European Union External Action

MONGOLIA – Weekly press review 27 July 2020

27/07/2020 - 07:54
Mongolia – Weekly press review

Delegation of the European Union to Mongolia. This information is based on media reports found in the open sources/via subscription, and can in no way be taken to reflect the views of the European Union.

COVID-19

Total number of confirmed cases was 288 and the total number of recovered patients reached 218 on 27 July. Montsame Number of Mongolians retesting positive for COVID-19 after recovery rises to 31. Xinhua

The government has extended the high alert period until 31 July. Montsame

EU – Mongolia 

EU to provide EUR 37.5 million for Mongolia's pandemic response: On 21 July, Minister of Foreign Affairs N.Enkhtaivan met with Ambassador of the European Union to Mongolia Traian Laurentiu Hristea. The EU will cooperate with the Mongolian side in all possible areas to further expand bilateral cooperation and the EU will provide EUR 37.5 million to Mongolia for its COVID-19 response through short-, medium-, and long-term projects. Expressing his gratitude for providing assistance amid the global pandemic, Minister N.Enkhtaivan asked the Ambassador to support and protect the interests of Mongolians studying, working, and living in EU member countries. The Foreign Minister also voiced his willingness to put emphasis on expanding economic relations and cooperation and boosting trade and investments between the two sides. Moreover, the EU Ambassador undertook to examine the Mongolian side’s proposal to establish factories of EU-standard products in order to leverage EU's Generalised System of Preferences (GSP+). Montsame

Technical assistance of EUR 7.4 million to be provided to Mongolia support employment and the implementation of SDGs as part of the European Union’s Direct Budget Support Operation in Mongolia. Montsame  

Improvement of social protection services for herders discussed with FAO: Minister of Labor and Social Protection A.Ariunzaya met with Resident Representative of the United Nations Food and Agriculture Organization (FAO) in Mongolia Vinod Ahuja to discuss the ‘Support to employment policy for promoting job creation in Mongolia’ project funded by the European Union. Mr. Vinod Ahuja said EU deems that Mongolia has gained considerable experience in developing policies that boost employment and job creation with the implementation of the project that greatly supports the Ministry of Labor and Social Protection. Montsame

Germany is providing an assistance of EUR 1 million to Mongolia for the fight against the COVID-19 pandemic. On 21 July Minister of Foreign Affairs N.Enkhtaivan received Ambassador of the Federal Republic of Germany to Mongolia Jörn Rosenberg. Minister N.Enkhtaivan expressed gratitude for the assistance being given by the country during the difficult time of the pandemic, and requested support from the Ambassador and the Federal Foreign Office of Germany in protecting the rights of Mongolian citizens living in Germany in this challenging period. The sides also discussed views on cooperating in establishing a food processing factory equipped with advanced German technologies in the framework of enhancing bilateral trade and investment and using the opportunity to increase the export of Mongolia. Montsame

Request put forth to cooperate in introducing French technology in Mongolia: On 23 July, Minister of Foreign Affairs N.Enkhtaivan received Ambassador of the French Republic to Mongolia Philippe Merlin. Foreign Minister N.Enkhtaivan put forth a request to cooperate in establishing small and medium-sized enterprises that meet international standards and requirements and exporting their goods by introducing advanced technology and know-how of France. Montsame

Italian designer conducts training to Mongolian leather goods manufacturers within the European Union funded project “Trade Related Assistance for Mongolia” (EU-TRAM) being implemented by the Mongolian National Chamber of Commerce and Industry. The EU-TRAM project supports export of non-mining products. In particular, the project team is working to establish cluster of organic beauty products, leather and skin, camel and yak wool and providing support to export them. Montsame

Political and internal developments

Former Prime Minister S. Bayar found guilty of financial crimes: The court concluded that during his term as prime minister, from 2007 to 2009, S. Bayar ordered the Minister of Mineral Resources and Energy D. Zorigt, Minister of Finance S. Bayartsogt, and Ministry of Nature, Environment, and Tourism L. Gansukh to sign the Oyu Tolgoi investment agreement. The court found S.Bayar guilty of money laundering and sentenced him to five years in prison, and also banned him from holding public office for two years. Ch.  Davaanyam was sentenced to two years in prison. The court ordered the confiscation of their real estate assets in the United States, valued at nearly MNT 11.2 billion. AmCham

Former Intelligence Chief sentenced to three years in prison for using torture to obtain confessions in the investigation of the murder of the politician S. Zorig and other investigations. Following an investigation lasting two decades Ts.  Amgalanbaatar and two others were sentenced to up to 25 years in prison for the murder of S. Zorig. AmCham News

Internal migration to be halted temporarily: The regular election of Citizens’ Representative Khural will be held on 15 October 2020. According to the Law on Elections of Mongolia, citizens’ internal migration is to be suspended nationwide starting 16 August until the day after the Election. Montsame  

Court ruling used to change width of TT-GS railway gauge to wide: Following a Constitutional Court decision that Resolution #64 adopted by Parliament in 2014 had violated the Constitution it was resolved that the 267-km Tavantolgoi-Gashuunsukhait (TT-GS) railroad would have a broad gauge, thus closing a debate that had been going  on for years.  Mongolian Mining Journal

Foreign Policy

UNFPA: Gender-based, domestic violence clients rise by 87% amid COVID-19: A total of 6 One Stop Service Centers (OSSCs) and 2 shelters in Ulaanbaatar are now able to better respond to violence against women and children during this pandemic with the provision of dignity kits, which contain basic hygiene and sanitation items, and two sets of COVID-19 guidelines. Dignity Kits and COVID-19 guidelines are also being distributed to OSSCs and shelters in 19 provinces. The United Nations Population Fund (UNFPA) and the United Nations Children’s Fund (UNICEF) have been working together with financial support from the Government of Japan to protect maternal and child health, as well as to prevent and respond to violence against women and children during the time of COVID-19 global pandemic. Montsame 

UK Visa Application Centre in Mongolia re-opens. News

China to expand humanitarian aid to Mongolia: China will expand its humanitarian aid program in Mongolia to include additional free surgeries and medical personnel training, according to a series of agreements signed on 23 Thursday. Xinhua

New Head of Swiss Cooperation Office in Mongolia appointed: Dr Stefanie Burri has been appointed as the Head of Swiss Cooperation Office in Mongolia. Montsame 

Mongolian delegation attends ASEAN Regional Forum Senior Officials' Meeting held virtually on 21 July.  Mongolia has been working as its member since 1998. Montsame

National Police Agency and Oyu Tolgoi extend road safety partnership for safer roads to implement evidence-based interventions that have proven to reduce road traffic fatalities and injuries, with a focus on rural intercity roads. This year, the campaign focuses on passengers, specifically on the role that passengers must play to re-inforce safe driving. Montsame

"What development means in a post pandemic Mongolia?":  To look at transformation possibilities through the systemic lens to for the last 2 months, a Reference Group consisting of a small group of local experts participated in a series of structured conversations looking at transformational possibilities through a systemic lens. It has begun to construct a strategic argument or a logic that explores both what the pandemic has done and what needs to be done. UNDP wishes to create a conversation about the nature of the post-normal and challenges and opportunities that pose for Mongolia. As the next step in this process, the ‘Sounding Board’ of thought leaders and key influencers from different walks of life in Mongolia was formed. The first meeting of the sounding board was organized on 21 July 2020UNDP

Economy

Tavantolgoi-Gashuunsukhait railroad to be commissioned in 2022: The railroad will run for around 240 km through the territories of Tsogttsetsii, Bayan-Ovoo and Khanbogd soums of Umnugobi aimag and will be developed with two railway stations and six junctions. Montsame

Turquoise Hill announces increased gold production: Gold production guidance for 2020 has increased to a range of 155,000 – 180,000 ounces from 120,000 – 150,000 ounces, while Copper production remains on track to achieve guidance of 140,000 to 170,000 tonnes. Newswire

Industrial production in statistics: According to the preliminary results, the gross industrial output reached MNT 6.6 trillion in the first half of 2020, showing a decrease 22.5% from the same period of previous year. This decrease was mainly due to the decrease in mining and quarrying gross output by 26.9% and manufacturing output by 15.7%. In the first half of 2020, gold and extraction of iron ore increased by 15.9-42.4% compared to the same period of previous year. However, extraction of brown coal, copper concentrate, flour spar, hard coal and crude oil were decreased by 5.3%-69.4%. Montsame

Average market price of livestock products as of June: The highest average price of 1 kg white cashmere was MNT 60 000 (app. EUR 20), whereas the lowest average price of a white cashmere was MNT 30 000 (app. EUR 10). Montsame

Number of foreign tourists decreased by 73.8%: In the first half of 2020, the number of tourists from China decreased by 87.6%, tourists from Russian Federation decreased by 62.5%, tourists from South Korea decreased by 83.2% and tourists from United States of America decreased by 88.8% compared with the same period of previous year. Montsame  

Ongoing energy projects discussed with World Bank: The sides talked about speeding up the Second Energy Sector Project and the construction of 10 MWt solar power plant in Khovd aimag. Under the Second Energy Sector Project, a total of USD 54.4 million will be provided for Erdenet-Bulgan Energy Distribution Network SOE (USD 16.1 million), Baganuur Southeastern Region Electricity Distribution Network SOE (USD 25 million), and the National Electricity Transmission Network (USD 630 000) and some improvements will be made to reduce the losses of the distribution networks. At the energy ministry's request, the World Bank is carrying out a feasibility study into building hydro power plants and a completed study on a spot along the Kherlen River on which a hydro power plant could be built has been submitted. Montsame  

Moody's announces completion of a periodic review of ratings of Mongolia: The credit profile of Mongolia (issuer rating B3) incorporates its "ba3" economic strength, supported by strong growth potential balanced by a small and narrowly diversified economy; its "b2" institutions and governance strength, which balances weak executive institutions and policy effectiveness against ongoing structural reforms; "b3" fiscal strength, reflecting a high, albeit improving, debt burden, weak debt affordability, and a reliance on foreign currency denominated debt; and a "b" susceptibility to event risk, driven by external vulnerability risk and banking system risk. While a fractious political environment is a common feature, with a high rate of change among ruling parties, the recent re-election of the incumbent party will lend some political and policy continuity. Moodys

Commentary

More Mongolian Banks to Consolidate, Signalling Reform Commitment: The Mongolian banking sector may undergo a significant consolidation over the next few years due to tighter legislation and its enforcement, Fitch Ratings says. The strong majority retained by the incumbent party in the country's parliamentary election in June should provide a favourable backdrop for local authorities to resume banking sector reforms, one of the main objectives in the State Monetary Policy for 2020. In Mongolia, the IMF's Extended Fund Facility programme that drove the reduction in banking sector vulnerabilities for three years expired in May 2020. The programme ended without concluding its reviews due to a prolonged period with insufficient progress in banking recapitalisation amid the coronavirus pandemic. Fitch Ratings  

Banking reforms left to next Government by E. Odjargal: The ruling MPP had earlier set up a team to suggest amendments to the existing laws that would make banks work in a more transparent manner and allow more shareholders into their closed ownership structure. Among other things sought to be achieved through the amendments were: quick disposal of customers’ claims from banks that declare bankruptcy; setting a limit of 20% on an individual’s shareholding in a bank; lower interest rates on consumer loans; digitalization, etc. As an example, the group suggested that the current interest rate of 15%-20% on consumer loans up to MNT 500 million could be brought down by 8% if the banks charged 3% less and the government gave another 5% exemption. The Extended Fund Facility Program of the IMF ending this month called for, along with other things, a rehabilitation – a euphemism for reform – of Mongolia’s banking system.  Progress on this has been tardy, as we have shown, with the result that the IMF has not released the last tranche of its promised funds.  Mongolian Mining Journal

Landlocked central Asian nations show potential beyond commodities: The UNCTAD study highlights how each can overcome geographical remoteness and transform the structures of their economies, which have become increasingly geared towards exporting commodities to their neighbours. According to the latest statistics, natural gas accounts for 90% of Turkmenistan’s exports, for example, while fuels represent two-thirds of Kazakhstan’s. Bhutan sells 94% of its exports to neighbouring India, while 90% of Mongolian products go to next-door China. UNACTAD  

Monitoring COVID-19 Impacts on Households in Mongolia: To monitor the household-level impacts of COVID-19, the National Statistics Office of Mongolia (NSO) and the World Bank have implemented a joint COVID-19 Household Response Phone Survey (HRPS) on a national sample of 1 334 households. Key findings:   Self-employed and agriculture households have been significantly impacted.  16 % of self-employed workers received zero income and 73% experienced income losses since end-January. This is mainly due to fewer customers, business place closures and logistics disruptions due to COVID-19. 70% of farmer and herder households reported their agricultural income has declined compared to the same time last year. World Bank 

COVID-19 means development setbacks for Mongolia: The general picture of the COVID-19 situation in Mongolia is very positive. The Government of Mongolia closed all educational institutions including kindergartens, schools and universities at the beginning of the year. It also introduced strict measures on social distancing, such as a ban on public gatherings, limiting public transportation, closing public spaces such as gyms, and making the wearing of masks in public compulsory. Travel has been very limited, including a complete ban on any international travel by road, rail, or air. We do not know the full impact the pandemic is having yet, but we know it is significant. For instance, in the first quarter of 2020, the economy contracted by 10.7%, and government revenue fell by 8.6% year on year, whilst expenditure went up 19.3%. Mongolia has a large amount of debt, which means that there is an increased risk of defaulting on debt. According to the IMF, GDP is also expected to fall sharply to minus one per cent this year, down from 5.3% in 2019. UN

Wary of Sino-Russian influence, Mongolia seeks better ties with the US by Rishi Gupta: It has been difficult for Mongolia to do away with the Sino-Russian influence, especially on the strategic front. For instance, with its stated military prowess, China wants Mongolia to join the Beijing-based Shanghai Cooperation Organisation. Mongolia actually wishes to diversify its strategic ties with other countries, especially the US. President Trump has been vocal in bringing Mongolia under NATO as a partner, but considering the unpredictability of President Trump, Mongolia cannot risk intimidating its neighbours. India is also looked upon as a promising partner of Mongolia. In October 2019, President Battulga paid a state visit to India which caused immense unease in China. It was reflected through a muted coverage of the visit by Chinese media. A similar pattern of Chinese unease was observed during Prime Minister Modi’s visit to Mongolia in 2015, the first-ever visit by an Indian Prime Minister. However, the viability of these options is held hostage by its geography. Think China  

Mining in Mongolia: Stormy 30 Years: Mining is the only sector that has been carrying the country’s economy for 30 years. The Minerals Law of Mongolia was first adopted to successfully implement the liberal policy based on gold with a focus on opening doors for foreign investors. Unfortunately, the law did not work. Whether it was because Mongolia was not known at all, or those who knew considered the country’s geographical location to be a drawback, or because of the recession in the global commodity market, the law somehow received a bad review from investors. Therefore, the law was re-approved in collaboration with World Bank experts in 1997. This time, the only criteria for investors were time. As a result, by the time the law entered into force on 1 July 1997, investors with their applications were lining up in a queue in the doorway of the former Mineral Resources and Petroleum Authority. Oyu Tolgoi, one of the world’s largest new copper-gold mines, was discovered thanks to this law. Mongolian Economy

Economy History of Democratic Mongolia: From Liberalism to Populism: How has Mongolia been doing in the last 30 years? According to the 2003 IMF working paper, the main drivers of economic growth was capital accumulation between 1990-2001. In other words, an increase in livestock drow economic growth, but education or employment had a little impact. In the 1980s, Mongolian productivity was negative similarly to other socialist countries. That means the economic growth was “driven forcefully” by raw materials and labor. Only from 1995, the total productivity became positive. In the World Bank report, the Mongolian economy became heavily dependent on exports from 2007. The Mongolian economic growth is mainly driven by exports of raw materials such as gold and copper. The World Bank had warned us about the spread of corruption, and possible obstacles to economic growth including high-interest rates and road quality. The World Bank further recommended us to improve the investment environment so Mongolia could leverage the knowledge, experience, know-how, technology of other advanced countries. Mongolian Economy  

Mining Mongolia: what potential does this landlocked country hold? Mongolia recently cancelled an executive order to fund the giant Tavan Tolgoi coal project through an international initial public offering (IPO), instead choosing to self-fund the project. Such a situation is typical in a country that has consistently struggled to capture international investors despite purported billions in mineral wealth. The decision to self-fund transport links for the Tavan Tolgoi coal mine is just the latest in a long-running struggle to attract investors in an unforgiving economic landscape. Tavan Tolgoi is Mongolia’s second largest mining investment following Rio Tinto’s copper-gold mine Oyu Tolgoi, and according to its website, the project has estimated coal reserves of around seven billion tonnes - more than a third of which is high-grade hard coking coal. Yet despite the deposit’s significant size, the recent IPO is only the latest in a series of false starts to take the mine to the next stage. Previous attempts fell through in 2011 and 2015, when the Mongolian parliament blocked an agreement with a group of foreign firms, citing high development costs.  Mine

A Tripartite Relationship: The Mongolia Story by Gus Anderson: Precarious it may be, Mongolia offers a paradox. Landlocked and isolated in East Asia may be disadvantageous, but there is a silver lining. Why is this? Well, its neighbours consist of Russia and China. Two regional superpowers may suggest that Mongols are but a pawn in a Russo-Sino game. However, like all former colonies, Mongolia has a card to play in a Russo-Sino duopoly. As long as Mongolia maintains its buffer status, Mongolia can sustain a tripartite relationship. Mongolia is safe as long as Sino-Russian efforts are balanced. What about the future? Chinese expansion suggests that Russia is going to be challenged. We will see, but for now, equal weightings have allowed for peace. This may be not so rosy in the future. Mongolia will have to face the gloomy prospect of disequilibrium when the problem arises. Meridian

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Prepared by Edina Bartalová

Delegation of the European Union to Mongolia

ICC Tower, 6th floor, Jamiyan Gun Street 9

1st khoroo, Sukhbaatar district, Ulaanbaatar

https://eeas.europa.eu/delegations/mongolia_en