BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 425 – April 29, 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:

MMC receives notice demanding immediate payment of $95.4 mn in debt;

SouthGobi shares fall 10% after failing to make loan payment;

Erdene Closes $2.5 Million Financing With Sandstorm Gold;

Xanadu reports ‘bonanza grade assays’ from Oyut Ulaan;

Khuvd becomes flightpath destination for western Mongolia;

Novosibirsk will co-operate to update 'Russian apartments';

Hep-C medicine available at heavy discount;

Construction Ministry sues Mongol Daivin for unfinished road work;

French NGO donates medical equipment;

Monnis Motors donates vehicles for ASEM;

Shopping mall planned under the Beatles monument;

Hotel managers trained for ASEM;

MGG 2015 losses narrow despite more slowed growth;

Snow Leopard Vodka – Making a Difference for 10 Years;

A&O, Hogan Lovells, Mayer Brown act on Mongolia’s $500 MN sovereign bond.

Economy:

Mongol Bank: currency auctions, 1-week bills;

April SMI data signals continued deterioration in business conditions;

Monthly minimum wage increases;

Tax hikes set for more than 50 categories of imported goods;

Tourism figures down;

Measures for sustainable farming;

Electronic mining data system launches;

new tech cuts elections expenses 10 times;

Mobile app under developed for ASEM delegates;

Tuul river levels rise;

More than 4,000 families to move out of gers and into apartments;

UB targets 300,000 measles vaccinations;

Drones patrolling UB’s street;

3 dead in wildfire;

Silk road highway to open up Kazakhstan, Turkey markets;

ADB border-crossing loan to help boost China-Russia trade;

ADB's new loan to scale up urban services in Gobi project;

Cashmere price take a turnaround;

For commodities markets, the bad times are just beginning;

Can Mongolia be saved from low commodity prices?;

Iron ore’s surprise rally looks on borrowed time;

IMF warns Chinese response to debt needs to be more comprehensive;

How Russia is moving ahead with its Asian pivot.

Politics:

Delegates' talks focus on security at ASEP;

MPP accepts court’s ruling on election rules;

Doctors protest law criminalizing patients’ deaths;

Uyanga chairs Independence and Unity Party;

Vietnam-Mongolia legislativeties thriving, says NA Vice Chairman;

Indo-Mongolia joint-military exercise Nomadic Elephant- 2016 launches;

Russia responds to blue jean kerfuffle;

Baby dinosaurs comes home;

UB administration launches investigation into religious groups;

Sant Maral’s Politbarometer suggests economic revival is key to the voters.

BCM Updates:

Announcements;

Knowledge Sharing Sessions;

Advocacy Notes;

Working Groups News;

BCM in the University Classroom Series;

Cooperation & Member discounts;

Member Vacancies;

Websites Update - Presentations, Mongolia Reports, Interviews;

Media Coverage & Social Networks.

Economic Indicators:

Inflation;

Central Bank Policy Rate;

Currency Rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank Invest Mongolia Agency

Mongolian Business Database

BCM MONTHLY MEETING NOTICE

BCM’s monthly meeting for members will be on Monday, May 2 at 5PM at the BLUE SKY HOTEL, 3rd floor, “Crystal” conference room. The meeting will be in English only. The meeting will feature the following presentations: - Call to Order/Business Council of Mongolia: B. Byambasaikhan, Chairman, BCM - BCM Report: Ch. Mergen, Executive Director, BCM - B. Ochkhuu, General Manager, Gold’s Gym – “BCM Open Day at Gold’s Gym” May 14, 2016 - Jennifer Zimdahl Galt, Ambassador of the United States of America to Mongolia, US Embassy – “U.S. Economic Engagement in Mongolia” - M. Dagva, President of MPIGM & General Director of QMC LLC - "Self-Regulation Initiative of Mongolian Mining Industry" - Jon Lyons, Country Representative Mongolia, GGGI & Thomas Papazov, Business Development Manager, Engie Mongolia – “Energy Efficiency – Business opportunities for Energy Services” New Members:

1. British School of UB – Established in 2010, the mission of the British School of Ulaanbaatar is to

provide its students with a learning environment and curriculum that meets international

standards.

2. Matoza LLC – is a privately held company, founded in 2016, specialized in international

import/export, tourism, education and innovation.

3. Mera LLC – is a Mongolian national owned company, established in 2001, specialized in

manufacturing explosive products and providing drilling and blasting services.

4. Mongolia Quest LLC – established in 2012, Mongolia Quest designs custom tailored private

journeys for Mongolia and beyond to fit a unique travel style and interests of travelers.

Networking Reception: A networking reception will be held for all attendees immediately following the business portion of the meeting in the “Topaz” room on the 3rd floor, Blue Sky Hotel. Finger food will be served at the reception by Churchill’s. Networking is Easier Now: To help you network with other BCM members and make the most out of the networking reception, BCM is willing to connect you to individuals and organizations you want to reach out during the Networking Reception. You can email us in advance to request introduction or approach us during the Networking Reception. Please email us at bayarmaa@bcmongolia.org and we will try our best to connect you with the right people. Publicize Your Activity: BCM invites your organization to publicize your business or activity during our Monthly Meeting and Networking Reception, regularly attended by over 100 people. We will publicize your activity in creative, new and fun way through lottery and games during networking reception to make it more interactive. For more information, please contact Tuguldur, Office Manager at tugi@bcmongolia.org. Presentations:

All presentations from previous Monthly Meetings are uploaded on our website in knowledge hub: presentation section. You can see all Monthly Meeting presentations by months, by dates and search by key words. Presentations of Working Groups Meetings, Knowledge Sharing, other conferences and trainings can also be found from this section. To check presentations, click here. If you would like to make a presentation on our upcoming Monthly Meeting, please contact Tuguldur, at tugi@bcmongolia.org. For more information about website log-in and use of interactive features, please contact Dolgorsuren, Communication Assistant at dolgorsuren@bcmongolia.org.

BUSINESS

MMC RECEIVES NOTICE DEMANDING IMMEDIATE PAYMENT OF $95.4 MN IN DEBT

Mongolian Mining Corp. (MMC) on 26 April received a notice from investors demanding immediate

payment for USD95.4 million worth of debt. MMC owes USD600 million from investors including BNP

Paribas Singapore and Industrial and Commercial Bank of China Ltd. for 8.876 corporate senior debt

due in 2017 that it defaulted on in March when it missed a payment. BNP and ICBC in their notice

demanded immediate repayment of USD95.4 million in additional outstanding debt, demanding a

handover of equity for MMC’s intermediary holding company where its shareholding of subsidiaries is

held, Mongolian Coal Corp. Ltd. (MCCL)

MCCL, as the sole intermediary holding company below the Company, directly and indirectly owns

the capital stock of all other subsidiaries of the Company.

Source: Mongolian Mining Corp.

SOUTHGOBI SHARES FALL 10% AFTER FAILING TO MAKE LOAN PAYMENT

SouthGobi Resources Ltd. shares were lower after the company released an update on the

shareholder loan due to Turquoise Hill Resources Ltd. SouthGobi had not repaid the shareholder

loan brokered on 27 October to defer the repayment for a shareholder loan from Turquoise Hill to

April 22, 2016. A new repayment plan with an outstanding loan principal of USD3.4 million and

interest accrued up to 2 April of USD700,000. “While SouthGobi believes it will be able to reach

such a new repayment plan with Turquoise Hill, there is no assurance that the repayment plan will

be favorable to SouthGobi. SouthGobi’s shares were last down 10% at $0.45 apiece. Turquoise Hill’s

shares were last down 0.9%,” reads the statement.

The stock is down 31.11 percent, hitting $0.31 per share.

Source: Sonoran Weekly Review

ERDENE CLOSES $2.5 MILLION FINANCING WITH SANDSTORM GOLD

Erdene Resource Development Corp. has closed a CAD2.5 million deal for equity and securities

considerations that will fund drilling at the Bayan Khundii gold project, said the Mongolia-focused

miner in a 21 April statement. Sandstorm Gold Ltd. is buying five million shares at a price of

USD0.20 per share that it has agreed to hold for 18 months, in addition to the option for CAD1.5

million additional shares and a 2 percent net smelter returns royalty on Erdene's flagship god

properties Bayan Khundii and Altan Nar.

Erdene has a three-year buyback option for 50 percent of the royalty.

Source: Erdene Resource Development

XANADU REPORTS ‘BONANZA GRADE ASSAYS’ FROM OYUT ULAAN

Xanadu Mines Ltd has reported “bonanza grade assays” for its Oyut Ulaan copper-gold project in

Dornogobi Aimag. Recent exploration from Xanadu’s 90-percent owned project has discovered three

parallel epithermal lode structures that occur within 1.5 kilometer of eachother, said Xanadu in an

28 April announcement. New results were also successful in demonstrating zones of lower grade

gold mineralization in the chlorite-sericite altered wall-rock.

“We are delighted that detailed trench sampling of these newly discovered quartz-sulphide veins

continues to deliver outstanding gold results with multiple bonanza grade assays confirming the

existence of continuous shallow high-grade gold mineralisation with remarkable continuity along the

strike,” said Xanadu Chief Executive Officer Andrew Stewart said. “Now we have received all

results from the first part of the trenching program we are now developing plans for accelerated

exploration of this exciting new discovery at Oyut Ulaan.”

Source: Xanadu Mines Ltd.

KHUVD BECOMES FLIGHTPATH DESTINATION FOR WESTERN MONGOLIA

State-owned MIAT Mongolian Airlines and privately owned Aero Mongolia are opening routes to

western Mongolia at a significant discount thanks to some government assistance. A ceremony was

held on 21 April for the launch of flights between Ulaanbaatar to Khuvd, with connecting flights to

Bayan-Ulgii, Uvs and Gobi Altain. A ticket to Khuvd now costs MNT175,000 compared with

MNT240,000.

Source: News.mn

NOVOSIBIRSK WILL CO-OPERATE TO UPDATE 'RUSSIAN APARTMENTS'

Russian builders will return to Mongolia to fix the again apartment buildings that first populated

Mongolia's capital. The mayor of Russia's Novosibirsk, Anatoly Lokot, promised to bring Russian

construction companies to Mongolia to help improve Mongolia's aging Soviet apartment buildings

built from 1965 to 2000 in a meeting with with Ulaanbaatar counterpart Erdene Bat-Uul, according

to the City Administration Media Bureau. In addition to the repairs to apartments, Lokot suggested

Russian contractors also help with road construction.

“Builders from Novosibirsk have contributed much to the construction of Ulaanbaatar. For this

reason, we will continue to co-operate - primarily on the repair and renovation of old buildings in

UB,” said Bat-Uul. “We really need your experiences and management.”

Source: News.mn, Unuudur

HEP-C MEDICINE AVAILABLE AT HEAVY DISCOUNT

Gilead Sciences has signed an agreement with the government for the import of a Hepatitis C

medicine for sale at a preferential rate. The pharmaceuticals company's subsidiary Ombal is brining

a drug called Harvoni, used for treating the blood-borne illness known as Hepattis C, at a cost of

USD94,000 per unit compared with the normal sales price of USD1,200.

Source: News.mn

CONSTRUCTION MINISTRY SUES MONGOL DAIVIN FOR UNFINISHED ROAD WORK

The contractor Mongol Daivin is facing a lawsuit from the Ministry of Construction for an unfinished

road construction project. The government is running urban development projects throughout the

country to build base infrastructure for homes, including central heating and water pipelines,

spending MNT5 billion at each town. Mongol Daivin has not finished building roads at six of the 16

towns it was hired to build, according to Construction and Urban Development Minister Z.

Bayanselenge. “The company got 80% of financing and completed only 20% of the assignment,” said

Bayaneselenge.

Source: Unuudur

FRENCH NGO DONATES MEDICAL EQUIPMENT

The French NGO Action Mongolia has donated equipment laparoscopic surgery to a hospital in

Dundgobi Aimag. Representatives of the NGO were in Mongolia this month to sign a cooperation

memorandum with the Ministry of Health and Sports to develop laparoscopic surgery and improve

medical diagnosis, treatment and the quality of medical services in Mongolia. It includes a promise

to donate laparoscopic surgery equipment and train Mongolian medical staff.

Source: Mongolia.GoGo.mn

MONNIS MOTORS DONATES VEHICLES FOR ASEM

Monnis Motors has offered to loan out its vehicles to the government at no cost for the upcoming

Asia-Europe Meeting (ASEM) summit. ASEM event to be held in July will be the largest organized in

the country since its transition to a democracy and market economy, but is putting a strain on

resources during the economic slow down. Monnis has agreed to lend vehicles in return for a tax

exemption from the government on customs tax and value-added tax for its imported vehicles.

“Providing our cars for ASEM is such an honor to us,” said Monnis Motors Chief Executive Officer P.

Bayar has said.

Source: News.mn

SHOPPING MALL PLANNED UNDER THE BEATLES MONUMENT

Tserendorj Street between State Department Store and the circus will be closed for traffic and

turned into a shopping center, according to city urban development Plans. The Ulaanbaatar City

Representative Council plans to establish four car-free streets to improve the city’s image. The

street known for the Beatles memorial statue and a fountain that runs during summer will be

redesigned along with an underground 9,940 square-meter shopping center.

The city plans to enlist private financiers for the project, with companies buying up retail space at

auction for all four project developments in the Sukhbaatar and Chingeltei Districts. Construction is

expected to complete after two years, with a design that reflects Mongolian traditions, according to

the city council.

Source: News.mn, Mongolia.GoGo.mn

HOTEL MANAGERS TRAINED FOR ASEM

The Korea International Cooperation Agency hosted a training session for hotel managers expected

to provide services for visiting delegates for the upcoming Asia Europe Meeting summit to be held in

Ulaanbaatar in July. About 150 managers attended the session, which will run until 29 April focusing

on how to run international meetings and manage high-level guests who may have higher-than-usual

expectations. “This training is focusing not only on ways for strengthening the potential of hotels,

but also on boosting of the development of Mongolian tourism and the hotel services industry,” said

the chief advisor to President Tsakhia Elbegdorj, P. Tsagaan.

The government is also enlisting the help of 1,500 student volunteers from organizations such as the

Rotaract Club who participated in trainings from 25 April to 10 May. Volunteers were split into

groups of 50 for a “Basic Training” session on teamwork and diplomatic protocols from experts from

the Dudu training institute.

Source: Montsame, 2

MGG 2015 LOSSES NARROW DESPITE MORE SLOWED GROWTH

Toronto Venture Exchange (TSXV)-listed Mongolia Growth Group is seeing its losses narrowed

despite turbulent economic conditions, reporting a 52 percent decrease in spending that reduced its

negative annual spending for 2015. The real estate development and property management firm cut

its losses attributed to annual adjusted funds from operations by 89 percent year-on-year in 2015 to

CAD451,898 along with just CAD2.67 million in non-cash, non-capitalized development spendings.

The company's main development is the Tulguldur Center, located just next to Mongolia's central

business district. “We are proud to report significant improvements in AFFO despite the

accelerating weakness in the Mongolian economy,” said Harris Kupperman, chairman and chief

executive officer.

Over the next quarter, MGG plans to increase agency revenues and identify more cost-cutting

opportunities, but those may be under cut by worsening economic conditions. “With rental rates in

in a downward trend, our focus during 2016 will continue to be on efficiency gains and cost

reductions while we push ahead with our agency business,” Kupperman said.

Source: Mongolia Growth Group

SNOW LEOPARD VODKA – MAKING A DIFFERENCE FOR 10 YEARS

Snow Leopard Vodka, a premium spirit with a mission to save its namesake cat, is celebrating its

10th anniversary this week. The distiller sends 15 percent of its profits to snow leopard

conservation, raising a total of USD270,000 for this endangered feline. It's also aided Mongolia

during one of the worst natural disasters known as a “dzud” in three decades. In 2010, Snow

Leopard Trust UK stepped up while families were suffering from millions of livestock deaths by

donating over USD11,000 from sales of Snow Leopard Vodka to bring emergency aid to local

communities and help them rebuild their lives. Mongolia is also where the groups and partners have

launched the first long-term study of snow leopards in Mongolia’s South Gobi with the help of GPS

tracking collars.

Source: Snow Leopard Trust

A&O, HOGAN LOVELLS, MAYER BROWN ACT ON MONGOLIA’S $500 MN SOVEREIGN BOND

Mayer Brown JSM and Hogan Lovells have advised the government of Mongolia on a $500 million

sovereign bond offering under its USD5 billion global medium term note program, its first offering

since 2012. Allen & Overy and local firm GTs Advocates acted for the joint lead managers, which

includes Credit Suisse, Deutsche Bank, ING and JPMorgan Chase as well as local banks TDB Capital

and Golomt Bank and TDB Capital.

Corporate and securities group partners Jason T. Elder and Tom Kollar handled the transaction for

Mayer Brown. The Hogan Lovells team was led by Chris Melville in Ulaanbaatar and fellow partners

Sina Hekmat in New York and Andrew Carey in London. Hong Kong-based partner Alexander

Stathopoulos oversaw the offering for A&O. Proceeds from the offering will be used to refinance

indebtedness, fund budget deficits and finances different projects including infrastructure and

roads.

This article is a reprint from last week that was corrected by the Source

Source: Legal Business Online, Cover Mongolia

ECONOMY

MONGOL BANK: CURRENCY AUCTIONS, 1-WEEK BILLS

The Bank of Mongolia on 26 April sold CNY20 million to commercial banks in currency auctions for a

closing exchange rate of MNT307.20. Also that day, it accepted tugrug swaps with commercial banks

for an equivalent of USD53 million.

On 27 April, the central bank issued one-week bills worth MNT47 billion at a weighted interest rate

of 12 percent.

Source: Bank of Mongolia

APRIL SMI DATA SIGNALS CONTINUED DETERIORATION IN BUSINESS CONDITIONS

An index measuring business activity and sentiment for Mongolia indicated a slower albeit still

marked deterioration in business conditions across the country. The World Economics Headline Sales

Managers’ Index (SMI) for Mongolia gives a monthly assessment of economic activity in the country

with an index above 50 indicating growth and anything below meaning contraction. The short-term

outlook for activity dropped further during April with the Business Confidence Index posting below

the 50.0 no-change mark for the fourteenth month in a row. Surveyed managers attributed this to

reduced raw material prices, declining demand conditions and rising unemployment levels.

“Business confidence continued to deteriorate while staffing levels registered the fastest decline on

record. Overall, the latest data points to further drop in underlying demand over the next few

months.” reads a statement on the April report.

Source: World Economics

MONTHLY MINIMUM WAGE INCREASES

Labor unions have succeeded in convincing lawmakers in raising the minimum wage by 25 percent.

The government has raised the minimum wage to MNT240,000 a month after petitions from the

Confederation of Mongolian Trade Unions, the Mongolian Employers Federation, effective 1 January

2017.

The minimum monthly wage was set to MNT192,000 in 2013. Since then no changes were made until

today.

Source: Mongolia.GoGo.mn

TAX HIKES SET FOR MORE THAN 50 CATEGORIES OF IMPORTED GOODS

A tax hike of between 6.5 and 20 percent on 50 types of imported goods is set to take effect on 1

May. Mongolia has used taxes to encourage the consumption of domestically produced goods such as

cement and other imported goods, cutting down on import consumption while increasing export. A

host of tax hikes will target foods such as cheeses and potatoes, while the tax on construction

materials such as doors, windows, wooden furniture, and bricks and other building-block materials

will be added or expanded. Textile goods such as spun yarn will also be taxed.

Government in 2015 increased hiked import taxes on 10 categories of goods, including meat, honey,

cement and trolleybuses, but this year may offer exemption on goods such as assembly parts that

can be used for production here are also being introduced. A bill backed by the Cabinet Secretariat

on 25 April would cut the costs companies assembly public-transport vehicles by 15 percent,

according to its backers.

Source: Unuudur, Mongolia.GoGo.mn

TOURISM VISAS DOWN

The number of visitors entering the country with tourist visas has fallen by 7.5 percent in the first

three months of 2016 compared with the same period last year. Although not everyone who enters

the country with a tourist visa actually does pays for those services—many people enter the country

on tourist visas for a variety of reasons, such as unregistered work—the fall indicates a decline in

business activity from foreign visitors. The number of total foreign visitors fell by 10.5 percent to

63,600 against the same period last year, with about three-quarters visiting for for up to 30 days,

2.7 percent for up to 90 days and 23.2 percent for 90 days or more.

When looking at the number of visitors from specific countries there was some growth, however,

with North Koreans leading the pack with its numbers growing by 64.4 percent. It was followed by

Vietnam with 24.4 percent growth and New Zealand by 23.3 percent. The number of Italian visitors

fell by 26.1 percent, Hong Kong by 26.0, China by 18.6 percent and Ukraine by 15.1 percent.

Source: Montsame

MEASURES FOR SUSTAINABLE FARMING

A new state-owned farming company will take control of directing sustainable land usage for

farming. The Cabinet Secretariat on 10 April approved the creation of Mongolian Farming Corp. with

plans to issue MNT50 billion work of financing from the Development Bank of Mongolia.

Source: Montsame

ELECTRONIC MINING DATA SYSTEM LAUNCHES

A new data system archiving information from the mining industry has made public a decade's worth

of information collected from the mining industry in Mongolia. The data available includes

information related special licenses that have been issued, production and sales figures, tax

payments, donations made and community support provided by miners.

The archive system is an initiative from the Extraction Industry Transparency initiative that was

launched in 2006. Since then, a total of 4,701 companies engaged in mining, oil, and uranium

activities have released reports, while the government has reported on the tax income of 6,858

entities. “Launching the integrated electronic information database is a great advance,” said the

president of the Mongolian National Mining Association N. Alga said. “However, consumers do have

their own needs and demands. If we could provide information to target groups, that would be

better.”

Source: UB Post

NEW TECH CUTS ELECTIONS EXPENSES 10 TIMES

New voting machines and software are set to cut costs from this year’s election by 10 times from

the 2012 elections. The training has started for employees from 21 provinces as well as city’s,” said

J. Erdenbat, IT drector for the Election Committee. “MNT2.5 billion will be spent on the whole

expense of election.”

The new voting machines will run on batteries that can keep 13-hours charge in case of power

failure as well as read fingerprints and registration sheets to identify voters.

Source: Unuudur

MOBILE APP UNDER DEVELOPED FOR ASEM DELEGATES

The Ulaanbaatar administration has unveiled plans to roll out a new mobile app designed for the

hundreds delegates expected to arrive in Mongolia's capital for the Asia-Europe Meeting to be held

in July. The ASEM event will be the largest organized in the country since its transition to a

democracy and market economy, and will require the assistance to between 800 and 1,200 foreign

journalists expected to arrive. The app will include information on locations for buildings and

monuments, maps, services available in the city and security information for visiting journalists.

The app is available in either Mongolian or English language.

Source: Mongolia.GoGo.mn

TUUL RIVER LEVELS RISE

Officials are pointing to the return of water levels at the Tuul river to assuage fears that it may be

drying up for good. This year has seen the river hit its lowest-ever recorded levels because of the

extremely cold temperatures, according to Institute of Meteorology researcher G. Davaa. This

week, however water levels rose to 94 centimeters thanks to ice melt in Gachuurt, the Bosgo bridge

and Terelj.

He added that the new construction along the river, which is the city’s main source for water, is

not drying it up. Many alarmists have shared warnings on social media that the finite water

resources are on their last legs because of a pool built for a villa that will be used during the Asia-

Europe Meeting (ASEM) summit this summer. Environmentalists have called for the closure of resorts

located near the river, reforestation efforts and the use of so-called gray water, which is water

recycled after primary consumption.

Source: Mongolia.GoGo.mn

MORE THAN 4,000 FAMILIES TO MOVE OUT OF GERS AND INTO APARTMENTS

Ulaanbaatar expects to see 4,044 apartments commissioned this year as it plans to move ger-

dwelling residents into apartments. About half the city lives in Mongolia's ger districts, the source of

most of the city's air and soil pollution because there is no access to plumbing or the central

heating facility. Since 2014, 2,100 people from 500 homes have moved out of gers into apartments

in Ulaanbaatar. Currently, 58 developers are building apartments at 22 locations throughout the

city.

Source: Montsame

UB TARGETS 300,000 MEASLES VACCINATIONS

The Ulaanbaatar City Health Authority is planning to vaccinate 300,000 people for measles to help

stop the spread of the disease, which has been deadly to 62 deaths this year. Outbreaks throughout

the country have resulted in 15,540 measles patients, with the total deaths including 59 children as

of the first week of April. Mongolia saw no measles cases from 2010 to 2014, but the disease made a

comeback last year with 23,464 cases and eight deaths.

“ll members of staff at the Ministry of Health, the health authorities and district and family

hospitals are working as hard as possible,” said Sh. Enkhbat, the director of the UB City Health

Administration. “Currently, the measles outbreak has stabilized”.

Source: News.mn

DRONES PATROLLING UB’S STREETS

Police in Ulaanbaatar Songinokhairkhan District have begun using drones for crime surveillance,

according to the General Police Department. The district's governor's office has equipped police

with the DJI Phantom 4, which flies with a 12 megapixel camera and 4K video. The district's

citizens' council has financed the purchase of 27 surveillance cameras and 35 alarm cameras. “This

can be a good model project for the entire police organization,” reads a statement from the

Source.

The General Police Department is also keeping a database the contains the records of 1,025

subjects as part of its crime prevention strategy.

Source: General police department

3 DEAD IN WILDFIRE

A wildfire that broke out in Dornod Aimag and spread to Sukhbaatar Aimag killed three people and

injured one this week. Colonel S. Zaluukhuu, the chief fire fighter at the National Emergency

Management Agency, said there had been 31 wildfires this year. “Spring time is dry and windy

therefore the risk of forest and steppe fires is high,” he said.

“People have to be very careful while smoking and handling fire.”

Source: Udriin Sonin

SILK ROAD HIGHWAY TO OPEN UP KAZAKHSTAN, TURKEY MARKETS

The Silk Road highway that China is planning for will give the opportunity for expanded trade with

countries such as Turkey, according to the Mongolian ambassador. China plans to build the highway

route through western Mongolia to facilitate trade with Russia and other countries, but will also

open up access to Turkey and Kazakhstan, said Mongolia's ambassador to Turkey, B. Batkhishig. “We

will be linked on these roads by building railway in Khuvd and Gobi-Altai Aimags,” said Batkhishig.

Also planned for the project is the construction a railway from China to Europe that will not travel

through Mongolia. China's plans circumvent Mongolia despite its attempts to negotiate for a route

through here. Instead it will travel from Xinjina, Uyghur, Azerbaijan, Iran, Turkmenistan and

Kazakhstan. “We have drafted the project on a paper,” said Batkhishig.

Source: Mongolia.GoGo.mn

ADB BORDER-CROSSING LOAN TO HELP BOOST CHINA-RUSSIA TRADE

The Asian Development Bank (ADB) has approved a USD27 million loan to support more efficient and

less costly trade flows across three major border crossing points in Mongolia, paving the way for

increased trade with neighboring People’s Republic of China (PRC) and the Russian Federation.

“International trade is essential for Mongolia’s economy and much progress has been achieved to

conclude free trade agreements with trading partners. However, market access alone is not a

sufficient condition for harnessing trade for development,” said Cristina Lozano, an ADB Regional

Cooperation Specialist.

The project aims to reduce costs and time spent for customs with the financing of infrastructure

and equipment at the border points of Altanbulag, Bichigt, and Zamyn-Uud, expanding handling

capacity and allowing customs officials to work more efficiently. Assistance will also be given to

upgrade the existing Customs Automated Information System, which was put in place with ADB

assistance in 2010.

Source: News Hour

ADB'S NEW LOAN TO SCALE UP URBAN SERVICES IN GOBI PROJECT

The Asian Development Bank (ADB) has over USD19.4 million in additional lending to scale up a

project for upgrading urban infrastructure and management services in fast growing provincial

centers and border towns in the southeast Gobi desert. The financing will fund new wastewater

treatment plants, while a technical assistance grant of USD1 million will be used to assist the

government in addressing sludge reuse, including implementing a pilot in at least one of the project

provincial centers. “This new assistance will support essential urban improvements in selected

aimag (province) centers, giving a significant boost to the living conditions in these areas as well as

aiding economic development,” said Antonio Ressano-Garcia, an ADB Senior Urban Development

Specialist.

The fresh funds will cover the construction of modern wastewater treatment plants in four

provinces (Dalanzadgad, Sainshand, Avairkheer and Tsetserleg) to replace the current inadequate

pond systems.

Source: Asian Development Bank

CASHMERE PRICE TAKE A TURNAROUND

Cashmere prices have surged 23 percent past last year’s peak of MNT55,000 kilogram. The price of

cashmere has hit MNT68,000 a kilogram after more than two years of falling price value that has hit

the country’s traditional nomadic herders hard.

Source: News.mn

FOR COMMODITIES MARKETS, THE BAD TIMES ARE JUST BEGINNING

For the commodities market, the good times have come and gone, but the bad times are only just

beginning. "It is no secret that the Mongolian economy is affected by decreasing foreign direct

investments, coupled with China's slowdown and impacted by [falling] global commodity prices,"

Mongolian Prime Minister Saikhanbileg Chimed said in Hong Kong in April.

The Asian Development Bank forecast in March that the country's gross domestic product will grow a

meager 0.1 percent in 2016. Since the start of the 20th century, there have been three

commodities supercycles, or periods of generally rising prices, the last of which is estimated to

have peaked between 2011 and early 2014. Both of the previous uptrends were followed by

downturns that lasted more than a decade.

Source: Nikkei Asian Review

CAN MONGOLIA BE SAVED FROM LOW COMMODITY PRICES?

Having capitalized on the global commodity boom, and its proximity to a ravenous China, Mongolia

has until recently seen rapid economic growth. As Chinese growth forecasts in the coming years sink

towards the mid-single-digit range, Mongolia enters 2016 skirting with recession. As commodity

exports dry up, Mongolia is faced with a revenue shortfall. Despite the billions from mining

concessions, one-third of Mongolians still live in poverty

Efforts to jump-start mining in Mongolia have met opposition, such as the government's plans for

increasing uranium mining. In 2015 the government issued three uranium mining permits to French

mining firm Areva, with production slated to begin in 2017. This endeavor has drawn protests from

locals. And commodity price volatility has highlighted the need for Mongolia to diversify its

economy. To this end, Mongolia has received a USD60 million loan from the ADB to improve the

country's credit guarantee system.

Source: UPI

IRON ORE’S SURPRISE RALLY LOOKS ON BORROWED TIME

Caught between slowing Chinese demand and relentless production growth 2016 was supposed to

bring more pain for the iron ore industry—Mongolia's fourth-largest mining commodity. So far things

haven’t played out that way. Instead of sinking to USD30 a tonne as many analysts had predicted,

the steelmaking commodity has surged in value. Boosted by rising Chinese steel prices and supply

disruptions in Australia and Brazil, it has gained more than 50 percent this year and hit a 15-month

high of USD68.70 a tonne last week. If sustained, the rebound, which has made iron ore the top

performing major commodity of 2016, could add billions of dollars to the bottom line of big

producers such as BHP Billiton PLC, Rio Tinto Group and Vale SA.

But their shareholders should not get too excited — few industry participants believe the recovery

in the 1.4bn-ton-a-year market will last, including the major producers. “I think we’re going to see

this [higher prices] for a few months, and then things will come back off again,” said Mike Henry,

head of BHP’s Australian operations at the Melbourne Mining Club.

Source: Financial Times

IMF WARNS CHINESE RESPONSE TO DEBT NEEDS TO BE MORE COMPREHENSIVE

China’s leaders need to look beyond the current solutions being floated to tackle the country’s

mounting corporate debt problems and come up with a bigger plan to do so, the International

Monetary Fund’s (IMF's) top China expert has warned. The IMF has been expressing growing concern

about debt issues for Mongolia's top trade partner and pushing for an urgent response by Beijing to

what the fund sees as a serious problem for the Chinese economy.

The IMF warned that the two main responses Beijing was planning to the problem — debt-for-equity

swaps and the securitization of non-performing loans—could in fact make the problem worse if

underlying issues were not dealt with by creating a temporary lifeline to inviable state-owned

companies, they warned. It could also leave them managed by state-owned banks or other officials

with little experience in doing so.

Source: Financial Times

HOW RUSSIA IS MOVING AHEAD WITH ITS ASIAN PIVOT

At first glance Russia made an eastward turn a long time before the West imposed sanctions on the

country. However, until now we have seen more of a Chinese pivot and not a full-fledged

reorientation of policy toward Asia. Russian Foreign Minister Sergey Lavrov tried to correct this

imbalance with a recent visit to Mongolia and Japan. The first stop in Mongolia demonstrates

Russia's acknowledgement that the middle-developed country is a useful for processing

hydrocarbons that would be exported to China. "Mongolia actually separates us from China," says

Alexander Frolov, deputy director of the National Institute of Energy. "This is why Moscow wants to

bring Mongolia into the Eurasian integration processes, and in particular to implement a Russia-

Mongolia-China economic corridor," suggesting that it could happen at the SCO summit in Tashkent

in July.

In addition, Russia will be engaged in the modernization of Mongolian companies, and will give the

country a loan of 1 billion rubles.

Source: UPI

POLITICS

DELEGATES' TALKS FOCUS ON SECURITY AT ASEP

Security during this time of mass migration from asylum speakers and anti-terrorism efforts were

the chief talks of focus at the the Asia Europe Parliaments (ASEP-9 meetings) held last week in

Ulaanbaatar. The meeting is seen as a lead up to the larger Asia-Europe Meeting Summit to be held

in July, which will be the largest international gathering in Mongolia's history as a democracy. On 21

and 22 April, 170 delegates from 32 countries and the European Parliament gathered for talks

where many speakers during the even condemned all kinds of terrorism as severe threats to the

global peace and stability, how legislative parliaments have and should contribute to anti-terrorist

efforts through policy and monitoring financial transactions.

The number of Refugees and the flow of migrants have peaked to their largest-ever numbers,

participants said, and governments must tackle this ongoing problem on the political and security

socio-economic fronts.

Source: Montsame

MPP ACCEPTS COURT’S RULING ON ELECTION RULES

The Mongolian People’s Party (MPP) has signaled that it won’t push any longer for a change in the

election rules following the Constitutional Court’s decision to maintain the same rules for this

year’s election as 2012. “Our position is it’s wrong to hide behind a party list in favor of a direct

election,” said the lead official for the MPP in Parliament, S.Byambatsogt, said. However he added,

“There is no need even for a possibility to delay from the decision of the Constitutional Court.”

The Mongolian People’s Party has pushed to see all seats in Parliament filled by direct vote for

candidates rather than a vote for a party that will choose who takes the seat. Some critics point out

that this gives an advantage to established parties who have the resources to campaign for party

members compared with smaller parties with lesser funding.

Source: Unuudur

DOCTORS PROTEST LAW CRIMINALIZING PATIENTS’ DEATHS

President Tsakhia Elbegdorj has sided with protesters decrying a law that would send doctors to jail

for patients whose conditions worsen during treatment. More than 6,000 doctors and medical

students on 26 April 26 demonstration at Chinggis Square protesting against a portion of a new law

that holds doctors accountable if patients’ health worsen or they die. The law, which takes effect

on 1 September, would bar doctors from practicing for between one and three years, fines them for

between MNT20 million and MNT80 million, and can even result in two-to-eight years of prison.

After the president met with officials from the Ministry of Health, government promised to give an

answer to the doctors’ protests by 29 April.

Source: Udriin Sonin, Mongolia.GoGo.mn

UYANGA CHAIRS INDEPENDENCE AND UNITY PARTY

MP G. Uyanga has left the Justice Coalition to chair the Independence and Unity Party that many

believe to be run by the Democrat's Khaltmaa Batulgaa. Batulgaa, who is currently under

investigation for corruption, is believed to be the mastermind of the party, which has yet to

disclose it's membership. Uyanga announced her new role with the 1,000-member party after it's

first irregular meeting, held on 18 April at the State Opera and Dance Theatre.

Although the party claims that a number of senior politicians and business people have intentions to

join the party, there's little known about who these individuals are. The party was established in

November 2014 and received approval from the Supreme Court last May. L. Tsog, a political ally

who coordinated with her in efforts in Parliament to dismiss Prime Minister Chimed Saikhanbilg.

Source: News.mn

VIETNAM-MONGOLIA LEGISLATIVETIES THRIVING, SAYS NA VICE CHAIRMAN

Vietnam-Mongolia legislativeties are thriving, says the vice chairman for Vietnam's National

Assembly. Highlighting the fruitful traditional friendship between the two countries, Uong Chu Luu

said that Vietnam always treasures the valuable support and assistance given by the Mongolian

government and people during its past struggle for national independence. That includes the

Mongolian Parliament sending a high-ranking delegation to attend the IPU-132 Assembly in Hanoi

last year and recommended that Parliament create conditions for enterprises of the two countries

to enhance collaboration and help Vietnamese citizens live and work in the country.

Source: Vietnam.vn

INDO-MONGOLIA JOINT-MILITARY EXERCISE NOMADIC ELEPHANT- 2016 LAUNCHES

The Eleventh Indo-Mongolia joint training Exercise, Nomadic Elephant - 2016 to promote military

associations between India and Mongolia commenced on 25 April in Mongolia. The exercise will run

through to 8 May 2016 with the aim of developing synergy and inter interoperability between the

two armies to fight in Counter Insurgency and Counter Terrorism environment under the U.N.

mandate. From the Mongolian Armed Forces, a total of 60 personnel will take part in the exercise,

while the The Indian contingent will share their practical experiences of Counter Insurgency and

Counter Terrorism operations through a series of classroom lectures and outdoor demonstrations.

Besides, military training both the contingents will also share their techniques of unarmed combat,

specialized rappelling and participate in various sports events during the two weeks exchange.

Source: Business Standard

RUSSIA RESPONDS TO BLUE JEAN KERFUFFLE

Russia's has responded to some outcries of disrespect toward Mongolia when Russian Foreign

Minister Sergey Lavrov arrive in Mongolia last week in casual blues. Lavrov was caught off guard by

media and official greetings when stepped off his private plane on 14 April at Chinggis Khaan

International Airport in blue jeans, according to the ministry, according to a statement from the

Russian Ministry of Foreign Affairs. Many Mongolians watching the arrival on TV took the casual

attire as a slight against the nation, where society still holds fondness for Russia after decades as a

Soviet satellite. On social media, Mongolians wrote in outraged about the perceived insult.

"The Russian delegation spent a night in a plane and planned to change clothes at the hotel before

the official meeting took place" said Russian Ministry of Foreign Affairs spokeswoman Maria

Zaharova. She added, “We didn't mean any disrespect by this,” she said.

Source: Mongolia.GoGo.mn

BABY DINOSAURS COMES HOME

The fossil remains of three baby dinosaurs which had been smuggled out of Mongolia have been

returned home. Although small, the three small Saurolohus, belonged to a type of giant herbivore,

which lived 70 million years in the Late Cretaceous - the last age of the dinosaurs. The Sauolophus

returned to Mongolia under a co-operation agreement between the Mongolian Ministry of Education

Culture and Science, the Belgian Scientific Policy Authority and the Royal Belgian Institute of

Natural Science, which covers Mongolian geological, paleontological and biological items of value

which had been illegally smuggled abroad.

Over the last three years 23 dinosaur remains have been returned from the United States.

Source: News.mn

UB ADMINISTRATION LAUNCHES INVESTIGATION INTO RELIGIOUS GROUPS

A new task group organized by the Ulaanbaatar administration will open an investigation into the

religious groups operating in Mongolia. Mayor Erdene Bat-Uul ordered the creation of the task group

in response to complaints by some citizens that foreign religions are having too much influence on

governance in Mongolia, especially non-Buddhist religions. The investigation, which closed on 25

April, put scrutiny onto churches, monasteries, NGOs, schools, kindergartens and charity groups,

according to the City Administration Media Bureau.

Source: News.mn

SANT MARAL’S POLITBAROMETER SUGGESTS ECONOMIC REVIVAL IS KEY TO THE VOTERS

A recent poll from the Sant Maral Foundation this month gives clues that voters will be putting

pressure on politicians for an economic revival above all other issues. Sant Maral released its annual

Politbarometer last week reporting unemployment as the heaviest issues on the minds for

Mongolians in the months leading up to the election. And when asked about the outlook on the

economy over the next five years, the percentage of people who thought the economy would

improve increased from last year’s 35.8 percent to 40.0 percent this year.

Since transitioning to the free market economic model in 1990, Mongolia’s economy has never really

experienced a prolonged and severe economic crisis, except for brief periods in 1997, and 2008.

Mongolians might be expecting this current slowdown from 2012 to soon end. That gives reason to

believe that the two major political parties will vote for policy favorable to FDI and the mining

industry.

Source: Mongolian Investment Banking Group

BCM UPDATES:

ANNOUNCEMENTS

‘OPTIMIZING COSTS AND MANAGING IN DOWNTURN,’ NATSAGDORJIIN PUBLIC LIBRARY, 4 MAY

The next “BCM Knowledge Sharing Session" will be held at 17.00 on Wednesday, 4 May. This time

the session will be facilitated by Ch. Mergen, the newly appointed Executive Director for the

Business Council of Mongolia (BCM) on the topic "Optimizing Costs and Managing in Downturn."

The session is offered free of charge to BCM members only and will be conducted in Mongolian

language.

_________________________________________

2016 COAL & METALS MONGOLIA, 6-7 MAY, CORPORATE HOTEL AND CONVENTION CENTER

Join to learn about Mongolia's major infrastructure and coal assets at Coal & Metal Mongolia

conferences—now an annual event. Hear from Mongolian government officials and expand your

business contacts while learning about infrastructure in Mongolia and how to the capital investment

environment can become more competitive. Over 500 guests are expected and 80 companies

exhibiting their services.

For more information, call 9911-6135, 7011-5590. BCM members can receive a 10 percent discount

at registration by emailing saruul@bcmongolia.org for a special discount code.

_________________________________________

EXPO MONGOLIA – THE PLACE TO BE IN MAY 2016 FOR DOING BUSINESS!

A perfect time for international investors, associations and private companies to start business in

Mongolia and to play a key role in future development. Therefore Expo Mongolia, the international

trade fair in Buyant-Ukhaa Sport Complex, Ulaanbaatar, is the meeting place for all industries.

From 23–25 May in the Buyant-Ukhaa Sport complex, official pavilions and individual exhibitors are

warmly welcomed to the unique networking platform in the expanding eastern market to establish

business contacts and to present new innovations to trade professionals from Mongolia and

surrounding countries.

BCM members will have 10% discount on registration. Please contact saruul@bcmongolia.org to get a

special discount code. For more information please visit www.expomongolia.com.

Please contact us via e-mail: em@expomongolia.com. Tel: +976 94009471, +976 70009471

BCM ADVOCACY NOTES

Revisions to latest draft of Labor Law bill

Ministry of Labor has recently made revisions to the latest draft, particularly in areas of joint

agreement and annual leave. Currently, this draft is being reviewed and commented by other

Ministries. Labor Minister Bayarsaikhan.G reconfirmed his intentions to submit the draft for the

autumn Parliamentary session.

The latest draft can be found here.

BCM WORKING GROUP NEWS

Risk Working Group

BCM’s Risk Working Group’s meeting was held on Wednesday, 28 April at Suite 1201, 12th floor

Express Tower, with 10 members in attendance, representing Mandal General Insurance, MIG

Insurance, Xac bank, Wagner Asia, Deloitte Onch, Erdenes Tavan Tolgoi, American Center for

Mongolian Studies and Occupational safety and health management institute (OSHMI).

AGENDA OF THE MEETING:

- Introduction and Opening remarks by Working Group Co-Chairs (Risk WG Co-Chairs)

- "Occupational safety and health management institute of Mongolia" (Moiltmaa S., Executive

Director, Occupational Safety and Health Management Institute of Mongolia (OSHMI))

- “Assess and control the OSH Risks” (Lead Consultant and Auditor at OSHMI)

- "Workplace health and safety-Tips on handling risks, when medical help is not immediately

available” (Usukhbayar A., M.D., M.Sc, Health Insurance Director at Mandal General Insurance)

WG members were introduced to the OSHMI at large and its past activities and followed by

Battumur N., OSHMI Lead Consultant and Auditor updating the members of the current situation of

the risk management system at local companies. His opening slide made many of the members in

attendance question the existing risk management system at each of their organizations; and his

presentation ended with an interesting short clip on the dangers of not appropriately assessing

risks.

On second part of the WG meeting, Dr Usukhbayar gave away some important tips in handling office

based health and safety risks. His presentation was complimented by full demonstration of

cardiopulmonary resuscitation /CPR/ on a mannequin and checking of blood pressure of individual

WG members.

For more information about this meeting, please contact Khulangoo P., Working Group Coordinator

of BCM at khulangoo@bcmongolia.org.

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Energy & Environment Working Group

BCM’s Energy and Environment Working Group’s meeting was held on Tuesday, 26 April at meeting

room of Open Society Institute, with 13 members in attendance, representing GGGI, Engie

Mongolia, US Embassy, Xac bank, Wildlife Conservation Society, Techenomics, Nature Conservancy,

Mongolian Wind Energy Association, Institute of Energy Economics, and the newest addition to the

Working Group –EuroKhan. The meeting was organized under the theme of: “INNOVATION IN GREEN

TECHNOLOGY”

- Recap of the last meeting and introduction of new Co-Chair: Thomas Papazov, Engie Mongolia

(Energy and Environment WG Co-Chairs)

- Feature presentation: "Institute of Energy Economics-Who we are and our innovative approaches"

(Enkhtuvshin R., Institute of Energy Economics/IEE/)

- Feature presentation: "Green technology and innovation"

(Nyamdavaa G., Ministry of Environment, Green Development and Tourism/MoEGDT/)

- Facilitated discussion on business implications of green technology and innovation in Mongolia

Enkhtuvshin of IEE shared with the group institute’s recent studies and researches and projects for

possible partnership. Dr Nyamdavaa informed the group about the upcoming “Green Technology

Expo-2016” and action plan implemented by the MoEGDT. Highlight of the meeting was the 303

Decree by the Government of Mongolia, which allows companies to be exempt from customs duty

when importing tools, equipment approved as environmentally sound and efficient. Please click

here to see the list.

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

Coordinator of BCM at khulangoo@bcmongolia.org.

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Legislative Working Group

BCM’s Legislative Working Group’s meeting was held on Thursday, April 14, 12th floor Express

Tower, with 13 members in attendance, representing Minter Ellison, Hogan Lovells, Oyu Tolgoi, ELC

Law Office, Newcom, PATC (Professional Accounting and Tax Consulting) and MCS.

Agenda of the meeting:

16:00-16:10 Opening remarks and introduction of plan for 2016 - Legislative WG Co-Chairs

16:10-16:40 Overview and update of recent changes to the draft labor law - Sebastian Rosholt,

Minter Ellison

16:40-17:10 Proposed tax legislation revision - Anthony Woolley, Hogan Lovells

17:10-17:30 Issues in VAT law and the CIT draft law - Munkhtur T, Director of Business

Development, MCS

Meeting began with BCM’s Executive Director Jim Dwyer’s introduction of the newly appointed Co-

Chairs of the Legislative Working Group: Sebastian Rosholt of Minter Ellison and Anthony Woolley of

Hogan Lovells. Jim extended his gratitude to both gentlemen for volunteering as Co-Chairs.

Sebastian’s presentation focused on the changes in the February to March drafts of the Labor Law,

highlighting the positive developments especially on the annual leave days and the negative

developments that were added into since the December draft. Sebastian also emphasized that some

of the negative developments from the employer’s perspective presented in his presentation were

the provisions originated from the December draft.

Anthony gave a comprehensive overview of the tax regime of Mongolia up to the current draft of

the Corporate Income Tax (CIT) law. The CIT Law draft was scheduled for discussion at the

Budgetary Standing Committee on 11 April, but was postponed. The presentation covered changes

in the threshold of the standard tax rates, affiliated parties, tax returns, tax exemptions and cross

referrals to other legislation.

Munkhtur from MCS shared with the group specific risks project developers see in the current

proposed CIT Law. Main concerns are in regards to the VAT on the purchased PPE, works performed

by non-residents and the tax levied on sales of securities.

Bayar, Managing Partner, ELC Law Office, suggested that these concerns from the businesses could

be further explored with BCM’s Tax WG and advocated immediately. WG Co-Chairs agreed to the

suggestion and assured the group that after a consultation with Tax WG chair and key members, a

statement by the BCM’s Legislative WG will be issued.

It was agreed that the recommendations on the CIT law will be incorporated in the 1st Annual BCM

Summit Proceedings for further advocacy.

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

Coordinator of BCM, at khulangoo@bcmongolia.org.

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Capital Markets Working Group

BCM’s Capital Markets Working Group’s meeting was held on Tuesday, 5 April at Suite 1201, 12th

floor Express Tower, with 15 members in attendance, representing OT, BDSec, Khan Bank, Golomt

Bank, TDB, XacBank, Mongolia Growth Group, Ernst & Young Mongolia Audit, Nova Terra, Wagner

Asia Equipment LLC and Mahoney Liotta.

Agenda of the meeting:

16:00-16:10 Opening remarks and re-cap from last meeting

(Capital Markets WG Co-Chairs)

16:10-16:50 Guest speaker: "Oyu Tolgoi Project Financing"

(Dorjpalam Kh., Senior Advisor Corporate Finance, OT LLC)

16:50-17:10 Member time: Update on Custodian Banking

(Ariunjargal Ch., Head of Custody Services Dept., Khan Bank)

Nick Cousyn, Co-Chair of the Capital Markets Working Group, provided a recap of the last meeting

to the members and updated the members on the latest market news of the Government of

Mongolia’s coming into the market twice with Credit Suisse syndicated loans.

Ms. Dorjpalam Kh, Senior Advisor Corporate Finance of OT LLC, gave a comprehensive overview of

the Oyu Tolgoi Project Financing. The presentation covered key topics: the significant benefits to

Mongolia, list of project financing participants, financing plan with its tranches and key financing

terms. Participants were mostly interested in knowing the drawdown of the financing and how the

financing schedule is tied to the technical certification of the underground development.

Ms. Ariunjargal Ch., Head of Custody Services Department at Khan Bank, updated the members on

the engagement with Financial Regulatory Commission (FRC) on the issue of Custodian Banking

Services, in particularly failed trade management and establishment of the market infrastructure at

Mongolian Stock Exchange through Millennium IT. Due to the re-organization at the FRC, its

Chairwoman’s resignation to run for office in the parliament, regulations required for the failed

trade management have not been finalized at the Government level. On the recent FRC Working

Group tasked on the custodian banking issue, brokerage firms and commercial banks have clarified

impending issues on the T+1 and T+2 settlement issue.

During the discussion period, BCM reminded the members of the 1st Annual BCM Summit scheduled

on 21 April and encouraged members to send up to 3 issues and challenges faced by the business

and sector in relation to the regulatory environment and related recommendations on those issues

that need to be addressed by the political parties and the next government.

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

Coordinator of BCM atkhulangoo@bcmongolia.org.

_________________________________________

Tax Working Group

BCM’s Tax Working Group’s 2016 kick-off meeting was held on Wednesday, 2 March at Suite 101,

12th floor Express Tower, with 16 members in attendance, representing Oyu Tolgoi, PwC, Deloitte

Onch Audit, Sumitomo Corporation Mongolia office, International SOS, WCS, MahoneyLiotta, Lehman

Lee & Xu and PATC.

Agenda of the meeting: 16:00 - 16:10 Opening remarks (Chair, Tsendmaa Choijamts, PwC) 16:10 -

17:00 Introducing new VAT law (Altankhorol O, Senior state tax inspector, Revenue department of

the General Department of Customs and Taxation) 17:00-17:30 Q&A session and discussion on TWG

plans for 2016 (Members, state tax inspector)

Ms. Altankhorol, General Department of Customs and Taxation of Mongolia, reviewed the newly

adopted Value-Added Tax (VAT) law of Mongolia, which took effect on 1 January 2016. The

presentation covered key policy changes, changes in the other related regulations and frequently

asked questions from businesses. Members in attendance were interested in the procedural changes

in the new VAT law, such as the registration and de-registration as a VAT payer, VAT-exempt goods

and services and VAT zero-rated goods and services.

Ms. Tsendmaa Ch, Tax Executive Director of PwC Mongolia, shared with the members Tax Working

Group’s draft plan for 2016. As Chair of Tax Working Group, MS Tsendmaa, informed the members

of the intent of engaging representatives from the government entities to the WG meetings in order

to learn more about legal and procedural changes and to exchange expert views with

representatives from government bodies.

Next meeting is scheduled for May. For more information about this meeting, please contact

Khulangoo Purevjav, Working Group Coordinator of BCM at khulangoo@bcmongolia.org.

_________________________________________

Business Ethics Working Group

Business Ethics Working Group meeting was held on 1 March at Express Tower from 16:00 to 17:30

with 12 members in attendance representing Atlas Copco, Transparency International, Mandal

General Insurance, US Embassy, Wagner Asia, Deloitte Onch Audit, Asia Foundation, Valliant Art and

Interiors, World Vision and the Institute of Finance and Economics.

Agenda of the meeting: - Introduction of members and guests (Anders Berglund, Atlas Copco) -

Recap from the last meeting (Christine Hudetz, TI Mongolia) - Insurance sector transparency (Zaya

Bolorbold, Mandal Insurance) - Discussion on topics and plan for 2016 (Christine Hudetz, TI

Mongolia).

The meeting begun with recap of the last meeting: development of the draft plan for 2016 and

collective agreement on the need to reach-out for more local companies as members of the

Working Group. Given the delicacy of the issues the WG intends to cover at its meetings and the

subsequent low interest from BCM members to sign-up for this WG, nonetheless members have

agreed to continue with its meetings and aim to draw more attention from local companies.

Ms. Zaya, Mandal Insurance, presented an overview of the insurance industry and Mandal fight

against kickbacks and the adverse effects of kick-back culture within the industry. Attendees were

highly impressed with Mandal’s meticulous top-down approach against kick-backs, from its

philosophy to its hiring procedure. During the discussion time on plan for 2016, Wagner Asia has

volunteered for a presentation in November and Asia Foundation offered to share its study findings

on corruption in Mongolia.

Co-Chair reminded the members of the next meeting topic item: Gift giving policy on Tuesday, first

week of May. For more information about this event, please contact Khulangoo Purevjav, Working

Group Coordinator of BCM at khulangoo@bcmongolia.org.

_________________________________________

BCM Education Working Group

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

Business Center, 10F Galaxy Tower from 16:00 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;

Meeting minutes summary:

Opening remarks by Education Working Group Chair - Saha Meyanathan. Saha related 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

‘BCM in the University Classroom’ is expanding to high schools!

We are pleased to share that Amartuvshin Sh, CEO of Axel Fischer Academy, spoke at American

School of Ulaanbaatar (ASU) on 12 April 2016. Mr. Amartuvshin's speech entitled "New Season" was

targeted for staff at the ASU, to empower them with a new sense of purpose and motivate them

further in their service in the education sector. We thank ASU for hosting us and making it available

during spring break. BCM extends gratitude to Amartuvshin Sh for taking the lead in our first ever

"BCM in the high-school classroom" lecture initiative.

Please be checking our posts on "BCM in the University Classroom" series, as interesting presenters

are lined up this month!

KNOWLEDGE SHARING SESSIONS

A BCM Knowledge Sharing Session was organized on 21 March in partnership with our member,

Corporate Governance Development Center (CGDC), on the topic "Methods for analyzing current

organizational strategy and identifying the strategic vision". The session was led by Enkhbold

Chuluunbaatar, Ph.D., business strategy manager at CGDC and a senior lecturer in the Department

of Business Administration at the Institute of Finance and Economics. His research interests include

entrepreneurship, culture and creativity, and strategy management. The focus of the session was

given on how to define organizational vision based on identifying organizational resources and

assessing factors that create value in the organization. A total of 15 people representing 12 member

companies attended the session.

COOPERATION & MEMBER DISCOUNTS:

- The British School of Ulaanbaatar offers the following discounts to BCM members

- Corporate packages for sending children to BSU

- 20% off for private or company use of the Indoor and outdoor sports complex, swimming pool and

conference room

- Oxford Business Group (OBG) offers BCM members and the 1st Annual BCM Summit participants a

complimentary read-only, online subscription to all of OBG’s digital reports

- Axel Fischer Academy offers 20% discount to BCM members on “Equipping your rising star Leaders”

in a three months training

- PROSUM LLC offers 10% discount to BCM members on promotional products they distribute from

European producers

- Corporate Governance Development Center (CGDC) offers 20% discount on all of its trainings to

BCM members

- News.mn offers 20% discount of its products and services for BCM members

- Mongolian Economy offers 50% discount for its advertisements & paid articles on website and 55%

subscription discount on its online magazine for BCM members

- NPC&Mandal offers 20% discount to BCM members

- Birches Group offers 10% discount on Mongolia Compensation and Benefits Survey for BCM

members

- New Media offers 25-50% discounts to BCM members on its online accounting software, E-

commerce platform, web & mobile application development and job searching software.

For more information about announcements and discounts, click here or contact Otgongerel,

Partnership Manager at otgongerel@bcmongolia.org.

MEMBERS’ VACANCIES

- Thiess Mongolia is hiring an Electrical Engineer & Mechanical Engineer. Deadline for

Application: April 20, 2016. For more information: contact: 70129820

- Save the Children is hiring a Finance Assistant. Deadline for Application: 5 pm April 08, 2016. For

more information: contact 11-329371; secretary@savethechildren.mn

- Euro Khan is hiring a Sales Engineer. For more information: contact at 11-325867, email:

info@euro-khan.com

- Atlas Copco Mongolia LLC is hiring a Sales Engineer. For more information: contact at +976

70129294 or send your CV to e-mail address anders.berglund@mn.atlascopco.com

For more information about vacancies, click here. To post your vacancy on BCM website, contact

Dolgorsuren at dolgorsuren@bcmongolia.org.

WEBSITE UPDATES: PRESENTATIONS, MONGOLIA REPORTS, INTERVIEWS

PRESENTATIONS:

1st Annual BCM Summit Presentations:

- B. Byambasaikhan, CEO, Erdenes Mongol – “Strategic Transformation”

- Anders Berglund, General Director, Atlas Copco Mongolia – “Technology in cost effective mining”

- N. Munkhnasan, General Director, Monpolymet – “Mongolia’s Cement Sector”

- David Rohanna, Managing Partner, APIAG Mongolia –“Issues and Solutions for Investment in Natural

Resources”

- Matthew Pottle, Managing Partner, PricewaterhouseCoopers - “Global Perspectives on Risk

Management during Economic Slow Down”

- B.Enkhtuya, COO, Golomt Bank –“Behavioral-Based Human Resource to Improve Productivity”

- B. Ulziibayar, CEO, Ard Capital Group –“MSE and Capital Markets”

- Randolph Koppa, Executive Vice Chairman, TDB –“Macroeconomic Issues amid Global Trends”

- Ch. Khashchuluun, Executive Director, National Council of Private Sector Support –“Innovation in

Mongolia”

- Ms. M. Suvdmaa, International Affairs Manager, Precom –“Meat Industry Reform”

- A. Usukhbayar, Health Insurance Director, Mandal General Insurance –“Private Health Insurance –

Can be a prospective leverage to improve healthcare industry in Mongolia”

- S.J. (Steve) Potter, Executive Director, WAGNER ASIA Group of Companies –“Implementing an

effective CSR Program: Case Study: The WAGNER ASIA Group of Companies”

- B. Enerel, Head of Investments, UB Development Corporation –“UB City Projects”

- L. Sumati, Director, Sant Maral Foundation –“Election Highlights”

- Cameron McRae, Founding President, Institute of National Strategy –“Macro view of the

Government since 2012”

_________________________________________

BCM Monthly Meeting, 28 March:

- Steve Rose, General Manager, Cummins Mongolia Investment - "Cummins supporting Mongolian

customers"

- Barrie Evans, Director, Churchill's - "Their life in your hands"

- P. Tsagaan, Chief of Staff, Office of the President - "Update on ASEM"

_________________________________________

BCM Monthly Meeting, 22 February:

- A. Baatarpurev, Director of Markets Development Department, Financial Regulatory Commission -

"Financial Market Developments in Mongolia"

- Jennifer Bielman, Country Director, MercyCorps Mongolia - "Mercy Corps: Building Resilience in

Mongolia"

- D. Uuriintuya, Chairman, Mineral Resources Authority of Mongolia - "Mongolian Events during PDAC

2016 in Toronto"

- N. Munkhnasan, General Director, Monpolyment - "Overview of Monpolyment"

_________________________________________

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”

_________________________________________

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)

_________________________________________

INTERVIEWS:

- Interview with Garrett Wilson, Wagner Asia AutomotiveExecutive Director, Bloomberg TV, 21 April

2016

- Interview with Dr.Khashchuluun Ch., at the 1st Annual BCMSummit, Bloomberg TV, 21 April 2016

- The First Annual BCM Summit news coverage by Bloomberg TV,21 April 2016

- "The Business community will deliver its recommendations and messages to the Government"VIP76

website coverage at the 1st Annual BCM Summit, 21 April 2016

- "Companies that estimate their risks realisticallycan escape from the crisis" VIP76 website

coverage at the 1st Annual BCMSummit, 21 April 2016

- "The World wants Mongolia" VIP 76 websitecoverage at the 1st Annual BCM Summit, 21 April 2016

- "Investors deal with issues with no emotion"coverage by VIP76 website, 21 April 2016

- "The First Annual BCM Summit panel discussions ongoing" coverage by VIP76 website, 21 April 2016

- "S.Oyun, Parliament Members gave lecture to students of University of Humanities within "BCM in

University Classroom"series" coverage by VIP76 website, 19 April 2016

- Jim Dwyer, Executive Director, 30 March 2016, BCM interview to Mongolian National Broadcasting

TV

- VIP76 website, March 2016, “BCM Monthly meeting coverage”

- Jim Dwyer, Executive Director, BCM, Bloomberg TV, 27 January 2016, "Business community calls

for political stability

WEBSITE:

According to Google Analytics report, as of 26 April 2016, the daily web traffic to the BCM

website was 150 visitors with 179 sessions. 66% were from Mongolia, 5% from United States and

4% from United Kingdom.

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.

MEDIA COVERAGE

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."

Elisabeth Ellis, a partner at Minter Ellison LLP was featured in November 2015 edition in the article

titled "In Order to Make the Labor Law More Effective."

_________________________________________

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

From January 2013 to April 2016 we posted a total of 112 news items related to BCM activities,

economic and business related updates.

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 12,216 fans on our Facebook fans page, 1,995 connections on

LinkedIn network, and 2,062 followers on Twitter.

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]

March 31, 2016 *1.7% [source: NSOM]

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

Note: 1.1% y-o-y; 3.1% Core - Ulaanbaatar City, March 31, 2016

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 – 28 April, 2016

Currency

US dollar USD 2,009.41

Euro EUR 2,279.17

Japanese yen JPY 18.57

British pound GBP 2,927.81

Hong Kong dollar HKD 259.06

Chinese Yuan CNY 310.25

Russian Ruble RUB 30.82

South Korean won KRW 1.77