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Friday, November 28, 2014
Headlines in Italic are ones modified by Cover Mongolia from original
TRQ closed -3.08% to US$3.46
Oyu Tolgoi Underground: At the Right Time and Under Right Terms - Walsh
By David Stringer
November 28 (Bloomberg) Rio Tinto Group (RIO), the world's second-biggest miner, flagged a boost in cash returns to investors after joining its biggest rival in cutting spending and operating costs.
Glencore-Rio Merger Will Happen, Hannam Tells Hedge Funds
By Matthew Campbell, Dinesh Nair and Aaron Kirchfeld
November 25 (Bloomberg News) Hedge funds including GLG Partners, DE Shaw & Co. and Pentwater Capital Management were told this month by a prominent London mining banker to prepare for an all-but-inevitable takeover of Rio Tinto Group by Glencore Plc (GLEN), according to people familiar with the meeting.
Xanadu Mines: Managing Director's Address to AGM
November 28, Xanadu Mines Ltd. (ASX:XAM) --
Guildford Coal: Group Managing Director's Address to AGM
November 28, Guildford Coal Ltd. (ASX:GUF) --
MSE News for November 27: Top 20 -0.07% to 14,926.53, Turnover ₮682 Million
Ulaanbaatar, November 27 (MONTSAME) At the Stock Exchange trades on Thursday, a total of 110 thousand and 847 units of 16 JSCs were traded costing MNT 682 million 019 thousand and 147.00.
"Mon-it buligaar" /90 thousand units/, "Khokh gan" /17 thousand and 590 units/, "State Department Store" /1,046 units/, "Genco tour bureau" /1,000 units/ and "Baganuur" /450 units/ were the most actively traded in terms of trading volume, in terms of trading value were "Mon-it buligaar" (MNT 675 million), "Khokh gan" (MNT one million 935 thousand and 900), "Baganuur" (MNT one million and 575 thousand), "Gobi" (MNT 873 thousand and 200) and "State Department Store" (MNT 586 thousand and 657).
The total market capitalization was set at MNT one trillion 467 billion 526 million 899 thousand and 011. The Index of Top-20 JSCs was 14,926.53, decreasing 9.99 units or 0.07% against the previous day.
MoF Offers ₮87.2 Billion 12-Week 15.96% T-Bills on MSE at Discount
November 27 (MSE) Information on government securities that have been offered to the public
1. The issuer's name: Mongolian Ministry of Finance
2. The purpose of the issuance of bond: Fund management of State treasury
3. Offering scope of securities: Offering to the public
4. Type of securities: Government securities
5. Face value: MNT 100,000
6. Discounted price: MNT 96,457.00
7. Amount: 872,378
8. Securities performance:
* Coupon of Government Securities will be determined within 365 days.
9. Rate of interest: interest rate of the Government Securities, which will be issued weekly will be based on auction results of Central Bank basis State Government Securities weighted average interest rate. If the Central Bank's weekly trading cancelled, the interest rate will be set based on the previous trading of Government Securities weighted average interest rate.
10. Order deadline: The Mongolian Stock Exchange will take orders 6 days and the trading will close on the 6th day at 14.00 PM and information on total orders will be delivered to the securities issuer.
11. Trading period: Total registered orders distribution of MSE trading system will be determined based on the Ministry of Finance votes.
Hogan Lovells Client Update: Mongolia – Custodial Regulations Adopted
November 26 (Hogan Lovells) On 3 July 2014, the Regulations on Custodial Licensing and Operations(the "Custodial Regulations") were jointly approved by the head of the Financial Regulatory Commission (the "FRC") and the President of the Bank of Mongolia (the "BoM").
The Custodial Regulations have been much-awaited after the adoption of the amended version of the Law of Mongolia on Securities Market (the "Revised Securities Law") on 24 May 2013, which introduced the concept of custodian services to Mongolian capital markets and provides a basic regulatory framework for the same.
We set out below a brief summary of the Custodian Regulations.
1. Scope Of The Regulation
The Custodial Regulations regulate the issuance, suspension, extension and revocation of custodian service licences and set out the requirements to be observed when conducting custodian services.
Custodial services are defined as services related to the deposit of securities and the exercise of ownership rights therein.
Pursuant to the Custodial Regulations, only banks, their controlled or subsidiary companies, or the central securities depository (the "Permitted Entities") may conduct custodial services.
The principal requirements which Permitted Entities are required to satisfy in order to obtain a custodial service licence are as follows:
(a) to be registered with the Legal Entities Registration Office of Mongolia;
(b) to satisfy the minimum share capital requirements set out by the FRC and BoM;
(c) to have sufficient human resources with the relevant professional skills;
(d) to have 6 or more experts having a minimum of 3 years' experience in the banking, financial or capital markets sectors and who are qualified to work in the securities market; and
(e) to meet the requirements in terms of office space, facilities, equipment and technical/computing infrastructure to carry out custodial services.
The FRC shall decide whether to issue a licence within 30 days of receipt of a completed application.
3. Custodial Services And Its Types
A legal entity licensed to conduct custodial services (the "Custodian") may also conduct specific securities registration activities, settlement activities and other activities approved by the FRC.
The Custodian may engage in the following activities on behalf of its clients:
(a) those activities which it is authorised pursuant to the agreement entered into with a client;
(b) obtain information relating to the entity in which clients have invested, to inform the client regarding the same and to carry out the client's instructions;
(c) notify clients of any taxes payable, transfer the same to the relevant tax authority and reclaim any excess tax paid; and
(d) receive notices of shareholders meetings from the central securities depository, inform clients of the date and agenda of shareholders meetings, enquire of the client's preferred method of participation in the shareholders meeting and exercise voting rights on behalf of the client.
The Custodian is required to provide relevant custodial services relating to following:
(a) general and extraordinary shareholders meetings;
(c) capital increases;
(d) conversion of equities and debt instruments;
(e) coupon payment of debt instruments;
(g) issue of dividends;
(h) exchange of securities;
(j) proxy voting;
(k) redemption of debt instruments;
(l) split and consolidation of shares; and
(m) tax rebates in relation to equity and debt instruments.
Other activities may be provided by way of agreement.
A Custodian is required to conclude a custodial services agreement with each client.
4. Crosscheck Of Assets In The Client Accounts
The Custodians shall undertake a crosscheck of the assets in client accounts on weekly basis in cooperation with the central securities depository.
The Custodians are able to provide services to the clients of custodians outside of Mongolia who have concluded cooperation agreements in respect of securities registered in Mongolia by opening accounts at the central securities depository either in the client's name or in the foreign custodian's name and undertaking the same crosscheck with the foreign custodian and/or the foreign central securities depository using the international interbank transfer system.
5. Types Of Accounts
Custodians may maintain following types of client accounts:
(a) fully disclosed/open or direct ownership accounts (the "Fully Disclosed Account");
(b) nominal/nominee account or indirect ownership accounts (the "Nominee Account");
(c) mixed accounts; and
(d) trustee accounts.
Fully Disclosed Accounts are owned by and will record information relating to a beneficial owner. The beneficial owner may appoint a professional representative who will manage the account on behalf of the beneficial owner.
Nominee Accounts are managed by the Custodian and will only record information relating to the nominal owner. The nominal owner will be appointed by the beneficial owner by way of a custodial services agreement and will undertake securities transactions based on instructions given by the beneficial owner or a representative thereof.
Mixed Accounts have terms and conditions to those for Nominee Accounts, but the account will also are registered in the name of beneficial owner. The mixed account is similar to the Fully Disclosed Account as it holds complete information on the beneficial owner, but is managed only by the Custodian.
Trustee accounts are managed by a representative on behalf of the beneficial owner in accordance with an agreement entered between the beneficial owner and the representative.
6. Requirements For Risk Management
Custodians are required to undertake 'know your client' activities in accordance with the regulations approved by the President of the BoM and the risk-based approach recommended by the Financial Action Task Force in order to prevent the financing of terrorism, money laundering and other prohibited activities and to ensure the client's ability to pay.
The Custodian is required to transfer funds from the deposited amount of securities in accordance with the percentage set by the BoM into specific accounts opened by the BoM in order to mitigate risks to the financial system.
7. Suspension And Revocation Of Licences
The FRC may suspend a custodial service licence on the following grounds:
(a) where the licence holder fails to submit operational reports to the FRC on more than three consecutive occasions;
(b) where the licence holder fails to submit financial reports and relevant information to the FRC and other authorities within the time specified by law for two consecutive quarters;
(c) where the licence holder fails to pay the relevant FRC fees within three months of the due date;
(d) where the license holder conceals errors caused by its failure to maintain and/or cross-check its clients' securities and asset registrations in accordance with the applicable regulations;
(e) where the license holder repeatedly distributes misleading advertisements and false information;
(f) where the custodial services cannot be provided in accordance with this regulation (for example, due to a force majeure event or because the Custodian no longer satisfies the minimum requirements);
(g) where the license holder has committed a serious breach of the terms of the custodial services agreement; or
(h) other grounds specified in law.
Licence holders may request the FRC reinstates a suspended licence after remedying breaches and returning to normal operations.
The FRC may revoke a custodial service licence on the following grounds:
(a) the holder of the licence issues a request for revocation;
(b) the custodian's (or its parent's) banking licence has been revoked by the BoM;
(c) the licence holder has not paid the FRC's fees for more than a year;
(d) licence holder has not satisfied the minimum levels of capital adequacy, operational risk fund adequacy and/or the prudential liquidity ratios in the form and amount set by the FRC and the BoM for two consecutive quarters;
(e) the licence holder has not carried out any operations for a year following issuance of the licence;
(f) the licence holder has not submitted the relevant reports to the FRC for two consecutive quarters;
(g) the licence holder has not complied with its obligations in respect of the FRC and has not remedied any such breaches during the prescribed period;
(h) the licence holder has been liquidated; or
(i) other grounds specified in law.
In the event that a Custodian becomes either insolvent, is liquidated or has issued a request to be wound-up, then the assets of the same, if it is a bank then the securities deposits of clients, shall be transferred to another entity that provides custodial services with the consent from the FRC.
8. Inspection And Liabilities
The FRC shall conduct both on and off-site, scheduled and unscheduled inspections in accordance with relevant laws and procedures and shall hold the relevant entity liable for any breaches identified.
Custodians are not responsible for any liabilities arising as a result of investment decisions made by their clients.
Those found to be in breach of the Custodial Regulations may also be subject to penalties in accordance with the Revised Securities Law, the Law on Banking, the Law on Combatting Money Laundering and Terrorism Financing and other laws and regulations.
The Custodial Regulations provide a regulatory framework in respect of licensing, types of custodial services, the general obligations of the entities engaged in custodial services, risk management and reporting obligations.
Those investors who, for various reasons were unable to be involved in the day-to-day management of their investments, are now able to delegate these management functions to Custodians.
The adoption of the Custodial Regulations is a positive step towards an enhanced investment environment and strengthened Mongolian capital market.
The FRC and the BoM as regulators will play an important role in ensuring the efficient implementation of the Custodial Regulations. We understand that the FRC has already issued custodial licences to two banks, being the Trade and Development Bank and Golomt Bank, and that these two banks currently undertaking preparations to provide custodial services.
For further information, please contact:
Anthony Woolley, Hogan Lovells
Baigalmaa Tsookhuu, Hogan Lovells
Bolormaa Gulguu, Hogan Lovells
BoM MNT Rates: Thursday, November 27 Close
November MNT vs USD, CNY Chart:
BoM FX auction: US$15.7m sold at ₮1,893, CNY39.3m at ₮308.7, accepts $135m USD, $5m MNT swap offers
November 27 (Bank of Mongolia) On the Foreign Exchange Auction held on November 27th, 2014 the BOM has received bid offer of 15.7 million USD as closing rate of MNT 1893.00-1897.03 and 81.8 million CNY as closing rate of MNT 308.46-309.44 from local commercial banks. The BOM has sold 15.7 million USD as closing rate of MNT 1893.00 and 39.3 million CNY as closing rate of MNT 308.70.
On November 27th, 2014, The BOM has received USD SWAP agreement ask offer of 135.0 million USD and MNT Swap agreement bid offer in equivalent to 5.0 million USD from local commercial banks and accepted all offer.
PM: Supporting private sector will be pillar of gov't economic policy
Ulaanbaatar, November 27 (MONTSAME) The cabinet will focus its main policy into stabilizing the national economy in order to overcome current economic difficulties. Supporting the private sector will be a pillar of this policy, so the cabinet wants to hear businessmen's opinions about creating proper solutions.
The Prime Minister Ch.Saikhabileg said it when he convened businessmen on Thursday.
The new cabinet will implement a pragmatic policy for support business. In other words, the cabinet works will be evaluated by the number of successfully realized project not by the number of regulations or rules, the Premier emphasized.
Mentioning that the cabinet meeting on Wednesday made some decision on backing businesspeople and gave obligations to Ministries, Saikhanbileg said a National Council will be set up at the Prime Minister to co-implement programmes on promoting the national economy. This council aims to reflect the private sector's proposals and opinions in the state policy to be focused on stabilizing the macro economy, attracting external and domestic investments, improving the business environment and activating the great construction works and foreign trade, and it is open for businessmen to offer their representatives to the council, the Premier said.
The Prime Minister pointed out the government has submitted to parliament some ten bills on abolishing bureaucracy and several phases at the state, which block the private sector's actions, and added that the cabinet will make efforts to approve these documents. Effective reforms will be done in the actions of taxes and customs, he went on.
"The Prime Minister has invited all political parties at parliament to the new cabinet, and it was a right step. The establishment of the economic council by the party- and faction-free cabinet was a correct solution," the businessmen emphasized.
Co-organized by the Mongolian National Chamber of Commerce and Industry (MNCCI), the Unified Association of Employers and the "CEO" club, the meeting brought together authorities of some 70 companies.
Mogi: a better detailed one should come out by Monday. Looked pretty nice
Cabinet Backs Bill on Overhauling Policy on State Property
Ulaanbaatar, November 27 (MONTSAME) The cabinet meeting ran Wednesday discussed a draft law on state property worked out by S.Odontuya MP and other parliamentarians, and then decided to give some related proposals to the bill. The proposals will be reflected in the cabinet meeting's note and will be conveyed to the draft initiator.
Having 26 clauses in six articles, the bill on state property reflects clauses on types of state properties, understanding about them, regulations of owning and utilizing state properties, the rights and responsibilities of state organizations on state properties, reasons and rules of founding state-run factories and companies, forms of state participation in the relations of entities and other relevant matters.
November 28 (Independent Mongolian Metals & Mining Research) --
WHAT IS HAPPENING
· Media and Public Relations Office of Mongolian Government has reported on November 27,2014 that Cabinet Meeting has made decision that central administration officials will not longer be appointed to board of SOE-s
· "with exception of SOE-s established on agreements between Governments, going forward while appointing representatives for state property, State Property Committee has been instructed to ensure participation of knowledgeable, experienced, with no conflict of interest, private sector representatives and other sector specialists and other representatives
· appointment of central administration officials is viewed as having negative influence to cause loss to healthy and fair competition
· there are instances of central administration officials having in some manner priority rights due to being regulators and policymakers. Moreover, it is viewed that there is increase of negative influence of political pressure. Moreover, there are negative consequence of disrupting normal operations of Board of Directors due to central administration officials having their official duties.
· Currently, total of 474 directors work on 57 companies Boards, including 144 independent directors and 176 state officials."
· The move by new PM Ch.Saikhanbileg that will be welcomed by any student of corporate finance and corporate governance, should be interpreted that Mongolian director on board of directors of Oyu Tolgoi company, Head of Strategy, Policy Planning of Mining Ministry of Mongolia Mr.Otgochuluu going forward will not be eligible for directorship on board of Oyu Tolgoi
· We believe that him being " policymaker" negatively affects his focus on success of Oyu Tolgoi as a business company
· We believe that all directors of board of Oyu Tolgoi , Mr.Da. Ganbold, Mr. Ch.Otgochuluu and Mr. G.Temuulen, - due to their undisclosed affiliation with DP and MPP are "negative influenced" by political pressure from these parties.
· At the minimum, we believe that directors should disclose their political, party, factional and other significant affiliations which would help ultimate beneficiaries of Mongolian state stake in Oyu Tolgoi- 3 million Mongolian citizens and their future generations evaluate how their best interests are protected at Oyu Tolgoi
· Since October 2014, Independent Mongolian Metals&Mining has been calling for resignation of current Mongolian directors Mr.Da. Ganbold, Mr. Ch.Otgochuluu and Mr. G.Temuulen on board of Oyu Tolgoi company, which could be viewed as currently most important Mongolian SOE and appointment of competent, qualified Mongolian directors who are sufficiently qualified in terms of expertise, competency, knowledge of mining, finance, corporate governance and free from political pressure and objectives yet committed to best interests of ultimate beneficiaries of Mongolian state stake- 3 million Mongolian citizens and their future generations ( this fundamental point appears to be forgotten by current directors, who could care about what's in it for current Government or a current Party or a current Faction), in a word, people of caliber of such individuals as Mr.Bold Baatar or Mr.Zorigt Dashdorj.
· We call on current directors to accept personal responsibility through resignation for collapse(after 18 months of negotiations) of US$4.2 billion project finance for Phase 2 of Oyu Tolgoi , the only ready funding for Mongolia since 2013, led by blue-chip reputable development banks such as EBRD and IFC that was unable to resolve suspension of Phase 2 of OT that resulted in total layoffs of ~2000 young and skilled Mongolians and their dreams of market economy unrealized, the most prominent FDI dispute
· Decks have been cleared at Mongolian Government and it is time for decks to be cleared at the Board of Oyutolgoi company to rebuild trust and be on one page with global top tier investors to resolve urgently suspension of Phase 2 of OT to focus on making Mongolian company OT and its Mongolian employees and suppliers global success
· Enough "Panama Canal" disputes, OT should not be "Panama Canal", time to make Mongolia, Mongolian private sector, Mongolian mining and OT , global top tier FDI into Mongolia successin all respects - financial/economic, environmental & social responsibility and corporate governance
GoM press release:
Cabinet Shuffles Around Heads of Intelligence, Police and Tax Authorities
Ulaanbaatar, November 27 (MONTSAME) Cabinet meeting on November 26 appointed the following officials the heads of General Intelligence Agency, General Police Department and General Taxation Department.
The former head of CIA B.Ariunsan was freed from his office replaced by B.Khurts (Mogi: the famous Khurts, google it), responsibilities of the head of Police Department was assigned from S.Baatarjav to R.Chingis, and of the head of Taxation Department—from T.Batmagnai to B.Ariunsan.
Recent Political Turmoil Homemade
By Julian Dierkes
November 26 (Mongolia Focus) I find it noticeable that the recent political turmoil (I hesitate to call it a crisis as a change of government is an endorsement of democratic institutions in some ways, and the state budget was passed relatively easily during this tumultuous period) is entirely homemade.
While Mongolian politics and media are usually rife with speculation about the various foreign connections that this or that politicians is supposed to have, there has been very little discussion of such connections recently.
In comparing R Amarjargal and Ch Saikhanbileg, there seemed to be very little discussion whether one of them is more Russophile than the other, or closer to China or to another neighbours.
Is this lack of hinting at foreign connections an indicator of the recognition that this turmoil was homemade? The conclusion that the turmoil was entirely made-in-Mongolia seems quite obvious, but that has not been a reason for countries not to blame foreign forces for various activities. Note for example the silly insinuation of some kind of CIA or other involvement in the current Hong Kong protests offered by Chinese propaganda outlets.
But even in the free-wheeling and very political Mongolian media, there seems to have been an acknowledgment that the Altankhuyag government collapsed due to DP-internal fighting not through foreign manipulation. As much as Saikhanbileg is sometimes guessed to be "close" to Rio Tinto (whatever that really means), there haven't been any hints at corporate conspiracies that have led to government changes.
That is all not only an accurate portrayal of the current crisis, but also a healthy sign of recognition of the agency of Mongolia's government in its own fate, as I also discussed in the context of a brief reflection on Myanmar's development as a lens on Mongolia's context in the UB Post.
A Professional Minister vs. Professional Bureaucrats
By Mendee Jargalsaikhan
November 22 (Mongolia Focus) The political climate in Ulaanbaatar is now in favour of the pro-professional cabinet. President, Chairman, members of parliament, and even well-known columnist Baabar advised Mr. New Prime Minister to recruit professionals outside from the parliament and to tame the parochial interests. This is not new. The majority of past governments, either the coalition or the ruling party, had tried. But, I would doubt – this ad hoc solution would address the deep problem of governance – because the current structure of the public service continues to create incentives for anyone to follow their parochial interests, but not the fine laws of the Public Service and professional merits.
First, professionals are frustrated – they don't want to see another around of the politicization. Now we can categorize the public servants into three major categories: (1) old cadre and senior specialists, (2) newly recruited professionals through merits, and (3) political party-affilliated specialists. The first group are people who are familiar with the bureaucratic routines – who were either part of or worked with experienced cadre of the pre-1990 administrations. Now most accept – they [senior specialists – 'ахлах мэргэжилтнүүд'] are shouldering the heavy workload. The second group has been recruited through a standard public service entry process [following the professional merits]. They are hardworkers, but poorly paid. The last group could be divided into two sub-categories: (1) the true party fanatics – who come and go depending on the election results and (2) assimiliators – who find ways to become public servants through the political party line. In comparison with previous two groups, the third group has less incentives and expertise to work, but more accessible to benefits (e.g., travel, schools, awards, bidding, contracts). For sure, the new professional minister and vice minister will bring his/her own team (e.g., advisors, assistants) and will attempt to provide another opportunities for political party-affilliated specialists.
Second, it will deepen the unequal distribution of the workload and benefits. After each election, at the national and provincial/local governments, we would see strong (most of the time, quite explicit) competitions for posts of ministers, vice-ministers, chiefs, and deputy chiefs of agency, chiefs of departments, senior positions of the state-owned enterprises. Why, because these posts are highly paid and accessible to all sorts of public funds and assets. And, even these senior officials create new positions and units for 'their' persons, but not for the workload. This parochial interest-driven process creates unequal distribution of workload and benefits for public servants. The majority of public servants could not complain because they could be easily marginalized or victimized by temporary political appointees.
Third, the appointment of the professional minister and the ignorance of professional bureaucrats weaken the bureaucracy – which is the core of any government. Obviously, we would see three types of professional ministers in this new cabinet: (1) A true professional minister – an skillful manager, who can uphold his professional expertise and ethnics over other interests. (2) A 'hijacked' minister – a good manager, but caught up in his/her personal, factional, and tribal (i.e., provincial) interests. (3) A 'balanced' minister – who tries to balance his professional and parochial interests. But, all these ministers will work under same structural constraints. For one, they are all uncertain about the fate of the coalition government – since they could not see the lifespan of the new government within and beyond one and half year. Second, they and their team would spend 3-6 months to figure out, 3-6 months to implement, and 3-6 months to choose their options before the 2016 election. Third, political parties, political and economic factions, their provincial homeland associations (нутгийн зөвлөл), and others will often pressure them either to support their candidates, polices, and tenders or not to endanger these interests. Some professional ministers would fight against these structural constraints, but most wouldn't because of the audience costs.
So, what should be done.
Yes, Mr. New Prime Minister has no options other than to appoint professional ministers, but, it would be a temporary fix – and exacerbate the underlying problems.
This is up to the parliament. The parliament is the only institution – that could establish a non-partisan commission to examine the public service, to brainstorm with the past and current experts, and to implement a long-term public service reform plan.
The commission could be headed by influential politicians – former presidents and prime ministers – along with non-partisan experts. They could examine past experiences (even including the communist periods and along with transitional periods of 1990s), asks hard questions on why our fine public service law, regulations, and standards are not solving the problems, and, produces the long-term public service reform strategy.
The public service is the core, the main processor (i.e., computer PC), of the state. Our processor needs an overhaul, if we delay this reform process, the state will implode; the bureaucracy could not respond to any external and internal crisis. With a short-term fix, parties will continue to see the public service as a school for their cadre, an asset for their election, and a source of income whereas the political-economic factions will consider the bureaucracy a tool to increase and protect their profits. Only the parliament could dismantle this current public service structure that forces public servants to side with politicians, parties, and factions to survive, but not pursue their professional merits.
Guest post: Mongolia's new government must move quickly to restore confidence
By Marius Toime, projects partner at international law firm Berwin Leighton Paisner
November 27 (FT beyondbrics) Chimed Saikhanbileg, Mongolia's incoming prime minister, must do more than simply continue the policies of his predecessor, ousted amid accusations of economic mismanagement and corruption.
His election by parliament last week, after Norov Altankhuyag was removed by a vote of no confidence, leaves big question marks over whether he can bring about real change. The opposition People's Party boycotted his election, fearing that he will let the country drift without fresh leadership and put investment, jobs and income at risk.
Mongolia's economic problems are well-known. Foreign direct investment, which has surged over the last 15 years, dropped 64 per cent year-on-year from January to May. Inflation is rising, while Rio Tinto's expansion of the Oyu Tolgoi mining project is in limbo after multiple disputes with the Mongolian government.
Fluent in Russian and English and with international experience, Saikhanbileg's top priority must be to recharge the economy and boost investor confidence in the sprawling, resource-rich nation.
His choice of a new cabinet over the next two weeks will be critical. Including more professionals and experienced bureaucrats, rather than officials elected for political reasons, would signal progress and a recognition that corruption must be addressed. Improving the staffing and expertise in departments such as the mining ministry would help reassure foreign investors that their interests are in safe hands.
Saikhanbileg must also refresh relations with Rio Tinto to break a deadlock over management fees. Given his involvement in earlier discussions, many feel his appointment does not bode well for a breakthrough. Yet the importance of Oyu Tolgoi to Mongolia's future cannot be overstated. When fully up and running, it could account for a third of its GDP.
Despite recent political instability, some important legal reforms have been enacted by parliament in the past six months that should create a more stable environment. The new government must build momentum on these and ensure they are clearly understood by the international community. One major change is a new petroleum law that should streamline approval for activities such as prospecting, storage, transportation and sales of petroleum products. However, more work must be done to improve transparency in the terms of oil production sharing agreements between investors and the Mongolian government.
Changes have also been made to Mongolia's minerals law. Exploration licenses have been extended from nine to 12 years, making them more attractive for long-term investors. A government ban on the issue of new exploration licences has also been revoked. Yet there are also less welcome changes, including more obligations on mining license holders and a significant reduction of the maximum exploration area from 400,000 to 150,000 hectares.
Changes to laws governing Mongolian mineral wealth will always lead to vigorous debate but it is clear that at least some of these reforms are steps in the right direction. Saikhanbileg must make this message heard and develop a plan with clear timelines to address investor challenges such as the ability to take security over shares and other moveable assets, and work with the private sector to build critical infrastructure to support investment.
Mongolia will continue to play an important role in north-east Asia's economic prosperity. However, if Saikhanbileg does not move quickly to resolve the Oyu Tolgoi impasse and stem the decline in economic growth, investors may choose to stay on the sidelines until after the 2016 elections.
Cabinet Backs ADB Credit Agreement for Darkhan Sewage Upgrade
Ulaanbaatar, November 27 (MONTSAME) At the cabinet meeting Thursday, acting Minister of Industry and Agriculture Sh.Tuvdendorj gave a report on harvesting of this year.
According to the report, the country has harvested 518.7 thousand tons of grain, of which 489.4 thousand tons of wheat, 164.0 thousand tons of potatoes, 102.2 thousand tons of vegetables, 51.7 thousand tons of oil plants, 40.3 thousand tons of fodder plants.
- The cabinet backed draft credit agreements to be established between Mongolia and the Asian Development Bank (ADB) in order to implement a project on improving the sewage water management of Darkhan city. This matter will be consulted with a related Standing committee of parliament.
What happens when you put nomads in tower blocks?
In her second dispatch from Mongolia, Tanja Smith from Gradon Architecture explores the challenges faced by a developing nation when two cultures collide
November 26 (BDOnline) My first month living in Mongolia has been characterised by a diary packed full of meetings and greetings. The phrase 'Sain bain uu?' (Are you well?) has been a handy one to know. But at least all of this means I'm making contacts.
Ulan Bator may be inhabited by almost half of the Mongolian population but it soon becomes apparent that, not unlike back home in the North East, everybody pretty much knows everybody else. A tight architecture and infrastructure network exists here – and I'm working hard to establish Gradon Architecture as a UK presence within this inner circle.
I'm also getting more acquainted with the challenges that lie ahead; not just for my practice forging business relationships in a foreign land, but also those faced by the industry as a whole.
In one of my many meetings I was introduced to an Australian expatriate who has also moved out here. While discussing possible projects our conversation turned to what sustainable housing actually means here – a topic never far from the agenda.
Many thousands of the previously nomadic population now live in Ger tents on the outskirts of Ulan Bator, with little access to life's necessities. As a practice, our work here focuses on trying to create environmentally friendly solutions for the country's huge housing problem.
Both my newfound friend and I hail from countries where there is a great deal of work to be done in terms of housing the indigenous people of the land. In Australia and South Africa (my birthplace) many mistakes have been made and I fear the same for Mongolia.
Our discussions centred on whether pushing a nomadic people, who for centuries have cultivated their own way of life, into a western lifestyle is the best way of providing for their needs.
There's no doubting that, among the younger Mongolian population in particular, the demand for modern housing is high. The transition for them is easy – many of the population want to be westernised, or at least "easternised", with housing and lifestyles comparable to their more urbanised neighbours.
But others come to the city blind to the wave of change they are about to encounter and in desperate need. They are nomads by birth and by heart, yet circumstances have led them to the city to find work.
They have lived, sustainably, in Gers all their lives – following a way of life that has served them well for thousands of years. Relocating them into the tower blocks that are springing up at breakneck speed, where space is limited and the lifestyle very different, is like putting a round peg in a square hole.
We talk about culture shock, but what kind of culture shock is it when it occurs within the borders of your own land? Where the people are familiar but not the same. They speak of wifi, cable TV and Facebook, while the now-displaced nomad is more acquainted with the Gobi, the signs of the seasons and the smell of the air that brings rain.
The crux of the matter is that we can design as much green and sustainable housing as we want here, but it means nothing if the people who will live in it are not comfortable within these "units" and lose their Mongolian identity forever. I call them units because they are little more than that… a small space in an eventual concrete jungle.
Are there better ways we as architects can provide warm housing ad amenities without shoehorning them into a predetermined lifestyle?
With an increasing demand for housing, and with technology, materials and money all in short supply, it is easy to understand why one-size-fits-all tower blocks have become the go-to solution.
Of course there is a path of progression in any developing country, but I would desperately like to see Mongolia avoid the mistakes that have already been made elsewhere.
For Gradon Architecture, this isn't just about designing visually appealing buildings. While it is important to seek progressive ideas, above all we must keep the people for whom we are creating this housing central to our plans.
To do this we have to focus not just on construction but also on culture. This is an immense challenge and tackling it requires a unified approach. But, despite everyone knowing everyone else, there is a real lack of joined-up thinking here. I've already experienced the can-do attitude of Mongolians – now the challenge is to get everyone on the same page.
Nomadic civilization is Mongolia's value: Former PM Sh.Gungaadorj on Agriculture Sector
November 25 (UB Post) The 15th Prime Minister of Mongolia, PhD of agricultural sciences and honored agronomist Sh.Gungaadorj gave a lecture at the invitation of Khugjil Club of the Mongolian Democratic Union last Friday. At the lecture, he shared his history about setting foot into the agricultural sector and focus points for developing the nomadic livestock sector.
"Local and agricultural policies are necessary in Mongolia. Developing the mining sector is obviously necessary but how we do it is important. Natural resources do exhaust. Agriculture on the other hand is an everlasting resource. No matter how many years pass, it'll still be available. Therefore, we need to develop a government policy for developing this sector," highlighted Sh.Gungaadorj.
Below is an interview with Sh.Gungaadorj about broad range of topics related to the agriculture sector.
What is Mongolia's key development policy? How would you define Mongolia's development rate?
A definition of a developed nation is that it has highly-educated people that don't need to fear or be depressed about something. The key to development is people. As for our nation, our people are all scattered around. We haven't reached high levels of development. The main development policy for Mongolia is the agriculture sector. This sector is the most fundamental sector that'll guide us to development.
Lately, Mongolians are moving to cities. Isn't this conflicting to what you've just mentioned?
Unless rural areas are developed, Mongolia will become a nation centered on cities. Mongolians will move to Ulaanbaatar, Darkhan and Erdenet cities as well as provincial centers. Agriculture sector has been passed down to Mongolians for centuries. It's still being passed on.
During the world economic crisis in 2010, Mongolians were able to overcome it by eating meat while other countries starved. In fact, Mongolians have never starved. I'd say those who are starving are negligent and pathetic because right now, Mongolia has resourceful vast lands. Those people can go to any river and fish, or even grow crops and vegetables anywhere they see fit. No one will restrict them from doing so. We have so many available resources while other countries don't. Mongolia is the only country in the world that's upholding the nomadic way of life and preserving its original form. This is Mongolia's significance and value. Mongolia shouldn't lose its pastoral traditions and culture.
The sector the government should always concentrate on is agriculture. Everything of animal origin can be used. Recently, leaders of our neighboring two countries visited Mongolia and discussed about importing Mongolia's meat. We're discussing about the possibility of selling agricultural goods. That's why pastoral cattle breeding should be taken at government and parliamentary level. Most importantly, livestock should be healthy. The Ministries of Agriculture of Mongolia, China and Russia seem to be discussing and exchanging ideas about this. A major work for preventing livestock disease outbreak should be carried out, instead of taking action when diseases have already spread.
What kind of government policy should be executed in the agriculture sector?
Mongolia shouldn't be getting hyped up over having 50 to 60 million livestock. Soviet leader Joseph Stalin ordered Mongolians to raise livestock to 200 million in 1940. This wasn't a policy. Generally, livestock should be kept within a specific limit. After that, productivity of livestock should be increased so that it can be processed and manufactured into products. Meat quality should also be improved to make it more expensive as Mongolian meat is something that's very valuable.
For instance, during my time as the Ambassador to Kazakhstan, representatives of Kuwait Sheikhs (Kuwait's royal family) came to visit holding a magazine with photos of Mongolian sheep. They said they wanted to purchase 1,000 fat-tailed sheep, exactly the same as the photos, for Sheikh's birthday. When I told them that livestock are slimmer now that it's winter, they replied that they didn't mind. They used to buy sheep from New Zealand and Australia but at the time, they wanted to switch to Mongolian sheep because their Sheikh took a liking to its unique taste after eating it once.
Mongolian meat has a unique taste because our livestock choose its own pasture from Mongolia's vast land. Taste of livestock pasturing in Gobi (desert) and Khangai region (mountainous area) are different.
People say Gobi's meat taste better. Is it true?
Indeed. Meat from Gobi livestock is very juicy despite the scarcity of grass. Even famous Mongolian writer B.Rinchen praised Gobi's meat. This is the true value of pastoral livestock.
Lately, people are saying pastures will be privatized to herders. Can you comment on this?
This is something that should never happen. Mongolians have been managing it for a long time. Privatizing land is impossible.
How do you see extensive animal husbandry?
This doesn't mean all livestock should be for pasture breeding. Extensive animal husbandry is crucial. Whether it's for meat or milk production, extensive animal husbandry should be developed. Pastoral cattle breeding should also be preserved. Marketable livestock has a drawback, which is to raise livestock that are more beneficial.
What do you mean by that?
Lately, the number of goats has increased because cashmere price is increasing. But suddenly, people started butchering goats because its meat price started to rise.
I can't remember when but China informed that goat meat price rose and tons of goats were killed and shipped to China. Mongolia shouldn't become some foreign country's toy like this.
Are you implying that China has begun meddling into the agriculture sector? For a long period of time, hasn't Mongolia been keeping livestock numbers consistent?
Mongolians have been following the policy to keep 20 to 30 percent of small cattle as goats. When I was young, approximately 20 goats were among 100 small cattle. Besides cashmere, goats aren't valuable since they can't endure cold weather and eat plants down to its roots. Most importantly, flock structure should be improved with special policies as goats are necessary. The number of livestock is abundant but (product) quality is problematic. That's why I keep underlining policies.
During winter and spring, many herders have gotten into accidents after following their livestock. As if livestock is more important than people. Pastoral cattle herding sector should be improved. During these seasons, herders can raise livestock within fences and pasture them in the summer. Times have changed now.
I'll share a story. Severe blizzard occured in 1986. When I was traveling in the countryside, a family said they hadn't grazed their cattle for a week. We were delivering forage so we unloaded one of our trucks. Approximately 200 bales of hay were loaded per truck. We let out the cattle and it took them one hour and fifty minutes to finish a truck full of forage. At the time, we realized the importance of forage. During that year's severe weather conditions, over a million livestock died but in the previous famine from 1968 to 1969, 3,808,000 livestock had died. This showed the significance of forage. Unfortunately, nowadays, forage issues have been completely abandoned.
Several organizations such as the Mongolian State University of Agriculture, have opened classes for educating and training herders. Can you comment on this?
This is the correct approach. Special policies are necessary. Herders are more intelligent than any person. Their words are orderly and valuable. For example, Hero of Labor, State prize winning and shepherd S.Tsogtgerel. Whenever he gives a lecture about something he begins by explaining and stating the significance of whatever he is going to talk about. Herders have knowledge about wide range of topics.
I met a young Bulgarian ambassador when I was serving as Ambassador in North Korea. He asked why Mongolians are so talented. He said Mongolians learn languages very quickly and have technological talent. He mentioned that when he was studying international relations in university, Mongolians would become fluent in Russian language and graduate with three to four languages including English, Germany and Russian while others learnt basic Russian and English language. I told him Mongolians are different as Mongolia is a nation with nomadic culture and that herders that conduct pastoral cattle breeding have great amount of knowledge because they talk and communicate with nature. I also explained that herders are people with versatile minds as they observe the color of the sky and conditions of water and mountain as soon as they wake up to decide where to pasture livestock and when to gather wool. Mongolians seem to learn quickly and forget quickly. Overall, every country praises Mongolians.
Source: Uls turiin toim
Global Partnership for Education and partners support local solutions for Mongolian children
November 18 (Global Partnership for Education) With a $10 million grant from the Global Partnership for Education and World Bank support, the government of Mongolia is making solid progress in getting more Mongolian children an early-childhood education. Recently, 17 new kindergartens were built and equipped in Ulaanbaatar, the capital, and 100 new kindergartens in rural areas based on the typical ger (felt-lined tents) in which most rural families live.
These interventions help increase access to early childhood education for children in disadvantaged urban and rural communities, thereby reducing social inequality in Mongolia's thriving economy.
Involving herders' children is key
Many of the children who miss out on pre-school education come either from poor urban families, or from herders' families who live in remote regions far from towns where they are expected to help with herding the animals and other chores.
Establishing mobile kindergartens in rural areas
Jeff Ramin is the GPE Country Lead for Mongolia, Haiti, Papua New Guinea, Timor-Leste, Yemen, Bhutan, Philippines and Maldives.
GIEWS Country Brief: Mongolia
November 17 (FAO) --
FOOD SECURITY SNAPSHOT
2014 wheat production is estimated to have recovered from last year's reduced level
Wheat imports forecast to decrease in 2014/15 marketing year (October/September)
Prices of wheat flour in October were generally stable but at record levels
Disaster Management Reference Handbook (2014) - Mongolia
(Center for Excellence in Disaster Management and Humanitarian Assistance) --
This country book focusing on Mongolia is intended to be a reference for individuals deploying to conduct disaster preparedness engagements or disaster response operations in Mongolia, but it is not meant to be a checklist or manual for all disaster response operations. The research team con- ducted extensive research and analysis on existing Mongolian plans, policies, and capabilities related to disaster management and risk reduction. The team also reached out to United States Government (USG) stakeholders and open source research to compile this book.
Mongolia is exposed to a range of intersecting and complementary natural disasters that have dramatic impacts on the nomadic lifestyle and livelihoods of a large segment of the population. Mongolia's disaster hazards are forcing changes on people who have relied on traditional forms of animal husbandry for food, income, and stability. As these changes exert influence on more of the population and cause people to move from rural areas to urban and peri-urban locations in search of work and support, Mongolia will see second- ary effects from population migrations, economic hardship, sanitation and hygiene problems, and infrastructure demands.
Mongolia has well-established assessments and plans to identify disaster hazards and to organize responses to disasters. However, resource constraints continue to be a problem in implementing disaster risk reduction programs in support of those plans and mechanisms. As a result, Mongolia remains largely dependent on external assistance for funding to promote advances in disaster risk reduction and response capabilities. Additionally, the complex nature of the natural hazards in Mongolia creates challenges in identifying which risk factor or hazard to address first. Mongolia faces development challenges as the population and economy struggle to adapt from traditional nomadic culture for food and livelihoods.
The quality and availability of infrastructure, utilities, and services drop off outside of urban areas. As herders contend with slowly but persistently shrinking grazing areas, more prevalent drought conditions, and growing deserts, the urbanization trend of recent years will continue and possibly grow, meaning that Mongolia will have to integrate a large population of nomads into urban environments. The conditions of population migrations, cultural shifts, and economic growth will pose challenges that make development gains vulnerable to disaster and humanitarian hazards.
Genghis Khan era coins found in Mongolia's ancient capital Karakorum
November 27 (Press Trust of India) Gold coins belonging to the era of legendary Genghis Khan have been discovered in the ancient capital of Karakorum in Mongolia along with several items made of coral, pearl and turquoise.
Archaeologists of the Mongolian-German Karakorum Expedition have displayed the findings preserved in the Karakorum museum.
During the excavation works performed in 2014 in the ancient capital Karakorum by the expedition, many interesting findings including gold coins of Genghis Khan's era were unveiled.
"A consecrated placement of relics in a stupa to Khans of the 13th century was found underneath the entrance stand of the temple named 'Great temple of Tsogt'," archaeologists were quoted as saying by Mongolian news agency MONTSAME.
The consecrated placement consisting of nine treasures wrapped in silk, crop and fruit was put inside a big vase with clay cap.
Treasures were represented by two gold coins, three silver coins and several items made of coral, pearl, turquoise, copper and steel.
One of the two gold coins is made in Samarkand and belonged to the Genghis Khan period while silver coins were made during the Mongke Khan rule.
The archaeologists from Mongolia and Germany are now preserving these artifacts in the Karakorum museum for further research.
A project has already begun for the construction of an open museum for preserving the archaeological remains of the temple.
Genghis Khan was the founder and emperor of the Mongol Empire that existed during the 13th and 14th centuries and became the largest contiguous empire in history after his demise.
UNESCO Inscribes Mongolian Ankle-Bone Shooting as Intangible Cultural Heritage
Inscribed in 2014 (9.COM) on the Representative List of the Intangible Cultural Heritage of Humanity
Mongolians revere certain parts of bones of their domestic livestock and use them in religious rites, plays and traditional games. One such popular team-based game is knuckle-bone shooting. Teams of six to eight players flick thirty domino-like marble tablets on a smooth wooden surface towards a target of sheep knuckle-bones, aiming to knock them into a target zone, while shooters sing traditional knuckle-bone shooting melodies and songs. Each shooter possesses individually crafted shooting tools and instruments, and wears costumes embossed with distinguished characteristics depending on their rank and merits. Team members are tied by close bonds and follow ethical rules of mutual respect and dignity. The rituals, knowledge, skills, technique and expertise associated with knuckle-bone shooting, as well as the craftsmanship of tools, accessories and equipment, are transmitted through apprenticeship. Knuckle-bone shooting provides a favourable environment in which each member contributes to the team's success, social well-being and development by supporting and learning from others. The tradition brings team members from different backgrounds closer together, encourages their interaction and respect towards elders and one another, and improves their social cohesion.
Consent of communities: English/Mongolian
Decision 9.COM 10.29
The Committee (…) decides that [this element] satisfies the criteria for inscription on the Representative List of the Intangible Cultural Heritage of Humanity, as follows:
· R.1: Knuckle-bone shooting unites players with strong ties based on mutual respect and respect towards masters who transmit their knowledge and skills to apprentices within each team; practitioners recognize it as part of their cultural heritage that provides them with a sense of identity and continuity while strengthening social cohesion;
· R.2: Inscription of knuckle-bone shooting on the Representative List could contribute to ensuring awareness of the significance of intangible cultural heritage for ethics education and social cohesion, while promoting intergenerational dialogue and reflecting the diversity of groups that practise it across Mongolia;
· R.3: Elaborated with particular attention to the proposals from community members, safeguarding measures within a five-year plan include research at the national level and systematization of the information collected, creation of products for domestic and foreign tourists, organization of regional and national championships and construction of a National Palace for knuckle-bone shooting as well as the integration of the traditional game in the general education curriculum;
· R.4: The multi-year nomination process allowed for many discussions and consultations between practitioners and concerned governmental and non-governmental institutions; the Mongolian Association of Knuckle-bone Shooting collected expressions of free, prior and informed consent from shooters of different ages;
· R.5: The element was included in the National Representative List of Intangible Cultural Heritage in 2005 and re-approved by the Minister of Culture, Sports and Tourism in 2008; the List and any relevant information are updated every year.
Link to full release
UNESCO: Collecting cultural statistics in Mongolia to ignite evidence-based policy making processes
In March 2014, at the 5th edition of the Mongolia Economic Forum held in Ulaanbaatar, government officials, industry leaders, academics, civil societies and business organizations got together to discuss development matters.
During the event, it was highlighted that for many years now, the country's economy has been driven mainly by one single sector: the mining sector. Not surprisingly, the theme of the Forum was "Let's Create in Mongolia": since the world economic crisis in 2008, the country has been on an urgent quest to identify other sectors that contribute to the overall development of the country, namely the creative sector, which happened to be at the heart of some of the most relevant discussions that took place in this year's Forum.
Professor Bayaraa Baasandorj, Head of the Department of International Collaboration of the Mongolian State University of Arts and Culture (MSUAC), believes that investing in cultural industries represents one of the best ways to help promote this much needed economic diversification. But she also explains why culture hasn't just yet been considered a top priority on the Mongolian development agenda.
"Culture is a sector that generates income and revenue. But unfortunately, in Mongolia as well as in many other countries in the world, it is still considered to be a sector that spends money as opposed to being one that brings economic advantages. Until we're able to show some statistics that prove that the cultural industries do contribute to development, this situation is not going to change. Policy makers want and need data. And together with the International Fund for Cultural Diversity (IFCD), we're working towards providing them with this data", she says.
Professor Bayaraa is referring to a project entitled "Cultural statistics in action: getting a clear picture of Mongolian cultural industries", that the MSUAC is conducting with the support and the funding from UNESCO's IFCD.
The core of this project lies at determining a National Framework for Cultural Statistics of Mongolia. In order to do that, a plan of action was implemented, which included activities such as defining the arts and culture key domains, identifying indicators for these key domains and most of all, studying and becoming aware of UNESCO's conceptions of cultural statistics, so that this framework could be as much in accordance to the international standards and coding systems as possible.
Professor Altantsetseg Chuluun, Vice-President for Research and Academics at MSUAC shares her view about the importance of the project: "currently, the available information on the cultural and creative sector is limited. The National Framework for Cultural Statistics of Mongolia will provide policymakers and the public sector with more systematic data. We believe this will contribute to the development of the Mongolian economy by producing a more realistic picture of the culture sphere. Ultimately, we hope that this project will offer new gateways to find more business perspectives".
A little over a year after the start of this project, results are already becoming evident.
For example, the MSUAC presented the framework to the Ministry of Culture, Sports and Tourism. Understanding the incredibly broad spectrum covered by this framework – with indicators going from urban design and decorative services all the way to visual arts - the Ministry decided to adopt it as a guideline to develop new policies and programs related to the private sector: proposals on how to get private companies to invest in culture are already being studied.
Thanks to the statistical framework, another relevant result was achieved: the signing of the Memorandum of Understanding between the Ministry of Culture, Sports and Tourism and the National Statistical Office. Now that they're working closely together, surveys and researches will be conducted as joint efforts and thus, information will be exchanged more quickly, which will accelerate the implementation of the project nationwide.
Playboy Mongolia Names Top 10 Hottest Ladies of 2014
November 27 (infomongolia.com) On November 27, 2014, the Playboy Mongolia Magazine editors called a press conference regarding the on-line poll summary on Top 10 Hottest Ladies in 2014.
The poll was collected between November 11 and 18, where a total of 24,224 accesses were registered, of which 1,579 people gave their votes. According to poll summary, the 78% of total votes were given to top 10 hottest ladies out of 48 promoted beauties.
The average age given votes was 34 years old and mostly by men and the winner of the on-line poll is topped by Actress B.Bayarmaa collecting the most votes of 169.
Mongolian Top 10 Hottest Ladies in 2014
1. Actress B.Bayarmaa - 169 votes
2. Actress A.Gereltsetseg - 162
3. Journalist L.Dulguun - 154
4. Actress G.Urnaa - 147
5. Actress O.Dulguun - 143
6. Journalist U.Gerelee - 143
7. Singer D.Otgonjargal - 141
8. Actress A.Ganchimeg - 136
9. Actress B.Misheel - 124
10. Actress B.Khulan – 122
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