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Parliament established a Budget Sustainability Council during its December 22 plenary session.
The council will mainly focus on researching and analyzing the coherence of the state budget and its amendments, drafting recommendations for legislators, reviewing mid-term budget announcements, and developing the economy and society with amendments to the Law on Fiscal Stability.
Amendments to the law will be focused on ensuring the sustainability of the state's budget and financing, as well as the efficacy of the state budget. The council will consist of chairman and eight staff members. Parliament supported proposed customs and value-added tax exemptions for certain energy imports upon their first review.
The exemptions will reduce import costs for state-owned Western Energy System's energy imports from China and Russia through January 1, 2021. During the session, the Governor of the Bank of Mongolia N. Bayartsaikhan spoke about reducing the foreign currency exchange rate and strengthening the purchasing power of the tugrug.
The BoM stated that it agreed with MP T. Ayursaikhan about disabling foreign exchange accounts except for those held by entities, individuals, banks, and non-banking financial institutions that have forex income, but the BoM noted that the process should be carried out through market mechanisms rather than a direct ban.
In 2017, 26,800 tons of Mongolian meat was exported at a value of 111 billion MNT.
Due to the spread of infectious livestock disease, China only imported horse meat from Mongolia. China's horse meat imports (18 tons out of 24 tons exported) increased the nation's overall meat export by three percent over 2016.
Beef export (560 tons) was only carried out with Russia. In total of 2,400 tons of lamb was exported to Iran and Qatar. Twelve companies had special permits for exporting meat to China renewed.
Chinese officials stated that new special permits will be granted in 2018 after the cancellation of quarantine procedures in three Mongolian provinces.
Parliament’s State Structure Standing Committee and the Ulaanbaatar Mayor’s Office hosted a discussion on the amendments to the capital’s legal status on December 20 at the State Palace.
Senior Advisor to the Mayor of Ulaanbaatar D.Munkh-Erdene introduced the amendments at the meeting. D.Munkh-Erdene noted that the Capital’s Legal Status was approved by Parliament in July 5, 1994, and the socio-economic state and population of Ulaanbaatar in 1994 was drastically different than that of today. He cited that 23 years ago, the population of Ulaanbaatar was 589,000, which has risen to 1.3 million, and there are more than 400,000 vehicles registered in Ulaanbaatar, an increase of 19.5 folds since 1994. He added that Ulaanbaatar’s GDP was 44 billion MNT in 1994, which had jumped to 15 trillion MNT in 2016. He emphasized that the extreme changes in these figures highlights the need for the capital to change its legal status.
D.Munkh-Erdene stressed that the authors of the amendments believe that the following changes will stimulate Ulaanbaatar’s development.
Legislate policies being executed by Ulaanbaatar’s leadership
Adopt development models of developed countries’ capitals in Ulaanbaatar
Promote manufacturing through innovate technology based on knowledge
Reform Ulaanbaatar’s administrative rules
Renew the rights and responsibilities of Ulaanbaatar’s residents
Member of Parliament D.Erdenebat noted that legislating policies being executed by Ulaanbaatar’s leadership is unnecessary, and a lot of advantages from urban re-planning and the capital general development plan, which were withdrawn in 2012, should have been included in the amendments.
MP D.Terbishdagva said, “People follow their rights of the Constitution that provide Mongolian citizens with the freedom of movement and residence in any place within the country’s territory, but they are not able enjoy their constitutional rights to a healthy and safe environment and to be protected against environmental pollution and ecological imbalance.” D.Terbishdagva asked D.Munkh-Erdene if any measures and solutions to tackle this challenge have been included in the amendments.
D.Munkh-Erdene pointed out that to reduce rural to urban migration, establishing a satellite town and supporting enterprises that will operate in the satellite town and its residents with tax facilities are outlined in the amendments.
Only 8 percent of workers will be affected by personal income tax increase says Minister of Finance www.theubpost.mn
Coming into effect on January 1, 2018 five new tax will be increased as agreed upon with the International Monetary Fund. The biggest and the most controversial tax increase is the personal income tax.
Starting in 2018, the personal income tax will increase to 15 percent for those earning above 1.5 million MNT. Business owners and miners alike have been opposed to the decision and have staged public protests. Finance Minister Ch.Khurelbaatar took questions from the media at a recent press conference leading up the tax increase.
The decision to increase the personal income tax for high-income individuals was made earlier this year. Many are opposed to this decision. Even some Parliament members are saying that we need to reconsider this issue. What is your stance on this issue?
There are two sides to the issue. In April of this year, Cabinet proposed to Parliament to increase taxes and Parliament ultimately decided. People are only focusing on the highest rates. The tax rate will vary from 10, 15, 20, and 25 percent depending on which tax bracket an individual falls into.
However, 92 percent of workers will pay the 10 percent they have been paying. Therefore, only eight percent of Mongolia’s workforce will be included in the tax increases. On the other hand, those that earn the lowest will have less burden. Depending on inflation and the fluctuations in the exchange rates, the group that earns the lowest suffers the most. This is why we have taken this measure.
The taxes were agreed to be increased as part of Mongolia’s enrollment into the extended fund facility with the International Monetary Fund (IMF). As some Parliament Members have brought up the issue, if we do not increase taxes, would it be a breach of agreement?
Mongolia enrolled into the IMF program in April of this year. Shortly after, the program came to a standstill due to the government providing 100 percent of the child money allowances. A week ago, the Executive Board of IMF reviewed Mongolia’s progress for the extended fund facility and said the program was being implemented successfully.
IMF told us that there was an opportunity to improve the economy and erase debt. If we amend the tax increases now, it will mean going back on what we agreed upon with IMF. Outside of the personal income tax, the tax on alcohol and tobacco is increasing also. I believe many would support this increase. Alcohol is the main cause of various crimes. I imagine very few would protest this increase. Only alcohol producers are protesting this decision.
Will a new type of tax be introduced in 2018? For example, there was a proposal to legislate a tax on livestock. Can you elaborate on this possibility?
We will not be creating any new taxes. In the 2016 election, the Mongolian People’s Party promised to not create any new taxes. It is possible for us to operate within the tax law we have in place right now. Preliminarily, we will focus on improving the fiscal discipline of Mongolia and spending the assets from the state budget wisely. We have the full opportunity to decrease the budget deficit while also improving the financial and fiscal management of Cabinet.
In the past, the government has stored its money and assets in commercial banks and has had to pay an exorbitant amount of money on interest rates for high interest loans to get it back. Since being appointed as Finance Minister, I have not decreed for loan from commercial banks. Funds from foreign aid and assistance that are being used for the implementation of projects will be transferred from commercial banks to the State Treasury Fund. It has not been easy; we have been receiving a lot of pushback. In addition to all of this, we have to monitor the budget spending.
There is a necessity to fully implement the glass account law. All transactions conducted from the state fund must be placed in the glass account. As of right now, all of the projects have been registered in the glass account. At this time, the government has not cut back on its wasteful spending and the financial and fiscal management of Cabinet has not reached a level where taxes can be feasibly increased. We are of the mindset of implementing all of the previously mentioned measures and then taking a look at Mongolia’s internal assets and opportunities.
As part of the budget amendment to the 2017 state budget, all civil servants will be provided with a one-time bonus of 300,000 MNT. At a time when this was being discussed, you said that the bonus would be tax-free. Yet now, civil servants will receive 250,000 to 270,000 after taxes. How did this situation come about?
In the amendment to the 2017 state budget, initially Cabinet proposed to provide a one-time 300,000 grant to all civil servants. When it went to Parliament, it was rebranded as a bonus, most likely due to the climate of Mongolia’s society at the time. The law states that bonuses are subject to a social insurance fee and the personal income tax of 10 percent must also be imposed.
The controversy surrounding Mongolia’s placement in the EU’s tax haven blacklist still hasn’t died down. Is this issue being discussed in Cabinet?
Cabinet will discuss this issue today (December 20). The Finance Ministry is working to improve transparency through reform in the General Law on Taxation, Law on Personal Income Tax, and Law on Corporate Income Tax. This will allow information regarding any foreign nationals registered at Mongolian banks to be reported through the taxation office.
In addition, we will also need to undertake legal reform regarding the shareholder information of foreign nationals in companies registered in Mongolia.
Is it true that a special ambassador will be appointed to resolve this issue?
From what I know, the Foreign Minister is discussing this issue and will be appointing a special ambassador. Ambassadors from various countries, the World Bank and IMF have all expressed regret at Mongolia’s placement in the blacklist. They have expressed that Mongolia is a developing country and it is unfortunate for Mongolia to be included in the blacklist at a time when the Ministry of Finance is taking measures to alleviate the issue. There is now the issue of why the possibility of a blacklist was not mentioned to the Finance Minister at the time or an ambassador at the very least. However, I concede that we do need to improve our legal environment....
Yo.Baatarbileg, head of the parliamentary standing committee on social policy, education, culture and science received South Korean honoured director Pae Gyong Hwang on 22 December at the State House in Ulaanbaatar.
During the meeting, the two sides discussed the cultural events planned for marking the 30th anniversary of diplomatic relations between Mongolia and South Korean. These celebrations will occur in 2020. In addition, they agreed to perform the opera 'Chinggis Khaan' at the Seoul Grand Opera house.
Mr Baatarbileg has requested Mr Pae for his support in establishing a new Opera House in Ulaanbaatar. Pae Gyong Hwang promised to deliver his proposal to the South Korean Ministry of Arts and Culture.
Ulaanbaatar /MONTSAME/ Inaugural ceremony of a project to renovate wastewater treatment Plant in Darkhan city was held on December 21.
The project Improving Wastewater Management of Darkhan city costs USD 20.68 million and 10 percent of it is being funded from Government of Mongolia and 90 percent from Asian Development Bank (ADB) loans.
Within the scope of the construction work, 7.4 km sewer pipes will be renewed.
Minister of Construction and Urban Development Kh.Badelkhan said renovation and installation of new equipment in the three pumping stations will increase waste water collection and save energy in the operetion.
"As a result of the project implementation, quality and safety indicators of the plant will satisfy standard requirements and negative influence to environment through air and soil will decline by 24.5 percent compared to 2016. Moreover its daily capacity will be increased 2.5 times by 2025."
The Minister also said wastewater treatment plant improvement project will be implemented in 10 provinces. The project will be complete in 2020.
The oil industry discovered the least amount of oil in 2017 in almost eight decades, breaking the previous record low set in 2016.
The global oil industry has discovered less than seven billion barrels of oil equivalent so far this year—a drop-off from the eight billion boe discovered last year. Last year’s total was the lowest since the 1940s. The 2017 figure is down by more than half from the 15 billion boe discovered in 2014-2015, and down sharply from the 30 billion boe discovered in 2012.
The plunge is the result of a third consecutive year of relatively low upstream exploration budgets. So many oil companies slashed their spending on exploration when the market downturn began in 2014, and they have yet to restore that spending to anything close to pre-2014 levels.
“We haven’t seen anything like this since the 1940s,” Sonia Mladá Passos, Senior Analyst at Rystad Energy, said in a statement. “The discovered volumes averaged at ~550 million barrels of oil equivalent per month. The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11 percent (for oil and gas combined)—compared to over 50 percent in 2012.”
The reserve-replacement ratio measures the volume of oil that is discovered relative to what is produced in a given year. The idea being, the industry needs to discover 100 percent of what it produces in order to avoid a decline in reserves.
Rystad Energy says that 2006 was the last year in which the industry posted a reserve-replacement ratio above 100 percent. The implication is that the world is burning through oil at a faster rate than the industry is discovering new reserves.
Moreover, Rystad says that the volume of resources per discovered field also declined in 2017. For instance, the average offshore discovery in 2012 held roughly 150 million boe in 2012, a figure that fell significantly to just 100 million boe this year. That matters because smaller fields tend to be less economic, and may not be enticing enough to be developed at all. “Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that over one billion boe discovered during 2017 might never be developed,” Rystad’s Passos said.
In terms of location, the top three countries for discoveries in 2017 were Senegal, Mexico and Guyana. Kosmos Energy discovered the Yakaar gas field in Senegal, which could transform West Africa into a notable LNG exporting region. Talos Energy discovered the Zama field, adding roughly one billion boe in recoverable resources in Mexico. Meanwhile, ExxonMobil added another one billion boe to its resource base in Guyana this year, the latest in a string of discoveries in the South American nation.
Still, there wasn’t too much else to write home about. The massive cuts to upstream spending could leave a gaping hole in supply in the future.
Because large conventional discoveries typically take years to develop, it is not as if the shortfall will be felt immediately. Even the past several years of paltry discoveries probably won’t lead to supply problems for quite a while.
There are still large stocks of crude oil in storage, and US shale will continue to grow at a blistering pace into 2018. Beyond that, OPEC has quite a bit of surplus capacity sitting on the sidelines. It might not be until the 2020s until the lack of discoveries starts translating into supply issues.
“While there have been some notable successes this year, we have to face the fact that the low discovered volumes on global level represent a serious threat to the supply levels some ten years down the road,” Rystad’s Passos said.
“Global exploration expenditures have decreased year-over-year for three consecutive years now, falling by over 60 percent from 2014 to 2017. We need to see a turnaround in this trend if a significant supply deficit is to be avoided in the future.”
That echoes the repeated warnings from the IEA, which recently predicted that despite the expected massive growth from US shale over the next decade or so, shale won’t be able to carry the load all on its own.
Shale “cannot increase indefinitely,” the IEA said in its 2017 World Energy Outlook. The IEA also noted that about 2.5 mb/d of supply is lost each year due to depletion, a gap that must be made up with new projects. And the impact of “near-record lows of new conventional oil projects receiving approval in recent years has yet to be fully seen.”...
I am very pleased to announce that 5th Invest Mongolia Tokyo has successfully finished on November 24, 2017. The event has attracted about 37 speakers and 280 attendees from 10 countries and 205 organizations.
Invest Mongolia Tokyo aimed to address following opportunities, risks and concerns that have been put forward by the investment communities from Mongolia, Japan and other nations.
Through the presentations and panels, participants have gained the opportunities to understand different angles of approaches from politicians, authorities, banks, lawyers and investors. At the same time, exchanging the ideas with others during breaks and the networking events have been very stimulating for them.
The conference was well received by participants because of following reasons.
First of all, with the implementation of IMF program and the stable currency, the economic condition in Mongolia has started to pick up finally. And, the sense of the bottoming out of the economy were shared both by the authorities in Mongolia and the Japanese investors.
Secondly, the conference was timely because it was held at the time just after the Party Congress of the Mongolian Peoples’ Party has selected Khurelsukh as the head of the party. The fact that the same person will act the party head and the Prime Minister was welcomed by Japanese investors because they believed the policies of the Government will be stable until 2020.
Thirdly, Frontier has successfully invited many key decision makers, opinion leaders and investors to the conference.
So, participants could get the most updated perspectives of
The strong commitment by Japanese Government through IMF program to Mongolia and the favorable political and economic outlook between Mongolia and Japan in 2018
The current economic condition in Mongolia, monetary policy of the central bank and the resilience of the economy even with the vulnerability of the coal business.
The still weak impact of EPA and the necessity to modify it to accommodate the business demands.
The opportunities and risks for Japanese small to mid-sized corporations to do business in Mongolia.
The investment opportunities in various sectors (especially in banking, NBFI, mining, telecom and sovereign) in Mongolia.
The legal developments in Banking and Finance Sector in Mongolia.
The strong interest by Mongolian Government to improve the investment climate.
Lastly, I would like to thank the supporting organizations. The conference was supported by Government of Mongilia, JICA, JETRO and many others. Also, Melville Erdenedalai, Khangarid Properties, Oriental Invest and others have supported the event. Without their commitments, the conference could not be materialized..
We want to organize the event annually and want to come back to Tokyo in December 2018. So, we welcome more active participation to the event from each of you next year.
Thank you very much for attending the conference.
Please click HERE to view Post Conference Report
Founder & CEO
Bitcoin plunged on Friday, extending a fall that saw the crypto-currency lose almost a third of its value from a record of nearly $20,000 (£15,000).
The crypto-currency's price dipped below $11,000 on Friday, according to the Coindesk exchange website, before recovering to above $13,000.
Amid the swings, three Bitcoin-related exchanges suspended certain trades.
Bitcoin has had a blistering trip over the past 12 months. Its price at the start of the year was about $1,000.
It has skyrocketed since - more than doubling in value since November - drawing interest from major firms as well as private investors.
But since Sunday Bitcoin has been on a losing streak, falling back to where it was at the start of December.
Analysts said investors should be prepared for such rapid changes, which have characterised the asset from its start.
"This is exactly how this asset trades and has done since the beginning," said Nick Colas, co-founder of New York-based DataTrek Research. "It has a lot of volatility and it will for the foreseeable future."
What happened on Friday?
This week's plunge led to a flood of trades that swamped one of Bitcoin's major exchanges, Coinbase, on Friday. A technical slowdown prompted the firm to halt buying and selling twice.
'Be ready to lose your money'
The CME and CBOE exchanges in the US also temporarily suspended trading of certain Bitcoin futures contracts, which allow investors to bet on where they expect the price of Bitcoin to be at certain points in the future.
The exchanges have automatic brakes that apply once a commodity or asset has moved by a certain amount - as happened in this case.
What sparked the slump?
The market remains driven by sentiment, according to Charles Hayter, founder and chief executive of industry website Cryptocompare.
"A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes," he said.
Some traders would have been cashing in on the spectacular gains made over the year, he added.
Concerns about the infrastructure behind crypto-assets may also be spooking investors, said Nick Colas, himself a Bitcoin trader.
In recent weeks, markets have been rattled by hacks and allegations of insider trading.
He attributes some of this week's slump to the launch of a new crypto-asset that came earlier than planned. The surprise temporary shutdown of Coinbase on Friday was the kind of thing that could erode investor confidence, he argued.
"It is not OK to just take trading offline randomly through the day," he said. "The robustness of that system is just as important to their confidence... as the price of crypto-currencies themselves."
A spokesman for Coinbase said the firm was working around the clock to ensure smooth trading. Friday's suspensions lasted for about two hours in total.
"We're doing everything within our power," the spokesman said.
What exactly is Bitcoin?
A digital asset, Bitcoin is not backed by any governments. It is created through a complex process known as "mining", and then monitored by a network of computers across the world.
There is a steady stream of about 3,600 new Bitcoins a day, with more than 16.5 million now in circulation. Supply is expected to peak at about 21 million.
Every single transaction is recorded in a public list called the blockchain.
This makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own, making copies or undoing transactions.
What are authorities saying about Bitcoin?
Regulators around the world have stepped up their warnings about its provenance as an investment.
One of this week's most striking comments came from Denmark's central bank governor, who called it a "deadly" gamble.
Earlier this month, the head of one of the UK's leading financial regulators warned people to be ready to "lose all their money" if they invested in Bitcoin.
Andrew Bailey, head of the Financial Conduct Authority, told the BBC that neither central banks nor the government stood behind the "currency" and therefore it was not a secure investment.
Despite the risk to individuals, US authorities have said they do not think it is a big enough part of financial markets to be a threat to broader economic stability....
ULAN BATOR, Dec. 23 (Xinhua) -- The Monetary Policy Council of the Bank of Mongolia announced on Friday to cut its benchmark interest rate from 12 percent to 11 percent due to positive changes in the Mongolian economy.
Bayardavaa Bayarsaikhan, a director of Monetary Policy Department, said annual inflation in Mongolia for 2018-2020 will be about eight percent. In view of this, Bank of Mongolia is working to ensure that inflation in Mongolia in 2018 does not exceed eight percent.
Meanwhile, experts of the Asian Development Bank (ADB) projected that Mongolia's economy will grow by three percent in 2018. This shows that there are more positive forecasts in the Mongolian economy compared with the April forecast of the World Bank (WB).
The World Bank experts in April concluded that Mongolia's GDP will increase by 2.8 percent in 2017, and by 3.1 percent in 2018.