Democracy, Railroad, & Jim Dwyer of BCM – 2009/12/11

Interviewers: Good evening ladies and gentlemen and welcome to Podcast number four. Mongolia business blog podcast (laughter). Once again you are joining Bobby, Lkhagva and Mergen for our podcast and our special guest tonight is Jim Dwyer. He is the executive director of Business Council of Mongolia, which I am sure all you members out there are listening audience, so we would like to welcome Jim tonight.

But before we speak directly speak to Mr. Dwyer, we have few other topics that we are going to cover. Some current events and what has happened in Mongolia during the last week.

So, this was a big week for Mongolia.

Right, yesterday we celebrated the 20th anniversary of the Mongolian democracy, one of the most peaceful protests, turning of state in the history of the world. December 10, 1989 was the day students and activists protested on Sukhbaatar Square. And yesterday, the founding fathers of democracy here in Mongolia, were giving out some good facts about how they had a survey on December 10th and most of the crowd was not really feeling strong about their commitment and most of the people were almost ready to break away from the protest and then the student union joined in. This was something that was not out in public until yesterday.

So, on the student protest then? How interesting!  I have not heard that either, so that was very interesting. Somewhat related, I saw an article in one of the English language papers, about how Mongolian students in the Czech Republic participated in the Czech Republic’s democratic protests and what not, so that was obviously about the same time as the Mongolian transition…..I thought that was quite interesting! 

There’s also another big event with the railroad. The dispute between the private sector and then the sector minister, we sum it up…uh

Do you have any comments Mr. Jim?

Jim: My comment is that there will probably be two railroads.  Mr. Battulga will see his done, because the Russians will finance it. So, why not?  If they are going to do that, that  will make two.

Interviewer: The other one is actually already processed. As I said on the earlier podcast, I have been to Tavan Tolgoi Tsogts City in South Gobi, but I did not actually see the railroad project.  I went and met the energy resource management and on their presentation they said that they are really eager to build their railroad, because right now, the amount that they are bringing out from the ground is much more than the amount they can transport.
Jim: They have just contracted with Leighton Asia here to build the railroad. Separately from the contract, they are also contracted  to manage the mine itself. So it seems like they are going forward.

Interviewer: I believe some of the politicians, who are counting on this railroad issue, they are saying that they already got the approval to build the railroad and that the standards and everything is done. Except that Mr. Battulga,  the person in position is not approving the railroad, but if we have to build, then I believe that is a win-win situation for Mongolia. 

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-Alright, so if we do not have anything else to add to the railroad topic, maybe we just move in to the Jimmy- D interview.

Jim: Hello?

Interviewer: Jim Dwyer has been in Mongolia for a total of eight years, I believe, yeah?

Jim: Yes

Interviewer: Right, long time…almost has his Mongolian citizenship …Anyway, so I guess some of the things we want to do are, maybe we can talk about BCM and his experience in Mongolia and also what BCM is doing in Mongolia.  Can you first give us a quick overview of BCM and its activities?
Jim:  BCM was formally started two years ago.  We have a very diverse membership now totaling about 140 members that are comprised of large Mongolian companies, small Mongolian companies, large international companies, embassies, all the major donors and number of NGOs. So it’s a diverse membership all focused on trade and investment in Mongolia and helping people that are invested here  enjoy laws that are economically savvy. That is our prime mission. It’s twofold, trade and investment and helping improve the business climate with respect to the laws via a dialogue with government agencies.  BCM is getting increasingly good marks and I think in just two years we’ve become recognized as a strong voice for business.

Interviewer: So, how do you go about interacting with the government?

Jim: That’s key for us. We have 5 working groups, comprised of over 50 volunteers from our members. They are focused on issues and recommendations in their areas like legislative, tax, vocational training, food and safety and capital markets and there could be a few more started. These recommendations, for example, coming out of our Tax Working Group were taken directly to the Ministry of Finance and to the Tax Authority.  We had a joint Tax Workshop with PricewaterhouseCoopers in November with a Tax Authority person in attendance.  All the presentations and the recommendations put together were then taken directly to the Ministry and to the Tax Authority. The key is how do we get it to the government? And …there are a lot of ways as we are learning and finding our way through hoops and getting a lot more visibility and hearing than a couple years ago.

Interviewer: Right, so how receptive is the government? I mean do they feel like it’s bunch of foreigners coming in trying to tell them how their law should be written or do they understand that, although there are a lot of foreigners that are members of BCM that they also own and operate businesses in Mongolia and that they should be listened to or?  

Jim: I think we have gone from being recognized as or thought of a foreign group, because we came out of a foreign base group “North America Mongolia Business Council” and are now better balanced; 7 of 14 board members are from Mongolian companies and we are being more regarded as on the level plain field representing businesses and so we have entrée a lot more than we used to. People listen to us. For example, the National Currency Law is a problem for a lot of people. Not dealing in tugrugs, which is no problem, but the fact that you cannot have an exchange rate mechanism, which is hurting local suppliers who import products and cannot link their tugrug quotes to a foreign currency.  Therefore they have to increase their sales quotes to cope with potential tugrug weakening and more than likely will lose business to Chinese and other foreign suppliers.  This is also a possible inflationary issue.  We brought this up in a meeting with a deputy governor  of Mongol Bank, who are implementing, and he understood and agreed with us.  In fact he spoke at our monthly meeting Monday not on that per se but on the banking system. He said btw we cannot change the law, we are implementing, but here is what you might do. So that was very positive, that was just one example of some doors being opened to us, which maybe a few years wouldn’t have been. 

Interviewer: What would you say are your or BCM’s biggest accomplishments?

Jim: I think the number one is our membership. We started with zero in September 2007. We had 7 basically large foreign companies that said ‘we have money invested here; we want to have a permanent advocacy office here representing us.’ And so, with those 7 we thought in 2008 we would have 40 members, because that’s what our predecessor had and we ended up with 110. And last year went to 130 and this year we are hoping to go to 150. Out of the 130, in the first three weeks of our new annual membership drive, which started November 1st, 88 have renewed. So, our membership is key. We are speaking for them. So people are coming to us.

I can think of two other accomplishments. One, we started a Newswire, which has become probably the strongest source of English business, economic and political news. Today we issued our 98th issue; number 100th will be the 1st of the New Year.  And it is becoming very well recognized and it’s being published and broadcast on MNB-TV.  Another station, B-TV has come and wants some stuff from it. They want foreign sourced articles, including from Bloomberg, for which they have a machine but they do not get stuff directly from Bloomberg. The BCM NewsWire is becoming well recognized by people here and by people who might be officed in Shanghai or Hong Kong or visiting or looking to invest or overseeing investments here.

The other one is what we call our Mining Supply Chain Database, which Oyu Tolgoi contracted BCM to put together.  With the help of subcontractors, mainly Sant Maral Foundation, we registered 1,150 companies that are looking to supply the mining supply chain and a lot of them are actually suppliers for other areas too.  Then we had an exhibition with some of those suppliers’ products and services, and another 200 companies have registered. And we’re just beginning and we’re looking at amplifying what we have bilingually, but also possibly teaming with top IT entity to take over the management of this database because BCM is not equipped technically to do so. BCM is going to stay involved as will OT, but they are not equipped either; they are a purchaser. So I think this database has real possibilities going forward.  It’s not a major accomplishment yet, but we got it launched and poised to become one.     

Interviewer: So, if our listener wanted to be listed on the database, how do they go about doing that? 

Jim: So, right now they call BCM.  We have taken it in house.  Just call 332345 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it and there is a questionnaire on the website to fill out. It will be easy to get on.            

Interviewer: So that number was?

Jim: That is just our office number: 332345                               

Interviewer: Ok, actually, …we had a question from twitter about mining supply chain database. One of our followers, Purevdulam, Mongolian person obviously…wanted to know what is the difference between BCM supply chain database and Mongolian mining directory on mining.mn? 

Jim: I am not familiar with that directory, but one feature on this database is that companies are sorted into 23 sectors. So, if you’re a purchaser and you want something in sector that calls for mining supplies maybe helmets or goggles or whatever the stuff might be, you can push and this will be enhanced and you can push and get 10 names or whatever is on there. So I think the sector breakdown is a good feature of our site. 

Interviewer: I did not get a chance to look at mining.mn site myself, but I am guessing it is more or less like a yellow pages of sorts, because I have a hard copy of the yellow pages from mining.mn and it is kind of like the Shar Nom or the Yellow Book in Mongolia, which is essentially yellow pages. Right, Phone book.
So how is this exactly different? I mean you mentioned 23 sectors, but then again phone book does have different sections also? 

Jim: Well, it has revenue numbers for the last three years, numbers of employees and other features. But a goal that might really be accomplished, if we successfully team up as I hinted, is to have the first B-2-B portal in Mongolia. And it will be suppliers, buyers and jobs.  It might be free to get on, but I suspect when you want to purchase things you will be paying, or you might be able to advertise on it.  There is one good example of it, Alibaba, located in our big neighbor to the South with thousands of registered users and Mongolia could develop something like it and we hope this will be it.

Interviewer: Ok. In a more sort of general sense, since you have been here, you have worked with various banks and private and public entities, how have you seen this sort of business environment change for better or for worse, since you have been here?

Jim: hhmmm

Interviewer: It is a very broad question I know, but

Jim: It is a good question…..
(Laughs)

Interviewer: Good question Bobby!!! Extra Credit!

Jim: Well, I think in one respect, and maybe this is self serving …it is not foreigners versus domestic companies. I think companies are in sectors and are facing up to the issues that are common to business and not one or the other. We are in the same boat here, all businesses are. So, they all need good laws, good tax laws, fair treatment and so I think there is more of a united business front. We get involved with sectors.  The local airline sector has just two companies, both BCM members.  Eznis Air, which is part of Newcom Group, and AeroMongolia, which is part of Monnis International, had certain problems with the regulatory environment here.  We were able to get the issues on the agenda of the Consultative Council, which reports to the Prime Minister, and some recommendations were made by that Council and pushed for implementation of changes in the Civil Aviation Authority. I am not quite sure that things have dramatically changed, but certainly there was a common ground and hearing….and companies were pushing together. Obviously as an advocacy association we recommend that is why you might join BCM.  As a single company, it is hard to be heard and find a way to go to the right government agency.  If it is a tax issue, you have to do that.  But on other issues, it helps to have some bulk and weight behind you.

Interviewer: True, definitely. So have there been any concrete changes or amendments or anything as a result of what BCM has advocated or pushed over? 

Jim: Well, we advocated very hard and backed the OT agreement being signed with letters to all members of Parliament and other officials at a key point. Now that was not finalized because of us, but we certainly were on board there. Another issue, given with the Prime Minister’s announcement this week about the fact that he would like to raise cash from the mineral resources still in the ground by future listings on foreign stock exchanges. We have been advocating that the Mongolian Stock Exchange should be fixed; either privatized or bringing in a big investor or sold to the Hong Kong Exchange or another strong exchange to start to build up this key part of the capital market markets.  A non- functioning stock exchange does not help. And to be open now just two hours a day and to have no institutional investors and just be a little club does not make sense.  That is rumored to be part of what the Prime Minister said.  He is focused or cognizant of the fact that the stock market does not work.  BCM is pushing and we’re looking to ADB to get money for our BCM Capital Markets Working Group, since ADB is helping finance the same subject. Our working group happens to be headed now by “private equity” person who was at ADB for several years. So I think we will be contributing to help form a more viable capital market.  It finally could be beginning.

Interviewer: Well, I mean that is certainly a lot of work, projects that BCM has taken. So I think, we are starting to push on our time limit, ideal time limit that we set for ourselves, which we never achieve. So I guess, one last question, let’s try to ask him a really good question! You guys have question in mind that you guys want to ask?   
(laughs)

Jim: How about something about jazz in Mongolia? (I’m kidding…)

Interviewer: So eight years…are you going to stay here forever or what are your plans?

Jim: My Mongolian wife thinks so and so do I (laughs).  I hope she is listening, but definitely staying here.  I think it is a good place and a good place to be based.

Interviewer: Ok well, on behalf of everybody that is here we thank you for coming and being interviewed by trio of podcasters. And we hope that the activities of BCM are successful and we do most certainly hope that the business environment of Mongolia improves. I guess with that this is the end of Episode number 4.

Thanks everybody! 

Thanks, Mr. Dwyer.