BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 350 – November 7, 2014

NEWS HIGHLIGHTS:

Business

Credit Suisse lends $300mn to Development Bank;

Aspire Mining signs with China Railways for Erdenet to Ovoot rail;

Erdenes TT accused of misspending;

Mongolian Mining reveals approaches for joint bids on coal projects;

Moody's downgrades XacBank;

Xanadu reports potential for “large-scale” copper gold system at Kharmagtai;

Hunnu Air halts Hong Kong flights amid economic downfall;

Shoe producer expands production more than 8-fold with new factory;

Xanadu appoints CFO;

Centerra Gold loss widens as prices, sales drop.

Economy

Mongol Bank: FX auctions, swap agreements, 1-week bills, treasury bills;

Removal of Mongolia's PM has no material impact on sovereign rating, per S&P;

Mongolia FDI in September less than $100mn for seventh straight month;

UB-Sukhbaatar Road complete;

Leather industry complex to be established in Shar Khutsiin Khooloi;

The struggles of the Sainshand Industrial Complex;

'Doing Business' reports improved regulatory environment for SMEs;

Soy products market in Mongolia: Databook to 2017;

Conservationists reintroduce marmot to Khentii;

Chinese engineer designs Chinese-Mongolian translation program;

UNICEF seeks to improve safety for child jockeys;

Fitch: Mongolian banks face rising risks from subsidized mortgages;

Met coal price recovery unlikely until 2016, says Moody’s;

Cooling Chinese demand for gold adds to metal’s gloomy global outlook;

Iron ore tumbles to 5-year low;

World Bank: China’s focus on growth could hinder change;

Kazakhstan proposes selling energy to China;

Japan registers joint carbon offset project.

Politics

Mongolia in limbo after premier loses confidence vote;

New Mongolian government needs to move fast on budget, OT deal;

Parliament receives bill to regulate pawn shop activities;

China-Russia-Mongolia dialogue eyes closer trilateral relations;

Mongolia requests Germany's assistance at ITB Berlin;

Ankara to promote tourism to UB;

Former GIA head’s sentence reduced by 5 years;

Poachers caught for selling endangered species' body parts;

Cameras installed along Tuul River;

Mongolia’s ambitious eGovernment strategy;

Corruption in the public sector hampers private business.

Others

Announcements;

BCM Updates - Working Groups; Websites; Social Networks; Photo Gallery.

ECONOMIC INDICATORS

Weekly Market Indicators from MIBG;

Supermarket Prices from Churchill’s;

Inflation;

Central bank Policy Rate;

Currency Rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank

International SOS

Wagner Asia Automotive

Invest Mongolia Agency

BCM MONTHLY MEETING NOTICE

BCM’s monthly meeting for members will be on Monday, November 10 at 5PM at the BLUE SKY

HOTEL, 3rd floor, “Crystal” conference room.

The bilingual meeting will feature the following presentations:

- Call to Order/Business Council of Mongolia: B. Byambasaikhan, Chairman, BCM

- BCM Report - Membership: Jim Dwyer, Executive Director, BCM

- Matthew Pottle, Managing Partner, PricewaterhouseCoopers - "PwC Global CEO Survey, 2014

Mongolia edition"

- Irmuun Demberel, Director, Promotion and Consultancy Services, Invest Mongolia Agency–

“Current FDI Outlook”

- Takenori Shimizu, Ambassador of Japan to Mongolia- "Economic relations between Japan and

Mongolia: Latest trends and developments"

- Piper Anne Wind Campbell, Ambassador of U.S. to Mongolia- "How to inform the dialogue about

the advantages of trade "

New Members:

1. Corsec – a member of QMC Group companies, is a privately held small business that provides a

range of corporate governance, listing and business support services to a diversified national and

foreign client base, including public and private companies and individuals.

2. Dale Carnegie – Founded in 1912, Dale Carnegie Training has evolved from one man's belief in the

power of self-improvement to a performance-based training company with offices worldwide.

3. Groundwater Management Solutions (GWMS) – provide specialist water supply and water

management consultancy services to our partners and pride ourselves on delivering practical, cost

effective and high quality solutions.

4. Tenger Insurance - established by the investment of TenGer Financial Group LLC and Petrovis

Company in 2001. Has been sustainably operating in the Mongolian insurance industry over a

decades by recommending complex risk solution to clients, and became a leading company by

receiving customer’s trust.

5. XacLeasing – founded in 2007 as a wholly owned subsidiary of TenGer Financial Group with the

aim of developing the leasing sector in Mongolia.

After the meeting those of you with reservations for BCM’s Membership Renewal Dinner should

proceed to the “Diamond” room on the 3rd floor, Blue Sky Hotel.

BUSINESS

CREDIT SUISSE LENDS $300MN TO DEVELOPMENT BANK

Credit Suisse has lent USD 300 million to the Development Bank of Mongolia, which it says is likely

to attract other investors.

“This loan is opening a new financial market for Mongolia and increasing the interest of

international investors in Mongolia,” said Pol Tregidgo, chief executive officer of Credit Suisse

Securities told Bloomberg TV in New York.

He said he expected large economic growth for the country in the medium- and long-term, and

Credt Suisse would like to take part in that with long-term projects.

“We are planning to have long term cooperation with Mongolian government and [Development

Bank]. We will concentrate on long term projects. Specifically, we will try to bring international

investors to Mongolia. Investors need to understand the economy and select appropriate sectors to

invest in.

Source: Zuunii Medee

ASPIRE MINING SIGNS WITH CHINA RAILWAY FOR ERDENET TO OVOOT RAIL

Aspire Mining Ltd. has signed an engineering, procurement and construction framework agreement

with a China Railways Construction Corporation subsidiary for the Erdenet – Ovoot section of the

Northern Rail Line in Mongolia.

Given CRCC is a Fortune 500 company this is a strong endorsement and vindication of the project.

The rail line is a key requirement to unlock the value of the Ovoot Coking Coal Project and future

earnings from mining and production from the project for Aspire. The agreement provides the basis

for Aspire’s wholly-owned subsidiary Northern Railways LLC and CR20G to negotiate for the award

of a fixed price, lump sum turnkey EPC Contract. This will cover Phase 1 of the Northern Mongolian

Rail Corridor extending rail from Erdenet heading west to Aspire’s wholly-owned Ovoot Coking Coal

Project.

Chinese financial institutions have now commenced preliminary financial analysis for both the

Ovoot Project and the Erdenet – Ovoot Railway. The execution of the Framework Agreement follows

the recent inclusion of the Northern Rail Line in the Mongolian Government’s National Rail Policy

and the inclusion of Phase 1 (Erdenet – Ovoot) on the Concession List of approved projects.

“CR20G’s keen interest to work with Northern Railways as we continue to await the grant of a

concession clearly indicates that it shares the same vision and intent as both Northern Railways and

the Mongolian Government to see rail developed in the north of the country," said managing

director David Paull said. “We are also pleased to also have the support of CR20G for access to

Chinese financing and look forward to progressing with other interested financial institutions as we

compile a total funding package.”

Source: Proactive Investors

ERDENES TT ACCUSED OF MISSPENDING

A parliamentary fact-finding team claims to have found evidence of misspending at state-owned

miner Erdenes Tavan Tolgoi LLC.

MP D. Khayankhyarvaa led an investigative team of seven MPs appointed by the Economic Standing

Committee to investigate. In a press conference, Khanyankhyarvaa said the team found that

Erdenes TT's staff had hired more staff than was planned for, with 123 employees. They also found

that salaries were above what is normal in government, with MNT 6 million a month for the

chairman and MNT 1.8 million a month for each board member. They also described the travel

expenses covered by the company as exorbitant.

Source: Zuunii Medee

MONGOLIAN MINING REVEALS APPROACHES FOR JOINT BIDS ON COAL PROJECTS

Mongolian Mining Corp. has been approached by independent parties to explore joint bids for coal

projects in Mongolia, the Hong Kong-listed firm said on Friday.

The Mongolian government is inviting bids for coal projects in the eastern and western parts of the

country’s Tsankhi region and has extended the initial deadline of 31 October to 1 December, it said

in a statement to the Hong Kong Stock Exchange. An investment and cooperation agreement on

these coal projects is expected to be signed between the winning bidder and a Mongolian state-

owned enterprise by 15 December. The bidder must be at least 51 percent privately-owned by a

private operator or consortium with at least five years’ experience in coal mining. Mongolian Mining

said it is actively looking for long-term partners to expand its business in China.

The company also plans to raise between HKD 1.56 billion and HKD 1.57 billion (approximately USD

312 million) from a rights issue, the firm announced on Friday. It plans to issue between 5.56 billion

and 5.60 billion rights shares, with three rights shares offered for every two shares held at 28 Hong

Kong cents per share. The joint underwriters are JP Morgan and BNP Paribas.

“The rights issue is the preferred means for the company to improve liquidity and finance its

general working capital,” the statement said.

Proceeds of the rights issue will be used to strengthen the mining firm’s capital base, expand the

company’s load-out facility for railway, and increase the feed volume of its coal feed facility. Some

of the funds will also be used to repay debt and replenish general working capital. The first day of

dealings in fully paid rights shares is on 30 December.

Source: Southern China Morning Post

MOODY'S DOWNGRADES XACBANK

Moody's Investors Service has downgraded XacBank LLC's issuer rating to B3 from B2 and its foreign

currency long-term senior unsecured MTN rating to (P)B3 from (P)B2. Moody's has also lowered the

bank's baseline credit assessment (BCA) to b3 from b2. At the same time, Moody's has affirmed

XacBank's local currency bank deposits rating of B2 and foreign currency bank deposits rating of B3.

The outlooks on the ratings are negative.

"The action on XacBank's ratings reflects the fact that the bank's asset quality continues to

deteriorate against the backdrop of adverse developments in its operating environment," says Hyun

Hee Park, a Moody's Assistant Vice President and Analyst.

"At a macro-economic level, the ongoing decline in foreign direct investment inflows (FDI)—coupled

with the contraction evident in Mongolian exports in 2012 and 2013—have contributed to a rundown

in foreign-exchange reserves, a weakening of the local currency, and a rise in the economy's

vulnerability to external risks," says Park.

To mitigate these risks, Moody's notes that the Bank of Mongolia (BOM) has implemented pump-

priming measures, some of which are heavily credit driven, including the Price Stabilization

Program and Housing Mortgage Program. The Bank of Mongolia had provided MNT 4.3 trillion (USD

2.6 billion) in loans to the banking system as of end-2013, representing about 40 percent of all the

system's loans. Mongolian banks then on-lent these loans to targeted industries and, as a result,

their assets grew 74 percent and loans 54 percent in 2013. For XacBank specifically, its own assets

and loans grew 68 percent and 63 percent in this same time frame.

However, the Bank of Mongolia began to unwind its Price Stabilization Program this year, and

funding from the BOM for the banks had fallen to MNT 2.9 trillion (USD 1.6 billion), or 24 percent of

total banking system loans, as of end-June 2014. Moody's considers that this development—against

the backdrop of the deterioration in macro-economic and export conditions—has materially

increased the risks to the asset quality and liquidity of Mongolian banks, including XacBank.

Upward pressure on the b3 BCA of XacBank, while unlikely in the near term, could occur if it

improves its asset quality and establishes a track record of maintaining healthy capital, liquidity

and profitability metrics throughout the economic cycle. The following factors could exert negative

pressure on the bank's ratings: (1) a significant deterioration in asset quality; for example, new

non-performing loans (NPLs) to gross loans exceed 4 percent; (2) a rise in concentrations, or a rise

in exposures to risky sectors, in particular construction; or (3) the Tier 1 ratio falls below 9

percent.

Source: Moody's Investor Services

XANADU REPORTS POTENTIAL FOR “LARGE-SCALE” COPPER GOLD SYSTEM AT KHARMAGTAI

Xanadu Mines Ltd. on 4 November reported on drill campaign results at the Kharmagtai copper-gold

project the potential for a large-scale porphyry copper and gold system with multiple shallow gold-

rich zones, similar to those seen elsewhere in the south Gobi such as Oyu Tolgoi.

The 10,000 meter drilling campaign at Kharmagtai indicated shallow gold-rich stockwork

mineralization that had already been located within the Altan Tolgoi and Tsagaan Sudal prospects.

At Zesen Uul the mineralization is reasonably well defined and may represent an off-faulted block

from a larger system.

The prospects are located within a flat topography amenable to surface mining and expanding

these zones remains a high priority target for the next phase of drilling. The focus of the next

drilling campaign will be to continue to define the mineralization that will support an initial

shallow open pit operation. Expansion of the gold-rich cores and the definition of medium-grade

material as a halo to the cores would bring the future pits into closer proximity with potential

economic mining synergies.

Source: Xanadu Mines Ltd.

HUNNU AIR HALTS HONG KONG FLIGHTS AMID ECONOMIC DOWNFALL

Local news media have reported the reason that a Hunnu Air flight enroute to Hong Kong from

Ulaanbaatar was canceled on 3 November was that the domestic airline carrier was months behind

on its aircraft leasing payments.

While some media have suggested Hunnu is experiencing serious financial strains, Hunnu has said

that the unscheduled landing was because of a misunderstanding between itself and the company it

rents from.

“The company apologizes to our passengers for delaying the Hong Kong-Ulaanbaatar flight on

November 4th, 2014,” reads a statement from the company, adding that it had arranged hotels

stays and new flights for the inconvenienced passengers.

Hunnu said it would suspend its flights to Hong Kong until issues were resolved.

Source: News.mn

SHOE PRODUCER EXPANDS PRODUCTION MORE THAN 8-FOLD WITH NEW FACTORY

Prime Minister Norov Altankhuyag attended the grand opening of a new Mongolian shoe factory that

was built with the help of government financing on 1 November.

The Best Shoes brand was established in 2011 with just four employees. Today the new factory will

allow the company to produce between 500 and 800 pairs of shoes a day compared with 60 to 70

pairs of shoes a month beforehand. The factory is staffed with over 70 employees and uses

production equipment from Germany and Italy.

“By operating a conveyor network system in our new 1,134 cubic meter building, we are now able

to provide 30 percent of the supply for the domestic footwear market,” said B. Tuvdennyam,

president of Best Shoes.

The Mongolian shoe manufacturer also has the license to manufactures bags and small leather

goods under a variety of Italian, German, and Indian brand names.

Source: UB Post

XANADU APPOINTS CFO

Xanadu Mines Ltd. has announced the appointment of Dambiinyam Munkshaikhan as chief financial

officer of Xanadu, effective 3 November.

Munkhsaikhan is a finance professional with more than 10 years of experience in mining, mining

services and financial advisory. Munkhsaikhan is located in Ulaanbaatar and strengthens

management capability within Mongolia. Most recently, Munkhsaikhan was financial advisor at

AREVA Mongol LLC, a subsidiary of the French energy conglomerate AREVA SA, where he had

responsibility for implementing a new Enterprise Resource Planning system.

Prior to AREVA, he held chief finance officer and executive director positions at a mining services

firm with operations in Central Asia and Hong Kong and played key roles in fund raising with

international private equity investors and structuring debt financing. Munkhsaikhan also held a tax

and accounting advisory position at the Mongolian Economic Policy Reform and Competitiveness

project funded by USAID, where he worked with Mongolian government and parliamentary working

groups to execute the 2007 national tax reform and public utility accounting reform.

Mark Langan, chief financial officer since 5 September 2012, will assist Munkhsaikhan with the

transition and has agreed to consult with Xanadu on a part-time basis.

Source: Xanadu Mines Ltd.

CENTERRA GOLD LOSS WIDENS AS PRICES, SALES DROP

Centerra Gold Inc. reported a deeper third-quarter loss on Wednesday, reflecting lower gold prices

and the sale of fewer ounces of gold, the company said.

The Toronto-based gold miner's net loss widened to USD 3.2 million, or 1 cent a share, from USD 1.8

million, or 1 cent, in the year-ago period. Analysts, on average, had been expecting a loss of 8

cents a share, according to Thomson Reuters I/B/E/S.

Centerra, whose main asset is the Kumtor gold mine in Kyrgyzstan, produced 110,792 ounces of

gold in the quarter and sold 107,367 ounces of gold. That is down from production of 113,840

ounces and the sale of 115,941 ounces in the same period last year. The average price realized for

Centerra's gold fell 5 percent to USD 1,265 per ounce from USD 1,337 an ounce in the year-prior

period.

Centerra lifted its 2014 production target to between 600,000 and 650,000 ounces of gold. Kumtor

is still expected to produce 550,000 to 600,000 ounces, while the Boroo mine in Mongolia is now

seen producing 50,000 ounces, up from a previous 45,000 ounce estimate. Centerra said it was

expecting Mongolian Parliament to consider the designation of the Gatsuurti license as a strategic

deposit by the end of 2014. “If Parliament ultimately approves this designation, it would have the

effect of excluding Gatsuurt from the application of the Mongolian Water and Forest Law and would

allow the Mongolian Government to acquire up to a 34% interest in Gatsuurt,” reads the statement.

Centerra's Kumtor open-pit mine has faced several setbacks since the project started in 1994,

including threats of nationalization, riots and more recently a USD 300 million ecological damages

lawsuit. The mine contributes some 10 percent of the impoverished country's GDP. Centerra and

the government of Kyrgyzstan have been in discussions for more than a year on a deal that would

involve the state swapping its 32.7 percent stake in Centerra for half of a joint venture that would

control the Kumtor mine.

Source: Reuters

SPONSORS

Mongolian Business Database

Oxford Business Group

Mongolian Economy Magazine

ECONOMY

MONGOL BANK: FX AUCTIONS, SWAP AGREEMENTS, 1-WEEK BILLS, TREASURY BILLS

The Bank of Mongolia on 6 November reported the sale of USD 17.5 million and CNY 59 million in

currency auctions for closing rates of MNT 1,873.18 and MNT 306.62, respectively. Also that day,

the central bank accepted USD 70 million from commercial banks' ask offers via a U.S. dollar swap

agreement and USD 5.1 million in bid offers.

The central bank reported on 5 November the issue of one-week bills worth MNT 214 billion at a

weighted interest of 12 percent a year.

On 5 November, the Bank of Mongolia reported MNT 30 billion in bids for 52-week treasury bills with

a face value of MNT 30 billion [or MNT 60 billion, the Source is unclear -ed]. The treasury bills were

sold at a discounted price with an average yield of 16.347 percent. Also that day, the central bank

reported MNT 43 billion in bids for three-year treasury bills with a face value of MNT 30 billion. The

three-year bills were sold to banks at a premium price and with a weighted average of 16.75

percent.

Source: Bank of Mongolia

REMOVAL OF MONGOLIA'S PM HAS NO MATERIAL IMPACT ON SOVEREIGN RATING, PER S&P

Standard & Poor's Ratings Services said today that the Mongolian parliament's removal of Norov

Altankhuyag as prime minister on Nov. 5, 2014, has had no material impact on the sovereign credit

ratings (B+/Stable/B).

We believe the dismissal of Mr. Altankhuyag partly reflects the legislature's greater focus on

effective policymaking and better governance, and increases the likelihood that these areas will

improve in the coming year. Charges of poor management amidst deteriorating economic conditions

and delays in key projects led to the vote against the prime minister.

A key factor underpinning our stable outlook on the sovereign ratings is Mongolia's strengthening

economic relationship with neighboring countries. We believe these ties are unlikely to change

because of Mr. Altankhuyag's departure. Following the recent visit of the presidents of China and

Russia to Mongolia, we expect Mongolia to roll out a number of projects that facilitate foreign

investment, industrial development, and exports.

We do not see a high likelihood that political uncertainty ahead of the appointment of a new prime

minister could significantly increase external risk. Mongolia's international reserves rose 17% in the

third quarter this year, while exports increased by 30% year-over-year in the first three quarters of

2014. Moreover, the central bank can tap its Chinese renminbi (RMB) 15 billion (about US$2.4

billion) currency swap arrangement with the People's Bank of China if external liquidity is tight.

However, key policy decisions may be delayed if it takes a long time for the major political parties

to agree on a new prime minister. For example, approval of the 2015 budget and the launch of

policies and projects necessary to turn around the economy could be pushed back. In such a

scenario, the sovereign rating on Mongolia could come under downward pressure.

Source: Standard & Poor's

MONGOLIA SEPTEMBER FDI LESS THAN $100MN FOR SEVENTH STRAIGHT MONTH

Mongolia’s inbound foreign direct investment (FDI) for September was USD 57.3 million, extending a

streak of months under USD 100 million to seven, according to data released today by the nation’s

central bank. Monthly inbound FDI in 2013 never fell below USD 100 million.

Inbound foreign investment in year through end-September was USD 697.5 million, versus USD 1.675

billion a year earlier, a 59 percent decline. The current account deficit for year through end-

September was USD 905.7 million versus USD 2.415 billion a year ago. Capital and financial

accounts had USD 213.2 million surplus for year through end-September, a decrease of 78 percent

from a year ago.

Mongolia’s current account deficit to GDP ratio was 15 percent in the first half of 2014, according

to Bank of Mongolia Chief Economist Bold Sandagdorj.

Source: Cover Mongolia, Bloomberg

UB-SUKHBAATAR ROAD COMPLETE

Mongolia commissioned a road running from Undurkhaan Soum to Munkhkhaan and Baruun Urt

Soums officially on Saturday, completing the paved route from Sukhbaatar to Ulaanbaatar.

Speaker Zandaakhuu Enkhbold attended the opening ceremony for the 177.9-kilometer road. It was

built for MNT 87.8 billion, via two separate projects coordinated by different project executors.

Mongolia will build 5,400 kilometers by 2016, said Enkhbold, connecting six additional provinces to

Ulaanbaatar by road. Six more remain, he said.

A new 263-kilometer road between Ulaanbaatar and Khuvsgul Aimag is expected to open next in the

near future, he added.

Source: UB Post

LEATHER INDUSTRY COMPLEX TO BE ESTABLISHED IN SHAR KHUTSIIN KHOOLOI

The Cabinet Secretariat on 31 October approved plans to build an industrial complex for the

production of leather goods at in Ulaanbaatar.

The Cabinet placed Industry and Agriculture Ministry Sh. Tuvdendorj and Ulaanbaatar Mayor to lead

construction of the industrial complex, which will be built at a location called Shar Khutsiin

Khooloi, located in khoroo 14 of Khan-Uul district, Ulaanbaatar. The project is in line with the

government's 2012-2016 Action Plan, which calls for government support for the construction of

new infrastructure for the production of leather goods near Ulaanbaatar and Darkhan.

Source: UB Post

THE STRUGGLES OF THE SAINSHAND INDUSTRIAL COMPLEX

Upon arrival at the Sainshand Industrial Complex there was hope that construction was on schedule

and running smoothly. Instead, there were just locked doors and dark tunnels to welcome guests.

Three years have been spent building the complex, but still nothing is operational there and the

company leading the project has been unable to pay its workers since April. Most of the workers

have been laid off, and over MNT 300 million has been spent on its development.

“There are environmental and political issues in building the complex,” said Vice Minister Industry

and Agriculture B. Tsogtgerel. “If these problems are fixed, the construction work will be

conducted effectively. This issue is beyond our ministry and the vice minister’s authority.”

Sainshand will need investment of USD 11 billion for the construction of infrastructure and

industrial plants. The U.S. firm Bechtel Corp. spent USD 2.4 million for the development of a

master plan, prefeasibility studies, and other planning after being selected as the project advisor in

2011. During that first phase, officials promised that over 10,000 workers would work for its

construction and 2,400 people would be provided with jobs once its coking, copper cathode, iron

pellet, cement and steel plants were operational.

Project planners also planned for a nearby town for workers to go home to that would house 21,000

people. It was estimated that the industrial complex could expand the economy by 20 to 30

percent. Fluor, the U.S. firm that replaced Bechtel, said Sainshand could drive up gross domestic

product (GDP) per capital to USD 10,000. None of that has materialized. Parliament has twice

discussed the need to finance Sainshand, but neither time received support. Unfortunately the

promises won't be fulfilled any time soon, if at all.

Source: UB Post, Unuudur

'DOING BUSINESS' REPORTS IMPROVED REGULATORY ENVIRONMENT FOR SMES

Budding local entrepreneurs in East Asia and the Pacific continue to see improvements in the

business environment, according to a new World Bank Group report, “Doing Business 2015: Going

Beyond Efficiency.” The region’s economies implemented 24 regulatory reforms in the past year

alone. Indonesia improved prospects for local entrepreneurs by implementing three regulatory

reforms in 2013/14 in areas measured by the report. Across cities, the approval process for business

incorporation was streamlined and labor taxes were reduced. In Jakarta, the process for getting an

electricity connection was speeded up by eliminating the need to obtain multiple certificates.

The data shows that many economies in the region, including Mongolia, made it easier for

businesses to pay taxes in the past year. Vietnam reduced the corporate income tax rate, and China

enhanced its electronic filing and payment system—while also making business incorporation less

expensive. Mongolia introduced a new electronic payment system for taxes. Such reforms are

saving entrepreneurs valuable time. In Mongolia, for example, local businesses saw the average

time for tax compliance fall from 192 hours a year in 2013 to 148 hours—less than in Austria.

Mongolia was also highlighted for improving transparency for investors by expanding disclosure

requirements for related-party transactions.

“The important thing is for Mongolia to keep moving forward in its efforts to make the regulatory

environment simpler and more efficient. Mongolia’s reforms have been highlighted in the Doing

Business series for several years now, and we hope this continues,” said James Anderson, World

Bank's country manager for Mongolia.

Read the full report here, where Mongolia ranked 72nd on the “Ease of Doing Business” index.

Source: World Bank

SOY PRODUCTS MARKET IN MONGOLIA: DATABOOK TO 2017

The “Soy Products Market in Mongolia: Databook to 2017" report provides extensive market research

covering the soy products market in Mongolia.

The report presents detailed historic and forecast data on the soy products consumption trends in

Mongolia, offering consumption volume and value at market and category level. Bringing together

Canadian's research, modeling, and analysis expertise to develop uniquely detailed market data, it

allows both foreign and domestic companies to identify the market dynamics of overall soy

products sales, and remain sensitive to those categories that will be in the ascendancy in the

coming years. It covers products ranging from soy desserts to drinks.

“This report fills the gaps in marketers' understanding of market trends and the components of

change driving them,” reads the Source. “Thanks to its provision of comprehensive and granular

insights into the Soy Products market in Mongolia, the report facilitates the confident updating of

strategic and tactical plans.”

Future forecasts allow marketers to understand the future pattern of market trends, from winners

and losers to category dynamics, and thereby quickly and easily identify the key areas in which they

want to compete in the future.

Read the full report here.

Source: Digital Journal

CONSERVATIONISTS REINTRODUCE MARMOT TO KHENTII

The Animal Conservation Fund is introducing 50 marmots to a town in Khentii Aimag as part of a

larger program to reinvigorating the marmot population in the province.

Galshar Soum, Khentii Aimag used to be home to a large population of marmots, but their numbers

are now dwindling because of poaching. Now conservationists are trying to bring those numbers up

again by capturing them and reintroducing areas where the population has fallen.

Source: Zuunii Medee

CHINESE ENGINEER DESIGNS CHINESE-MONGOLIAN TRANSLATION PROGRAM

An engineer from north China's Inner Mongolian Autonomous Region has developed a program to

translate Chinese into Mongolian.

"My intention was to improve the accuracy of translation," said Ilichi, 32, an ethnic Mongolian who

developed the freeware, which can be easily accessed online.

China has just under 6 million ethnic Mongolians, with more than 4 million using Mongolian as their

everyday language. To protect the language, regional law requires that all government institutions,

businesses and shops in the region use both Chinese and Mongolian in public. Many of the Mongolian

words people see on the street, however, are simply wrong: bad translations from their Chinese

counterparts, or vice versa.

"I've tried the software on many texts and the translations the program provides are quite

satisfactory," said Balaji Nyima, an ethnic Mongolian linguist who has been working with the

language for more than 20 years. His expert opinion is echoed by another 30,000 mainstream users

of the program.

Ilichi, who claims there are nearly 500,000 words in the database, has been trying to start his own

business since graduating from Inner Mongolia Normal University in 2005, developing the translation

software and working as a translator at the same time. His biggest challenge now lies in finance.

"Although it may only serve the needs of a small group of people, it is a job that has to be done. It

is the only way we can preserve our ethnic minority languages in a new technological era," Ilichi

added.

Source: Shanghai Daily

UNICEF SEEKS TO IMPROVE SAFETY FOR CHILD JOCKEYS

Concerns over the risks posed to child jockeys plying their trade in Mongolia’s racing industry have

been highlighted by UNICEF, the United Nations’ agency for children.

It says racing is popular in Mongolia, but the sport poses a serious danger to young riders who often

compete with no protection and insurance. The agency is seeking stronger safety laws to protect

the young riders, whose racing careers can be crucial to family livelihoods.

A report on the UNICEF website highlights the situation of one former child jockey named Budgarev,

who four years ago was trampled in a training accident, suffering two broken legs and losing his

front teeth. He still uses crutches. He was uninsured and was not wearing any safety gear. His

trainer did not want to report the injury or take him to hospital, according to the report. He only

saw a doctor a month later, and his condition was much worse by then, with infections in both his

legs and gums. He has since had to drop out of school and cannot go far on his crutches. Bugarev's

younger brother, Munkh-Erdene, 13, is also a former jockey, who suffered skull damage in a race

tumble.

Horse racing has long been a part of Mongolia’s culture and the nation has a strong equine heritage.

However, in recent years racing has increasingly fallen under the influence of big business. The

Mongolian jockeys are nearly always children and hundreds of horses and jockeys can race at one

time. Families sometimes organize races to celebrate weddings, involving jockeys as young as five

who rarely wear protective gear. The current law governing the hugely popular Naadam national

festival in Ulaanbaatar states that children under 7 cannot race. The jockeys must be insured and

wear protective gear.

UNICEF wants the law extended to all races in Mongolia. It also wants a ban on winter races, when

conditions underfoot can be treacherous. It also wants the minimum age raised to 9, on a path

toward reaching the international standard of 14. Authorities have acted over the injury toll,

monitoring national races and enforcing rules around age, safety equipment and insurance.

Source: Horse Talk

FITCH: MONGOLIAN BANKS FACE RISING RISKS FROM SUBSIDIZED MORTGAGES

Mongolian banks' mortgage exposure continues to rise amid the government's commitments to

provide affordable housing to low-to medium-income households, and to contain inflation, Fitch

says in its “Asia-Pacific Banks: Chart of the Month” report.

Ongoing securitization by Mongolian Mortgage Corporation LLC supports banks' liquidity as banks can

repay 90 percent of funding from the Bank of Mongolia with the senior tranche of the residential

mortgage-backed securities. The securitization also improves banks' interest spread. However, most

of the credit risk remains in the sector as banks retain the equity tranche carrying a 1,250 percent

risk weight for regulatory capital purposes. The mining sector and the volatile operating

environment for the banks remain the key pressure points for Mongolian banks.

Source: Reuters

MET COAL PRICE RECOVERY UNLIKELY UNTIL 2016, SAYS MOODY’S

A recovery in metallurgical (met) coal prices to between USD 135 and USD 145 a metric ton is

unlikely before the second half of 2016, says Moody’s Investors Service.

In its sector commentary “Slow China demand, few curtailments push out met coal recovery,”

published on Thursday, the firm noted that while it maintained its expectation that production cuts

would ultimately bring benchmark prices closer to the USD 135 per metric ton to USD 145 marginal

cost of production; it now believed that it would take longer than previously forecast. Moody’s

pointed out that while the fourth-quarter benchmark price for high-quality coking coal settled at

USD 119 a metric ton, essentially identical to the second and third quarters, spot prices for high-

quality met coal showed no upward momentum. Exacerbating the trend were a muted supplier

response, slowing demand from China and a weak global economy, which made any material price

recovery unlikely over the next 18 months.

Moody’s added that despite production cuts being expected to ultimately help coal prices recover

to marginal levels, the protracted price weakness would continue to stress met coal producers.

"Weak demand from China, which consumes close to 60 percent of the world's coal, will push out

the recovery,” Moody's VP and senior analyst Anna Zubets-Anderson said.

China also produced more than half of the world's met coal. "We are seeing slowing imports into

China and believe that the Chinese steelmakers rely more heavily on domestic met coal supplies

and attempt to manage with lower inventory levels," Zubets-Anderson commented. The slow

implementation of supply curtailments would also affect the recovery of coal prices. Continued

growth in coal production in Australia, whose miners made up roughly half of the seaborne met-

coal market, was also expected to contribute to sustained low prices.

Source: Mining Weekly

COOLING CHINESE DEMAND FOR GOLD ADDS TO METAL’S GLOOMY GLOBAL OUTLOOK

Cooling Chinese demand for gold has added to an increasingly gloomy global outlook for the

precious metal, which slumped to a fresh four-year low on Monday.

Gold prices in Shanghai normally carry a premium to global prices, but that reversed to a rare

discount Monday. The premium, which is attributable to capital controls, was USD 2 to USD 3 an

ounce to London prices about a week ago. The tepid demand is especially unusual as the premium

typically rises this time of year as Chinese traders stock up on gold ahead of the Lunar New Year

holiday, which is due in February. Lunar New Year is the peak gold-buying season in China. But the

price move in Shanghai shows even Chinese buyers aren’t yet stepping in to buy at cheaper prices,

betting that they may have further to fall.

“The way the market is going right now, [traders] will definitely wait,” said Wallace Ng, head of

precious metals trading at Gerald Metals in Shanghai.

Gold was trading at USD 1,168 an ounce in London on Monday, after touching a low of USD 1,161.86

an ounce, a level not seen since late July 2010. Gold, which is priced in U.S. dollars, has slumped in

recent weeks as the greenback rallied after the U.S. Federal Reserve said it would end its bond-

buying program, signaling it is moving closer to raising rates. That has diminished gold’s allure as a

safe-haven commodity.

“You would not have expected Shanghai gold to be at a discount,” said a leading Hong Kong-based

executive with an international bank, who didn't want to be identified. “The physical buying in gold

has dried up.”

Source: Wall Street Journal

IRON ORE TUMBLES TO 5-YEAR LOW

A lack of demand for physical cargoes has seen the price of iron ore, the key ingredient in

steelmaking, hit a five-year low.

Benchmark Australia ore for immediate delivery into China fell USD 1.10 to USD 76 a ton on

Wednesday, the lowest level since June 2009. The steelmaking commodity has declined more than

40 percent this year as supply from the world’s biggest producers—BHP Billiton, Rio Tinto PLC and

Vale—has overwhelmed demand growth, which has started to weaken. Traders said no deals were

done on spot market trading platforms on Wednesday, with Chinese steel mills and traders content

to wait for further declines.

The closure of steel mills near Beijing ahead of the Asia-Pacific Economic Cooperation (APEC)

conference this week has been blamed by many commentators for lack of interest in physical

cargoes. China is the world’s biggest consumer of seaborne iron ore, accounting for about two-

thirds of global demand However, Melinda Moore, analyst at Standard Bank, said seasonality was

also playing its part. As temperatures across northern China start to drop, so does construction and,

in turn, demand for iron ore. Moore said data from the China Iron and Steel Association showed

average daily crude steel output of large and medium-sized mills had fallen 7.5 percent in the past

10 days of October ahead of the winter slowdown, while inventories were down almost 10 percent

to 14.1 million tons.

“We would expect inventories to drop at least another 1-2mt over the coming month, with lows

usually struck in early January,” she said.

In spite of this year’s sharp drop in prices, the big three iron ore producers plan to continue

pumping more ore into the market.

Source: Financial Times

WORLD BANK: CHINA’S FOCUS ON GROWTH COULD HINDER CHANGE

China’s focus on short-term growth targets could hamper overhauls that it needs for sustaining

longer-term economic expansion, the World Bank said Wednesday.

In its China economic update, the World Bank praised Beijing for tightening credit growth, reducing

excess capacity and grappling with pollution. But it also said these steps had contributed to slower

growth this year and cautioned that a government growth target for 2015 near the 2014 level of

about 7.5 percent would hamper economic rebalancing efforts.

“The current emphasis on meeting short-term growth targets will make it more challenging to

implement the policies necessary to shift growth to a more sustainable medium-term path,” reads

the report.

“The emphasis should be on reform rather than specific growth targets,” Karlis Smits, senior

economist at the World Bank and the main author of the report, said at a briefing.

Earlier this month the World Bank cut its forecast for China’s economic growth to 7.4 percent in

2014 and to an average of just above 7 percent in 2015 and 2016. It previously had growth at 7.6

percent for 2014 and 7.5 percent for 2015. China’s gross domestic product grew 7.4 percent in the

January-September period compared with the year-earlier period. China hasn’t missed its annual

growth target since the Asian financial crisis of the late 1990s, though government officials have

argued that the growth rate will be generally in line with Beijing’s goal of about 7.5 percent.

Many economists agree with the World Bank, saying that higher growth targets require more

expansionary macroeconomic policies that make it more difficult to rebalance the economy and

replace China’s traditional reliance on government investment to drive economic growth.

The World Bank said Beijing had used targeted support measures to cushion the effects of slower

growth and that it still had room for more accommodative fiscal and monetary policies if necessary.

But it added that this risked perpetuating China’s traditional growth model, which relies on

government-led investment fueled by credit expansion.

The bank also noted that even if China pushes ahead with all of these ambitious reforms, this will

not reverse a trend of slower growth over the next decade.

Source: Wall Street Journal

KAZAKHSTAN PROPOSES SELLING ENERGY TO CHINA

Kazakhstan officials have floated to China the possibility of selling electricity to China. Officials

gathered in Beijing for a Kazakh-Chinese ministerial consultation on 29 October where they

initiated the proposal of sending electricity to energy-hungry China. Parties also discussed the

preparation of the official visit of Prime Li Keqiang to Kazakhstan and an upcoming

intergovernmental agreement on the sharing of water resources.

Source: Inform.kz

JAPAN REGISTERS JOINT CARBON OFFSET PROJECT

Japan and Indonesia have agreed on registration of an energy savings project at an Indonesian

textile factory under their joint crediting scheme (JCM). This marks the first project registry almost

two years after Tokyo launched the bilateral program to reduce greenhouse gas (GHG) emissions

with Mongolia in 2013.

Japan has signed bilateral carbon-offset deals with 12 countries, with the first agreement struck

with Mongolia in January 2013. The deals call for Japanese firms to invest in developing low-carbon

technology, systems, services, systems and infrastructure in other countries. Carbon reductions and

removals under their JCMs will be verified and counted as part of their GHG mitigation efforts. The

agreements will remain effective until a new international framework is in place after 2020.

The JCM scheme with Indonesia has made the most progress, with another project pending JCM

registration after its methodologies were approved. Another five projects are also waiting for their

methodologies to be approved after public consultation. Japan and Mongolia are also expected to

register under the JCM a project to install energy-saving transmission lines in Mongolia's national

grid.

Source: Argus Media

POLITICS

MONGOLIA IN LIMBO AFTER PREMIER LOSES CONFIDENCE VOTE

Mongolia will have as long as a month in political limbo following the ouster of the former Prime

Minister Altankhuyag Norov yesterday after a collapse in foreign investment.

The ruling Democratic Party has 30 days to find a permanent replacement, Oyungerel

Tsedevdamba, a government lawmaker said by phone. Deputy Prime Minister Terbishdagva Dendev

is acting as prime minister until a replacement is named. Whoever takes over faces slowing growth,

a sliding currency and the need to resolve a dispute over further development at Rio Tinto Group’s

Oyu Tolgoi copper and gold mine that has contributed to the nation’s slump.

Thirty-six lawmakers in Mongolia’s 76-seat Great Khural voted against Altankhuyag in a no-

confidence motion, with 30 against. Altankhuyag had faced mounting pressure as economic growth

slumped from about 17 percent in 2011. Saikhanbileg Chimed, acting cabinet secretary, is the

leading candidate to replace Altankhuyag, political commentator and TV talk show host

Jargalsaikhan “De Facto” Dambadarjaa said by phone. Parliament Speaker Enkhbold Zandaakhuu

and MP Battulga Khaltmaa are other possible candidates, Neil Ashdown, an analyst for IHS, wrote in

a note to clients.

Altankhuyag’s reshuffle of his cabinet to promote his own supporters in October means “it is highly

likely that whoever becomes prime minister will carry out a wide-ranging change of personnel,”

said Ashdown. That leaves a higher risk of instability over policy, he said.

The deadlock over the underground expansion at Oyu Tolgoi, which the company projects will

account for about a third of Mongolia’s gross national product once at full capacity, began last year

after Rio Tinto raised cost estimates for the project. Issues around taxes and costs still need to be

resolved between the government and Rio before the expansion can progress, beginning with a

memorandum of understanding that wipes the slate clean of previously contentious issues. The

change in leadership should not affect the Oyu Tolgoi negotiations, Mongolia’s acting Minister for

Environment and Green Development Oyun Sanjaasuren said by phone, because the matter now

rests with Rio.

“It’s not the Mongolian side, but the Rio Tinto side that is not willing to push forward with project

finance,” said Oyun, referring to a USD 4.2 billion in bank lending commitments that lapsed at the

end of September.

Last month, the head of Rio’s copper division, Jean-Sebastien Jacques, told Fairfax Media that the

decision to move ahead with project financing rests with the Mongolian government.

Source: Bloomberg

NEW MONGOLIAN GOVERNMENT NEEDS TO MOVE FAST ON BUDGET, OT DEAL

Mongolian Prime Minister Altankhuyag Norov's departure on November 5 signals the end of the so-

called “Government of Change” that he formed in 2012 with a grand coalition. But there is little

time to mourn its passing, as the Democratic Party will have to regroup and choose a new leader

quickly enough to pass a budget for next year and strike a deal so work can restart on the enormous

Oyu Tolgoi copper and gold mine.

Altankhuyag's exit does not require an election. Instead the Democratic Party, which won the 2012

election but did not have enough seats in parliament to form a government on its own, will have to

barter an agreement with a minority party so that over 50%—or at least 39 heads—of lawmakers are

drawn into the fold. The Democratic Party already has 35 members in office. It has made up the

difference until now with its alliance with the Mongolian People's Revolutionary Party (MPRP),

Mongolian National Democratic Party and Civil Will-Green Party.

According to Luvsanvandan Sumati, head of the polling group the Sant Maral Foundation, Mongolia

could continue on with the current roster in its grand coalition, or the Democrats could instead

partner with the now-opposition Mongolia People's Party (MPP). This latter option would be the

reverse arrangement from the 2009-2012 government led by the MPP premier Sukhbaatar Batbold,

where the Democratic party was the minority coalition member.

The reason parliament acted so precipitously is likely because two crucial deadlines are looming.

The deadline for parliament to pass a budget for next year is November 15 and Mongolia also only

has until the end of the year before the next deadline to agree on a $4 billion financing package

that would fund an expansion of the troubled Oyu Tolgoi mine. Developers say the expansion would

unlock 80 percent of the wealth there.

Even with a fully functioning government, getting all this done before the end of the year would be

a big ask.

Source: BNE

PARLIAMENT RECEIVES BILL TO REGULATE PAWN SHOP ACTIVITIES

Parliament member G. Uyanga has submitted a new bill that proposes to regulate the items-for-

cash transactions employed by pawn shops.

Uyanga submitted the law to Parliament on 4 November, saying that for years people had to turn to

pawn shops for cash rather than traditional banking. "There are laws and norms that regulate

relations between other financial subjects and customers such as laws on banks, saving and credit

cooperatives and on other financial organizations,” said Uyanga. “But an integral part of the

financial sector—the pawn shops, which are responsible for loans—have been operating without any

specific regulations."

Source: Montsame

CHINA-RUSSIA-MONGOLIA DIALOGUE EYES CLOSER TRILATERAL RELATIONS

Chinese, Russian and Mongolian deputy foreign ministers pledged on Thursday to boost trilateral

cooperation and exchanges of views to maintain the strategic relations among the three countries

at a high level.

During the meeting, the deputy ministers exchanged views on boosting bilateral relations and

trilateral cooperation as well as on organizing the next high-level meeting among the three heads

of state. The three parties agreed to develop and boost trilateral cooperation and exchanges of

views in various sectors including trade, economy, transportation, infrastructure construction,

mining, tourism, humanitarian work and environmental protection. Also, the deputy ministers

expressed their commitment to rendering supports on the issues concerning each other's

sovereignty, security and fundamental interests.

To prepare for the next high-level meeting of the three presidents, scheduled in July, 2015, the

second deputy foreign minister-level consultative meeting will be held in next February in Beijing,

China, according to the three sides.

Source: Xinhua

MONGOLIA REQUESTS GERMANY'S ASSISTANCE AT ITB BERLIN

Mongolia enlisted the help of Germany for upcoming conferences Mongolia will either be hosting or

participating during a consultative meeting between their Foreign Affairs Ministries in Ulaanbaatar

on 3 November.

State Secretary B. Boldbaatar asked for Germany's support in Mongolia's role as a partner for the

2015 IBT Berlin conference, a leading global trade show for tourism to be held in March. Germany

also offered Mongolia support in the organization of the annual conference of the Freedom Online

Coalition in Ulaanbaatar in May, and the 11th ASEM Summit in Ulaanbaatar in 2016.

Source: News.mn

ANKARA TO PROMOTE TOURISM TO UB

The deputy mayor of Turkey's capital, Ankara, has offered its assistance in developing Mongolia's

tourism industry in Ulaanbaatar. Ankara's Deputy Mayor Ali Goksin said it could order multiple

campaigns to promote tourism to Ulaanbaatar.

“We launched the program 'Friendly Ulaanbaatar,' which was designed to welcome five million

tourists to the city by 2030,” said Ulanbaatar's Mayor, Erdene Bat-Uul. “We expect support from

you for it. We will create projects featuring Turkish culture to attract Turkish tourists to our city. I

hope you will collaborate with us on tourism."

Source: News.mn

FORMER GIA HEAD’S SENTENCE REDUCED BY 5 YEARS

Colonel D. Tsogtbaatar, a former head of Counter Intelligence for the General Intelligence Agency,

has had his 10-year prison sentence reduced to 5 years by appealing to the 2009 Amnesty Law.

Tsogtbaatar was sentenced to 10 years in prison after being found guilty of revealing state secrets

and extorting property from individuals. His crimes were related to a several-million-euro fraud

case related to German citizen M. L. Kloiver, who is currently sought by Interpol. D. Enkhbaatar

was alleged to have extorted money from Yo. Enkhtuya, who was Kloiver's girlfriend at the time.

Source: Undesnii Shuudan

POACHERS CAUGHT FOR SELLING ENDANGERED SPECIES' BODY PARTS

Authorities have arrested 10 Mongolian citizens who were in possession of 162 saiga antelope horns

and are suspected of being a part of an international black-market ring for the trade of endangered

species.

A police unit that focuses on environmental crimes arrested the group of suspected poachers on 24

October. They believe the arrested individuals have sold the parts of numerous endangered species

in Central Asia. The suspects were caught while attempting to sell to Chinese traders saiga horns

that they believe were smuggled into Mongolia from Russia.

The police investigators believe the black-market racket extends through Kazakhstan, Mongolia,

Russia, and China. According to a 2011 government report, a male saiga antelope can sell for MNT 2

million, while a female goes for MNT 2.2 million.

The total value of the animals allegedly poached by the suspects is estimated to be at least MNT

162 million. If found guilty, the suspects could be fined three-times that amount and sentenced to

five years in prison.

Source: News.mn

CAMERAS INSTALLED ALONG TUUL RIVER

The Tuul River Basin Authority has installed cameras along parts of the Tuul River that flows

through the capital of Mongolia to catch polluters in the act.

The authority believes that the cameras will help control dumping activities such as dumping and

polluting the river water. The river authority also plans to launch a study to research available

resources.

The river has suffered in recent years from the growing population of Ulaanbaatar and its poor

treatment of the river. The pollution that originates in the city travels well outside Ulaanbaatar, as

far as Lun Soum, Tuv Aimag.

Source: News.mn

MONGOLIA’S AMBITIOUS EGOVERNMENT STRATEGY

Today, Mongolia country is at a key stage in its development. With its economy having grown at an

annual rate of 12 percent since 2010 thanks to a mining boom, Mongolia is now seeking to establish

a knowledge-based economy to help ensure that this newfound wealth benefits the entire nation.

Currently ranked 65th out of 193 states for eGovernment, Mongolia is aiming to break into the top

30 by 2016 and has borrowed USD 20 million from the World Bank for its Smart Government

program. Tenzin Dolma Norbhu, World Bank lead ICT policy specialist and team leader for the

Smart Government Project in Mongolia, says: “The SMART Government project aims to use

information and communication technologies to improve the accessibility, transparency and

efficiency of public services in Mongolia.

“The project will support the government in achieving its vision and leveraging the ICT sector as a

key driver of growth, competitiveness and improved governance.”

Mongolia is rolling out a national eID system that is being financed independently of the World

Bank; and a tax ePayment system was launched in May 2014 that lets taxpayers submit tax reports,

access their history and make payments online. Since the mid-1990s, the Mongolian government has

been reforming the telecommunications sector, opening up the market to partial privatization, and

has established an independent watchdog, the Communications Regulation. As a result, the ICT

sector has expanded rapidly, with an average compounded annual growth rate in mobile teledensity

of 30.6 percent over the past six years. The World Bank believes the use of ICT sector has helped

drive economies of scale and increased efficiencies across the country. With 16,100 miles of

fiberoptic backbone and access networks being extended nationwide, more than 200,000 internet-

connected points are on the map of Mongolia, bringing ICT closer to its people

Challenges do remain, however Mongolia now needs to build institutional capacity to consolidate

the reforms and measures it has introduced. However, the country is well on the way to greater

government efficiency, transparency and accountability.

Source: Gemalto

CORRUPTION IN THE PUBLIC SECTOR HAMPERS PRIVATE BUSINESS

Government agencies such as the tax office are making business more difficult in Mongolia, where

corruption is still a large obstacle for companies trying to run their businesses freely, according to a

study by the Asia Foundation and the Sant Maral Foundation. However, there has been some

improvement.

“The study aims to strengthen democratic governance with more responsible and transparent legal

regulations through supporting power balance,” according to Meloney C. Lindberg, country

representative of the Asia Foundation.

The study showed that nearly half of the companies surveyed (43.3 percent) had experienced

corruption in the public sector and that it was affecting them directly. The tax office was cited as

the government agency creating the most obstacles for companies, named by 30.6 percent of

respondents. That was followed by the Specialized Inspection Agency with 18.2 percent and

customs with 11.8 percent. Although the overall assessment remains negative, businesses reporting

“a lot” of corruption dropped by 5.4 percent. The number of companies that “never” encountered

corruption also increased.

Source: Mongolian Economy

___________________________________________________________

ANNOUNCEMENTS

2014 ANNUAL RISK FORUM CONFERENCE, 27 NOVEMBER, UB

The 2014 Risk Forum will be held at the Tuushin Hotel on 27 November.

This year is the conference's fifth to bring together professionals from the local insurance industry,

local business representatives, and government leaders to present an analysis of the economic and

social risks and have an opportunity to share the best risk management practices. The event will be

organized by Mandal General Insurance, the leading provider of the risk management solutions.

“This is the biggest business lobby event in Mongolia with regard to improvement of risk

management framework” said Ganzorig Ulziibayar, chairman of Mandal, who is also chairman of

BCM risk management working group.

The morning session of the forum will put a focus on current political and economic situation and

risks that threatens businesses and companies. It includes key highlights from the Risk report

published by Mandal Insurance, currency rate fluctuation risks, and other impacts caused by

economic downturn.

Speakers during the second session will be focusing on social risks that are caused mainly because

of flawed planning for a catastrophic event in UB. Presentations from NEMA, UB City authoritywill

give a comprehensive overview on the current situation and effective solutions to businesses that

operate in UB as well as municipal agencies involved in home rule of UB City.

__________________________________________________________________

MONGOLIA PROJECTS & INVESTMENT SUMMIT, 17-19 NOVEMBER, HONG KONG

The Mongolia Projects & Investment Summit will be held in Hong Kong from 17 to 19 November.

The context of the Summit will be a constructive, productive and sincere appraisal of Mongolia as a

place for FDI, given the current circumstances, and what is being done to strengthen its

attractiveness to the international investment community. The Mongolia Projects & Investment

Summit Hong Kong will bring together leading business, investment and governmental figureheads

in an environment of progressive discussion and action.

The implementation of the new Investment Law, amendments made to the Mining Law, a realized

dedication to PPP and more do show that the government is moving in the right direction. The

question on investors’ minds is what tangible progress has been made since last November which

would warrant a return of FDI?

BCM members are eligible for a 15 percent early bird special. Download the brochure for the

conference agenda here. For registration logon here, or for more information email

info@beaconevents.com or call: +852 2219 0111.

_____________________________________________________________________

‘BCM IN THE UNIVERSITY CLASSROOM’ NEWS

Business Council of Mongolia (BCM) has been pushing forward with its ‘BCM in the University

Classroom’ series since March 2012. Led by BCM’s Education Working Group, the program provides

lectures at universities to help inspire students and give them direction for their future careers.

The series has grown to include an average of 10 lectures per academic year. Now 2,045 students

and teachers have participated with BCM in the University Classroom Project.

Most recently on 23 October Bulganmurun Tsevegjav, senior officer at GGGI and BCM`s

Environmental Working Group chair, gave a presentation entitled “Role of International

Organizations in Mongolia’s Path to Green Growth: Global Green Growth Institute” to an audience

of 33 students, postgraduate students and teachers at the National University of Mongolia’s

department of Geo ecology and environmental study,.

The next ‘BCM in the University`s Classroom’ series lecture will be held on 20 November at the

Institute of Finance and Economics. GTs Advocates will be invited to speak. Presentation title:

"Corporate Business Law in Mongolia". For further details, please contact Erdenetsetseg T, BCM

Working Group Coordinator at erka@bcmongolia.org

______________________________________________________________________________________

BCM WORKING GROUP MEETINGS

Education Working Group

The BCM Education Working Group met on Wednesday, 15 October, with 21 members attending.

Saha Meyanathan-/DAS/ moderated the session.

New Members: Tsetsentsolmon Baatarnaran-Higher Education Reform Project, Uyen Ganzorigt-PwC,

Battuvshin Chuluundorj-University of the Humanities, Ph.D Dorjderem Nyamjav-Mongolian Institute

for Resources and Technology.

New Participants: Telmen Erdenebileg, Owen Roach, Mark Dvorak -Save the Children, Shinbayar

Gan and Battugs B-Labor Exchange Central Office of Mongolia, Julian Woll-GIZ were welcomed.

Guest: Peter McLinton-STVET project Support to Mongolia's Technical and Vocational Education and

Training Sector.

Speakers and topics were:

1.Update on Higher Education

-Update on Higher Education Reform Project activities (Ms B.Tsetsentsolmon-Higher Education

Specialist at Higher Education Reform Project)

-International Accreditation Process of the ISU (Dr Robert Stearns)

-German-Mongolian Institute for Resources and Technology (Ph.D Dorjderem Nyamjav)

-Higher Education Update from PwC Academy-(Uyen Ganzorigt)

-List of best University's in Mongolia (Mr.Misheel Dashdavaa, Mr.Undral A- Forbes Mongolia)

2. VETP Update

-Update on VETC partnerships by (Mr.Pascal Houben-GIZ)

Please contact:erka@bcmongolia.org

Tax Working Group

BCM`s Tax Working Group met on 1 October with 14 people attending.

Co-chair Tsendmaa Ch, Tax Executive Director of PwC, moderated the meeting.

New members: Rentsenkhand D - BDO, Nyamdulam N and Zoljargal Ch - PATC.

New Participants: Enkhmaa D, Munkhtsetseg S from MSM.

Speakers and topics were:

1."The changes to tax regulations" in 2014 by Azzaya L, Senior Tax Consultant of PwC, and

Tsendaa Ch, Tax Executive Director of PwC

2. Open discussion

Members discussed various tax law applications in Mongolia and asked any agenda topics for next

WG meeting.

If you have any suggestions for the next Tax WG meeting agenda, please send it to

erka@bcmongolia.org.

Logistics Working Group

BCM`s Logistics Working Group met on 30 September with 9 people attending.

Chairman Tengis G, Chief Executive Officer of Monroad, moderated the meeting.

New Participant: Inca Bataa from Santa Fe Relocation Services

Speakers and topics were:

1. "Mongolian Customs"- Amgalan N, Regulatory Reform Manager at Business Plus Initiative (USAID).

2. Defining the mission in a position paper of the Working Group.

Members discussed the Logistics WG mission and suggested it include the following key areas:

1. Logistics policies-influence

2. Transparent customs-inspection agency

3. Logistics routes

4. Logistics centers

5. Transport insurance

6. Transportation cost (import, export, nationwide)

If you have any comments or suggestions on the Logistics WG mission, please send them to

erka@bcmongolia.org.

The next working group meeting is scheduled on 25 November with the following agenda:

1. Discussion of Logistics WG Mission statement

2. Guest: Federation of Freight Forwarder of Mongolia.

We still welcome those who have interest to join our BCM`s Logistics Working Group.

______________________________________________________________________________________

BCM WEBSITES

MONGOLIAN WEBSITE: ‘PRESENTATIONS’

The following statistics and reports posted on Presentations section in Mongolian:

http://bcmongolia.org/mn/илтгэлүүд

6 Presentations at Discover Mongolia, Children’s Palace, UB, 4-5 September, 2014 (MNG)

• Б.Оюунгэрэл - "Монголын Геологи, Уул уурхайн Мэргэжлийн Институт" Дисковер

Монголиа 2014

• Б.БААТАРЦОГТ ГЕОЛОГИЙН БОДЛОГЫН ХЭЛТСИЙН ДАРГА - "ГЕОЛОГИ ХАЙГУУЛЫН

ТАЛААР ТӨРӨӨС АВЧ ХЭРЭГЖҮҮЛЭХ АРГА ХЭМЖЭЭ" Дисковер Монголиа

• Монголын алт үйлдвэрлэгчдийн холбооны Удирдах зөвлөлийн дарга Т.Ганболд - "АЛТНЫ

САЛБАРЫН ӨНӨӨГИЙН БАЙДАЛ, ЦААШДЫН ЗОРИЛТ" Дисковер Монголиа 2014

• Лхамаасүрэнгийн Раднаасүрэн УУЯ-ны СБТГ-ын ТБХ-ийн дарга "МОНГОЛ УЛСЫН

НҮҮРСНИЙ ЭКСПОРТЫН ӨНӨӨГИЙН БАЙДАЛ" Дисковер Монголиа 2014

• Г. Эрдэнэбилгүүн "Ашигт малтмалын нөөц ашигласны төлбөр, холбогдох асуудлууд,

боломжит шийдлүүд" Дисковер Монголиа 2014

• УИХ, ЗАСГИЙН ГАЗРЫН ГИШҮҮН Д.ГАНХУЯГ "ЭРДЭС БАЯЛГИЙН САЛБАРЫН ЭРХ З ҮЙН

ОРЧНЫ ШИНЭЧЛЭЛ"2014 ОНЫ 09 ДҮГЭЭР САРЫН 04 ДИСКОВЕР МОНГОЛИА

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• U.S. Ambassador Piper Campbell's speech at Invest Mongolia 2014

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ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', ‘INTERVIEWS‘, MONGOLIAN

BUSINESS NEWS’, ‘PHOTO GALLERY’

3 Presentations at Risk Management and Insurance Solutions conference, Corporate Hotel, 16

October, 2014

• Vlad Bobko, Chief Broking Officer, Director Large Accounts and Specialty, Aon CEE, CIS and

Mongolia - "Political Risks and Trade Credit Workshop"

• Munich Re Group - "MINING RISKS - insuring the un-insurable?"

• Vlad Bobko, Chief Broking Officer, Director Large Accounts and Specialty, Aon CEE, CIS and

Mongolia "Risk Management and Insurance Solutions Conference for Mongolian Industries"

2 Presentations at BCM Monthly Meeting on September 22, 2014:

• Peter A. Markey, Managing Partner, Ernst & Young Mongolia – "Business Risks in the Mining

and Metal sector"

• Kh. Dorjpalam, Officer Treasury, Oyu Tolgoi - "Overview of the Risk Management and

Insurance Conference in October in UB"

9 Presentations at Discover Mongolia, Children’s Palace, 4-5 September, 2014 (ENG)

• Cameron McRae, Executive Chairman, SkyPath Partners LLC, Mr. Geoff McNamara, Pacific

Road Capital, Financial Regulation Committee, Ministry of Economic Development, Moderator: Jim

Dwyer, Executive Director, Business Council of Mongolia - "Panel Discussion"

• Amarbayasgalan.E, Director, Investment Banking Division, Golomt Bank - "Banking and

Mining" Discover Mongolia 2014 International Mining Investors Forum, September 4-5, 2014

• Neil Ashdown, Deputy Head of Asia, IHS - "Mongolian Competitiveness among Asian

Emerging Market" Discover Mongolia 2014 International Mining Investors Forum, September 4-5,

2014

• Paul Cromie, Chief Geoscientist for Asia Pacific, Anglo American - "Anglo American Global

Exploration" Discover Mongolia 2014 International Mining Investors Forum, September 4-5, 2014

• Peter Akerley, President & CEO, Erdene Resource Development - "Mining Exploration

Project" Discover Mongolia 2014 International Mining Investors Forum ,September 4-5, 2014

• George Lloyd, CEO, Xanadu Mines - "Mining Exploration Project" Discover Mongolia 2014

International Mining Investors Forum, September 4-5, 2014

• Adrian Buck, Geo Consultant - "TSIM Geophysics: Mongolian Case Studies" Discover Mongolia

2014

• Sebastian Rosholt, Senior Associate, Minter Ellison LLP - "Amendments to the 2006 Mineral

Law of Mongolia: Private sector overview" Discover Mongolia 2014 International Mining Investors,

September 4-5, 2014

• Bilguun Ankhbayar, CEO, MIBG LLC - "Review and Outlook of Mongolian Investment

Environment" Discover Mongolia 2014 International Mining Investors Forum, September 4-5, 2014

12 Presentations at Invest Mongolia, Blue Sky Hotel, 2-3 September, 2014 (ENG)

• APIP - "Trends and Dynamics of the Real Estate Market in UB" Invest Mongolia 2014

• "Mongolian Cashmere Industry Overview" Invest Mongolia 2014

• B.Tsogtgerel, Vice Minister - "MINISTRY OF INDUSTRY AND AGRICULTURE" Invest Mongolia

2014

• Toshinobu KATO, JICA Mongolia - "Perspective on Long-term Development Strategy in

Mongolia～Japanese experience and cooperation" Invest Mongolia 2014

• Tokyo Stock Exchange - "Opportunities for Mongolian Companies to Raise Capital in Japan"

Invest Mongolia 2014

• Matthew Pottle, Country Managing Partner, PwC - "Mongolia: capitalising on the

megatrends" Invest Mongolia 2014

• Graeme Hancock, President, Anglo American Mongolia - "ANGLO AMERICAN AN

INTRODUCTION" Invest Mongolia 2014

• John Johnson, CEO, CRU China-"China's top commodity trends and what this means for

Mongolia" Invest Mongolia 2014

• Batsukh Galsan, Chairman, "OYU TOLGOI" PROJECT" Invest Mongolia 2014

• Ya. Batsuuri, CEO, Erdenes Tavan Tolgoi JSC - "Largest developing coking coal deposit in the

world" Invest Mongolia 2014

• Graeme Knowd, Associate Managing Director - "Mongolia Banking System Outlook Mongolian

Banks Face Cyclical and Structural Challenges " Invest Mongolia 2014

• Erdenedalai Odkhuu, Associate; Bolormaa Gulguu, Associate, Hogan Lovells (Mongolia) LLP -

"Legal Developments in 2014 :Changes and Future Developments" Invest Mongolia 2014

2 presentations from BCM monthly meeting on June 23, 2014:

• T. Gansuld, Executive Director, Outotec Mongolia – “Outotec Mineral Processing Solutions

and Experience in Mongolia”

• Lisa Gardner, Journalist & Media Trainer – “Mongolia’s Media Laws: Defamation, Libel and

Threats to Press Freedom”

3 presentations from BCM monthly meeting on May 26, 2014:

• B. Lakshmi, Director, Mongolia Economic Forum – “Why Mongolia Business Summit?”

• Nick Cousyn, Co-chair, BCM Capital Markets Working Group – “Use of MSE for State

Privatizations”

• Peter Benson, VicRoads Team Leader, ADB Capacity Building Project – “Mongolia Roads –

Achievements and Challenges”

• China Metals & Mining Thermal Coal, Coking Coal, Copper, Gold, Steel by Macquarie Capital

Securities Limited

Mongolia Reports: http://bcmongolia.org/en/mongolia-reports

• Mongolia Economic Report – August 2014 by BCM;

• World Investment Report 2014 by United Nations Conference on Trade and Development ;

• Social and economic situation of Mongolia as of May 2014 by National Statistical Office of

Mongolia; (available in Mongolian language - Монгол улсын нийгэм эдийн засгийн байдал 2014

оны 3 сарын байдлаар, Үндэсний статистикийн хороо);

• Real Estate Report 2014 by Mongolia Properties;

• ASIA Reaching for the Top by International Monetary Fund, June 2014;

• ASIA Achieving Its Potential by International Monetary Fund, June 2014;

• Mongolia: Economy outlook 2014, by Asian Development Bank;

• Polit Barometer by Sant Maral Foundation, March 2014.

Interview Section: http://bcmongolia.org/en/interviews

• Peabody Energy's Greg Boyce Says Don't Write Off Coal

• Talking to United World, the Executive Director of the Mongolian Drilling Association (MDA)

Professor J. Tseveenjav. Source: http://www.worldfolio.co.uk/;

• Jim Dwyer, Executive Director, BCM – “Business need more business”;

• Damshnamjil Tsogtbaatar, Chairman of the SPC: “Privatizing Mongolia”;

• Jan Hansen, Economist, ADB: “The depreciation should help to increase the

competitiveness and to develop the non-mining industrial sector”.

The “Photo Gallery” contains photos from the 6th Anniversary BCM Renewal dinner on November

11, 2013.

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SOCIAL NETWORK WITH BCM

The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.

Keep up to date on the latest business deals in Mongolia and how the climate for investment is

improving each day with BCM.

Add BCM on Facebook at https://www.facebook.com/TheBusinessCouncilOfMongolia to read the

latest announcements and comment on events carried in the NewsWire with the community.

Hear breaking news and announcements as they happen when you follow BCM on Twitter at

https://twitter.com/bcmongolia.

The bulk of the content on BCM’s new LinkedIn page is Mongolian language to better cater to BCM's

Mongolian-speaking audience and members. Please click on the below link to follow us on our new

LinkedIn page.

http://www.linkedin.com/company/business-council-of-mongolia?trk=company_logo

Social stats: BCM now has 6,373 fans on our Facebook fans page, 1,775 connections on LinkedIn

network, and 1,300 followers on Twitter.

Of course for news information, interviews, event photos, videos and announcements regarding our

organization, visit the official BCM website at http://bcmongolia.org/en/

________________________________________________

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

Year 2012 *14.0% [source: NSOM]

Year 2013 *12.5% [source: NSOM]

September 30, 2014 *13.0% [source: NSOM]

*Year-over-year (y-o-y), nationwide

Note: 13.6% y-o-y, Ulaanbaatar city, September 30, 2014

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

March 19, 2012 12.75% [source: Mongol Bank]

April 18, 2012 13.25% [source: Mongol Bank]

January 25, 2013 12.50% [source: Mongol Bank]

April 8, 2013 11.50% [source: Mongol Bank]

June 25, 2013 10.50% [source: Mongol Bank]

July 30, 2014 12.00% {source: Mongol Bank}

CURRENCY RATES – 6 NOVEMBER 2014

Currency Name Currency Rate

US Dollar USD 1,873.23

Euro EUR 2,342.66

Japanese yen JPY 16.36

British pound GBP 2,994.17

Hong Kong dollar HKD 241.62

Chinese Yuan CNY 306.42

Russian Ruble RUB 41.44

South Korean won KRW 1.73

Disclaimer: Except for reporting on BCM’s activities, all information in the BCM NewsWire is

selected from various news sources. Opinions are those of the respective news sources.

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