BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 449 – October 21, 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:

• OT mine hits all-time high in Q3 2016

• Thiess invests in Maptek I-Site laser scanner for OT mine

• Oyu Tolgoi signs a major contract for underground development

• Erdene up 22% after drilling 68 meters of 2 g/t gold

• Baganuur prepped for winter operations, energy minister says.

• KEPCO, SoftBank to embark on super grid project in Northeast Asia

• Minters, A&O, Bakers, NRF involved in Mongolia wind farm project

• Korean contractors set to build Asia’s 4th largest solar farm

• China’s Smart Oil Investment In Dornogovi

• Mongolia hopes to enlist Western tech firms for ‘high-speed data center’

• State hospital recruits Beijing partner for expertise and diagnosis

• Coca-Cola Happiness Center opens at MGG’s Tuguldur Shopping Center

• MIAT bans ‘Samsung Galaxy Note7’ on all flights

• Korea’s ‘Survivor’ type reality challenges celebrity cast in Mongolia

• SouthGobi Resources appoints authorized representative

• JV Consult represents German trade fair operator in Mongolia

• Mongolia hosts conference on nomadic tourism and sustainable cities

• XacBank Awarded “Best Bank of Mongolia- 2016”

• TDB named “The Leading Partner Bank in Mongolia” for 2nd consecutive year

Economy:

• Mongol Bank: FX Auctions, swaps, 1-week bills, T-bills

• Business confidence worsens as sales plunge

• Mongolian PM on mission to halve budget deficit ratio to 9%

• IMF team in Mongolia

• Poland to lend EUR50 billion for trade

• Subsidized mortgage program suspended, again

• Mongolian brands ready for export to Japan

• China, Mongolia eye energy deals

• Mongolia aims to become world’s center for nomadic tourism

• Mongolia ready to cooperate with Kyrgyzstan in agriculture, mining

• End poverty now, Mongolia

• Climate change collectives on the Mongolian steppe

• Why grass now costs more than sheep on Inner Mongolian prairie

Politics:

• Elections carry over scheduled for 23 Oct.

• Japan and Mongolia agree to strengthen ties further

• China, Mongolia to strengthen military cooperation

• Ex-head of Mongolian development bank arrested

• Former State Housing Corporation director accused of embezzlement

• Returned peacekeepers from Sudan waiting on salaries

• Government threatens to sue for allegations of illegal falcons trade

• UB Council investigates ‘Smart Ulaanbaatar’ spending

• Armed robbery goes awry and riot ensues

• Young Mongolian weightlifter sanctioned for doping

• Khoomei included in UNESCO Intangible Cultural Heritage list

• An open letter to citizens of Mongolia, Australia and Malaysia—EDITORIAL

BCM Updates:

• 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.

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BUSINESS

OT MINE HITS ALL-TIME HIGH IN Q3 2016

The Oyu Tolgoi mine has hit an all-time high for material mined in a quarter-year, 66

percent shareholder Turquoise Hill Resources in its third-quarter report. The mine, which

is also 34 percent owned by the government mined more than 25 million tons. However,

grades are on the decline, resulting in a 9.9 percent fall in copper production from the

second quarter and 57.1 percent gold.

Turquoise Hill continues to expect Oyu Tolgoi to produce 175,000 to 195,000 tons of

copper in concentrates and 255,000 to 285,000 ounces of gold in concentrates for 2016.

Meanwhile, Turquoise reported good progress with underground development.

Source: Turquoise Hill Resources Ltd.

THIESS INVESTS IN MAPTEK I-SITE LASER SCANNER FOR OT MINE

Maptek and IT Experts LLC have delivered an I-Site 8200 3D laser scanning system to Thiess

for the Oyu Tolgoi copper and gold project. Thiess, in joint venture with local contractor

Khishig Arvin, is delivering the boxcut and decline project from August 2016. The boxcut

will provide a safe and secure entrance for the underground tunnels and conveyors

expanding over 10 kilometers and depths of up to 1,300 meters.

The twin declines provide up to 395 meters of vertical lift with a maximum gradient of 18

percent. The conveyor to surface declines consist of 16.6 kilometers of tunnels and 35,000

cubic meters of large excavations to house the required conveyor transfer and drive

stations.

Source: Maptek

OYU TOLGOI SIGNS A MAJOR CONTRACT FOR UNDERGROUND DEVELOPMENT

Oyu Tolgoi LLC has contracted out underground mining and support services to a joint

venture between Hasu Megawatt and Australia’s Redpath, the gold and copper miner

announced on 14 October. The mine controlled by Rio Tinto Group signed a contract with

the joint venture called Dayan Contract Mining for the the sinking of Shaft 2 and Shaft 5 at

Oyu Tolgoi. “Dayan brings together the strength of a Mongolian company with international

expertise in underground development, and will bring long term benefits by creating world

class expertise and capability in Mongolia,” said Oyu Tolgoi’s chief development officer for

the underground mine, Marco Pires.

The contract also includes underground development services, which will cover lateral

development, large excavations and mine services of the underground mine. The mining

support services will cover development and provision of a skilled Mongolian workforce for

the underground project.

Source: Oyu Tolgoi

ERDENE UP 22% AFTER DRILLING 68 METERS OF 2 G/T GOLD

Shares of Halifax-based Erdene Resource jumped 22 percent after it reported intersecting

68 meters of 2 grams per ton of gold in 170 meter step-out hole at its Bayan Khundii gold

project in southwest on 19 October. Erdene highlighted a new zone discovered under

shallow cover, 170 meters north of Striker Zone, including 30 meters of 3 grams of gold per

ton of ore near the top of the hole. It also reported consistent gold mineralization

beginning at 20 meters, averaging 123 meters of 1.3 grams per ton.

Source: Mining.com

BAGANUUR PREPPED FOR WINTER OPERATIONS, ENERGY MINISTER SAYS.

The Baganuur coal mine will run throughout winter starting from this year, said the energy

minister. The extended months of operation will increase annual production, said Energy

Minister P. Gankhuu during a visit to the mine on 12 October. “We will complete winter

preparation by mid November,”

The government last summer directed MNT20 billion in state funds to the Baganuur and

Shivee Ovoo coal mines amid extreme financial stress, said the minister. Despite those

challenges, the government will not remove its subsidies on coal prices, even though they

contribute to these mines inability to profit.”Coal price cannot be freed up,” the minister

said, adding, “Government will control the price.”

Source: Udriin Sonin

KEPCO, SOFTBANK TO EMBARK ON SUPER GRID PROJECT IN NORTHEAST ASIA

Korea Electric Power Corp. (KEPCO) and SoftBank will soon embark on building a super grid

that will link South Korea, China, Japan and Mongolia for the ambitious push dubbed the

“Smart Energy Belt of One Asia.” “We have initiated a preliminary feasibility study on a

demonstration project linking a 2-gigawatt electricity grid between Korea and China, as

well as between Korea and Japan,” Cho Hwan-eik, president and chief executive of South

Korea’s state utility firm KEPCO, said during the World Knowledge Forum (WKF) in Seoul on

14 October.

The One Asia smart grid push aims to transmit new renewable energy such as solar or wind

power energy from countries that are best able to produce it to other countries that lack

such energy by building a power grid among the nations. About KRW7 trillion (USD6.2

billion) to KRW8 trillion would be injected in the first demonstration project.

Source: Pulse News

MINTERS, A&O, BAKERS, NRF INVOLVED IN MONGOLIA WIND FARM PROJECT

MinterEllison LLP and Norton Rose Fulbright have advised Denmark’s Vestas on a deal to

supply turbines for Mongolia's 50 megawatt Tsetsii wind farm. Baker & McKenzie.Wong &

Leow is representing the sponsors, while Allen & Overy are acting for the joint financiers

for the project, which is being led by Newcom Group’s renewable energy arm, Clean

Energy Asia LLC. Vestas will supply 25 wind turbines to the wind farm, expected to be up

and running by late 2017.

The project is part of Mongolia’s goal to boost renewable energy generation—currently at 7

percent—to 20 percent by 2023 and 30 percent by 2030.

Source: Legal Business Online, Lawyers Weekly

KOREAN CONTRACTORS SET TO BUILD ASIA’S 4TH LARGEST SOLAR FARM

Construction launched on Asia’s fourth-biggest solar plant being built by South Korean

contractors at Khushig Valley, where construction on an international airport is also being

led. A ceremony for laying the foundation was held on 17 October at Sergelen Soum, Tuv

Aimag for the 50 megawatt solar plant. Leading the project is Moseha Eco Energy, along

with contractor Korea Engineering Consultants and financier Idea Bridge. They have

estimated a total cost of USD94 million.

Development will run through three ages, beginning with the commissioning of 15

megawatt production in the first quarter 2017, followed by a 15-megawatt extensions in

2019 and 20 megawatts in 2021.

Source: Udriin Sonin

CHINA’S SMART OIL INVESTMENT IN DORNOGOVI

The Mineral Resources Authority (MRA) and Smart Oil Investment of China signed a

production sharing agreement for an oil exploration site on 14 October. Smart Oil

Investment of China was selected for the tender for oil exploration at Ergel 12. The

company previously obtained an eight-year exploration license. During that time, Smart Oil

Investment plans to conduct gravity and magnetic exploration, 2D and 3D seismic surveys,

and drill eight exploration and evaluation holes for the sum of USD35.5 million. The

company will spend USD1 million for land reclamation.

Smart Oil Investment has agreed to give 40 percent of oil explored to the government of

Mongolia. The MRA noted that Mongolia’s stake may increase to 70 percent if the

company’s oil exploration is higher than 15,000 barrels per day.

Source: Lehman Law

MONGOLIA HOPES TO ENLIST WESTERN TECH FIRMS FOR ‘HIGH-SPEED DATA CENTER’

Mongolia hopes to build a “high-speed data center” with the entrance of tech firms

Microsoft, Google and Intel, said MP B. Enkh-Amgalan. Buildings have already been built

and talks with Russian and Chinese Telecommunications companies have already taken

place, said the lawmaker, without elaborating on the purpose of the facility or how these

companies would contribute. Microsoft opened its office, last week. Google’s office may

open by the next week. Intel will come very soon,” he said.

“We do not need any guarantee from the government, we only need some support,” Enkh-

Amgalan said.

Source: Udriin Sonin

STATE HOSPITAL RECRUITS BEIJING PARTNER FOR EXPERTISE AND DIAGNOSIS

State Hospital No. 1 has launched a partnership with a Beijing hospital that will allow for

testing of more illnesses and bring more expertise to patients’ treatments. Beijing’s HenHe

Hospital will provide advice, information and services from its doctor staff electronically

through the e-out patient diagnosis program. “Tests can be sent abroad,” said Hospital

Director B. Byambadorj. “If needed, foreign doctors will join for patients’ surgeries.”

Hospital No. 1 also has plans to open a partnership agreement with a South Korean

institution, Byambadorj said.

Source: Unuudur

COCA-COLA HAPPINESS CENTER OPENS AT MGG’S TUGULDUR SHOPPING CENTER

A new new youth center for community activities, competitions and “delivering happiness”

has opened in central Ulaanbaatar from the TSX Venture-listed Mongolia Growth Group

(MGG). Mongolia Growth Group Properties LLC, MGG’s local subsidiary based in

Ulaanbaatar, opened the MCS Cola Happiness Center at its Tuguldur shopping center in

time for the new school year on 5 September. “This center will be focused on expediting

activities and competitions announced from MCS Coca Cola LLC for youth to take part in

and spend their free time in a fun and educational environment,” reads a 18 October

statement. “The center also provides the latest updates and news about the world’s No.1

brand, Coca Cola.”

The youth center offers free Wi-Fi, books for reading, consoles for video games, and space

on the second floor for lectures, seminars and entertainment.

Source: MGG Properties

MIAT BANS ‘SAMSUNG GALAXY NOTE7’ ON ALL FLIGHTS

MIAT Mongolian Airlines has banned Samsung’s Galaxy Note 7 from its flights following a

recall from the company because of reports that the device had caught fire. Bans were put

in place by the U.S. airline authority following about 100 incidents where devices

overheated and in some cases burst into flames. Previously, airlines had been urging

travelers not to turn on their phones, pack them in checked luggage or charge them during

a flight.

Samsung has estimates the recalls will cost it USD5.3 billion.

Source: News.mn

S. KOREA’S ‘SURVIVOR’ TYPE REALITY CHALLENGES CELEBRITY CAST IN MONGOLIA

South Korea's version of “Survivor” has been airing so far six episodes from its 27th

location Mongolia. "Law of the Jungle" is in Mongolia where actress Park Se Young,

accompanied by the group's maknaes, or youngest members, Eric Nam and Changsub of boy

band BTOB are shown hunting for marmots in the episode aired on 14 October. In the

show, the celebrity cast members are sent to less-inhabited, natural locations to survive

on their own and experience living with local tribes and people. The next location for "Law

of the Jungle" would be in the South Pacific Ocean where "Singer Special" would be its

theme.

The Mongolian season, with the theme "Nomad," started its broadcast on 2 September and

airs every Friday on SBS.

Source: iTech Post

SOUTHGOBI RESOURCES APPOINTS AUTHORIZED REPRESENTATIVE

SouthGobi Resources Ltd. has appointed Kwow Siu Man as authorized representative and as

the company’s secretary, replacing Executive Director and Chief Financial Officer Yulan

Guo, according to a 12 October statement. Kwok is an executive director and the head of

Corporate Secretarial of Boardroom Corporate Services (HK) Ltd. and a director of

Boardroom Share Registrars (HK) Ltd. He has over 25 years’ extensive legal, corporate

secretarial and management experience gained at company secretary and other senior

positions from companies overseas and in Hong Kong (including the Hang Seng Index

Constituent and Hang SengMid-Cap 50 stock companies).

Yulan Guo has resigned from the representative role, confirming no disagreement with the

company’s board.

Source: SouthGobi Resources Ltd.

JV CONSULT REPRESENTS GERMAN TRADE FAIR OPERATOR IN MONGOLIA

JV Consult LLC has become the official local representative of Messe München, a German

company specializing in global trade fairs around the world. The company this month

becomes be the direct contact point for Messe München’s upcoming trade fairs in Munich

and abroad, as well as support or organize private business delegations to visit Messe

München’s trade fairs.

Messe München organizes over 200 trade fairs in Europe, Asia and Africa

Source: JV Consult LLC

MONGOLIA HOSTS CONFERENCE ON NOMADIC TOURISM AND SUSTAINABLE CITIES

Ministers and high-level officials from nine World Tourism Organization (UNWTO) Silk Road

member states gathered to address the potential of nomadic and sustainable city tourism

at a conference held in Ulaanbaatar from 13 to 15 October. The Silk Road countries have

agreed that long-term success will depend on marketing and promotion, capacity building

and destination management, and travel facilitation. The Silk Road has become one of the

most visited international travel routes. Despite such growth, an increase in visitation also

brings challenges, such as the protection of the environment and the maintenance of

necessary heritage standards.

Sustainable growth for nomadic tourism “requires the collective engagement and

cooperation of Silk Road destinations, the private sector and the civil society,” said

UNWTO Secretary-General, Taleb Rifai, at the opening of the conference. “With these

ingredients in place, we can produce responsible nomadic tourism products to diversify

Silk Road tourism and achieve the adequate tourism development for the countries

involved.”

Source: Travel Daily News

XACBANK AWARDED “BEST BANK OF MONGOLIA- 2016”

XacBank LLC received the award “Best Bank of Mongolia, 2016” by the Global Finance

magazine on 10 October. The selection criteria included the bank’s capital increase,

profitability, strategic partnerships, customer service, sound pricing structures, and the

integration of cutting-edge technology into the product lines. XacBank received the honors

first in 2014 and now once again for the 15th anniversary of the awards.

Source: Mongolia.GoGo.mn

TDB NAMED “THE LEADING PARTNER BANK IN MONGOLIA” FOR 2ND CONSECUTIVE YEAR

Trade and Development Bank of Mongolia (TDB) has been recognized as the “Leading

Partner Bank in Mongolia” by Asian Development Bank (ADB). The award, which was

granted from ADB’s Trade Finance Program (TFP), recognizes TDB’s active involvement in

international trade funding programs since 2005. It’s the second time it’s received the

award since March 2010. TFP provides guarantees and loans to support trade in developing

countries and has supported more than 8,200 small and medium-sized enterprises across

Asia, totaling over USD23.6 billion.

In 2015, TDBM executed 77.9 percent of foreign trade related transactions and has proven

its leading position in the banking sector of Mongolia through its broad network of foreign

transaction settlements, highly educated banking staff and business affiliations with

international banks and financial institutions.

Source: Trade and Development Bank of Mongolia

ECONOMY

MONGOL BANK: FX AUCTIONS, SWAPS, 1-WEEK BILLS, T-BILLS

The Bank of Mongolia on 20 October sold CNY40 million to commercial banks at currency

auction (out of total bids for USD24.3 million and CNY63 million) for closing rates of

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

USD17.1 million in tugrik swap agreements.

On 17 October, the central bank issued MNT126 billion in one-week bills at a weighted

interest of 15 percent. On 14 October, it received MNT90 billion in bids for 12-week bills

with a face value of MNT60 billion at a discounted price and weighted average yield of

16.848 percent. It received MNT30 billion in bids for 28-week bonds with a face value of

MNT30 billion (originally MNT40 billion) that was sold at a discounted price and weighted

average yield of 16.897 percent. It received 10 billion in bids for 39-week bonds with a

face value of MNT10 billion (originally MNT20 billion) that was sold at a discounted price

and weighted average yield of 16.99 percent.

Source: Bank of Mongolia

BUSINESS CONFIDENCE WORSENS AS SALES PLUNGE

The Headline Mongolian Sales Managers’ Index (SMI) continued to fall back on its summer

gains to post a value of 39.5 in October. This represents the second monthly fall in the

index value, as a run of 7 consecutive monthly gains came to an end in September. The

Market and Sales Growth Indexes both experienced sharp drops during the month which

has also been reflected in reduced business confidence levels.

Sales managers are reporting that the weakness of the Tugrik is hurting their businesses

considerably as the Tugrik is now at its lowest exchange rate against the Chinese Renminbi

for well over 10 years.

Source: World Economics

MONGOLIAN PM ON MISSION TO HALVE BUDGET DEFICIT RATIO TO 9%

Mongolian Prime Minister Jargaltulga Erdenebat aims to slash his government's budget

deficit for fiscal 2017 in half, as a percentage of gross domestic product. "We will review

overall government spending to reduce the ratio of the deficit to 9 percent from the

current 18 percent," he said while visiting Japan, declaring his determination to shore up

fiscal health quickly. Amid rising concern about a Mongolian default on foreign currency

debt, he said he would formally ask the International Monetary Fund for financial

assistance.

Erdenebat said it is impossible to keep the national budget at the levels seen when

resource prices were soaring. He indicated that the government would scrutinize all

expenditures for fiscal 2017 other than those directly related to national welfare.

Austerity could further strain the economy, but Erdenebat has reason to push for it. The

maturity of foreign currency-denominated bonds is close at hand, and default fears are

swirling. Japan could also lend a hand. “I am hoping for the provision of yen loans, as at

the time of the previous IMF support [in 2009],” Erdenebat added.

Source: Nikkei Asian Review

IMF TEAM IN MONGOLIA

The International Monetary Fund (IMF) is sending a working group to Mongolia on 20

October to assess the current state of economy. A delegation headed by the Governor of

the Bank of Mongolia took part in the annual meeting of IMF and the World Bank Group,

held last week in Washington D.C.

Source: Montsame

POLAND TO LEND EUR50 BILLION FOR TRADE

Plan has agreed to loan EUR50 billion for trade Poland, the foreign affairs state secretary

announced on 18 October. Secretary D. Davaasuren said the polish government has offered

the loan to be used for its export.

Source: Montsame

SUBSIDIZED MORTGAGE PROGRAM SUSPENDED, AGAIN

The Bank of Mongolia has once again suspended the government-subsidized mortgage

lending program to eliminate loans priced too cheaply by the past government, as the

Jargaltulga Erdenebat government attempts to manage fiscal challenges amid slowed

growth. Mortgages priced at 5 percent interest will be raised to 8 percent, according to

the Bank of Mongolia. It also said that the program needed to be put on hold in light of

findings that commercial banks had been using the banks’ funding for reasons other than

the mortgaging program.

The central bank is currently working on a new investment plan to finance apartments up

to 100 square meters. Meanwhile, it is considering a MNT120 billion bond to bring in

capital for the program. So far, MNT3.9 billion has been lent for homeowners to buy

86,200 apartments, it reported.

Source: Undesnii Shuudan

MONGOLIAN BRANDS READY FOR EXPORT TO JAPAN

Mongolian companies are beginning to reap the benefits from a trade agreement with

Japan that removes tariffs on goods for sale there. The garment brand Gobi Cashmere, the

carpet producer Erdenet and 27 other companies have entered the Japanese market

thanks to the Economic Partnership Agreement (EPA) that came into effect this year. The

agreement eliminates trade tariffs on 5,700 goods sold to Japan in mining, agriculture and

more, as well as 9,300 types of goods from Japan being sold here. Mongolia will eventually

wind up cutting 59 percent of its tariffs on 3,429 types of goods while Japan will remove

86 percent of its own taxes on 8,000 products.

Up to 80 percent of all imports from Japan are automobiles between three and six years

old, or parts and accessories for them.

Source: News.mn

CHINA, MONGOLIA EYE ENERGY DEALS

Prospects for future China-Mongolia shipments of energy equipment have improved now

that the head of China’s largest power distributor, State Grid, has told Mongolian

government leaders that China is ready to buy electricity from their country.

“Strengthening energy cooperation” and promoting development of a cross-border power

grid to serve Northeast Asia were discussed during talks in Ulaanbaatar between State Grid

Chairman Liu Zhenya and Mongolia’s prime minister. “Liu Zhenya said electricity would be

an important trading product in the future,” the statement said.

Earlier this year, the Japanese telecom and energy conglomerate Softbank said it was

leading an initiative for “feasibility studies on multinational power grid interconnection”

involving State Grid, PJSC Rosseti in Russia, and Korea Electric Power. Mongolia and China

are considering a proposal to jointly build and operate a USD12 billion power plant called

Xibe Obo.

Source: Break Bulk

MONGOLIA AIMS TO BECOME WORLD’S CENTER FOR NOMADIC TOURISM

Mongolian government aims to attract tourists by rebranding its current tourism based on

its rich nomadic culture and heritage, a top Mongolian official said on Thursday. "According

to a plan on sustainable development up to 2030, we envision that Mongolia will become a

center of nomadic tourism," Miyegombo Enkhbold, speaker of the Mongolian parliament

said at the opening of the International Silk Road Conference on Nomadic Tourism and

Sustainable Cities held at Ulaanbaatar.

Sluggish commodity prices and internal political struggles have plummeted the land-locked

country into deep economic crisis, and economic diversification is seen by many here as

the country's future development. Tourism has caught much attention in this regard.

Representatives of the Mongolian Ministry of Environment and Tourism have pledged to

improve competitiveness of its tourism sector and adopt about 30 standards to ensure

comfortable stay for tourists and attract them to Mongolia, including one for building

toilets in rural areas.

Source: Global Times

MONGOLIA READY TO COOPERATE WITH KYRGYZSTAN IN AGRICULTURE, MINING

Mongolia is ready to cooperate with Kyrgyzstan in agriculture and mining, Parliament

Speaker Miyegombyn Enkhbold said in a meeting with his Kyrgyz counterpart Chynybay

Tursunbekov. The Kyrgyz parliament speaker said his country’s MPs can learn much from

their Mongolian colleagues. “Studying of your experience in building a parliamentary

democracy is very important for us,” Chynybay Tursunbekov said.

Source: 24.kg

END POVERTY NOW, MONGOLIA

October 17 is End Poverty Day. Every day is a day to end poverty, but it helps to designate

one day per year to reflect on this goal. In Mongolia, poverty declined from 2010 to 2012,

and again from 2012 to 2014. But today, overall growth of GDP is projected to be only 0.1

percent for 2016, with production in the non-mining sector declining. And Mongolia’s pro-

cyclical policies that funded social programs in the boom years now face opposite

pressures.

Mongolia spends relatively more on capital investment than most countries, and much of

the spending is inefficient. On the revenue side of the equation, transitioning Mongolia’s

system of low, flat income tax rates to a more progressive system would also help protect

the working poor while freeing up needed revenues. And as tempting as it may be to

create new programs outside of the budget system, doing so only exacerbates the

problems.

Source: World Bank

CLIMATE CHANGE COLLECTIVES ON THE MONGOLIAN STEPPE

As the world prepares for climate change talks in Morocco next month, herders in Mongolia

are working to save their ecosystem and way of life—and they’ve borrowed a page from

their communist past to do so. Roughly 70 percent of Mongolia’s pastureland is degraded

or desertified, largely due to overgrazing and exacerbated by climate change. In response

to no government regulation, herders are self-organizing into collectives to better manage

resources, rehabilitate the environment and create emergency relief funds.

While the Paris Agreement aims to keep global warming well below 2 degrees Celsius,

Mongolia’s submission to the U.N. Framework Convention on Climate Change shows that

the nation has already surpassed that threshold. “We’re basically doing a similar thing to

Soviet times,” said B. Batnasan, a member of a herder collective in Ikh Tamir Soum. “How

we’re getting our livestock to be healthier; how we’re preserving pastureland; it’s been

done before.”

Source: IRIN News

WHY GRASS NOW COSTS MORE THAN SHEEP ON INNER MONGOLIAN PRAIRIE

Gazing at the thin grass barely covering the soil on what was once one of China’s lushest

prairies, herder Lingjae of China’s Inner Mongolia Autonomous Region was not optimistic

she would get a good price for her sheep. “The dealers are not satisfied: one sheep is

crippled, several others are too lean,” she said, sighing.

The Chinese territory faces similar problems to that faced in Mongolia. Over the summer,

the Hulunbuir grasslands were hit by the worst drought in decades. The extreme drought

pushed up the price of grass and caused livestock prices to plunge. That’s left herders

facing hefty economic losses and even led to a violent confrontation in August between

two groups contesting access to a piece of not-so-barren pasture before winter. The

extension of road networks and power grids had made it much easier for herders to move

around and had attracted outsiders grazing much larger herds, creating new challenges for

local governments.

Source: South China Morning Post

POLITICS

ELECTIONS CARRY OVER SCHEDULED FOR 23 OCT.

Local elections will be held again on Sunday, 23 October, following low voter turnout on 19

October. The Mongolian People's Party took a lead in the election this week, winning 200

counties throughout Mongolia's 21 provinces compared with the Democrats 100. About

7,800 posts were up for competition throughout the country.

Source: Montsame, News.mn, 2

JAPAN AND MONGOLIA AGREE TO STRENGTHEN TIES FURTHER

Mongolian Prime Minister Jargaltulga Erdenebat and Prime Minister Shinzo Abe agreed

Friday during talks in Tokyo to accelerate ongoing efforts to draw up a 2017-21 action plan

to strengthen bilateral ties. Erdenebat chose Japan as the destination of his first

diplomatic tour after he was appointed in early July, underlining his intention to place

great importance on Mongolia’s ties with Japan.

On Thursday Japan and Mongolia held a forum in Tokyo to attract more trade and

investment by Japanese firms to the landlocked central Asian nation. Abe said the two

leaders “had a very meaningful discussion” on the security threat posed by North Korea

and agreed to “keep cooperating” on the matter. Mongolia is one of the few countries that

has relatively strong political ties with the hermit state.

Source: Japan Times

CHINA, MONGOLIA TO STRENGTHEN MILITARY COOPERATION

China and Mongolia pledged to strengthen bilateral military cooperation as senior military

leaders of both countries met in Beijing on Friday. Xu Qiliang, vice chairman of China's

Central Military Commission, met with Dulamsurengiin Davaa, chief of the General Staff of

the Mongolian Armed Forces, who attended the seventh Xiangshan Forum, which

concluded in Beijing on Wednesday. Xu said the Chinese and Mongolian military should

enhance exchanges and cooperation as their bilateral relationship has been upgraded to a

comprehensive strategic partnership to make bigger contributions to regional peace and

stability.

Davaa said developing Mongolia-China ties has been a priority in Mongolian foreign policy,

adding the Mongolian military expects closer ties with the Chinese army.

Source: Global Times

EX-HEAD OF MONGOLIAN DEVELOPMENT BANK ARRESTED

A former chief executive of the Development Bank of Mongolia has been arrested on 11

October on suspicion of wrongly channeling money from the country's sovereign debt fund,

a spokeswoman from the country's Independent Authority against Corruption said.

Mongolia's Morning News newspaper reported that Munkhbat Nanjid had approved debt to

companies and commercial banks without issuing tender notices. In addition, he is alleged

to have extended USD1.49 million to the Mongolian Stock Exchange while he was a board

member. Munkhbat was removed from his position by the new Mongolian People's Party

government that took power in July.

Last Tuesday, the vice minister of justice claimed that the bank approved funding

Parliament’s permission and allowed infrastructure projects to receive far more money

than originally agreed. One payments totaling 1.3 billion tugrik (USD570,150) went to the

locally licensed affiliate of U.S. financial news company Bloomberg to fund a video

advertisement called Inside Mongolia, which aired in 2013 to sell Mongolian bonds.

Source: Nikkei Asian Review

FORMER STATE HOUSING CORPORATION DIRECTOR ACCUSED OF EMBEZZLEMENT

Authorities have accused a former director of the State Housing Corporation of embezzling

over MNT1 billion. The Independent Authority Against Corruption has opened an

investigation into A. Gantulga for allegedlylending at eased conditions to friends who then

squandered the money. The National Construction Consortium LLC never even begun

construction on a project agreed on for a contract signed by its direct, D. Tsend. That

same company reportedly fell short of completing a job from 2013 to build a small waste

water treatment plant in one of Ulaanbaatar’s ger districts. Troubles arose after National

Construction failed to pay for more than MNT27 million worth of materials purchased from

the company Erelt Impex.

Source: Unuudur

GOVERNMENT THREATENS TO SUE FOR ALLEGATIONS OF ILLEGAL FALCONS TRADE

The government is suing a private citizen for defamation of the Ministry of Environment

and Tourism for allegations that the ministry illegally sold Mongolian birds to Arab buyers.

The head of the group Mongolian Professional Hunters, D. Khurtsgerel, has accused the

government of illegally exporting wild sheep and falcons in secret and naming Environment

Minister D. Oyunkhorol as being directly linked to the alleged activities, Khurtsgerel said in

a 7 October press conference. The government, however, has responded that Khurtsgerel

himself is involved with the sale of falcons and is fighting back with its legal suit.

The environment minister has admitted that the Mongolian government quietly passed a

special decree for gifting Mongolian birds to visiting delegates of the Asia-Europe Meeting

last summer. Although there is currently no count for how many birds were presented as

gifts, Mongolia collected about MNT3 billion from a contract presiding over the

arrangement. “Moreover, people who were on this duty brought about MNT 15 billion to

the Mongolian economy by staying in Mongolia for seven-10 days as well,” said Oyunkhurul.

Source: Undesnii Shuudan

RETURNED PEACEKEEPERS FROM SUDAN WAITING ON SALARIES

Mongolian peacekeepers worked who worked for one year in South Sudan have not been

given their salaries from the Mongolian government, according to the returned soldiers.

Peacekeepers who returned from 31 August to 16 September have not received any

payment. Usually those returned from their mission receive their salaries within three days

of their return. Although the U.N. pays for the peacekeepers monthly, the Mongolian

government holds onto that money until they return.

Source: Unuudur

UB COUNCIL INVESTIGATES ‘SMART ULAANBAATAR’ SPENDING

A task force within Ulaanbaatar City Council has raised questions on past spending for the

“Smart Ulaanbaatar” program that was launched to bring technological solutions for

delivering public services. A petition has been launched by the council’s subcommittee for

the project on 13 October for what it calls exorbitant costs of MNT44 billion. That includes

MNT229 million for video conferencing equipment that has not been used and USD1 million

for a master plan from the company Cisco.

Source: Undesnii Shuudan

ARMED ROBBERY GOES AWRY AND RIOT ENSUES

A riot ensued in an apartment in one quiet neighborhood holding more than a kilogram of

gold. Around 20 men fought near Hospital No. 1 in Ulaanbaatar’s Sukhbaatar District that

reportedly resulted in a head injury and stabbings for two individuals. The fight occurred

after about a dozen men broke into an apartment to steel 1.5 kilograms of gold and

jewels. Another 10 men were reportedly already in the apartment and fought back to

protect their goods. The incident was reported by residents of the apartment building, and

police who caught the men on site.

Source: Udriin Sonin

YOUNG MONGOLIAN WEIGHTLIFTER SANCTIONED FOR DOPING

A young Mongolian weightlifter has been sanctioned after testing positive for testosterone,

the Court of Arbitration for Sport has announced. U. Chagnaadorj, aged 19, competed in

the 56 kilogram category at the Rio-Olympics but did not finish. He participated in the

competition in place of a Russian weightlifter who had been eliminated by the

International Olympic Committee. Chagnaadorj and other three athletes have been banned

for different periods of time. He becomes the seventh athlete to test positive for doping

during the Olympics in Brazil.

Chagnaadorj failed to lift 103 kg in his third attempt at the Rio Olympics on 8th of August.

He was listed fourth at the 2016 Asian Championship.

Source: News.mn

KHOOMEI INCLUDED IN UNESCO INTANGIBLE CULTURAL HERITAGE LIST

"Khoomei" or Mongolian throat singing has been inscribed in the UNESCO Representative

List of the Intangible Cultural Heritage of Humanity. For this type of singing, a singer

manipulates the resonances created as air travels from the lungs, past the vocal folds and

out of the lips to produce a melody attracted the attention of art connoisseurs. Khoomei is

divided up into four main styles that vary from bass, baritone and tenor tones. They are

"karkhiraa,” "isgeree," “narmai” and “shakhaa.”

Source: Montsame

AN OPEN LETTER TO CITIZENS OF MONGOLIA, AUSTRALIA AND MALAYSIA—EDITORIAL

The Altantuya Shaariibuu murder that took place in Malaysia 10 years ago remains

shrouded till today in a layers of injustice. It is a shame to not one but three governments

as we hear from the agonized father of the slain Altantuya, Dr Shaariibuu Setev, who

reports now that he “suspects Mongolia, Malaysia and Australia have colluded to mute the

politically sensitive case of an ex-Malaysian policeman who murdered his daughter a

decade ago and has lately been held in an immigration detention in Sydney.”

The Malaysian court ruled that motive was not essential for the case in hearing. But if

Mongolia, Malaysia and Australia do not see the importance of ensuring that justice is

done, seen to be done and acceptable to the three countries’ hallways of justice, will the

citizens of these three countries just let it slip like a cloud?

Source: Malaysiakini

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

- University of Humanities is hiring English language Instructor, Accountant Instructor and

Economics Instructor. Deadline for application: Oct 24, 2016, for more information: please

contact at: humanresources@humanities.mn

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

azbayar@bproduction.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 – 20 October 2016

Currency Rate

U.S. dollar USD 2,326.58

Euro EUR 2,553.54

Japanese yen JPY 22.43

British pound GBP 2,857.62

Hong Kong dollar HKD 299.89

Chinese Yuan CNY 345.21

Russian Ruble RUB 37.28

South Korean Won KRW 2.06