1 FOREIGN RELATIONS OF MONGOLIA’S ROAD TRANSPORT SECTOR BROADENING WWW.MONTSAME.MN PUBLISHED:2019/02/21      2 MONGOLIA EXPRESSES READINESS TO CONTRIBUTE TO STRENGTHENING ASIA-EUROPE COOPERATION WWW.MONTSAME.MN PUBLISHED:2019/02/21      3 OYU TOLGOI FUNDED 35.1 KM ROAD OPENS IN KHANBOGD WWW.GOGO.MN PUBLISHED:2019/02/21      4 POLYMER BITUMEN TO BE DOMESTICALLY PRODUCED WWW.MONTSAME.MN PUBLISHED:2019/02/21      5 KHURELBAATAR CHIMED: 319 ENTITIES DREW LOANS FROM TWO FUNDS WWW.ZGM.MN PUBLISHED:2019/02/21      6 CONSTRUCTION OF TAVANTOLGOI-GASHUUNSUKHAIT ROAD TO BE INTENSIFIED WWW.MONTSAME.MN PUBLISHED:2019/02/20      7 OVER 30 MEASURES PLANNED FOR REDUCTION OF ENVIRONMENTAL POLLUTION WWW.MONTSAME.MN PUBLISHED:2019/02/20      8 MONGOLIA SAYS IT EARNS OVER 169 MLN USD FROM COAL EXPORTS TO CHINA IN JAN WWW.HELLENICSHIPPINGNEWS.COM  PUBLISHED:2019/02/20      9 RUSSIA’S GAZPROM TO START CHINA GAS PIPELINE BY DECEMBER 1 WWW.RT.COM PUBLISHED:2019/02/20      10 MONGOLIA'S FOREIGN TRADE UP 41.6 PCT IN JAN. WWW.XINHUANET.COM PUBLISHED:2019/02/20      УГСАРМАЛ ОРОН СУУЦНЫ ДУЛААЛГАД ЗОРИУЛЖ 12.7 ТЭРБУМ ТӨГРӨГИЙГ УЛСЫН ТӨСВӨӨС ГАРГАХААР БОЛЖЭЭ WWW.IKON.MN НИЙТЭЛСЭН:2019/02/21     2018ОНД ЦАГААН БУДАА , ЭЛСЭН ЧИХЭР , ТАХИАНЫ МАХНЫ ИМПОРТ 24-32 ХУВИАР ӨСЖЭЭ WWW.BLOOMBERGTV.MN  НИЙТЭЛСЭН:2019/02/21     ДЦС IV: 2018 ОНД НИЙТ АШИГ 4.7 ДАХИН ӨСӨЖ , 4.48 ТЭРБУМ ТӨГРӨГ БОЛСОН WWW.BLOOMBERGTV.MN  НИЙТЭЛСЭН:2019/02/21     ТУСГАЙ САНГУУДААС ГАРГАСАН ЗЭЭЛИЙН 100 ОРЧИМ ТЭРБУМ ТӨГРӨГ ХУГАЦАА ХЭТЭРСЭН ӨР БОЛЖЭЭ WWW.BLOOMBERGTV.MN  НИЙТЭЛСЭН:2019/02/21     МОНГОЛ УЛСЫН БОРЛУУЛАЛТЫН МЕНЕЖЕРҮҮДИЙН ИНДЕКС СҮҮЛИЙН 12 САРД АНХ УДАА УНАЛТЫН БҮСЭД ШИЛЖИВ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2019/02/21     2018 ОНД ХАМГИЙН ЧИНЭЭЛЭГ БҮЛГИЙН ХЭРЭГЛЭЭ ЯДУУ БҮЛГИЙНХНЭЭС 5.1 ДАХИН ИХ БАЙВ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2019/02/21     ХОВД ГОЛД ОСОЛДСОН 6 НАСТАЙ ХҮҮХДИЙН ЭРЛИЙГ ЗОГСООЛОО WWW.MONTSAME.MN НИЙТЭЛСЭН:2019/02/21     ДБНХ-НООС П.ОРХОНЫ БАРИЛДАХ ЭРХИЙГ 4 ЖИЛЭЭР ХАСАВ WWW.MONTSAME.MN  НИЙТЭЛСЭН:2019/02/21     УУХҮЯ: II САРЫН БАЙДЛААР НИЙТ НУТАГ ДЭВСГЭРИЙН 5.6 ХУВЬД АШИГТ МАЛТМАЛЫН ЛИЦЕНЗ ОЛГОСОН WWW.BLOOMBERGTV.MN  НИЙТЭЛСЭН:2019/02/20     300 ОРТОЙ ТӨРӨХ ЭМНЭЛГИЙН БАРИЛГЫН АЖИЛ 80%-Д ХҮРЧ ГУРАВДУГААР САРЫН 1-НЭЭС ДУЛААНД ХОЛБОГДОХООР БОЛЖЭЭ WWW.IKON.MN НИЙТЭЛСЭН:2019/02/20    

Events

Name organizer Where
“Doing business with Mongolia”, “UK Investors show” бизнес хөтөлбөр March 27-April 02. 2019 ЛОНДОН ХОТ, ИХ БРИТАНИ Mongolian Business Database London UK
SYMPOSIUM ON GLOBAL MARKETS Nationalism and Protectionism: The United States in the International Arena June 17-18, 2019 The Center for American and International Law Plano, Texas, USA The Center for American and International Law (CAILAW) Plano Texas June 17-18 2019
"Open to Export" ICC WTO International business award ICC WTO London

NEWS

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Parliament forms quorum after two months www.zgm.mn

After prolonging the lawmaking process for about two months, the Parliament finally formed a quorum last week. With multiple urgent items of high importance on the order list, the Parliament appointed Ulaan Chultem as the Minister of Food, Agriculture and Light Industry.

Next on the order list was the suspension of some Parliament members’ special rights who have involved in Small and Medium-sized Enterprise Development Fund embezzlement allegations. The Prosecutor General of Mongolia Enkh-Amgalan Magvannorov submitted a bill on suspending the rights of four Parliament members. Although a number of public servants related to the case were detained, the Parliament viewed that the loans of four MPs, namely Soltan Gombojai, Damba-Ochir Dorjdamba, Undarmaa Batbayar and Enkhbold Luvsan, drawn from the SMEDF are in line with the law of Mongolia.

At the plenary session, Mr. Enkh-Amgalan addressed, “We are investigating everyone related to funds. This is a very large-scale investigation. It is taking time because of the lack of staff. Only 25 people are working on each loans granted from the SMDF and the Independent Authority Against Corruption is investigating the fund. There are many others, including Animal Husbandry Fund and Agriculture Support Fund.”

Additionally, the end to public demonstration on ousting the Speaker was followed with the meeting of Standing Committee on State Structure last friday. The committee held discussion on President-initiated bill on Parliament Session Procedures, which allows the Parliament to oust the Speaker with the majority votes from Parliament members. Accordingly, the bill will be discussed by the Parliament this week. The ratification of the bill lead to potential dissolution of the Parliament as Democratic Party caucus began collecting signatures for a petition to oust the Speaker.

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Crypto mining will bloom in Mongolia as Japanese investor triples mining power www.chepicap.com

Mongolia to see crypto mining business blooms as mining company, Ginco plans to almost triples their miner devices.

Defying the current bearish trend of crypto and the downturn of crypto mining businesses worldwide, Mongolia is expecting the blooming of crypto mining business in the country.

The news came after a Japanese company, Ginco reveals their plan to add their mining capacity from 600 to 1600 miners before the year ends.

Considering that the company just started their mining business in the country last October, the step can be considered pretty bold.

However, in an interview with Nikkei Asian Review, the CEO, Yuma Furubayashi expressed his optimism about his business’ future prospect by saying, “The business environment is increasingly harsh, but we can still produce a profit.”

And that’s not the only plan that the company has to conquer the bear market. Besides the mining unit addition plan, Furubayashi also mentions spin-off project ideas, one of them is providing repair services for mining devices.

For the record, Ginco is not a new player in crypto business as they’re known for their crypto wallet in their home country, Japan, as reported by Bitcoinist.

The biggest irony is, the news came just a day after mining giant, Bitmain announced the halt of the development of their mega mining facility in Rockdale, Texas due to the prolonged bear market.

The once mining domination has been struggling to maintain their business as well as deal with internal issues in the last couple of months, such as the layoff of many of their employees and the replacement of Jihan Wu from the CEO position in the company.

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Cheap Electricity Makes Mongolia the New Cryptocurrrency Mining Hub for Japanese Miners www.coingape.com

The latest report from Japanese media reported ‘ Mongolia’s cheap electricity’ has captured the growing cryptocurrency mining interest from the Japanese bitcoin miners. Mongolia, a location between China to the south and Russia to the north is featured with ‘the blend of cheap electricity and cold weather’.

Cheap electricity attracts Japanese cryptocurrency miners to Mongolia
Cheap electricity and cold weather are the two major aspects every bitcoin mining firm loves. So far, Malta, Switzerland, China, and other countries are in mainstream media and very recently Mongolia is also turning up as the ‘cryptocurrency mining hub’.

The mining firms which are already situated in this location are yielding high profits in cryptocurrency. Eventually, Ginco, e-wallet Company based in Tokyo is the latest name to operating within the capital city of Mongolia, Ulaanbaatar. Launched in October 2018, Ginco firm has two ventures within the location. Presently the firm has 600 mining computers and all set to expand 1000 units soon this year.

The cryptocurrency market for mining firms has performed extensively well during 2017 but the sudden crash in 2018 has effected major firms to collapse and stop their operations. For instance, GMO Internet Inc has incurred the loss of $321 million in late 2018 and gave up on cryptocurrency mining. This isn’t something that discourages Ginco Tokyo based wallet firm, conversely, despite the plummeting cryptocurrency market, Yuma Furubayashi, CEO of Ginco Mongol is confident of generating profit out of it. He says

“The business environment is increasingly harsh, but we can still produce a profit,”

Betting on the future potential of Bitcoin
The report adds that the electricity rates available at Mongolia are quite cheaper than the rates in Japan as well as China. Eventually, Mongolia is now seen as the ‘mining hub’ beside US and Sweden where miners can actually have the stake of profit despite the market crash. Notably, iTool is the successful running business in Mongolia. Having said that, ‘Mongolian company’ is set to leverage the ‘resources available’ and create opportunities for new business entities as well.

Bitcoin which was trading at the peak of $19000 in late 2017 has fallen down to the figure of $4000 in late 2018. No doubt the currency is still holding the first spot in terms of ranking but struggling to grip the value of $4000 this week. Although the graph of bitcoin has remained negative for quite long now, the manager of Tokyo-based consultancy LayerX, Hiroyuki Maruno urged that ‘bitcoin holds value’. He added that;

Many big cryptocurrency mining companies have shut down their operations. But “bitcoin, which has become synonymous with virtual currency, will always hold value,

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Mongolia emerges as crypto mining hub www.asia.nikkei.com

TOKYO -- Mongolia has become a cryptocurrency mining hub as companies reeling from the 2018 bitcoin crash find opportunities in a country that offers favorable conditions of cheap electricity and cold weather.

At an underground structure at a condominium complex in the capital city of Ulaanbaatar, a shelf full of crypto mining equipment was recently seen growling as it engaged in constant computing of virtual currency transactions to generate profit.

This is one of the two locations out of which Tokyo-based e-wallet company Ginco operates in the city. The company launched the business in October and runs about 600 mining computers; it plans to add 1,000 units in early 2019.

"The business environment is increasingly harsh, but we can still produce a profit," said Yuma Furubayashi, CEO of Ginco Mongol. Energy cost is a key factor in the profit equation of crypto mining. Electricity prices in Mongolia run around a third of Japanese rates and lower than in China, which has been home to many crypto miners.

The landlocked nation's cold weather also helps by cooling the heat-generating mining computers.

Mongolia is one of the few countries where bitcoin miners can still generate a profit, along with the U.S. and Sweden, according to Ginco. Following a crash in the second half of 2018, the virtual currency's price has declined to a fifth of the peak it reached in December 2017.

Many big crypto mining companies have shut down their operations. But "bitcoin, which has become synonymous with virtual currency, will always hold value," says Hiroyuki Maruno, a manager at Tokyo-based consultancy LayerX.

Mongolian information technology company iTools began bitcoin mining last summer using the site of a former construction materials factory. The facility, located in the city of Darkhan, north of the capital, gets electricity from its own generating facilities.

Tokyo-based online ad company Unimedia outsources operation of mining equipment to iTools.

The languishing virtual currency market has put the brakes on iTools' plan to expand its fleet of mining equipment. But CEO Tamir Bayarsaikhan stresses that the business enables the company to deepen its expertise in blockchain technologies.

The technology, known for high levels of security, has broad applications, including data management. The Mongolian company hopes to leverage its blockchain-related operations to create new business.

Crypto mining is an attractive year-around business for companies in Mongolia, whose core industries like mineral mining, agriculture and tourism slow down during the harsh winter. The government is actively nurturing the country's information technology sector.

The leasing unit of Trade and Development Bank of Mongolia has joined with Ginco in plans to add crypto mining to its fleet of leased equipment, along with mineral mining and farming machinery.

Mongolia's economic development has historically been driven by resources like coal and copper. Can crypto miners strike gold? It will probably take some time to find out.

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Sea buckthorn factory to be built www.montsame.mn

Ulaanbaatar /MONTSAME/ The Government’s commitment to supply the population with nutritious fruits and berries by increasing their varieties and production, establish a consolidated sea buckthorn production network and increase the export revenues is reflected in its Action Plan for 2016-2020.

Under the framework of this commitment, Food and Agriculture Department of Ulaanbaatar city and the Green Asia Network NGO signed a cooperation agreement to establish a factory with capacity to process 600 tons of sea buckthorn berries per year with non-refundable aid from the Korean International Cooperation Agency.

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Russia-China trade turnover hits record $100 billion www.rt.com

The volume of mutual trade between Russia and China finally reached $100 billion for the first time ever, according to Gao Feng, the Chinese commerce ministry's spokesman.
The official said that the trade turnover hit the all-time high in the middle of December, 2018. Feng added that Russia was China’s major partner when it comes to trade growth dynamics.

Russia is reportedly ranked as China’s tenth biggest trade partner, while China remains a major importer of Russian produce, accounting for 15 percent of the country’s international trade as of 2017. Feng highlighted that Beijing was ready to expend efforts to strengthen the ties between the states.

According to the latest data by China's customs administration, trade turnover between the neighboring states grew 27.8 percent from January through November 2018 compared to the same period in the previous year, and totaled $97.23 billion. Exports of Chinese goods to Russia increased 12 percent and amounted to $43.45 billion, while Russia’s sales to China surged 44.3 percent to $53.78 billion.

In November, Chief Executive of the Russian Export Center Andrey Slepnev said that the projected figure of $100 billion worth of mutual Russia-China trade could double in the years ahead. The partners are promoting settlements in ruble and yuan in an attempt to bypass the US dollar and other Western currencies due to numerous anti-Russian sanctions and persisting trade pressure placed on Beijing by Washington.

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Higher gold royalty poses threat to FX reserves www.zgm.mn

Due to consecutive failure to form the quorum, the Parliament has delayed its plenary sessions for two months. One of the key items on the order list was a bill on extending 2.5 percent gold royalty for another three years, which was supposed to be ratified before the turn of the year. Thus, gold tax will now be set at pre-revision level at 5-10 percent, depending on the global price of gold.

According to a study conducted by the Bank of Mongolia (BoM), higher royalties lead to lower gold purchase, which ultimately affects foreign exchange (FX) reserves. For instance, gold tax was at an unbearably high level of 68 percent with the sudden income tax in 2006-2013. As a result, gold purchase fell from 15.5 tons to 2.1 tons by 2010. In other words, the BoM’s treasury fund was almost drained empty.

Officials explain that the sudden income tax, which raised gold tax from 5 percent to 68 percent, was due to boom in copper price; however, the decision had more adverse effects than its benefits as the number of artisanal miners drastically increased as a result.

The 2.5 percent gold royalty was approved in 2014. The result was almost immediate as gold purchase consistently increased in an annual amount, reaching a record high of 22 tons last year, which is 10 percent higher than the previous record in 2017, expanding FX reserves by USD 800 million to a 15-year record.

Therefore, the increased gold royalty is raising concern over a potential tax avoidance of gold producers, reduced gold purchase and increased illegal transportation of gold. A spokesperson of the BoM previously stated, “This law was ratified to boost the economy that was collapsing in 2014. The 9 percent royalties will increase budget revenue by only MNT 50 billion. BoM views the 2.5 percent royalties should be extended by at least 3 years.” BoM estimates to increase foreign exchange (FX) reserves by USD 750 million this year. The 2019 Monetary Policy Guidelines ratified by the Parliament stated to increase FX reserves to USD 6.5 billion in the middle-term.

As for other countries, gold royalty stands at 3 percent in the U.S, 5 percent in Brazil, 4 percent in Indonesia and 2.5 percent in India. This shows that the current 5-10 percent tax is higher than average.

Miners and investors seek favorable tax environment. China, for instance, deduct only CNY1.2-7 per ton of gold depending on the capacity of the mine, technical conditions and locations, as well as 2 percent royalty on import golds.

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Frontclear facilitates a transaction with Development Bank of Mongolia and Societe Generale www.montsame.mn

Ulaanbaatar/MONTSAME/ Frontclear arranged and structured back-to-back USD/JPY cross-border cross currency swap transactions for the value of USD 30 million with Societe Generale and Development Bank of Mongolia.

Credit, legal and operational risks have made it very difficult for Mongolian banks to access global capital markets. This second landmark transaction of Frontclear in Mongolia has made it possible for Development Bank of Mongolia LLC (DBM) to competitively access the swap market with foreign banks and hedge the proceeds of a Samurai bond issue into USD. Both cross currency swap transactions were documented under an International Swap and Derivatives Association (ISDA) agreement, whereby Frontclear customized the swap confirmation to overcome legal issues in the Mongolian market.

The transactions helped to further clarify certain legal issues related to close-out netting in Mongolia, which were mitigated by effective Frontclear deal arranging and structuring. The transaction documents introduced best practice operational and legal concepts, which were reviewed and discussed in a Frontclear organized Executives’ Roundtable in Ulaanbaatar in September 2018. Frontclear is already planning further technical assistance in Mongolia to address those legal issues as well as other roadblocks preventing Mongolian banks effecting accessing global funding and swap markets.

“We are proud to execute our second transaction in Mongolia and the key role we have played in originating the structure and bringing Societe Generale to work in money market transactions in the country. The transaction strengthens Mongolian banks’ ability to mitigate legal and operational risks and sets a benchmark for the development of Mongolia’s money market going forward,” according to Andrei Shinkevich, Senior VP at Frontclear.

“This is DBM’s first ever swap transaction with Societe Generale and we look forward to working with new partners to expand our treasury operation,” – Amgalan Battulga, Head of Treasury Management of Development Bank of Mongolia noted.

“Societe Generale is delighted to have concluded this transaction with Frontclear allowing Development Bank of Mongolia to hedge interest rate and currency risks related to its Samurai bond. It illustrates the strength of the collaboration between our two institutions, Societe Generale and Frontclear, which share the common objective to participate to the development of capital markets in emerging countries,” says Jérôme Sabah, Global Head of Rates, Credit and Forex Sales for Financial Institutions at Societe Generale said.
source: Development Bank of Mongolia

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Terra launches Mongolia’s first ever blockchain payment system www.leaprate.com

Terra, the blockchain company building a payment system powered by its stablecoin, has just announced that it has teamed up with Mongolia’s capital city of Ulaanbaatar.

The partnership’s aim is to utilize Terra’s blockchain technology and change how Mongolian citizens pay for goods and services, as well as to reform the largely cash-based infrastructure of Mongolia by enabling more transparent and convenient digital payments. Terra’s payment solution will first launch in Ulaanbaatar City’s Nalaikh District through a pilot program, with plans to expand citywide.

Mongolia’s fintech market is still in its early stages, but has recently experienced a series of successful IPOs from local startups that display the market’s rising potential.

The pilot program in Nalaikh City will launch with two main features:

peer-to-peer (P2P) payments to allow instant transfer among users of different banks, and
mobile payments to build the infrastructure for secure, contactless payments.

Facilitating P2P and recurring utility payments with Terra are important first steps towards building a blockchain-based financial infrastructure in Mongolia,” commented Daniel Shin, Co-founder of Terra. “From there, we will build out a wider range of financial services, reforming the remittance, loan, and overall banking industry. We are extremely honored to work closely with the Mongolian government and look forward to the launch of Terra in Ulaanbaatar.

We believe this pilot program with Terra will reform how the people of Nalaikh City make everyday payments. It will contribute to the development and enrichment of the nation’s digital payment infrastructure, while creating a new online platform to easily share information and offering great opportunities to connect with our citizens through advanced technology. We look forward to becoming the first customers of this blockchain payment system and setting into motion financial reform in the capital city,” said Radnaabazar Choijinsambuu, Governor, Nalaikh District of the Capital City.

The pilot program is set to launch within the next 6 months. A special task force made of key players from Terra, Nalaikh District, and XGround – a fintech company with a strong base in Mongolia – will oversee the initiative.

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Anti-corruption protests held in Mongolia again www.akipress.com

Another protest action started in Ulaanbaatar main square on January 10 against speaker of parliament Miyegombyn Enkhbold and other members of the Mongolian People's Party (Mongol Ardiin Nam) and the Democratic Party (Ardchilsan Nam), together known by the abbreviation MANAN.

There has been rising anger over a long-running corruption case related to allegations that Enkhbold and other political figures had looked to raise 60 billion tugrik ($23 million) by selling off government positions. Enkhbold has denied the allegations.

The Mongolian opposition Democratic Party (DP) January 7 demanded to hold immediate general elections accusing MANAN of leading Mongolia to poverty.

A cross-party group of politicians who are boycotting the parliament’s plenary sessions has signed a letter demanding Enkhbold’s resignation. Enkhbold rejected to step down.

On December 27, 2018 nearly 25 thousand people took to streets in Ulaanbaatar to protest against "corrupt officials."

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