25 PM to
see and hear some of the articles from today’s BCM NewsWire.
13. SPONSORS
ECONOMIC INDICATORS
MSE WEEKLY REVIEW
For the week ended April 17, 2009, trading activity on the Mongolian Stock Exchange (MSE) totaled
10.2 million shares with 28 companies traded. Total market value of transactions was MNT 843.5
million. Total market capitalization of the 358 stock companies listed on the MSE was MNT 454.2
billion, and decreased by MNT 5.1 billion, or 1.1 % from the previous week.
The Top-20 Index decreased by 9.91 points or 0.2% compared to the previous week, closing at
5,046.29 points. The MSE Composite Index increased by 17.69 points or 0.7% compared to the
previous week, closing at 2,507.08 points.
Most active stocks traded were: Khuh Gan (9,872,800 shares), Remicon (285,600 shares), UID
(27,700 shares), Genco Tur Buro (14,400 shares), and APU (12,700 shares).
Major share price percentage gainers were: Talkh Chicker (15.0%), NIC (7.7%), Atar Urguu (7.0%),
Genco Tur Buro (5.9%), and Zoos Goyol (5.0%). Major share price percentage losers were: Baganuur
(17.4%), Takhi (10.0%), Spirt Bal Buram (6.6%), APU (5.5%), and HB Oil (5.0%).
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
March 31, 2009 *16.3% [source: NSOM]
* year over year (yoy)
14. CURRENCY RATES – April 23, 2009
Currency name Currency Rate
US dollars US 1423.19
Euro EUR 1839.76
Japanese yen JPY 14.50
British pound GBP 2074.80
Hong Kong dollar HKD 183.64
Chinese yuan CNY 208.38
Russian ruble RUB 41.78
South Korean won KRW 1.06
Disclaimer: Except for reporting on BCM’s activities, all information in the BCM NewsWire is
selected from various news sources. Opinions are those of the respective news sources.
