Friday, August 8, 2014

[Walsh optimistic on Sept, MSE to cut costs, MNT on new low, NSO confirms Q2 GDP delay, and Mongolia sends 4th contingent to South Sudan]

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Friday, August 8, 2014

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Headlines in Italic are ones modified by Cover Mongolia from original


Overseas Market

Mogi: a bit more reassuring

Walsh optimistic of OT resolution ahead of September deadline: "It's about how you share the pie"

Rio Tinto's market-beating profit boosts hopes for cash return

August 7 (Reuters) - Anglo-Australian miner Rio Tinto raised hopes it could sharply boost cash returns to investors after topping market forecasts with a 21 percent rise in first-half profit.

The world's no. 2 miner slashed costs and cut capital spending quicker than expected, at the same time as it boosted shipments of iron ore by a fifth, which helped it offset a 29 percent slump in prices of the steelmaking ingredient this year.

Strong cash flows allowed Rio to cut net debt to $16.1 billion (9.56 billion pounds), putting it in line with a mid-teens range it wanted to hit before it would consider returning capital to shareholders. That boosted expectations for a share buyback in February, when it announces full-year results.

Chief Financial Officer Chris Lynch said there was a strong chance of good news on returns in early 2015, adding the company was no longer under pressure to cut debt.

In copper Rio warned that the market had moved into surplus as new mines had come on stream.

Walsh was optimistic Rio could resolve a dispute with Mongolia over the expansion of its Oyu Tolgoi copper and gold project ahead of a September deadline for securing finance, a project analysts and investors are closely watching.

Rio has budgeted for some capital spending this year on the mine, where it halted work a year ago due to disagreements with the government.

"If there were a 12 month deferment of that project than we would be faced with an impairment, but we are focused on ensuring that we bring that project on as early as we can," Walsh said. "Everyone wants that project to proceed. It's just about how you share the pie."

Link to article


Rio Tinto announces first half underlying earnings – Rio Tinto, August 7

Presentation: 2014 Interim Results – Rio Tinto, August 7


TRQ closed -0.58% to US$3.41, flat at C$3.74

Turquoise Hill to Announce Second Quarter Financial Results on August 12, 2014

VANCOUVER, BC--(Marketwired - August 07, 2014) - Turquoise Hill Resources (NYSE:TRQ) (NASDAQ:TRQ) (TSX:TRQ) will announce its second quarter financial results on Tuesday, August 12, 2014.

The Company will also host a conference call and webcast to discuss second quarter results on August 12, 2014 at 5:00 pm EDT/2:00 pm PDT. The conference call can be accessed through the following dial-in details:

North America: 416 340 8530 | 800 769 8320

International: +1 416 340 8530 | +1 800 2787 2090

The conference call will also be simultaneously webcast on Turquoise Hill's website at An archived playback of the call will be available on the company's website.

Link to release


EGI closed +1.38% to US$0.294, ETG closed flat at C$0.31

Entree Gold Announces Second Quarter 2014 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 7, 2014) - Entrée Gold Inc. (TSX:ETG)(NYSE MKT:EGI)(FRANKFURT:EKA) - ("Entrée" or the "Company") has today filed its interim operational and financial results for the quarter ended June 30, 2014.

Greg Crowe, President and CEO commented, "In the second quarter, we announced the commencement of a pre-feasibility drill program at our 100% owned Ann Mason project in the Yerington district of Nevada. This drill program is a critical first step towards the completion of a pre-feasibility study which could ultimately demonstrate Ann Mason's potential to become a long-life, open pit copper mine located in one of the most desirable mining jurisdictions in the world."

The infill drill program is designed to upgrade the mineral resources contained in the 2012 Preliminary Economic Assessment Phase 5 pit ("2012 PEA" - see News Release of October 24, 2012) from indicated and inferred to a combination of measured and indicated categories. The program contemplates approximately 14,000 metres of pre-collar reverse circulation and diamond drilling in 31 holes, and is expected to be completed by the end of 2014. The estimated budget is approximately US$5 million. The Company plans to issue an updated resource estimate in the first quarter of 2015.

Greg Crowe further commented, "With approximately US$42 million of cash at the end of the second quarter, Entrée continues to be well funded in this difficult market environment. We remain committed to balancing prudent cash management with our mandate to build shareholder value through the advancement of our key assets and continuing to assess other strategic opportunities."

Mongolia Update

On March 31, 2014, the lender commitments for project financing for the Oyu Tolgoi underground mine expired. On May 12, 2014, Turquoise Hill Resources Ltd. ("Turquoise Hill"), majority owner of Mongolian subsidiary Oyu Tolgoi LLC ("OTLLC"), announced that 14 of the 15 global banks participating in the Oyu Tolgoi project financing had agreed to extend their commitment letters to September 30, 2014.

On June 23, 2014, Turquoise Hill announced that OTLLC had received an audit report from the Mongolian Tax Authority claiming unpaid taxes, penalties and disallowed entitlements associated with the initial development of the Oyu Tolgoi mine. Turquoise Hill stated that it strongly disagrees with the claims in the audit report, and advised that outstanding shareholder issues, including tax claims, must be resolved before further investment in the underground can proceed. As a result, distribution of the underground feasibility study, which was originally expected to be completed in the first half of 2014, will be delayed.

Corporate Highlights

Link to release


Mongolia Growth Group Ltd. June 2014 Monthly Letter to Shareholders

Toronto, Ontario, August 7 (FSCwire) - Mongolia Growth Group Ltd. (YAK – TSXV and MNGGF –  USA), a real estate investment and development company pursuing the dynamic growth of the Mongolian economy via ownership of institutional-quality commercial property assets in the capital city of Ulaanbaatar, Mongolia is pleased to announce the release of its June 2014 Shareholder Letter. 

June 2014 Shareholder Letter 

To the Shareholders of Mongolia Growth Group Ltd.,

In June 2014, MGG's core commercial property portfolio* experienced a same-store rental increase of 32.3% relative to June 2013 on properties owned 12 months or longer, as measured in local currency (Mongolian Togrog). Total billed revenue for June 2014 was 242.2 million Mongolian Togrog, as compared to 214.8 million Mongolian Togrog in June of 2013 or a 12.7% increase.** The occupancy rate for the core portfolio in June of 2014 was 94.7% including an occupancy rate of 94.0% for core retail properties and an occupancy rate of 95.2% for core office properties. 

Investment Portfolio and Leasing Update 

Investment Portfolio 

During the month of June, we continued to implement our strategy of shifting MGG's asset mix away from smaller properties that cost more to maintain and manage, towards larger institutional-quality assets that are easier to scale, as we continue to build MGG into Mongolia's leading commercial real estate concern.  During June, we disposed of 6 properties for a total of approximately CAD $1,060,000. Over the first six months of 2014, we have disposed of a total of 12 properties for approximately CAD $1,450,000 in cash along with 3 properties in consideration for the transactions in February and May. The proceeds of these sales will be used for the renovation of the retail center mentioned in the Press Release on May 29, 2014. 

Leasing Update 

During the past few months, MGG has continued to maintain a stable level of occupancy along with increased revenues on new leases. Here are some highlights of our recently signed leases. 

-       During 2013, we began renovations on one of our store-fronts with a view to modernize it and increase its size, to increase future earnings potential. We have completed all work on that property and in June leased it to a well-respected tenant at market rates. 

-       We renewed a lease on Peace Avenue for the highest retail rent per meter (Mongolian Togrog terms) in the history of our company. 

-       The medical tenant mentioned in the press release on July 3rd, has now fully moved into the newly renovated facility and begun paying rent at market rates, leading to zero vacancy in the newly renovated facility. 

Medical Facility Video 

In keeping with our precedent from prior major renovations, we have created a video to document the progress of our renovation of the medical facility mentioned above. You can watch it at the following link

Mongolian Economic Update 

During the first quarter of 2014, Mongolia's GDP grew 7.4% in real terms 

Since our previous update to you: 

·         Mongolia passed changes to the 2006 Minerals Law designed to boost exploration for minerals (Bloomberg) 

·         Mongolia is seeking to sign a gas project and export accord with China. The agreement will cover two coal-to-gas plants with 95% of exports going to China through pipelines.   About 80 million metric tons of lignite coal will be extracted annually to produce the gas at the plants and the plants could produce 15 billion cubic meters of gas a year. (Bloomberg) 

·         Gold sold to the Central Bank of Mongolia increased 65.4% in the first half of the year to 4 tones. As the royalties on gold have fallen from 10 to 2.5 percent, the volume of gold sold to the Central Bank of Mongolia increased considerably. (UB Post) 

·         Copper Concentrate Export Increase 2.4 Times in First Half to $985.8 Million (UB Post)

Japan and Mongolia sign free trade agreement. Mongolia will abolish tariffs on Japanese autos while Japan will reduce its tariff on Mongolian beef. (The Japan Times) 

We look forward to updating you again on our progress and new developments in the Mongolian economy next month.

Link to release


Mogi: no mention of negotiations with GoM on restructuring the JV

Denison Mines Corp. Reports Second Quarter 2014 Results

TORONTO, ONTARIO--(Marketwired - Aug. 7, 2014) - Denison Mines Corp. ("Denison" or the "Company") (TSX:DML)(NYSE MKT:DNN) today reported its results for the three months and six months ended June 30, 2014. All amounts in this release are in U.S. dollars unless otherwise stated.

Mineral Property Exploration

In Mongolia, exploration expenditures on the Company's Gurvan Saihan joint venture ("GSJV") properties totaled $43,000 and $290,000 for the three and six months ended June 30, 2014, compared to $56,000 and $397,000 for the three and six months ended June 30, 2013. Expenditures in Mongolia during the first half of 2014 and 2013 relate primarily to annual license payments required to maintain the GSJV properties in good standing while the Company continues to explore strategic alternatives regarding its ownership interest in the GSJV. The Company currently has an 85% interest in the GSJV, with Mon-Atom LLC holding the remaining 15% interest.

Link to release

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Local Market

MSE News for August 6: Top 20 +0.41% to 15,818.48, Turnover 26.2 Million

Ulaanbaatar, August 6 /MONTSAME/ At the Stock Exchange trades held Wednesday, a total of 40 thousand and 838 shares of 11 JSCs were traded costing MNT 26 million 234 thousand and 965.00.

"State Department Store" /24 thousand and 143 units/, "Hai Bi Oil" /10 thousand and 106 units/, "Remikon" /2,866 units/, "Mongolia Development" /2,008 units/ and "APU" /788 units/ were the most actively traded in terms of trading volume, in terms of trading value--"State Department Store" (MNT 13 million 520 thousand and 080), "Hai Bi Oil" (MNT four million 042 thousand and 400), "Tavantolgoi" (MNT three million 154 thousand and 020), "APU" (MNT three million 085 thousand and 155) and "Mongolia Development" (MNT one million 305 thousand and 200).

The total market capitalization was set at MNT one trillion 592 billion 474 million 445 thousand and 136. The Index of Top-20 JSCs was 15,818.48, increasing by MNT 64.76 or 0.41% against the previous day.

Link to release


MSE News for August 7: Top 20 +0.75% to 15,936.48, Turnover 12.8 Million

Ulaanbaatar, August 7 /MONTSAME/ At the Stock Exchange trades held Thursday, a total of 22 thousand and 271 shares of 20 JSCs were traded costing MNT 12 million 814 thousand and 200.00.

"Silikat" /5,500 units/, "Remikon" /4,363 units/, "Hai Bi Oil" /3,505 units/, "Mongolia Development" /2,584 units/ and "Olloo" /2,113 units/ were the most actively traded in terms of trading volume, in terms of trading value--"Sharyn gol" (MNT one million and 865 thousand), "Mongolia Development" (MNT one million 679 thousand and 600), "Gobi" (MNT one million 532 thousand and 600), "Shivee ovoo" (MNT one million 433 thousand and 500) and "Hai Bi Oil" (MNT one million 366 thousand and 950).

The total market capitalization was set at MNT one trillion 600 billion 600 million 096 thousand and 811. The Index of Top-20 JSCs was 15,936.48, increasing by MNT 118.00 or 0.75% against the previous day.

Link to article


Mongolian Stock Exchange Announces Cost-Cutting Measures

August 7 (Cover Mongolia) MSE has announced that it has entered into cost-cutting mode starting from August 5. During this period MSE shall undertake restructuring measures such as streamlining the organizational structure, eliminating convergence of roles, cutting wages by 30%, lowering expenditure.

In the short run, MSE shall lay off surplus staff, and not make major procurements in the remaining months of 2014.

Link to MSE release, August 6 (in Mongolian only)

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BoM MNT Rates: Thursday, August 7 Close











































August MNT vs USD, CNY Chart:


Link to rates


BoM FX auction: US$18 sold at 1,880, CNY128.5m at 304.5, accepts swap $2m bid, $18m ask offers

August 7 (Bank of Mongolia) On the Foreign Exchange Auction held on August 7th, 2014 the BOM has received bid offer of USD and CNY from local commercial banks. The BOM has sold 18.0 million USD as closing rate of MNT 1880.00 and 128.5 million CNY as closing rate of MNT 304.50.

On August 7th, 2014, The BOM has received MNT Swap agreement bid offer in equivalent to 2.0 million USD and USD Swap agreement ask offer of 18.0 million USD from local commercial banks and accepted all offer.

See also:

·         FX Auction Statistics

Link to release


BoM issues 245.5B 1-week bills, total outstanding -12.5% to 431.1B

August 6 (Bank of Mongolia) BoM issues 1 week bills worth MNT 245.5 billion at a weighted interest rate of 12.0 percent per annum /For previous auctions click here/

Link to release


Last 12-week auction average yield was 9.328%, June 26

GoM Treasury Auction: 30B out of announced 60B 12-Week Bills Sold at Average 13.49%

August 6 (Ministry of Finance) Auction for 12 weeks maturity Government Treasury bill was announced at face value of 60.0 billion MNT. Face value of 30.0 billion /out of 30.0 billion bid/ Government Treasury bill was sold at discounted price and with weighted average yield of 13.490%

Link to release


UPDATE: NSO Confirms Delay in Announcing Q2 GDP

By Mogi

August 7 (Cover Mongolia) A phone call to the National Statistical Office confirmed that the agency is late in announcing Q2 GDP due to the need of "verifying data," and said that they should announce in the coming days.

Link to NSO schedule


MIBG: BoM Raises Rates, Desperate For Foreign Capital

August 6 (MIBG) Last month, Moody's Investors Service warned that Mongolia's current economic situation was unsustainable and demoted the country's foreign currency Government bond rating from B1 to B2. Moody's also cautioned that foreign exchange reserves had fallen to $1.6 million, compared to $2.2 million in January. As foreign-direct investment continues to decline, Mongolia's current-account deficit and rising external debt burden have pushed the Government into draining foreign exchange reserves.

In an attempt to neutralize the incessant economic decline, the Mongolian Central Bank raised interest rates from 10.5% to 12%; a 1.5 percentage-point hike enacted in order to help calm high inflation and the consistent deterioration of Mongolia's foreign-direct investment. (Mogi: what does raising rates do for FDI? It's about inflation and currency)

The current state of the mining industry in Mongolia is directly correlated with the present condition of the economy. Foreign-direct investment in Mongolian mines has experienced drastic deterioration, due in part to inconsistent domestic regulation by the body governing the mining sector. The quantity of exports has also declined in correlation to China's growth, however, to thwart a decline in imports, the government enacted several stimulus policies and eventually pushed inflation to double digits.

Expansionary monetary and fiscal policy has added to demand pressures, which have fueled inflation and increased the risk of leakage into the country's banking system. Throughout this year, the Tugrik has decreased 10% against the US Dollar.

Looking forward, the state of foreign-injected capital remains unpredictable. This instability threatens the further development of the mining sector. Moreover, it would have negative effects on Mongolia's ability to increase foreign-exchange export earnings in order to repay the country's external debt, which now equates to over 150% of the country's GDP.

Resolving the Oyu Tolgoi dispute as soon as possible would clear the way for Mongolia's economic recovery. At full capacity the mine can equate to over 30% of the country's GDP. Furthermore, the resumed production of the mine would attract international investors, which should be Mongolia's prime objective moving forward. The recent changes in mining legislation have initiated the motion, however, if the dispute is not resolved, the amendments will not bear much significance. With over $3 trillion of untouched resources, the whole world is examining Mongolia industriously, waiting for the inconsistency in regulation to stabilize.

Link to post

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Speaker Leaves for Dornod

Ulaanbaatar, August 7 (MONTSAME) The Chairman of the State Great Khural (parliament) Z.Enkhbold Thursday left for Dornod aimag in order to take part in the Eastern Regional Assembly of the Union of Democratic Force (UDF). (Mogi: one of the major DP factions)

To run August 8-9 near the Buir Lake in Khalkhgol soum, the assembly will bring together 500 members the UDF from Dornod, Khentii, Sukhbaatar, Gobisumber, Dornogobi aimag, the city's Bayangol, Bayanzurkh, Chingeltei, Khan-Uul, Bagakhangai, Baganuur and Nalaikh districts.

With a motto "Let's reform our Mongolia", the UDF has elected the Parliament Speaker as its president, whereas current Minister of Population Development and Social Welfare S.Erdene has been elected the vice president.

The UDF comprises politicians such as G.Bayarsaikhan, a head of the parliamentary Standing committee on environment, food and agriculture, and D.Arvin MP.

Link to article


MIBG: Threat of Government Instability Increasing

August 6 (MIBG) The recent arrest of the senior advisor to the Prime Minister is taking headlines of most media in Ulaanbaatar, and proposes the idea that the change in Government may be in the making.

In May, Prime Minister Altankhuyag Norov, leader of the Democratic Party of Mongolia unveiled his "100-day action plan" designed to boost the nation's weakening economy. The plan was approved on May 9th and is to be concluded on August 18th, the plan broadly seeks to improve the economy by resolving the headline issues including the stalled development of the Oyu Tolgoi copper-gold project, the revocation of the 106 licenses and a controversial Mineral Law. Since the approval of the action plan the MNT continues its record setting fall and flirted with USD/MNT rate 1880 (-12% YTD) and foreign direct investment continues to fall (-70% YoY in the first half of 2014) as market sentiment weakens over a prolonged debate Mongolia's investment environment.

On July 4th, the Mongolian government approved a specific resolution, Resolution #216, to settle the 106-license dispute. However, despite the government's efforts, the specific resolutions relating to the licenses have not met the market expectation and do not provide adequate measures to address the underlying issues, which is a clear recognition of the formal license holders who were affected when 106 licenses were revoked. MIBG continues to meet with Government and industry professionals. And the intention to recognize the previous license holders are clearly evident, however a written document is missing. We expect to see further details once the 7 person working group commences operation to tender those 106 licenses in mid-August.

Furthermore, the long-running dispute between the Mongolian government and Rio Tinto over the underground expansion of the Oyu Tolgoi copper mine continues to drag on. Financing commitments needed to build the underground mine are set to expire on September 30th and the implementation procedures of the mineral-law amendments or Resolution #216 have not yet been confirmed.

As foreign-direct investment continues to decline, Mongolia's current-account deficit and rising external debt burden have forced the government to drain the foreign exchange reserves.

In addition to the mining related issues, most of the actions identified under the 100-day plan to overcome financial difficulties and change the management system of public properties are already included in the existing government action plan. However, it appears that those measures have not been implemented over the past two years.

The Mongolian People's Party, which is the main opposition party to the DP, has formed a working group to closely monitor the implementation progress of the action plan and to report its outcomes. According to the head of MPP Enkhbold Miyegombo, the Deputy Speaker of Parliament (MPP), the 100-day action plan will be assessed and evaluated on August 20th.

From the following issues and the recent arresting of the Prime Minister's advisor, L.Gansukh, it seems certain that the current Government will continue to receive heavy criticism from the general public and the opposition party. Boum-Yalagch Olzod, leader of the Mongolian Green Party, believes that the progression of the100-day action plan is very unsatisfying and that there will be changes in government in the upcoming month, including the resignation of the Prime Minister.

In addition, the recent incident that involved the Prime Minister illegally meeting his advisor L.Gansukh at the detention facility is receiving a lot of negative media attention and could further damage the Prime Minister's reputation. From the perception of the Mongolian People's Party's the actions of the Prime Minister and the Minister of Justice have disrupted the rule of law.

There is even a rumor that the daughter of the Prime Minister, who worked for Clean Air Foundation could also be involved in the recent arresting of the Prime Minister's advisor, who is being held for alleged funds embezzlement from the Coal Program. This week anti-corruption agency criticized the Prime Minister's recent visit to the detention center and hints that the Prime Minister himself could interrogated.

All these developments may hint that a shift in Government may be in the making. However as state heads of two neighboring countries of Mongolia are scheduled from late August to early September, we do not expect the Government change to take place in August. MIBG will continue to monitor the situation and provide further developments to our clients.

Link to post


MP S.Ganbaatar (I): We need to create national debt management

August 7 (UB Post) Each Mongolian taxpayer will carry 7 million MNT in debt, if the debt ceiling rises to 70 percent of gross domestic product. Parliament Member S.Ganbaatar comments on national debt. 

There is a report that the debt ceiling has exceeded 70 percent of GDP. What is your opinion on the debt ceiling increase?

I hope that the debt ceiling does not exceed 40 percent. If the debt of organizations and companies are assumed as national debt, then it has exceeded 40 percent. Government and the Central Bank's debt should be considered separately. I talked about it at the Standing Committee on State Budget's meeting. The most important thing is to analyze consumption and the effects of 1.5 billion USD in debt.

The debt is a risk and a hazard at the same time. We can't control the risk, but we can minimize the risk. Government needs to make a strong decisions on how to spend debt.

What is the off-budget debt?

Development Bank and big foundations have large debt.  This means we need to create national debt management.

According to the law, debts of Government and state-owned enterprises are considered national debt. Experts and economists say that some parts of the references have been deducted?

I agree with those people. We argued about it in the State Budget Standing Committee's meeting, but haven't dealt with it yet. It's wrong to deduct some references.

Is there any repayment risk if the debt ceiling rises to 70 percent?

It is risky for sure. To minimize the risk, pre-feasibility studies must be done.

If the Law on Debt is changed, the Fiscal Stability Law needs to be changed too, as foreign countries have advised that the law needs to be stable for a minimum of three years.

I have one idea. Forty percent is a valid recapitulation. The debt isn't a small amount, if we use it for effective and beneficial projects. The reason for taking on debt is to bring about economic growth. Before any debt, pre-feasibility studies and market research must be done, which determines whether or not debt should be taken on. But we didn't do this at all, so it needs to be legislated.

What should we do to make good industry?

Every country needs to concentrate a large amount of money on big refineries to make progress. Secondly, to bring in beneficial currency from foreign markets, qualified domestic products need to be produced. That's all we want. Mongolia has been affected by the repression of market cycles of raw material prices. The only way out of this situation is industrialization.

Does this mean the debt ceiling isn't important?

Yes. It doesn't matter If it's 40 percent or 70 percent. The most important thing is to invest in effective, beneficial projects where pre-feasibility studies are developed. But 40 percent is a valid recapitulation and I support it.

Link to article

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AmCham Mongolia: New Tax E-Payment System Launch, August 8

Dear Members and Friends of AmCham Mongolia,

Apologies for resending the email. The U.S. Ambassador Piper Anne Wind Campbell will be speaking at the tomorrow's event. Please find below the updated agenda. 

With the support of AmCham Mongolia honorary member Business Plus Initiative Project (BPI), the General Department of Taxation (GDT) is launching its new Tax E-Payment System. During the launch event, the GDT and commercial banks will demonstrate to taxpayers how to use the new system to pay taxes electronically. The new E-payment options will make paying taxes easier, cheaper, safer and faster by connecting GDT and banks electronically with just a few clicks, eliminating physical visits to banks and GDT office. 

Please forward this information to your accounting department in case they would be interested in attending.

Event: Tax E-Payment System Launch
Time: 12:00 pm – 1:30 pm, Friday, August 8, 
Venue: General Department of Taxation, 5-1 UN Street, Chingeltei District


11:45 - 12:00 Guests arrival
12:00 - 12:05 Opening remarks, Commissioner of the GDT Mr. Batmagnai
12:10 - 12:15 Opening remarks, The U.S. Ambassador Ms. Piper Anne Wind Campbell
12:15 - 12:40 Demonstration of E-Payment System, GDT IT Department Head Mr. Kh. Batbayar
12:40 - 13:00 Questions and Answers
13:00 - 13:30 Refreshments/Media Interviews



Mogi: struggling, really? More than the rest? I think he meant/needed to title it "Why is Mongolia is struggling to attract American investors?"

Why are American investors struggling in Mongolia?

by Mendee Jargalsaikhan

Mendee Jargalsaikhan ( is a visiting fellow at the East-West Center in Washington and a PhD student at the University of British Columbia. He was a former Defense Attaché to the US and Senior Research Fellow of the Mongolian Institute for Strategic Studies.

July 30 (Center for Strategic & International Studies) Unlike the 1990s, Mongolia is now in the radar of US investors. Then, Mongolians were desperate for US investors, but few responded because of the unattractive market environment, uncertain political and socio-economic development, and undeveloped regulatory framework for foreign investment. Today, Mongolia is described as a high-potential investment destination for US investors, although there remain some complications.

Mongolia has restructured its macroeconomy with assistance from international financial institutions (IFIs), entered into a series of agreements with the US to increase bilateral trade and investment, and even offers short-term visa exemptions for US citizens. Above all, Mongolia recognizes the US as a vital 'third neighbor' to balance the influence of its powerful neighbors, China and Russia. Mongolia sought to strengthen its relationship with the US by renewing its commitment to democracy, deploying over 2,000 military personnel to Iraq and Afghanistan, and constantly seeking opportunities to develop closer ties. In spite of cultural and geographic distance, Mongolian officials have invited US corporations to invest in large-scale mining and infrastructure projects. Moreover, Mongolia is committed to democratic principles, proximate to East Asian economies, and is not experiencing any armed conflict. Why then are major US investors struggling to close investment deals in Mongolia – especially, in areas of mining and infrastructure development?

It is neither because of changes in our foreign policy objectives nor limited knowledge about Mongolia's investment environment. The 'third neighbor' foreign policy has been re-affirmed by politicians in policy statements and in meetings with US officials. This soft-balancing strategy has never been challenged by China or Russia. They seem to respect Mongolia's strategy as long as Mongolia remains militarily neutral. Nor can ignorance be the problem: an enormous amount of knowledge has been generated by IFIs, ranging from the World Bank to the European Bank of Reconstruction and Development, embassies, trade representatives, local branches of multinational corporations, legal firms, consulting services, and media ever since Mongolia's opening in 1990 and re-opening of mineral wealth in the first decade of the millennium. Mongolia has been recognized as the new frontier for US entrepreneurs.

The main obstacle for US investors is domestic politics in Mongolia. Self-interested politicians and political-business factions increasingly dominate domestic politics and foreign policy. This results in weak government institutions, unaccountable politicians and political parties, and unclear decisionmaking processes.

The government's ability to make long-term policies has been weakened by the politicization of public service. In theory, public servants are supposed to serve as gatekeepers against parochial, short-term interests by adhering to long-term developmental policies that would benefit Mongolia as a whole. Following the first parliamentary election in 1992, there was competition in Mongolia between two major political parties as well as smaller ones to appoint party-affiliated individuals to senior, mid-level and junior positions of the government and state-owned enterprises. This encourages individuals and public servants to seek political party affiliation, and in turn, discredits merit-based professional public service. The emerging pattern now is that political parties either attempt to reduce politicization during coalition governments, as in 2004 and 2008, or take revenge and politicize positions when one party dominates both the legislature and the Cabinet as occurred in 1996, 2000, and 2012. As a result, key policymaking areas are understaffed with career technocrats while overall posts were filled with party-affiliated officials whose main aim is to benefit within the four-year election cycle.

Similarly, Parliament, a key legislative, policymaking body, lacks nonpartisan professional staff and research capacity, which are important aspects of parliamentary democracy if there is to be policy continuity. The absence of such capacity allows politicians to intrude on the lawmaking process without much analysis by politicizing any issue on populist grounds. For example, Parliament has been unable to produce substantial studies and reports on major developmental projects like strategic mines or infrastructure development for the public since its establishment in 1992. In the vacuum, influential individuals and factions spur public opinion with one-sided facts to cancel or delay other factions' projects and to advance their own interests. That means the government is operating on flash-drive memories of influential politicians and factions rather than the hard-drives of capable, professional government institutions.

Another related problem is increasing unaccountable, opportunistic behavior by government officials at the national and local levels. Particularly at the national level, members of Parliament and the Cabinet are influential political actors. They engage in competitions over governmental posts at ministries, agencies, and state-owned enterprises such as the Erdenet copper plant, airlines, and railways, as well as in newly established ones in the mining and infrastructure sectors. Since political parties are divided along factional interests and are losing political cohesiveness to self-interested individuals and business factions, the two major political parties are unable to hold their members accountable for opportunistic behavior. Politicians and factions favor short-term construction projects in their locality for quick benefits, rather than supporting long-term major projects. In general, politicians are afraid of allowing their opponents to get credit for implementing major long-term projects – like Oyu Tolgoi and Tavan Tolgoi, two of the largest mining operations in Mongolia – and related infrastructure. This creates an environment that favors blame game tactics against opponents and encourages unaccountable, opportunistic, political behavior. As a result, members of Parliament and the Cabinet are perceived as skillful rent-seekers who make false promises to foreign and domestic investors.

The other problem is an unclear decisionmaking process. On paper, Mongolia has a clear decisionmaking process where all issues can be openly debated in public. But, over the last decade, the decisionmaking processes have been overtaken by informal politics and bargaining among politicians and political-business factions. Good intentions become hostage to self-interested politicians, factions, and political entrepreneurs who seek to disadvantage opponents to improve their own bargaining position. Therefore, politicians and business factions enter into a non-transparent decisionmaking processes. This creates opportunities for others to upset the balance of power to trigger more rounds of crises, bargaining, and compromise. As a result, no major development projects and policies to solve socio-economic challenges are fully implemented. No single study has been completed on the pros and cons of any major investment agreement or policy. The public and investors (both foreign and domestic) suffer while self-interested individuals and factions benefit.

The self-interest-dominated Mongolian politics is worsened by competition among foreign and domestic investors. Unlike US, German, and Japanese companies, the main competitors in Mongolia are not obligated under international and domestic anti-bribery and corruption acts (e.g., the Foreign Corrupt Practices Act, OECD Antibribery Convention). As a result, competition over major projects generates incentives for politicians and political factions to gain short-term benefits at the expense of national priorities. For such politicians, narratives of geopolitics and nationalism are easy ways to spur public opinion while meeting their short-term self-interest.

Mongolian politicians are aware of the importance of US investments to strengthen the 'third neighbor' policy. But, 'short-termism' in Mongolian politics is weakening the institutional capacity of the state to reach and honor investment agreements while implementing long-term policies to cope with socio-economic challenges. Unless politicians and political-business factions restrain their short-sighted interests and focus on national priorities that would strengthen state sovereignty and benefit Mongolians as a whole, the country will become an unstable, debt-ridden 'island of the poor' in the stormy sea of Inner Asia. Celebrations of democracy will not save the nation and keep third neighbors close by. Disciplined, professional, and apolitical state institutions together with responsible political parties and politicians will create an 'island of opportunities.'

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Mongolian Medi-care Exhibition & Fair at Misheel Expo, August 27-29

Ulaanbaatar, August 7 (MONTSAME) First international exhibition of medical facilities and apparatus will be organized on August 27-29 in the "Misheel Expo" center.

Co-organized by the Ministry of Health, the "Misheel Expo" Group, the "Monolab" LLC, China's SCIS LLC, and the Society of Medical Engineers, the exhibition will present the world's biggest medical apparatus producers and suppliers such as GE Healthcare, Medtronic, Covidien, Pentax, Nihon Kohden, Belimed AG, ERBE, Kangda, KHB, Microport, KDL, Boxun, Siling, Sanyou, General Care and Medi Land. 

Apart of propagandizing the latest progressive hi tech for medical diagnosis and treatment, the action will also help to widen collaboration among the state, private sector and international organizations and to share experiences.

At the exhibition's opening will Health Ministry, diplomats of the Chinese Embassy, authorities of the medical bodies and international organizations. 

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Reader's Response to Selbe River "Restoration" Project

By Andy Parkinson

August 7 (UB Post) I recently read your article on the completion of the first phase of the Selbe River "Restoration" project, a goal of which is to restore the flow of the Selbe River. In my opinion, this project has not restored the river and will make no contribution to increasing water flow; it is merely an expensive, hard landscaping project that has destroyed any remaining natural ecological characteristics of the Selbe River in this location, and which will, in fact, decrease the water quality downstream. I don't mean to criticize the implementers of the project, as to my knowledge this was a well intentioned project, but I do believe that their frame of reference, design concept and understanding of the problem has been mistaken.

First, let's look at the problem; there are concerns that the Selbe River, which once had steady flows and even reportedly once supported grayling [a species of salmon], is drying up and, in recent years, experiences very low flows at times in summer. The natural environment of the stream bed and riverside habitat has been degraded by the accumulation of rubbish, grazing by livestock, and even from being used as a winter road through the ger districts. Still, the Selbe River channel provides something of a green ribbon through the city. Lets also note that the Selbe River can experience serious floods, and that the channel has been constrained by concrete banks and levees to protect the city from flooding; its primary purpose now is to convey flood waters safely downstream.

Now, let's look at the solution that has been implemented: a section of the river channel has been bulldozed and completely concreted over, within this channel a waterproof liner has been laid to retain water, and a series of small dams or weirs have been constructed to hold the water back. The retaining walls of the flood channel have been re-built, and within the channel, landscaped paths, terraces and steps have been built, a few small areas have been sown with grass and a few shrubs have been planted (but nothing resembling native Mongolian river habitat). The natural river channel has been completely destroyed. The work has not increased the flow in any way. Water flowing in to the restored section from upstream equals the water flowing out downstream, no new water has miraculously appeared. The water flow has been slowed and held back by the weirs to create something resembling a canal, not a river. Now, during periods of low flow in the Selbe, water trickles in and trickles out at the other end, leaving a large volume of stagnant water behind the weirs, which heats up and turns green due to algal growth. The quality of this water is now much worse than that flowing in, and the warmer water flowing out has a negative effect on (what is left of) the in-stream ecology downstream. We can see that the river has not been restored, it has been transformed into a landscaped canal with little or no ecological value, and the flow has not increased.

How could this be done better? Both in-stream works and upstream work throughout the Selbe catchment are required. If we consider the problem of low flow, what is the cause? It's easy to blame climate change and changes in weather patterns, perhaps also de-forestation has been blamed, or over extraction of groundwater too. But the forests in the Selbe headwaters are actually quite well protected and a healthy catchment should have some resilience to climate change. The major problem in the Selbe catchment is almost certainly urbanization. Over the last ten to fifteen years, much of the Selbe catchment has been gobbled up by expanding ger districts and the dacha districts beyond that.

The process of urbanization has destroyed much of the natural vegetation in these areas: even the land that has not been built upon has been damaged by roads, tracks, trampling, heavy grazing, compaction and soil erosion. In a natural catchment, when rain falls the vegetation slows run off and allows infiltration to replenish ground water. Now, when it rains there is rapid surface run off leading to flash floods; all the water runs off quickly and there is less infiltration to recharge the groundwater that feeds the river. So in order to restore the flow of the Selbe River, there needs to be catchment wide work to decrease storm runoff and to increase retention and infiltration of rainfall within the catchment. Fortunately, there are numerous sustainable urban design and ecological restoration techniques to enable this. This is a challenge that needs to be incorporated into the plans and projects underway to upgrade or re-develop the ger districts. UN-Habitat's work with the Unur ger district community on flood control and gully restoration is a good example of some efforts already under way in the city.

In-stream works, meaning in the river channel flowing through the city, should focus on more sustainable and ecologically sensitive restoration efforts without bulldozing and concreting the entire channel, and it is likely that a much greater length of river could be restored for the same budget when compared to the bulldozer and concrete approach. I mentioned that the frame of reference or precedent for this project was one reason why the designers of this project took this course; as I understand the idea was to copy what had been done on the Cheonggyecheon Stream in Seoul (a tributary of the Han River). There, the stream had been completely buried under a highway and was entirely reconstructed, which is not necessary in the case of the Selbe. The result is a very nice urban park, and landscaped canal, but not a natural river and functioning ecosystem. A better reference would be to look at the restoration of the Los Angeles River in the USA, or the Kallang River in Singapore.

I hope that the next stage of the Selbe River restoration project can learn from the work already completed, and use more sustainable and ecological methods in the next stage, allowing more river to be restored within the allocated budget while still meeting the multiple objectives of providing a flood channel, improving flow and in-stream ecology, and offering green space within the city.

Andy Parkinson, Vietnam

Andy Parkinson is an environmental consultant with expertise in ecological restoration and sustainable design.

Follow him on Twitter @ando_parkinson.

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His Highness the Amir of Kuwait visits Mongolia's President

KUWAIT, Aug 7 (KUNA) -- His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, currently on a visit to Mongolia, paid a visit to Mongolian President Tsakhiagiin Elbegdorj at the Presidential Palace in the capital Ulan Bator.

His Highness the Amir and the Mongolian President held cordial talks that depicted depth of the good ties bonding the two friendly countries and peoples. The discussions dealt with cooperation in various sectors for service of joint interests.

The top-level meeting was attended by the State of Kuwait Ambassador to Mongolia, Khaled Yateem Al-Fadhli. 

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Belarus Opens Embassy in Mongolia

Ulaanbaatar, August 6 (MONTSAME) The Ambassador Extraordinary and Plenipotentiary of the Republic of Belarus Mr Stanislav Chepurnoi Wednesday presented his diplomatic credentials to the President Ts.Elbegdorj.

At the same time, the Embassy of Belarus opened in Ulaanbaatar becoming the third Embassy of one of the former Soviet Union's Republics. Mr Chepurnoi has become the 21st Ambassador to Mongolia.

At the meeting after the presentation, Mr Elbegdorj said the Mongolia-Belarus relations have been intensifying, gaining positive changes since a visit of the Belarusian PM to Mongolia in 2013.

By the intergovernmental talks, our countries have managed to resolve many issues which had not been touched for many years. The opening of the Embassy of Belarus in Mongolia as well as the appointment of the Ambassador mean that Belarus attaches great importance to the relations with Mongolia, "this is a clear example of expanding the ties," Mr Elbegdorj emphasized.

Expressing gratitude to the President for the audience, Mr Chepurnoi affirmed that the bilateral relations have been boosting in recent years, and added that a frequency of high-level mutual visits is increasing thanks to forming a legal environment for the cooperation.

The Ambassador invited again the Mongolian President to Belarus hoping that this will significantly contribute not only to the bilateral political ties, but also to the economic and trade cooperation. Mr Chepurnoi also said his country wants to expand the agricultural cooperation with Mongolia "because Mongolians know well the Belarus-made agricultural machines and techniques".

"We want to cooperate with Mongolia in supplying hi tech products, vehicles, road and construction technologies. We already have started working out specific projects and programmes on the cooperation after the visit of our Prime Minister to Mongolia. The opening of the Embassy is vital to the realization of these plans," Mr Chepurnoi said.

Appreciating proposals on setting up joint factories and enterprises, the leader of Mongolia said the Belarus-made machines and techniques are needed here because our mining, industry and agricultural sectors are expected to boost. He hoped that Mongolia will become a bridge for Belarus to penetrate the Asian market.

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Mongolian FM Interviewed by Luxemburger Wort Newspaper

Ulaanbaatar, August 6 (MONTSAME) The Minister of Foreign Affairs of Mongolia Mr L.Bold Tuesday gave an interview to the "Luxembourg Wort" newspaper.

A journalist Joseph Lorent asked the Minister about the Mongolia-Luxemburg relations and cooperation, international situation, and Mongolia's foreign policy. For example, Mr Bold spoke about a visit of Deputy Prime Minister of the Grand Duchy of Luxembourg Jean Asselborn to Mongolia and his return visit to Luxembourg.

Mr Bold also gave the journalist newspaper clippings with his interviews and news published in Luxembourg newspapers.

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Foreign Minister Meets S.Korea's Ambassador on Easing Mutual Visa Terms, 25th Anniversary of Ties Next Year

Ulaanbaatar, August 6 (MONTSAME) The Minister of Foreign Affairs of Mongolia L.Bold Tuesday received Mr Lee Tae-ro, the Ambassador Extraordinary and Plenipotentiary of the Republic of Korea to Mongolia.

At the meeting, which ran in the Ministry of Foreign Affairs, the dignitaries discussed issues of celebrating the 25th anniversary of the Mongolia-S.Korea diplomatic relations next year and easing terms of inter-citizen mutual visits.

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U.S. Air Force Humanitarian Assistance Project Coming to Mongolia Capital and Rural Areas in August

August 6 (U.S. Embassy in Ulaanbaatar) The United States and Mongolia will conduct humanitarian assistance operations Aug. 4-18 as part of Operation Pacific Angel - Mongolia (PACANGEL).

Operation PACANGEL is a total force, joint and combined humanitarian assistance operation led by United States Pacific Air Forces. PACANGEL 2014 includes general health, dental, optometry, pediatrics, and engineering programs as well as various subject-matter expert exchanges.

Approximately 65 U.S. military members, along with local non-governmental organizations and host nation military forces, will conduct humanitarian assistance operations in Ulaanbaatar, Erdenet, and Orkhon and Bulgan provinces as part of this operation. PACANGEL will enhance participating nations', including Mongolia's, humanitarian assistance and disaster relief capabilities.

Officially in its seventh year, PACANGEL supports U.S. Pacific Command's capacity-building efforts by partnering with other governments, non-governmental agencies and multilateral militaries in the respective region to provide medical, dental, optometry, and engineering assistance to their citizens. This operation will be used to improve and build relationships in the event of future humanitarian assistance and disaster relief efforts. Since 2007, U.S. military members, together with host nation military and civilian personnel throughout the region, have improved the lives of tens of thousands of people through PACANGEL operations.

Gen. Badambazar J., chief of peace support operations Armed Forces Mongolia, left, and Maj. Adam Negri, chief of Office of Defense Cooperation, right, meet the Pacific Angel 14-4 Opening Ceremony on Aug. 4, 2014, at Ulaanbaatar, Mongolia.

Mongolian Armed Forces civilian and military nurses attend a subject matter expert exchange on Aug. 4, 2014, at Ulaanbaatar, Mongolia.

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4th Contingent of Peacekeepers Pays Tribute to Military Banner Before South Sudan Mission

Ulaanbaatar, August 7 (MONTSAME) Mongolian troops of the 4th contingent of the Armed Forces--to serve with the UN mandate in the United Nations Missions in Sudan (UNMIS) operation in South Sudan--paid tribute to the Military Banner on Thursday.

Held in the General Headquarters of Mongolian Armed Forces (GHMAF), the ceremony was attended by Major-General B.Bayarmagnai, a deputy head of the GHMAF; Brigadier-General J.Badambazar, a department head of the GHMAF; authorities of the GHMAF departments and sections and of the Defense Ministry; and family members of the servicemen and military officers.

This time, our 850 troops will be headed by Lieutenant-Colonel M.Batchuluun. Main objective of their service within the UNMISS is to support South Sudan in ensuring security and peace.

Mongolia has been participating in the UNMISS since 2012.

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Social, Environmental and Other

Nomadic Fashion Show to Be Held at Chinggis Khaan Statue Complex, August 8

August 7 ( The "Nomadic Fashion Show" is to be held on coming August 8th in Tsonjin Boldog as one of the attractive resort complex in Mongolia where the giant statue of Chinggis Khaan structured in there. The forthcoming event has been organized by the Genco Tour Bureau in association with the Ministry of Culture, Sport and Tourism of Mongolia along with the "Torgo" Fashion Salon accordingly.

This year's nomadic costume fashion show will be an open air show in its' first time through which the best Mongolian top models will present over 70 unique and ideal traditional costumes with modern and vanguard designs; as well as, the Mongolian Morin Khuur Ensemble, Merit Artist D.Bold, singer S.Naran, "Shanz 3" band, DJ Saran, DJ MAC from UK and the Mongolian contortionists will perform at the invitation from the organizers.

The show ticket costs 80,000 MNT (Tugrug) and the special buses will be under service at 6:00 pm on the event date to take each and every ticket holders from A Corpus, Bayangol Hotel to the Tsonjin Boldog resort complex where will also diversity of services available for the visitors' convenience.

Elsewhere, the next years' "Nomadic Fashion Show" was also prescheduled to be held on July 14, 2015 by the event organizers accordingly in advance.

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TV9 to Broadcast FIBA 2014 Basketball World Cup

August 7 ( The 17th edition of the 2014 FIBA Basketball World Cup will be hosted in the Kingdom of Spain between August 30th and September 14th and it will be the last time that the tournament will be held on the four-year cycle. The next FIBA World Cup will be held five years later in 2019.

Meanwhile, the Mongolian TV9 television channel has obtained the official right for live broadcasting the forthcoming 2014 FIBA Basketball World Cup in association with the MCS Coca Cola company, Skytel LLC, MNBA Sport TV along with the Mongolian National Basketball Association.

The presenters of the live broadcasting were selected as the Mongolian distinguished coach Ts.Tseverbal and the officers of the Mongolian National Basketball Association B.Damba and S.Tulga who will present the daily live basketball matches at 7:30 pm, 10:30 pm and 03:00 am each day according to the fixed schedule of the championship.

The TV9 channel will transmit the specially prepared introduction broadcast of each national basketball team daily at 10:30 pm starting from today.

The winner of the 2014 FIBA Basketball World Cup will automatically qualify for the 2016 Summer Olympics in Rio de Janeiro, Brazil.

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TV Channel to Broadcast FIBA Basketball World ChampionshipsMontsame, August 7


German dentists blame sugar in concern over poor dental health in Mongolia

August 6 ( 48 qualified dentists of the German Dental Association International charity organization carried out free dental examinations on 8000 patients in Bayankhongor aimag Mongolia. According to dental specialists 60-70 percent of both children and adults have dental problems.

Dentists are concerned that there are only a few children who have healthy teeth.

Sugar intake is blamed as a major contributor to the higher dental problems. German dentists suggest Mongolians to cut sugar intake and to focus on decreasing the number of shops where offer wide range of sweets and confections.

Bayankhongor is not the only place where dentist and dental equipment are needed.

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