BCM NewsWire 578 – 17 May 2019

ECONOMY

GDP RISES 8.6 PERCENT IN Q1

In the first quarter of 2019, GDP of Mongolia at 2010 constant price reached MNT 3.5 trillion by preliminary estimation of production approach, increased by MNT 279.9 billion or 8.6 percent compared to the same period of the previous year. This increase was mainly driven by the 8 percent increase in the service sector, which is worth MNT 127.7 billion (wholesale and retail trade sector by MNT 52.2 billion or 13.9 percent) and industry, construction sector by MNT 124.9 billion or 11.2 percent.
In addition, the inflation measured by the consumer price index (CPI) at the national level increased by 1 percent from the previous month, by 2.8 percent from the end of the previous year and by 7 percent yoy.
In the first four months of 2019, the total equilibrated revenue and grants of the General Government Budget amounted to MNT 3.1 trillion and total expenditure and net lending amounted to MNT 2.8 trillion, resulting in a surplus of MNT 286.5 billion in the equilibrated balance.

Source: ZGM Daily
See also: Preliminary balance of payments for April 2019

MINING INCOME UP BY 41.2 PERCENT

As reported by the Ministry of Mining and Heavy Industry, MNT 981 billion has been accumulated to the state budget from the mining sector in the first four months of 2019.
Accumulated income to the state budget rose by MNT 286.1 billion or 41.2 percent comparing to the previous year. Collected taxes and duties from minerals such as gold, coal, copper and spar have increased while tax income from zinc and iron have decreased.
Export of mining products reached USD 2.5 billion in the last 4 months. It is an increased performance by 18.2 percent or USD 386.6 million comparing to the same time of the last year. Iron ore, coal, copper, zinc and molybdenum concentrate and crude oil made up 83.2 percent of the total export.
Coal export reached 11.4 million tons or USD 961 million as a sum in the first 4 months of this year. The coal price per ton has been an average of USD 84.4 this year.

Source: Montsame

MONGOLIA EARNS OVER 700 MLN USD FROM EXPORTS OF COPPER CONCENTRATES

Mongolia earned 701.4 million U.S. dollars from the exports of copper concentrates in the first four months of this year, up 4 percent year-on-year, local media reported Friday, citing the Mongolian Customs General Administration (MCGA).
The Asian country exported a total of 489,100 tons of copper concentrates in the period between January and April in 2019, an increase of 30,500 tons from the same period last year, the MCGA said in a statement.
Mining is the most important sector of Mongolia's economy. The country is rich in natural resources such as gold, silver, iron, coal, copper, molybdenum, tungsten, phosphates, tin, nickel, zinc, and fluorspar.
The mining industry accounted for 72 percent of industrial output, 87 percent of total exports, 24 percent of the gross domestic product and 75 percent of foreign investment in 2018, according to the country's Ministry of Mining and Heavy Industry.

Source: Xinhua

FOREIGN TRADE TURNOVER INCREASES BY 15.9 PERCENT

In the first 4 months of 2019, Mongolia traded with 130 countries from all over the world and total trade turnover reached USD 4.3 billion, of which USD 2.5 billion were exports and USD 1.8 billion were imports.
In April 2019, exports and imports reached USD 740.3 million and USD 480.5 million respectively. Compared to the previous month, exports and imports increased by USD 62.3 million and USD 32.3 million respectively.
In the first 4 months of 2019, total foreign trade turnover increased by USD 570.9 (15.4 percent) million, of which exports increased by USD 386.6 million (18.2 percent) and imports increased by USD 184.3 million (11.7 percent) compared to the same period of the previous year.
The 386.6 million increase in exports from same period of previous year was due to an increase of USD 171.0 million in bituminous coal and USD 51.4 million in gold, unwrought or in semi-manufactured forms exports.

Source: Montsame

NON-PERFORMING LOANS INCREASED BY 4.3 PERCENT

The money supply reached MNT 19.9 trillion at the end of April 2019, showing an increase of MNT 188.7 billion or 1 percent from the previous month and by MNT 3.6 trillion or 22.5 percent from the same period of previous year.
At the end of April 2019, the amount of outstanding loan to entities, enterprises and citizens amounted MNT 17.6 trillion, increased by MNT 182.8 billion or 1 percent from the previous month and by MNT 3.2 trillion or 21.9 percent from the same period of previous year.
At the end of April 2019, the non-performing loans in banking system amounted MNT 1.9 trillion, increased by MNT 80.2 billion or 4.3 percent from the previous month and by MNT 738.4 billion or 61.2 percent from the same period of previous year.

Source: Montsame

BAN ON BURNING LOW-GRADE COAL FOR DOMESTIC USE IN CAPITAL COMES INTO FORCE

A ban on burning of low-grade coal for domestic use in the Mongolian capital Ulan Bator came into force on Wednesday, with the aim of reducing air pollution.
"Today, we all witnessed a historic decision to improve air quality in the capital city and protect ourselves from air pollution," Lamjav Byambasuren, vice health minister of the country, said at the opening of an event on raising public awareness of air pollution.
Public participation in air pollution reduction is important, Byambasuren said, calling on residents of the city to comply with the ban on the burning of low-grade coal for domestic use.
According to a statement issued by the National Committee for Environmental Pollution Reduction, households and enterprises who violate the ban will be fined from 300,000 Mongolian tugriks (over 113 U.S. dollars) to 3 million Mongolian tugriks (about 1,134 dollars).
Households in Ulan Bator will be supplied with processed fuel instead of raw coal.

Source: Xinhua

REGISTERED UNEMPLOYED DECREASED BY 4.1 PERCENT

At the end of April 2019, the Labor and Social Welfare Services Agencies have registered 33 thousand job seekers, of which 22.5 thousand or 68.1 percent were unemployed and remaining 10.5 thousand or 31.9 percent were employed but looking for a new job.
Registered unemployed people decreased by 952 (4.1 percent) compared to the previous year but increased by 717 (3.3 percent) from the previous month. A breakdown by gender shows that 11.7 thousand or 52.3 percent were women among total number of registered unemployed.
From total registered unemployed at nationwide, 418 or 1.9 percent were with disabilities, of which 212 or 50.7 percent were women.
In the first four months of 2019, the Labor and Social Welfare Services Agencies have recorded 23.2 thousand newly unemployed and 4.4 thousand registered persons were hired on a new job. By the reasons of new registered unemployed, the highest percentage or 51.4 percent were people who dismissed from job..

Source: Montsame

NEW ECONOMIC FORUM TO SEEK EFFECTIVE WAYS TO SOLVE ECONOMIC PROBLEMS

The main objects of the New Economic Forum are to identify the challenges of economic development and to seek realistic opportunities in a scale of the national producers of excellence, international organizations, and the private sector developers.
Bloomberg TV Mongolia organized the New Economic Forum with the Business Council of Mongolia, Mongolian Chamber of Commerce and Industry (MNCCI), American Chamber of Commerce (AmCham) in Mongolia, Australian Chamber of Commerce in Mongolia (AustCham), German Business Association of Mongolia (DMUV), and France-Mongolia Chamber of Commerce on May 13.
The world transition from the Western countries to the new economy is growing, the tendency of leaders to seek new economic reforms has been expanding to new markets and new leaders. Implementing policies based on the collective economy and innovative policies is a key policy for new economies.

Source: ZGM Daily

ERDENEBUREN HYDROPOWER PLANT PROJECT TO BE INTENSIFIED

The Government of Mongolia adheres to a policy to reduce the use of imported energy and increase domestic source. During his working visit to Khovd aimag, Prime Minister U.Khurelsukh got acquainted with the progress of project on constructing Hydropower Plant on Khovd River in Erdeneburen soum of the aimag and made a decision to intensify the project implementation. Currently, the feasibility study of the HPP is under formulation.
When Erdeneburen HPP comes into operation, it will be a reliable and cheap energy source that the energy need of western aimags can be fully provided. In addition, it will yield numerous positive socio-economic outcomes, such as budgetary subsidy being given to western energy system will be zeroed, about 1000 permanent job places will be newly created as well as accessibility of doing business will be improved.     
With a total investment worth of USD288 million, the 100MW HPP will produce 300 million kW/h electricity annually.

Source: Montsame

URBAN SERVICES FOR MONGOLIA'S BOOMING BORDER TOWNS - VIDEO

Rapid growth in mining and cross-border trade is putting a strain on existing infrastructure in Mongolia's South Gobi region, an area famous for its wild nature, nomadic culture, and rich mineral deposits.
In Mongolia's South Gobi, four water reservoirs and 39 km of water supply pipelines have been built and 24-hour smart water kiosks are now operating.
More than 200 households now have connections to water supply pipelines in Mongolia's South Gobi region.
The Government with support from the Asian Development Bank is now working to improve urban infrastructure and services.

Source: ADB

FUEL PRICE: SWORD AND SHIELD - EDITORIAL

Two days ago we saw fuel prices increase in Ulaanbaatar yet again. The AI-92 fuel, which takes up 80 per cent of Mongolia’s total fuel consumption, is currently being sold for 1,855-1,880 MNT per liter, which is 70-90 MNT dearer from the rates a week ago. Also, the price of diesel fuel has also gone up by 30-40 MNT per liter.
When fuel prices increase, we also see an increase in consumer goods, especially food products. However, the correlation doesn’t work the other way – a reduction in fuel prices doesn’t mean cheaper consumer goods. So, when the sword of fuel prices strikes, it cuts down the real income of people.   
The fluctuations in fuel prices depend on three key factors: Fuel supply being fully dependent on imports; Fluctuations in MNT rate; and Government attempts to set fuel prices.

Source: Jargal Defacto

POLITICS

PRESIDENT VETOES TAX BILLS

On 22 March 2019, the Parliament approved the revised versions of the laws on General Taxation, Corporate Income Tax and Personal Income Tax together with supporting amendments. The revised tax laws were set to come into force from 1 January 2020.
As the final texts of the revised tax laws were made available, the President vetoed the tax laws in their entirety together with supporting amendments.
The Parliament will now discuss the veto and vote on the veto. The Parliament could overrule the veto by affirmative vote of two-thirds of the members of Parliament (i.e. rejecting the veto) attending the relevant plenary session.
The following summarizes the reasons for Presidential veto.

Source: Avinex Partners LLP

CORRUPTION PROBE STARTS INTO OT "DUBAI AGREEMENT”

Known as the Dubai Agreement, a 2015 expansion deal for the Oyu Tolgoi copper and gold mine, has been under scrutiny by a parliamentary working group. Very senior figures were involved in signing the agreement, the transparency of which has long been questioned.
The report by the working group has been presented to the parliamentary  Standing Committee on Economics. According to L.Oyun-Erdene, Head of the Cabinet Secretariat, the Mongolian side sent its examination results to Rio Tinto, which is the major owner and operator of the mining complex; but it refused to amend the agreement. Currently, the 4-5 people who responsible for signing the agreement are under investigation by the Independent Authority against Anti-Corruption and other legislative bodies.

Source: News.mn

UN EXPERT WARNS AGAINST SETBACKS IN RULE OF LAW AND SHRINKING SPACE FOR CIVIL SOCIETY

Mongolia must ensure that reforms to its legal framework promote rather than restrict the work of human rights defenders, the UN Special Rapporteur on the situation of human rights defenders, Michel Forst, said today.
While Mongolia has often – and rightly so – been depicted as champion of democracy in East and Central Asia, recent legislative amendments are of concerns and are sending mixed messages, Mr. Forst said in a statement at the end of a two-week visit to the country.
“Having carefully considered the information received from the Government, civil society and other stakeholders, I conclude that, Mongolia is a relatively safe country for human rights defenders,” the UN expert said.  “Although some cases of attacks and abuses against human rights defenders were reported, I did not observe a pattern of systematic attacks against them”.
“However, this relatively safe environment does not translate into a conducive environment for human rights defenders. Obstacles such as stigma, the lack of understanding of who human rights defenders are, and dangerous amendments to several laws instill fear and hinder their work.”  

Source: Montsame

MONGOLIA MARKS 30 YEARS OF COOPERATION WITH EUROPEAN UNION

2019 is the 30^th anniversary of relations between Mongolia and the European Union. May 9 was also “Europe Day”, a day remembered for the beginning of what is now known as the European Union. In