BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 414 – February 5, 2016

BCM NewsWire provides short summaries of news collected from around the world. Each article is

kept to a maximum of 150 words for brevity, but click on the link next to “Source” to read the full

article.

NEWS HIGHLIGHTS:

Business:

Canada's Centerra given go-ahead to mine Mongolian gold deposit;

Russia forgives USD171 mn in Mongolrostsvetmet debt;

Erdenet Mining allies with local producers;

Petro Matad delays survey and drilling plans;

Aspire cuts mining cost estimates at Ovoot;

Geology lab receives global accreditation;

Charcoal for barbeque grilling, made in Mongolia;

Mobicom fined for unfair practices;

President unveils Wiki-style dictionary;

The Let’s Read! Asia digital library expands to Mongolia;

City IT Department and university to co-implement “Smart UB” program;

Ard Financial Group acquires 17.4% of Mongol Post JSC;

Shangri-La Hotel on fire, again;

Wagner Asia named 'Best Socially Responsible Investor' at 2016 Silk Road awards;

UB Development Corp. puts out calls for business partners;

The story of Oyu Tolgoi;

Sam Walsh: Rio Tinto’s boss is an iron fist in a velvet glove.

Economy:

Mongol Bank: currency auctions, swaps, 1-week bills, T-bills;

Moody's assigns (P)B2 rating to Mongolia's medium-term note program;

Mongolia delays planned sovereign dollar bond;

Mongolia’s 2015 inbound FDI falls 39% y-o-y to USD232 mn;

Total imports fall more than a quarter in 2015;

Government to cut interest rates on loans by March;

Banks granted 1,129 mortgage loans in last 10 days;

Mongolia to buy petroleum on credit from Russia while in financial pinch;

Oil processing plant planned for Khentii;

Mongol Bank says interest rates should be 10% for agro producers;

UNDP launched carbon-offset initiative;

Government promises MNT30 bn financing for health care products;

Emergency authorities plan for disaster response;

Mongolian delegation launches project to combat gender-based violence;

PM attends renovation ceremony at UB central railway station;

Despite commodities boom years, Mongolia still faces capacity gap.

Politics:

PM survives no-confidence vote over economic policies;

Parliamentary election will take place on June 29;

Legislation legalizes ports for trade;

Parliament adopts Law on Land for Farming;

Reducing air pollution in ger areas must be a priority, says sub-committee;

MP recommends protections for Gobi mountains;

Ministries ordered to cut costs;

Democratic party proposes merger with coalition partners;

Austria to send home 125,000 Mongolian immigrants;

MPRP member explains away alleged corruption as campaign financing;

Railway embezzlement suspects released on bail;

MTZ contractor believed to be tied to corruption attempts second suicide;

Illegal border crossings spike alongside Mongolia-Russia border;

Road maintenance workers threaten to go on strike;

476 drivers lose points for traffic violations;

Weekend traffic restrictions for Tsagaan Sar;

INS follows up on failed motion to dismiss PM—REPORT;

Why did Russia just write-off 97% of Mongolian debt?—EDITORIAL;

ISIS, explained by a maniacal Buddhist warlord;

Why sky burials are vanishing in Mongolia—PODCAST.

BCM Updates:

Announcements;

New Mongolian Laws;

Knowledge Sharing Sessions;

Advocacy Notes;

Working Groups News

BCM in the University Classroom Series;

Websites Update - Presentations, Mongolia Reports, Interviews;

Social Networks.

Economic Indicators:

Churchill’s Supermarket Price Comparison

Inflation;

Central Bank Policy Rate;

Currency Rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank Invest Mongolia Agency

Mongolian Business Database

BUSINESS

CANADA'S CENTERRA GIVEN GO-AHEAD TO MINE MONGOLIAN GOLD DEPOSIT

Canada's Centerra Gold Inc. <CG:TO> has been given the go-ahead from Mongolia's lawmakers to

mine the Gatsuurt gold deposit after a five-year delay, as the resource-rich country looks to bolster

its economic activity and gold reserves. The parliament passed a bill granting the country 34

percent ownership of the mine with 1.6 million ounces of probable gold reserves, a government

website says. Centerra, which also owns the Boroo mine in Mongolia, will hold the remaining 66

percent of equity. With the parliament's approval, the government can now negotiate the final

conditions for mining with Centerra. The Toronto-based company said it will conduct economic and

technical studies once it has negotiated definitive agreements with the government, including a

deposit development and investment agreement.

"The Gatsuurt project represents an exciting opportunity to use Centerra's existing Boroo mill and

other infrastructure to develop the 1.6 million ounce Gatsuurt deposit with very modest initial

capital investment," said Centerra Chief Executive Scott Perry in a statement.

Source: Reuters

RUSSIA FORGIVES USD171 MN IN MONGOLROSTSVETMET DEBT

Russia has lowered the debt owed by state-owned Mongolrostsvetmet by 97 percent after

implementing sweeping debt forgiveness last week. Mongolia must pay USD3.8 million within the

next 30 days to be forgiven the USD174.5 million in debt of Mongolrostsvetmet to Mongolia's

northern neighbor.

Source: Udriin Sonin

ERDENET MINING ALLIES WITH LOCAL PRODUCERS

State-owned miner Erdenet Mining Corp. has agreed to buy up raw materials from local companies

in Orkhon Aimag as it looks to expand its operations. Erdenet has agreed to purchase 35 percent (up

from 30 percent) of its raw materials from local companies ahead of plans for cast iron and copper

concentrate production, said B. Namkhainyambu. “The Industry Minister became acquainted with

the activities of Hutni Projekt Frydek-Mistek LLC’s coke production and cast iron processing factory,

and Vitkovets Group’s steel processing tsvetmet during his visit last year to the Czech Republic.”

Last year, Erdenet expanded its annual ore-process capabilities by 23 percent to 32 million tons and

commissioned a steel pellets factory. The government has plans for a concentrator at Bor Undu,

where there are water resources and infrastructure including roads, rail and power. “This location

has the potential to become a region with a chemical and metallurgical complex in the future.”

Source: UB Post, Mongolian Mining Journal

PETRO MATAD DELAYS SURVEY AND DRILLING PLANS

Petro Matad Ltd. shares fell on Wednesday after the company said it had suspended its seismic data

acquisition at its project and its drilling plans for the site have been pushed back. Petro Matad said

it has completed its seismic data acquisition for Block IV at the project, but will now postpone

collecting data for Block V and will start again in May. Due to that delay, it now plans to start

drilling two exploration wells at the project in 2017, rather than in 2016, as had been previously

planned.

Petro Matad said it remained confident in the project and said drilling the two wells back-to-back in

2017 will result in operational efficiencies for the business. It also said the availability of drilling

rigs makes it likely it will be able to secure drilling rigs for the project at a lower cost than had

previously been envisaged.

Source: London South East

ASPIRE CUTS MINING COST ESTIMATES AT OVOOT

Mining cost estimates for Aspire Mining Ltd.’s Ovoot metallurgical coal project have been cut by 22

percent following a high-level review of the project to take into account current market conditions.

The cut in mining costs confirms the expectation that Ovoot remains at the lower end of the global

metallurgical coal cost curve, the company said.

The company also received the results of a geophysical survey conducted over the Ovoot tenements

and surrounding areas by local Mongolian firm, AMO-Discover LLC. The survey identified two regions

of interest that have been recommended for further surveying and drilling to the southwest and

within existing exploration licenses. The survey also identified areas of limited further exploration

potential and the company is now in the process of relinquishing 17,000 hectares of tenement area,

reducing its tenement position to about 25,000 hectares.

Source: World Coal

GEOLOGY LAB RECEIVES GLOBAL ACCREDITATION

The Mongolian Geological Central Laboratory has received triple accreditation for international

standards, according to its director. N. Tegshbayar said the accreditation makes the lab one of the

top-five in the world. Accreditation includes the competency of its scientists and modern

equipment.

Source: Udriin Sonin

CHARCOAL FOR BARBECUE GRILLING, MADE IN MONGOLIA

A Mongolian company has released a charcoal product for barbecue grilling made from locally-

sourced saw dust. Mongolia's annual demand for charcoal is between 300,000 and 500,000 tons, said

MCPT Co. General Manager Ch. Purev. “Sales started as an experiment in 2014, and after five years

of experimenting, now we are selling through more than 10 chain stores,” said Purev.

MCPT has targeted buyers in South Korea for exports, and plans to expand its operations through

the purchase of additional sawdust from Russia's Buryatia Republic. “Our daily production capacity

is three tons,” Purev said.

Source: Undesnii Shuudan

MOBICOM FINED FOR UNFAIR PRACTICES

Mobicom Corp. has been fined MNT2.3 billion by the Authority for Fair Competition and Consumer

Protection (AFCCP) for selling phone numbers at a rate below real costs, saying that the company

was using unfair tactics to push out competitors. Mobicom, Mongolia's largest telecom company,

released phone numbers beginning with the two digits 94 at a price of MNT20 per number. The sale

came along with special deals, such as free phone calls to specified phone numbers of friends or

family and overall free text messaging.

AFCCP fined Mobicom for taking advantage of its size and resources to charge at a cheaper rate

than competitors could, setting a bar too low for pricing that competitors could not match. It also

cited a bizarre condition that said Mobicom had broken the law by advertising on television,

Internet and on pamphlets.

Source: Undesnii Shuudan

PRESIDENT UNVEILS WIKI-STYLE DICTIONARY

The Office of the President has unveiled a new English-Mongolian dictionary phone application that

allows users to submit up-to-date definitions and vocabulary. Numerous scholars and researchers

were tasked with presenting input to create an app that gives greater context to the languages,

said P. Tsagaan, the lead advisor to President Tsakhia Elbegdorj. Mongolian often does not translate

directly or simply to English, sometimes resulting in awkward statements from new learners.

The application currently contains definitions for 60,000 words, as well as 80,000 phrases. Users can

edit definitions and create new terms through the website MongolToli.mn.

Source: Montsame

THE LET’S READ! ASIA DIGITAL LIBRARY EXPANDS TO MONGOLIA

The Asia Foundation’s Books for Asia program celebrated the opening of a new children's digital

library on 1 February. The library “will deliver an entire library of stories into the hands of

underprivileged students,” reads a statement from the Asia Foundation. It added, “Let’s Read!

Mongolia will use high-impact, low-cost technology to give children access to age-appropriate books

in Mongolian and English.”

The system has been set up at 6 public schools in Ulaanbaatar's ger districts, where more than half

of Mongolia's 1.6 million residents live.

Source: Asia Foundation

CITY IT DEPARTMENT AND UNIVERSITY TO CO-IMPLEMENT “SMART UB” PROGRAM

IT authorities for Ulaanbaatar plan to collaborate with the University of Ulaanbaatar to see through

the “Smart Ulaanbaatar” initiative to bring city services to residents through technology.

Representatives of the city and university signed a cooperation agreement on 29 January on

evaluating the qualifications of engineers. They plan to eventually create 9 different goals,

including the hosting of trainings and contests as well as offering students work experience.

Source: Montsame

ARD FINANCIAL GROUP ACQUIRES 17.4% OF MONGOL POST JSC

ARD Financial Group has confirmed a 17.4 percent stake holding in Mongol Post JSC after its public

offering on 8 January. The government listed 34 percent equity in the national postal delivery

service at the start of the year, raising MNT6.2 billion to expand its services, technical capacities

and governance. ARD, who also has holdings in Nomin Khishig Real Estate and Wild Digital Agency,

has promised to help introduce best practices in the corporate governance of the company.

Source: ARD Financial Group

SHANGRI-LA HOTEL ON FIRE, AGAIN

Thirty-three workers were sent to hospitals for medical care after a fire broke out at a construction

site owned by the Shangri-La Hotel on 28 January. The accident was the second fire in two years

during construction at the global hotel's properties and took place at a separate site directly next to

the hotel that opened last year. Officials have not yet made a statement on the cause for the fire.

Source: Unuudur

WAGNER ASIA NAMED 'BEST SOCIALLY RESPONSIBLE INVESTOR' AT 2016 SILK ROAD AWARDS

Wagner Asia Equipment LLC received the honor “Best Socially Responsible Investor” at the 2016 Silk

Road ceremony. Hosted by the Mongolian National Chamber of Commerce and Industry (MNCCI), the

awards recognize the embassies, international organizations and foreign investors who contribute to

Mongolia's development. Wagner Asia won the award for its social responsibility projects in 2014

and 2015, investments made those years as well as the corporate governance and transparency in

its operations.

Source: Wagner Asia Equipment LLC

UB DEVELOPMENT CORP. PUTS OUT CALLS FOR BUSINESS PARTNERS

UB Development Corporation (UBDC) is looking for partners to execute urban development projects

in line with the 2030 Master plan. “We are inviting private companies and individuals willing to

cooperate with us in implementing economically viable projects,” reads a statement for UBDC,

adding that project proposals were welcome before 28 February.

The Ulaanbaatar Chamber of Commerce welcomed businesses to investment opportunities at an

investors’ forum last month. “Projects and programs budgeted by the city will be introduced to the

private sector,” said the chamber's president, J. Od, in an interview.

Source: BCM, Mongolian Economy

THE STORY OF OYU TOLGOI

Oyu Tolgoi LLC has published more than half a century of history in a tell-all book available for

download. Oyu Tolgoi 1957-2015 includes more than 200 pages of history, biographies on the key

figures in the project's development and photos.

Source: Oyu Tolgoi LLC

SAM WALSH: RIO TINTO’S BOSS IS AN IRON FIST IN A VELVET GLOVE

By rights, Sam Walsh should be miserable. The company he leads, Rio Tinto Group—the world’s

second-largest mining conglomerate—has lost USD31 billion in share market value since the middle

of 2014. But his performance since taking over the top job in 2013 has been a one-man charm

offensive in public, even as he imposed a brutal efficiency drive within the company that has seen

budgets slashed and a slew of top executives leave.

And beneath his surface humility, he has a vigorously healthy ego. Some business journalists

mocked him for saying that his tenure at Rio would one day be “a Harvard case study,” but Walsh

insists that Harvard is now actually doing such a study. “He did a lot of things to take Rio Tinto into

the 21st century,” says former Rio management official Preston Chiaro. “Sam thought the mining

industry was backward and wanted to bring modern practices into Rio Tinto.

Source: Australian

SPONSORS

Oxford Business Group The New Media Group

Mongolian Economy Magazine

ECONOMY

MONGOL BANK: CURRENCY AUCTIONS, SWAPS, 1-WEEK BILLS, T-BILLS

The Bank of Mongolia on 2 February sold USD20 million and CNY5.5 million to central banks in

currency auctions (out of USD64.85 million and CNY26.5 million in bids, respectively) for closing

exchange rates of MNT2,014.35 and MNT304.8, respectively. Also that day, it accepted tugrug swaps

with commercial banks for an equivalent of USD5.45 million, but rejected U.S. dollar swaps worth

USD30 million.

The Bank of Mongolia on 3 February issued 1-week bills worth MNT256.9 billion at a weighted

interest rate of 12 percent. Also that day, the central bank received MNT34.8 billion in bids for the

auction of 52-week treasury bills with a face value of MNT25 billion. It canceled the auction of

three-year bonds with a face value of MNT15 billion because of a lack of bids.

Source: Bank of Mongolia

MOODY'S ASSIGNS (P)B2 RATING TO MONGOLIA'S MEDIUM-TERM NOTE PROGRAM

Mongolia's (B2 negative) credit profile will come under pressure over the next 12 to 18 months, due

to a combination of falling commodity prices and lower growth in China (Aa3 stable), said Moody's

Investors Service on 1 February. Mongolia's slim reserve buffers, which are insufficient to cover its

short-term external and maturing long-term debt over the next two years, exacerbate this

situation. Over time, however, Moody's expects growth and inward investment flows will reduce

these domestic and external pressures.

Since Moody's downgraded the government's bond rating from B1 in July 2014, some strains on the

credit profile have abated. The central bank has reversed monetary and quasi-fiscal stimulus

measures that contributed to a rapid build-up in credit growth and inflation through 2011 and 2012.

Beyond 2021, Moody's expects growth and inward investment flows will resume to adequate levels

to address Mongolia's vulnerabilities, led by foreign direct investment in large mining projects—in

particular Oyu Tolgoi.

Source: Moody's Investors Service

MONGOLIA DELAYS PLANNED SOVEREIGN DOLLAR BOND

The government of Mongolia (B2/B/B) has decided to delay a planned offering of U.S. dollar

sovereign bonds, according to investors. However, a source close to the deal claimed the issuer was

only waiting for suitable market conditions. An issuance of 144A/Reg S senior unsecured notes from

the sovereign's USD5 billion global MTN program was expected to follow. Investors said their pricing

expectations did not meet those of the issuer and that the deal had been delayed as a result.

However, a source close to the deal said that the issuer was continuing to monitor markets and

could launch a deal after Lunar New Year.

Last year, Trade and Development Bank of Mongolia hired banks for a proposed U.S. dollar issue,

while Golomt Bank was also rumored to be mulling a similar offer. Development Bank of Mongolia

invited banks to pitch for roles on a planned euro-denominated bond. None of the planned deals

have come to fruition so far.

Source: International Financing Review

MONGOLIA’S 2015 INBOUND FDI FALLS 39% Y-O-Y TO $232 MN

Inbound foreign direct investment fell to USD232 million in 2015 versus USD381.9 million in 2014,

according to data released by central bank on 1 February. Mongolia had USD153.6 million of foreign

direct investment in December, the highest total of any month in 2015. The second highest amount

was USD85.4 million in May

Mongolia had inbound foreign investment of USD2.14 billion in 2013 and USD4.45 billion in 2012.

Source: Bloomberg, Cover Mongolia

TOTAL IMPORTS FALL MORE THAN A QUARTER IN 2015

Mongolia's total imports slid 27.5 percent from 2014 last year as the country saw its foreign trade

balance narrow. The gap between imports sold and exports bought fell this year after a tough year

of economic downturn from slowed growth in China and little foreign investment into the country.

Mongolia's imports of commercial goods fell 31 percent last year from the year before. Fuels were

down by 39 percent, while cars and foods imported were down 27 percent and 16 percent,

respectively. Imports for industrial use were down 13 percent.

Source: Montsame

GOVERNMENT TO CUT INTEREST RATES ON LOANS BY MARCH

The state-backed mortgage program will reduce annual interest rates even further to 5 percent by

the end of the month, said representatives of the Democratic Party at a 2 February press

conference. The government plans to lower interest from the locked-in rate of 8 percent in place

since 2013 as a means of stimulating growth after lending petered out last year. The government

hopes to lower interest to agriculture workers, too, to stimulate the economy and maybe gain favor

ahead of elections scheduled for June. Tax cuts are also on the agenda.

“As the PM said, the interest rate of mortgage loans for apartments can be reduced to 5 percent,

and the interest rate for herders' loans—to fall threefold within February," said B. Garamgaibaatar,

head of the parliamentary unit within the Democrats.

Source: Montsame

BANKS GRANTED 1,129 MORTGAGE LOANS IN LAST 10 DAYS

Banks have issued MNT15.9 billion mortgages in the 10 days following the re-launch of the program.

Parliament passed legislation to reboot the 8 percent government-subsidy mortgage program after

it came to a halt in December because a judge had ruled it was in violation of lending laws. Six of

Mongolia's 11 banks have resumed lending, where there were enough funds for a total of MNT68.5

billion to 1,129 borrowers.

Source: Mongolia.GoGo.mn

MONGOLIA TO BUY PETROLEUM ON CREDIT FROM RUSSIA WHILE IN FINANCIAL PINCH

Mongolia will buy petroleum products from Russia on credit following less-than-expected

government income that resulted from slowed economic growth. “Because Mongolia received little

money from taxes in the first quarter, there is a shortage of U.S. dollars, said Prime Minister

Chimed Saikhanbileg.

Source: Undesnii Shuudan

OIL PROCESSING PLANT PLANNED FOR KHENTII

Industry Minister D. Erdenebat has receives orders from the Cabinet on 1 February to execute the

preliminary work for building an oil processing plant and piping system at Bor-Undur Soum, Khentii

Aimag. He'll be responsible for developing a tender to select an investors’ consortium that includes

at least one domestic company and negotiating a concessionary contract.

According to the preliminary feasibility study, Khentii’s Bor-Undur was identified as the best

location ahead of Choir, Sainshand and Choibalsan because of the surrounding infrastructure,

logistics receiving for crude oil, and proximity to the market. Development has been estimated to

take 4 years.

Source: Montsame

MONGOL BANK SAYS INTEREST RATES SHOULD BE 10% FOR AGRO PRODUCERS

The president of the Bank of Mongolia has encouraged commercial banks to lower their interest

rates to 10 percent for lending to agriculture producers in light of last year's lowest recorded

inflation since 2006. Last year's third quarter clocked in 2.5 percent economic growth said central

bank President Naidansuren Zoljargal. Khan Bank and Turiin Bank LLC (State Bank) lent a total

MNT240 billion at a rate of 2.5 percent a month, or 30 percent a year.

A third of inflation between 2010 and 2012 was an upward trend in meat prices, said Zoljargal. A

resolution to supply issues, such as the meat fund, from 2013 to 2015 helped assuage those

inflationary pressures, he said. The depreciation of the tugrug hasn't contributed much to inflation

since August 2014, he added, while imports fell.

Source: Montsame

UNDP LAUNCHED CARBON-OFFSET INITIATIVE

Mongolia has launched a carbon-offset program to prevent the pace of climate change that provides

financial incentives for maintaining forests. Mongolia can play a significant role in climate change

mitigation through the sustainable management of its forests and restoration of degraded forests,

said the U.N. resident coordinator and U.N. development program resident representative Beate

Trankmann, during her opening remarks for the launch of the program on 26 January. The Reducing

Emissions from Deforestation and Forest Degradation (REDD) program is designed to find strategies

for making countries forests a part of the economy. “It would be easy to believe that our forests

have only little value. The reality is very different,” said Trankmann. “Selected services of the

Mongolian forests are worth more than MNT 430 billion per year to the national economy.”

Mongolia ranks among the top-8 most-threatened countries from climate change, with average

temperature increasing more than 2 degrees Centigrade over the last 70 years.

Source: Montsame

GOVERNMENT PROMISES MNT30 BN FINANCING FOR HEALTH CARE PRODUCTS

Prime Minister Chimed Saikhanbileg has promised to deliver MNT30 billion to support the growth of

production of health care products. “Making medicine and medical products independent from

foreign countries is one of the main objectives of the government of Mongolia and companies and

entities which run operations in the health sector,” said Prime Minister Chimed Saikhanbileg during

his weekly address to media.

Saikhanbileg said the government would ensure that at least 50 percent of products used for health

care would be produced domestically through government financing. Today, only 17 percent of the

medicine and equipment used for medical aid is produced at home.

Source: UB Post

EMERGENCY AUTHORITIES PLAN FOR DISASTER RESPONSE

State emergency officials are making moves to mitigate the effects of disastrous weather conditions

this winter. About 80 percent of Mongolia is covered by snow, while 18 of Mongolia's 21 provinces

are suffering from severe cold temperatures and enough snowfall to result in a natural disaster

called a dzud. A dzud is the death of thousands of herders' animals because of harsh winter

conditions.

The Cabinet has ordered the delivery of about 6,500 tons of hay as free aid, in addition to more

than 2,600 tons of fodder sold at a half-price discount, said State Emergency Commission Secretary

N. Enkh-Amgalan.

Source: Montsame

MONGOLIAN DELEGATION LAUNCHES PROJECT TO COMBAT GENDER-BASED VIOLENCE

Fifteen Mongolians traveled to Alaska from 18 to 28 January to participate in the first phase of the

U.S. government-funded “Combatting Gender-Based Violence in Mongolia” project. During the 11-

day visit, representatives of the National Center Against Violence, the General Agency for Social

Welfare, the National Police Agency, the Trauma Hospital’s One-Stop Crisis Center, domestic

violence shelters, and related civil society organizations learned about effective strategies and best

practices to prevent and respond to domestic violence.

The project seeks to build the capacity of the Mongolian government and NGO partners working

with victims of domestic violence through exposure to domestic violence shelter management

techniques and domestic violence response and prevention strategies. The Mongolian delegation

visited three cities in Alaska and met with representatives of the NGO Abused Women’s Aid in

Crisis, the prosecutor’s office, the local police department in Anchorage, and other groups.

Source: U.S. Embassy

PM ATTENDS RENOVATIONS CEREMONY AT UB CENTRAL RAILWAY STATION

Prime Minister Chimed Saikhanbileg addressed a crowd at Ulaanbaatar's central railway station to

celebrate the renovations completed there. Up to MNT245 million has been spent since last August

on expanding the main lobby areas as well as build a business conference hall, a fine-arts gallery,

and shops including a currency exchange booth. Saikhanbileg said the work was part of Mongolia's

preparation for the Asia-Europe Meeting Summit to be held this July in Ulaanbaatar.

In order to ensure a convenience for passengers, main lobby areas at the central railway station

have been expanded.

Source: Montsame

DESPITE COMMODITIES BOOM YEARS, MONGOLIA STILL FACES CAPACITY GAP

As a commodities-exporting country deeply linked to the Chinese market, Mongolia faces

heightened risks from the current commodities slump and China’s economic slowdown.

“Commodities, and their prices, remain a critical valve for the Mongolian economy,” said Jonathan

Berkshire Miller, director of the Council on International Policy. The fall in commodity prices

exacerbates issues already hurting the steep fall in foreign investment entering the country, he

said.

“During its boom years, Mongolia did take significant efforts to develop its infrastructure, especially

in the 'key need' areas such as energy, water, transportation and telecommunications. The problem

is that the need and capacity gap is so large that these efforts, spearheaded by both the private

and public sectors, remain insufficient. Infrastructure capacity remains poor in Mongolia, and while

there have been improvements, universal access to water and especially electricity remains a

distant goal.”

This article is part of an ongoing WPR series on the impact of falling oil and commodities prices on

resource-exporting countries.

Source: World Politics Review

POLITICS

PM SURVIVES NO-CONFIDENCE VOTE OVER ECONOMIC POLICIES

Mongolian Prime Minister Saikhanbileg Chimed has survived a no-confidence vote over his handling

of the economy, setting him up to rule through summer elections. Forty-two lawmakers in the 76-

seat Parliament voted in support of Saikhanbileg, with 31 against. A five-hour debate concluded in

the early hours of Friday. A group of 19 MPs had filed a petition alleging that Saikhanbileg’s May

authorization of Rio Tinto Group’s development of the Oyu Tolgoi copper mine constituted an abuse

of power, offering little benefit to Mongolian citizens, delaying dividends and increasing the state’s

debt burden.

Saikhanbileg and his Democratic Party has five months to turn around the sluggish economy before

voters return to the polls. The vote results are a “major boost for political stability until 2016

elections, de-risking Mongolia in this sense,’’ Dale Choi, founder of Mongolian Metals & Mining, said

in an e-mailed statement.

Source: Bloomberg

PARLIAMENTARY ELECTION WILL TAKE PLACE ON 29 JUNE

Mongolia's parliamentary elections are slated for 29 June, according to an amendment to the

Elections Law and Ulaanbaatar's Citizens Khural passed on 29 January. A majority of lawmakers in

Parliament voted in favor of the law, which schedules the elections for the last Wednesday of June.

Mongolians living abroad are able to cast their ballots with their embassies from 17 to 19 June.

The amendment also sets the period when politicians may campaign to 11 June. The government

has budgeted MNT16.5 billion for campaigning in this year's elections, with details on spending

expected by May.

Source: Montsame, Mongolia.GoGo.mn

LEGISLATION LEGALIZES PORTS FOR TRADE

Parliament has paved the way for international transportation networks such as the “Silk Road”

project creating routes between China and Europe that Mongolia plans to build a highway to

facilitate with an intergovernmental agreement that's been ratified. A standing committee in

Parliament ratified the agreement on 2 February, which will allow for ports of trade and to move

goods between countries. “This can augment transit transportation and movement capability and

also facilitate the transportation and trade,” said a standing committee member.

Ports can be set up at already-existing border checkpoints, including Altanbulag, Sainshand,

Ulaanbaatar, Zamyn-Uud and Choibalsan.

Source: Montsame

PARLIAMENT ADOPTS LAW ON LAND FOR FARMING

Parliament passed a bill on 29 January that provides farming companies buying up land for crops

some protections. A majority of Parliament voted in favor of the law, which makes sellers

responsible for maintaining soil quality prior to any sales. Previous land owners are also responsible

for striking deals with herders that might traditionally pass through the land throughout the year.

Source: Montsame

REDUCING AIR POLLUTION IN GER AREAS MUST BE A PRIORITY, SAYS SUB-COMMITTEE

A sub-committee in Parliament has ordered the Cabinet Secretariat to take more direct action on

reducing air pollution in Ulaanbaatar as soon as possible to prevent long-term health impacts on

children. MP Ts. Oyungerel, who leads the sub-committee on Reducing Air Pollution, asked for a 5-

year plan to make Ulaanbaatar's ger districts coal free for heating. It also directed them to see the

ger districts as “an integrated part of a permanently sedentary Ulaanbaatar city.”

Source: Montsame

MP RECOMMENDS PROTECTIONS FOR GOBI MOUNTAINS

Parliament's environmental working led by MP L. Erdenchimeg has called for the Tost and

Tosonbumba mountains in Umnugobi Aimag to be put under state protection. The working group

said local bodies should be responsible for protecting the land.

Former Environmental Minister Ts. Oyungerel said she had already prepared a bill that would set

aside the mountains as reserved land.

Source: Montsame

MINISTRIES ORDERED TO CUT COSTS

Cabinet Secretariat head S. Bayartsogt has put out a call to government managers to implement

cost-savings measures. The government last year introduced sweeping cost-cutting measures after

it failed to pull in expected income amid slowing growth in China and a fall in coal prices. “The

current expenses of all budgetary organizations—except for the institutions for education, health,

culture, sciences, emergency, police and court—have been cut by up to 10 percent, so the general

managers should adhere to the economizing regulation,” said Bayartsogt at a 29 January Cabinet

meeting.

Source: Montsame

DEMOCRATIC PARTY PROPOSES MERGER WITH COALITION PARTNERS

The Democratic Party has formally invited coalition partners, the Civil Will-Green Party (CW-GP)

and Mongolian National Democratic Party (MNDP), to join their fold. The Democrats would see the

number of sitting MPs in Parliament grow ahead of July elections, but could further complicate

relations in a party already rife with factions and independent agendas. The parties said they would

consult party members through their executive councils as well as members of the upper and lower

legislative parties.

CW-GP has already rejected a similar proposal to join forces from the Justice Coalition, which

includes the MNDP as well as Mongolian People's Revolutionary Party (MPRP).

Source: Montsame

AUSTRIA TO SEND HOME 125,000 MONGOLIAN IMMIGRANTS

Mongolia's 125,000 residents in Austria will return home after sweeping immigration reform has

ordered their deportation. Mongolian, Moroccan, Ghanaian, Algerian, Tunisian and Georgian citizens

must return home within the next three years, despite the fact that their home countries do not

suffer from political instability or violence. Mongolia has no means of recourse, said the Ministry of

Foreign Affairs.

Deported citizens will be given EUR500 each if they leave the country within 10 days of the

demand, or else face forcible deportation.

Source: Montsame

MPRP MEMBER EXPLAINS AWAY ALLEGED CORRUPTION AS CAMPAIGN FINANCING

Mongolian People's Revolutionary Party (MPRP) MP G. Shiilegdamba has written a letter to the public

explaining that his plans to hand over USD120,000 that landed him in prison was a donation to their

party, which the controversial figure leads. Shiilegdamba, who is former minister of health and

sports, was arrested last month by the Independent Authorities Against Corruption as he was about

to deliver USD50,000 to Mr. Enkhbayar, who is a former president and prime minister known to the

public as the “godfather of corruption.” The donation was meant for financing the party's political

campaign, said Shiilegdamba. According to the letter dated 28 January, Shiilegdamba said he had

agreed to give another USD120,000 to Enkhbayar that same day before his arrest.

Shiilegdamba also denied ever writing a letter from 15 November for his resignation, saying that he

only signed it at the request of Deputy Prime Minister Ts. Oyunbaatar.

Source: Undesnii Shuudan, News.mn

RAILWAY EMBEZZLEMENT SUSPECTS RELEASED ON BAIL

The head of Samsung C&T and a former government official believed by authorities to be involved

with corruption and embezzlement have been released on bail. Samsung Director Li John Gyol and

B. Batzaya, who was state secretary for road and transportation and board member for Mongolian

Railway (MTZ), allegedly embezzled USD6.4 million in funds meant to pay for construction of a

railway route between the Tavan Tolgoi coal fields and the Chinese border.

They were released after the two-month investigatory period had expired on 20 December. Batzaya

had been transferred to a hospital after getting sick during his incarceration.

Source: Unuudur

MTZ CONTRACTOR BELIEVED TO BE TIED TO CORRUPTION ATTEMPTS SECOND SUICIDE

Police are investigating an alleged suicide attempt by a figure police believe was a co-conspirator

for a USD 6.4 million embezzlement scandal from a railway construction project. An unspecified

amount of time has passed since Z. Baasandorj, director of KHNP Co., attempted to kill himself

after an investigation was opened into him for possible links to the scandal. He is on the hook for

MNT3.4 billion he borrowed for a job contracted out by Mongolian Railways (MTZ) that his company

never received payment for. B. Batzayaa, a former minister of road and transportation and board

member of state-owned MTZ, was arrested for the crime, as well as the head of the lead contractor

for the project, Samsung C&T.

In 2011, KHNP was hired by MTZ prepared 50 kilometers of ground work for the rail line's

construction, which runs between Dalanzadgad Soum, Umnugobi Aimag to Choibalsan Soum. The

suicide attempt is reportedly Baasandorj's second.

Source: Udriin Sonin

ILLEGAL BORDER CROSSINGS SPIKE ALONGSIDE MONGOLIA-RUSSIA BORDER

Border authorities at Selenge Aimag have seen a dramatic jump in the number of illegal attempts to

cross the border last year. The 18.7 percent increase in arrests while illegally trying to cross the

border comes after Altan Bulag was established as a special economic zone where Russians and

Mongolians could cross freely.

Three Russians last year in January were arrested after attempting to cross the border while

intoxicated. Groups of Russians have also been caught trying to smuggle drugs into Mongolia. A

popular form of contraband out of Mongolia have been birds of prey that can be sold on the black

market. Thirty-one Mongolian citizens attempted to cross at frontier access points to avoid

inspection by customs. The areas between Mongolia and Russia are rich in forests and difficult to

control, said the Border Troop 0243. They're also at greater risk of fires, such as those that spread

from Russia into Mongolia last summer.

Source: News.mn

ROAD MAINTENANCE WORKERS THREATEN TO GO ON STRIKE

Members of the Trade Union of Road Workers have gone on strike after going three months without

salary after the government cut its budget for maintenance by 55.5 percent to MNT8 billion for this

year. The 4,000 employees working for 52 companies are waiting for a total of MNT5.3 billion from

the government.

In a letter to Parliament, the union demanded that legislators raise the budget, arguing that they

could not maintain 160 kilometers of paved road as planned without the funds. The strike makes

good on the workers threat to do so if they did not hear back by 8 February.

Source: Zuunii Medee

476 DRIVERS LOSE POINTS FOR TRAFFIC VIOLATIONS

Police handed out violations taking away points from the licenses of 476 drivers on the day the new

regulations for driving in Ulaanbaatar rolled out. Drivers are allowed to have up to 10 points

removed to maintain their licenses, with up to five points lost in a single offense. On 1 February,

police removed a single point for minor offenses by 400 drivers. Two points were removed from the

licenses of 74 drivers and three points from 2 drivers.

Points can be deducted when receiving a ticket from police or when received by mail after cars

caught breaking traffic laws on cameras installed along roadsides.

Source: Mongolia.GoGo.mn

WEEKEND TRAFFIC RESTRICTIONS FOR TSAGAAN SAR

Ulaanbaatar has rolled out special driving regulations during Mongolia's three-day lunar New Year

holiday, Tsagaan Sar. The restrictions come in response to expected traffic congestion in

Ulaanbaatar in the week before the holiday season. From 10:00 to 20:00, drivers with license places

ending in even digits and zero will be permitted to drive on Saturday, while those with odd digits

will be permitted on the road for Sunday. The regulations first launched on 30 and 31 January.

Traffic restrictions will not apply on the actual days of the festival, from 9 to 11 February. Schools,

banks and state offices will resume normal operations on 12 February. Public transportation to

communities surrounding Ulaanbaatar will be provided from 9 to 11 February.

Source: UB Post, Mongolia.GoGo.mn

INS FOLLOWS UP ON FAILED MOTION TO DISMISS PM—REPORT

The Institute for National Strategy (INS) has published a follow-up report on a motion rejected by

Parliament on 28 January for the dismissal of Prime Minister Chimed Saikhanbileg. Written by

Cameron McRae, president of INS and executive director at Tarva Investment and Advisory LLC and

a recent addition to the Business Council of Mongolia's Executive Committee, under the INS banner

has analyzed Mongolia’s political, economic and investment arenas.

McRae served as the chief executive officer of the Oyu Tolgoi copper-gold mine from 2010 to 2013.

Read the full article here.

Source: Institute for National Strategy

WHY DID RUSSIA JUST WRITE OFF 97% OF MONGOLIAN DEBT?—EDITORIAL

Last Week, Russia passed a government-to-government agreement between Russia and Mongolia

that settled 97 percent of Mongolia’s outstanding debt of USD174.2 million. The debt forgiveness

has been a long time coming and has roots in the bilateral relationship between the two neighbors

dating back to the early 1990s.

Russia has addressed similar issues concerning outstanding debts with several Cold War-era client

states and partners, including Syria, Cuba, Iraq, North Korea, Libya, and Afghanistan. Notably,

Russia had agreed to the debt forgiveness arrangement with Mongolia at a time of higher global oil

prices and less pressure on its own budget. The debt write-off does open interesting opportunities

for Moscow as well. Mongolia is a major importer of refined petroleum, which comprises 22 percent

of its overall imports as of 2013.

Ankit Panda is an editor at The Diplomat. He writes on security, politics, economics, and culture.

Source: The Diplomat

ISIS, EXPLAINED BY A MANIACAL BUDDHIST WARLORD

As the debate over the true relationship between ISIS and Islamic tradition grinds on, historians of

20th-century Mongolia must be wondering about talks of Baron Roman Fedorovich von Ungern-

Sternberg. In the early 1920s, Ungern-Sternberg carved out a religiously inspired pseudo-state based

in Ulaanbaatar while terrorizing its inhabitants with sadistic public murders. His story is instructive

for anyone trying to understand what’s unique and what isn’t about the Islamic State.

Ungern-Sternberg envisioned “a great State” in which “the wise religion of the Buddha shall run to

the north and the west.” But the cruelty and capriciousness of the baron’s rule ultimately alienated

his followers, and his messianic worldview did not prove conducive to sound strategic thinking. It is

also worth recalling that it was the victory of Soviet forces and the establishment of the Soviet-

allied Mongolian People’s Republic in 1924 that finally brought an authoritarian form of stability to

the region.

Source: The Atlantic

WHY SKY BURIALS ARE VANISHING IN MONGOLIA—PODCAST

In an episode of Generation Anthropocene, student reporter Reade Levinson travels to Mongolia in

hopes of witnessing a practice known as sky burial, in which the bodies of the dead are prepared for

the afterlife. But as Reade learns on her journey, in Mongolia the forces of urbanization,

modernization and environmental change may be threatening this sacred ritual.

Source: Smithsonian.com

BCM UPDATES:

ANNOUNCEMENTS

1ST ANNUAL BCM SUMMIT, APRIL 21, BLUE SKY HOTEL

The Business Council of Mongolia (BCM) will host its first Annual Business Council of Mongolia

Summit on 21 April at Blue Sky Hotel and Tower in Ulaanbaatar. The forum will provide a venue for

a wide spectrum of informative, meaningful and innovative topics important to Mongolia's business

community. The focus will be on business strategies to cope with survival in the economic

downturn, innovative business trends and more.

BCM continues to maintain a strong membership base consisting of nearly 240 business

stakeholders—both national and international—including international financial institutions,

embassies and educational institutions. BCM has more than 350 volunteers leading its 8 working

groups and lending their wealth of experience in business and education.

Registration is MNT100,000 per head for members, compared with the regular fee of MNT120,000.

Save money with the early bird rate of MNT80,000 for members and MNT100,000 for non-members

by registering before 21 March. For more information, email Saruul at saruul@bcmongolia.org.

_________________________________________

MONGOLIA MINING FORUM, 8 MARCH, AT PDAC, TORONTO

Mongolia will promote the progress made in its mining and geology sectors in recent years on 8

March at PDAC, the world’s leading annual International Convention, Trade Show & Investors

Exchange for minerals exploration and mining scheduled on 6 to 9 March in Toronto.

The Mongolian delegation led by the Ministry of Mining and Mineral Resources Authority (MRA) will

consist of representatives of the ministry, major mining companies including Erdenes Mongol, MRA,

Invest Mongolia Agency, the Petroleum Authority, and more. A working group led by MRA will

provide Mongolian businesses the opportunity to promote their projects to investors and have one to

one meeting with potential investors during this world leading international mining investors’

conference.

For more information, call Tsetsegmaa, the senior manager at Invest Mongolia, at +976 88008161,

or email tsetsegmaa@investmongolia.com. You can also reach MRA External Affairs Officer Chinzorig

at +976 99000357 or cmunhuu@yahoo.com.

_________________________________________

MONGOLIA ECONOMIC FORUM 2016, 30-31 MARCH, GOVERNMENT PALACE

Over 1,000 guests are expected for the 2016 Mongolia Economic Forum to be held at the

Government Palace on 30-31 March.

This year's two-day event will be held under the theme “Lessons learned, Facing challenges and

Solutions pending,” where participants will seek to define the country’s current national and global

context, as well as outline alternatives for the promotion of future economic and social prosperity

in Mongolia.

BCM members will have 30 percent discount on registration. Register here, and send an email to

info@meforum.mn mentioning your BCM membership to receive your discount. For more

information email the same address or call 11 321051.

_________________________________________

MONGOLIA MINING 2016, 6-8 APRIL, BUYANT UKHAA SPORT COMPLEX

The 2016 Mongolia Mining International Mining & Oil Expo will be held for the 6th consecutive year

from 6 to 8 April 2016 at the Buyant Ukhaa Sports Palace in Ulaanbaatar. This year's expo will

feature traditional mining and emerging oil industries of Mongolia with exhibitors and visitors

representing the industry's major companies. Guest speakers from the government, universities, and

companies will lead seminars of the government policy for mineral resources and new laws focused

on mining and infrastructure in Mongolia.

For more information, contact Munkh-Erdene via email at munkh@minex.mn or call at 344488.

_________________________________________

7TH ANNUAL NATIONAL FORUM FOR RENEWABLE ENERGY, 6 APRIL, CORPORATE HOTEL AND

CONVENTION CENTER

The National Renewable Energy Forum, Mongolia's premier conference on the renewable energy

sector since 2008, will open on 6 April at the Hotel and Convention Center in Ulaanbaatar. At the

forum, speakers will review the initiatives and activities that address key issues for the renewable

energy sector.

Registration is MNT35,000, and there is no limit to the number of registrations. For more

information, email Myagmardorj at e.myagmardorj@gmail.com.

NEW MONGOLIAN LAWS

The following laws, amendments, annulments and addendum to laws were published in the latest

weekly Government bulletin. Unless otherwise decided by Parliament, they will take effect ten (10)

days after publication.

Date Laws

22.01.2016 Law on Election

Amendments to Law on Election automated system

Amendments to Law on Central election organization

Annulment of Law on Parliament election of Mongolia

Annulment of Law on Capital's civil representative council election

Annulment of Law on Aimag, sum, district civil representative council election

Annulment of Law on Presidential election of Mongolia

25.01.2016 Law on Mongolian Red Cross Society's legal status /revised version/

Annulment of Law on Mongolian Red Cross Society's legal status

Amendments to Law on Constitutional Court of Mongolia

Amendments to Law on Dispute settlement procedure at Constitutional Court

Amendments to Law on Parliament of Mongolia session order

Addendum to Civil law

Amendments to Law on Immovable property collateral

Please visit BCM's website, Legislative Working Group, for a summary of Mongolian laws. BCM

members who wish to access complete versions of the laws and regulations in Mongolian language

are welcome to email the BCM office.

KNOWLEDGE SHARING SESSIONS

"BCM KNOWLEDGE SHARING SESSION", 27 JANUARY, at SANTIS EDUCATIONAL SERVICES

The session was organized in partnership with our member Santis Educational Services on the topic

"Benchmarking standards for language acquisition in the workplace" with 12 members attending.

The session was led by Andrew Orgill, President of Inlingua Mongolia. Language Benchmarking is

how governments, organizations, and industries support the language acquisition of individuals in a

meaningful way. By using an approved objective English-speaking test as part of the screening

process organizations can greatly enhance their chances of commercial success. This test must be

reliable and have a global benchmark. Andrew discussed about these tests, which are now available

here in Mongolia, and why they have become an imperative in today’s marketplaces. During the

session, participants had an on-line connection with Inlingua head office in Switzerland to see their

virtual training facilities.

A BCM Knowledge Sharing Session was organized on 24 December at the Ulaanbaatar City Public

Library with 31 people from 19 member companies attending. The topic of this month's session was

“Implementation of System Certification Standards and its Benefits” facilitated by D.Otgonbat,

Director of Observe Consulting LLC. The topic covered System Certification standards, why they are

important for business and how to adopt and implement SC standards in Mongolia. The feedback

collected from attendees showed that 95% informed that their training needs were met; 60% said

their expected topics were fully covered; the remaining 40% informed their expected topics were

partially covered. 25% of participants proffered to extend the duration of the session. Otgonbat D is

a Certified Management Consultant and Lead Auditor for QMS (ISO9001), EMS (ISO14001), OHSMS

(OHSAS18001) and EnMS (ISO50001) certified by the Professional Evaluation and Certification Board.

Mr. Otgonbat also works as a national trainer for Sustainable Finance Initiative.

BCM ADVOCACY NOTES

Majority supports review of the “Long-Term Sustainable Development Mission of Mongolia” in

Parliament

On 13 January the State Structure’s Standing Committee was convened to discuss whether to submit

the draft resolution regarding the Long-Term Sustainable Development Mission of Mongolia 2016-

2030, initiated by ten members of Parliament namely B.Garamgaibaatar, S.Byambatsogt and

N.Battseregby and others, to the parliamentary session for review. At the Standing Committee’s

meeting, MP S.Byambatsogt, one of the initiators of the draft law, delivered a presentation on the

draft resolution. 66.7 percent of the members who participated in the meeting agreed to submit

the draft resolution for review at the parliamentary session. Review of the draft resolution is billed

as the 10th issue on today’s parliamentary session.

Source: www.parliament.mn

Parliamentary draft resolution of “Long-Term Sustainable Development Mission of Mongolia”

On 4 January the Chairman of the State Great Khural (Parliament) Mr. Zandaakhuu Enkhbold was

presented a parliamentary draft resolution regarding the Long-Term Sustainable Development

Mission of Mongolia 2016-2030. The presenters were the Chairman of the State Structure’s Standing

Committee MP A. Bakei, Vice-Chair of the Democratic Party Caucus MP S. Odontuya, Chair of the

“Justice Coalition” at the Parliament MP N. Battsereg, and MP S. Demberel. To view the draft

resolution in Mongolian language, please click here.

Draft Labor Law (Draft Law) is returned to the Government

The Draft Labor Law (Draft Law) was returned to the Government by the Parliament. No further

meeting was convened by the Draft Law working group and the draft law is on hold. The Draft Law

working group is not intending to re-submit the Draft Law to the Parliament in the near future.

On 10 December in the plenary session of the Parliament it was decided to return the Draft Labor

Law (Draft Law) to the Government based on multiple conceptual and editorial comments provided

by a wide range of stakeholders. Furthermore, the working group is aiming to submit the amended

Draft Law to the spring session of Parliament, which will be held around April 2016.

The Economic Council, established by the decree of the Prime Minister Ch. Saikhanbileg in 2015, is

currently working on the draft Law on Arbitration. BCM’s Legislative Working Group reviewed the

draft law and provided key comments. In its scheduled meeting on Friday, December 11, the

Economic Council was positive toward BCM's comments.

For more information, please contact Working Group Coordinator at khulangoo@bcmongolia.org.

BCM WORKING GROUP NEWS

Capital Markets Working Group

BCM’s Capital Markets Working Group’s meeting was held on Friday, 22 January at Suite 101, 12th

floor Express Tower, with 12 members in attendance, representing BDSec, ING Bank Mongolia, Khan

Bank, Golomt Bank, Oyu Tolgoi, Ernst & Young Mongolia Audit, Mahoney Liotta, Asian Real Estate

Capital Ltd and Mongolian Bankers’ Association.

Purpose of the meeting was to introduce the new meeting format, soft ideas on core themes

proposed by Co-Chairs, including ideas from members and brainstorm on Capital Markets WG

(CMWG) mission and objectives. It was agreed in the meeting on a common theme of ‘working

towards increased foreign investment in Mongolia’. It was suggested by members to include more

emerging players in the capital markets such as the insurance industry and most importantly engage

other stakeholders from government entities with the Working Group. Updates were given on the

developments of ‘custodian banking’ and how the WG can leverage their efforts towards sound

regulations for custodian banks.

On the next scheduled Capital Markets Working Group meeting, Dorjpalam Kh, Office of the

Treasury, Oyu Tolgoi will deliver a presentation on project financing.

For more information about this meeting, please contact Khulangoo Purevjav, Working Group

Coordinator of BCM at khulangoo@bcmongolia.org.

_________________________________________

Risk Working Group

BCM’s Risk Working Group’s 2016 kick-off meeting was held on Thursday, 21 January at Suite 101,

12th floor Express Tower, with 14 members in attendance, representing Mandal General Insurance,

MIG Insurance, Deloitte Onch Audit, XacBank, Wagner Asia, Iarudi, Golomt Bank and Bagatumurch

LLC.

Agenda of the meeting:

•16:00-16:10 Introduction and Opening remarks by Working Group Co-Chairs

•16:10-16:50 "Case studies on tax related cases tried at the Supreme Court of Mongolia"

(Bolorchimeg Kh, Lawyer ELC LLP)

•16:50-17:35 Discussion on proposed topics and finalize plan for 2016

Guest speaker, Bolorchimeg of ELC LLP, emphasized that the presentation is illustrative only and it

does not go into details or the legal implications. The presentation focused on: (i) Tax cases

resolved by the Supreme Court - last 3 years, (ii) Tax Dispute Resolution Process and (iii) Case Study

of Tuushin LLC vs Tax Inspectors of General Tax Authority. Members in attendance were interested

in the tax inspectors’ inspection process and what it entails, and in the statistics of the tax related

cases resolved by the Supreme Court.

Zaya Bolorbold, co-chair of the Risk WG (RWG) presented an overview of the last year’s activities

and introduced proposed plans for 2016. Working group members have supported the draft plan for

2016, with some members volunteering as main speakers from Deloitte Onch Audit, Bagatumurch

LLC. Given the current weather condition in Mongolia, it was decided that BCM to reach-out to the

NEMA and/or State Emergency Commission to request a presentation on the 'dzud* situation; it was

also agreed that the presentation can be complimented with Risk Working Group members’

presentation on how the impacts of the dzud will be translated into insurance claim. Next meeting

is scheduled for 3rd week of February.

For more information about this meeting, please contact Khulangoo Purevjav, Working Group

Coordinator of BCM at khulangoo@bcmongolia.org.

_________________________________________

Business Ethics Working Group

BCM’s newest and eighth Working Group, Business Ethic’s meeting was held on 18 January at the UN

House from 16:00 to 17:30 with 15 members in attendance.

Private sector: Atlas Copco, Mandal General Insurance; Government: Independent Agency against

Corruption (IAAC)

Other stakeholders: U.S. Embassy, UNICEF, Transparency International, World Vision, Extractive

Industry, Transparency International, Research Planning Institute;

Agenda of the meeting:

- Introduction of Working Group’s objectives

- Featured guest speaker: Anders Berglund, “The Business Code of Practice at Atlas Copco Group”

- Proposed topics and plan for 2016

The formation meeting focused on identifying collective objectives for the group and finalizing

topics for 2016. At the meeting, members volunteered to speak and some have proposed specific

deliverables as milestones as a group achievement for the year. It was decided to meet once every

two months and attract more local companies to hear their challenges in maintaining their integrity

in their respective sector.

For more information about this event, please contact Khulangoo Purevjav, Working Group

Coordinator of BCM at khulangoo@bcmongolia.org.

_________________________________________

BCM’s Logistics Working Group

BCM’s Logistics Working Group (LoWG) met on Tuesday, 8 December at MonEx office, 6F Vista Office

Building with 7 people in attendance representing Mongolian Express Co., Ltd. (known as Monex),

Representative Office of Mitsui & Co., Ltd. in Ulaanbaatar, Khaan Shorgoolj LLC and KGB TEGBE-

Dolgoon Delgerekh LLC.

Agenda of the meeting:

• Featured guest speaker: Bayarbat – “From Hand to Hand; Challenges Faced”

• Discuss and plan WG’s 2016 activities

Upon introducing new members, Enkhbat D.-Logistics WG Chair, invited the featured speaker, Mr.

Bayarbat, to deliver a presentation about KGB TEGBE-delivery services. Other than introducing the

company, Bayarbat’s presentation touched on wider aspects such as the culture of delivery service

in Mongolia at large, challenges his new up-and-coming company is facing and possible solutions in

the delivery logistics within Ulaanbaatar.

Meeting participants were interested in the expansion plans of the company, such as delivery

services within Mongolia, cargo service between USA and Mongolia, to which Bayarbat gave

comprehensive answers about the company’s plan for establishing cargo service between South

Korea and Mongolia initially and delving into other markets.

Enkhbat D., Chair of the Logistics WG (LoWG), presented his plan for reviving WG activities in 2016.

He again encouraged our members to read through the soft ideas laid out and provide comments.

Since logistics fosters many elements, it was decided to focus on a certain theme for each meeting,

so that members interested or operating in that topic area can actively participate and bring in

more insight.

The meeting was concluded with an action item for the BCM WG Coordinator to follow-up the

questionnaire and request customers to provide comments on the 2016 plan by COB 28 December.

For more information about this meeting, please contact Khulangoo Purevjav, Working Group

Coordinator of BCM, at khulangoo@bcmongolia.org.

_________________________________________

BCM’s Energy and Environment Working Group

BCM's Energy and Environment WG meeting was held on 3 December, 2015 at EEIBC from 16:30-

18:30. The meeting was attended by 16 people with the following stakeholders:

Private sector: Newcom, Sopocco LLC, Areva Mongol LLC, Observe Consulting LLC, MCS Energy

Government: Ministry of Environment, Green Development and Tourism, Energy Development

Center of Ministry of Energy

Others: GGGI, WCS, French Embassy, Embassy of Canada

Guests: Sustainable Fiber Alliance

New members: D. Otgonbat, Observe Consulting LLC and Ch. Sarnai, Clean Energy Asia of Newcom

Group

Agenda of the meeting:

Discussion Topic: What's happening in Paris during Climate change events: What are the implications

for private sector?

Introduction and Opening remarks by Working Group Chair

"Introduction about Climate Change Conference/21 and Mongolia's commitment status" by D.Saruul,

Project Manager, Biennal Update Report to UNFCCC.

"Introduction about French Embassy and Overview about COP21 in Paris" by Raphael Droszewski,

First Advisor, Chief Adjoint de mission et Consul, The Embassy of France in Mongolia

Discussion on the topic among participants

Meeting minutes summary:

Bulganmurun Tsevegjav, Senior Program Officer of GGGI-Mongolia and Chair of the BCM’s Energy &

Environment WG (EEWG), introduced Jon Lyons, GGGI’s Country Representative to Mongolia, as an

upcoming Chair of the EEWG for 2016 during her absence.

Key points agreed during the meeting was to organize the next meeting in Jan or Feb 2016 following

up on the COP21 outcomes, updates on financial mechanisms, available funds and incentives for

private sector to develop low-carbon projects and to discuss its implications for the private sector.

For more information, please contact Bayarmaa Amarjargal, Vice Director at

bayarmaa@bcmongolia.org.

_________________________________________

BCM Education Working Group

BCM’s Education Working Group was held on 26 November 2015 at Executive Excellence

International Business Center, 10F Galaxy Tower from16:00 to 18:00. Fifteen people attended the

event representing foreign mission in Mongolia, private sector, universities and consultants of donor

funded projects:

Foreign Mission: Canadian Embassy;

Universities: National University of Mongolia, Mongolian University of Science and Technology

Private sector: PwC, Minter Ellison

Donor organizations: Save the Children, Support to Mongolia’s Technical and Vocational Education

and Training Sector-EU, Cooperative Vocational Training in the Mineral Resource Sector-GIZ, The

Global Fund;

Agenda of the meeting:

16:05-16.10 Introductions

16:10-16:25 Update on Higher Education Reform Project activities (IRIM/Saha)

16:25-16.40 Update on Vocational and Technical Education Activities (VETP/Pascal)

16:40-17:10 Update on Labor Law Amendments, TVET Law Amendments: Higher Education

Amendments (IRIM/Saha)

17:10-17:30 Updates by members (FLP, Mandal)

Meeting minutes summary:

Opening remarks by Education Working Group Chair-Saha Meyanathan with passing of the

information about being selected as the best Working Group of the year 2015.

Status update by Manlaibaatar Z., Deputy Director of IRIM on the pilot project results of the ADB

funded Higher Education Reform Project (HERP). The dissemination workshop for the Universities

will be organized first week of December.

During the Q&A session, Professor Purevdorj of MUST highly emphasized on the importance of

building the capacity of the professors, as they are the ultimate knowledge givers to the students.

The WG members were given a matrix developed by Dr. Saha, on three draft laws: TVET, Higher

education and Labor law. During a Q&A session, participants made remarks related to the Matrix, to

highlight a few:

For more information about this event, please contact Khulangoo Purevjav, Working Group

Coordinator of BCM at khulangoo@bcmongolia.org.

‘BCM in the University Classroom’ series

Guest Speaker: Jon M. L. Lyons, Country Representative, GGGI,

Presentation topic: "Pathways to Greening Economic Growth in Mongolia and beyond"

Where & When: at the University of Humanities on 24 November 2015 and at the Institute of

Finance and Economics on 3 December 2015.

Jon M. L. Lyons, Country Representative, GGGI, gave presentations entitled "Pathways to Greening

Economic Growth in Mongolia and beyond" at the University of Humanities (UoH) on 24 November

2015 and at the Institute of Finance and Economics (IFE) on 3 December 2015. Over 80 senior

students attended the lecture at the UoH and over 70 students at the IFE.

Mr. Lyons, fluent in Mongolian, delivered his presentations in Mongolian. The presentations were

followed by question and answer sessions. While students at the UoH were curious about his recent

project on model green public kindergarten to be built in Songinokhairkhan district of Ulaanbaatar,

students at IFE were asking questions about the size of projects eligible for green finance,

monitoring and reporting requirements for donor-funded projects and vacancy at GGGI or possibility

of doing an internship there.

For more information, please contact Khulangoo, Working Group Coordinator at

khulangoo@bcmongolia.org and Bayarmaa Amarjargal, Vice Director at bayarmaa@bcmongolia.org.

WEBSITE UPDATES: PRESENTATIONS, MONGOLIA REPORTS, INTERVIEWS

Presentations:

BCM Monthly Meeting, 25 January:

- Sodontogos Erdenetsogt , Chief/National Coordinator of National Secretariat for Development of

the Second Compact agreement between Government of Mongolia and the USA Millennium

Challenge Corporation -

“Development process of the second compact agreement between government of Mongolia and USA

Millennium Challenge Corporation”

- Gantugs D, CEO, Mongolian Mortgage Corporation - “MIK Holding IPO and RMBS Issuance”

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BCM Monthly meeting on December 7:

- Mergen Chuluun, Managing Director, Nomadic Expeditions - “YPO Mongolia: Building Better

Leaders Through Education & Idea Exchange”

- Meloney C Lindberg, Country Representative, The Asia Foundation and L. Sumati, Director, Sant

Maral Foundation - “Introduction and Key Findings of Private Sector Corruption Perception Survey –

STOPP”

- S. Galbadrakh, Specialist at Prevention and Education Department, Independent Authority Against

Corruption (IAAC) of Mongolia - “Introduction of IAAC”

- Terrence Edwards, Editor-in-Chief, BCM NewsWire - “Overview of the BCM NewsWire”

_________________________________________

Mongolia Projects & Investment Summit Hong Kong, 16-17 November:

- Zoljargal Naidansuren, Governor, Bank of Mongolia, “The new equilibrium: reforms to sustainable

growth and savings"

- Narantuya Zagdkhuu, Chair, Financial Regulatory Commission of Mongolia, "Making Mongolia a

frontier again: financial market developments"

- Norihiko Kato, CEO, Khan Bank, "Where does the banking sector fit it?"

- Munkhsukh Sukhbaatar, Rio Tinto, "The way forward for Oyu Tolgoi underground"

- Bat-Uul Erdene, Mayor of Ulaanbaatar city, "City of Ulaanbaatar-2030"

- Matthieu Le Blan, EBRD Head office in Mongolia, "The importance of economic diversification and

import replacement opportunities EBRD's role in enabling progress"

- Tuvshintugs Batdelger, Economic Research Institute, "Transaction Cost of Conducting Business in

Mongolia: SME perspective"

- Oliver Thirlwall, Asian Real Estate Capital, "Distressed opportunities-banking and real estate"

- Kevin Trzcinski, Vice President Corporate Development at Worldwide Power & Technology (HK)

Ltd., "Mongolia as a destination for Scientific Research & Development"

- Randolph Koppa, President, Trade and Development Bank, "Challenges and Opportunities for

Growth"

_________________________________________

Mongolian Annual Risk Management Forum, 11 November:

- “A Practical Case Of Implementing A Risk Management Strategy In Corporate Governance” -

Garrett Wilson Director, Risk Management, Compliance & Outsourced Services Wagner Asia Group

- “Public Buildings And Disaster Risk Management” - Sam Sallam, President, Best Western

International Mongolia

- "Organization Psychological Management" - Delgermend.Ts, Organizational Psychologist,

NPC&Mandal LLC

- "New macroeconomic balance A shift from consumption to saving" - Munkhbayar Tedevsuren, Head

Of The Coordination And Analytic Unit Under Financial Stability Council Advisor To The Governor

- "Macro-Economic Outlook 2016" - Ankhbayar Chuluunbat, Senior economist, Mandal General

Insurance

- "Global Perspective On Risk Management During Economic Slowdown" - Matthew Pottle, PwC

Mongolia

- "Corporate Crises Management" - G.Odbayar, Mining National Operator

_________________________________________

BCM Monthly Meeting on 2 November:

- Andrew Woodley, CEO, Oyu Tolgoi LLC -“Oyu Tolgoi: Delivering globally competitive copper

business”

- Susan Cote-Freeman, Program Manager Private Sector Team, Transparency International -

“Introduction to Transparency International’s Business Principles for Countering Bribery”

- Elisabeth Ellis, Partner, Minter Ellison LLP - “Impact on your business of the proposed new Labor

Law”

_________________________________________

BCM’s “Knowledge Sharing” event at EEIBC on October 9

- Dr. Nigel Finch, Managing Director, Saki Partners, “Strategically Managing Mongolia’s Sovereign

Credit and Perception Ratings”

_________________________________________

Presentations at BCM Monthly Meeting on 28 September:

- Mend-Orshikh, Founder & President, New Media Group, “Sales and business opportunities using

BCM online platform”

- Steve Potter, Executive Director, Wagner Asia Group, “Corporate Ownership vs. Corporate

Responsibility: How a foreign owned company can contribute to the well-being of Mongolia. Case

Study: WAGNER ASIA Group”

- Cameron McRae, Chief Executive Officer of Tarva Investment and former CEO of OT LLC,

“Competitiveness in Central Asia”

- Saha Meyanathan, CEO, EEIBC and Chairman of BCM Education Working Group, “BCM and

Mongolia's Education & Capabilities Agenda”

_________________________________________

Presentation at Discover Mongolia 2015 on 3 September:

- S. Javkhlanbaatar, General Director, Invest Mongolia Agency, “Opportunity to invest in the mining

industry”

_________________________________________

Presentations at BCM Monthly Meeting on 24 August:

- Jennifer Bielman, Country Director, Mercy Corps Mongolia, "Mercy Corps in Mongolia - 15 Years of

Progress"

- Lee Cashell, CEO, APIP, “Overview of the Property Development Market”

- Anthony Woolley, Senior Associate, Hogan Lovells, “Legislative Update - 2015”

_________________________________________

Mongolia Reports:

- IMF, “World Economic Outlook, October 2015: Adjusting to Lower Commodity Prices”

- ADB, Financial Systems of Financially Less Developed Asian Economies: Key Features and Reform

Priorities (Sep 2015)

- Hogan Lovells, "Legislative update: 2015 Spring session of the Parliament of Mongolia"

- Oyu Tolgoi, "Scorecard July 2015 - Monitoring Our Performance"

- Sant Maral Foundation, "Survey on Perceptions and Knowledge of Corruption"

- Jim Dwyer, Executive Director, BCM, Rumsfeld Foundation’s, CAMCA Regional Forum, UB, June 20,

2015, “FDI Environment in Mongolia”

- Hogan Lovells, “Law on State Registration of Legal Entities”

_________________________________________

Interviews:

- Mongolian Economy Magazine, November 2015 issue - "In Order to Make the Labor Law More

Effective"

- Mongolia President Ts. Elbegdorj: Charlie Rose Show (PBS/Bloomberg TV-New York)

- BCM Monthly Meeting news coverage on Bloomberg TV, August 24, 2015;

- Jim Dwyer, Executive Director, BCM, Interview re BCM Business Growth Index, on Star TV News,

August 20, 2015;

- Jim Dwyer, Executive Director, BCM, Interview re BCM Business Growth Index, on Bloomberg TV

News, August 20, 2015;

- B.Byambasaikhan, CEO, Erdenes Mongol and Chairman, Business Council of Mongolia, INS interview

SOCIAL NETWORKS

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 BCM 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 11,127 fans on our Facebook fans page, 1,966 connections on

LinkedIn network, and 1,956 followers on Twitter.

_________________________________________

Website: According to Google Analytics report as of 26 January, the daily web traffic to BCM

website was 50 visitors with 70 sessions. 80% were from Mongolia, 5% from the USA and 3% from

Canada.

_________________________________________

BCM’s column in the Mongolian Economy Magazine began in Edition 12, May 2015. The first column

featured an interview with Mr. I. Ser-Od: "Times like these demand that we be more creative and

proactive." The second column was published in Edition 15, July 2015: “Entrepreneurs Set Up Study

Tours of Businesses.” The third column was in the edition, September 2015: "Wagner Asia

Technology Innovations."

_________________________________________

The BCM NewsWire is used as source for the "MM Today" News program in English aired by Mongolia

National Broadcasting (MNB) on Fridays at 19:00.

_________________________________________

BCM now has a profile page at VIP76, one of the major online information networks in Mongolia.

From January 2013 to February 2016 we posted a total of 109 news items related to BCM activities,

economic and business related updates.

_________________________________________

The "Photo Gallery" in Knowledge Hub section of the new BCM website has the most recent photos

from BCM events.

As a BCM member you can now visit the official BCM website at http://bcmongolia.org to enjoy

newly introduced interactive features such as: edit your organization's profile information; post

vacancy notices from your organization; post cooperation proposals with other members or deals

you would like to offer to other BCM members; and start a forum and ask questions directly on the

web platform. Of course you can also visit our website for news information, interviews, event

photos, videos and announcements regarding BCM.

ECONOMIC INDICATORS

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]

Year 2014 *11.0% [source: NSOM]

December 31, 2015 *1.9% [source: NSOM]

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

Note: 1.1% y-o-y; 4.8% Core, Ulaanbaatar City, December 31, 2015

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}

January 14, 2015 13.00% {source: Mongol Bank}

January 14, 2016 12.00% [source: Mongol Bank]

CURRENCY RATES – February 4, 2016

Currency

US dollar USD 2,017.42

Euro EUR 2,235.50

Japanese yen JPY 17.11

British pound GBP 2,939.08

Hong Kong dollar HKD 259.03

Chinese Yuan CNY 306.69

Russian Ruble RUB 26.36

South Korean won KRW 1.68