|Frontier's "Invest Mongolia Tokyo 2018"||Frontier Securities||Tokyo Japan|
|"Open to Export" ICC WTO International business award||ICC WTO||London|
Ulaanbaatar /MONTSAME/ In connection with the Government’s decision to increase excise tax on fuel, filling stations began to impose limits on their supply. These limitations have caused citizens to worry about potential fuel price hike. Chief of the Authority for Fair Competition and Consumer Protection (AFCCP) B.Lkhagva stated its stance on the matter.
He said, “AFCCP is currently examining whether a condition to limit supplies really created. Retail sellers do not have a legal justification for raising prices and fabricating shortages. We met with related officials of the companies which imposed limits and also sent advisory letters to importers to prevent from creating fuel shortage. If companies artificially increased demand and raised prices, they will be fined at 4-6 percent of their sales revenue of the previous year depending on offences, according to the related clauses of the laws on Competition and Offence.
Last week, Mineral Resources and Petroleum Authority reported that the fuel prices would be discussed by the Public and Private Consultative Council responsible for maintaining and monitoring oil supply and prices.
Currently, our country has oil reserves equal to approximately 38 days consumption.
Ulaanbaatar /MONTSAME/ Mogoin Gol JSC sold 73 thousand tons of coal in 2017, thus accumulating a revenue worth MNT 2 billion 500 million.
The company, based in Mogoin Gol coal mine in Khuvsgul aimag, expanded its operation last year and started exporting coal to China.
While the southern neighbor of Mongolia received 18 thousand tons of coal from the company, Zavkhan aimag purchased 20 thousand tons and the rest was supplied to meet the local coal demand.
Founded in 1971, Mogoin Gol JSC has 70 regular employees today. In order to increase its revenue, the company needs to renovate about 70 percent of its equipment, according to CEO B.Khashbat.
The reserve of Mogoin Gol coal mine is estimated to be 12 million tons, and about 2 million tons of coal have been extracted as of today.
The Republican-controlled Federal Energy Regulatory Commission or FERC unexpectedly and unanimously rejected Energy Secretary Rick Perry’s plan to boost nuclear plants and slow down the closure of coal-powered plants.
According to Perry, the US’ power grid would become vulnerable if more coal-fired power plants were to close down, a common occurrence in past years as the rise of natural gas and renewable energies has pushed many coal-reliant companies towards bankruptcy. In the Department of Energy’s view, such cleaner power sources are unreliable and, thus, put the power grid in jeopardy when events such as the 2014 polar vortex in the Arctic hike electricity demand.
To counteract the effects of such situations, the Secretary’s office suggested to strengthen power plants with fuel on site, that is coal and nuclear plants. To do so, the department issued a Notice of Proposed Rulemaking which requested that FERC require utility companies to pay not just for the electricity they buy from power plant companies and supply to consumers, but also for the fixed costs associated with power plants that keep 90 days of fuel on site.
However, the Regulatory Commission said that Perry’s arguments were unfounded. “There is no evidence in the record to suggest that temporarily delaying the retirement of uncompetitive coal and nuclear generators would meaningfully improve the resilience of the grid. Rather, the record demonstrates that, if a threat to grid resilience exists, the threat lies mostly with the transmission and distribution systems, where virtually all significant disruptions occur. It is, after all, those systems that have faced the most significant challenges during extreme weather events,” today's decision reads.
Nevertheless, the five-member bureau said it will review the resilience of the nation’s electric grid by assessing information that should be provided within 60 days by each regional market operator and other entities that oversee the grid. Once that documentation is processed, the panel will decide whether it’ll implement new measures.
According to AP, Perry thanked the federal agency for addressing his proposal. “What is not debatable is that a diverse fuel supply, especially with onsite fuel capability, plays an essential role in providing Americans with reliable, resilient and affordable electricity, particularly in times of weather-related stress like we are seeing now,” AP quotes him as saying.
Environmental advocates, business groups, some public utility companies, as well as natural gas suppliers such as Koch Industries had previously criticized the Secretary’s proposal saying it would raise prices and disrupt electricity markets by subsidizing coal and nuclear plants with billions of dollars.
Ulaanbaatar /MONTSAME/ The Government had its irregular meeting on January 4, and announced that Erdenet Mining Corporation (EMC) has become 100 percent government-owned now, as government takes EMC’s 49 per cent shares. In response, Mongolian Copper Corporation (MCC) held a press conference on the matter in the Mongol News media center on January 5.
BoD Chairman of MCC M.Munkhbaatar expressed the company's stance, saying, “Government’s statement sounds like we have mutually reached to agreement and established an agreement, which is not true. No such agreement was conducted and we think we have become a victim of politics. We are deplored by the Government’s action that overrode Supreme Court’s decision. MCC competed with companies from China, Russian Federation and Kazakhstan to bring back 49 percent of EMC to Mongolia. This fact has been distorted from many sides, with suspicions circulating that have no basis in reality.”
MCC’s purchase of EMC shares brought many positive outcomes, he stressed. Specifically, 500 tenders were announced in 2017, while in 2016 just one was conducted and as a result of it, MNT 15 billion was saved, and each worker was rewarded MNT 500 thousand during New Year celebrations. Additionally, tax paid by EMC last year was 4 times more than previous year.
“We do not understand how Government can act outside the Constitution and annul the decision made by Supreme Court. We have not even received an official notice on the Government decision yet,” said Mr.Munkhbaatar.
MCC’s lawyer Batbayar mentioned that there was no deal between the Government and MCC and rights of a private organization has been seriously violated and therefore MCC has every right to protect its interests.
MCC Executive director Ts.Purevtuvshin expressed the company's intention to file a complaint to international arbitration.
Russia-China combined gold reserves could shake US dominance in global economy - expert tells RT www.rt.com
The gold accumulated by China and Russia could be seen as part of a strategy to move away from international trade denominated in US dollars, according to Singapore’s BullionStar precious metals expert Ronan Manly.
Manly exclusively told RT that there is a shift occurring regarding the two countries building up their gold reserves, to perhaps returning to gold-backed currencies in the future and a move away from the global dominance of the US dollar, which is no longer supported by gold.
“China and Russia have both been aggressively accumulating their official gold reserves over the last 10 - 15 years,” he said, adding that only a decade ago each of them held around or less than 400 tons. “But now both these nations hold a combined 3670 tons of gold.”
“Interestingly, both Russia and China publicize and promote their accumulations of gold and publicly refer to gold as a strategic monetary asset. They make no secret of this. But on the flipside, the US does the opposite, and constantly downplays the strategic role of gold.”
According to Manly, for Russia and China gold is the only strategic monetary asset that could provide independence from the US dollar.
Manly said the sides could conceivably be holding a lot more gold than they declare in their official reserves due to many channels through which they could buy the precious metal.
“If China and Russia combined showed that they held more gold on a combined basis than the US, this would, even symbolically, be a blow to the US dollar and to the position of the US in the global economy,” the expert concluded.
Senior executives from Vietnam's state oil company are standing trial in Hanoi in a crackdown on corruption in the country's energy and banking sectors.
The 22 defendants include the ex-head of PetroVietnam Construction, Trinh Xuan Thanh, and a senior Communist Party official.
Germany says Mr Thanh was abducted from a park in Berlin last July, but Hanoi insists he returned home voluntarily.
He is accused of corruption and could face the death penalty if found guilty.
The German government described Mr Thanh's suspected abduction by Vietnamese spies as a "scandalous violation" of its sovereignty. Foreign Minister Sigmar Gabriel said it evoked "thriller movies about the Cold War".
Also on trial is Dinh La Thang, a former Politburo member and one of the most senior Communist Party officials to go on trial in decades. He is accused of economic mismanagement and faces up to 20 years in jail.
Some of the former executives, who are alleged to have caused massive losses at PetroVietnam, could face the death penalty if convicted of the most serious offences.
Dinh La Thang is one of the most senior Communist Party officials to go on trial in decades
The government's official news website posted about the trial which is due to last until 21 January.
It said that 12 defendants are accused of "violation of state regulations on economic management causing serious consequences" and eight are accused of embezzlement. Some are accused of both.
The case comes amid a massive anti-corruption crackdown in Vietnam, one of Asia's most corrupt nations. It is ranked 113th out of 176 countries in Transparency International's corruption perceptions index.
The government has vowed to tackle the issue in order to boost economic growth. In September, the former head of a major Vietnamese bank was sentenced to death for fraud.
But analysts say the crackdown, while tackling corruption, has also mainly targeted opponents of Communist Party chief Nguyen Phu Trong.
XIAN, China (Reuters) - French President Emmanuel Macron said on Monday China and Europe should work together on Beijing’s “Belt and Road” initiative, a project aiming to build a modern-day “Silk Road” he said could not be “one-way”.
“The ancient Silk Roads were never only Chinese,” Macron told an audience of academics, students and businessmen in Xian, an eastern departure point of the ancient Silk Road.
“By definition, these roads can only be shared. If they are roads, they cannot be one-way,” he said.
Unveiled in 2013, the Belt and Road project is aimed at connecting China by land and sea to Southeast Asia, Pakistan and Central Asia, and beyond to the Middle East, Europe and Africa.
Xi pledged $124 billion for the plan at a summit in May but it has faced suspicion in Western capitals that it is intended more to assert Chinese influence than Beijing’s professed desire to spread prosperity.
Investors should get ready for potential risks this year, warns Deutsche Bank. They include stock market corrections, the collapse of cryptocurrencies and housing bubbles.
With national central banks pursuing active policies pegged to the whole range of internal and external drivers, the geopolitical environment is continually changing with one concern being replaced by others.
Domestic policies carried out by governments across the world commonly have a significant impact on the whole planet, and new phenomena such as a crash in the crypto-market might bring down real companies.
That’s why the number of risks worth worrying about is growing, even when the Volatility Index VIX is steadily falling. Deutsche Bank's chief international economist Torsten Slok has circulated a list of 30 risks for markets in 2018.
“They are in random order and are both upside risks and downside risks,” the analyst writes in a note. “Think of them not only as potential VIX-boosters but also as potential sources of faster or slower growth than what we have in our baseline forecast.
An International Monetary Fund staff team led by Geoff Gottlieb visited Ulaanbaatar from October 18-30, 2017 to conduct discussions on the first and second reviews of the three-year extended fund facility program. Shortly after, the IMF Executive Board completed the first and second reviews of Mongolia’s performance under the program and approved the 79.1 million USD disbursement. Geoff Gottlieb, IMF’s mission chief for Mongolia, gave an exclusive interview to Unuudur and The UB Post.
The IMF’s resident representative, Neil Saker, made a statement last December. He noted, “There have been several positive changes as part of the IMF extended fund facility.” He said that foreign capital and investment has increased, economy and tugrug exchange rate have stabilized, also the interest rate of bonds in the international market has decreased. In your opinion, what are the most important improvements of the past?
The first key improvement came in early 2017 when the authorities agreed to a comprehensive mix of sound policies to stabilize the economy. This strong commitment allowed the authorities to secure substantial financial assistance from the international financial community and thus avert a potential financial crisis which was a real risk earlier last year. The second key improvement is that authorities have followed through on these commitments and used the better than expected external environment to over-perform on their key macroeconomic targets, particularly with respect to the fiscal balance and foreign exchange reserves. This performance has helped stabilize the exchange rate and reduce borrowing costs. The final critical improvement is with respect to the growth outlook. While much of the recent momentum is a function of external events, there has been renewed momentum in other sectors including manufacturing.
Coming into effect on January 1, 2018, some taxes will be increased as agreed upon with the International Monetary Fund. The decision to increase the personal income tax for high-income individuals was made last year. Many people are opposed to this decision. What do you think of this?
A flat income rate at 10 percent is not appropriate for a country like Mongolia especially given rising income inequality. A progressive tax system where richer people pay proportionally more is typical globally and is more equitable. The changes are structured to be pro-poor as the threshold before which the tax rates kick in has been raised from 84,000 MNT to 120,000 MNT and will gradually rise to 240,000 MNT by 2021. 85 percent of citizens will pay less tax than before. The highest rate of 25 percent is still low by international standards and will only apply to those who earn 3.5 MNT per month (three and a half times the average wage). There is scope for further reforms to improve the efficiency and fairness of the tax system and they will be a focus of the program going forward.
I heard that IMF told the Finance Ministry that there was an opportunity to erase the debt. Is it possible? As you know Mongolian debt is still high. Bonds will be maturing in the 2020s.
We are not familiar with this comment. In most cases, debt is not “erased”. Rather the government can ensure that it becomes less of a burden to the economy by reducing the ratio of debt to GDP. This primarily occurs by generating strong GDP growth while limiting the extent of new borrowing with strong fiscal performance. The government can also improve the debt-GDP ratio by lowering their interest bill which can be achieved by exchanging expensive debt with cheaper obligations as confidence returns and Mongolian debt becomes more attractive to investors.
Stepping back, from the outset of this program, we have believed that Mongolia’s debt will become safe and sustainable over the medium term provided the authorities pursued the appropriate policies, mainly with respect to a prudent fiscal policy, stronger financial supervision, and steady completion of mega-construction projects related to the mining sector. Debt is still high but the authorities have made considerable progress since program approval and the current trajectory for public debt is now considerably better than it was before. Public debt is currently approximately 85 percent of GDP and is now projected to fall to 73 percent of GDP by 2022. As a general matter, the fund does support efforts by authorities to take advantage of good market conditions to ensure a smooth repayment profile and low average interest cost.
The economic situation is becoming better because of increased coal export revenue. But I think there are risks. For example, maybe there are downside risks to the coal sector. What risks are there for the future of the Mongolian economy?
All economies that have a significant dependence on commodities are vulnerable to changes in global demand. Mongolia is not alone in this regard. The key is that the authorities use the policy tools at their disposal to limit the scope of these changes to destabilize the Mongolian economy. In particular, during periods of strong commodity revenues, the authorities need to reduce debt and build foreign exchange reserves. Such policies are the focus of the IMF program.
Legal reforms will be made in the banking sector. What is the main impact of legal reforms?
The objectives are to update the legal environment both to reflect the significant changes in the banking system in recent years and to be in line with global reforms passed as a response to the global financial crisis. The reforms will also improve the governance of the Bank of Mongolia (BOM) and its operations, improve the regulatory and supervisory framework, and strengthen the financial sector safety net.
Mongolian commercial banks were going through an AQR. Can you tell us about the results?
The BOM hired outside advisors to conduct the AQR and those advisors are still finalizing the report. We understand that the BOM wishes to make a public statement about the report once it is complete.
A fiscal council will be established. How will the council work?
The Fiscal Council is intended to be a high-level body with the aim of ensuring that the fiscal stance and the annual budget are consistent with the fiscal rules that Mongolia adopted in 2012, including the Fiscal Stability Law. Adherence to this framework would avoid the debt problems of recent years and would strengthen macroeconomic stability. Fiscal councils have been adopted in several countries in recent years and have generally helped in ensuring prudent fiscal policies.
When will an IMF staff team visit Mongolia?
The current plan is to visit Mongolia in the second half of January as part of the Third Review Mission.
Do you think the Mongolian economy will have a full recovery when the IMF program ends?
The main goal for the program is to ensure that key macro-policies (e.g. fiscal balance and exchange rate policy) and structural reforms (toward a more stable banking system, a stronger tax code) are adequate to lay the groundwork for high and sustainable growth. If this is achieved, vulnerabilities will have been substantially reduced. Nonetheless, given the size of challenges that Mongolia faced at the time of program approval, more time may be needed for a full recovery....
Amendments to the Minerals Law of Mongolia came into effect on January 1, 2018.
The changes to the law include a 30 percent tax for the primary shareholder of a mineral license if ownership of the license is transferred. Land available for license tenders will be determined by state agencies and then decided on by the Ministry of Mining and discussed by Cabinet.
The Mineral Resources and Petroleum Authority will accept outside suggestions when preparing a tender. An assessment committee will open, assess, and report on the tender process.
The Ministry of Finance expects that 36 billion MNT will be generated from issuing mineral resource permits and that the newly amended law will end special permit controversies.