Monday, August 4, 2014

[MNT ends 15-day losing streak, BoM/NSO fail to announce June FX/GDP, 4 banks cease mortgage issuance, and SCO to admit Mongolia in Sept]

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Monday, August 4, 2014

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Headlines in Italic are ones modified by Cover Mongolia from original


Overseas Market

KCC last traded C$0.075 Thursday, +275% YTD


Vancouver, Canada – July 23, 2014 – Kincora Copper Limited (TSX.V:KCC) (the "Company" or "Kincora") is pleased to announce that Jonathan (Sam) Spring, the Company's President and CEO, has joined as a member of the Board of Directors effective immediately.

Sam joined the Company in August 2012, and is formerly a Senior Mining Analyst with over 10 years financial services experience across various disciplines within the Goldman Sachs Group and Ocean Equities Ltd (now part of Pareto Securities). Sam has a commerce degree from the University of Melbourne, is a Chartered Accountant (ICAA) and CFA Charterholder.

Link to release


TRQ -2.02% Friday to US$3.39, +4.31% YTD. SGQ +1.72% Friday to C$0.59, -35.9% YTD

Turquoise Hill: No Plan to Sell Remaining 26% SouthGobi Stake Now

By Michael Kohn and Yuriy Humber

July 31 (Bloomberg) -- Sale price at 31% discount is based on SouthGobi's current share price and reflects its need for cash and takes into account "difficult" near-term coal market conditions, Turquoise Hill spokesman Tony Shaffer says in an e-mailed response to questions.

* Turquoise Hill says selling larger stake would have triggered takeover of entire company

* Co. remains focused on Oyu Tolgoi project

* Related Story: Rio's Turquoise Hill Unit to Sell 29.95% of Coal Miner SouthGobi


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Local Market

MSE Trading Results, August 1: Top 20 -0.23%, ALL -0.04%, Turnover 1 Million

August 1 (MSE) --

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Link to MSE Trading Report


MSE Weekly Trading Report, July 28 - August 1: Top 20 -1.71%, Turnover 22.9 Million

August 1 (MSE) --

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BoM MNT Rates: Friday, August 1 Close











































July MNT vs USD, CNY Chart:


Link to rates


Mongolia Rate Hike Is Step in Right Direction: Morgan Stanley

By Michael Kohn

Aug. 1 (Bloomberg) -- Bank of Mongolia policy rate increase to 12% from 10.5% is "first step in the right direction" and heeds IMF recommendation to tighten policy, Morgan Stanley analysts say in report yday.

* More monetary and fiscal policy tightening is needed, report says

* With CPI at 14.6%, real policy rates remain negative at -2.6% even after 150bp rate hike

* Morgan Stanley remains underweight on Mongolian sovereign credit due to low level of fx reserves



CORRECT: Mongolia Policy Rate Increase Targets Inflation Rate

By Michael Kohn

Aug. 1 (Bloomberg) -- (Corrects second bullet to say Bank of Mongolia, not the government, will reduce outstanding program loans.)

Bank of Mongolia decision to raise policy rate to 12% from 10.5% may help slow down credit growth and reduce balance of payment pressure, Bank of Mongolia Chief Economist Bold Sandagdorj says in interview.

* "We need to restrict the potential acceleration of inflation," Bold says after policy rate decision was announced yday

* Bank of Mongolia expects to reduce outstanding program loans by 770b tugrik: Bold

* Measures to increase foreign exchange and improve balance of payments haven't been so effective, Bold says

* Bold predicts single-digit inflation by the end of 2014



Cover Mongolia: BoM Fails to Announce June FX Reserves

August 2 (Cover Mongolia) --

BoM: The Bank of Mongolia has changed its' policy regarding official foreign exchange reserves reporting. The statistics will be published with an one-month lag /previously published with three-months lag/ on the first business day of the following month. Policy is in effect since July, 2014.

/in million USD/


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Link to reserves page


NSO Fails to Announce 2nd Quarter GDP on Friday

August 3 (Cover Mongolia) --

NSO August, 2014 Announcement Schedule:







11 - August - 2014



11 - August - 2014

Gross domestic product by quarter


1 - August - 2014

Preliminary Data

National consumer price index


11 - August - 2014

Agricultural products


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Average price of construction materials in


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Registered unemployed


8 - August - 2014



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11 - August - 2014

Main indicators of railway and air transportation branch


8 - August - 2014



8 - August - 2014

Foreign trade by 15 days


15 - August - 2014



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11 - August - 2014

Link to schedule


Khan, Capital, Capitron, UB City Banks suspend issuance of mortgages

August 3 (UB Post) Due to lack of funding, Khan Bank, Capital Bank, Capitron Bank and Ulaanbaatar City Bank temporarily suspended the issuance of Ipotek loans starting July 30. Commercial banks began limiting Ipotek loans last spring. Analysts say that because fewer Ipotek loans have been granted, housing prices have decreased by up to 200,000 MNT per square meter.

Link to article


Mogi: looks like measures to curb foreign currency risks in banking system

BoM Governor Decree A-122: Regarding amendments to the regulation on setting and monitoring prudential ratios to banking operation

Ulaanbaatar, July 30 (Bank of Mongolia) --

In accordance with the Article 28.1.2 of The Law on Central Bank (The Bank of Mongolia), it is hereby decreed:

1.    The following Articles 2.6.2 and 2.6.3 to be added to the Regulation on setting and monitoring prudential ratios to banking operation approved by the decree #460 in 2010 by The Governor of the Bank of Mongolia:

"2.6.2. Tier II capital shall not exceed Tier I capital.",

"2.6.3. Total subordinated debt amount qualified as Tier II capital shall not exceed 50 percent of total Tier I capital."

2.    The following amendments to be made in Annex 1 of the Regulation on setting and monitoring prudential ratios to banking operation:

10.5  "Domestic currency mortgage loans", "with the risk weight of 50%";

10.6 "Foreign currency mortgage loans", "with the risk weight of 100%";

10.8 "Other foreign currency loans issued to individuals and legal entities exposed to currency risk", "with the risk weight of 120%";

10.9 "Deposit backed loans", "with the risk weight of 0%";

10.10 "Other loans", "with the risk weight of 100%";

3.    An entity satisfying one of the following conditions is defined as an entity hedged against currency risk:

1)    The ratio of total amount of scheduled foreign currency loan payments to total amount of sales and revenue generated in foreign currency adjusted to global market rate during the term is less than 85 percent;

2)    Entered in to foreign currency derivative contracts with the banks registered and operating in Mongolia during the term of the loan.

4.    Bank's amounts receivable from the Bank of Mongolia by the long-term swap contracts with the Bank of Mongolia in accordance with the "Regulation on long-term swap contracts" approved by decree A-14 on January 17, 2014 by the Governor of the Bank of Mongolia shall be stated as "Other contingent liability" in the off-balance sheet account until the exercise day of the swap contract in the foreign exchange position report..

5.    Clauses 1, 2 to be applied from July 1, 2015.

6.    Bank CEOs are obliged to advise borrowers applying for foreign currency loans with the guidance set in the annex of this resolution.

7.    Supervision Department (Mr.Ganbat D.) and Legal Department (Mr. Delgersaikhan D.) to supervise the fulfillment of this decree.


Annex of the decree A-122 of the Governor of the Bank of Mongolia approved in 30 July, 2014


Although foreign currency loans have lower interest rate than loans denominated in MNT, foreign currency loans are exposed to currency risk due to the exchange rate fluctuations consistent with the macroeconomic conditions. Due to underestimation of currency risk, borrowers with foreign currency loans might incur losses and complication in repayment of loans. Thus, the Bank of Mongolia advises borrowers to reduce currency risk exposure by improving general knowledge of currency risk and currency risk reducing derivative instruments, choosing to borrow in MNT, engaging in derivative contracts (swap, forward contracts) when borrowing in foreign currency.

Link to release


BoM: Consolidated Loan Report of Banking System, Q2'14

August 1 (Bank of Mongolia) --

(in thousands of togrog)


Outstanding loan at the beginning of the period

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Link to full report


BoM: Individual and SME Loan Report, 2nd Quarter 2014

August 1 (Bank of Mongolia) –

/in thousands of togrog/


Outstanding loan at the beginning of the period

Fourth quarter of 2013

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Link to report


Mongolia: An Economy of Temporary Possession

Speaker(s): Dr Rebecca Empson 
Chair: Professor Rita Astuti

Recorded on 22 May 2014 in Old Theatre, Old Building.

In this lecture Rebecca outlines an economy based on the temporary, rather than outright possession of resources and commodities. Ethnographic evidence shows that such transient forms of possession can come to shape the very financial forms we might have assumed were incompatible with them. Mongolians located at the periphery of financial centres thereby come to shape wider economic practices that impact upon what we have understood capitalism to be. 

Theoretically, this may be taken as a broader critique of the idea of the 'performativity of economics' and the need to acknowledge the complex motivations that drive people toward different kinds of economic activity, including emotive feelings of trust, secrecy and uncertainty, as well the politics of accumulation in a rapidly changing landscape of economic potential. 

Rebecca Empson is a lecturer in Social Anthropology at UCL. She works in Mongolia on ideas about kinship, economics and material culture. Her monograph, Harnessing Fortune: Personhood, Memory and Place in Mongolia is published by Oxford University Press (2011). In September this year she will begin a new ERC-funded project exploring the form of capitalism emerging in Mongolia's mineral economy, entitled: Emerging Subjects of the New Economy: Tracing Economic Growth in Mongolia

Rita Astuti is professor of social anthropology and head of the anthropology department at the LSE.

Link to lecture

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Cabinet Meeting Held in Khutag-Undur Soum, Bulgan Aimag

August 2 ( The Cabinet meeting of the Government of Mongolia was held in Khutag-Undur Sum, Bulgan Aimag on August 1, 2014. Previously, the Cabinet meeting was scheduled to take place in Khuvsgul Aimag in terms of commissioning the Murun-Tarialan paved road structure but the meeting was postponed due to the delay of the road construction project.

In 2014, the Government of Mongolia has planned to complete the projected infrastructure by connecting all centers of four Aimags by the paved road structure and one of them is under construction which is the 88 km road project between Unit Bag (sub-administrative unit to Sum) of Khutag-Undur Sum, Bulgan Aimag and Tarialan Sum of Khuvsgul Aimag. Therefore, the Cabinet meeting took place in Bulgan in order to see over the current conditions and ongoing processes in there.

During the meeting, the Minister of Roads and Transportation A.Gansukh has informed to all members regarding the current implementation process of the paved road construction project in between the centers of Khuvsgul, Umnugovi, Sukhbaatar and Dornod Aimags which will be a part of the central magistral road connected with the capital city.

Minister A.Gansukh also noted that the Umnugovi road construction project will be completed within this August and the rest of road projects shall be commissioned according to the projected schedule within this year of 2014 because the required investment on overall road construction had already prefixed beforehand. Most importantly, the contracted road construction companies must ensure the perfect quality road; so that, the Ministry of Roads and Transportation simultaneously pays high attention on that vital issue in accordance with the project requirements.

Prime Minister N.Altankhuyag strongly recommended to the Minister of Roads and Transportation that the paved road construction between Khuvsgul and Ulaanbaatar must be completed with high quality on a timely manner within 2014.

The Governors of Khuvsgul and Bulgan Aimags as well as the management people from the contracted road construction companies on Khuvsgul road project had attended in the Cabinet meeting of the Government in Khutag-Undur sum, Bulgan Aimag.

Link to article


Junior coalition partner CWGP urges for extraordinary parliament session

August 3 (UB Post) Civil Will-Green Party stated that the need to convene a special parliamentary session in mid-August has emerged.

The party said, "Exchange rate increases are undermining not only the public's purchasing power but also economic stimulation by negatively affecting business operations. In this case, unless the Government and Parliament immediately take effective policy measures, the situation will continue to worsen and negatively affect social and political stability. So we recommend a special session be convened to make specific decisions."

Link to article


338 million fine collected from convicted MIAT officials added to state budget

August 3 (UB Post) The 338 million MNT fine imposed on the former director and vice director of MIAT Mongolian Airlines B.Erdenebileg and Ch.Khorolsuren was added to the state budget this week.

The MIAT officials are currently serving sentences in prison for embezzling and laundering 338 million MNT from MIAT by creating and receiving a fraudulent "War Risk Insurance" fee from passengers, and on charges of embezzling from payment of introducing an electronic ticketing system at MIAT.

The payment was transferred from a MIAT account to a Hong Kong-based company account in August 2008, which was later deposited to the bank accounts of N.Gantumur and O.Tamir, who were suspects in the "War Risk Insurance" fee case.

Link to article


Mongolia's railway to China turns into national security threat

By Jacopo Dettoni 

Ulaanbaatar, July 30 (bne) It may be a difference of less than 10 centimetres, but it's proving enough to revive Mongolians' darkest feelings of suspicion about their giant southern neighbour China.

The difference in question is the 85mm between Mongolia's 1,520mm rail gauge – a legacy from the Soviet era, and called the "Russian gauge" – and China's narrower 1,435mm gauge, a more widely used track width across the globe that's known as the "Standard gauge."

This minor detail represents a huge technical barrier between the two countries, since each train crossing the border is forced to make long stops to change the wheels. But while Mongolia's growing army of mining companies consider it a logistics bottleneck, Mongolians themselves see it as a matter of national sovereignty – a necessary shield protecting their sparsely populated homeland and its vast mineral resources from the ever-present "Chinese threat."

The Mongolian authorities have debated the issue for years, all to no avail. But it has become front-page news again after the government's recent attempt to pursue the construction of a standard gauge railway stretching from Tavan Tolgoi, the country's largest coal mine, to the Chinese border turned into a political quarrel fuelled by the powerful and controversial politician, businessman and judo hero, Khaltmaa Battulga.

"Tanks can easily penetrate into Mongolia in no time if we build a railway with a [narrower] gauge track, the same used in China," a TV show produced by Battulga claimed a few days ahead a key parliamentary discussion on the project in June.

The TV show triggered a wave of anti-Chinese sentiment right at a time when the Mongolian government is trying to increase commercial ties with China. In an attempt to rebut the criticism, the government labelled the televised content as "damaging to national security, economic sovereignty, and diplomatic relations with China." President Tsakhiagiin Elbegdorj himself summoned Battulga and accused him of "wrecking a good culture being formed and shaped in politics." Even so, the deliberations over the bill for the railway project was delayed until the fall session.

Godfather politics

Battulga is one of the most controversial figures in Mongolia's political and business arena. A former judo champion with the nickname Genco, recalling a character from Martin Scorsese's "The Godfather," Battulga started off trading electronic appliances with China in the 1990s and ended up building an empire ranging from meat processing to land development.

His political career has been as successful as his business ventures. After serving as roads, transportation, construction and urban development minister in the previous government, he became industry and agriculture minister and was even touted to be close to replacing Prime Minister Norovyn Altankhuyag in April. Instead, he ended up leaving the government in May in protest at a bill prohibiting the simultaneous holding of offices as a minister and a member of parliament.

Battulga has continued his dark warnings about supposed threats to national security. "The war and conquest of any country starts with transportation, banking system and communications," Battulga said during a TV show. "We have to protect these fields – some nations fight for it, die for it, but unfortunately Mongolians just give away these fields."

If it is arguable that a railway to China, or a TV show against it, represent a threat to Mongolia's national security, there is little doubt that the country's logistics bottlenecks are a much more concrete threat to its economic ambitions.

The present cost of trucking coal across the 20-kilometre border is $10 per tonne. This will come down to  $0.1 once the coal is moved by rail, with transportation times reduced to three hours from three days and the overall transport capacity increased to 50m tonnes a year from 20m tonnes, according to government figures. If such estimates materialize, the narrower gauge railway project will improve the competitiveness of Mongolia's coal, which gets often outpriced by China's other coal suppliers like Australia. Mongolia exported to China 18.2m tonnes of coal in 2013 and this is planned to reach 50m tonnes by 2015.

On the other hand, the railway will also increase the Mongolia's economic dependence on China, which is already the only buyer of its coal, raising concerns over the country's economical and political sovereignty. Those same concerns had already emerged in 2012, when China's state-owned Aluminium Corporation of China (Chalco) was about to acquire a coal mine operator, SouthGobi Resources, from a Canadian company. Ulaanbaatar reacted by passing a new law requiring government approval for foreign investment in strategic industries. More recently, a Chinese blogger caused outrage in Mongolia when he redrew a map of China and asked: "Is Mongolia the next Crimea?"

China's poor track record in dealing with border disputes and neighbouring countries proves to be fertile ground for such worries to proliferate. Nonetheless, Mongolia's government has little room to pursue other alternatives to feed its slowing economic growth. Despite recurring announcements, work has yet to kick off at the Sainshand industrial park project, a multi-billion project aimed to process locally Mongolian minerals and connected via railway to Russian ports. On the other hand, Chinese state firm Shenhua Group has already agreed to bear 70% of the cost of the 267km railway connecting Tavan Tolgoi and the Chinese border, making it a more realistic short-term option.

Besides, the government hopes it can gain access to third markets through Chinese ports, giving Mongolia the chance to become the "Panama" of Eurasian transit trade, to put it in the words of local columnist Dambadarjaa Jargalsaikhan. "By making use of a mere difference of 85mm, we can turn Mongolia into a big player in terms of international trade," Jargalsaikhan wrote in 2013, referring to the country's chance to become a regional hub for goods in transit towards China.

However, for as long as Mongolia's relationship with China remains one of ambivalence, such ambitions remain vulnerable to sudden bursts of anti-Chinese sentiment and, ultimately, will not be fulfilled.

Link to article

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China Seeks to Increase Investment in Mongolia

August 1 (Mongolian Economy) Economists agree that it is important to attract more investors during this time when foreign reserves are decreasing by large numbers. Over the past five months, foreign currency reserves have dropped by 28.6 percent. On a year-on-year basis, the number has decreased by 52.6 percent. As a result, Mongolia has been hosting many forums and meetings with foreign investors, despite these summer months being a time to celebrate Naadam festivities. 

Yesterday, the Mongolian National Chamber of Commerce and Industry hosted Mongolian and Chinese businesspeople in the Liaoning Province to mark their 65th year of diplomatic relations. The Foreign Affairs Ministry of Mongolia announced that the year of 2014 is a year of friendly bilateral exchanges. This meeting aimed to incorporate Mongolian businesses within the Chinese market since over 50 percent of foreign direct investment comes from the People's Republic of China. 

Chinese companies are currently operating in many sectors in Mongolia, most importantly in the mining, construction and trade services sectors. Mongolia receives 80 percent of all exports from China and in return, China imports 30 percent of all Mongolian products. In 2010, the Concession Law was passed. This allowed better access for Chinese investors so they could invest in bigger and better projects. 

The Liaoning Province of China is interested in three main sectors: Agriculture, mining and roads. Mongolians want to push further investment into their agricultural sector because more investment would help them become more profitable over time since the processing of raw materials is an expensive procedure. 

During the meeting, no contracts were signed. Rather, Mongolians provided more information to Chinese businesspeople about the investment climate. Another meeting will be organized in Liaoning this autumn as yesterday's meeting mainly served to provide information and link the related businesspeople together. 

Link to article


Mongolian railway sector celebrates 76th anniversary

August 1 ( Mongolia marks the 76th anniversary of establishing railway transport in Mongolia on August 1st and 2nd.

Building of a narrow gauge (750mm) line connecting the capital, Ulaanbaatar, with the coal mines of Nalaikh (Mogi: wait, what? Narrow?), some 33km distant was the start of Mongolian Railway Development.  Ulaanbaatar-Nalaikh railway line opened in 1938.  The principal main line in the country, a line connecting Russian and China, passing through the Mongolian capital, Ulaanbaatar opened in 1950, its extension to the Chinese border in 1955. It was built to Russian (1520mm) gauge.

On the occasion of the 76th anniversary of railway transport in Mongolia, President Ts.Elbegdorj will arrive at the event to congratulate to all staffs of Mongolian railway in Khonkhor rail station on August 2nd.

In addition, Capital City Administration and Ulaanbaatar Railway JVC launched railbus service between two ends of the city, from Amgalan to Tolgoit since June.

Link to article


Mongolia transitions to digital broadcasting

August 3 (UB Post) Mongolian terrestrial television network operators officially switched to digital technology on July 31. An open house was organized at Chinggis Khaan Square to provide residents with more information about the transition.

Out of the four digital technology standards implemented throughout the world, Mongolia chose to transfer to the European DVB-T2 standard. Digital Terrestrial Television (DTTV) is designed to broadcast wide-screen images with 16:9 aspect ratio through HDTV and SDTV, enabling viewers to directly receive high-definition channels. Ten transmitters will be installed in Ulaanbaatar and 244 transmitters in soums. By the end of August, digital transmitters will be installed in remaining soums and settlements. Mongolia will have full digital TV coverage across the nation by 2016.

At the open house, many residents were concerned about whether their current TVs could be used with the digital TV switchover. The old analog signal will not be switched off even with the digital TV transition. Channels will be broadcast through a combined analog and digital system until January 1, 2016. During this period, residents will need to purchase either a Set Top Box modem or a TV that supports the new DVB-T2 standard. The Chairman of the Information Technology, Post and Telecommunication Authority (ITPTA), Ts.Jadamba, announced that analog signals will be completely switched off on January 1, 2016.

Countries all around the world are transitioning from analog to digital systems in a similar manner. Japan and South Korea were able to do a complete transition in five years. However, officials believe that Mongolia will be able to do a complete transition within two years.

The ITU Regional Office for the Asia and Pacific Region sent a letter congratulating Mongolia for transitioning to a digital system. Radio and telecommunication companies in the eastern and western regions of Mongolia report that broadcasts have been operating normally. Ts.Jadamba reported the successful introduction of Mongolia's digital system during an online broadcast from Chinggis Khaan Square.

Link to article


ALS opens coal analytical laboratory at Tavan Tolgoi Mine in Mongolia

July 9 (ALS Group) ALS one of the world's largest and most diversified testing services providers is pleased to announce the opening of the new coal analytical laboratory at Tavan Tolgoi mine in South Gobi, Mongolia.

ALS Group LLC (formerly Stewart Mongolia) have been providing world class inspection and analytical services to our clients since 1994. ALS Coal has invested in a new state-of-the-art facility comprising of an over 1,000m2 building located just next to the Tavan Tolgoi mine. The new laboratory will service Erdenes Tavan Tolgoi JSC with whom ALS has established long term cooperation agreement. Tavan Tolgoi deposit is one of the world's largest coal deposits.

The new facility provides sufficient infrastructure to allow installation of additional capital equipment on a 'plug & play' basis facilitating an increase in production capacity at any given time.

The new facility is equipped with the latest technologies available in the market to provide our valued customers with a wide range of analytical services such as:

·         Sample Preparation

·         Proximate Analyses

·         Determination of Calorific Value

·         Determination of Total Sulphur and Phosphorus

·         Free Swelling Index

·         G Index

·         XY Plastometry

·         Geotechnical analyses

Our existing team of highly skilled employees now have the benefit of a modern and efficient facility which will guarantee the high quality and enhanced timeliness of data being generated by this laboratory.

Link to release

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Road from Foreign Ministry to State First Hospital closed for repair until August 16

August 3 (UB Post) The road between the Ministry for Foreign Affairs and the State First Clinical Hospital was closed on Thursday night for expansion and repairs. The road is set to open at 6 p.m. on August 16.

The city road authorities have advised drivers in Ulaanbaatar to choose alternative routes for the time being.

Heating pipelines under the 141 meter long road will be replaced, while the surface of the road is repaired.

Link to article


2.3 billion spent for first phase of Selbe River bank restoration

August 3 (UB Post) Two local companies have recently completed the first part of a project to recover the flow of Selbe River and upgrade its surrounding area at the cost of 2.3 billion MNT.

The project was launched three years ago, in 2011, with a total budget of 8.5 billion MNT to upgrade 1.3 kilometers of area surrounding the river. The first phase of the project upgraded the area which spans 350 meters between Ikh Toiruu bridge and Golden Villa Town.

The original budget for the first phase was two billion MNT, but 297.8 million MNT was added later for unexpected repair works.

Ulaanbaatar administrators will inspect the upgrade and decide whether to launch the second stage of the project.

Link to article

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SCO to admit new members: India, Pakistan, Iran and Mongolia

August 1 (Voice of Russia) Draft documents on the procedure of the admission new members to the Shanghai Cooperation Organization have been adopted. This is one of the main outcomes of the meeting of the foreign ministers of Russia, China, Tajikistan, Kazakhstan, Uzbekistan and Kirgizstan held in Dushanbe on Thursday.

The adoption of these documents at the next SCO summit will give the green light for admitting the four observer-states, India, Pakistan, Iran and Mongolia, to the six-member organization.

Documents will be submitted to the SCO summit for the adoption. The summit will be held in Dushanbe in September. At present, Tajikistan holds the SCO presidency.

The quartet has expressed their desire to join the SCO in the past few years. The four countries have taken part in economic and cultural projects of the organization as observer-states. The desire of India, Pakistan, Iran and Mongolia reflects the growing authority and influence of the SCO in the eyes of Asian countries, says expert at the Higher School of Economics Alexei Maslov.

"At present, the SCO has started to counterbalance NATO's role in Asia. Consequently, these countries want to take part in the SCO in the capacity of safeguard of their interests. At present, the SCO is strengthening because the American policy towards Asia has been excessively tough and is aimed at suppressing their interests. The American policy contradicts the interests of Asian countries. In this sense, it's quite natural that India, Pakistan, Iran and Mongolia expressed desire to join the SCO. There is another aspect that has to be taken into account. The growing role of China in the world shows that many countries are afraid of directly cooperating with it without outside backing. In this context, SCO enters in the capacity of guarantor that China will honour the interests of these countries in the framework of the existing SCO guidelines," Maslov said.

The admission of India, Pakistan, Iran and Mongolia will pave the way for the SCO to hold itself out as the centre of power in global politics, says expert at the Institute of International Studies, Leonid Gusev.

"If these countries become the SCO permanent members, this means that the organization will turn into a powerful structure. If other countries join the SCO, then we can say about the appearance of an alternative powerful global organization because it will be seriously reckoned," Gusev said.

By giving green light to the admission of the quartet, the SCO shows that it is organizationally developing and capable of upgrading itself and rejecting exhausted norms, says Alexei Maslov.

"It has long considered that the admission of new members to the SCO, which have serious problems between them, for example India and Pakistan, would be dangerous for its future. The reason here was that this might led to grow strain between members. However, there are special relations between China and Pakistan. For one, China lobbies the admission of Pakistan to the SCO. Meanwhile, Russia actively supports the SCO membership of India, Iran and Mongolia. At present, owing to the admission of the quartet, the SCO will be able to create a powerful organization in Asia and it will be a powerful economic, cultural and educational network," Gusev said.

The foreign ministers adopted a draft strategy for the development of the SCO up to 2025. It was submitted by Russia. It has set the task of minimizing the negative influence of global and regional processes on the SCO territory. It is also aimed at upgrading its role and significance in solving global issues.

Link to article


Meeting Held Between Working Groups of Mongolia-China Intergovernmental Committee

August 1 ( The working groups of economy, science and technology of the Mongolia-China Intergovernmental Committee had involved in the meeting held on July 30, 2014 in Ulaanbaatar, which led by the Head of the Department of Neighboring Countries at the Ministry of Foreign Affairs of Mongolia T.Tugsbilguun and the Deputy Head of the Asian Department at the Ministry of Commerce of PR China Song Yaoming accordingly.

In between the working groups, they have exchanged their views and opinions about the implementation process of trade and economic cooperation which was recorded on the protocol during the Mongolia-China XIII Intergovernmental Committee Meeting; at the same time, both parties have noted that the related implementation process is keep going successful at this stage.

Elsewhere, the working groups of the Mongolia-China Intergovernmental Committee have reached on mutually agreed basis that the joint project implementations under Chinese grant-aid and soft-loan shall be constantly intensified to somewhat higher level with more productive way out in mining, infrastructure and industrial sectors of Mongolia.

Link to article


150 Mongolians Involved in Crimes Abroad This Year

Ulaanbaatar, August 1 (MONTSAME) A bit more than 150 Mongolians have been involved in crimes abroad in the first seven months of this year, reported the Foreign Ministry of Mongolia on Thursday. 

Some 100 are detained in China, 22--in South Korea, six--in Chinese Hong Kong, six--in Turkey, 11--in USA, five--in Russia, three--in the Czech Republic, two--in Poland, three--in Singapore, three--in Chinese Taipei, and by one--in Austria and Hungary.

By types of the crimes, 92 Mongolians were involved in robbery, one--homicide, 22--in trafficking of prohibited products, 17 breached the residence laws, nine were involved in prostitution, 14--in hooliganism, eight breached road traffic laws, one had been carrying drugs.

The Consular department of our Foreign Ministry warned the Mongolians abroad, especially students, that they must strictly obey the laws and regulations of countries they reside in.

Link to article


Mongolian Citizens Ranked 77th on Global Ranking of Travel Freedom

August 1 ( The Henley & Partners Holdings PLC is a global leader in residence and citizenship planning in association with the International Air Transport Association (IATA) had jointly released "The Henley & Partners Visa Restrictions Index 2014" which is the global ranking of countries according to the travel freedom.

This global ranking index was analyzed and created based upon the visa regulations of all the countries and territories in the world that ranks all countries in accordance with the visa-free access for their citizens enjoy to other countries. The experts in this field consider that the global ranking shows the international travel freedom of citizens as well as the international relations and status of individual countries relative to others and that's surely as the first in its' kind within the travel freedom issues of the world countries.

"The Henley & Partners Visa Restrictions Index 2014" covers the overall territory areas of 199 countries of the world in which the Finland, Germany, Sweden, United States and Great Britain have listed as top 5 countries within the international community nations of travel freedom. The citizens of these top listed countries have visa-free access to 174 countries and Mongolia is listed at 77th with the status of visa-free access to 51 countries across the world.

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Mongolia TV Interview with Minister for Foreign Affairs of Australia, Julie Bishop

July 16 (Foreign Minister of Australia) --

MUNKHTSETSEG DASHZEVEG: I have learnt that you are paying close attention to the human rights issues confronting women and girls in the Indian Ocean, Asia-Pacific region. On top of that, I found in the news that under your leadership Australia is changing approach towards its development cooperation. Particularly, I was interested at Australian aid that will promote the empowerment of women and girls in the Indian Ocean-Asia Pacific region, especially it will support the women's participation in the economy, and in community decision-making.

JULIE BISHOP: Australia has been a democracy for over 100 years and we've had a national government for over 100 years but I am the first female Foreign Minister that we have had in Australia, so perhaps it's natural that I would turn much of my focus to the empowerment of women and girls in the lives of our societies in the Indian Ocean Asia-Pacific. The focus of our aid program is to empower women and girls at a leadership level - at a political, business, community level - but also to provide the economic empowerment of women to ensure that they take part in the formal labour economies of the countries in our region.

Our aid program also contains a significant focus on working with women to ensure that they can reach their full potential. I can't imagine a world without women being given every opportunity to reach their full potential through participating in political life, in businesses, in communities, in families and so that is where much of the focus of our foreign and aid policy is at present. And, as we focus on the issue of economic diplomacy - just as traditional diplomacy seeks the goal of peace, economic diplomacy seeks the goal of prosperity - we believe that women are a vital factor in that economic diplomacy that we'll practise throughout our region.

MUNKHTSETSEG DASHZEVEG: We heard that Australia has invited Mongolia to participate at the New Colombo Plan, which is your initiative. Since the New Colombo Plan was launched, you have visited several places in Asia. What are the early outcomes so far? We see this program as a bridge between Australia and the region. What are your expectations from the New Colombo Plan in general? and towards Mongolia in particular?

JULIE BISHOP: In relation to the New Colombo Plan, there are many thousands of students from the region that study in Australia and have over many years. Indeed, the original Colombo Plan in the 1950s and 1960s saw thousands of students from the region live and study in Australia. This Government has introduced a reverse plan, whereby young Australians are given an opportunity through scholarships and grants to study at universities in nations in our region. We have had a pilot program in 2014; and over 1300 students will have taken part in the pilot program to four separate locations in the Asia-Pacific. From 2015, we are inviting many more nations to be part of our New Colombo plan so that they can receive and host Australian students to study in their universities; and undertake internships or work experience with companies, businesses operating in the host country.

We are delighted that Mongolia wants to be part of the New Colombo plan, and we look forward to sending bright young Australian students to study and live in Mongolia. We hope that they will come back with new perspectives, new insights, new understanding, language skills; and not only have a wonderful educational experience, but also make friendships and connections that will last a lifetime.

MUNKHTSETSEG DASHZEVEG: Many Mongolians have studied in Australia, and they call themselves "the Mozzies". We would be happy if Australians that would study in Mongolia could also have a brand nickname. What are your thoughts on that?

JULIE BISHOP: We are delighted that Mongolian students, who study in Australia, call themselves "Mozzies". And I can't see why, Australian students, who study in Mongolia, shouldn't also be called "Mozzies". After all they buzz back and forth between Australia and Mongolia, like mosquitos do. So perhaps, Mozzies is a good name. Otherwise, we have to think of something like the Koalas, or the Kangas, or the Wallabies, I don't know if that works as well as Mozzies.

MUNKHTSETSEG DASHZEVEG: We heard that your Excellency is invited to visit Mongolia. On behalf of the women of Mongolia, we would be happy to see you visiting Mongolia; and we welcome you to learn more about Mongolian women of today.

JULIE BISHOP: Thank you.

Link to interview


Japan-Mongolia: Partnership and Partners

By Jargalsaikhan Dambadarjaa

August 3 (UB Post) Ts.Elbegdorj, the President of Mongolia, participated in a Mongolia-Japan business forum and signed a joint statement with Shinzo Abe, the Prime Minister of Japan, agreeing in principle to establish an economic partnership agreement between Mongolia and Japan. The agreement, negotiations of which have been going on for four years, covers broad areas such as free trade, direct investment, and intellectual property. It will be effective upon ratification by Parliament. The current economic partnership between the two countries could be described as patchy due to the low trade turnover generated by only few companies and a limited number of goods. The purpose of this agreement is to improve and take the current partnership to the next level. As an observer who took part in the visit to Japan, I am sharing my views and the conclusions I've drawn with regards to when we will have a comprehensive economic partnership with Japan, and what or whom the outcomes will be dependent upon.


Mongolia-Japan diplomatic relations have improved dramatically. The heads of state of the two countries are having more frequent high-level visits and have become good friends who visit each other's home. However, the economic relations between Mongolia and Japan have been largely dominated by soft loans and economic aid between the two governments. When Mongolia had problems associated with power supply, transportation, and education, Japan fixed our power plant, supplied dozens of buses, and repaired hundreds of high schools. It is also the Japanese who are building a new airport and a hospital here in Mongolia.

As of 2013, our bilateral trade turnover was only 310 million USD, 290 million of which came from the sales of used cars by Japan, while Mongolia's cashmere was largely responsible for the remaining 20 million. In just the past year, Japan made a total foreign direct investment of 136 billion USD internationally, whereas for over the past 20 years, they have invested only 0.5 billion USD in Mongolia. A current economic partnership map dominated by plain colors resembling economic aid has a small number of dots with different colors. These unevenly distributed dots, which look like patches, represent a small number of economic partnerships in the private sector.

The parties in the agreement are seeking to boost Mongolia's economy, fueled by efforts from the private sector, rather than having to rely on receiving economic aid from Japan, to become a true business partner that can accompany Japan in the international market. This economic partnership agreement will be the first such agreement Mongolia establishes, whereas it will be the 15th economic partnership agreement for Japan. If we manage to fully implement the agreement, the economic and business relations between the two countries will improve in quality and positively affect the livelihood of Mongolians.


This economic partnership agreement allows us to expand our economic cooperation with Japan not only on free trade, but also in other areas such as investment and intellectual property. The main purpose of the agreement is to significantly boost bilateral trade and investment. To achieve this, Shinzo Abe put forward the ERCH Plus initiative to support industrial diversification and export promotion, while our president proposed exploring opportunities together, producing together, and aspiring to be active in the world market together. It has also been agreed upon that Mongolians will work with a Japanese advisor to develop mid and long-term plans in order to carry out economic structural reforms and devise stable economic policies.

The agreement will eliminate Mongolia's five percent tax on used cars imported from Japan, while Japan will either remove or dramatically reduce their 38.5 percent tax on meat purchased from Mongolia. However, it should be noted that Japan is now exporting used cars, whereas Mongolia is not exporting meat to Japan because of failure to meet international hygiene standards. The parties have also agreed to gradually reduce and ultimately remove Mongolia's custom tariffs on all types of goods and commodities being imported from Japan over the next 10 years.

Furthermore, the agreement will reduce the taxes imposed on Mongolia's raw materials coming from the mining industry and partially-processed products. As a result, Mongolia will export more at a cheaper cost and have a better balance of trade. There could be minor amendments over time to the agreement, with regards to considerations such as the consequences of having an increased number of left hand drive cars and ensuring that there are no mutual trade imbalances and losses due to reduced taxes. In any case, this agreement has gone forward thanks to the strong efforts of promotion and endorsement by the President, who worked harder for it than the government. The positive outcomes expected from the agreement will depend on how good a partner Mongolia can be. Japan has the third largest economy in the world and is already known for their highly developed free market, experience, and trusted partnership.


The current structure of Mongolia's economy and the capability of government administration show that some major changes need to be made to allow this agreement to benefit every Mongolian. In order for Mongolia to become a partner who is economically organized, we need to turn those irresponsible state-owned companies who run deficits into publicly-owned shareholding companies and have them managed by technocrats rather than politicians. It will create and encourage fair competition within the private sector and the Japanese will not be pushed into partnering solely with Mongolian companies that are affiliated with government officials. Mongolia must bring its corruption level down to that of Japan.

A law needs to be developed to ban companies that are associated with government authorities from taking part in more than 50 concession agreements offered to Japan by the Government of Mongolia. Private sector projects should be promoted by their owners through relevant organizations. The government must organize it in a way that offers an equal opportunity to every private company.
There are no state-owned companies in Japan. Railroad, communications, and tobacco production companies are all privatized. Currently, Japan Post is the only state-owned company, the structure of which has changed since 2007, and it is expected to be fully privatized soon. Mongolian state-owned companies constantly take swipes at private companies, and their management gets replaced after every election. Therefore, Mongolians hardly believe that the interim management teams of those state-owned companies can establish good partnerships with private Japanese companies that have hundreds of years of experience.

The meat we produce can meet the strict hygiene standards of Japan only when Mongolian herders work under strong partnerships with the Japanese. A month ago, Australia established a partnership agreement similar to that of Mongolia's, after supplying meat to Japan for almost 20 years, making up one-third of their market, and holding negotiations for seven years. Under the agreement, Japan reduced the tariffs on Australian frozen beef from 38.5 percent to 19.5 percent over 18 years, while the tariffs imposed on chilled beef will be dropped from 38.5 percent to 23 percent over 15 years. In the early 1980s, Japanese companies invested heavily in Australia's meat processing plants. Brazil's JBS, together with Japan's Nippon Meat Packers, control 40 percent of Australia's meat production today. Mongolians do not really know how disciplined, hard-working, tidy, and demanding (of oneself and of others) the Japanese are. Japanese people are only seen as tourists and travelers in the Mongolian countryside. Japanese films and books need to be translated into Mongolian to spread a more accurate understanding.

Mongolia can establish an economic partnership agreement with a highly-developed country like Japan. However, once established, it will be another case to respect and implement the agreement. Mongolia has become known for disregarding its responsibilities set out by agreements that have been established. It is time for not only the Government of Mongolia but also the people, to work hard to revive our reputation. When he gave a speech in Tokyo, President Elbegdorj convinced the Japanese that Mongolians can do it. The only thing that needs to be done now is to make it happen.

Trans. by B.AMAR

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Social, Environmental and Other

Missing MRAM geologist found dead

August 1 ( Rescue team found Friday dead geologist who lost in Bayan-Under sum in Bayankhongor aimag.

Missing geologist was lost for a week since he lost contact with other two geologists who were working for geological studies in the countryside.  Other two were lucky to meet local residents.

The body was found by rescue team around 10.00 pm at place near Tsenkher in Bayan-Undur sum in Bayankhongor aimag.

Three geologists of Mineral Resources Authority were lost 120-130 km away from Bayan-Undur sum in Bayankhongor aimag when they had a tire tore out on July 24th.  The two had no contact when he went to call for help using GPS device.

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PM Legs Visiting Orbis Flying Eye Hospital

Ulaanbaatar, August 1 (MONTSAME) The Prime Minister N.Altankhuyag and accompanying him officials legged Thursday a famous "Orbis"--the international flying eye hospital.

It has currently landed in "Chingis Khaan" international airport near Ulaanbaatar. The Premier expressed a gratitude to the international medical group for implementing beneficial projects for the Mongolians, for children especially, and confirmed that his government will back the hospital's actions here.

Noting that hi tech devices such as cellular phones and personal computers are worsening children's eye sight, the Premier asked the doctors to deliver here knowledge and information on how to take a proper care for eyes.

The flying hospital arrived here on July 20 by invitation of Mongolia's Ministry of Health and in line of the "Virtu Foundation" NGO. Being here for the sixth time, the hospital finished works on Friday after treating people with eye-sight problems and training our ophthalmologists. The doctors also legged the National Center for Mother and Children (NCMC) to run medical examinations on patients and to perform surgeries in their plane.

According to the World Health Organization (WHO), 285 million people in the world suffer from eye sight problems, 90% of them are living in developing countries. The avoidable blindness shows a high rate in Mongolia, the doctors said. The cornea-related blindness is common in localities, whereas the blindness caused by diabetics tends to rise in the capital city, they noted.

The Orbis Flying Eye is a hospital at the Orbis international non-profit non-governmental organization (NGO) dedicated to saving sight worldwide. Orbis programs focus on the prevention of blindness and the treatment of blinding eye diseases in developing countries. Since 1982, Orbis capacity-building programs have enhanced the skills of 325,000 eye care personnel and provided medical and optical treatment to more than 23.3 million people in 92 countries.

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Fully funded Mongolian Global Grant approved by Rotary International

(Elaine Fiorilla from the International Medical Equipment Consortium (IMEC) receives a check from PDG Tony Gilmore representing the first payment for maternal and pediatric medical suites to be shipped to clinics in Mongolia.)

July 25 (Capital City Sunrise Rotary Club, Concord, New Hampshire) Mongolian Ambassadorial Scholar Batuka Baterdene had an idea when he came to the states to pursue a degree in city planning at the State University of New York (SUNY) Albany. It was his vision to somehow equip five rural clinics with the basic medical equipment they needed to provide necessary care to expectant mothers and their infants in villages that were hundreds of miles from the nearest hospital. Batuka made a presentation, with a series of compelling videos taken by two expat members of the Ulaanbaatar Rotary Club, that demonstrated the desperate need at a forum in Massachusetts called Rotary Northeast Link. Link was organized a number of years ago by Past District Governor Karen Babbin to provide a basic Rotary and cultural awareness education to incoming and outgoing Ambassadorial Scholars and for outgoing Group Study Exchange Teams - none of whom were Rotarians.

I was attending Link as a District Governor and as a previous attendee and member of the committee. Batuka's presentation struck a chord with me as a very worthwhile cause. I spoke to him after the presentation and said that I'd like to help, but it would have to be after my District Governor year ended in July 2013. With the help of the videos, we put together a presentation and took it to as many Rotary clubs as possible through the summer and into the fall and winter. A District Governor classmate gave us press in her adjoining district. It turned out that several years before a Group Study Exchange Team, headed by Rotarian Dr. Burt Dibble, visited the District which included Mongolia, and he was ready to help with the fund raising.

Batuka traveled back to Mongolia in December. We continued to communicate using Skype, email, text and Facetime. Batuka found us a club partner at Ulaanbaatar Peace Avenue. Every member gave to the project. They worked through the Ulaanbaatar club to secure the necessary Memos of Understanding from the government saying that this donation would not be taxed; from the Medical University saying that they would provide training for a representative at each clinic; and from the clinics themselves, assuring that they understood the equipment was only to be used for its intended purpose. Meanwhile the equipment list was being refined to fit the environment. The only high-tech equipment items are the sonograms (solid state - two laptop sized units), the infant fetal heart monitors and, to a lesser extent, the incubators. Particular attention is being paid to the local power sources; power conditioning equipment is used to protect the sensitive equipment. LED lighting gets around the problem of burned-out bulbs and the sterilizers are non-electrified "Pot Sterilizers" - any heat source will do. Almost all of the durable equipment is mechanical to eliminate specialized repair should it be damaged or broken. IMEC (International Medical Equipment Consortium) will have put together almost $800,000 in equipment and supplies in the five suites that will be shipped.

The biggest challenge will be the weather and delivery time. IMEC will take some time to assemble all the hundreds of pieces that make up the suites. Shipping in a 40-foot container to Ulaanbaatar will take a minimum of 72 days. In past years it has snowed in August - we're all hoping that the first snow is late. When the equipment arrives in UB, a representative of each of the clinics will be brought in for a one-day training session. Some may have to travel as much as 1700 miles. After a refresher course on the equipment (all medical professionals are trained at the university in UB), each will accompany their equipment back to their clinic.

There are lots of moving pieces to a grant like this, but with the help of dedicated and engaged Rotarians, it gets done.

Tony Gilmore, PDG
Capital City Sunrise Rotary Club

Link to release


Mogi: meanwhile Inner Mongolia is facing its worst drought in 60 years

River water levels on the rise nationwide to dangerous levels

August 3 (UB Post) The National Agency for Meteorology and Environment Monitoring of Mongolia says that the water level of Uur River, fed from Khuvsgul's mountains, rose by 65 cm in a single day, and was 55 cm higher than average levels at this time of year.

In addition, the water levels of the Kherlen River in Mungunmorit soum, Baganuur District and Choibalssan; the Onon River in Dadal soum and Altai Mountains; Khovd River in Myangad soum; and the Taats River in Nariinteel soum, exceed flood levels by five to 35 cm.

The water level of the Tuul River has risen by 10 to 15 cm in recent days, reaching levels for dangerous flood conditions. The Khalkh River has also reached dangerous levels.

Residents who live near river banks, herders, and visitors are advised to practice caution in these areas to avoid injury, loss of life or loss of property.

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Mongolian Folk Artists Invited to Ferrara Buskers Festival in Italy

August 1 ( Ferrara city is located in the northern Italy that still remained a part of artistic centers of the Italian Renaissance and very famous with its' annual Ferrara Buskers Festival dedicated to the art of the street which is the biggest event in its' kind in the world.

The festival has been actively kept going annually since 1988 and the 27th Ferrara Buskers Festival will take place between August 21 and August 31 in which the Mongolian folk-art singers and bands including Khulan, Khukh Mongol, Sedaa and TransMongolia will participate as guests at the invitation from the organizers.

The press conference regarding the Introduction of 2014 Program of the Ferrara Buskers Festival was organized in Rome, Italy on July 31, 2014 in association with the Ministry of Culture and Tourism of Italy, the Municipality of Ferrara and the Embassy of Mongolia in Rome, Italy respectively.

During the press conference, the Ambassador Extraordinary and Plenipotentiary of Mongolia to Italy Sh.Odonbaatar expressed his deepest gratitude to the Ferrara Buskers Festival organizers for their special invitation to the Mongolian folk-art artists as the honorable guests; at the same time, highlighted that the upcoming event will surely contribute to developing the cultural collaboration between Mongolia and the Italian Republic.

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Our artists to participate in int'l music festivalMontsame, August 1

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