BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 337 – August 8, 2014

NEWS HIGHLIGHTS:

Business

Khan Bank receives $8mn EBRD loan towards MSME business financing;

Golomt signs cooperation agreements with Hungarian Ex-Im, Minsheng Bank;

Golomt installs Finacle core banking system;

Truck Retread launches heavy-duty tire repairs;

MSE negotiates for use of Bloomberg's terminal for securities trades;

Nomadic Fashion Show to be held in Tsonjin Boldog resort complex;

MSE initiates legal actions against 196 delinquent companies;

EBRD helps finance top-class cement plant in Mongolia;

Major jurisdiction victory for Mongolian National Railway Company;

HBOil posts H1 revenue 210% higher than full-year 2013;

MSE launches custodian and securities services training;

LSE, MSE will host Capital Market Day in London;

Wolf Petroleum chairman sees new path with Petroleum Law;

Sam Walsh steers Rio Tinto to recovery;

Contenders for Rio Tinto’s chief executive role;

Standard Chartered expects to pay penalty.

Economy

Mongol Bank: FX auction, swap agreements, 1-and 4-week bills, treasury notes;

Mongolia H1 foreign investment dips 70% on uncertainties;

Mongolia raises rates amid debt pressure;

Mongol Bank says it strengthens monetary policy with hike in interest rate;

MNT 20.4 billion collected for Stabilization Fund;

Mongol Bank to release monthly foreign currency reserve reports;

Amgalan power station completion date pushed to October;

Cabinet approves MNT 1.9bn for 10.6 km of road;

Troubles for the Khatan Tuul River;

Cabinet orders construction of grain silos nationwide;

Ulaanbaatar transitions to digital TV;

Inspectors fail UB roller coaster for faulty brakes;

Dentists suggest Mongolians cut sugar intake;

Scenes from Mongolia’s changing steppe;

World's toughest horse race retraces Chinggis Khaan's postal route;

Australian businesses are searching for Asian partners;

China may invest more than CNY 250bn (USD 40 bn) in Inner Mongolia-China rail.

Politics

Belarus Embassy opens in UB;

SCO to admit Mongolia as a new member;

Putin to arrive in Mongolia in September;

Japanese delegation visits Mongolia’s Olympic headquarters;

Premier meets Chinese children from flood-hit province;

Premier's senior advisor arrested by anti-corruption agency;

Threats to government stability on the rise—putting premier's job on the line;

Police, nationalists squash Chinese protest;

Tony Blair using his connections to change the world, profitably.

Others

Announcements;

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

ECONOMIC INDICATORS

Weekly Market Indicators;

Monthly Macroeconomic Overview – June 2014;

Supermarket Price Comparison – August 2014;

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

BUSINESS

KHAN BANK RECEIVES $8MN EBRD LOAN TOWARDS MSME BUSINESS FINANCING

The European Bank for Reconstruction and Development (EBRD) announced on 31 July that it has

provided an USD 8 million loan to Khan Bank LLC to improve financing for micro, small and medium-

sized enterprises (MSME).

The loan is the third tranche under a USD 25 million framework created to allow the suppliers and

distributors of MSMEs with ties to big corporations to receive more competitive financing, according

to an EBRD press release. The new loan is being provided in the local Mongolian currency, the

tugrug, in an effort to develop the domestic capital markets.

―This is our first time borrowing in [the tugrik] from the EBRD,‖ Khan Bank Chief Executive Officer

Norihiko Kato said. ―Thanks to the EBRD‘s support of value chain finance, we will be able to better

meet the expectations of our current and potential customers.‖

The EBRD extended the first two tranches of the loan, totaling USD 17 million, to Khan Bank last

year.

Source: Cistran Finance

GOLOMT SIGNS COOPERATION AGREEMENTS WITH HUNGARIAN EX-IM, MINSHENG BANK

Golomt Bank LLC and Hungarian Export-Import Bank on 31 July signed a medium-term credit facility

to initiate investments and joint-venture projects using Hungarian services as well as medical

equipment, environmental protection and water treatment equipment, and agricultural machinery

to Mongolia.

―On the basis of this agreement, Golomt will show its best effort to support companies which will

import goods and services from Hungary. Golomt is pleased to take the opportunity to contribute to

further enhance current economic relationship between the two nations," said Bolormaa

Luvsandorj, chief investment officer of Golomt at the signing ceremony.

Golomt also signed a cooperation agreement with China's Minsheng Bank to allow business owners

from both countries to receive financial services such as letters of credit, collections, and

guarantees. The two banks signed a memorandum of understanding earlier this year for cooperation

in the delivery of banking and financial services amid increasing trade turn-over between the two

countries.

Source: Golomt Bank LLC

GOLOMT INSTALLS FINACLE CORE BANKING SYSTEM

Golomt Bank LLC has completed integration of the Finacle core banking system.

The Finacle system developed by Infosys Corp. will allow Golomt customers to receive the

―Premium – Smart‖ e-banking services anywhere in the world. In addition to core banking, the

system allows for customer relationship management, treasury, trade finance, wealth management,

and internet and mobile bank and credit-debit transactions.

Golomt installed Finacle version 10.2.14 over a period of 18 months for USD 10 million.

Source: Golomt Bank LLC

TRUCK RETREAD LAUNCHES HEAVY-DUTY TIRE REPAIRS

Truck Retread Mongolia on 1 August opened Mongolia's first large, heavy-duty tire repair facility.

Truck Retread is utilizing technology from Bridgestone Bandag to repair 30,000 heavy-duty tires a

year. The repairs extends tire usage by three times as many miles as Chinese competitors, said N.

Bavuu, director of this factory. He added that Australian professionals would train Mongolian

workers to operate the facility within six months of its opening.

Source: Udriin Sonin

MSE NEGOTIATES FOR USE OF BLOOMBERG'S TERMINAL FOR SECURITIES TRADES

The Mongolian Stock Exchange (MSE) is in talks to possibly adopt the Bloomberg Terminal electronic

trading system for bond trades.

The MSE's acting chief executive officer, D. Angar, met with representatives from Bloomberg who

specialize in the Asia-Pacific financial markets on 4 August to discuss the possibility of utilizing the

terminal system for the auction of government bonds. The Bloomberg terminal electronic trading

system is currently being utilized by stock exchanges in Great Britain, Sweden, Belgium, South

Africa, Finland and Georgia.

Source: Info Mongolia

NOMADIC FASHION SHOW TO BE HELD IN TSONJIN BOLDOG RESORT COMPLEX

Genco Tour Bureau on 20 August will host the "Nomadic Fashion Show" at the Tsonjin Boldog resort,

near the giant Chinggis Khaan statue.

The fashion show will be held outdoors and will feature some of Mongolia's top models wearing over

70 unique takes on traditional costumes. The show will also feature performances by the Mongolian

Morin Khuur Ensemble, Merit Artist D. Bold, singer S. Naran, the band Shanz 3, DJ Saran, Britain's DJ

MAC, and Mongolian contortionists.

Genco Tour Bureau has partnered for the event with the Ministry of Culture, Sport and Tourism of

Mongolia and Torgo Fashion Salon.

Source: InfoMongolia.com

MSE INITIATES LEGAL ACTIONS AGAINST 196 DELINQUENT COMPANIES

The Mongolian Stock Exchange (MSE) is preparing to take legal actions against 196 listed companies

that failed to file reports for the second quarter of this year. The MSE on 5 August sent an official

letter to the Financial Regulatory Committee ordering that appropriate legal action be taken

against the companies that failed to send in their reports.

Separately, the MSE has opened an investigation into the trade of shares of Khuvsgul Altan Duulga

following warning prompts from its Millennium IT surveillance system. Khuvsgal Altan Duulga's share

price fell 15 percent after the trade of 120 shares at a stock price of MNT 874.17 each.

Source: MSE

EBRD HELPS FINANCE TOP-CLASS CEMENT PLANT IN MONGOLIA

The European Bank for Reconstruction and Development (EBRD) has helped finance Mongolia‘s Senj

Sant for the construction of Mongolia's first dry process cement plant to help the company meet the

rising demand for cement in the country.

EBRD lent Senj Sant USD 65 million, following a USD 20 million equity investment in Senj Sant in May

2013. Senj Sant, which is owned by Mongolia‘s Monpolymet Group, is using EBRD financing for the

continued funding of the construction of the plant, as well as its commissioning and eventual

operation, which is expected in 2015. The plant is being built to process 3,000 tons of cement a day

and will be located about 450 kilometers south of Ulaanbaatar. Developers say the plant will deliver

a higher-quality product than what is currently imported from China and will help to diversify the

economy away from mining.

―The EBRD‘s long term financing, including equity, is not only helping us build the first greenfield

cement plant in Mongolia using environmentally friendly dry process, but also supporting the

company in raising business standards to international levels,‖ Monpolymet Group Chief Executive

Officer Munkhnasan Narmandakh told guests at the signing for the financing agreement.

Source: European Bank for Reconstruction and Development

MAJOR JURISDICTION VICTORY FOR MONGOLIAN NATIONAL RAILWAY COMPANY

A high court in London gave judgment in favor of Ulaanbaatar Railways (UBZ) JSC, the Mongolian

national railway company, in its USD 55 million jurisdiction battle against Standard Bank PLC.

UBZ, represented by Sidley Austin in London and MDS KhanLex in Ulaanbaatar, argued that the

English court had no jurisdiction over the company (one of the largest in Mongolia) and that London

was not the proper forum for the case. Giving judgment, Justice Walker found that Standard Bank

had failed to make good the necessary jurisdictional gateway under the applicable civil procedure

rules and that the courts of England and Wales were not the proper forum for the claim—with the

circumstances of the case pointing strongly to Mongolia.

In a key finding for practitioners dealing in the burgeoning Mongolian market, the judge also held

that it had not been established to the requisite standard that a foreign investor such as Standard

Bank would be treated unjustly if there were a trial in Ulaanbaatar.

Source: Sidley Austin LLP

HBOIL POSTS H1 REVENUE 210% HIGHER THAN FULL-YEAR 2013

HBOil JSC on 4 August posted earnings from first-half 2014 that were 210 percent greater than the

full-year 2013, or 410 percent higher on an annualized basis. HBO‘s first-half profits were MNT 221

million versus a loss of MNT 93 million for full-year 2013. First-half profits represented a 540

percent increase in profits from full-year 2012, or 1,080 percent increase on an annualized basis.

Bloomberg highlighted HBO as the best-performing A-Board stock, increasing 76 percent year-to-

date.

Source: BDSec JSC

MSE LAUNCHES CUSTODIAN AND SECURITIES SERVICES TRAINING

The Mongolian Stock Exchange (MSE) began its Custody & Securities Services Masterclass on 6 and 7

August to better prep market participants on custodian and securities trade.

The class will be presented by Bruce Lawrence, senior post-trade advisor at the London Stock

Exchange (LSE) Group. Lawrence, who has over 30 years of experience in finance, will introduce

organizations to the intricacies of the custody and security industry and at the same time assist

them in their on-going development as a Mongolian sub-custodian. This Masterclass will address the

important principles of the business and the produces and services required by the international

investor community.

Source: MSE

LSE, MSE WILL HOST CAPITAL MARKET DAY IN LONDON

The Mongolian Stock Exchange (MSE) and the London Stock Exchange (LSE) Group will co-organize

―Capital Market Day‖ in London on 9 September.

The event aims to attract more investment into Mongolian companies from LSE investors. The event

is also being used to encourage Mongolian companies to register with the MSE by 8 August and

introduce the idea of dual listing on the LSE.

LSE has partnered with the MSE to implement its Millennium IT system and improve its regulations.

Source: Mongolian Economy

WOLF PETROLEUM CHAIRMAN SEES NEW PATH WITH PETROLEUM LAW

Wolf Petroleum Ltd.'s chairman has expressed hope that the new Petroleum Law passed one day

before Parliament recessed will help stimulate investment interest in the Mongolia-focused

petroleum explorer.

Wolf Petroleum, which is currently looking for partners to begin up to USD 3 million in drilling at its

Sukhbaatar license, can benefit from the new regulation for a 180-day timeline for government

approval for product share agreements. ―The legal environment was slightly unclear before because

it took companies two to three years, or more, to establish a production sharing contract, which

lessens risks with the government. Any investor would be fed up negotiating contract conditions for

an uncertain period of time,‖ said Chairman T. Lkhagvadorj.

With FDI falling 70 percent for the first half of the year compared with the same period in 2013,

Mongolian companies are struggling to stay afloat. The plummeting FDI is largely due to the political

instability in the country, said Lkhagvadorj. ―The foremost important duty of the government is to

make business environment for private businesses stable and then receive taxes from them. If these

conditions are met, within the next two to three years, investments will revive.‖

Lkhagvadorj added that Wolf Petroleum shares on the Australian exchange had been suffering

because of political instability, with share price down 75 percent to USD 0.05 a share. ―But we will

not give up. We have deposits with abundant amount of oil resources and several investors that

want to invest.‖

Source: Unuudur

SAM WALSH STEERS RIO TINTO TO RECOVERY

The Oyu Tolgoi copper mine's lead investor Rio Tinto PLC approaches its interim results on Thursday

knowing they are likely to represent a watershed for the miner and Sam Walsh, its chief executive.

Behind Walsh is a year and a half of hard graft in trying to restore Rio‘s reputation, blemished by

the misguided acquisitions that cost predecessor Tom Albanese his job and catapulted the genial

64-year-old Australian into his seat. Now Walsh has entered the second half of the three-year term

he was initially granted. He has also come to the end of the period during which a relentless diet of

austerity—penance for Rio‘s mistakes—is almost all the company veteran has been expected to

deliver.

Rio‘s recovery, aided last year by better-than-expected prices for iron ore, its chief commodity,

and rising production, has come to the point where most observers expect significant cash to be

generated. Rio says its only use for that cash this year is to reduce its net debt—inflated by past

deals to USD 18 billion at the end of 2013—to a more comfortable ―mid-teens‖ level. Beyond,

decisions loom as to what to do with the money.

―We know that, certainly from next year, investors will want us to give them clarity on how we

intend to deploy the cash that this business is going to be generating,‖ said Chris Lynch, Rio‘s

finance director.

But there are also tentative signs that Rio will have more leeway over coming months to look at

other options. Decisions regarding strategic growth may not be wholly off the menu, with some

analysts and investors urging Rio to look to the future. Walsh himself said this month he detected

more investor appetite for growth. Rio has been talking about potential board approval for some of

its projects including South of Embley, a bauxite mine in Australia, and La Granja, a copper mine in

Peru. Rio has said capital spending in 2015 will be about USD 8 billion, half of the 2012 level.

Growth in such areas could balance any concerns that Rio, while still styled as a ―diversified‖

miner, has become highly dependent upon one commodity: iron ore.

Lynch said that, whatever options Rio takes, the company wants ―more stability over the cycle‖ and

that means it will run a more conservative balance sheet than in the past as a bulwark against

volatility. ―We have to be robust enough in any scenario. We have learnt that since the global

financial crisis and because more and more of our commodities are subject to near-term pricing,‖

he said. ―The mining business is about long-term assets and you don‘t want a knee-jerk, back and

forth, stop-start way of running the company, which would destroy value.‖

Source: Financial Times

CONTENDERS FOR RIO TINTO’S CHIEF EXECUTIVE ROLE

Sam Walsh has a contract as Rio Tinto PLC chief executive that is due to expire at the end of 2015.

The 64-year-old has said he would relish prolonging his leadership. But many observers think a

change will be made, regardless of Walsh‘s success in stabilizing the miner.

The question is how quickly one might come to the fore. ―Rio has a good slate of contenders to take

over as chief executive,‖ Andrew Keen at HSBC says, ―but they are not quite ready yet – a lot of

them are relatively new in the job.‖

Andrew Harding, head of iron ore, holds the job that was previously Walsh‘s, running Rio‘s most

important division, and for that reason is probably a frontrunner. Aged 47, he is a 21-year Rio

veteran and previously ran its copper business. Chris Lynch, finance director since 2013, is the only

executive on Rio‘s board other than Walsh and is another industry veteran, but at 60 is only a few

years younger than Walsh. Alan Davies, head of diamonds and minerals, and Harry Kenyon-Slaney,

head of energy, also have important operational experience across commodities and lengthy Rio

careers but like Harding are relatively new to their current roles.

The heads of the other mining businesses are also relatively new to Rio. Jean-Sébastien Jacques,

head of copper, joined Rio in 2011 from Tata Steel while Alfredo Barrios came to the group from BP

only in June and is running aluminum.

Source: Financial Times

STANDARD CHARTERED EXPECTS TO PAY PENALTY

Standard Chartered PLC said it expects to pay a financial penalty in connection with allegations of

failures in a system meant to prevent money laundering.

The British lender made the announcement as it reported an 8 percent rise in first-half profit that

was weighed down by a charge tied to suspected lending fraud at a Chinese port and a slowdown in

its financial-markets business. Net profit was USD 2.3 billion, up from USD 2.13 billion from the

same period last year, when the bank took a USD 1 billion charge to reflect a decline in the value of

its South Korean business. A slowing economy, heavy competition and a government program that

lets households write off a big chunk of bank debt have weighed on the lender.

"Our performance in the first half of 2014 is clearly disappointing," said Chief Executive Peter

Sands. "It is not what we strive for and not what our investors expect."

Standard Chartered said it is in talks with the New York banking regulator over new allegations that

it failed to flag suspicious transactions to regulators. The talks are expected to result in

enforcement action, including a monetary penalty, Standard Chartered said. The probe relates to a

computer system Standard Chartered put in place in 2007 to check payments for suspicious activity.

Once processed, payments are screened to find instances of unusual activity, and those cases are

then flagged to regulators.

In 2012, the bank paid USD 667 million to settle allegations by U.S. authorities over processing

transactions that may have violated U.S. sanctions. The bank, which focuses on emerging markets,

said adjusted profit, a measure watched by analysts, plunged 20 percent to USD 3.27 billion, from

the first half of 2013. The results were partially hit by continued difficulty at its South Korean

business. The bank said it put aside USD 174 million, in part to cover the fallout of suspected

lending fraud at Qingdao port on China's eastern seaboard.

Source: Wall Street Journal

SPONSORS

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Mongolian Economy Magazine

ECONOMY

MONGOL BANK: FX AUCTION, SWAP AGREEMENTS, 1-AND 4-WEEK BILLS, TREASURY NOTES

The Bank of Mongolia on 7 August auctioned USD 18 million and CNY 128.5 million to commercial

banks for closing rates of MNT 1,880.00 and MNT 304.50, respectively. The central bank also

reported that it had received an equivalent of USD 2 million from swap agreements and accepted a

swap agreement ask offer of USD 18 million with commercial banks.

The central bank reported on 6 August the issue of one-week bills worth MNT 245.5 billion at a

weighted interest of 12 percent a year. The central bank on 4 August reported the issue of four-

week bills worth MNT 55 billion at a weighted interest of 12 percent a year.

The central bank reported on 6 August MNT 30 billion in bids for the auction for 12-week treasury

notes with a face value of MNT 30 billion. The bills were sold at a discounted price with an average

yield of 13.49 percent.

Source: Bank of Mongolia

MONGOLIA H1 FOREIGN INVESTMENT DIPS 70% ON UNCERTAINTIES

Foreign direct investment in Mongolia fell 70 percent in the first half of the year, central bank data

showed on Friday, with investors wary of the country's position on the foreign ownership of its

resources.

Mineral-rich Mongolia has made it easier for foreign companies to gain majority stakes in mining,

finance and other sectors, but protracted disputes with some multi-nationals are putting investors

off despite the government's efforts to resolve them, including changes to controversial legislation

aimed at limiting foreign ownership in "strategic sectors." The central bank said investment into

Mongolia fell a total of USD 873.2 million from January to June against a year earlier.

Mongolia has sought to attract billions of dollars of foreign capital to transform its remote pastoral

economy into a regional mining powerhouse, but giant projects such as the Oyu Tolgoi copper-gold

mine and the Tavan Tolgoi coal project have been subject to long delays. The central bank said that

Mongolia's earnings from coal exports dipped 17 percent in the first half of the year, with volumes

down 143 percent over the period. Over the same period, copper exports rose 144 percent to

become the country's biggest earning commodity over the period, driven by Oyu Tolgoi, a joint

venture between the Mongolian government and mining giant Rio Tinto.

Source: Reuters

MONGOLIA RAISES RATES AMID DEBT PRESSURE

Mongolia‘s central bank raised interest rates last week by 1.5 percentage points to 12 percent to

help stabilize an economy that‘s been buffeted by high inflation and falling foreign investment in its

mining sector.

Foreign investment in Mongolia‘s mines has fallen rapidly, in part due to frequent changes in local

regulations governing the sector. To compensate, the government has pushed expansionary fiscal

and monetary policies, funded by a rise in external debt to more than 150 percent of gross domestic

product. Exports, especially of coal, have slowed as China‘s economic growth has moderated. But

demand for imported consumer goods has remained strong because of the government‘s stimulus

policies and pushed inflation into double digits.

Moody‘s Investors Service last month warned the situation was untenable and downgraded

Mongolia‘s foreign currency government bond rating to B2 from B1. The agency warned that foreign

exchange reserves have fallen to USD 1.6 billion in May from USD 2.2 billion at the start of the year.

Mongolia‘s current-account deficit and its rising external debt burden have become harder to

finance as foreign investment has fallen. Instead, the government has run down foreign exchange

reserves, Moody‘s said. The nation‘s currency, the tugrik, has fallen over 10 percent against the

U.S. dollar this year.

Mongolia now needs to boost foreign investment, reduce government spending and rein in still-high

credit growth, Moody‘s said. The rate hike—which comes after a series of cuts last year—is a step in

this direction. Mongolia‘s parliament earlier this month also revoked a suspension on granting new

mineral exploration licenses, according to media reports.

Source: Wall Street Journal

MONGOL BANK SAYS IT STRENGTHENS MONETARY POLICY WITH HIKE IN INTEREST RATES

Mongolia has raised its policy interest rate by 1.5 percent to 12 percent to better bolster the

economy during a difficult financial period, said D. Boldbaatar, director of monetary policy and

research at the Bank of Mongolia.

―External economic environment has deteriorated for quite a long term,‖ said Boldbaatar. ―Because

the deficit from the balance of payments was so poor for the last year and a half, we had less

foreign exchange earnings than was paid on the international market. Due to the low resources for

the long term, it became impossible to support domestic demand.‖

The monetary policy head said foreign observers were watching for a sign that the central bank

would move to adjust its economic policy. Raising interest rates, he said, would encourage foreign

investment. Although there will be some pains from the added costs for borrowing, the expectation

that it would bring down inflation has taken precedent. The government will also cut programs by

MNT 766 billion, he added, but that does not include the 8 percent mortgage lending program.

Source: Undesnii Shuudan

MNT 20.4 BILLION COLLECTED FOR STABILIZATION FUND

The government has paid 39 percent more into the Stabilization Fund for the first half of the year

compared with the same period last year. The Stabilization Fund received MNT 20.4 billion in the

first half of year, according to the Ministry of Finance.

Source: Zuunii Medee

MONGOL BANK TO RELEASE MONTHLY FOREIGN CURRENCY RESERVE REPORTS

The Bank of Mongolia on 4 August announced a change in policy for the reporting of foreign

exchange reserves, effective July. Statistics will be published monthly rather than the current

practice of reporting every three months.

Source: Bank of Mongolia

AMGALAN POWER STATION COMPLETION DATE PUSHED TO OCTOBER

Work on the Amgalan power station is underway, after delays pushed back the completion date by

two months, said the chief engineer of the Amgalan power station.

―People have the understanding that the power plant will be finished in October 2014, and we need

to make a clarification that the plan has been postponed,‖ said Ch. Tsogtsaikhan, chief engineer of

pre-service administration for the Amgalan Thermal Power Plant. ―The whole construction has three

phases, and currently we are finishing construction of base objects and are shifting to the second

phase - assembly of steel construction parts. The third phase will be assembly of equipment and

technique.‖

Construction, which is being run by China's SMEK, was supposed to begin immediately after an

agreement signing in April 2013, but difficulty in procuring land after project developers received

protest from 45 households pushed back the completion date to October, said the engineer. Work is

about 40 percent complete, he said, with the construction of three coal burners to finish and pilot

runs of the first burner to begin by October this year.

The 300-megawatt power station will feed into a 770 meter transmission line running north and

another 771 meter line running south. The project has 428 workers on duty, 40 percent of whom are

Mongolian. Once complete, the power station will be manned by 100 workers.

Source: Undesnii Shuudan

CABINET APPROVES MNT 1.9BN FOR 10.6 KM OF ROAD

The Cabinet Secretariat on 28 July approved spending by the Development Bank of Mongolia of MNT

1.9 billion for the construction of 10.6 kilometers to complete the road between Undurkhaan Soum,

Khentii Aimag and Choibalsan Soum, Dornod Aimag as part of 95.4 kilometers of road under

construction between the two provinces.

Source: UB Post

TROUBLES FOR THE KHATAN TUUL RIVER

More than half of Mongolia‘s population resides near the Tuul River basin, which takes up three

percent of Mongolia‘s total landmass, and has provided clean, clear water since the time of

Mongolia's nomadic ancestors. Unfortunately, urbanization and industrialization now require

protection for this ancient life source.

More than two million people living nearby threaten the river, in addition to some 20,000 industrial

operations, 400 hectares of irrigated crop production, 330,000 livestock, and Mongolia‘s three

major thermal power stations. Ulaanbaatar residents consume 77 million cubic meters of water a

year from the Tuul River basin.

The facilities of the Ulaanbaatar Central Waste Water Treatment Plant are overstretched, making it

notoriously faulty. Looking at research from the past two years, the treatment plant falls far short

of what is needed. Although tests from water coming in and out of the plant showed that its

cleaning capacity had grown from 50.7 to 52.8 percent, it would fail to meet what is required even

if its facilities were boosted 90 percent because of the added environmental stress from

construction projects.

The government passed Resolution No. 203 in 2012, making polluters accountable for their

treatment of local water supply. However, the fines that should be assessed on companies are

never issued. Water from the Tuul River is highly dangerous for drinking, according to tests by the

Central Laboratory of Environmental Monitoring taken along the River; from Ulaanbaatar down to

Songino Soum, Zavkhan Aimag, and Khadan Khyasaa, Selenge Aimag. Processed water from the

waste treatment plant pollutes water from the Tuul River before traveling to Songino Soum, Shine

Tseg, and Khadan Khyasaa. Azotemia ammonia in the water surpassed acceptable levels between 36

and 94 times in tests, and phosphorus by five to 30 times. Permanganate oxide exceeded safe levels

by 1.5 to 5.7 times.

Source: Unuudur, UB Post

CABINET ORDERS CONSTRUCTION OF GRAIN SILOS NATIONWIDE

The Cabinet Secretariat on 1 August ordered the financing for the construction of grain silos after

hearing a summary on agriculture from Agriculture Minister Sh. Tuvdendorj. Tuvdendorj received

orders to initiate construction of grain silos in Khutag-Ondor Soum, Bulgan Aimag; Bayangol Soum,

Selenge Aimag; Baruun Turuun Soum, Uvs Aimag; Umnudelger Soum, Khentii Aimag; and in Dornod

Aimag.

Source: Montsame

ULAANBAATAR TRANSITIONS TO DIGITAL TV

Mongolian terrestrial television network operators officially switched to digital technology on 31

July.

Ten transmitters will be installed in Ulaanbaatar and 244 transmitters in counties. By the end of

August, digital transmitters will be installed in remaining counties and towns. Out of the four digital

technology standards implemented throughout the world, Mongolia chose to transfer to the

European DVB-T2 standard. Digital Terrestrial Television (DTTV) is designed to broadcast wide-

screen images with 16:9 aspect ratio through HDTV and SDTV, enabling viewers to directly receive

high-definition channels. Mongolia is expected to be equipped with full digital TV coverage across

the nation by 2016.

The old, analog signal will not be switched off as part of the digital TV transition, giving a year and

one-half's time before digital signals are used exclusively on 1 January 2016, said chairman of the

Information Technology, Post and Telecommunication Authority (ITPTA), Ts. Jadamba. Consumers

who do not wish to purchase a new television may purchase a box modem to receive the digital

signal.

Source: UB Post

INSPECTORS FAIL UB ROLLER COASTER FOR FAULTY BRAKES

The Ulaanbaatar Specialized Inspection Agency discovered several safety issues with the roller

coaster operating at the National Amusement Park this week during a routine inspection.

On-site inspection revealed that the front spring on the car‘s brake was missing, which is meant to

prevent the car from rolling backward on the tracks, while its rear spring was broken. Inspectors

also noted violations for staff failing to show up for work.

The roller coaster was installed at the park last year and received approval after testing by the

State Special Commission on 16 April. The operators of the roller coaster have been trained, but do

not hold any professional license to do so.

Source: UB Post

DENTISTS SUGGEST MONGOLIANS CUT SUGAR INTAKE

Visiting dentists have called on Mongolians to cut down on sweets after inspecting the pearly whites

of Mongolians in Bayankhongor Aimag.

Sugar intake was blamed as a major contributor to dental problems in the country. The German

Dental Association sent out 48 dentists to carry out free dental examinations for 8,000 patients in

the southwestern Aimag. Afterward, dental specialists said 60 to 70 percent of both children and

adults had dental problems. Dentists were concerned that only a few children had healthy teeth.

Source: News.mn

SCENES FROM MONGOLIA’S CHANGING STEPPE

Mongolia is the most sparsely populated nation in the world, and it is home to one of the last

surviving nomadic cultures. Their way of life has been largely unchanged for generations, with some

herding customs pre-dating the era of Chinggis Khaan. But the steppe‘s landscape is changing today.

A large part of the nomadic population is moving to urban areas to seek employment, education,

and modern conveniences. But the appeal of modernity draws not only those who have moved, but

also those who have chosen to stay in the steppe.

Today those Mongolians who remain on the steppe merge old traditions with new means. They

continue their lifestyle as pastoral herders, but many of them use motorbikes to herd cattle and

horses. Gas stations dot the vast landscape. Ox carts for moving their homes are beginning to be

substituted by trucks, as the availability of transportation and gas increases. A number of nomads

have been able to acquire solar panels, a useful way for them to gain access to electricity without

settling. They use solar energy to power television sets and to charge mobile phones. Their

television sets are their main source of information and entertainment, and their mobile phones a

way to contact their children attending boarding schools in the cities. Many Mongolians from

nomadic families now study in the cities, but, during the summer, they come back to help their

families maintain the herds, and a number go back to their nomadic lifestyle after having finished

their education.

In a rapidly changing country, a change in people‘s way of life is almost inevitable. But these

changes are also keeping old ways alive. Rather than leaving their life on the steppes, Mongolia‘s

nomads are beginning to adapt in their own manner, and are able to reap the conveniences of

modern society while still keeping an ancient and fascinating way of life alive.

Source: National Geographic

WORLD'S TOUGHEST HORSE RACE RETRACES CHINGIS KHAAN'S POSTAL ROUTE

Competitors gallop toward the finish of 2014's Mongol Derby. Fewer than half of the riders in this

year‘s race are expected to make it across the finish line. The goal—beyond not getting seriously

injured—is to ride a 621-mile circuit (1,000 kilometers) of Mongolian steppe in less than ten days.

Fewer than half of the riders are expected to make it across the finish line. The rest will either quit

or be carried off the course by the medical team. Broken bones and torn ligaments are common,

frustration and bruised egos the norm.

The race route is modeled on the horse relay postal system created under Chinggis Khaan in 1224,

which was instrumental in the expansion of the Mongolian Empire. According to the Adventurists,

the United Kingdom-based company that created the race in 2009, the course changes about 25

percent from year to year. Would-be competitors submit a written application and are interviewed

by phone. There is a USD 13,122 race fee, which covers the cost of the horses, medical and

veterinary support, GPS and tracking devices for each rider, interpreters, vehicles, and pre-race

training. Aside from selecting the riders, the Adventurists also take care in choosing each individual

horse for the race.

It is much more a mental challenge than it is a physical one, Willings says. "I think anyone can cope

with anything for a weekend," she says, "but over ten days, you get buffeted by good and bad

fortune a lot."

Despite the difficulty of the race, more riders are signing up every year. Last year, Prior Palmer, a

19-year-old British rider, won the race in seven days, making her the first female rider to win the

Mongol Derby. This year's field includes riders from 16 countries, including Germany, Switzerland,

Australia, the U.S., the U.K., Iceland, China, and Ireland.

Source: National Geographic

AUSTRALIAN BUSINESSES ARE SEARCHING FOR ASIAN PARTNERS

Australian businesses trying to break into Asian countries such as Mongolia say finding the right local

partner is the biggest challenge they face. But they also want government assistance to pave the

way to the region.

A groundbreaking market research study of large and small businesses with Asian interests has

identified China as by far the most popular offshore market, followed by Singapore, Hong Kong,

Indonesia and Malaysia. They are also penetrating fringe countries including Mongolia and Pakistan.

The study, to be released on Tuesday, says industry associations, followed by Austrade, professional

services firms and chambers of commerce are the most common sources of information for

businesses moving into the region. It has also identified the key areas where companies with

experience in Asia feel there are resource gaps which prevent them being more successful.

―The need for more assistance with developing cultural capacity is also clear,‖ the authors say.

The report reveals some striking differences between large and small companies over the

challenges of developing Asian platforms, although 17 percent of both groups nominate finding a

local partner as the main challenge. But small businesses are much more concerned about having

insufficient knowledge of the foreign regulatory environment, while bigger companies are more

concerned about hiring the right staff for the specific country.

Grant Dooley, who is seeking Asian capital for Australian projects as the head of the Asia business

group at Hastings, says smaller companies need assistance from agencies such as Austrade while big

companies can invest more in upfront development staff.

Source: Australian Financial Review

CHINA MAY INVEST MORE THAN CNY 250BN (USD 40BN) IN INNER MONGOLIA-CHINA RAIL

The National Development and Reform Commission (NDRC) has approved the feasibility study of the

nation's biggest investment in freight railways—stretching from Inner Mongolia to central China—

reports the Guangzhou-based 21st Century Business Herald, citing a source close to China Railway

Corp.

The railway won initial approval in early 2012, but only now has been able to earn its real birth

certificate, the source said. The railway should break ground in September, and the rail will start

going down in earnest by the end of this year, the source said. According to plan, the railway begins

from northern Inner Mongolia's Ordos and snakes through Shaanxi, Shanxi, Henan, Hubei, Hunan and

Jiangxi before ending at the Beijing-Kowloon Railway's Ji'an Station, a total of 1,806.5 kilometers

and 84 stations. The railway cost has been estimated at 193 billion yuan (USD 31.2 billion) and will

need five years to complete. It will be able to transport more than 200 million tons in commodities

a year.

Wang Mengshu, deputy chief engineer of the China Railway Tunnel Group and a member of the

Chinese Academy of Engineering, estimated the actual cost at upwards of CNY 250 billion (USD 40.5

billion). In his experience, the final cost for railway construction typically exceeds the mark

because of inflation and some changes in design proposals which add costs. The railway is one of

the demonstration state projects to attract social capital. While waiting for the final approval,

cities and provinces that will be welcoming the line have been actively preparing for the

construction of the railway.

The stake holding structure of the railway is diversified, mostly concentrating on domestic railway

investment firms and local energy giants. State-owned giant China Railway Investment Corp

accounts for 20 percent of the railway, while six others each own a 10 percent stake. The remaining

20 percent goes to domestic railway investment firms and energy companies.

Source: Want China Times

POLITICS

BELARUS EMBASSY OPENS IN UB

Belarus on 6 August opened its embassy for the first time in Ulaanbaatar.

After Ambassador Stanislav Chepurny handed over his credentials to President Taskhia Elbegdorj,

they discussed closening relations between their two nations. ―This noticeable event will surely

contribute to our further bilateral cooperation development, and I hope that Mongolia will be the

wide-open bridge to connect Belarus with the emerging Asian market; at the same time, the

Republic of Belarus will also become for us a trustworthy bridge to the European market in the

future,‖ said Chepurny.

Ulaanbaatar currently has 21 resident foreign ambassadors.

Source: InfoMongolia.com

SCO TO ADMIT MONGOLIA AS A NEW MEMBER

Mongolia and three other nations were admitted as new members of the Shanghai Cooperation

Organization (SCO) at a meeting of the foreign ministers of Russia, China, Tajikistan, Kazakhstan,

Uzbekistan and Kirgizstan held in Dushanbe last weekend.

SCO adopted new documents giving the green light for admitting the four observer-states, India,

Pakistan, Iran and Mongolia, to the six-member organization. A summit will be held again in

Dushanbe in September. At present, Tajikistan holds the SCO presidency.

―At present, the SCO has started to counterbalance NATO‘s role in Asia. Consequently, these

countries want to take part in the SCO in the capacity of safeguarding their interests,‖ said an

expert at the Higher School of Economics Alexei Maslov. ―At present, the SCO is strengthening

because the American policy towards Asia has been excessively tough and is aimed at suppressing

their interests. The American policy contradicts the interests of Asian countries. In this sense, it‘s

quite natural that India, Pakistan, Iran and Mongolia expressed desire to join the SCO.‖ Maslov

added that SCO provides geo-political security from China, providing a guarantee to nations that

China will ―honor the interests of these countries.‖

Russia has formally submitted a draft strategy adopted by foreign minister for the development of

the SCO up to 2025. The strategy has set the task of minimizing the negative influence of global and

regional processes on the SCO territory. It is also aimed at upgrading its role and significance in

solving global issues.

Source: Macedonia Online

PUTIN TO ARRIVE IN MONGOLIA IN SEPTEMBER

Russian President Vladmir Putin will pay an official visit to Mongolia on 3 September.

The visit comes five years after Putin received an official invitation from former Mongolian Prime

Minister Sukhbaatar Bayar in 2009. This visit was initiated by President Tsakhia Elbegdorj when

meeting with his Russian counterpart at the Fourth Summit of the Conference on Interaction and

Confidence-Building Measures in Asia (CICA), held in May in Shanghai, China. It was there that

Elbegdorj invited Putin to celebrate the 75th anniversary of the World War II Khalkh Gol battle

victory.

Mongolia wants to expand traditional bilateral economic relations with Russia and will likely

negotiate for expanded trade. According to Russian news publication TAR-TASS, a new visa-free

regime for travel may be signed.

Source: News.mn

JAPANESE DELEGATION VISITS MONGOLIA’S OLYMPIC HEADQUARTERS

A Japanese delegation on 4 August offered assistance in training Olympic athletes while visiting

Mongolia's Olympic headquarters in Ulaanbaatar.

K. Iwamoto, deputy head of the City Council of Fukuoka, Japan and leader of the delegation,

handed the Olympics committee an official request to cooperate in joint training at the Fukuoka

Prefecture prior to the 2020 Tokyo Summer Olympic Games. The Fukuoka Prefecture has offered

assistance in helping Mongolia allow two competitors to compete in badminton events at the

forthcoming Tokyo Olympics, under the leadership of Japanese coach N. Ishiguro.

Source: Montsame

PREMIER MEETS CHINESE CHILDREN FROM FLOOD-HIT PROVINCE

Prime Minister Norov Altankhuyag on 4 August met with a group of 100 children from northeast

China's Liaoning province, who visited the country at his invitation.

Altankhuyag invited the children from the flood-hit Liaoning province to visit Mongolia during his

tour of China in October 2013. During the meeting, the prime minister gave gifts to the Chinese

children.

"You all overcame a hard time. May you feel comfortable during your stay in Mongolia and make

friends with many Mongolian children," said Altankhuyag.

This year marks the 65th anniversary of the establishment of diplomatic relations between Mongolia

and China and also the year of the "Mongolia-China Cultural, Arts and Humanitarian Exchange," as

declared by the Mongolian government. In past years, children from China's disaster-hit areas of

Sichuan and Hulunbuir have also visited Mongolia for summer holidays at the invitation of Mongolian

premiers.

The Chinese children will stay at the children's summer camp "Nairamdal," about 30 kilometers from

Ulaanbaatar.

Source: Global Post

PREMIER'S SENIOR ADVISOR ARRESTED BY ANTI-CORRUPTION AGENCY

A senior advisor to Prime Minister Norov Altankhuyag and three other officials were arrested on

Wednesday night by the Independent Agency Against Corruption (IAAC), local media reported 31

July.

According to the report, Gansukh Luumed, the former minister of natural environment and tourism

and senior advisor to Altankhuyag, was arrested for embezzlement by IAAC. The prime minister

criticized the arrest as "sabotage of government actions." Gansukh is coordinator of the

government's subsidy program "Coal," which enables residents of ger districts in Ulaanbaatar to

purchase coal at a much lower price in winter.

"I will fight strongly with this kind of intentional action that violates law and breaches rights of

innocent people," Altankhuyag said in a statement issued Thursday. He added, "Arresting people

who were responsible for coordinating and implementing [the] 'coal' program, which benefited

thousands of low-and middle-income households, is a sabotage of government actions," he said.

Source: China Development Gate

THREATS TO GOVERNMENT STABILITY ON THE RISE—PUTTING PREMIER'S JOB ON THE LINE

The recent arrest of the senior advisor to the prime minister is making headlines during an already

difficult time for him. This is leading many to wonder how much longer he can hold his office.

Gansukh's arrest for the alleged embezzlement of funds from the state ―Coal‖ program meant to

bring higher-quality coal at a cheaper price is bringing lots of negative media attention on Prime

Minister Norov Altankhuyag. This week the Independent Agency Against Corruption (IAAC) criticized

Altankhuyag for visiting Gansukh, whom he has publicly defended, and hinted that the prime

minister himself could be interrogated. The Mongolian People‘s Party (MPP) claims that both the

prime minister and justice minister have broken Mongolian law. Making matters worse is a rumor

that Altankhuyag's daughter, who worked for Clean Air Foundation, could also be involved in

Gansukh's case.

The 100-day action plan approved on 9 May that Altankhuyag said would boost the nation‘s

weakening economy has fallen far short of its goals. The long-running dispute between the

Mongolian government and Rio Tinto over the underground expansion of the Oyu Tolgoi copper mine

continues to drag on, and Resolution No. 216, which was supposed to settle a dispute of ownership

for 106 licenses for many investors has not provided adequate measures to address the underlying

issues. Meanwhile, the tugrug continues its record-setting fall, flirting with an exchange rate of

MNT 1,880 per U.S. dollar. That is a 12 percent fall from the beginning of the year. Foreign direct

investment has also continued to fall—down 70 percent year-on-year for the first half of 2014.

It is not likely that any move will be made until after the visits of both Russia and China's heads of

state this month and next. However, Altankhuyag's days in office may be numbered.

Source: Mongolian Investment Banking Group

POLICE, NATIONALISTS SQUASH CHINESE PROTEST

Sukhbaatar District police on 1 August squashed a demonstration of more than 100 Chinese workers

at Chinggis Square demanding pay never received from the company Beren Group LLC.

The workers complained that the construction company has failed to provide them with any food

accommodations, in addition to the pay they never received. Protesters claimed that when they

brought their grievances to the company they received angry remarks that they would receive

nothing. At the scene were members of several nationalist movements, such as the Khas Union and

Bosoo Khoh Mongol.

Chinese workers arrived in Mongolia in June to work for Beren for housing construction.

Chinese workers were escorted away from Chinggis Square by the police and members of the

nationalist groups to the Chinese embassy. Embassy officials assured protesters that they would

send an official request to the company to resolve these issues. The workers were later brought to

the General Agency for Citizenships and Migration to check on the workers' documents and were

told they would discuss their grievances with Beren. The next day, authorities deported 42 of the

workers they found guilty of violating their visa.

About 72.58 percent of Mongolia's 24,800 foreign nationals are Chinese.

Source: Udriin Sonin

TONY BLAIR USING HIS CONNECTIONS TO CHANGE THE WORLD, PROFITABLY

In the years since stepping down as Britain's prime minister, Blair has tried to fashion a second act

as a globe-trotting do-gooder in Rwanda and a half-dozen other African nations—not to mention

Mongolia—focusing on poverty and infrastructure though his Africa Governance Initiative, one of the

four charities he or his wife, Cherie, have founded. But at home, enthusiasm for such endeavors has

been tempered by criticism of his equally ambitious business enterprises, through a private

consultancy called Tony Blair Associates, whose clients have included controversial monarchs and

autocrats like Kazakhstan‘s president, Nursultan Nazarbayev.

The British press, which still bristles over Blair‘s support of the United States in the Iraq war, is

taking aim at his newfound riches from consulting, raising questions over whether he is cashing in

on his connections. In many ways, Blair faces a perception problem. Years into his post-political

makeover, confusion lingers about what particular hat he wears at any given time.

Blair‘s work in Rwanda has suffered along with Rwandan President Paul Kagame‘s reputation, which

has been undercut by reports of ruthlessness and repression. David Himbara, an economist who was

a close aide to Kagame and was once the government‘s liaison with Blair, said the breaking point

that forced him to leave came after seeing Kagame order the beating of two aides over their choice

of office curtains. (Mr. Kagame offered a somewhat different account of what happened.) Himbara

said Blair‘s charity ―did good work, but good work when you realize you are working with a criminal

state, then good work becomes what?‖ Blair dismisses such criticism, pointing out how far Rwanda

has come under Kagame in the two decades since the Rwandan genocide.

Blair has received a warmer response from the American government, which has awarded one of his

charities grants of more than USD 7 million over several years. The relationship has been helped by

high-level friends, including Hillary Clinton, the former U.S. secretary of state.

Much of the discussion about Blair in Britain has focused on a simple question: How rich is he

getting? Blair brushed off suggestions in the media that he was worth 100 million pounds, roughly

USD 170 million, but he is not middle class, either. He is paid a total of USD 5 million to USD 7

million a year by three firms: JPMorgan, Khosla Ventures and the Zurich Insurance Group. He gives

about a dozen speeches a year; one 2009 speech in the Philippines earned him more than USD

300,000, but an aide said that was unusually high. His various enterprises employ more than 200

people. His companies reported roughly USD 12 million in net assets. Then there is the Blairs‘

growing collection of properties, but an aide said many of Blair‘s properties had mortgages or were

bought on behalf of his children. He also gave millions of dollars of the proceeds from his

autobiography to a charity for injured British troops.

―This notion that I‘m about to join the rich list or something is just ridiculous, and I‘ve got no

desire to do that,‖ Blair said. ―It‘s not why I‘m doing it.‖

Source: New York Times

ANNOUNCEMENTS

INVEST MONGOLIA, 2-3 SEPTEMBER, ULAANBAATAR

Frontier Securities' eighth annual Invest Mongolia conference is scheduled for 2 and 3 September in

Ulaanbaatar

This year, the conference will be held over two days for presentations and discussions on ―smart‖

governance, a roadmap for Mongolia to come out of its economic crisis, and industries such as

mining, infrastructure, tourism, real estate and oil.

BCM members will receive a 15 percent discount at registration. Register online at frontier-

conference.com. For more information call 976-7011-9999 or email: conference@frontier.mn

___________________________________________

2014 DISCOVER MONGOLIA, 4-5 SEPTEMBER, ULAANBAATAR

The 12th Discover Mongolia International Mining Investors Forum (IMIF) will be held in Ulaanbaatar,

Mongolia on 4 and 5 September at the Children's Palace of Mongolia— the location of the conference

for the past 11 years.

The forum will have two days of intensive minerals and mining discourse and exhibition for

companies. Although the Mongolian economy is undergoing serious challenges and difficulties, some

decisions and resolutions adopted at the law-making and executive branches of the government

makes us restore confidence and trust. Parliament‘s decisions to harness the country‘s economic

and business environment are long-term steps to nurture investor confidence and trust in Mongolia.

The 12th annual Discover Mongolia-2014 IMIF is pleased to announce its Platinum Sponsors are

Xanadu Mines and Mongol Metals and its Gold Sponsor is Anglo American.

Business Council of Mongolia is supporting Discover Mongolia 2014 International Mining. BCM

members will receive an early bird rate to attend the forum. For Exhibition, Sponsorship and

Delegates information visit discovermongolaiforum.com. For more information call 976-7014-9762,

fax 976-7014-9762, or email info@discovermongoliaforum.com.

___________________________________________

OIL & OIL SHALE MONGOLIA 2014 RESCHEDULED TO 10-11 SEPTEMBER IN UB

The international investment conference Oil & Oil Shale Mongolia 2014 has a new scheduled date of

10 and 11 September.

The Ministry of Mining and Petroleum Authority and Minex Mongolia LLC have decided to host the

event after the passage of the long-awaited new Petroleum Law. This will be the country's first

international investment conference on oil, gas, and oil shale. The event will be attended by

international investors, oil, gas, and oil shale companies, service providers, consultancies,

equipment suppliers, and traders. Delegates will have the opportunity to network with key industry

contacts and obtain vital information on legislation and policies on oil, gas, and oil shale

exploration and production regulations from government authorities.

BCM is supporting the conference. BCM members will receive a 15 percent discount to attend. For

more information or to register email Chimednyam at chimednyam@minex.mn or call +976 344488,

or +976 9910-5877.

BCM WORKING GROUP NEWS

The BCM Environmental Working Group met on 26 June with 15 members attending.

Bayarmaa A, Vice Director, BCM, moderated the session.

New members: Shinetsetseg-Breakthrough PR, Ariunaa Norovsambuu–The Asia Foundation.

New Participants: Tirza Theunissen-The Asia Foundation, Binderya Oyunbaatar, Dolzmaa

Davaasuren-The Nature Conservancy,

Guests: Batima Puntsagmaa-Mongolian Water Forum, Kevin Trzcinski-Mongolian National University,

Tsenguun Tumurkhuyag, Munkhjargal Bayarlkhagva-Sustainability East Asia, Altai Onkhor–Water

Resources Group.

Speakers and topics were:

Introduction of Urban Services Program by Tirza Theunissen, TAF Deputy Country Representative,

Asia Foundation;

Impact of Climate Change on Water Resources by P. Batima, Director, Mongolia Water Forum;

Application and Use of Solar Thermal and Energy Efficient Technologies in Mongolia by Kevin

Trzcinski, Vice President of International Relations, Mongolian National University.

If you have any questions, please contact Erdenetsetseg at erka@bcmongolia.org.

___________________________________________

The BCM Logistics Working Group met on 10 June with 7 members attending.

Mattias Ahlin-Scania, Chairman, moderated the session.

New members: D Enkhbat CEO-Mongolian Express; Rentsendorj Yondon, Mongolian Opportunities

Fund; Buyanderler Tsogt-Ochir, Logistics Supervisor, Cummins Mongolia; Nobuo Okada, General

Manager, Mitsui Co.

Tengis Garamgaibaatar, Chief Executive Officer, Monroad, was elected as WG chairman.

Congratulations to him for his new role as BCM`s Logistics Working Group Chairman! We thank

Mattias Ahlin for his groundbreaking efforts in launching the Working Group. Mattias is

returning to Scania‘s headquarters in Sweden.

Speakers and topics were:

1. Follow up from last meeting‘s discussion

a. Main challenges for the Mongolian Logistic sector

2. Discussion about BCM Logistics Working group role and focus areas

(Mission Statement)

a. Transport modes; road, rail, air

b. Customs efficiency

c. Legal framework; Loads and dimension, safety, standards

d. Stakeholders: Ministries, customs, transport organizations, vehicle manufacturer association

e. Transport efficiency

3. Discussion about meeting intensity and organization

4. Other business

Next meeting was scheduled on 7 August. If you have any interest joining the new and growing

Logistics Working Group, please contact Erdenetsetseg at erka@bcmongolia.org

___________________________________________

The BCM Capital Markets Working Group met on 29 May with 11 members attending.

Howard Lambert /ING Bank/ and Nick Cousyn /BDSec/, Co-chairmen, moderated the session.

Guest: Michael O`Malley-Executive Director at ISG MineElect.

Speakers and topics were:

Facilitating foreign direct investment (FDI) and Capital Markets update - by Byambaa Losolsuren,

Leader of FDI Capital Markets group of 100 Day Revitalization Council, and Partner of Mandal

Capital LLC.

If you have any recommendations on Capital Markets for the Revitalization Council, please contact:

erka@bcmongolia.org

___________________________________________

The BCM Tax Working Group met on 22 May, with 12 members attending.

Onch D. - Co-chair, BCM‘s Tax WG and Deloitte Onch a moderated the session.

Attending were representatives from the following BCM member entities - Deloitte Onch, PwC,

Ernst & Young, KPMG Tax, OT, Terra Energy, Petro Matad, MahoneyLiotta, TMZ and BCM.

New members: Amarbayasgalan and Tuvshinbayar from Terra Energy.

Meeting agenda:

• Overview - B. Byambasaikhan, Secretariat, 100 Day Revitalization Program; Chairman, BCM;

• Initial new tax policy thoughts from WG members.

On May 29 BCM‘s Tax Working Group sent a detailed study of the current value added tax (VAT)

deficiencies and recommendations for efficiencies to result in greater tax revenue to the 100

Days Revitalization Council.

Please contact T.Erdenetsetseg, BCM Working Group Coordinator, erka@bcmongolia.org .

___________________________________________

The BCM ‗expanded‘ Legislative Working Group (LWG) met on 20 May with 42 members attending at

Corporate Hotel meeting room.

This was the third expanded WG meeting on the draft Amendments to the Minerals Law. The 2 ½

hour session included BCM members from mining companies, embassies and the MNMA. Special

guests were 5 members of Parliament and others from the Mining Ministry, Geological Society

and Export Society.

LWG Co-chair, James Liotta, Mahoney Liotta, moderated the session.

The following 11 presentations were made:

- A healthy Private Sector Driven Industry (1997 and 2006 Minerals Law / Amendments / what to

look for. By Doug McGay – longtime resident in the Minerals and petroleum industry;

- Investor views and concerns about making investments in Mongolia and its mining sector. By

Randolph Koppa – Vice Chairman, BCM and President, TDB;

- A view from the Mining Majors by Sunjidmaa Jamba from Peabody Energy;

- A supply side view by Stephen Potter, Wagner Asia;

- Tax Issues impacting the Minerals Industry by D. Onchinsuren – Co-chair BCM Tax Working

Group and Deloitte Onch Audit;

- Use of MSE for State Privatizations by Nick Cousyn – Co-chair, BCM Capital Markets Working

Group and BDSec;

- Views from within the Industry by N. Algaa – Executive Director, MNMA;

- Transparency and Public Comment by David Wyche – Economic/Commercial Section Chief,

Embassy of the United States of America

- International Agreements that attract bi-lateral investment, and views on the State ownership

of assets by Maxim Berdichevsky – Counselor & Senior Trade Commissioner, Embassy of Canada

- Some specific thoughts on the Amendments by James Liotta – Co-chair, BCM LWG and

MahoneyLiotta Law Firm; Bayar Budragchaa - Co-chair, BCM LWG and ELC Law Firm.

As MP Garamgaibaatar, Chair of the Standing Committee on Economic Affairs and Head of the

Parliamentary Working Group on the Draft Amendments to the Minerals Law, commented at

the meeting's conclusion - "We should not really change general structure and core contents of

the draft Amendments."

Also MP Garamgaibaatar welcomed BCM sending any additional comments directly to his Working

Group which was accomplished by the BCM Legislative Working Group.

Note: Amendments to the Minerals Law were passed by Parliament on 1 July 2014.

BCM WEBSITES

MONGOLIAN WEBSITE: ‘PRESENTATIONS’

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

http://bcmongolia.org/mn/илтгэлүүд

• Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 4 сарын байдлаар, Үндэсний

статистикийн хороо

• Мандал Женерал Даатгал тайлан, 2014 оны 5 сар

• Сант марал сангаас гаргасан УЛС ТӨРИЙН БАРОМЕТР №13(47), 2014 ОН 3 САР

• Монгол улсын нийгэм эдийн засгийн байдал, 2014 оны 3 сарын байдлаар, Үндэсний

статистикийн хороо

•―Anti-Corruption legislation and State Policy‖ (Mongolian) by D. Munkhjargal, Prevention and

Public Awareness Department, Senior Commissioner, Independent Authority Against Corruption

(IAAC) Mongolia at the ―ANTI-CORRUPTION LEGISLATION/POLICY, INTERNATIONAL BEST PRACTICE

ON TRANSPARENCY‖ Training seminar, Mar 06, 2014

___________________________________________

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

BUSINESS NEWS’, ‘PHOTO GALLERY’

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

• 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

• 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‖.

BCM's English website includes the ―Mongolia Business News‖ section. BCM continuously posts news

stories and analysis of relevance to Mongolia at ‗Mongolian Business News‖ before they are all put

together each week for Friday's weekly NewsWire.

The ―Photo Gallery‖ contains photos from the 6th Anniversary BCM Renewal dinner on November

11, 2013.

The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home

page for a consolidated account of the week‘s events.

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 5,901 fans on our Facebook fans page, 642 connections on LinkedIn

network, and 1,136 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]

June 30, 2014 *14.6% [source: NSOM]

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

Note: 15.1% y-o-y, Ulaanbaatar city, June 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 – 14 AUGUST 2014

Currency Name Currency Rate

US Dollar USD 1,874.73

Euro EUR 2,507.26

Japanese yen JPY 18.29

British pound GBP 3,161.36

Hong Kong dollar HKD 241.89

Chinese Yuan CNY 304.17

Russian Ruble RUB 51.90

South Korean won KRW 1.81

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.