BCM NewsWire 581 - 7 June 2019

BCM HIGHLIGHT

INT'L CONFERENCE ON NORTHEAST ASIAN SECURITY HELD IN MONGOLIA

The Sixth International Conference of the Ulaanbaatar Dialogue on Northeast Asian Security kicked off here Wednesday.
The two-day conference had brought together more than 200 government officials, scholars and representatives from around 20 countries and international organizations, including China, Russia, South Korea, the United Nations and the European Union.
According to Mongolian Foreign Minister Damdin Tsogtbaatar, the conference would cover five topics of opportunities and challenges in Northeast Asian security environment, cooperation and competition dynamics in the region, regional energy cooperation, humanitarian challenges in emergency situations, and perspectives for dialogue in Northeast Asia.
Initially intended to facilitate a peaceful solution to the Korean Peninsula issue, the agenda of the conference had been expanded year after year, said Tsogtbaatar.
"There should be new attempts to establish regional security regime that includes all regional states. The Ulan Bator Dialogue on Northeast Asian Security is an excellent move towards this direction," said Yuan Chong, deputy director of Institute of Japanese Studies at the China Institutes of Contemporary International Relations, at the conference.

Source: Xinhua
See also: President sends message to Ulaanbaatar Dialogue
Japanese, N.Korean officials will not meet
North East Asian Youth-Peace and Security seminar running

HOWARD LAMBERT AWARDED NAIRAMDAL MEDAL, VISITS BCM BOARD

Howard Lambert, Managing Director and Head of Corporate Clients, Middle East, of ING bank, was bestowed with the “Nairamdal Medal” on June 3 – one of the highest honors bestowed upon foreign citizens by the Government of Mongolia – for his contributions to the Mongolian economy during his time as the head of ING Mongolia.
The BCM hosted a lunch meeting in honor of Mr. Lambert and his accomplishments. 

Source: BCM internal

ECONOMY

FISCAL FRAMEWORK STATEMENT PREDICTS

Mongolia’s legislative body approved the Fiscal Framework Statement last week, approving the economic prediction of next year, draft fiscal framework for 2020 and 2021-2022 budget. The key indicators of the next year’s fiscal policy are written below.
Experts warn that in the coming year, the economic crisis may embrace the global market. Mongolia's economy expanded by 8.6 percent in the first quarter of this year and has seen an unprecedented increase in the last few years. This year's growth is expected to decline, according to the Fiscal Framework Statement. As a result, GDP growth is expected to stand at about 6 percent. The Asian Development Bank and the World Bank are slightly optimistic about the GDP growth of Mongolia with 6.3- 6.9 percent growth estimations. The World Bank forecasted Mongolia's GDP to grow 6.5 percent in 2021. Economic growth is expected to be supported by mining, agriculture, industry, and services.

Source: ZGM Daily

FDI UP BY 7.5 PCT IN JAN-APRIL

Mongolia has attracted foreign direct investment (FDI) worth 661.8 million U.S. dollars in the January-April period, up by 7.5 percent year-on-year, the country's central bank said Thursday.
Over 90 percent of the FDI goes to the Oyu Tolgoi copper-gold mine, which is partly owned by the Mongolian government, the Bank of Mongolia said in a statement.
The mine is expected to produce an average of 430,000 tons of copper and 425,000 ounces (about 12,050 kg) of gold annually for 20 years.
It will attract at least 1.3 billion U.S. dollars of FDI this year, making up one third of government revenue in 2019, according to the Mongolian Finance Ministry.
Mongolia is rich in natural resources, and FDI in the mining sector has been one of the main drivers of the country's economic growth.

Source: Xinhua

BOM INJECTS USD 850 MILLION THROUGHOUT THIS YEAR TO STIMULATE ECONOMY

The Bank of Mongolia (BoM) pumped USD 850 million into the banking system to intervene in the growing USD rate this year. Officials are highlighting the fact that the net amount of the first few months of this year is nearing the full year funds of 2018.
The BoM is continuing to inject liquidity to strengthen the weakening exchange rate of the MNT, as well as holding a policy to increase foreign currency reserves. Although the FX reserves have increased by 3-4 times over the past three years, international organizations previously estimated FX rates to stabilize if the reserve expanded by another USD 1-2 billion. Accordingly, the greenback reserves, which currently stands at about USD 3.8 billion, need to to reach at least USD 5.5 billion in the following years.
As of April 18, the BoM purchased USD 660 million from "Oyu Tolgoi", "Erdenet Mining Corporation" and "Erdenes Tavan Tolgoi" LLC this year.

Source: ZGM Daily

DEMAND FOR INVESTMENT RISES IN AGRICULTURE AS LIVESTOCK HEADS INCREASE

According to the statistical data on the growth of livestock heads in Mongolia, the share of livestock in the macroeconomy is declining, calling for investment in the field. The agricultural sector accounts for only about 10-15 percent of the gross domestic product (GDP) according to the Ministry of Food, Agriculture and Light Industry (MOFA). The amount falls further for animal husbandry.
Foreign trade partners and delegations tend to emphasize the potentials of animal husbandry in Mongolia; however, the agriculture accounts for only 0.04-0.08 percent of direct foreign investment (FDI) in Mongolia. The sheer amount displays the investors’ interest and value in the sector. The agricultural sector, especially, animal husbandry is highly dependent on the weather condition. The sun, wind, and rain affect the number of livestock and benefits of it. The traditional animal husbandry sector has been facing difficulties due to risks including the carrying capacity of a pasture, the low livelihood of herders, and animal diseases.

Source: ZGM Daily

OIL PRICE DECLINE MAY IMPACT MONGOLIA’S FUEL PRICES

Crude oil prices fell for five consecutive days reaching the lowest level in May, which is likely to have an effect on Mongolia's economy and potentially reduce fuel price. Brent crude price slumped 0.51 percent to USD 60.97 per barrel on Wednesday. Brent crude oil price, which reached USD 75 since late April, decreased around USD 15 over the last month.
Particularly, the price of oil decreased by USD 9 per barrel last week, which was a multiple-month sharp drop. However, the decline in crude oil prices will not have immediately trigger Mongolia’s fuel price to decrease. The oil price changes takes longer time to have an effect on Mongolia's economy. 
The joint council on fuel price held a meeting on Tuesday and submitted a suggestion containing four or five articles. “Global price of oil usually rise in April and May. In addition, commodity prices rose in recent months, due to the Iranian ban and Libya and Venezuela crisis. However, prices are likely to decline this month.

Source: ZGM Daily

NONPERFORMING LOANS JUMP BY MNT 84.5 BILLION

At the end of April, the amount of outstanding loan to entities, enterprises and individuals amounted to 17.5 trillion MNT, up by 182 billion MNT (1.1 percent) from the previous month and by 3.2 trillion MNT (21.9 percent) from the same period of last year.
On the other hand, the number of new loans issued to individuals increased by 28 percent to stand at 9.1 trillion MNT as the number of new loans issued to private organizations rose by 15 percent, reaching 8.2 billion MNT.
While loan performing normally rose by 31 billion MNT, or 0.2 percent, from March to April this year, nonperforming loans hiked by 84.5 billion MNT, or 4.5 percent. Loans to private organizations account for 85 percent of all nonperforming loans.
As for overdue loans, 79 percent belonged to organizations.

Source: The UB Post

EU SCHEME TO SUPPORT MONGOLIA YAK AND CAMEL WOOL TRADE

An EU-funded initiative is to support the development of the yak and camel wool trade in Mongolia, helping to improve access to international markets and the formation of partnerships with foreign companies.
A meeting of the TRAM project - Trade Related Assistance for Mongolia (EU TRAM) - last month discussed establishing a yak and camel wool cluster to manufacture end products and promote them overseas.
According to the MNCCI, the aim is to create high-standard products as competitive as Mongolian cashmere goods.
Launched in March last year, EU TRAM is a four-year project, worth almost EUR5m (US$5.6m) with the aim of increasing and expanding Mongolian exports, and contributing to sustainable economic growth and development of the country. It has a special focus on specific products/sectors with high potential for export.
Mongolia has preferential duty-free access to the EU market under GSP+ scheme, yet there is low usage of these benefits due to low capacity of Mongolian products to fulfil EU market requirements.

Source: Just-Style.com

WORLD COMPETITIVENESS RANKING 2019 INTRODUCED

On June 3, Economic Policy and Competitiveness Research Center introduced IMD World Competitiveness ranking 2019.
This year, Singapore, Hong Kong and the USA topped the ranking. Mongolia is ranked at 62nd, remaining unchanged from previous year’s ranking.
Mongolia’s consumer price index or inflation, living cost and rental costs of apartments and offices ranked lower as compared with that of other countries, reported I.Odonchimeg, deputy director of EPCRC.
In the economic performance category, one of four basic categories, Mongolia is ranked at 58th. Last year, it stood at 48th in the same category. The decline of Mongolia’s competitiveness score was mainly influenced by the worsening indications of current account, transparency and pension fund, alongside weakness of employment, business law, health, environment and educational index.
Since 2010, The EPCRC, in cooperation with the World Competitiveness Center, has been publishing Mongolia in World Competitiveness Report.

Source: Montsame

NASA IMAGERY: THE URBANIZATION OF ULAANBAATAR

Mongolia’s capital, Ulaanbaatar, sits near the confluence of the Selbe and Tuul rivers on a plateau at the foot of a large, forested mountain. This was not always the case. When the town was initially established in the 1600s, it was a migratory settlement built as a center for Buddhist priests. It changed locations more than two dozen times.
Several teams of scientists have used Landsat images to monitor how the city—particularly the ger districts—have changed over several decades. According to some estimates, ger districts now hold more than 60 percent of Ulaanbaatar’s population.
The Landsat 7 and 8 satellites captured these natural-color images of the city in 2000 and 2018. Notice the development in the river valleys (green linear features) that lead out of the city. Note also how forested areas in the hills north and south of the city have lost tree cover over the years, probably due to people harvesting wood to heat their homes.

Source: NASA

CAPITAL SAFER FOR FOREIGN TOURISTS WITH STUDENT VOLUNTEERS

A total of 40 selected students are working in the Mongolian capital as volunteers to provide information services for foreign tourists as part of local efforts to boost tourism, according to a local official Tuesday.
The students who are proficient in English are expected to provide foreign tourists with all the information they need and protection-related services during the tourism peak season or until the end of August. They started working on Monday under an annual program launched six years ago, which is aimed at making Ulan Bator a safer place for foreign visitors.
"Majority of foreign tourists visiting Mongolia travel through the capital city. So, ensuring the safety of tourists is one of the priorities for us," Tsend Enkhtuvshin, deputy head of Ulan Bator's tourism department, told Xinhua.

Source: Xinhua

THE RAILWAY RIDDLE - EDITORIAL

As he laid the foundation stone of the 414.6-km railroad between Tavantolgoi and Zuunbayan on May 24, President Kh. Battulga noted that something was at last happening on the ground to implement the State Policy on Railway Transportation adopted by Parliament in 2010. For nine years, he said, domestic politics and politicians with personal stakes in coal mining had not allowed anything to move.
Recalling his days as Minister of Road Transportation in the coalition government, Battulga said he had tried to build the railroad in the northern part of the country. He had formed a team, determined routes, signed agreements, laid foundation stones, obtained loans and had spent some of the money, too. Yet, not one km of railroad has been built. There is only piled earth and crumbling embankments on the route from Tavantolgoi to Gashuunsukhait. The government is paying interest on the $200-million loan and the principal must be repaid in 2022.

Source: Mongolian Mining Journal

POLITICS

SECOND BILL TO AMEND THE CONSTITUTION OF MONGOLIA PRESENTED

The second bill to amend the Constitution of Mongolia was presented today (6 June) to the speaker of parliament during a united session. The Constitution of Mongolia was approved in 1992 and was amended in 2000 for the first time. After 19 years, D.Lundeejantsan has presented a new amendment bill; this has been signed by 64 member of parliament. All members of the opposition Democratic Party and some members of the Mongolian People’s Party refused to sign the document.

Source: News.mn

JAPANESE OFFICIALS SEEK NORTH KOREAN DIALOGUE IN ULAANBAATAR SECURITY SUMMIT

Japanese and North Korean foreign ministry officials will meet today in Mongolia on the sidelines of the Ulaanbaatar Dialogue on Northeast Asian Security.
Japan and North Korea have never formally established diplomatic relations. Tokyo has refused to establish relations due to claims that the North Korean government abducted Japanese citizens between 1977 and 1983 and that North Korea’s nuclear program poses a significant threat to Japan’s security.
Due to the current collapse of American diplomatic efforts with North Korea and growing tensions between China and the US over trade, Japan continues to see North Korea as a threat. Last month the rogue country tested short-range ballistic missiles, an indicator of an emboldened Pyongyang.
Japan’s most recent response to the threat of North Korea has been largely diplomatic. Japan is now taking a larger role in negotiations with the country, both working with China and garnering US support for a potential Kim-Abe summit.

Source: ForeignBrief.com
See also: Japanese, N.Korean officials will not meet