BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 459 – January 6, 2017

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:

• Mongolia requests $200m loan from Russia’s second-largest bank

• Mongolian Mining ready for debt restructuring

• XacBank approved for $20 mn funding from Green Climate Fund

• 3 new mineralized porphyry centers identified at Xanadu’s copper-gold project

• Erdene Intersects 110 meters of 9.3 g/t gold at Altan Nar

• Gold producers dream of Xanadu

• Prophecy Sells 10,000 tons of coal to Erdenet Mining

• Chinese firm to provide free feasibility study for China-standard railway

• Mongolian Mining contracts out fuel, office and security services

• S. Korea’s SH Corp. to partner for urban development in UB

• New rules put in place at Development Bank

• FRC grants operational licenses to NBFIs

• Mongolia Energy to raise $2 mn from placement

• SouthGobi Resources executes deferral agreement with CIC

• Attocube to enter Mongolian preschool education market

• Children’s education company announces franchise in Mongolia

• Gobi expands abroad

• Turquoise Hill appoints Maryse Saint-Laurent as independent director

• Khan Bank appoints IFC representative board member

• Altai confirmed as permanent director of MSE

• New weather app launched

• Monos Farm named “Best National Producer” by MNCCI

Economy:

• Mongol Bank: FX auction, swap agreement, T-bills

• 7 Jan. to run as a business day

• Mongolian Economy suffers as business activity continues to slow

• Mongolia may default in 2017 without urgent foreign funding, warns Eurasia

• Miners invest MNT20 bn in 2016

• Mongolia asks Russia to grant $1.6bn loan for undisclosed purpose

• Mongol Bank denies plans to roll out MNT50,000 note

• Civil penalties increasing by 25 percent

• VAT program to continue through 2017

• Livestock numbers hit all-time high in 2016

• Dzud may affect up to 150,000 herders

• Mongolia to offer visa concession for tourists groups

• State Commission begins inspection at new airport

• Mongolia and U.S. discuss cooperation in roads and transport sector

• Germany to lend EUR13.5 mn for specially protected areas

• World’s worst air has Mongolians seeing red, planning action

• UB approves MNT3.2 bn budget to push electric heating and fight air pollution

• 70% of Korea’s fine dust particles come from China (and Mongolia), study says

• Mongolia and Russia to boost agricultural cooperation in four main areas

• Mongolia to impose controls on GM foodstuffs

• Mongolia faces economic winter

• Why Mongolia is a wrestling powerhouse

• Nomads who live with real-life Rudolph

Politics:

• Mongolian gov't approves plan to revive economy

• Bill marks changes for presidential election

• Cable broadcasters oppose proposed cable tax

• Standing committee on petitions hold discussion on air pollution

• Government to allow benefits to single parents

• Indonesia, Brazil embassies to be liquidated

• New Japanese Ambassador assumes office

• Mongolia, Laos sign agreement on diplomatic missions’ land use

• U.S. Embassy celebrates 70th anniversary of Fulbright Program

• 3 convicted for 1998 assassination of Zorig

• Despite frigid weather, Mongolians protest worsening smog

• Mongolian authorities arrest suspect for drug smuggling

• Mongolia's young democracy tested by economic crisis

• Landlocked Mongolia considering permanent neutrality

• China’s Diplomatic hat-trick no accident

• India drives Mongolia into China's submission

• Deported mother and daughter resume their lives in Calgary after leaving Mongolia

again

• China needs to get over the Dalai Lama's visit—EDITORIAL

BCM Updates:

• Member-to-Member Special Offers & Benefits

Economic Indicators:

• Inflation

• Central Bank Policy Rate

• Currency Rates

*Click on titles above to link to articles.

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BUSINESS

MONGOLIA REQUESTS $200M LOAN FROM RUSSIA’S SECOND-LARGEST BANK

Mongolia’s government has asked VTB, Russia’s second-largest bank, for a loan of USD200

million for buying Russian oil products, Russian media have said. “The two sides expressed

satisfaction with an export loan extended by the VTB bank to the Development Bank of

Mongolia, which has enabled Mongolia to be supplied with Russian oil products,” media

stories quoted the Russian cabinet as saying in a report on Russian-Mongolian governmental

talks in Ulaanbaatar on December 13. The report was published this week.

“The Mongolian side has asked the VTB bank to consider long-term financing to a sum of

$200m with better terms for interest rates,” the report said.

Source: Emerging Markets

MONGOLIAN MINING READY FOR DEBT RESTRUCTURING

Mongolian Mining Corp. is prepared to launch debt restructuring after defaulting on

USD600 million in corporate debt last year, the Mongolia-focused miner announced on 21

December. Mongolian Mining, certain subsidiary guarantors and partner liquidators have

entered into an agreement with certain consenting note holders.

The 8.875 percent interest senior notes were set to mature in 2017, but Mongolian Mining

missed a payment last year. On 21 December, a Cayman Islands court made an order

approving each of the (RSAs) and authorizing partners in the liquidation to take all steps

required to bring them into effect.

Source: Mongolian Mining Corp., 2

XACBANK APPROVED FOR $20 MN FUNDING FROM GREEN CLIMATE FUND

XacBank LLC received unanimous approval for USD20 million to finance more-efficient and

renewable energy production in Mongolia, the bank announced on 19 December. Approval

from the fund’s board of directors on 15 December comes after XacBank was accepted for

accreditation last October. The program is an extension of XacBank’s existing Business

Loan Program for GHG (greenhouse gases) Emissions Reduction, which targets low-interest

lending to small business. Businesses run by women will be a more specific target.

The low-interest lending program aims to reduce CO2 emissions by 1.2 million tons over

eight years.

Source: Montsame

3 NEW MINERALIZED PORPHYRY CENTERS IDENTIFIED AT XANADU’S COPPER-GOLD

PROJECT

Xanadu Mines Ltd. reported the finding of three new targets in its latest exploration

highlights from its Kharmagtai copper-gold projects on 22 December. First assays have

been received from an undercover bedrock drilling program confirmed continuity of

mineralization under shallow cover with drilling intersecting anomalous bedrock copper

and gold mineralization over a widespread area of approximately 25 square kilometers.

“Drill testing is expected to start immediately and we are looking forward to what we

might learn from the next program of RC drilling.” said Xanadu’s managing director and

chief executive officer, Andrew Stewart.

Click on the Source for highlights including a target with greater than 0.3 percent copper

and three grams per ton of ore gold over a two-meter interval.

Source: Xanadu Mines Ltd.

ERDENE INTERSECTS 110 METERS OF 9.3 G/T GOLD AT ALTAN NAR

Erdene Resource Development Corp. reported of 9.3 grams per ton of gold in ore in its

December exploration results report from the Altan Nar gold-polymetallic project. The 9.3

grams of gold over 110 meters at Hole TND-101 was accompanied by 32 grams per ton of

silver, and 1.4 percent combined lead-zinc.

Click on the Source for other highlights from Altan Nar, the Discovery Zone North, the

Altan Arrow gold-silver project and the Bayan Khundi gold project.

Source: Erdene Resource Development Corp.

GOLD PRODUCERS DREAM OF XANADU

Australian gold producers are among a host of mining companies that have taken a close

look at Mongolian explorer Xanadu Mines Ltd. in recent weeks, with a shortage of new

discoveries, improving appetite for acquisitions and recent policy stability in Mongolia

putting the nation’s stalled mining industry back on track. Xanadu’s Ulaanbaatar-based

managing director Andrew Stewart told The Australian the company had hosted five visits

in the past two months from mining companies interested in learning about its early-stage

copper and gold projects in Mongolia.

The level of interest is a sharp improvement on recent years, he said, when the company

would host just one to two such visits a year. He said Australian gold miners in particular

were showing renewed interest in Mongolia. “There are a lot of cashed-up mid-tier gold

producers that are looking to expand,” he said. “When you look at Australia, there just

aren’t as many options for those big discoveries.”

Source: The Australian

PROPHECY SELLS 10,000 TONS OF COAL TO ERDENET MINING

Prophecy Development Corp. has signed two coal sales and purchase agreements to sell a

total of 16,000 tons of coal sourced from its 100 percent owned Ulaan Ovoo mine. The two

purchasers were Erdenet Mining Corp, for 10,000 tons, and Selenge Energy Heat Plant, for

6,000 tons. Coal deliveries sourced from existing stockpiles from Ulaan began in December

2016. Delivery of the 16,000 tons is expected to complete by February 2017.

In recent months, Prophecy has received multiple, unsolicited written expressions of

interest from parties in Russia, China, and India, relating to possible transactions involving

sales from, or joint venture of, Ulaan Ovoo.

Source: Prophecy Development Corp.

CHINESE FIRM TO PROVIDE FREE FEASIBILITY STUDY FOR CHINA-STANDARD RAILWAY

The Chinese company CREC will develop a feasibility study this year for a new railway

route to be built between Choibalsan Soum and Khuut in Dornod and Zuunbayan Khangi at

no cost with a memorandum signed by Mongolia’s railway developer on 26 December. The

192-kilometer route between Choibalsan and Khuut will be built with a Chinese-standard

rail gauge, as opposed the the wider Russian standard. The study is expected to be

complete before the end of June, while the rail is expected to complete between 2018

and 2020.

The construction proposal will be submitted to parliament for approval before construction

launches, the cabinet under Prime Minister Erdenebat decided on 21 December.

Source: Unuudur

MONGOLIAN MINING CONTRACTS OUT FUEL, OFFICE AND SECURITY SERVICES

Mongolian Mining Corp. has contracted out three service agreements with providers for the

next two years. From 1 January 2017 until 31 December 2019, NIC will provide fuel

transportation, site storage and fueling services to Mongolian Mining from for a total

consideration of up to MNT36 billion (USD14,48 million). Also during that time USS will

provide about of office and camp support from a contract worth up to USD13.74 million,

and M-Armor will provide security from a USD6.46 million contract.

NIC is an associate of Oyungerel Janchiv, a non-executive director. USS and M-Armor are

wholly-owned subsidiary of Mongolian Mining’s parent company, MCS Group.

Source: Mongolian Mining Corp.

S. KOREA’S SH CORP. TO PARTNER FOR URBAN DEVELOPMENT IN UB

A South Korean company focused on urban housing has agreed to help build up Ulaanbaatar

lagging infrastructure. A Mongolian delegation led by the head of the Ulaanbaatar City

Council, Ts. Sandui met with the met with Byeon Chang-heum, the president of the ‘SH’

(Seoul Housing) Corp., and Seoul city official, during a visit to South Korea 13 to 20

December. The parties agreed to establish a joint working group to work together on

issues including the battle against air pollution in the capital and the need for sewage

facilities.

Source: News.mn

NEW RULES PUT IN PLACE AT DEVELOPMENT BANK

Lawmakers are introducing new regulations for the Development Bank of Mongolia to

better shield the country from its growing liabilities during today’s economic turmoils.

Parliament approved a resolution to implement risk-prevention ventures for the bank as its

liabilities have stacked up to MNT5.9 trillion as of 28 December. The resolution hikes the

the bank’s capital to MNT1 trillion and puts its debt under the accounts of the Ministry of

Finance, consolidating the government’s total debt. The Development Bank’s total asset

and loan portfolio amounted MNT7 trillion and MNT5.9 trillion, respectively,

The Development Bank has financed some 2,000 programs and projects since its

establishment in 2011.

Source: Montsame

FRC GRANTS OPERATIONAL LICENSES TO NBFIS

The Financial Regulatory Commission has granted operational licenses to six non-banking

financial institutions. The non-banking financial institutions processed the licensing on the

condition they hold a shared capital of MNT800 million. The commission cut that figure

from MNT2.8 billion in March 2016.

Source: Montsame

MONGOLIA ENERGY TO RAISE $2 MN FROM PLACEMENT

Mongolia Energy Corporation aims to raise HKD15.6 million (USD2 million) from a new share

placement. The miner said it agreed to place 60 million new shares at HKD0.26 per share,

representing a discount of about 7.1 percent to the closing price of HKD0.28, to Gold

China Enterprises Co., Ltd. The subscription shares represent around 3.19 percent of the

enlarged issued share capital of Mongolia Energy.

The proceeds will be used as general working capital.

Source: Haitong

SOUTHGOBI RESOURCES EXECUTES DEFERRAL AGREEMENT WITH CIC

SouthGobi Resources Ltd. has deferred USD1.4 million in debt repayment to next May as

part of a revised payment schedule with China Investment Corp. The owed funds to be

repaid on 19 May are cash interest and associated costs monthly on average during the

period from December 2016 to April 2017.

Source: SouthGobi Resources Ltd.

ATTOCUBE TO ENTER MONGOLIAN PRESCHOOL EDUCATION MARKET

A South Korean producer of education resources will be making its products available to

preschools in Mongolia. Attocube announced on 19 December that it had signed a

memorandum of understanding with the Mongolian Association of Private Preschool Center

concerning its entrance into Mongolia’s preschool education market. The memorandum

commits Attocube to exporting approximately 1,000 sets of wooden blocks and related

educational content to Mongolian preschools, in addition to workbooks, picture books,

role-playing books, and board games.

Source: Korean Herald

CHILDREN’S EDUCATION COMPANY ANNOUNCES FRANCHISE IN MONGOLIA

Creative Learning Corporation has expanded its international presence with new master

franchise sales in Italy and Mongolia. The expansion of by proprietor of the highly-popular

children’s education and enrichment programs Bricks 4 Kidz and Sew Fun Studiosbuilds

upon sales announced recently of master franchises in Turkey, Switzerland, Czech

Republic, France, Philippines and Madagascar as well as numerous individual franchises

around the world. Coming in fiscal year 2017, these sales of new master franchises in Italy

and Mongolia build upon Bricks 4 Kidz’s robust sales of international franchises in fiscal

year 2016.

Bricks 4 Kidz is continuing its international sales efforts and expects to announce

additional international sales in the near future. These sales result from the effort Bricks 4

Kidz has expended to expand and develop its international presence through sales and

work with franchisees across the globe.

Source: Creative Learning Corp.

GOBI EXPANDS ABROAD

Gobi Cashmere JSC is expanding its consumer bases for it Mongolian cashmere garments

with the launch of new stores in Asia and Europe. The Mongolia-listed company opened its

first brand-name store in Japan as the Haneda airport in Japan last month just weeks after

opening a flagship store in Berlin, Germany. The Mongolia-listed companies plans to open

more branch shops in Brussels, Belgium and Erenhot, China in January 2017.

Gobi has also launched a shop in the United States at Georgetown through its subsidiary

T&U. Mongolian school friends Tosca Metz and Una said opening the cashmere boutique is

a childhood dream come true.

Source: Udriin Sonin, Georgetown Dish

TURQUOISE HILL APPOINTS MARYSE SAINT-LAURENT AS INDEPENDENT DIRECTOR

Turquoise Hill Resources has appointed Maryse Saint-Laurent to its board as an

independent director, effective 4 January, the 66 percent shareholder of Oyu Tolgoi

announced the same day.. Saint-Laurent is an accomplished legal executive, corporate

director and senior advisor to boards and management teams with almost 20 years of

experience in the energy and electricity sectors. Since 2015, she has served as a legal and

governance advisor.

"We welcome Maryse to the Turquoise Hill Board and look forward to benefiting from her

diverse background as a legal executive as well as an experienced director," said newly-

appointed Turquoise Hill Chairman Peter Gillin,

Source: Turquoise Hill Resources Ltd.

KHAN BANK APPOINTS IFC REPRESENTATIVE BOARD MEMBER

Khan Bank LLC has appointed John Law to its board of directors, representing the

shareholding held by the financial arm of the World Bank, International Finance Corp. (IFC)

Law has nearly 30 years of experience in finance and has served as a principal banking

specialist for the Financial Institutions Group at IFC. His other work includes top

managerial positions at Citibank and J.P. Morgan & Co covering the Asia-Pacific region.

Heis a Senior Advisor at Oliver Wyman, a leading global management consulting firm that

combines deep industry knowledge with specialized expertise in strategy, operations, risk

management, and organization transformation.

Source: Montsame

ALTAI CONFIRMED AS PERMANENT DIRECTOR OF MSE

Altai Khangai has been appointed as the executive director of the Mongolian Stock

Exchange (MSE) after four months working as the acting director. Altai is a lawyer who

served in the same position at the MSE from 2011 to 2014.

Source: Zuunii Medee

NEW WEATHER APP LAUNCHED

The new Anhaar weather app is in English and Mongolian for alerting mobile-phone users to

weather disasters. Developed by the National Emergency Management Agency of Mongolia

(NEMA) and the United Nations Development Program (UNDP), the mobile app aims to

make people in Mongolia better prepared for emergencies including dzuds, floods and

fires.

“The Anhaar app provides information on common hazards in Mongolia and instructions on

how to stay safe,” said Colonel Battogtokh P., the first deputy chief of NEMA.

Source: UB Post

MONOS FARM NAMED “BEST NATIONAL PRODUCER” BY MNCCI

Monos Farm has been named the “Best National Producer for 2016 by the Mongolian

National Chamber of Commerce and Industry (MNCCI). It produces more than 90 medicines

after launchings Mongolia’s largest pharmaceutical plant last year. The facility is also the

first to operates with international standards, including those from the World Health

Organization

Source: Unuudur

ECONOMY

MONGOL BANK: FX AUCTION, SWAP AGREEMENT, T-BILLS

The Bank of Mongolia on 27 December accepted bids for USD20.1 billion and CNY60 million

for resultant exchange rates of MNT2,480 and MNT351.60, respectively. It also accepted in

swap agreements U.S. dollar selling bids worth USD14.8 million.

On 4 January, the bank issued MNT133 billion worth of one-week treasury bills at a

weighted annual interest of 14 percent.

Source: Bank of Mongolia

7 JAN. TO RUN AS A BUSINESS DAY

The government has made Saturday, 7 January a day of work to compensate for the start

of the New Year’s holiday a day early last month. The Jargaltulga Erdenebat cabinet made

30 December a holiday in the hopes of keeping people home and preventing the spread of

influenza outbreaks and accidents from extreme weather conditions.

Source: Mongolia.GoGo.mn

MONGOLIAN ECONOMY SUFFERS AS BUSINESS ACTIVITY CONTINUES TO SLOW

The Headline Mongolian Sales Managers’ Index (SMI) for December was 37.0, almost

unchanged from the level in November. The index is close to it’s the lowest level in 8

months as winter conditions start to take hold.

The Market Growth Index experienced another sharp drop during the month which has also

been reflected in falling business confidence levels. The Sales Growth Index, improved

marginally to 33.8, up by 0.4 on the November level. Sales managers are reporting that the

weakness of the tugrik is severely hurting their businesses as the tugrik remained close to

record lows in mid-December against the Chinese Renminbi.

Source: World Economics

MONGOLIA MAY DEFAULT IN 2017 WITHOUT URGENT FOREIGN FUNDING, WARNS

EURASIA

A political snafu with the world's second-largest economy is no light matter for any country

but for troubled Mongolia, it could mean a potential sovereign default. Ulaanbaatar, facing

flat growth and a budget deficit of 20 percent of GDP in 2016, is in desperate need of

foreign lending to meet debt repayment obligations next year and Beijing may be the only

country willing to provide a soft loan, according to political risk consultancy Eurasia. While

President Xi Jinping's administration previously began talks on the matter, negotiations

have now adjourned following the Dalai Lama's recent visit to Mongolia. That could leave

the nation at high risk when a USD580 million bond issued by the state-run Development

Bank of Mongolia matures in March.

"The suspension of China talks will increase concerns in the market about a possible

default by the spring," Emily Stromquist, senior analyst at Eurasia, said in a note on

Tuesday.

Source: CNBC

MINERS INVEST MNT20 BN IN 2016

Mining continues to be the strongest magnet for investment in Mongolia as the 20 new

mines put on line last year brought MNT20 billion of investment and 800 new jobs. The

mining sector comprises 85 percent of Mongolia's exports, 63 percent of industrial

products, 18 percent of GDP and one-fourth of national revenue.

Source: Mongolia.GoGo.mn

MONGOLIA ASKS RUSSIA TO GRANT $1,6BN LOAN FOR UNDISCLOSED PURPOSE

Mongolia addressed Russia with the request to grant it a concessional loan of 100 billion

rubles (USD1.6 billion), but did not specify the purpose of the loan, Interfax reports with

reference to the protocol of the 20th meeting of the intergovernmental commission on

trade-economic and scientific-technical cooperation held with the participation of the

representatives from both countries. “Because of the absence of information on the

Mongolian part about the purpose of the requested loan and its financial parameters

acceptable to the Mongolian party, the Russian party has no possibility to examine the

partners’ request,” read the protocol.

In addition, Mongolia asked the Russian state-owned VTB Bank to provide a loan of USD200

million for the purpose to conduct long-term purchases of Russian oil products.

Source: Russian Construction

MONGOL BANK DENIES PLANS TO ROLL OUT MNT50,000 NOTE

The Bank of Mongolia has denied rumors that it was planning to roll out a MNT50,000 bill.

“The publishing of a new currency note for MNT50,000 is not in consideration by the Bank

of Mongolia,” said a spokesperson following reports in media that it planned to circulate

bills this year. Those reports were accompanies by an image of a MNT50,000 note, which

the bank also said was false. The spokesperson added that a new bill would be a matter

for lawmakers, and that the central bank could not make the decision to roll out a new bill

on its own.

“At present, the Bank of Mongolia is putting its all efforts into seeking solutions for

overcoming the existing economic challenges and reviving the economy. In comparison to

this issue, publishing MNT50,000 note isn’t important at all.”

Source: Mongolia.GoGo.mn

CIVIL PENALTIES INCREASING BY 25 PERCENT

Fines, penalties and fees will be hiked by a quarter along with the raise in the minimum

wage that serves as benchmark. The minimum wage is set at MNT240,000 a month this

month as a result of persistent demands from the Confederation of Mongolian Trade

Unions. Motorists caught driving after their inspection is up will be fined MNT120,000, or

50 percent of the minimum wage, for example.

The trade union originally wanted a 40 percent hike, but concluded to just 25 percent

given today’s fiscal challenges.

Source: Mongolia.GoGo.mn, Montsame

VAT PROGRAM TO CONTINUE THROUGH 2017

The value-added tax refund program implemented last year will continue into 2017

[Source did not include a citation for this claim -ed]. Mongolia is expecting to hand out

total refunds of MNT32.1 billion to 896,873 individuals this year. The program also

included a lottery, which collected MNT675.9 million from the 20 percent tax.

Source: Undesnii Shuudan

LIVESTOCK NUMBERS HIT ALL-TIME HIGH IN 2016

The number of livestock grew 9.9 percent to 61.5 million last year, according to official

figures from the National Statistics Committee. Broken down, that includes 3.63 million

horses, 4.08 million cows, 401,300 thousand camels, 2.78 million sheep and 2.56 million

goats. Sheep accounted for 45.3 percent of all livestock, while goats were 41.6 percent,

horses 5.9 percent and camels at 0.7 percent. Uvurkhangai, Khuvsgul, Arkhangai, Tuv and

Bayankhongor Aimags had the largest numbers of animals.

Source: News.mn

DZUD MAY AFFECT UP TO 150,000 HERDERS

Around 150,000 herders in the northern belt of Mongolia are at risk of losing their animals

and livelihoods this winter as officials prepare to scale the dzud risk up to an emergency

level [Source includes no citation for this claim -ed]. As temperatures plummeted to below

-40Celsius in northern Mongolia and -56Celsius in the west in recent weeks, the national

State Emergency Commission dispatched authorities and aid groups to conduct risk

assessments across the country.

Unlike the last dzud, this one is expected to impact northern and eastern Mongolia. The

most vulnerable are the 2,500 pregnant women, 26,000 children and 8,000 elderly people

living in winter pastures. Dzuds usually occur in five-yearly cycles and last for two winters.

Mongolia is still reeling from the 2015-2016 dzud which killed 1.2 million livestock and left

tens of thousands of herders in poverty. The 2010 dzud was much more deadly, killing

eight million animals and costing the government millions in aid response.

Source: UB Post

MONGOLIA TO OFFER VISA CONCESSION FOR TOURISTS GROUPS

Tourists arriving in Mongolia in groups will be able to receive discounts on visas. The

concessions can be received by travel through travel agencies, in addition to a new 72-

hour visa-free policy for all foreign travelers in-transit. Government made the decree in

the hopes of encouraging more travel to Mongolia.

Source: Mongolia.GoGo.mn

STATE COMMISSION BEGINS INSPECTION AT NEW AIRPORT

A committee has launched an inspection of new international airport due to commission

this year. Construction of The New Ulaanbaatar International Airport (NUBIA) is underway

at Khushig Valley, Tuv Aimag, about 52 kilometers south of Ulaanbaatar.. “When the

Commission issues its concluding report, the Civil Aviation Authority of Mongolia will begin

their flight tests and other tasks of the Operational Readiness and Airport Transfer

process”, said Kimihiro Maeta, the Japanese Consultants Project Manager, about the

inspection that launched on 2 January.

Started in June 2013, the nearly complete construction progress of Mongolia’s new

international airport is expected to wrap up this month.

Source: Mongolia.GoGo.mn

MONGOLIA AND U.S. DISCUSS COOPERATION IN ROADS AND TRANSPORT SECTOR

Mongolia is looking for help from the U.S. government to complete its mission of building

roads between the capital and all 21 provinces. Minister of Road and Transportation D.

Ganbat in a meeting with U.S. Ambassador Jennifer Galt last week said the ministry would

like funding from the Millennium Challenge Corporation’s second compact for roads and

transportation projects. Mongolia has still yet to link together every province with the

capital, said Ganbat, with another 130 kilometers of roads between Gobi Altai and Uvs

Aimags still needed.

Ganbat also suggested expanding the 176.4 kilometers of roads between Choir and

Sainshand that were built with financing from the Millennium Challenge Fund’s first

compact with a third lane and a fourth lane for the road between the capital and Darkhan.

Funding was also needed for upgrading facilities along the 620 kilometers of road between

Ulaanbaatar and the Zamyn Uud land port to China, he said.

Source: Montsame

GERMANY TO LEND EUR13.5 MN FOR SPECIALLY PROTECTED AREAS

Germany will give addition financing toward Mongolia’s specially protected areas, bringing

a total of EUR13.5 million for 2017. The additional EUR7 million of funding will expand the

number of to protected area throughout western Mongolia. The 11 areas originally marked

to receive financing for construction and environmental management are Otgontenger,

Dornod Mongol, Gorkhi Terelj, Khangain mountains, Khan Khentii, the Khustain mountains,

Onon, Balj, Orkhon valleys, Tarvagatai mountains, Ulaan Taiga, Zed Khantai Buteel

mountains.

Source: Unuudur

WORLD’S WORST AIR HAS MONGOLIANS SEEING RED, PLANNING ACTION

If you think air pollution in China has been bad, just look at Mongolia. Levels of particulate

matter in the air have risen to almost 80 times the recommended safety level set by the

World Health Organization—and five times worse than Beijing during the past week’s bout

with the worst smog of the year. An air pollution protest was held last week along with a

crowdfunding campaign to purchase 100 air purifiers for hospitals and schools raised more

than $1,400 in five days.

“The hospital I visited today did not have any air purifiers, even though 40 mothers were

scattered along a narrow corridor, each with a sick baby in their arms,” Onon Bayasgalan,

an environmentalist who organized the crowdfunding campaign, said Thursday. “They

sleep on fold out cots in the corridors, as the hospital rooms are full of pneumonia cases.’’

Source: Bloomberg

UB APPROVES MNT3.2 BN BUDGET TO PUSH ELECTRIC HEATING AND FIGHT AIR

POLLUTION

Ulaanbaatar and global organizations such as the World Bank are ready to spending

millions this year combating air pollution in the capital. The National committee to reduce

air pollution has budgeted MNT5 billion for 2017, including MNT3.5 billion to subsidize

electricity costs by 50 percent to encourage the use of electric heaters over burning coal

and other materials. Meanwhile, electricity will be completely free to ger districts.

MNT450 million will be spent on improved stoves and MNT400 million will be spent on

briquette. Moreover, the World Bank to invest MNT7.8 billion for the Ulaanbaatar Clean Air

Project (UBCAP).

Prime Minister Erdenebat Jargaltulga has outlined a plan to combat air pollution that

includes the use of aid from China to relocate ger dwellers into homes linked to city

heating and provisions of affordable heating units.

Source: Mongolia.GoGo.mn, UB Post

70% OF KOREA’S FINE DUST PARTICLES COME FROM CHINA (AND MONGOLIA), STUDY

SAYS

About 70 percent of fine dust particles found in South Korean skies come from neighboring

Northeast Asian countries such as Mongolia and China, a recent study shows. According to

an analysis of the state-run Korea Environment Institute, up to 70 percent of Korea’s fine

dust particles and other airborne pollutants originated in China and other Central Asian

countries like Kazakhstan and Mongolia.

Since the arrival of the New Year, a thick toxic haze has blanketed most of South Korea,

prompting local authorities to advise people to stay indoors. Researchers at the KEI

pointed out that the Korean Peninsula is under the influence of air pollution in China and

Mongolia due to northwesterly wind. They added that three Chinese provinces, adjacent to

Korea, topped the list in China for high fine dust emission levels.

Source: Korean Herald

MONGOLIA AND RUSSIA TO BOOST AGRICULTURAL COOPERATION IN FOUR MAIN AREAS

Mongolia was expected to receive five million doses of vaccine for animals from Russia last

month as part of its renewed efforts to work with Mongolia for agriculture. The Ministry of

Food, Agriculture and Light Industry has finalized a deal with Russian for the improvement

of livestock health, export of animal origin products, establishing crop farm and trans-

boundary trades. The commencement of a second stage of the livestock health program

was been negotiated during the 20th meeting of Mongolia-Russia Intergovernmental

Commission held in Ulaanbaatar.

Russia was committed to sending the five million vaccine unites by 25 December, out of an

agreed total of 20 million doses.

Source: Montsame

MONGOLIA TO IMPOSE CONTROLS ON GM FOODSTUFFS

Parliament members have tabled a draft amendment to the country's food legislation to

control production and import of genetically modified foods and raw materials. The

amendment prohibits the planting and production of genetically-modified raw material

and foods, establishes standards and controls for imports, and proposes new food safety

legislation. The proposed effective date is 1 January 2017.

Source: Agra-net.com

MONGOLIA FACES ECONOMIC WINTER

Mongolia is in the depths of an unusually harsh winter that is decimating livestock and

sending temperatures to minus 56 degrees Celsius. But an economic winter has also hit

people like factory owner Jargalsaikhan. The 40-year-old once thought Mongolia’s

economic boom would last more than a decade. He had had ambitious plans for the

cement factory he started eight years ago, thinking that bank lending will keep flowing.

Then, the Mongolian economy collapsed, and his factory can barely survive now.

Since coming to power in June, the Mongolian People’s Party has announced an economic

reform plan containing spending cuts. They have also asked the International Monetary

Fund (IMF) for help. IMF aid could ease financial concerns for the country, as Mongolia will

have to repay $1 billion in debt by 2018.

Source: Central News Asia, Financial Tribune

SUMO'S NEXT SUPERSTARS? WHY MONGOLIA IS A WRESTLING POWERHOUSE

At a sumo training camp on the outskirts of Ulaanbaatar, Mongolia, tension was beginning

to mount. The World Sumo Championships was just days away. For the wrestlers in the

Mongolian national youth team, a win would gain them global recognition. Acceptance into

a Japanese "heya" (a sumo stable) might be just around the corner.

Although sumo isn't an Olympic sport, Mongolian athletes have scooped medals in judo and

wrestling —similar sports that have provided 17 of the nation's 26 medals in Olympic

history. "In Mongolia, though, the same salaries seem much bigger. Sumo champions are

also incredibly famous in Mongolia, and former champions have parlayed their sumo

careers into careers in politics and business,” said Taylor Weidman, a photographer who

shadowed the wrestlers.

Source: CNN

NOMADS WHO LIVE WITH REAL-LIFE RUDOLPH

A community in Northern Mongolia doesn’t look to the sky on Christmas Eve for Rudolph.

Because they have reindeer in their very own backyard. In the snowy wilds near the

Khuvsgul Lake live a nomadic reindeer herding family, the Gabaa’s. The Gabaa family use

reindeer for milk, cheese and transport. And their dung for fire.

Despite being able to spend only three days with the Tsaatan people, photographer Joel

Santos— who captured the stunning images of the family with their deers—traveled four

days to reach them — three driving and one on horseback — before repeating the epic

journey to return home. The youngest member, Uchraa, is already well trained in riding

the family reindeer. The family rely on their reindeer for milk, cheese and transportation.

Click on the link for the full photo essay.

Source: Gold Coast Bulletin

POLITICS

MONGOLIAN GOV'T APPROVES PLAN TO REVIVE ECONOMY

The Mongolian government on 21 December approved a detailed plan to revive the

landlocked country's economy, which has been mired in a severe downturn. The Mongolian

government is expected to start negotiations with other countries on long-term loans with

low interest rates to reduce its debt burden and refinance its current loans. Also, the

Mongolian government and the Bank of Mongolia will determine terms to extend or

refinance a USD580 million loan taken out by the Development Bank of Mongolia, which is

due in March, and international bonds due in January 2018.

Recently, Mongolian Parliament Speaker Miyegombo Enkhbold led a delegation of the

country's top officials to wealthy Gulf countries, such as Saudi Arabia, Kuwait and the

United Arab Emirates, and Mongolia's neighbor Russia, to seek financial assistance. Under

this economic revival plan, the Mongolian government will also try to diversify its mining-

dependent economy and improve the quality of veterinary services for its 61.5 million

livestock herds and export meat abroad.

Source: Global Times

BILL MARKS CHANGES FOR PRESIDENTIAL ELECTION

Lawmakers hope to change aspects of the contest for this year’s presidential election with

a new bill they’ve submitted. MPs Baasankhuu U., Oyundari N. and Enkhbold N. have

submitted a bill for this year’s election based on recommendations from the General

Election Committee.

Source: Montsame

CABLE BROADCASTER OPPOSE PROPOSED CABLE TAX

Cable TV broadcasters are protesting a proposed tax on television subscriptions that

Parliament will vote on. This bill is breaching the Constitution and other laws,” said

industry representatives in a press conference.

“This will be another blow to Mongolians during the economic hurdle.”

Source: Udriin Sonin

STANDING COMMITTEE ON PETITIONS HOLD DISCUSSION ON AIR POLLUTION

Parliament plans to adapt a long-term plan for combating air pollution in the capital.

Lawmakers are addressing concerns of the public as air pollution in Ulaanbaatar has

exceeded recommended levels from international groups such as the World Health

Organization by up to 6 times. In an opening speech for debate held in Parliament

preceding the drafting of legislation, MP Sarangerel D. said the smog problem that has

grown since the 1990s in Ulaanbaatar comes mostly from the so-called ger districts of

informal housing that use coal burning for heat and energy. The amount of a toxic

component called benzopirin, which causes cancer, has been observed to exceed the

tolerable level in 14 times in Ulaanbaatar’s smog, she said, according to a study conducted

by Chinese researchers.”

Air pollution is a problem of responsibility. Our citizens are demanding a certain effective

decision on this,” said Sarangerel.

Source: Montsame

GOVERNMENT TO ALLOW BENEFITS TO SINGLE PARENTS

A new bill before the cabinet would give more benefits to parents in need. The bill

outlines entitlements from the fifth month of pregnancy for parents with twins. The new

bill calls for MNT72.billion in spending to parents. Monthly benefits would be made

available to stay-at-home mothers of children up to three years old and quarterly benefits

for single parents.

Mongolia has 531,000 families with children, and 16 percent are single-parent households.

Source: Montsame

INDONESIA, BRAZIL EMBASSIES TO BE LIQUIDATED

Mongolia will shut down its embassies in Indonesia, Brazil and consulates offices at Osaka,

Japan and Hailar, China to save some cash while it waits on emergency financial assistance

from donor countries and international groups. The government expects to save between

USD400,000 and USD500,000 for the closure of each diplomatic office. “The Parliament

ordered the Government to liquidate some embassies,” said Foreign Affairs Minister Tend.

Munkh-Orgil. “The government needs to save.”

The foreign minister had previously announced plans at these specific locations because of

the few Mongolians living abroad in Indonesia and Brazil. Twenty-seven Mongolians live in

Indonesia, while 25 are in Brazil.

Source: Udriin Sonin

NEW JAPANESE AMBASSADOR ASSUMES OFFICE

A new ambassador from Japan has come to Mongolia. Japanese Ambassador Masato

Takaoka presented his credentials to President Elbegdorj Tsakhia on 26 December.

Source: Mongolia.GoGo.mn

MONGOLIA, LAOS SIGN AGREEMENT ON DIPLOMATIC MISSIONS’ LAND USE

Mongolia has signed an agreement for land use in Laos regarding land use for diplomatic

missions. Mongolian Ambassador Galbadrakh L. and the Deputy Minister of Foreign Affairs

of Laos, Sengphet Houngboungnuang ,signed the Agreement on the Use of Land and

Building for the Diplomatic Mission between the Government of Mongolia and the

Government of the Lao PDR on 26 December.

Source: Montsame

U.S. EMBASSY CELEBRATES 70TH ANNIVERSARY OF FULBRIGHT PROGRAM

U.S. Ambassador Jennifer Zimdahl Galt hosted a reception at her residence to

commemorate the 70th anniversary of the Fulbright exchange program on December 16.

Every year, nearly 40 scholars, students, researchers, and professionals travel between the

U.S. and Mongolia to work in areas ranging from health to IT. Thanks to the Government

of Mongolia’s support, up to ten additional Mongolian grantees get the opportunity to

study in the U.S. on the Fulbright program every year—more than double the number of

scholarships that were available prior to the establishment of this valuable partnership.

Founded in 1946 by U.S. Senator J. William Fulbright, the Fulbright program was

established to promote peace and enhance mutual understanding between the people of

the United States and other countries through the exchange of persons, knowledge, and

skills. It was launched in Mongolia in 1994.

Source: U.S. Embassy

3 CONVICTED FOR 1998 ASSASSINATION OF ZORIG

A closed court in Mongolia has convicted three suspects of the 1998 murder of Sanjaasuren

Zorig, a politician remembered for leading a peaceful transition to democracy. Nicknamed

the "Golden Swallow of Democracy,” Zorig was Mongolia's minister of infrastructure and

was widely expected to become prime minister in 1998 when he was assassinated in his

home at the age of 36. Mongolian media identified the three suspects as B. Sodnomdarjaa,

Ts. Amgalanbaatar and T. Chimgee, and said they had been found guilty of murder by a

panel of judges on Tuesday after a hearing held behind closed doors since October. They

were each given prison sentences of between 24 and 25 years.

Zorig's sister, Oyun, who is a former government minister, said she and her family did not

think justice had been done. "We also requested that the case is de-classified and the

court is open," she said. "Unfortunately, the request was not accepted."

Source: Reuters

DESPITE FRIGID WEATHER, MONGOLIANS PROTEST WORSENING SMOG

Hundreds of Mongolians have braved frigid weather to stage a protest in the country's

capital demanding that the government do more to address worsening air pollution they

fear is sickening their children and shortening their lives. The protesters gathered Monday

in a public square in front of government offices, holding banners with slogans such as

"Let's give fresh air to our future children," ''Smog is silent killer" and "We can't breathe."

Purevkhuu Tserendorj, one of the protest's organizers, said, "We are desperate and we are

organizing this demonstration to make authorities feel our frustration and anger."

Source: Business Insider

MONGOLIAN AUTHORITIES ARREST SUSPECT FOR DRUG SMUGGLING

Mongolian detectives have arrested d a man who was trying to enter the Zamyn-Uud

Mongolia-China border with 50 grams of methamphetamines. The man was arrested while

holding the drug known as “crystal” or “ice” among users on 22 December, close to the

Chinese border. The man is a Mongolian citizen and is being held at detention center

number 0461. He now faces between five and 10 years in prison for drug smuggling.

Source: News.mn

MONGOLIA'S YOUNG DEMOCRACY TESTED BY ECONOMIC CRISIS

Thirty-nine year old Otgonjargal left her hometown in western Zavkhan province about 15

years ago to make a living in the capital Ulaanbaatar. She sells clothes and other

accessories beside a road, but business has never been as bad. This year, her business has

plunged 50 per cent as the economy shrank. Otgonjargal blames the politicians for her

ordeals. “Of course I’m disappointed with the politicians.”

Many Mongolians are frustrated by the government’s seeming inability to contain the

economic fallout. Political watchers say the results of June’s parliamentary elections

indicates widespread frustration with the economy.

Source: Channel News Asia

LANDLOCKED MONGOLIA CONSIDERING PERMANENT NEUTRALITY

In the 13th century, Genghis Khan built the great Mongol empire through brute military

force. But today, the modern Mongolian nation is a young democracy that would rather

make friends than war. Sharing borders with major powers China and Russia, the third-

neighbor policy Mongolia has been cultivating has brought new allies such as the United

States and Japan in recent years. “The third-neighbor policy is important for Mongolian

independence. We’re trying not to be under the pressure of our two neighbors,” said

Professor Dashnyam Zolboo from the Mongolian Institute of International Affairs.

As another safeguard against outside dominance, Mongolia also wants to adopt a formal

policy of neutrality. President Elbegdorj Tsakhia believes a non-alignment position will

best serve a desire for peace, security and balanced foreign relations for the country.

Mongolia has yet to officially declare itself a neutral country although President Elbegdorj

has asserted that Mongolia has essentially been neutral in all but name.

Source: Channel News Asia

CHINA’S DIPLOMATIC HAT-TRICK NO ACCIDENT

In the final two weeks of 2016, Chinese diplomacy has scored an impressive hat-trick:

normalization of relations with Norway, Mongolia's commitment not to allow Dalai Lama

visits, and restoration of diplomatic ties with Sao Tome and Principe after the country cut

relations with Taiwan. This diplomatic treble was no accident. The seemingly unrelated

cases share a similarity: recanting perceived challenges to China's core interests. They sent

a strong signal to the world that the appeal of good Chinese diplomatic relations is rising

and that respecting China's concerns is not empty talk.

The one-China principle is the unshakable basis for China to develop relations with other

countries. Mongolia has promised never to allow such visits again [Correction: the foreign

minister merely said the government would not invite the Dalai Lama for a visit during the

current government administration -ed], just one month later. Mongolia's move rings alarm

bells for any countries that have contact with this political exile who attempts to split

Tibet from China under the cloak religion—such a move will severely jeopardize ties with

China.

Source: Ecns.com

INDIA DRIVES MONGOLIA INTO CHINA'S SUBMISSION

Prime Minister Narendra Modi was the first-ever Indian Prime Minister to visit Mongolia. He

may also be the last, as Mongolia now wishes that he had never come. When squeezed by

China to apologize for the Dalai Lama’s visit and promise to never again invite him,

Mongolia learned the hard way that India would neither come to its aid nor deliver on its

promises. Beijing made Ulaanbaatar kowtow, and that was a resounding slap on New

Delhi’s face.

Modi announced a credit line of USD1 billion during his visit in 2015 and assured the

Mongolian leaders that India would extend support in diverse fields and increase exports to

Mongolia. For New Delhi, it was a successful foray into “China’s backyard.” But there was

no trace of the muscle from India, and, on December 21, Ulaanbaatar apologized abjectly

to Beijing and promised to not allow the Dalai Lama to enter the country while the current

government is in place.

Source: InDepthNews

DEPORTED MOTHER AND DAUGHTER RESUME THEIR LIVES IN CALGARY AFTER LEAVING

MONGOLIA AGAIN

Months after they were forced to leave Canada, Ariunaa Demberel and Enky Ankhbayar are

embracing the opportunity to resume their lives in their adopted homeland. In September,

the pair were deported from Canada after officials determined they had inappropriately

entered the country in 2014 seeking refugee status as opposed to a humanitarian

exception based on the fact Ariunaa’s ex-husband allegedly kidnapped, beat and raped her

in their native Mongolia. The mother and daughter returned to Mongolia and immediately

fled to Russia and then the Philippines.

With the assistance of a worker in the office of Canada’s Minister of Public Safety,

Demberel and Ankhbayar were issued temporary visas allowing the mother to work and the

daughter to study in Canada. On Remembrance Day, the duo set foot on Canadian soil. The

two businesses that employed Ariunaa held her positions while she was overseas and she

has returned to work. Enky has resumed her studies at Western Canada High School.

Source: CTV

CHINA NEEDS TO GET OVER THE DALAI LAMA'S VISIT—EDITORIAL

Since the 13th and 14th centuries, the Mongolian Empire has allowed merchants, scholars,

diplomats, and religious peoples from all over the world and treated them equally on a

diplomatic and people-to-people level. Despite this history, the Dalai Lama’s visit in

November to Mongolia created somewhat expected tensions with the Chinese government.

But the Dalai Lama’s visit was not a China-Mongolia bilateral issue. The Dalai Lama was

invited by the Center of Mongolian Buddhism, the Gandantegchinlen Monastery, and was

accepted by the people.

From Mongolia’ standpoint, it behooves Chinese foreign policy to accept and respect

Mongolia’s Constitution and citizen’s rights to invite whomever they wish to conduct

religious ceremonies. From a geopolitical standpoint, it is in the best interests of both

China and Mongolia to continue their diplomatic, good-neighbor relations at both the

government-to-government and people-to-people levels.

Bolor Lkhaajav is pursuing a Master’s of Arts in Asia-Pacific Studies at the University of

San Francisco, and was formerly a Security Analyst with Horizon Intelligence.

Source: The Diplomat

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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]

Year 2015 *1.9% [source: NSOM]

November 30, 2016 *0.2% [source: NSOM]

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

Note: -0.6% y-o-y - Ulaanbaatar City, November 30, 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 – 5 January 2016

Currency Rate

U.S. dollar USD 2,497.12

Euro EUR 2,636.96

Japanese yen JPY 21.54

British pound GBP 3,075.70

Hong Kong dollar HKD 322.02

Russian Ruble RUB 41.59

Chinese Yuan CNY 363.02

South Korean Won KRW 2.11