bcm newswire issue 448

BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 448 – October 14, 2016

BCM NewsWire provides short summaries of news collected from around the world. Each

article is kept to a maximum of 150 words for brevity, but click on the link next to

“Source” to read the full article.

NEWS HIGHLIGHTS:

Business:

• Rio Tinto under pressure to justify Mongolia mega-mine

• Rio CEO says Mongolia won’t receive mine dividend for 10 years

• Cabinet recalls investigation into Erdenet Mining

• TDB holds no ownership in Erdenes, CEO says

• Mongolian Mining obtains Cayman court approval for share transfers

• Darkhan metallurgical plant’s union demands backpay

• Baker & McKenzie.Wong & Leow advises on Tsetsii wind farm

• Cadbury's new milk tray man even delivers to gers in Mongolia

• Urban Jeans rolls out new traditional-inspired lineup

• CHPP Power Plant II JSC Shares Split in Four

• MSE valued at MNT20 bn

Economy:

• Mongol Bank: FX auctions, 1-week bills

• World Bank adjusts down Mongolia GDP growth projection to 0.1%

• Mongol Bank reports 13.7 tons of gold reserves

• Rio Tinto awaits word on Mongolia's railway, power project investment

• No more than 4 investors hold 70% of MSE shareholdings, study shows

• World Bank, International Development Association sign on for export project

• Highway to new airport scheduled to commission in 2018

• Government to release student loans

• Tuv wraps up harvest

• Liver doctors to form professional council

• Glenwood Springs ideas summit small but ‘impactful’

• Women's networking helps create fresh ideas

• Government cuts ’clean air’ spending as deaths continue

• UNICEF, SDC partner for children’s water sanitation

• Working with the most vulnerable girls and boys

• China to help Mongolia in rare Gobi bear protection

• Beaver populate on the rise at Tes River

• 2,500 volunteers enlist for community watch groups

• Do Genghis Khan and Westerners have a common ancestor?

• Erdenebilegism: A new phenomenon in Mongolia’s democracy—EDITORIAL

• What the IMF's return means for Mongolia—EDITORIAL

Politics:

• Parliament to skip autumn break for 2017 budget

• Excise tax on petrol and diesel reduced

• Bill to ban MPs from holding offshore accounts

• Mongolia budgets 352.2 billion for 104 gov’t objectives

• President discusses judicial reform with court officials

• Dems criticize MPP government for nepotism and broken promises

• Development Bank’s former director arrested

• Laid off State Bank employees file suit

• Vocational students protest lost allowances

• Protesters forced out of their homes demonstrate against former governor

BCM Updates:

• New Mongolian Laws

• Upcoming Events

• Working Groups News

• Job vacancies at member organizations

• Member-to-Member Special Offers & Benefits

• Websites Update - Presentations, Mongolia Reports, Interviews

Economic Indicators:

• Inflation

• Central Bank Policy Rate

• Currency Rates

*Click on titles above to link to articles.

SPONSORS

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BUSINESS

RIO TINTO UNDER PRESSURE TO JUSTIFY MONGOLIA MEGA-MINE

Rio Tinto Group’s chief executive is under growing pressure from investors and analysts to

justify the FTSE 100 giant’s decision to build one of the world’s most expensive mines in

Mongolia. Shareholders are concerned that the USD12 billion project, called Oyu Tolgoi,

could be a financial disaster. They have begun to question management about the

financial and technical assumptions underpinning the initiative. Rio organized a trip for

analysts and investors to the copper project this month where it will seek to allay their

concerns.

In July, the company forced Bernstein, the American broker, to cancel a conference call

for discussing a highly critical report published by Bernstein. The report’s authored,

former Rio Tinto general manager of valuation, Neal Brewster, said risks included technical

challenges to its cave excavation approach, a potential requirement to build a USD1 billion

power plant, bullish performance forecasts and the possibility that Mongolia could

expropriate the asset.

Source: The Australian

RIO CEO SAYS MONGOLIA WON’T RECEIVE MINE DIVIDEND FOR 10 YEARS

Rio Tinto Group said Mongolia won’t receive any dividend from the giant Oyu Tolgoi mine

for 10 years as the world’s second-biggest mining company prioritizes completing a USD5.3

billion underground expansion. “We shouldn’t forget that Oyu Tolgoi is a long-term

project,” Jean-Sebastien Jacques, Rio’s chief executive officer, said in an interview with

Bloomberg Television Mongolia in Ulaanbaatar on Thursday. “It will take us five years to

build the infrastructure and seven to nine years to ramp it up.”

“Until we get to a steady state, which is clearly 10 years down the road, we will not pay a

dividend to anybody,” he said. Rio reported net earnings of USD53 million from Oyu Tolgoi

in the first half of this year. Mongolia owes Turquoise Hill about USD1 billion, Jacques said.

Source: Bloomberg

CABINET RECALLS INVESTIGATION INTO ERDENET MINING

The Mongolian government has not ordered further investigation into purchase of Russia’s

49 percent shareholding in Erdenet Mining Corp., which met some controversy after being

announced a day before the election, following the conclusions received by an

investigation into the deal. Prime Minister Jargaltulga Erdenebat’s Cabinet Secretariat

reviewed the undisclosed conclusions of the private company named Mongolian Copper’s

purchase for the shareholding for an alleged USD400 million from MongolRosTsvetmet. The

little-known company borrowed USD200 million from Trade and Development Bank of

Mongolia (TDB) for the purchase, and Mongolian Copper’s head was also reportedly an

attorney working on staff at TDB.

The Bank of Mongolia has been ordered to employ a separate investigation on the financing

for the deal, and if it grants TDB any shareholding.

Source: Montsame

TDB HOLDS NO OWNERSHIP IN ERDENES, CEO SAYS

The head of Trade and Development Bank of Mongolia LLC has denied holding any

ownership over Erdenet Mining Corp. in response to public uproar about a mysterious deal

it helped finance to purchase Russia’s stakeholding in the copper mine. “Our bank helped

the purchase as a financier, because we are asked to. That is our business,” said TDB Chief

Executive Officer O. Orkhon. He added, “I have to say officially that we do not have any

share of the Erdenet Mining Corp.” Orkhon also rejected speculations that the deal was

somehow related to a USD500 million sovereign-backed bond the bank issued in 2015

where TDB agreed to a currency swap deal with the central bank.

Meanwhile, Erdenet’s director, Ts. Davaatseren, has rejected assertions that the deal was

tainted and that the company paid less tax this year than previous years. “We are asking

that Erdenet not be politicized,” he said.

Source: Udriin Sonin, News.mn

MONGOLIAN MINING OBTAINS CAYMAN COURT APPROVAL FOR SHARE TRANSFERS

Mongolian Mining Corporation is free to engage in its debt restructuring plan with a

Cayman court’s 7 October decision that approved pending and future share transfer

orders. Mongolian Mining’s hired advisor So Man Chun of PriceWaterhouseCoopers has

helped protect the firm against so-called “winding up order,” which forces an insolvent

company into compulsory liquidation. “As at the date of this Announcement, no winding up

order had been made against the Company,” reads an 11 October statement.

“Accordingly, there is no impediment to the trading of the Shares.”

Source: Mongolian Mining Corp.

DARKHAN METALLURGICAL PLANT’S UNION DEMANDS BACKPAY

A trade union is demanding back pay from the Darkhan Metallurgical Plant. The Federation

of Energy, Geology and Mining Workers Trade Unions of Mongolia (MEGM) claims that 6,000

employees at the plant are owed salaries. The plant has been on standby, operating only

15 days a month since the company QSC LLC took control of the company, but the union

argues that employees are still owed 60 percent of their wages, as per the management

agreement it signed. “A court has ruled in favor of MEGM,” said union head Kh.

Buyanjargal. “Therefore it requires them to follow the court decision.”

The government had tendered an concession contract to QSC to build a railway. During a

meeting with the company’s management and the government, Prime Minister Jargaltulga

Erdenebat said a task force would be established for looking into the matter.

Source: UB Post

BAKER & MCKENZIE.WONG & LEOW ADVISES ON TSETSII WIND FARM

The Singapore-based law firm Baker & McKenzie.Wong & Leow has advised on Mongolia’s

second wind farm developed by the private, the 50-megawatt Tsetsii wind farm. The

practice, which is the Singapore member firm of Baker & McKenzie International, advised

sponsors Newcom Group and Softbank Group on the development and financing for the

construction of wind farm in southern Mongolia. The project will help to supply Mongolia's

power demand with clean, eco-efficient electricity by harnessing the country's

inexhaustible wind resources, contributing to the trend of increasing adoption of

renewable energy in Mongolia.

This deal follows the firm’s advice on the first successfully developed wind farm in 2013.

"We have now advised as lead counsel on four power projects in Mongolia - more than half

of the power projects being developed in the country,” said Martin David, principal and

head of the Singapore project practice.

Source: Conventus Law

CADBURY'S NEW MILK TRAY MAN EVEN DELIVERS TO GERS IN MONGOLIA

A year ago, Cadbury revived its long-running "Milk Tray Man" campaign in Britain, with an

interactive element, encouraging ordinary people to apply to be cast as the new Bond-like,

black clad hero. While at the time there were rumors (as with Bond) that the new Milk

Tray Man could even be female, a teaser for the new ad, which breaks this weekend on

"The X-Factor," shows that the Mondelez-owned brand hasn't been that brave—firefighter

Patrick McBride is the same kind of dark, brooding good looking guy we've seen in the past.

The difference this time is that he's delivering his box of chocolates not to a castle or a

palace, but to a Mongolian ger—presumably the kind of place millennials would really go to

get away from it all without a Wi-Fi signal.

The 20-second trailer, seen at the Source, is sumptously filmed in Mongolia's Altai

Mountains, and the full 90 second spot is promised to feature stampeding yaks and

Mongolian tribesmen. Chris Palmer at Gorgeous directed, for Fallon London.

Source: Creativity Online

URBAN JEANS ROLLS OUT NEW TRADITIONAL-INSPIRED LINEUP

Denimon, the Mongolian manufacturer behind the budget brand jeans Urban, is rolling out

a new line of Mongolian traditional garb made of denim. the name Denimon is an

amalgamation of an Italian village where the world’s first denim uniforms were first

weaved and Mongolia. Founded in 2009, it launched production in a basement apartment

with only three employees to become a top manufacturer today, producing 30 types of

clothes with over 100 different designs.

Source: Montsame

CHPP NO. 2 JSC SHARES SPLIT IN FOUR

Combined Heat and Power Plant (CHPP) No. 2 announced a one-for-four stock split on 18

October. The Mongolia Stock Exchange-listed plant will quadruple its shares for a total of

about 72.85 million shares valued at MNT25 each.

Source: Cover Mongolia

MSE VALUED AT MNT20 BN

Privatization of the Mongolia Stock Exchange (MSE) could net Mongolia MNT20 billion,

according to the finance minister. The MSE had been valued at MNT5.2 billion earlier this

year, with fixed assets valued at MNT3.95 billion, compared with the more recent

valuation of MNT20 billion. Mongolia still plans to privatize government owned companies

and structures, a promise carried over from the previous administration under the

Democratic Party, as 70 percent of state-owned assets were operating at a loss. The

Ministry of Finance has recommended full privatization compared with the a previous plan

under the Democrats to sell of just 66 percent of the exchange.

In the first half of the year, the MSE reported a a 613.2 million revenue shortfall, following

losses of MNT956 million loss for 2014 and MNT236.1 million. Some observers have

attributed the MSE’s losses to the “ultra-low latency” of the Millennium Exchange platform

integrated into trading in 2012 as part of the local bourse’s partnership with the London

Stock Exchange.

Source: UB Post, News.mn

ECONOMY

MONGOL BANK: FX AUCTIONS, 1-WEEK BILLS

The Bank of Mongolia on 13 October sold USD15 million and CNY10 million to commercial

banks at currency auctions (out of bids totaling USD56.8 million and CNY81.5 million) for

closing rates of MNT2,288.61 and MNT340.50, respectively. Also that day, it rejected an

equivalent of USD44.5 million in tugrik swap agreements.

On 12 October, the central bank issued MNT57 billion in one-week bills at a weighted

interest of 15 percent.

Source: Bank of Mongolia

WORLD BANK ADJUSTS DOWN MONGOLIA GDP GROWTH PROJECTION TO 0.1%

Growth in developing East Asia and Pacific is expected to remain resilient over the next

three years, according to a new World Bank report, but Mongolia will not fare so well.

Among the smaller economies, the growth outlook has deteriorated markedly in some

commodity exporters. In Mongolia, the economy is projected to grow only 0.1 percent,

down from 2.3 percent in 2015, on weakening mineral exports and efforts to control debt.

The newly released East Asia and Pacific Economic Update expects China to continue its

gradual transition to slower, but more sustainable, growth, from 6.7 percent this year to

6.5 percent in 2017 and 6.3 percent in 2018. In the rest of the region, growth is projected

to remain stable at 4.8 percent this year, and rise to 5 percent in 2017 and 5.1 percent in

2018. Overall, developing East Asia is expected to grow at 5.8 percent in 2016 and 5.7

percent in 2017-2018.

Read the full report here.

Source: World Bank

MONGOL BANK REPORTS 13.7 TONS OF GOLD RESERVES

The Bank of Mongolia reported a 34 percent increase in gold reserves at the end of

September compared with 2015. Gold reserves grew to 13.7 tons largely on the back of a

cut in the royalties to 2.5 percent in 2014 compared with up to 10 percent beforehand.

The central bank has bought 15.1 tons in the past decade. The central bank’s reserves

since the transition to a market economy peaked in 2005 at 15.23 tons of gold.

Source: Unuudur

RIO TINTO AWAITS WORD ON MONGOLIA'S RAILWAY, POWER PROJECT INVESTMENT

Rio Tinto Group is waiting for word on the Mongolian government's efforts to attract

investment for railway and power infrastructure projects that will boost the global miner's

Oyu Tolgoi copper-gold mine, Chief Executive Jean-Sebastien Jacques said. The country

will pitch railway projects to the China-initiated Asian Infrastructure Investment Bank and

other investors to support its mining industry, regional trade, as well as bring in foreign

investment. "We're looking very carefully at the situation about railways because we have

a vested interest," Jacques told Reuters on Thursday.

Jacques would not disclose planned spending for next year, but said a budget was up for

approval by Oyu Tolgoi's board in late November or early December. "When we start

spending and building the mine, the sooner the mine is up and running, the better it is for

the returns of the government of Mongolia, for Rio Tinto," he said.

Source: Reuters

NO MORE THAN 4 INVESTORS HOLD 70% OF MSE SHAREHOLDINGS, STUDY SHOWS

More than 70 percent of all shares listed on the Mongolian Stock Exchange (MSE) are owned

by just three or four investors, according to a new study from the Mongolian Securities

Clearing House and Central Depository (MSCHCD). The study looked at 310 companies,

including 30 partially state-owned companies. It found that 1,000 investors held about 5

billion shares, or 61 percent of all shareholdings. The government held 35 percent of MSE-

listed company shareholdings, while the remainder was held by 300,000 small investors,

representing 3 percent of shareholdings.

Source: Unuudur

WORLD BANK, INTERNATIONAL DEVELOPMENT ASSOCIATION SIGN ON FOR EXPORT

PROJECT

The World Bank and International Development Association have signed on to help the

Mongolian government execute a project to improve Mongolia’s capacities for export

trade. Prime Minister Jargaltulga Erdenebat’s Cabinet approved of a motion for the Export

Development Project on 11 October for approval by Parliament. The project will be funded

with a 25-year loans of USD20 million with 1.25 percent interest.

Source: Montsame

HIGHWAY TO NEW AIRPORT SCHEDULED TO COMMISSION IN 2018

A 32 kilometer highway connecting Ulaanbaatar to an new international airport being built

at Khushig Valley has reached the development stage, officials said. The highway is

designed to be 32.5 meters wide with six lanes.

The road is projected to have four sections along the 32 kilometers. For the first section of

22.5 kilometers, a Chinese railroad construction company has been selected as the project

executor which established a Lump Sum Turnkey (LSTK) contract with the government in

September of 2015, said G. Anand, official from the Ministry of Road and Transport

Development.

Source: Montsame

GOVERNMENT TO RELEASE STUDENT LOANS

Government plans to release ten-year student loans to help Mongolians pay for growing

education costs. The State Education Fund was renamed the Educational Loan Fund with

the aim of providing loans to students on 5 October by the Cabinet Secretariat under Prime

Minister Jargaltulga Erdenebat.

The Cabinet decided that loan criteria would be finalized this month.

Source: Montsame

TUV WRAPS UP HARVEST

The harvest season closed early for farmers in Tuv Aimag on 10 October in the face of

predicted snow storms by authorities. Wet snow might hit Tuv Aimag from 5 to 7 October,

“ said J. Surenkhorloo, an official from the Food and Agriculture Department. “Harvesting

needs to be hurried.

Farms were 65 percent complete with harvests at Tuv Aimag, which typically produces

around 47,000 tons of potatoes, 4,000 tons of various other vegetables and 4,000 tons of

crops used for animal fodder. Farms enlisted the help of 318 university students and 116

students from trade schools to pitch in for the hurry to finished, as well as 709 soldiers.

“Everyone is doing their best to complete the work on time,” said a Tuv Aimag

representative.

Source: UB Post

LIVER DOCTORS TO FORM PROFESSIONAL COUNCIL

Liver doctors plan to form a new professional council that will work under the Ministry of

Health to help advance liver treatment in Mongolia. Members of the health groups

concerned with liver disease met with the ministry on 12 October when they made the

announcement.

Source: Montsame

GLENWOOD SPRINGS IDEAS SUMMIT SMALL BUT ‘IMPACTFUL’

Kherlen Batbayar is happy to know she can just be herself and not try to emulate

somebody else to make a difference in the world. That was one of her takeaways at the

second GlenX Success Summit, held at Glenwood Springs High School on Saturday.

Batbayer is from Mongolia, native country of summit founder Altai Chuluun and his

brother, Mergen Chuluun, executive director of the Business Council of Mongolia who was

among this year’s event speakers on the topic of successful business networking. “Don’t

try to copy people, just learn from them and their experiences,” Batbayar, who works as

an assistant to the consulate of Mongolia in Denver.

GlenX aspires to be the Glenwood Springs equivalent of the Aspen Institute, with the main

goal being to share ideas and provide inspiration for business and community leaders.

Although lightly attended, with about 60 people on hand to hear speakers ranging from

Calaway and life coach Michelle Lefebvre to educator Aaron Garland and several business

and community leaders, Chuluun said he was pleased with the second installment of an

event he hopes to someday grow to the scale of the Aspen Ideas Festival.

Source: Post Independent

WOMEN'S NETWORKING HELPS CREATE FRESH IDEAS

Female leaders from various fields of business said a network event held in Seoul has

helped them create fresh ideas and ultimately improves the world. The event, called the

Power Women Network for Change in Asia Pacific, was held on 29 September at the Seoul

Innovation Park, a social innovation platform located in Eunpyeong-gu, northwestern

Seoul. Uyanga Batzogs, chief executive of Proliance LLC, a medical equipment company

headquartered in Ulaanbaatar, connected with women who have senior care expertise,

through the networking event.

“Today I met some people from the Asia Foundation. I have heard of them but I didn’t

realize that they are doing a project in Mongolia,” Batzogs said. “Using such a good

network, I hope I can help women entrepreneurs to do a better job in Mongolia.”

Source: Korea Times

GOVERNMENT CUTS ’CLEAN AIR’ SPENDING AS DEATHS CONTINUE

The government has cut its investment into reducing air pollution as a result of its

economic crisis. Parliament is set to trim spending on combating air pollution compared

with last year’s MNT102 billion, despite the prevailing health hazards that follows the

burning of wood, coal and more during Ulaanbaatar’s extremely harsh winters.

Mongolia has had some success over the years with programs to replace 97.6 percent of all

ger stoves in Ulaanbaatar with more efficient models, reducing air pollution by 26 percent

last year. However, many residents say they can’t feel the difference, and a medical

survey [Source does not cite the report -ed] has linked air pollution to 52.9 percent of

respiratory disease, 39.9 percent of lung cancer, and 28.8 percent of heart disease.

Source: News.mn

UNICEF, SDC PARTNER FOR CHILDREN’S WATER SANITATION

UNICEF and the Swiss Agency for Development and Cooperation (SDC) have signed an

agreement to work together towards developing effective solutions to improve water and

sanitation for children in schools and kindergartens in Ulaanbaatar ger district and support

effective planning and decision making for local and national authorities. Water, sanitation

and hygiene (WASH) is one of key priorities of UNICEF’s work in Mongolia. Last year UNICEF

has supported the development of “Norms and Requirements for WASH in Kindergartens,

Schools and Dormitories” which was jointly approved by the Ministry of Education, Culture,

Science and Sports, Ministry of Health and Ministry of Finance. In addition to supporting

national standards, UNICEF designed and developed indoor type container facilities as an

innovative solution to improve access to WASH facilities in schools and kindergartens.

Now with the assistance from SDC, UNICEF will generate new data and evidence that will

help the government of Mongolia to plan and budget for better WASH service delivery in

schools and kindergartens. “Sanitation and hygiene are key to child survival, development

and growth,” said Roberto Benes, UNICEF Mongolia Representative. “Unsafe water and

unsanitary facilities have a negative impact on children’s ability to learn in the

classroom.”

Source: Mongolia.GoGo.mn

WORKING WITH THE MOST VULNERABLE GIRLS AND BOYS

Thousands of nomadic herder families lost their only livelihood after extreme winter

conditions, or dzud, struck Mongolia last year and decimated their livestock. The disaster

has also caused anxiety and fear among children, as concerns about the risk of violence,

poverty and migration triggered stress within the affected herder families. The

International Federation of Red Cross and Red Crescent Societies (IFRC) launched an

emergency appeal in March to support the Mongolian Red Cross Society in providing food

and other vital necessities to the affected population.

5,100 children in 20 schools have been targeted with psychosocial support. Through its

Social Care program, the Red Cross is also providing safe spaces for children living on the

streets where they could have their meals, play, warm themselves during winter, and to

engage with other children.

Source: IFRC

CHINA TO HELP MONGOLIA IN RARE GOBI BEAR PROTECTION

The governments of China and Mongolia on Monday reached an agreement to work

together in protecting the rare Gobi bear. The agreement, reached between and by China's

Ministry of Commerce and the Ministry of Environment, Green Development and Tourism

aims to protect Gobi bears living in western Mongolia's Great Gobi conservation area,

which is their only habitat on the earth. Under the agreement, in the coming three years

the Chinese government will provide assistance in scientific research regarding the Gobi

bear's population and environment assessment, promoting the level of management of the

Great Gobi conservation area, and providing necessary equipment and material supplies.

Experts from the Chinese Academy of Forestry have spent eight days in collecting habitat

area information and learning Gobi bear conservation practices through an on-the-spot

investigation across the 18,000-square-kilometer core habitat of Gobi bear in the Great

Gobi conservation area in Mongolia.

Source: Global Times

BEAVER POPULATE ON THE RISE AT TES RIVER

The beaver population at the Tes river in northern Mongolia is on the rise, according to

research from environment officials. The population could have grown to as many as 100 in

three years, said Sh. Boldbaatar, the state inspector for environment for the Tes river,

says “It’s very difficult to say how many of them are there. In three years they have got

more than ever.”

The study conducted in September looked at the number of beavers around the border

between Mongolia and Russia. Beavers were transplanted to Mongolia in 2002.

Source: Unuudur

2,500 VOLUNTEERS ENLIST FOR COMMUNITY WATCH GROUPS

Ulaanbaatar is recruiting residents to act as the city police’s “ears and eyes” to keep

communities safe. Police have trained 2,500 volunteers for its community watch patrols.

The trained civilians will be the first deployed from 10 October as a means of deterring

crime and raising law enforcement’s awareness in the city’s most vulnerable areas.

Source: Montsame

DO GENGHIS KHAN AND WESTERNERS HAVE A COMMON ANCESTOR?

Newly published research indicates that Chinggiss Khan‘s family may not be Mongoloid, as

is generally believed, but Caucasoid. Based on a DNA analysis of bones that likely belonged

to the Mongolian royal family, South Korean researchers have concluded that Genghis Khan

and Westerners might share a common ancestor. “After analyzing the DNA from five bodies

discovered in Mongolia in 2004, we concluded that they were members of Genghis Khan’s

imperial family from the Mongolian era in the 12th and 13th centuries. We also concluded

that these individuals’ patrimonial origins could be the same as the ancestors of

Westerners,” said Lee Kwang-ho, the leader of the research team, on 10 October. Lee is a

professor in the departments of life science and science of cultural heritage at Chung-Ang

University.

The Korean researchers prepared the paper in collaboration with a team led by Dashtseveg

Tumen, a professor of anthropology at the National University of Mongolia. The paper was

published in the 14 September issue of “Plos One,” an open access journal.

Source: the hankyoreh

ERDENEBILEGISM: A NEW PHENOMENON IN MONGOLIA’S DEMOCRACY—EDITORIAL

Parliament’s vice speaker, Ts. Nyamdorj, has discussed openly about one individual, D.

Erdenebileg, who is taking over multiple industries in Mongolia. Chairman of Trade and

Development Bank (TDB), it appears that he owns the majority of its shares through an

offshore account while at the same time owning 99 percent of the shares of Ulaanbaatar

Bank. Nyamdorj said Erdenebileg used similar tactics to take control of the Darkhan

Metallurgical Plant, Khutul’s cement plant, Erdenet Mining Corporation, and

Mongolrostsvetmet. There is also speculation that he’s eying the Baganuur power plant as

well as Thermal Power Plants 3 and 4.

Monopolies set their own prices, restrict the free market competition and impede on

economic development. It will be impossible for a young democracy like Mongolia to

create and sustain free market competition without stopping the corruption that involves

both the government and the private sector.

Source: UB Post

WHAT THE IMF'S RETURN MEANS FOR MONGOLIA—EDITORIAL

Mongolia's relationship with the International Monetary Fund is a tale of geopolitics, local

greed, mismanagement and uneasy ties with Chinese and Western investors. Mongolia's

budget deficit is set to reach 20 percent of gross domestic product this year, and around

USD2 billion in public and private debt is scheduled to come due next year. With the

Mongolian economy on its knees, Chinese creditors are making a case for greater

investment concessions.

Chinese banks offer corporate lending against Mongolian collateral at an average of 5.6

percent compared with 22 percent by Mongolian Banks, and the Chinese shadow banking

market provides funding at rates of 10 to 20 percent. The question on investors' minds is

whether the new IMF bailout will be like the one South Korea received in 1997—a highly

disputed and initially unpopular but ultimately very successful, albeit painful,

restructuring. Or will Mongolia's second IMF bailout in less than seven years fail to achieve

much at all?

Rainer Michael Preiss founded the Mongolia Frontier Fund, a multiasset investment fund,

and is a portfolio strategist based in Singapore.

Source: Nikkei Asian Review

POLITICS

PARLIAMENT TO SKIP AUTUMN BREAK FOR 2017 BUDGET

Parliament will skip its break this autumn for local elections to make time to finalize a

budget for 2017. The Parliament was set to break on 19 October while voters hit the polls

to decide on their local leaders, but lawmakers have decided against it to deal with the

country’s pressing economic concerns.

The Ministry of Finance has projected a budget deficit of nearly 9 percent of GDP, or about

MNT2.589 trillion (USD1.1 billion). That’s down for more than a 20 percent deficit

compared with GDP after expenditure costs. The government has also proposed tax cuts

for businesses that operate in food production, creating construction materials, farming

and animal husbandry in an effort to promote job creation with more small businesses.

Source: News.mn

EXCISE TAX ON PETROL AND DIESEL REDUCED

Mongolia has reduced its excise tax on imported fuel products. The Cabinet Secretariat on

5 October approved the motion to reduce the excise tax on petrol and diesel fuel to

MNT260,000 and MNT280,000 for every ton of petrol and diesel fuel, respectively, that

passes through the Sukhbaatar, Zamyn-Uud and Altan Bulag land ports to Russia and China.

The excise tax rates were fixed at prices of MNT400,000 per ton of petrol and MNT520,000

per ton of diesel fuel. The tax is cut even further for fuels traveling in the country

through the Ereentsav border point, to MNT130,000 per ton of petrol and MNT150,000 per

ton of diesel.

Source: Montsame

BILL TO BAN MPS FROM HOLDING OFFSHORE ACCOUNTS

A new bill from the justice minister would ban high-ranking public officials from holding

offshore accounts if passed by Parliament. Justice and Domestic Affairs Minister S.

Byambatsogt submitted the bill, which does not include accounts connected to private

businesses, to Parliament on 7 October. It follows controversy stirred up by leaked

documents that connect Mongolian officials to offshore accounts, such as the so-called

“Panama Papers,” that have eroded the public’s faith in their government officials.

The number of offshore assets has risen since 1990, when Mongolia opened up to the world

with its independence from the Soviet Union and the move to a market economy, and

today totals USD15 billion. About 13,000 companies of foreign-invested companies are tied

to offshore districts, said Byambatsogt.

Source: Montsame

MONGOLIA BUDGETS 352.2 BILLION FOR 104 GOV’T OBJECTIVES

Mongolia has outlined 104 objectives for 2017 for education and restructuring of the

Cabinet government. The projects will require a total MNT5.5 trillion, including 352.2

billion from the national budget. It has planned for an additional MNT4.1 trillion from

private investors, MNT933.6 billion from foreign financiers, and 117.8 billion from other

sources.

Source: Montsame, 2

PRESIDENT DISCUSSES JUDICIAL REFORM WITH COURT OFFICIALS

Mongolia’s judicial reforms have helped improve the public’s trust in justice, said

President Tsakhia Elbegdorj during a review of the criminal courts on 11 October. In a

meeting between the president and court justices, Attorney General D. Oyuntungalag said

judges have succeeded in becoming more specialized in their practice, and civil courts

were working to close cases more quickly. Over 7,000 cases had been closed through

arbitration, she added.

Mongolia has installed new technical equipment in 115 courtrooms that have benefited

juries, said Criminal Appeals Court Judge S. Soyombo, and that 82 of a total 915 cases

made use of that equipment.

Source: UB Post

DEMS CRITICIZE MPP GOVERNMENT FOR NEPOTISM AND BROKEN PROMISES

The Democratic Party has criticized the current administration under the Mongolian

People’s Party and Prime Minister Jargaltulga Erdenebat for rampant nepotism in a review

of the first 100 days of its operation on 12 October. “The MPP has established a non-

functional government, consisting of blood relatives and horse trainers,” said the deputy

head for the party, J. Batzandan. He went on to say that the MPP had already diverged

from its promises, without elaborating.

The Democrats noted the cuts in allowances for teachers, doctors, students, homeowners,

herders and children, as well as the cancellation of the a law that allowed for spouses to

share each other’s pensions. Meanwhile, the government has raised taxes on alcohol,

tobacco and apartments, said Batzandan. They also criticized their recall of laws meant to

deal with domestic abuse, as well as a policy to crack down on crime, and cuts to judges’

salaries.

Source: Mongolia.GoGo.mn

DEVELOPMENT BANK’S FORMER DIRECTOR ARRESTED

Police have arrested a former director of the Development Bank of Mongolia, Nanjid

Munkhbat, after being accused of corruption during his post at the bank. The former bank

executive has been accused of abusing his powers and misspending funds from sovereign

bonds. Munkhbat could face between five and 10 years in prison for the charges against for

taking land and between two and five years for the charges for the misappropriation of

powers.

Source: Montsame

LAID OFF STATE BANK EMPLOYEES FILE SUIT

Former employees of State Bank have filed a suit against their the bank for what they

claim were unwarranted dismissals. The bank claims that the dismissals of three deputy

executive directors and four non-executive deputies were redundancies that were required

for cost cuttings. Another 20 sectional directors were also let go, and it is planning for

even more lay offs of a number of specialists.

Source: Undesnii Shuudan

VOCATIONAL STUDENTS PROTEST LOST ALLOWANCES

Vocational students demonstrated in front of the Democratic Party’s Headquarters in

Ulaanbaatar on 6 October, demanding the return of their government’s student stipends.

The 40 protesters said that Mongolia’s vocational education system had not devoted to

meet market demand and that they were unhappy with the government’s decision to

discontinue MNT70,000 monthly stipends from the start of January.

Source: UB Post

PROTESTERS FORCED OUT OF THEIR HOMES DEMONSTRATE AGAINST FORMER

GOVERNOR

A group of about 100 of residents of Ulaanbaatar’s Bayanzurkh district have launched

protests against a former governor for lost land they claim. Those people say they were

evicted from their homes at the order of former MP B. Batzorig after living more than 10

years at their homes in Bayanzurkh.

Source: Udriin Sonin

NEW MONGOLIAN LAWS

The following laws, amendments, annulments and addendum to laws were published in the

latest weekly Government bulletin. Unless otherwise decided by Parliament, they will take

effect ten (10) days after publication.

Date Laws

27.09.2016 Defense Law of Mongolia /revised version/

Annulment of Defense Law of Mongolia

Amendments to Law on Mobilization

Amendments to Law on President of Mongolia

Addendum to Law on Special Permits for Business

Amendments to Law on Diplomatic Service

Amendments to Law on Government Special Fund

Amendments to Civil Law

Amendments to Law on State Sign Fee

Amendments to Law on Lawyer's Legal Status

Amendments to Law on Population, Housing National Census

Amendments to Law on Jury

Law on Armed Forces /revised version/

Annulment of Law on Armed Forces

Amendments to Law on Geodesy, Cartography

Amendments to Law on National Reserve

Amendments to Law on State of Emergency

Amendments to Law on Participation to Peace Keeping Operation

Annulment of Some Provisions of Law on Government Special Fund

Law on Military Service

Annulment of Law on Mongolia Military Service Liability and Military

Servant's Legal Status

Amendments to Law on State of War

Amendments to Law on Military Servant Asset Liability

Amendments to Law on Court Decision Implementation

Amendments to Law on Population, Housing National Census

Amendments to Criminal Law

Amendments to Law on Occupational Safety, Hygiene

Law on Military Servant's Legal Status

Amendments to Law on Military Servant's Pension, Allowance

Amendments to Law on Regulations to follow Law on Amendments to Law

on Military Servant's Pension, Allowance

Amendments to Law on Military Servant's Asset Liability

Amendments to Law on Forensic Study

Addendum to Law on Elderly People's Social Welfare

Amendments to Law on Criminal Procedure

Amendments to Criminal Law

03.10.2016 Amendments to Law on Mongolia's 2016 Budget

Amendments to Law on Social Insurance Fund's 2016 Budget

Amendments to Law on Human Development Fund's 2016 Budget

Amendments to Social Insurance

Amendments to Law on Mongolia's Consolidated Budget's 2016 Budgetary

Statement, 2017-2018 Budget Perception

Amendments to Law on Budget Stability

Amendments to Law on Budget

Amendments to Law on Regulation to follow Law on Medical Aid, Service

Annulment of Law on Joint Pension

Amendments to Law Against Corruption

Addendum to Law on Primary, Secondary Education

Amendments to Law on Environment Protection

Amendments to Law on Education

Amendments to Law on Higher Education Funding, Student's Social

Guarantee

Annulment of Law on Regulation to Follow Law on Future Pension Reserve

Fund

Addendum to Law on Future Pension Reserve Fund

Amendments to Law on Concession

Amendments to Law on Livestock Genetic Fund, Health Protection

Annulment of Some Provisions of Law on Mongolia's administration,

territorial unit, its administration

Amendments to Law on Dept Management

Amendments to Law on Employment Promotion

Amendments to Law on Childcare Service

Amendments to Law on Science, Technology

Addendum to Law on Health

Amendments to Law on Government's Special Fund

Amendments to Law on Disabled Person's Rights

Amendments to Law on Civil Service

Amendments to Law on State, Local Property

Amendments to Law on Securities Market

Annulment of Some Provision of Law on Judicial Administration

Amendments to Law on Patent

Amendments to Law on Copyrights and Related Rights

UPCOMING EVENTS

"YELLOWEEN VEUVE CLICQUOT" MASQUERADE BALL, 31 OCT, SHANGRI-LA HOTEL

The Business Council of Mongolia will host the "YELLOWEEN Veuve Clicquot" Masquerade

Ball, 31 Oct, Shangri-La Hotel, free of charge to members. Be part of this unique ball

under the theme of "Masquerade, Black & Yellow" for a gathering of over 400 guests. The

evening will feature live music performances, awards for best costumes, and

complimentary champagne will be offered to the first 200 guests.

Date & Time: Monday the 31st of October, 7PM – 12AM

Venue: Shangri-La Hotel Ulaanbaatar, Naadam Bar

Tax: MNT30.000 for general public (non members); free for BCM members:

Register: Click here to register.

ORGANIZATIONAL PSYCHOLOGICAL MANAGEMENT-2016" FORUM, 22 OCT 2016,

REDROCK TERELJ RESORT

Organizer: NPC & Mandal

What: The "Organizational Psychological Management-2016" research driven forum for 120

influential leaders will be held at the Redrock Terelj Resort on 22 October.

Language: in Mongolian with no translation

Fee: BCM members will have 10% discount.

Registration: Logon to forum.npcmandal.mn (agenda is on the website).

For more information: call (976)-75754232, or email info@npcmandal.mn.

MONGOLIA STRATEGIC TRADE INDUSTRY OUTREACH SEMINAR, 26-27 OCT 2016, BEST

WESTERN TUUSHIN HOTEL

Organizer: The Center for Policy Research, University at Albany, State University of New

York, USA

Co-organizer: BCM, AmCham and Embassy of the United States

What: A free one-and-half-day seminar on trade for high-technology goods, high-value

“strategic” goods and technologies, and how they are regulated by the major exporters of

the world.

Objective: raise awareness and provide fundamental knowledge of how this critical aspect

of international commerce affects businesses in Mongolia.

Speakers: experts from China, Korea, Japan, and the United States.

Agenda: click here for English version; click here for Mongolia version.

Language: in English with simultaneous translation.

Fee: none (free of charge with lunch and coffee break)

Registration: Email Jay Nash, Research Fellow, Center for Policy Research (CPR) at

jnash@albany.edu before 17:00, 20 October 2016.

7TH ANNUAL RISK FORUM, 9 NOV 2016, BEST WESTERN TUUSHIN HOTEL Organizers: Mandal General Insurance, Golomt Bank, Willis Towers Watson Supporting organizations: BCM, Bank of Mongolia, OSHMI, NEMA Objective: Provide business community and government stakeholders with the most comprehensive overview of risks in Mongolia and risk management topics Theme: Global Standards of Risk Management – Mongolian companies’ best practices Language: English & Mongolian (synchronized translation) Participation: Complimentary ½ day event for Executive management of 350 organizations (by invitation only) For more info: Agenda, speakers, and panelists will be announced shortly via BCM

Newsletter; Contact organizers via zaya@mandal.mn for partnership and sponsorship

opportunities.

BCM WORKING GROUP NEWS

BCM’S RISK WORKING GROUP MEETING HELD ON 13 OCT 2016

Risk WG Meeting was held on International Day for Disaster Reduction which is on 13

October of every year.

Objective:

1. Discuss and finalize the BCM Statement on the Draft Amendment of the Law on

Disaster Protection to submit it in an official letter to the NEMA and President’s Office.

2. Discuss the Risk Forum agenda and role of BCM and Risk WG members in the Forum

to be held on 9 November 2016.

3. Agree Risk WG Plans and identify needs of members.

Agreements:

1. The first draft of the BCM Statement as to which comments to include and remove

that were collected from the Joint Risk and Legislative WG members since the last

meeting held in June 2016.

2. to send the revised version for final comments to Risk and Legislative WG members,

and then submit the final version to relevant authorities.

Discussion:

Risk Forum to be held on 9 Nov 2016. Members are welcome to participate in the forum

as a panelist.

For more info, EMAIL A. Bayarmaa, Senior Manager for BCM at Bayarmaa@bcmongolia.org.

- Business Ethics Working Group meeting “Third Party Bribery Risks” 27 September 2016

- Education & Innovation Working Group Meeting on “Opportunities for Fostering

Innovation in the Mongolian Market” 22 September 2016

- Energy & Environment Working Group’s consultation meeting with J.Batbayasgalan,

Deputy Governor of Capital City on “MUNICIPALITY’S ACTION PLAN FOR THE NEXT 4

YEARS”, 15 September 2015

- Risk and Legislative Working Groups' Joint Meeting on the "DRAFT AMENDMENT OF THE

LAW ON DISASTER PROTECTION" 16 June 2016

- Business Ethics Working Group Meeting on “CSR, GIFTS AND HOSPITALITY POLICY”, 7 June

2016

- Capital Markets Working Group Meeting on “OYU TOLGOI UNDERGROUND PROJECT

FINANCING”, 5 April 2016

- Tax Working Group Meeting on “VAT LAW”, 2 March 2016

JOB VACANCIES AT MEMBER ORGANIZATIONS

- B Production is hiring Accountant. For more information, please contact at

azbayar@bproduction.mn

- Transwest Mongolia is hiring hiring Parts Analyst. Deadline for application: Oct 16, 2016.

For more information: please contact atcareers@transwest.mn

Please click here to view full list of Job Vacancies at member organizations.

MEMBER-TO-MEMBER SPECIAL OFFERS & BENEFITS:

- Orchuulga 24 is providing 15% discount on written translation services to BCM Members

- MNC HD TV offers BCM members 20% discount from the fee to be showcased in their “The

Story of Business/Бизнесийн түүх” TV program.

- American University of Mongolia is offering BCM members a 20% discount on all of ELI

Summer Courses.

- Matoza LLC is offering 15% special discount to BCM members on Intensive Business English

Language Course in Poland with a Sightseeing Trip.

Please click here to view full list of Member-to-Member special offers & Benefits.

WEBSITE UPDATES: PRESENTATIONS, MONGOLIA REPORTS

PRESENTATIONS:

- Presentations from “Invest Mongolia 2016” Conference

Please click here to view full list of Presentations.

MONGOLIA REPORTS:

- World Bank, “Mongolia Economic Brief”, Sep 2016

- WPP and Y&R Mongolia, BradnZ’s first ever “Spotlight on Mongolia”, Sep 2016

- ADB, “Asian Development Outlook 2016: Asia’s Potential Growth” (forecasts of the next 2

years for the 45 economies in Asia and the Pacific including Mongolia)

- Invest Mongolia, “Your Guide to Invest in Mongolia” 2016

- BTI, “Mongolia Country Report” 2016

- World Bank, “Doing Business: Economic Profile of Mongolia 2016"

Please click here to view full list of Reports.

ECONOMIC INDICATORS

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

Year 2012 *14.0% [source: NSOM]

Year 2013 *12.5% [source: NSOM]

Year 2014 *11.0% [source: NSOM]

August 31, 2016 *-0.2% [source: NSOM]

*Year-over-year (y-o-y), nationwide

Note: -0.6% y-o-y - Ulaanbaatar City, August 31, 2016

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

March 19, 2012 12.75% [source: Mongol Bank]

April 18, 2012 13.25% [source: Mongol Bank]

January 25, 2013 12.50% [source: Mongol Bank]

April 8, 2013 11.50% [source: Mongol Bank]

June 25, 2013 10.50% [source: Mongol Bank]

July 30, 2014 12.00% {source: Mongol Bank}

January 14, 2015 13.00% {source: Mongol Bank}

January 14, 2016 12.00% [source: Mongol Bank]

May 6, 2016 10.50% [source: Mongol Bank]

August 18, 2016 15.00% [source: Mongol Bank]

CURRENCY RATES – 13 October 2016

Currency Rate

U.S. dollar USD 2,286.28

Euro EUR 2,517.54

Japanese yen JPY 22.01

British pound GBP 2,782.52

Hong Kong dollar HKD 294.67

Chinese Yuan CNY 339.91

Russian Ruble RUB 2.01

South Korean Won KRW 2.01