BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 300 – November 15, 2013

THIS MARKS BCM NEWSWIRE'S 300TH ISSUE! THANKS TO ALL OUR MEMBERS FOR THEIR

SUPPORT!

NEWS HIGHLIGHTS:

Business

SouthGobi Resources to restate results for past 3 years;

Entrée negotiates for stabilities at OT;

Areva forms a joint venture with Mongolia’s Mon-Atom;

Prophecy Coal pays off outstanding loan;

Sentosa completes first round of drilling at Darvii Naruu;

U.S. firm presents alternative course for Aspire's railway project;

Petro Matad data acquisition on track, exploration director to leave;

Undur Tolgoi to acquire road construction firm;

MEC fails to make note payments;

Teck increases stake in Erdene to 10.4 percent;

APU ordered to cease use of Chinggis Khaan’s name for its beer;

Erel to commission prefabricated materials factory;

HBOil extends option to purchase offshore DPRK exploration rights;

Direct UB-Erenhot flight to launch;

APU opens world-class food warehouse;

AUM opens new presentation course;

Michelmores extends international credentials in Tenger deal;

Kyrgyz lawmaker indicates government losing patience with Kumtor talks.

Economy

World Bank urges tightened economic policies;

Mongolia's new investment rules to spur mining sector development: miners;

Mongolia gears up for the fight of its mining life;

Mongolia to open investment agency;

Mongolia commissions UB-Dundgobi road;

Government wage budget increases 18 percent;

Bring in the start ups: supporting SMEs in Mongolia;

Greenfields man helps combat Tuberculosis in Mongolia;

Central Asian commodities exporters going strong, says EBRD;

China expected to cut growth target to 7 percent;

New leadership brings a change to Australia’s resources sector;

Mining will continue to drive Australian economy for the next five years.

Politics

Mongolia will never bury nuclear waste, says Elbegdorj;

12 health projects expected for completion in 2013, says Health Minister;

President initiates development roadmap meeting;

The MNT 70,000 grant per month for students will be changed;

Amarjargal resigns from Parliament;

Mongolia joins Open Government Partnership;

Mongolia receives support from international institute for green economy;

Serbia and Mongolia sign agreement on visa abolishment;

Mongolia signs intergovernmental agreement on dry ports;

Mongolian ambassador stresses educational ties with India;

UN officer attends Mongolian peacekeepers ceremony in South Sudan;

Mongolia and Russia to establish cross-border protected reserve;

Ganjuur Sutra registered on UNESCO World Heritage List;

Mongolia's wealthy politicians;

Ministry of Health leads in government red tape, says study;

Overview of the Investment Funds Law;

South Korean money laundering in Mongolia comes to light;

UB Mayor to receive honors in Washington, D.C.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank

International SOS

Wagner Asia Automotive

Oxford Business Group

Mongolian National Broadcasting

Breakthrough PR

BCM MONTHLY MEETING RECAP

The BCM meeting on 11 November with Bayanjargal Byambasaikhan in the chair was attended by

150 members and invited guests. The meeting observed BCM's 6th-year anniversary and was

followed by BCM‘s Annual Membership Renewal Dinner seating 185 members.

Jim Dwyer, Executive Director, spoke on the importance of BCM‘s members, ―our Lifeblood.‖ Jim

announced a special offer for subsidiaries and divisions of current BCM members to join at a 50%

dues discount. This dovetails with a BCM goal to attract more medium-sized entities to its

membership.

BCM membership now stands at 268, an all-time high, compared with 250 in October 2012. The 5

newest members are:

1. Clear Lakes Capital was established in 2011 to manage offices and apartments in Mongolia. It

focuses on the central parts of Ulaanbaatar offering well-furnished properties and improves the

properties by replacing kitchens and fridges, installing flat screen TVs, ovens and dishwashers. All

apartments have emergency water heaters and most properties have LED lighting and smoke

detectors installed. Above all Clear Lakes responds to occasional breakdowns in a matter of hours.

Its properties are to be found in Park View, Regency Residence, Four Seasons Gardens and Temple

View.

2. Since its establishment in 1924, the Institute of Finance & Economics (IF&E) has been one of the

leading economic and business development centers in Mongolia offering high quality programs.

Students are offered new opportunities and the latest knowledge reflecting current market

developments. IFE is on its way of becoming a highly competitive business school in Asia.

IF&E offers a wide range of Business programs such as Financial Management, Business

Administration, Tourism & Hospitality Management and, Business Economics, Business Law, and

Marketing Management.

3. Ramada Ulaanbaatar City Center is a premier international hotel in Ulaanbaatar. The hotel is set

in a luxury shopping mall complex, standing 17 stories tall with a new modern architecture. It

features 128 guest rooms and suits, and inclusive executive floors with its own lounge. The hotel is

located in the heart of the Ulaanbaatar downtown and 20 minutes away from Chinggis Khan

International Airport.

4. Established in 1998, the Mongolian National University is the second biggest private institution of

higher education in Mongolia. Its distinguished history of excellence and hard work continues to

provide students with unique opportunities to make difference through academic teaching, research

and professional programs. Currently 5,200 students study in the 58 undergraduate and three

graduate programs.

Mongolian National University has established cooperative relationships with 18 universities and

research institutions abroad. The university pays close attention to foreign language education. In

Mongolia only MNU students are trained for seven semesters in advanced specialized knowledge of

English education and curriculum contents, and the ability to use English.

5. Salmira Investment Fund is a U.S.-based investment partnership formed by three brothers. The

fund is an expression of the three principals‘ profound interest in emerging and frontier market

investing. Ultimately, Salmira is a fledgling family office that the brothers hope will continue to

grow as it positions itself in Mongolia and other Asian economies on the verge of exciting expansion.

The fund has active investments in Mongolia‘s transportation and financial sectors; its principals

continue to evaluate opportunities across most sectors of the Mongolian economy. In addition to its

Mongolia-based projects, Salmira evaluates and has participated in various private market

opportunities in Southeast Asia as well as real estate and resource-related investments in the

United States.

___________________________________________

Nick Cousyn, Chief Operating Officer of BDSec JSC, presented ―A Westerner‘s Journey to the DPRK,‖

where he discussed his recent visit to North Korea for a site visit to the Rason port and the Sungri

oil refinery recently acquired by Mongolia-listed HBOil JSC. HBOil is participating in an oil

exploration and production joint venture with North Korea's state-owned oil company and is set to

purchase a company with oil exploration rights in North Korea's East Sea.

Matthew Pottle, Managing Partner, PwC, presented ―PwC CEO Survey 2013 – Confidence in Growth‖

where he discussed data collected from two year's of surveys and interviews from company heads

based in Monoglia benchmarked against international responses. He said that although chief

executives had short-term concerns for the economy, there was greater confidence for the long

term.

David L. Wyche, Economic and Commercial Section Chief at the U.S. Embassy, presented ―The U.S.-

Mongolia Transparency Agreement.‖ The agreement signed this year is a result of years of

cooperation for a trade and investment framework agreement (TIFA) and was a key step toward

establishing a free trade agreement.

Sereeter Javkhlanbaatar, Director General, Foreign Investment Regulations and Registration

Department of the Ministry of Economic Development, gave an update on the new Investment Law,

which took effect this month. The new law, he said, removes distinctions between foreign and

domestic investors, providing many equal provisions. One dramatic change, some audience

members noted, was a new rule for establishing a foreign invested company. While in the past a

start-up in Mongolia needed USD 100,000 in assets, now USD 100,000 is required per investor.

Javklhanbaatar noted many improvements, however, including the removal of restrictions for

investment by private companies. Any entity 50 percent or more owned by a foreign government,

however, will need ministry approval for more than 33 percent acquisition for any company

operating within banking and finance, telecommunications and media, or mining.

_________________________________________________________

BUSINESS

SOUTHGOBI RESOURCES TO RESTATE RESULTS FOR PAST 3 YEARS

Coal miner SouthGobi Resources Ltd., controlled by Rio Tinto PLC, said it would restate results from

2011 through 2013 because of an error in the way it booked revenue from coal sales at its Ovoot

Tolgoi mine.

The company said it expects a delay in filing its third-quarter results due 11 November, after it

recognized revenue earlier than it should have at the flagship mine. Turquoise Hill Resources,

through which Rio controls SouthGobi Resources, also said it would restate its results for the same

period.

SouthGobi said it should have recognized revenue when coal was loaded onto a customer's truck,

and not when the coal was delivered to the customer's stockpile, without being collected. The

company said it had applied for an order to stop its management from trading in its stock.

SouthGobi said that if it delayed filing of the restated results beyond 14 November, it could

potentially default on convertible debentures held by China Investment Corp.

Source: Reuters

ENTRÉE NEGOTIATES FOR STABILITIES AT OT

Entrée Gold Inc. reported on its negotiations with Mongolia for its joint venture with Oyu Tolgoi LLC

in its third-quarter report published 13 November.

Since the government placed its temporary restriction on the joint venture licenses from transfer in

February 2013, discussions have focused on issues arising from Entrée's exclusion from the 2009 Oyu

Tolgoi investment agreement, including the fact that the government of Mongolia does not have a

full 34 percent interest in the joint venture property. Discussions have also covered the fact that

the mining licenses integral to future underground operations are held by more than one corporate

entity and that Entrée does not benefit from the stability that it would otherwise have if it were a

party to the 2009 agreement.

―Meetings to discuss possible ways of addressing all parties' concerns have been positive and

constructive,‖ said the Source. ―No final agreements have been reached and further discussions

with all stakeholders are required.‖

Stakeholders of the Oyu Tolgoi project, including the Government of Mongolia, OT LLC, Erdenes Oyu

Tolgoi LLC, Erdenes MGL LLC and Rio Tinto.

Source: Entree Gold Inc.

AREVA FORMS A JOINT VENTURE WITH MONGOLIA‟S MON-ATOM

Areva SA has signed an agreement to develop uranium mines in Mongolia and form a new joint

venture with state-owned Mon-Atom. The joint venture is for Areva Mines LLC, 66 percent owned

by Areva and 34 percent owned by Mon-Atom. An agreement for Mitsubishi Corporation to take an

equity interest has also been signed.

The signing ceremony took place in the presence of Luvsanvandan Bold, minister for foreign affairs,

Laurent Fabius, French minister of foreign affairs, Luc Oursel, president and chief executive officer

of Areva, and Ken

Kobayashi, president and chief executive officer of Mitsubishi Corporation.

―This collaboration, which also involves our partner, Mitsubishi Corporation, is strategic on two

levels. It will enable us to develop the uranium sector in Mongolia and to pursue the geographic

diversification of Areva‘s mining activities,‖ said Luc Oursel.

Present in the country since 1997, Areva has carried out exploration work resulting in the discovery

of two uranium deposits in the province of Dornogobi, Dulaan Uul and Zoovch Ovoo, whose

resources are estimated at 60,000 tons.

Source: Areva SA

PROPHECY COAL PAYS OFF OUTSTANDING LOAN

Prophecy Coal Corp. announced that it has sold 18,525,000 common shares of Prophecy Platinum

Corp. Proceeds from the sale were used to fully pay out the secured loan from Waterton Global

Value L.P. Prophecy Platinum was previously owned by Prophecy Coal in a private sale to arms

length purchasers.

After closing the private sale, the company owns approximately 7.3 percent of the issued and

outstanding shares of Prophecy Platinum Corp.

Source: Prophecy Coal Corp.

SENTOSA COMPLETES FIRST ROUND OF DRILLING AT DARVII NARUU

Sentosa Mining Ltd. has completed the first round of reverse circulation drilling at its Darvii Naruu

Copper Gold Project in Gobi-Altai Aimag.

The company drilled 18 holes totaling 2,020 meters to test six anomalies selected from the 37

identified by a recent airborne geophysics survey. Samples from the drill holes are currently being

transported to Ulaanbaatar in Mongolia where they will undergo geochemical analysis. In addition a

selection of 23 surface and RC drill chip samples from various locations are being transported back

to Perth, Western Australia were they will undergo Petrology analysis. Analysis should be completed

by the end of this month with results expected in early December.

Source: Proactive Investors

U.S. FIRM PRESENTS ALTERNATIVE COURSE FOR ASPIRE'S RAILWAY PROJECT

The United States' Trimble firm announced 13 November that its Quantm alignment planning system

was employed by Aspire Mining Ltd. for route optimization on the Mongolian Northern Railways

project from its Ovoot project to Erdenet Soum.

Quantm was selected to investigate alignment alternatives on the 547-kilometer coal freight rail

pre-feasibility study. The pre-feasibility study revision that SMEC prepared for Aspire identified a

more direct route from the Ovoot project to Mongolia's second-largest city, Erdenet. The more

direct route has resulted in a lower capital expenditure projection for the Northern Rail Line

project, with potential savings of approximately USD 200 million.

"The Quantm software was a direct factor in enabling us to achieve the results from the rail study,"

said Matt Crompton, infrastructure manager for Aspire. "It helped us do the analysis quickly and the

results are now ready for use by more traditional platforms for detailed engineering and analysis."

Source: Trimble

PETRO MATAD DATA ACQUISITION ON TRACK, EXPLORATION DIRECTOR TO LEAVE

Oil explorer Petro Matad Ltd. has acquired over half of the 200 kilometers of 2D seismic earmarked

for its licenses on Blocks IV and V in Mongolia.

The seismic program is designed to provide detailed coverage over two prospect areas and to

confirm at least two locations for drilling in 2014. Acquisition of the remaining data is progressing

well, it added, though fieldwork was slightly delayed, and is expected to be completed prior to the

winter shutdown. Processing of the data acquired to date has already started. Petro Matad has also

been re-interpreting the data generated by its unsuccessful drilling campaign in the northern part

of Block XX, a process it said is now largely complete. This reworking has indicated that none of the

wells in that campaign were in three graven areas identified as a part of a trend extending into the

adjacent and producing field to the north, Block XIX.

―Possible extension of those fields into Block XX therefore remains untested,‖ Petro Matad said.

Scout data from Block XIX is being integrated with the existing database in order to evaluate how

best to pursue this potential. The re-interpretation work also identified a number of similar basins

in the southern part of Block XX and seismic to further delineate these basins is planned for 2014.

Separately, Petro Matad announced the departure of the exploration director who is carrying out

the re-interpretation work. Ridvan Karpuz is leaving at the end of the year to take up a new

position elsewhere, though he will remain as a non-executive and oversee the exploration program.

Karpuz joined in August of last year and was responsible for the re-appraisal and re-interpretation

work on the Mongolian acreage. Executive directors John Henriksen and Amarzul Tuul will manage

the group‘s operations in Mongolia until a new exploration director is appointed.

Source: Petro Matad

UNDUR TOLGOI TO ACQUIRE ROAD CONSTRUCTION FIRM

Undur Tolgoi Minerals Inc. has entered into an agreement to acquire complete interest in Great

Hoard Holdings SARL, a Luxembourg entity that holds 75 percent of the share capital of Mongolian

company Ashid Munkhiin Zam LLC.

Through its wholly owned British Virgin Island-registered subsidiary, Jucca Holdings Ltd., Undur

Tolgoi will acquire Great Hoard Holdings SARL in an exchange for 5,363,636 newly issued shares of

Undur Tolgoi. AMZ holds road construction, repair and maintenance permits. AMZ intends to seek

road construction contracts and tenders in Mongolia. Road construction is one of the fastest growing

industries in Mongolia. The government intends to build over 10,000 kilometers of paved road in the

next 10 years. As part of its goal, the government passed a law in 2012 mandating paved roads

between Ulaanbaatar and each of the country's 21 province centers by 2016.

Last year Mongolia raised USD 1.5 billion in its first ever bond offering. Shortly afterward the

government announced that most of the bond money would be spend on development of

infrastructure and allocated USD 335 million to the road budget. Mongolia's roads officially total

49,294 kilometers, but only about 25 percent of the roads are currently paved. Most roads are little

more than dirt tracks, which are usually dusty and occasionally muddy. By undertaking

straightforward grading work, the roads would be quite similar to those servicing many of the

mining and outback communities in Australia.

"We are excited to enter the road construction industry in Mongolia,‖ said Chairman James Passin.

―For the benefit of its shareholders, we are committed to building [Undur Tolgoi] into a significant

and successful Mongolian-focused public company. Following a strategic review of the company, the

Board of Directors is refocusing the company away from mineral exploration in order to participate

in Mongolia's massive infrastructure growth potential."

Source: Undur Tolgoi Minerals Inc.

MEC FAILS TO MAKE NOTE PAYMENTS

Mongolia Energy Corp. Ltd. failed to repay principal and interest before the expiration of a

convertible note on 12 November.

MEC‘s default on redemption of the SF convertible note also triggers its potential early redemption

obligation under other existing convertible notes. As of the date of this announcement, these

outstanding convertible notes, excluding the note, have the aggregate principal amount of

approximately HKD 2.4 billion (USD 309.5 million). The holders of the note have proposed a

conditional six-month moratorium from 12 November 2013 on repayment of principal and interest

due under the note subject to formal agreement between the parties and MEC that the company

intends to exercise.

Shareholders and potential investors of the company are urged to exercise caution when dealing in

the shares of the company.

Source: Mongolia Energy Corp. Ltd.

TECK INCREASES STAKE IN ERDENE TO 10.4 PERCENT

Teck Resources Ltd. brought its stake in Erdene Resource Development Corp. to 10.4 percent via a

private placement that grossed a total USD 685,000.

Teck Resources has subscribed for 2.14 million units of the private placement for a total of USD

150,000. This investment will reduce the minimum amount of additional equity investment required

to be made by Teck on or before April 23rd, 2014 from USD 500,000 to USD 350,000 in order to

maintain the Strategic Alliance between Teck and Erdene.

The issuance saw a sale total of 9,797,500 units priced at USD 0.07 per unit. It follows a USD

500,000 private placement previously announced on 18 October, which was oversubscribed and

increased to the maximum to satisfy strong investor demand. Each unit is comprised of one common

share of Erdene and one-half of one common share purchase warrant. Each whole common share

purchase warrant entitling the holder to purchase one common share at a price of USD 0.10 for a

24-month period.

Source: Erdene Resource Development Corp.

APU ORDERED TO CEASE USE OF CHINGGIS KHAAN‟S NAME FOR ITS BEER

The Fair Competition and Consumer Protection Authority Mongolia have delivered a claim notice to

alcohol producer APU to cease the use of Chinggis Khaan for its beer products.

The note reported that consumers had complained of the company‘s use of the same name for the

beer product as well as its vodka. APU has accepted the claim and announced the company would

no longer provide a beer called Chinggis Khan.

Separately, Parliament has been in continued discussions about legislation that would ban the usage

of Chinggis Khaan‘s name and image for the marketing of alcohol and tobacco products

Source: News.mn

EREL TO COMMISSION PREFABRICATED MATERIALS FACTORY

Erel Group's new prefabricated materials factory is set to play a key role in the development of

Mongolia's ger districts.

Erel has concluded a contract with EBAWE Anlagentechnik GmbH, a German manufacturer for the

construction of a prefabricated construction materials factory. The factory produces hollow core

slabs, solid walls, sandwich walls, beams and columns. The prefabricated panels have advantages

over ordinary building materials due to the shorter time for construction, flexibility in form,

dimensions and design, cost-effective installation, and high resistance against earthquakes.

The provision of concrete will be ensured by means of a newly installed batching plant and

connected bucket conveyor system. For architectural panels a concrete grinding machine is

available.

The factory, known as Erel BUK-1, aims to be a major supplier of prefabricated concrete elements

for the Ulaanbaatar City Regeneration Project. The project goal is to develop and build up to

200,000 housing units as well as infrastructure, such as schools, hospitals, office space, retail

space, parks and recreational areas, district heating, electricity, water, sewerage and other

utilities and amenities. The aim is to move citizens from the ger districts.

The project will be financed in part by the Development Bank of Mongolia.

Source: Info Mongolia

HBOIL EXTENDS OPTION TO PURCHASE OFFSHORE DPRK EXPLORATION RIGHTS

HBOil JSC has negotiated an extension of its option agreement for the acquisition of up to 51

percent of a company with oil exploration rights in North Korea's East Sea.

HBOil extended the deadline on its option to purchase 51 percent of Korex Ltd. which holds the

exclusive rights for the exploration and production of hydrocarbons in the entire territorial waters

of North Korea in the East Sea to 31 January 2014. The extension allows HBOil additional time to

raise the necessary funds to exercise its option in full.

HBOil JSC will be featured as a presenting company at the annual Mongolia Investment Summit in

Hong Kong from 19 to 20 November.

Source: BDSec

DIRECT UB-ERENHOT FLIGHT TO LAUNCH

China's Capital Airlines will open a direct air route next Thursday between Ulaanbaatar and Erenhot

in north China's Inner Mongolia Autonomous Region.

The airline will operate two weekly round-trip flights with a flight duration of one hour and 20

minutes. The lowest fare without tax for one-way and round-trip tickets will be 620 yuan (USD

101.8) and 1,050 yuan respectively. It is the first year-round direct flight opened between the two

cities.

MIAT Mongolia Airlines opened a temporary direct flight between Ulaanbaatar and Erenhot on 7

August which is due to close on 2 November. Erenhot, bordering Mongolia, has been a bridgehead

for China's economic and trade ties with its northern neighbor, with many Mongolians residing and

doing business in the city.

Source: Xinhuanet

APU OPENS WORLD-CLASS FOOD WAREHOUSE

APU JSC opened its world-class, fully automated food warehouse.

Built in cooperation with Germany's Krones, construction, equipment and software installation took

11 months. The warehouse spans 96,000 cubic meters and stands 12 stories high. A single software

program is used to manage the warehouse while a separate program is used for supply

management.

Source: Udriin Sonin

AUM OPENS NEW PRESENTATION COURSE

The American University of Mongolia (AUM) is rolling out its "Taking the Stage: Becoming a Dynamic

Presenter" course targeting business professionals.

The workshop is structured to guide students through the presentation process from research to

practice to assessment. Students will choose a topic to focus on for the workshop throughout the

four weeks and build a single presentation on that topic. Students are given the opportunity to

prepare a presentation they need for work.

The course will be held from 19 November to 12 December at a cost of MNT 500,000.

Source: American University of Mongolia

MICHELMORES EXTENDS INTERNATIONAL CREDENTIALS IN TENGER DEAL

Law firm Michelmores‘ London office has advised private equity groups Bamboo Finance and Triodos

Investment Management on the sale of a significant stake in Tenger Financial Group to a consortium

led by Japanese bank Orix Corporation and which included the International Finance Corporation

and Mongolyn Alt Corporation.

The transaction has taken over a year to bring to completion as a result of a series of complex

constitutional and regulatory hurdles that needed to be overcome, including the approval of the

Ministry of Economic Development and the Bank of Mongolia. Enclude Capital Advisory UK Ltd., a

London-based specialist corporate finance advisor acted, as the sole financial advisor to the sellers.

―This complex multi-party, multi-jurisdictional deal is further evidence of Michelmores‘ growing

expertise in advising private equity funds, financial institutions, corporates and government

agencies on a wide variety of cross-border transactions in some of the most challenging emerging

markets,‖ said Joe Whitfield, a team leader for Michelmores.

Source: Lawyer Monthly

KYRGYZ LAWMAKER INDICATES GOVERNMENT LOSING PATIENCE WITH KUMTOR TALKS

A member of Kyrgyzstan's ruling coalition has indicated growing impatience on the part of the

government with discussions over the future of the Kumtor gold mine. Omurbek Tekebayev, leader

of the Ata-Meken parliamentary faction, said November 12 that Bishkek should have no dealings

with Centerra Gold Inc., the mine's current owner.

A new round of negotiations between the Kyrgyz government and Toronto-listed Centerra Gold are

currently underway, after the parliament rejected a proposed agreement that would have given

Kyrgyzstan a 50 percent holding in the mine. Under the draft agreement, Kyrgyzstan would have

exchanged the 32.7 percent stake it has held in the listed parent company since 2009, for a 50

percent stake in a new joint venture that would manage the mine. On 23 October, the Kyrgyz

parliament gave a resounding rejection of the draft deal, with just two of the 120 MPs voting in

favor. Instead, MPs instructed the government to negotiate a new deal that would give Kyrgyzstan

at least 67 percent of the mine.

However, there have recently been indications that Bishkek has become impatient with the long

drawn out negotiations any if a deal is not reached by December may move ahead with

nationalizing the mine, despite the damage this would likely do to the country's reputation among

international investors. In an interview with the BBC, President Almazbek Atambaev—who has

previously urged the government and parliament to reach a compromise with Centerra—indicated

that nationalization could be an option.

"In the next month we will define: either we will annul the agreement, or nationalize the project.

We are considering the opportunity of assets distribution to our benefit in more than 60 percent.

But the head of the state has rather radical opinion—he is for 100 percent," Tekebayev said.

Tekebayev also denied that nationalization would result in production at the mine, which accounts

for around 12 percent of Kyrgyzstan's GDP, being suspended.

Source: BNE

ECONOMY

WORLD BANK URGES TIGHTENED ECONOMIC POLICIES

The World Bank said that the persistent large balance of payments imbalance is a key challenge to

the Mongolian economy, in its newly released semi-annual Mongolia Economic Update.

The recent amendment of the 2013 budget shows the government‘s commitment to keep the

official budget deficit within the ceiling of the Fiscal Stability Law. Yet, the fiscal policy will remain

highly expansionary in 2013 and 2014 as a large portion of the Chinggis bond is used to finance

public investment projects outside the budget. The budget deficit is expected to reach over 12

percent of GDP in 2013 even though the official budget deficit is contained at 2 percent of GDP.

Monetary policy has been expansionary as well, with outstanding bank loans increased 62 percent in

one year in September. Credit expansion is largely due to lending programs introduced by the Bank

of Mongolia. The rapid credit growth has been reflected in volatile exchange rate movement and

rising inflation in recent months.

Growth-oriented economic policies need to be tightened toward economic stability, and fiscal

policy should be tightened further and the off-budget spending should be included in the budget

and controlled under the fiscal discipline of the Fiscal Stability Law. The Bank of Mongolia should

curb the rapid growth of credit and phase out policy lending programs.

"By slowing down the expansion of investments and by focusing on those investments that will have

the greatest economic impact, the government will be able to address progressively the

development needs of the country while maintaining economic stability,‖ said Coralie Gevers, the

World Bank Country Manager in Mongolia. ―If one stimulates the economy too much in a global

environment that is uncertain, it runs the risk of generating economic volatility which will hurt poor

people and will make it hard for businesses to plan and finance their operations.‖

The World Bank expects Mongolia‘s economy to grow at 12.5 percent for 2013, a downward revision

from its previous forecast of 13 percent. The revised forecast reflects the facts that economic

growth in China and the recovery of the minerals market have been slower than expected.

Source: World Bank

MONGOLIA'S NEW INVESTMENT RULES TO SPUR MINING SECTOR DEVELOPMENT: MINERS

Mongolia's new legislation that removes distinction between domestic and foreign companies when

it comes to investing in the country will help attract more investment, miners with projects in the

region said Friday.

From 1 November, foreign companies will not need to seek government or parliamentary approval

before investing in Mongolia. There will be no restrictions on the amount of investment if the

company is not 50 percent or more owned by a foreign government. If the company is state-owned

with more than 50 percent share held by a foreign government, it cannot buy more than 33 percent

of a project in Mongolia, without government approvals.

The new law also provides a stable tax structure as the rates cannot be amended by future

legislation unless those changes benefit the investor. It also removes all restrictions on the

movement of assets in or out of the country and also provides protection against nationalization of

the investors' assets.

‖We believe that this will improve sentiment towards Mongolia-related investment stories,"

Australia's Aspire Mining Ltd. said in a note to stakeholders Thursday.

"While the investment law has become effective recently and further regulations are to be issued, it

is certainly a welcome development which should promote domestic and foreign investment in

Mongolia," an official from SouthGobi Resources Ltd. said.

"Reports also suggest that the law is a first step in streamlining the investment environment and

creating more favorable investment conditions by simplifying the registration process and removing

some approval requirements," he added.

Source: Platts

MONGOLIA GEARS UP FOR THE FIGHT OF ITS MINING LIFE

On 1 November Mongolia's new, friendlier foreign investment law came into force. Probably not a

day too soon.

Foreign direct investment in the country dropped 49 percent to September 2013 compared to last

year which already marked a 17 percent year-on-year decline. The value of the currency, the

tugrik, is down 20 percent this year. Inflation has returned to double digits. The Mongolian central

bank's off-balance sheet spending is burning through foreign reserves as foreign debts balloon to 55

percent of gross domestic product (GDP). The country has been bailed out by the International

Monetary Fund (IMF) no fewer than five times and it suffers a domestic bank failure on average

every 18 months.

While the changes from the 2012 Strategic Entities Foreign Investment Law (SEFIL) which has been

replaced, including greater certainty surrounding mining taxes and royalties and the scrapping of

the distinction between private foreign and domestic investors, are being universally welcomed as a

positive step, a number of issues remain unresolved.

"In spite of the ups and downs, the trend has been a steady march forward as more and more

investors discover the long term prospects of the country and the potential rewards for patience

and commitment," said the Chairman of Oyu Tolgoi and Mongolia's trade and foreign affairs

ambassador at large, Galsan Batsukh.

Following its so-called Article IV mission to Mongolia the IMF issued a stern warning about Mongolia's

prospects given the country's deteriorating macro-economic picture, reduced investment from

developed economies and the economic slowdown in China: "Spillover risks will particularly affect

the more vulnerable emerging market economies. In light of this, Mongolia needs to change course

to avoid becoming highly exposed to these external shocks and risks of crisis.‖

Source: Mining.com

MONGOLIA TO OPEN INVESTMENT AGENCY

The Cabinet of Ministers approved the creation for an investment authority on 9 November.

The agency will be under the authority of the Ministry of Economic Development and will be tasked

with attracting foreign investors, sustaining the stability of the legal and business environments,

promoting the country‘s investment environment, and issuing stability certificates for eligible

investors.

The agency will also be responsible for coordinating with the State Registration Authority and

enforcing the terms of the Investment Law.

Source: Business-Mongolia.com

MONGOLIA COMMISSIONS UB-DUNDGOBI ROAD

A commissioning ceremony was held for a new 104-kilometer road connecting Ulaanbaatar with

Dundgobi Aimag was held 10 November.

The road is the third completed out of plans by the government to connect the capital with each of

Mongolia's 21 provinces. Three Mongolian companies participated in construction for one year and

four months. Spending on the road was MNT 49.2 billion, financed by proceeds for the 2012 USD 1.5

billion Chinggis bond.

Source: Undesnii Shuudan

GOVERNMENT WAGE BUDGET INCREASES 18 PERCENT

The Mongolian Labor Union has successfully negotiated an 18 percent increase in its allocations for

salaries, pensions and welfare.

The Union and Mongolian Employers‘ Federation announced a 36 billion increase for additional

spending in these areas after working together with 30-person working group of government

officials for the negotiations. They said MNT 139 billion would be used for salaries increases to

teachers and health care workers and MNT 96 billion for pensions and social welfare. They are

planning a gradual implementation to the provinces outside of Ulaanbaatar.

The government plans to implement a new method for implementing the salary hikes to prevent

inflationary pressures on groceries such as meat and gasoline. The salary raises will be granted to

employees that demonstrate qualifications and productivity as well as having years of experience.

The government plans to introduce future salary increases in line with economic growth.

The total allotment for government wages is MNT 1.5 trillion.

Source: Unuudur

BRING IN THE START UPS: SUPPORTING SMES IN MONGOLIA

Small businesses have never been old-fashioned nor in vogue in Mongolia. Small-and medium-size

enterprises (SMEs), however, are still important to the economy.

Assisting SMEs has been challenging to past governments in Mongolia, which spent billions of tugrugs

in soft loans to contribute to SME development. Despite these efforts, small business owners still

complain that not enough has been done.

―Soft loans that are supposed to go to SMEs are usually stuck with the middle man, the bank,‖ said

E. Ariuntugs, chief executive at the Mongolian Financial Non-Banking Institutions' Association.

There are also many who say that soft loans do not go to SMEs at all, but instead go to large

companies. One method to resolve this issue would be to introduce a mechanism that issues soft

loans through non-banking financial institutions (NBFIs) instead of banks. Most SMEs who fail to

meet the threshold put up by banks are left with no choice but to knock on the doors of NBFIs

because SME start ups are typically classified as high risk by banks. But an NBFI is different from

the bank. They provide services for about 60 percent of SMEs, with some 390,000 clients typical

among them. In total MNT 320 billion is circulated among NBFIs in Mongolia, of which about 70

percent is investors-owned equity. This gives more leeway to take risks and provide fewer obstacles

for small business owners to attain credit.

Approval of the Investment Law by Parliament is a large step forward in the right direction for

Mongolia‘s financial sector. However, this too is likely to be of most benefit for the country‘s

largest companies. Only NBFIs have the power to directly address the situation.

Source: Mongolian Economy

GREENFIELDS MAN HELPS COMBAT TUBERCULOSIS IN MONGOLIA

In an article for online publication The Conversation, Cameron Wright likens the spread of

tuberculosis in Mongolia to the reign of the nation‘s 12th century warlord Genghis Khan.

―This invader, Mycobacterium tuberculosis, favors stealth over force,‖ he writes. ―The disease that

it causes, tuberculosis (TB), has endured from ancient times into the 21st century. ―TB

disproportionately affects the world‘s vulnerable, with over 95 percent of active cases and deaths

caused by TB occurring in developing countries.

The 24-year-old Greenfields resident and Youth Ambassador for Development currently resides in

Ulaanbaatar, Mongolia, where he works as a Public Health Project Officer for the Mongolian Anti-

Tuberculosis Association (MATA). Since he flew to Mongolia in March this year, he has teamed up

with various national and international health organizations, including WHO and World Vision

Mongolia, to help combat TB and raise awareness of the MATA‘s work worldwide.

―Mongolia has a high burden of TB relative to its population,‖ he said.

Wright said his plans post-Mongolia are ―still evolving,‖ but hopes to secure a future in the public

health sector when he returns in March next year.

―It will also be good to see my family and friends,‖ he said.

Source: Madurah Mail

CENTRAL ASIAN COMMODITIES EXPORTERS GOING STRONG, SAYS EBRD

The European Bank for Reconstruction and Development (EBRD) reported strong growth across

almost the entire Central Asia and Caucasus region, with the launch of new natural resources

projects in Kazakhstan, Mongolia and Turkmenistan boosting the economies of the three major

commodities producers.

Mongolia, where production started at the massive Oyu Tolgoi copper-gold deposit this year, has the

region's highest growth forecast for 2013, with the EBRD expecting to see growth of 13 percent. Ten

percent growth is expected for Turkmenistan, following an increase in gas exports to China. Growth

will "remain strong over the medium term, supported by exploration of Turkmenistan's abundant gas

reserves and further diversification of export routes," the report says.

The EBRD increased its 2013 forecast for Kazakhstan's economic growth after an increase in oil

production and continuing high levels of investment. The EBRD expects Kazakhstan's economy to

grow by 5.6 percent in 2013—up from an earlier forecast of 4.9 percent—and 5.5 percent in 2014.

However, the bank warns of weakness in Kazakhstan's banking sector, where levels of non-

performing loans remain high. Strong growth of between 6 percent and 8 percent is also expected

elsewhere in Central Asia, despite a fall in remittance flows from Russia, which is expected to have

the greatest impact on the Tajik economy.

In the Caucasus, growth has accelerated to 4.5 percent in Azerbaijan due to a combination of

higher oil production and fiscal stimulus from the government, though the EBRD expects growth to

slow slightly to 3.5 percent in 2014. Meanwhile, growth in Armenia slowed from 7.1 percent in 2012

to just 2.5 percent this year following delays in public infrastructure spending and a hike in Russian

gas prices. There was a similar picture in Georgia, where growth dropped to 2 percent mainly due

to uncertainty in the run-up to the country's 27 October presidential elections. A modest recovery is

expected in both countries in 2014.

Source: BNE

CHINA EXPECTED TO CUT GROWTH TARGET TO 7 PERCENT

China will cut its growth target to 7 percent next year in a sign of the government‘s determination

to push through structural reforms and steer the economy on to a more sustainable path, one of the

country‘s top investment banks has predicted.

With Communist party leaders gathered in Beijing this week for a meeting that will set China‘s

policy direction for the coming decade, investors and companies have been looking for clues about

their strategic thinking. A lowering of the country‘s growth target—although unlikely to be

announced until the annual Chinese parliament in March—would be an important distillation of the

government‘s plans. China has consistently exceeded its annual growth targets in practice, but a

cut would still be an indication of Beijing‘s willingness to tolerate slower growth in the interest of

addressing risks from rising debt levels to soaring property prices. Beijing has aimed for 7.5 percent

growth in recent years.

China International Capital Corp. (CICC), an investment bank headed by Levin Zhu, son of former

premier Zhu Rongji, forecast in a report on Monday that the government will decide to lower next

year‘s growth target to 7 percent. CICC‘s analysts, led by chief economist Peng Wensheng, said the

target cut would set the stage for 2014 as a crucial year for implementing reforms, following on

from the Communist party plenary meeting that began in Beijing on Saturday and concludes on

Tuesday.

CICC said the lower growth target would lead the central bank to keep monetary policy on a tighter

footing, a shift that appears to have started already. On Monday, it reported that banks issued CNY

506 billion (USD 83 billion) in new loans in October, well down from September‘s CNY 787 billion.

Overall new credit issuance, including China‘s shadow banks, was also much lower in October,

falling to CNY 856 billion from September‘s CNY 1.4 trillion.

―The October credit numbers point quite clearly to a firmer stance,‖ said Louis Kuijs, an economist

with Royal Bank of Scotland in Hong Kong. ―We expect the firmer stance to be maintained in the

coming quarters.‖

Source: Financial Times

NEW LEADERSHIP BRINGS A CHANGE TO AUSTRALIA‟S RESOURCES SECTOR

The election of Australia's Liberal leader Tony Abbott as the new Prime Minister has heralded

significant changes for the country‘s resources sector.

In October, Abbott ingratiated himself to the resources sector by releasing draft legislation to

repeal the much-contested minerals resource rent tax (MRRT). Opponents criticized that the MRRT,

which was introduced in 2012, was predicted to raise only AUD 7.2 billion in revenue by the 2016-

2017 financial year, nearly AUD 5-billion less than expected by the Gillard government. The tax

raised only AUD 126 million during the first half of the 2012-2013 financial year.

Further, the newly elected government has moved to simplify the environmental approvals process

for major projects, introducing a ―one-stop-shop‖ concept to slash red tape and increase

investment, while maintaining environmental standards. The second stage would see the federal

and state governments agree on bilateral assessments and updating those that are already in, while

stage three would see agreements on bilateral approvals within 12 months with willing states. Azure

Capital MD for corporate advisory Geoff Rasmussen pointed out that the strong Australian dollar, as

well as the high cost of labor and the perception of unnecessary bureaucratic delays in

environmental approvals, were all still a disadvantage to Australia.

―Ultimately, you are competing against every country in the world in trying to get global

investment dollars into your assets. Getting rid of the MRRT and the carbon tax is not going to mean

that we will be fundamentally more competitive overnight.‖

Rasmussen noted that, while there was little to be done about the strength of the Australian dollar,

government did have influence on the cost structure of certain projects. He also suggested further

tax reforms and possible incentives to provide a permanent workforce in the northern regions of the

country, where resource projects are currently reliant on the fly-in, fly-out method of transporting

workers to site.

Source: Mining Weekly

MINING WILL CONTINUE TO DRIVE AUSTRALIAN ECONOMY FOR THE NEXT FIVE YEARS

Economic forecaster BIS Shrapnel has said that the mining industry would continue to be a positive

driver of the Australian economy—which competes Mongolia for exports to China—over the next five

years, despite a predicted fall in investment in the sector. In its ―Mining in Australia 2013 to 2028‖

report, BIS said that mining investment, production, contractor services and employment would

follow very different paths over the next five years.

While the mining investment boom peaked in the 2012-2013 financial year and was forecast to

decline 20 percent over the next five years, mining production was poised to grow 41 percent over

the same period, driving commensurate increases in mining operations activities, maintenance and

exports. The value of mining production rose 8.8l percent in 2012-2013 to AUD 151 billion, and BIS

noted that the outlook for production was strong, with yearly average growth of 7.1 percent

forecast to 2017-2018. This would lift the mining sector‘s share of Australian gross domestic product

(GDP) to 12.2 percent, making it Australia‘s second-largest industry sector.

―With respect to the mining boom, it‘s probably fair to say that this is not the beginning of the end,

but the end of the beginning,‖ said senior manager of BIS‘s infrastructure and mining unit, Adrian

Hart. ―

He said BIS Shrapnel is forecasting the ratio mining activity to GDP to rise from 18.7 percent to 19.8

percent by 2018. However, Hart noted that growth in mining employment would not keep pace with

the expansion in production as miners sought to restore productivity lost during the furious race to

invest in new capacity since the mid-2000s. BIS expected that mining operations employment would

rise only 11 percent over the next five years, mainly in oil and gas and iron-ore, whereas mining

construction employment would slump 40 percent.

―Given the strong increases in production expected, this translates to a 60 percent labour

productivity surge over the next five years,‖ Hart said. He added that this would provide both

challenges and opportunities for suppliers and contractors to the mining industry.

Source: Mining Weekly

POLITICS

MONGOLIA WILL NEVER BURY NUCLEAR WASTE, SAYS ELBEGDORJ

President Tsaskhia Elbegdorj refuted suspicions that Mongolia was being targeted as a destination

for nuclear waste disposal on Twitter November 13th following widespread rumors within the public

and a protest against yellow cake production by young members of the Mongolian People's Party.

―Mongolia still stands on its nuclear-free status. I assure you again the rumor about nuclear waste

burial in Mongolia is not the policy of Mongolia,‖ said Elbegdorj in a tweet.

The government issued an official statement 12 November on nuclear waste, refuting claims that

plans existed where nuclear waste would be buried und Mongolian soil

―Some political parties and public organizations released a note claiming Mongolia is allowing the

burial of nuclear waste from Japan in Mongolia,‖ reads the note. ―The note claimed that the Prime

Minister signed a nuclear waste agreement during his visit to Japan and the Foreign Minister signed

a uranium deal with France. Mongolia has declared its policy on nuclear energy and uranium

exploration. The reform Government takes this responsibility seriously announcing that Mongolia

has neither buried nuclear waste nor will bury nuclear waste in the future.‖

Source: News.mn

12 HEALTH PROJECTS EXPECTED FOR COMPLETION IN 2013, SAYS HEALTH MINISTER

Health Minister N. Udval provided an update on the developments in the health sector, specifically

regarding the construction of new health facilities, during Prime Minister Norov Altankhuyag's 30-

minute weekly press meeting Thursday.

"Eight out of the 47 projects have ended. 12 are planned to be completed by the end of this year,"

said Udval.

One project for the establishment of a burn center has increased to MNT 26 billion during the

project implementation, she noted. Responding to this, the prime minister said the government

would cut financing from the state budget, with the remaining work sold by tender bid auction.

Altankhuyag said that from here on hospitals would have the power to appoint their heads

themselves rather than have appointments come down from the Ministry of Health.

Source: Montsame

PRESIDENT INITIATES DEVELOPMENT ROADMAP MEETING

President Tsakhia Elbegdorj has initiated a meeting for 16 November where government, business,

academia, and civil society will convene to provide input for a road map for development for

Mongolia in the years up until 2050.

The meeting ―From a Big Government to a Smart Government‖ will open debates and discussions

about how far Mongolia is looking into her future, how well the country is cognizant of its strengths

and weaknesses, and how cautious Mongolia is against repeating its past mistakes.

Participants will be divided into five groups --decision-makers, local government, media, academia

and NGOs, and businesses—to together reach a common stand on Mongolia‘s development agenda.

The conclusions made during the each of the five sessions will be reported on by moderators at the

Plenary Session.

Source: Montsame

THE MNT 70,000 GRANT PER MONTH FOR STUDENTS WILL BE CHANGED

The Standing Committee on Budget is set to introduce a new scheme for monthly student stipends

that grant different sums to students based on academic performance and the institutions they

attend. A portion of graduate students will also have to be employed to receive a stipend. Stipends

will amount to half of minimum wage.

Source: Zuunii Medee

AMARJARGAL RESIGNS FROM PARLIAMENT

Democratic Party parliamentarian R. Amarjargal presented a resignation letter to the Parliament

speaker during a session of Parliament.

Amarjargal presented his resignation during a discussion on the state budget. In an address he noted

the need from parliamentarians for strong principles, honor and penchants for speaking truth,

giving independent member Sainkhuu Ganbaatar as an example. He gave no reason for his

resignation, but criticized government saying that it needed people like him who are clean as well

as economists such as Ts. Oyunbaatar.

Source: Unuudur

MONGOLIA JOINS OPEN GOVERNMENT PARTNERSHIP

Mongolia joined the Open Government Partnership (OGP), an international platform for domestic

reforming for greater accountability for the government to citizens, during a summit in London from

31 October to 1 November.

Mongolia introduced its action plan and joined as a member of the Open Government Partnership

during the summit, where over 1,000 delegates from sixty countries gathered. The three key

priorities of the action plan are to improve public services, increasing the transparency of public

institutions, and enhance justice while reducing corruption. Mongolia's adoption of the Anti-

Corruption Law and the Law on Information Transparency and the Right to Information in 2011, as

well as accession to the U.N. Convention against Corruption in 2005 were important milestones for

Mongolia's membership to the Open Government Partnership.

The government shared its experiences, providing examples in its development of open governance

at the London summit.

The partnership was launched in 2011 to provide an international platform for domestic reform for

greater transparency and accountability. The partnership has grown from eight member countries in

its inception to the today's 62.

Source: Montsame

MONGOLIA RECEIVES SUPPORT FROM INTERNATIONAL INSTITUTE FOR GREEN ECONOMY

Mongolia participated in the Global Green Growth Institute (GGGI) is Seoul, Korea from 3 to 5

November, where nations' leaders discussed strategies for developing green economies.

Former Korean President Lee Myung-bak announced a ―low carbon, green growth‖ strategy as a new

vision to guide the nation‘s long-term development in 2008 and founded the national committee.

Later in 2009, the government of Korea adopted the Green Growth Law, after which the Global

Green Growth Institute was established in June 2010 that grew into new kind of international

organization.

―Mongolia supports the Institute‘s action from the early beginning and we are glad to cooperate. In

order to broaden our activity in Mongolia, we opened a GGGI representative office in Ulaanbaatar

last September and the GGGI is ready to co-implement the Mongolia‘s National Strategy for Green

Growth,‖ said Director-General of the GGGI Howard Bamsey.

A Mongolian delegation led by Deputy Parliament Speaker L. Tsog and Minister of Environment and

Green Development Sanjaasuren Oyun were in attendance. The event was significant given the

discussion now underway in Parliament over how to best build a green economy. Mongolia became a

member state of GGGI during the 2013 Global Green Growth Summit held in Songdo.

Source: Info Mongolia

SERBIA AND MONGOLIA SIGN AGREEMENT ON VISA ABOLISHMENT

Serbia's Minister of Foreign Affairs Ivan Mrkic and his Mongolian counterpart Luvsanvandan Bold

signed an agreement for the abolishment of visas.

Mrkic said at a joint press conference held after the meeting that the Serbian and Mongolian

friendship is traditional and noted that Mongolia has very dynamic economic growth which is among

the biggest in the world. He expressed his hope that companies from Serbia would find interest in

doing business in Mongolia, adding that the laws which this country adopted recently provide for a

stable business environment.

Bold said that his visit to Belgrade is of historic importance because the 57th anniversary of

establishing diplomatic relations between the two countries is observed this year. He and Mrkic

discussed a series of issues related to economic cooperation, the possibility for establishing a

mechanism of cooperation between the two countries‘ parliaments and governments, and

cooperation in the field of education, science and culture.

Source: Balkans.com

MONGOLIA SIGNS INTERGOVERNMENTAL AGREEMENT ON DRY PORTS

Mongolia has signed an agreement that will help develop dry ports throughout Asia.

The second session of the Forum of Asian Ministers of Transport was held at the United Nations

Conference Center in Bangkok, Thailand from 4 to 8 November. In attendance was Minister of Road

and Transportation A. Gansukh, where he participated in discussions on regional transport issues

including those relating to regional transport networks, transport facilitation and logistics, financing

options for regional infrastructure development, and sustainable and inclusive transport.

Fourteen member countries sign the Intergovernmental Agreement on Dry Ports, the third

Intergovernmental Agreement to be negotiated under the auspices of ESCAP. By signing the

agreement, the governments of Armenia, Cambodia, China, Indonesia, Islamic Republic of Iran, Lao

PDR, Mongolia, Myanmar, Nepal, Republic of Korea, Russian Federation, Tajikistan, Thailand and

Vietnam pledged to promote international recognition of dry ports, facilitating investment in dry

port infrastructure, improving operational efficiency and enhancing the environmental sustainability

of transport, where Mongolia‘s border ports of Zamyn-Uud, Sainshand, Ulaanbaatar and Altanbulag

were considered as International Dry Ports, in addition to Choibalsan.

Source: Info Mongolia

MONGOLIAN AMBASSADOR STRESSES EDUCATIONAL TIES WITH INDIA

Mongolian Ambassador to India Sanjaasuren Bayaraa stressed the need of strengthening educational

ties between Mongolia and India countries, last week Friday in an address to the students at

Maharishi Dayanand University (MDU).

As a chief guest of inter-zonal youth festival, Bayaraa said that India and Mongolia share historical

ties and active cooperation between them can further improve the academic scenario.

The three-day youth festival commenced that day with dance and music performances and literary

expression. MDU vice chancellor HS Chahal threw light on the historical and cultural linkages of

both countries and said that avenues of educational and cultural exchange can be explored between

the two countries.

Source: Hindustan Times

UN OFFICER ATTENDS MONGOLIAN PEACEKEEPERS CEREMONY IN SOUTH SUDAN

The U.N. under-secretary general for the Department of Field Support, Ameerah Haq, traveled to

Bentiu, the capital of the State of Unity of South Sudan on Friday 8 November.

Haq met with the deputy governor, Mabek Lang de Mading, and the Council of State, when she will

visit the headquarters of the Second Mongolian Battalion of the United Nations Mission in South

Sudan (UNMISS). While with the Mongolian Battalion, Haq will attend a parade where Mongolian

peacekeepers will be decorated in appreciation of their work to support the people and authorities

of Unity State. The Mongolian Battalion is due to rotate next week and be replaced by the Third

Mongolian Battalion, with a force-strength of 850 men and women.

Mongolian engineers started assisting local authorities as early as June, when the governor

requested their support to address the damage caused by seasonal heavy rains. The engineers have

undertaken infrastructure work such as leveling and building drainage along Bentiu‘s main road,

constructing dykes or draining and rehabilitating the public sports complex of Bentiu so it could host

the independence celebrations in July—just to name a few of their projects.

―By working together and supporting the state government, the local authorities and the citizens of

the state, the Mongolian Battalion and UNMISS are striving to help extend state authority, prevent

conflicts, protect civilians and consolidate the peace so the people can build a strong economy and

a fairer society, where every child in every part of this state can succeed and achieve his or her

dreams,‖ USG Haq said about her travel to Bentiu.

Haq‘s visit is part of a wider tour in South Sudan. In Juba, she met with the minister of foreign

affairs and international cooperation, Benjamin Mariel Barnaba, as well as UNMISS staff and the

mission‘s senior management.

Source: U.N. Mission in South Sudan

MONGOLIA AND RUSSIA TO ESTABLISH CROSS-BORDER PROTECTED RESERVE

Mongolia and Russia have signed an agreement for the protection of rare species that migrate

between the countries.

B. Tulga, deputy minister of environment and green development, the World Wide Fund in

Mongolia, and the Mongolian-Russian Intergovernmental Natural Protection Commission met in

Moscow for a third annual meeting where they discussed the need to protect of the Uvs Lake basin

area and rare species that migrate to both sides of the Mongolia-Russia border. They agreed to

establish a protected area that would cover the Onon Balj National Park in Mongolia and Sohondyn

Shim Mandal Protected Area in Russia.

Other topics of discussion included the prevention of forest fires, the lumber industries in Russia

and Mongolia, and finding biological substitutes for pesticides.

Source: Unuudur

GANJUUR SUTRA REGISTERED ON UNESCO WORLD HERITAGE LIST

Mongolian Foreign Minister Luvsanvandan Bold received a certificate for the registration of the

Ganjuur Sutra on the World Tangible Heritage list from UNESCO Director General Irina Bokova 7

November.

The sutra becomes the third historical artwork from Mongolia registered on UNESCO's Memory of the

World. The sutra is a collection of Buddhism writings, consisting of 108 volumes. Each black paper

page was in 1819 beautifully decorated with nine precious stones as well as gold, silver, coral,

pearl, turquoise, lapis, lazulite, and nacre.

Other Mongolian contributions to UNESCO's Intangible Heritage list are Naadam festival, khoomii

(throat singing), long song, the Eagle festival, the Morin khuur (horse-headed fiddle), and the

Mongolian epict, the Mongolian flute playing technique, Bielgee folk dance, and the "Tsuur" musical

instrument.

Source: Montsame

MONGOLIA'S WEALTHY POLITICIANS

The median net worth of members of the US Congress—435 representatives and 100 senators—is a

comfortable USD 440,000, more than six times the wealth of your average American household.

Among U.S. lawmakers there are also haves and have-nots with the bank accounts of the 50 richest

members holding a tidy USD 1.6 billion. That translates to small beer across the Pacific. The

wealthiest 50 delegates to China's National People's Congress, a body that acts as a rubber stamp

for Communist Party decisions, control USD 94.7 billion, according to the Hurun Rich List.

While it seems fair to say that these days you have to be rich to be elected in the United States and

that being wealthy in China ingratiates you with the Communist Party, Mongolia takes the concept

to a whole new level.

Mongolian parliamentarians and high-ranking government officials have been required since 2007 to

disclose their assets and net worth to the Asian nation's Independent Authority Against Corruption.

The Mongolist blog has crunched the numbers and it looks like Mongolia's top politicians have

managed to expand their asset base much quicker than the rate of economic growth in the country.

According to latest 2012 annual filing, current parliament members are sitting on MNT 1,137 billion

in total net assets or approximately USD 785 million. Of the 74 MPs that disclosed their wealth, the

top four control about 64 percent of the total.

Those are impressive numbers particularly when you consider Mongolian politicians' hoard relative

to the size of their country's economy. U.S. Congress members' combined fortunes are a rounding

error when you consider America's USD 15.7 trillion economy. Chinese politicians fare better. They

control 1.1 percent of the globe's second largest economy. The rulers of Mongolia's fewer than three

million citizens have amassed moolah to the equivalent of 7.6 percent of the country's GDP.

Source: Mining Weekly, The Mongolist

MINISTRY OF HEALTH LEADS IN GOVERNMENT RED TAPE, SAYS STUDY

The Ministry of Health leads the government in bureaucracy, found the Mongolian National Chamber

of Commerce and Industry in a bureaucracy index for 2013. Following the Health Ministry (in order

of greatest to least layers of bureaucracy) was the Ministry of Education and Science, Ministry of

Industry and Agriculture, Ministry of Justice, Ministry of Construction and Urban Development,

Ministry of Defense, Ministry of Labor, Ministry of Energy and Ministry of Foreign Affairs.

Source: Udriin Sonin

OVERVIEW OF THE INVESTMENT FUNDS LAW

Parliament‘s approval of the first ever Investment Funds Law (IFL) in early October went relatively

unnoticed, with all attention of the time focused on the Investment Law. Nonetheless, it should be

noted that the IFL is of great importance to the future of Mongolia‘s economic growth and financial

sector development when it takes effect 1 January 2014.

Comprising 11 chapters and 58 provisions, the purpose of the IFL is to regulate the basic relations

related with the establishment of an investment fund, issuance of a license for the fund, regulation

fund management companies, custody of fund assets and protection of investor rights and interests.

The law defines two main types of investment funds—private and mutual, and different regulatory

norms will apply. Private funds will be subject to limited regulation from the Financial Regulatory

Commission (FRC). Those funds will not be allowed to do public marketing and can raise funds only

through private offerings. Mutual funds can raise funds through public offerings to 50 or more

people.

One chapter of the IFL is dedicated to custodian services. Along with Securities Market Law, the IFL

brings the concept of custodian services in order to protect investors. Custodian banks will

responsible for custody of fund assets, registration of fund units, verification of net asset value of

funds and also exercise some control over management companies.

Foreign funds are not allowed to raise funds in Mongolia without licensing, but these funds can carry

out investment activities after going through a registration process with the FRC. As a special

purpose vehicle, investment funds will not be taxed as a business entity, however investors will pay

income taxes on returns subject to effective tax regimes.

Source: Mandal Asset Management

SOUTH KOREAN MONEY LAUNDERING IN MONGOLIA COMES TO LIGHT

Local newspapers reported that the Economic Crime Combat Division of the Criminal Police

Department has brought down a South Korean organized money laundering operation in Mongolia.

An unnamed source said evidence was found that proved that the head of a South Korean crime

organization, a gangpae (tr: street gang), Ahn Jae Man, was laundering money in Mongolia collected

from extortion practices, loan sharking and gambling in South Korea.

Ahn Jae Man was arrested for a gambling business and an illegal transfer of MNT 11 billion from

South Korea. The origin of the transfer was named as Uilsot, as the company director, Lee Jae Gun,

in order to disguise the money as an investment. The company used the money to build a hotel

named Richfield in the Chingeltei District of Ulaanbaatar. Ahn Jae Man was accused of attaining

USD 4.5 million in South Korea through illegal means.

Lee Jae Gun, the owner of Richfield, was investigated by Chingeltei District police for forced

prostitution by Chingeltei District Police in 2011, but the case was dropped due to lack of evidence.

The State Investigation Department has confiscated the Richfield hotel due to its connection in the

arrest.

Source: News.mn, Unuudur

UB MAYOR TO RECEIVE HONORS IN WASHINGTON, D.C.

Ulaanbaatar Mayor Erdene Bat-Uul will be honored at International Republican Institute's 30th

Anniversary Celebration 9 December in Washington, D.C., United States. Bat-Uul will be share the

honor with Mikulas Durinda, a former prime minister of Slovakia.

Source: NAMBC

ANNOUNCEMENTS

MONGOLIA INVESTMENT SUMMIT, HONG KONG, NEXT WEEK

Since opening up the registration for the fourth annual Mongolia Investment Summit 2013 in Hong

Kong from 19 to 20 November, organizers have received an overwhelming response from investors.

With the new Investment Law being passed by the Mongolian Parliament last week, we expect the

investor interest for the Summit to pick up even more.

Meet with up to 500 senior level delegates at the Summit and set up one-on-one meetings with

investors and potential business partners all in one place. Mongolia Investment Summit is the only

Mongolian investment event taking place in Hong Kong, the financial deal-making hub of Asia. All

registered delegates will have exclusive access to our advanced Mongolia Invest Online Meeting

Planner which will allow you to see who‘s coming and let you pre-arrange meetings with the other

attendees to make the best use of your time at the event.

BCM is again a supporting partner organization. BCM members will enjoy 15% discount; please quote

Priority Code 695BCM15D during registration. To speak, sponsor or exhibit: Please contact King Tai

at king.tai@beaconevents.com.

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AUSTRALIAN UNDERGROUND MINING INDUSTRY PROGRAM, NOVEMBER 21-29

The Australian Trade Commission and the Underground Mining Engineer‘s Association of Mongolia

(UMEAM), is now registering companies and organizations to participate in an Australian

Underground Mining Industry Program, which will take place in Sydney and Brisbane on 21 to 29

November. The program consists of eetings with Australian mining equipment, technology and

service supplier companies in Sydney and Brisbane. Attending the 2013 Underground Mining

Excellence Conference and exhibition will provide an opportunity to engage with the latest

underground mining innovations and technology providers and a possible visit to the North Parkes

underground mine site.

Registration will close on 10 November. Attendance is limited. For more information, call 9910 6102

or send an email to bart.gurbazar@austrade.gov.au.

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“MM TODAY” ON MNB-TV, FRIDAY, 19:00-19:10

BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with

BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is

scheduled from 19:00 to 19:10 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

The ‗Presentations‘ section on BCM‘s Mongolian website can be reached via bcm.mn/itgeluud.

As a key component of BCM‘s Mongolian website, articles from the ‗News‘ section and the

government website Open-Government.mn are regularly updated.

S. Oyun, Minister of Environment and Green Development, presentation at BCM monthly meeting on

May 27 added to Mongolian website, bcmongolia.org/mn/илтгэлүүд.

- Байгаль орчин, ногоон хөгжлийн сайд С.Оюун, Байгаль орчин, ногоон хөгжлийн шинэчлэлийн

бодлого, үйл ажиллагаа, МБЗ-ийн сарын уулзалт 5 сарын 27, 2013

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

BUSINESS NEWS‟, „PHOTO GALLERY‟

On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available:

The following are presentations from the Mongolia Mining Summit, Perth, Australia, October 29-31,

2013:

• Mongolia‘s Minerals Future and Development by Otgochuluu Ch, Director General, Department of

strategic policy and planning at Ministry of Mining, Mongolia at the Mongolian Mining Summit 2013,

Perth, Australia, Oct 29-31, 2013

• Mongolian Economy: Investment Opportunities /Challenges, Jim Dwyer, Executive Director,

Business Council of Mongolia at the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31,

2013

• Oyu Tolgoi: Lessons from the Gobi, Houston Spencer Vice President, Communications and Media

Relations, Oyu Tolgoi at the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Market dynamics for Mongolian coking coal in the Chinese market, Graeme Hancock, President

and Chief Representative at Anglo American, Mongolia at the Mongolian Mining Summit 2013, Perth,

Australia, Oct 29-31, 2013

• Speech by Mr. Ariunbold Byamba, Deputy Director, Erdenes MGL LLC at the Mongolian Mining

Summit 2013, Perth, Australia, Oct 29-31, 2013

• Launching Mining Projects in Mongolia–A Major Contractor‘s Perspective, Eric Erdenebat

Tseveendorj, Country Manager, Orica Limited at the Mongolian Mining Summit 2013, Perth,

Australia, Oct 29-31, 2013

• Investing in a dynamic legislative environment, Elisabeth Ellis, Managing Partner Ulaanbaatar,

Minter Ellison at the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Sandvik In Pit Crushing & Conveying (IPCC), Doug Turnbull, Principal Mining Engineer, Sandvik

Mining Systems, at the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Ovoot Coking Coal Project, David Paull, Managing Director Aspire Mining, at the Mongolian Mining

Summit 2013, Perth, Australia, Oct 29-31, 2013

• The business of being a third neighbor, David Landers, General Manager, East Asian Growth

Markets at the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Nuurst Thermal Coal Project, Daniel Rohr, Chief Financial Officer, Modun Resources Ltd, at the

Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Culture matters in building sustainable long-term business relationships, Hana Tserenkhand

Byambadash Business Development Consultant. AusMon Consulting and Dr Christine Hogan Adjunct

Professor, Curtin University. Consultant & Author at the Mongolian Mining Summit 2013, Perth,

Australia, Oct 29-31, 2013

• Maximizing Business Benefits from Your IT Investment, Brad Skeggs, Executive Director, COSOL, at

the Mongolian Mining Summit 2013, Perth, Australia, Oct 29-31, 2013

• Presentation by Battsengel Gotov, CEO, Mongolian Mining Corporation, at the Mongolian Mining

Summit 2013, Perth, Australia, Oct 29-31, 2013

• Mongolian Mining Sector "Present and Future Developments", N.Algaa, Executive Director,

Mongolian National Mining Association, at the Mongolian Mining Summit 2013, Perth, Australia, Oct

29-31, 2013

• Jim Dwyer, Executive Director of BCM – ―Mongolian Economy: Investment

Opportunity/Challenges‖ at the 16th Annual NAMBC Investors Conference, Sept 24, 2013

• Business-mongolia.com: ―Working group‘s conclusion on the economy‖

• Joshua Sunga, Internship Program Director, AIESEC- "Youth Leadership Development" at the BCM

Monthly Meeting Aug 26. 2013

• G. Zorig, Country Manager, Tree Global Mongolia – ―Tree Global Mongolia Overview Presentation‖

at the BCM Monthly meeting Aug 26, 2013

• G. Saruul, Deputy CEO, Mongolian Stock Exchange – ―Securities Law Overview‖ at the BCM Monthly

meeting Aug 26, 2013

• Bilguun Ankhbayar, Chief Executive Officer, Mongolian Investment Banking Group LLC,

―MIBG Review‖, at the MSE-BCM Securities Law Overview Session, July 4, 2013

• Robert Rooks, Director, PwC Hong Kong, ―A brief Overview of Custody Services‖, at the MSE-BCM

Securities Law Overview Session, July 4, 2013

• Anthony Woolley, Senior Associate, Hogan Lovells, ―The Revised Securities Market Law‖, at the

MSE-BCM Securities Law Overview Session, July 4, 2013

• B. Saruul, Director General, Securities Department, Financial Regulatory Commission of Mongolia,

―Securities Markets Law – Path to Market Reforms‖, at the MSE-BCM Securities Law Overview

Session, July 4, 2013

Please note the presentations from each of the BCM monthly meetings.

The ―Mongolia Reports‖ section includes the following:

- ―Monthly Macroeconomic Overview, Sep 2013,‖ by EPCRC

- ―Selected Macroeconomic Indicators; data through October 16, 2013‖ by International Monetary

Fund;

- ―IMF Completes 2013 Article IV Mission to Mongolia‖ by International Monetary Fund;

- ―Mongolia Macro Flash‖, Adrienne Lui, Asia Pacific Economics Research, Citigroup Global Markets

Asia Ltd;

- ―Selected Macroeconomic Indicators for Mongolia, as of June 2013‖ by International Monetary

Fund;

- ―Polit Barometer April, 2013‖ by Sant Maral Foundation;

- ―Market Update‖ by Mandal General Insurance LLC;

- ―Annual Report 2012‖ by International Monetary Fund;

- ―Regional Economic Outlook: Asia and Pacific‖, April 2013 by International Monetary Fund;

- ―Highlights of 2012, Mongolia‖ by European Bank for Reconstruction and Development (EBRD);

- ―Official statement of Oyu Tolgoi LLC in relation to information, data and facts related to Oyu

Tolgoi‖ discussed during open session of the State Great Khural‖, dated 1 February, 2013‖;

- ―Mongolia Investment Climate Statement‖, by the Economic and Commercial Section of the U.S.

Embassy;

- ―Mongolia Foreign Labor Force Ratio for 2013‖ by Hogan Lovells International LLP;

- ―How Mongolia will perform in 2013?‖ by Mandal Asset Management;

- ―Mongolia Business Owner and CFO Survey result‖ by BDSec JSC;

- ―The fiscal regime for mining - a way forward‖ by IMF Fiscal Affairs Department;

- ―Taxes for Expatriates in Mongolia‖ by PricewaterhouseCoopers.

The following interviews are added to Interview Section from the Oxford Business Group, Mongolia

Reports 2013 book:

• B. Byambasaikhan, Chairman, Business Council of Mongolia: ―Talk is cheap‖;

• President Ts. Elbegdorj: ―Diversifying for growth‖

• Jim Dwyer, Executive Director, Business Council of Mongolia: ―Non-mining sectors budding‖;

• Peter Morrow, Chairman, American University of Mongolia: ―Filling in the blanks‖;

• N. Zoljargal, Governor, Bank of Mongolia: ―Sustainable vision‖;

• Gansukh, Minister of Roads and Transportation: ―Accessing new markets‖;

• J. Od, President, MCS Group: ―Building interest‖;

• B. Chuluunbaatar, President and CEO of Monnis Group: ―Climbing the ranks‖;

• Cameron McRae, President and CEO, Oyu Tolgoi: ―Sitting on a copper mine‖.

BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to

Parliament and Government is available for download.

BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business

News‖ before they are all put together each week for Friday's weekly NewsWire.

The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner on November 5.

BCM Football Cup 2013 pictures are posted to the website - http://bcmongolia.org/en/photos/350-

en/album?albumid=200

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

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

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SOCIAL NETWORK WITH BCM

The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.

Keep up to date on the latest business deals in Mongolia and how the climate for investment is

improving each day with BCM.

Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-

MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in

the NewsWire with the community.

Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better

business environment in Mongolia today.

Hear breaking news and announcements as they happen when you follow BCM on Twitter at

http://twitter.com/#!/bcMongolia.

We have now 1,822 fans on our Facebook fans page, 1,521 connections on LinkedIn network, and

804 followers on Twitter.

Of course for news information, interviews, event photos, and announcements regarding our

organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn

BCM WORKING GROUP MEETING

BCM's Legislative Working Group met on Thursday November 14, with 16 members attending. New member: Pierre-Michel Motteau from Audier Partner was welcomed. Gust: Simon Scott partner of Minter Ellison. Co-chair James Liotta, Mahoney Liotta, moderated the session. Meeting discussion was on the following topic: 1) The new Investment Law and the implications it may have on the investment climate in Mongolia. 2) The Draft Minerals Policy of Mongolia The direction would take Mongolia, the implications it may have on the investment climate in Mongolia, and the implications it may have on doing business in Mongolia in the minerals sector. Please contact erka@bcmongolia.org

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]

October 31, 2013 *10.8% [source: NSOM]

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

Note: 9.5% y-o-y, Ulaanbaatar city, October 31, 2013

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]

CURRENCY RATES – NOVEMBER 14, 2013

Currency Name Currency Rate

US dollar USD 1,738.82

Euro EUR 2,340.10

Japanese yen JPY 17.43

British pound GBP 1,788.28

Hong Kong dollar HKD 224.26

Chinese Yuan CNY 285.42

Russian Ruble RUB 53.17

South Korean won KRW 1.63

Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is

selected from various news sources. Opinions are those of the respective news sources.