Mongolia’s domestic party politics, international relations and economy all faced challenges in 2022. The Mongolian People’s Party (MPP) wrestled with how to govern despite having a supermajority in Mongolia’s parliament, the State Great Khural, and how to position itself vis-a-vis Moscow following Russia’s invasion of Ukraine.

The government staked its fiscal fortunes on reviving coal exports to China but faced protests on corruption allegations linked to a state-owned coal mining company.

The difficulties of governing with a supermajority in Mongolia appear to be an open question. The electoral triumph of the MPP in Mongolia’s parliamentary and presidential elections in 2020 and 2021 respectively, raised concerns about the potential for democratic backsliding.

There were questions about whether the MPP would revert to its former single-party ruling status and threaten Mongolia’s democracy. Yet developments in 2022 suggest that the party is unexpectedly struggling with how to make a supermajority work.

The party discipline that once made the MPP a powerful force seems to have dissipated, with MPs largely reverting to ad hoc alliances to get pet projects passed in parliament.

Mongolia’s Prime Minister, Luvsannamsrain Oyun-Erdene, grappled with a constitutional amendment introduced in 2019 that restricted the number of members of parliament that could serve in the cabinet.

While the amendment was intended to strengthen parliamentary oversight and subject matter expertise in cabinet appointments, it seems to have led to perceptions of weak ministers.

Mongolia’s constitutional court threw out the amendment in August 2022, leading to a cabinet reshuffle. This brought more politicians into the cabinet in the hopes of shoring up Oyun-Erdene’s power. Another reshuffle in January 2023 further increased the number of politicians in the cabinet.

There were also questions around whether Mongolian foreign policy could adapt to the shifting geopolitical landscape in 2022. In response to Russia’s war of aggression against Ukraine, Mongolian society has been divided between largely older Russophiles and younger internationalists who express their solidarity with Ukraine.

Mongolia’s government remained silent on the war for much of the northern-hemisphere spring, abstaining from votes censuring Russia at the UN General Assembly.

There was a perception that Moscow’s cozying up to Beijing would further reduce the degrees of foreign policy-making freedom available to Mongolia, as well as a realization that a resurgently imperialist Russia — on whom Mongolia is entirely dependent for fuels and for electricity in its western regions — was waging an energy war on Europe.

Plans for a trans-Mongolian gas pipeline from Siberia to China and proposed hydropower projects that would likely need Chinese funding ostensibly impact Mongolia’s relations with Russia and China too.

Yet Mongolia’s government embraced three internationalist initiatives in 2022. These are the Ulaanbaatar Dialogue (a regional security conference), a conference focused on “strengthening the role of women in peacekeeping” and UN Secretary-General Antonio Guterres’ visit to Ulaanbaatar in August.

In a speech to the UN General Assembly in September 2022, Mongolian President Ukhnaagiin Khurelsukh discussed the need to find peaceful solutions to conflict, clearly pointing at Russia without mentioning its invasion of Ukraine explicitly.

This marked a decisive turn towards the formulation of a more nuanced position on relations with Russia. Prime Minister Oyun-Erdene also visited Germany and President Khurelsukh visited China and Japan in the second half of 2022 to bolster Mongolia’s international relations.

Still, whether Mongolia can find other sources of income beyond coal exports for fiscal stability remains uncertain.

On 5 December 2022, protests erupted in Ulaanbaatar after Mongolia’s government acknowledged suspicions of corruption at the state-owned coal miner, Erdenes-Tavantolgoi JSC. Young people initially dominated the protests, as had been the case with a series of similar protests in April.

Corruption allegations sparked the protests, but protestors were also frustrated with the government’s lack of follow-through on promises for improved social support following the Covid-19 pandemic, economic woes linked to the closure of China’s border adjacent to Mongolia and rampant inflation.

While many Mongolians initially suspected that internal MPP machinations were behind the protests, they appeared to be unorganized and spontaneous.

During the second week of protests in December, some protesters were camping out on Sukhbaatar Square in cold temperatures to demonstrate their determination. In response, Mongolia’s government promised to investigate the corruption allegations.

Mongolia’s government has staked its fiscal fortunes for 2023 on coal sales to China to pay its sovereign debt, making allegations of corruption in a state coal miner particularly poignant.

This occurs at a time when interest in Mongolia’s “third neighbor policy” — strengthening ties with countries besides Russia and China — has been revived in the face of Russian and Chinese authoritarianism.

The protests also reveal a desire in Mongolian society to reduce dependence on coal for energy supplies. This will be met with fierce opposition from the domestic coal industry. A small flurry of Australian-invested methane fracking projects in the country is unlikely to provide adequate “bridge fuels.”

The government’s precarious fiscal position, coupled with domestic dissatisfaction, make it unlikely that the Oyun-Erdene administration will survive until the next parliamentary elections in June 2024.

BY:

Julian Dierkes is Associate Professor at the University of British Columbia’s School of Public Policy and Global Affairs. He is one of the principal authors of the Mongolia Focus blog.

At its regular meeting on January 25, the Cabinet made the following decisions:

The new structure of the National Committee for preparation for the Olympics was approved

A new structure of the National Committee in charge of preparatory works of national teams, which will participate in the Olympics and Paralympics was approved. The National Committee will be headed by the Prime Minister of Mongolia.

The preparatory works including selection and establishing the national team which will participate in Summer Olympics in 2024 and Winter Olympics in 2026, organizing the swearing-in ceremony, and other preparatory works, have already started.

A working group was established to develop proposals and conclusions for the implementation of anti-corruption work

In the framework of the goal to intensify the anti-corruption measures, included in the “Vision-2050” long-term development policy of Mongolia, the New Recovery Policy, and the 2020-2024 Action Plan of the Government of Mongolia, a working group was established to develop methodologies to eliminate bureaucracy, consolidate public opinions, study best practices of foreign countries and formulate proposals and conclusions for effective implementation of anti-corruption works.

Brief news

· The Cabinet decided to set the rate of customs duty on imported 92 octane gasoline at 0 percent from January 30, 2023, to January 1, 2024, and relevant officials were tasked to take measures to stabilize the supply and retail prices of gasoline and diesel fuel sold in the domestic market at a certain level and oversee their implementation.

· Conclusions and recommendations for a bill to amend the Law on budget, initiated and drafted by the member of State Great Khural G. Temuulen were discussed at the Cabinet meeting and the Cabinet decided to convey some of them to the bill initiator. The bill initiator drafted this bill to amend the Law on the Budget in order to ensure stability, completeness, and accuracy of budget, to create a legislative environment for proper budget management and accountability, and to clarify the mechanisms of public participation, external control, and state audit in the budgetary process of the Government.

· After discussing and supporting the draft agreement between the Government of Mongolia and the Government of the Republic of Maldives on the mutual exemption from visa requirements for holders of diplomatic, official, and ordinary passports, it was decided to issue an order of the Prime Minister on granting the right to sign the agreement.

· The Cabinet decided to award the 69th grand champion (yokozuna) of Japanese professional Sumo wrestling Hakuho M. Davaajargal, with the trophy named after the Prime Minister for recognizing his absolute victories, records set in sumo wrestling and contribution to promoting Mongolian strength and ingenuity.

South Korean telecommunications giant KT Corp. said Thursday it has signed a partnership deal with the Mongolian government to secure a stable supply of some 80 kinds of mineral resources, including rare earth elements.

KT CEO Ku Hyeon-mo signed the memorandum of understanding on mineral resources with Mongolia's Prime Minister Luvsannamsrai Oyun-Erdene in Ulaanbaatar on the sidelines of a meeting that aimed to strengthen strategic cooperation in realizing digital transformation in Mongolia.

Mongolia is one of the world's leading suppliers of mineral resources. It has some 80 kinds of mineral deposits, including rare earth elements, copper, fluorite, gold, iron and zinc. The country’s deposits of rare earth elements accounted for about 16 percent of global reserves. Rare earth elements are important mineral resources and are used in various future-value industries such as new and renewable energy, electrical products and automobile parts.

Under the agreement, KT laid a stable foundation for preferentially supplying Mongolia’s various mineral resources to other industries in Korea. The company will discuss with the South Korean government and Korean industry circles more specific plans for the supply of resources, the officials said.

On the same day of the memorandum signing ceremony, Mongolia held a separate ceremony for appointing KT’s chief as the country’s chief technology officer. Ku became the first foreign businessman to take the honor.

In line with the Mongolian government’s new recovery policy, KT has made efforts for the country’s industrywide digital transformation since last year. The digital transformation cooperation between KT and the Mongolian government is expected to contribute largely to the development of future value industries in Korea, as well as the development of Mongolia's industries.

In December 2021, the Mongolian government passed its new recovery policy, the first part of the country’s Vision 2050 program that aims to diversify its economy, boost industry and set democracy on the way to long-term development. The country also established a digital development department in May last year for the “digital Mongolia” strategy.

Ku has been recognized for KT’s digital transformation capabilities and contributions based on its digital platform company (Digico) strategy. By naming Ku as the CTO, the Mongolian government is planning to accelerate the country’s digital transformation in areas such as finance, medical care, digital and media.

"The latest cooperation with Mongolia in various business areas from resources and finance to medical care and media marked the beginning of an expanded Digico strategy," Ku said. "We hope to mark this year as the first for KT to expand our strategy and know-how to the global Digico strategy by leading the development and global growth of other industries, both at home and abroad."

By Jie Ye-eun (yeeun@heraldcorp.com)

The ringing of the bell ceremony organized and started the primary market for the “Sendly Bond,” offered publicly by the “Sendly NBFI” JSC.

The primary market for the “Sendly Bond” issued by “Sendly NBFI” JSC began on January 25, and the ringing of the bell ceremony for this issuance has been organized at Mongolian Stock Exchange.

According to the securities prospectus, 85,000 bonds with a nominal value of 100,000 MNT each, an 18-month term, and a 19.2% annual interest rate will be offered to the public, and 8.5 billion MNT will be collected.

Khash-Erdene, Chief of the Business Development Department of the Mongolian Stock Exchange, opened and said, “We are going to open the 6892nd trading session of the Mongolian Stock Exchange. The trading of this bond offered to the primary market by “Sendly NBFI” JSC will be accepted through the IPO system of the Mongolian Stock Exchange starting today and ending on January 31 between 10:00 and 17:00. In addition, we would like to inform all investors that the primary market will be closed if the order amount reaches 100 percent.

“We are pleased to announce that the bond offered to the public by “Sendly NBFI” JSC is the first product to enter the market through the exchange in 2023.

“2022 was the year of the historical growth of the stock market of Mongolia, where many new products were released, but today the “Sendly NBFI” company is offering the first product of 2023 to the public, opening new gates for the next products to be traded on the Mongolian Stock Exchange. I am confident that it will lead to success and accomplishment for the following products.”

At the bell-ringing ceremony, T. Khash-Erdene, Chief of the Business Development Department of the Mongolian Stock Exchange, T. Tserenbadral, Deputy Chairman of the Financial Regulatory Commission, B. Naranbat, Chairman of the Board of Directors of "Sendly NBFI" JSC, and B. Ulziibayar, CEO of "Ulzii and Co Capital" LLC, participated and rang the bell to open the 6892nd trading session of the MSE.

Source: MSE

The number of passengers crossing Mongolia's border reached 2016.2 thousand (double counting) in 2022. Compared to the previous year, the number of passengers increased by 1372.8 (3.1 times).

This increase was mainly due to the opening of the border crossing after the Covid-19 pandemic. The number of inbound passengers increased by 700.1 (1.5 times) compared to the 2020, but decreased by 4080.2 (66.9%) thousand from 2019. In 2022, 988.6 thousand passengers entered Mongolia. In terms of border points for all inbound passengers, 31.8% were crossed through Chinggis khaan, 20.1% were crossed through Altanbulag, 15.4% were crossed through Gashuun sukhait, 5.4% were crossed Zamiin-Uud, 3.7% were crossed Shiveekhuren, 3.5% were crossed through Bulgan, 20.1% were crossed through other border points. Out of the inbound passengers, 688.1 (69.6%) thousand were Mongolian citizens and 300.5 (30.4%) thousand were foreigners. In 2022, 300.5 thousand foreign passengers have entered, respectively increased by 261.3 (7.7 times) thousand. Of those foreign passengers, 92.4 % stayed up to 30 days, 2.8 % stayed for 30-90 days and 4.8% stayed for 90 days or more.

In 2022, 170.4 (56.7%) thousand of the inbound foreign passengers were males and 130.1 (43.3%) were females, 276.6 (92.0%) thousand were adults and 23.9 (8.0%) thousand were children. Also, 59.2% of inbound foreign passengers were visited from Europe, 34.4% from East Asia and the Pacific region, 3.7% from the America, 1.5% from Middle East, 0.7% from the and South Asia, 0.5% from the African regions. In terms of nationality of all the inbound foreign passengers, 52.3% were Russian, 18.2% were South Koreans, 5.9% were Kazakhstan, 4.6% were Chinese, 3.1% were from the USA, 15.9% were from other countries. The number of tourists was 286.3 thousand and increased by 253.2 (8.6 times) thousand from the same period of the previous year. In 2022, the number of tourists from Russian Federation increased by 140 637 (12.2 times), tourists from South Korea increased by 51 070 (23.1 times), tourists from the Kazakhstan increased by 16 828 (24.1 times) and tourists from China increased by 5 423 (1.9 times) compared with the same period of the previous year.

In 2022, 728.6 thousand Mongolian passengers (double counting) traveled abroad, of which 429.4 (58.9%) thousand traveled for tourism purposes, which increased by 308.5 (3.6 times) thousand from the same period of the previous year and 299.3 (41.1%) thousand traveled for employment, study and permanent residence purposes, increased by 137.9 (85.5%) thousand from the same period of the previous year, respectively (Table 2). Out of all outbound Mongolian passengers, 524.7 (72.0%) thousand were males adult passengers, 204.0 (28.0%) thousand were females, adult passengers and 42.9 (0.6%) were children. In terms of duration of stay, 592.8 (81.4%) thousand Mongolian passengers stayed up to 30 days, 12414 (1.7 %) stayed for 30 to 90 days and 123.4 (16.9%) thousand stayed for 90 days or more.

There were 2 637.3 thousand crossings of transportation vehicles (double counting) entered through the border of Mongolia in 2022, which increased by 754.4 (40.1%) thousand compared to the previous year. In terms of types of the crossing of transportation vehicles, 30.6% were freight trains, 25.6% were trucks, 5.9% were sedans, and 37.9% were other transportation vehicles. In terms of crossed border points, 29.7% through Gashuunsukhait, 29.5% through Zamiin-Uud, 8.4% through Shiveekhuren, 6.7% through Sukhbaatar, 6.4% through Altanbulag, and 19.3% through other border points.

Source: National Statistics Office

On January 24 in Washington, D.C., Deputy Assistant Secretary of the U.S. Department of State’s Bureau of Economic and Business Affairs Richard T. Yoneoka and Mongolian State Secretary of the Ministry of Road and Transport Development Batbold Sandagdorj signed a Memorandum of Consultations (MOC) finalizing an Air Transport Agreement between the Government of the United States and the Government of Mongolia – the first bilateral air transport agreement negotiated by the two countries. The MOC acknowledges that the aeronautical authorities of the countries intend to apply the agreement on the basis of comity and reciprocity pending its entry into force.

The Agreement establishes a modern civil aviation relationship with Mongolia consistent with U.S. Open Skies international aviation policy. It includes unrestricted capacity and frequency of services, open route rights, a liberal charter regime, and open code-sharing opportunities. After both countries complete their internal procedures, the Agreement will be signed and brought into force.

This Agreement with Mongolia will immediately expand our strong economic and commercial partnership, promote people-to-people ties, and create new opportunities for airlines, travel companies, and customers. Air carriers can provide more affordable, convenient, and efficient air services to travelers and shippers, promoting tourism and commerce. The Agreement also commits both governments to high standards of aviation safety and security.

The new Agreement will build on a framework of U.S. Open Skies agreements with over 130 other partners that enable U.S. air carriers to operate and expand flight networks far beyond America’s borders and connect the U.S. economy to growing markets abroad.

For further information, please contact the Bureau of Economic and Business Affairs Press Office at EB-Press-Inquiry@state.gov for press inquiries. Information on U.S. aviation policy and Open Skies agreements is available on the Department of State’s website here: https://www.state.gov/air-transport-agreements/

By U. S. Embassy Ulaanbaatar | 25 January, 2023 | Topics: News, Press Releases

The Mongolian Stock Exchange (MSE) leadership received the Commercial and Economic Counsellor of the Embassy of the People’s Republic of China, Song Xuejun, and the Deputy Director of China General Chamber of Commerce in Mongolia, Chai Fang Ping.

During the meeting, the Chief Executive Officer of the MSE, Altai Khangai, introduced the current and future situation of Mongolian capital markets to the visitors. The parties exchanged their views on opportunities to increase Chinese investment in the Mongolian capital markets. In addition, the parties discussed further actions to introduce opportunities for Chinese companies to participate in the online coal trades organized by the Mongolian Stock Exchange from February 2023.

The Government of Mongolia decided to sell coal through e-auction following the Resolution No.362 of the Government, approved on December 14, 2022, and the MSE conducted the trial e-auction of coal export on January 12, 2023. The traders of PRC, Singapore, and Hong Kong participated and purchased two lots or 12,800 tons of coal that traded through the trial trading of the MSE from “Energy Resources” LLC.

Hundred and seventy Chinese companies are procuring from “Erdenes Tavantolgoi” JSC.