|Frontier's "Invest Mongolia Tokyo 2018"||Frontier Securities||Tokyo Japan|
|"Open to Export" ICC WTO International business award||ICC WTO||London|
By Julian Dierkes
One of the prominent topics in political discussions of the past 2-3 years has been constitutional reform. This has been brought about by the indeterminate compromise between a parliamentary and presidential democracy that the framers of the Mongolian constitution in 1992 reached. Periods of cohabitation (i.e. when the president of a different party than the majority of parliament as has been the case for the past year) are particularly difficult, but even when they represent the same party, conflict between the president and party leaders and the prime minister has been frequent.
In practice, the main power that is reserved for the president is oversight over various parts of the judicial system. This has been even clearer under Pres. Elbegdorj as he has asserted this authority over the Anti-Corruption Agency (ATG), but also over the courts.
While the president also chairs the National Security Council and commands the military, this doesn’t actually give him/her the power to make military decisions. Likewise, the power to appoint ambassadors, doesn’t give formal authority over foreign policy. That’s why there are ministries of foreign affairs and of defence who are cabinet members, not subordinate to the president.
For a number of different reasons, constitutional debates have become more pressing in the past 2-3 years. Various reform proposals have been floated, and there currently is an experimental process in deliberative democracy that is meant to support these discussions, though it remains somewhat obscure in origins and directions.
Promises in the Election Platforms
Yet, despite these debates, the election platforms suggest an all-powerful presidency.
After its broad preamble and topics covered under “2.1 Human Rights and Justice”, virtually all of Battulga’s campaign platform addresses topics that are not under the jurisdiction of the president. Take “2.3 Health Care” as an example. Few Mongolians would disagree with the aspiration that “Health Care and Medicine will be updated with newest technologies. A Mongolian citizen will be able to get diagnostics and treatments of the highest level in his homeland.” In fact, this addresses the serous topic of medical tourism that allows wealthier Mongolians to receive superior medical services abroad while ordinary Mongolians must rely on a domestic health care system that is hampered by budgetary and technology constraints. Yes, this is an important issue, but is it one where the president has any impact?
The beginning of Ganbaatar’s election platform is particularly ironic in this regard.
He opens his platform with a discussion of the “the gap between the election promises made by the political parties and their action after the election”. Yet, the very next paragraph discusses unemployment as a paramount problem. Yes, conversations with Mongolians and the results of several surveys confirm that unemployment is a serious issue. But, Ganbaatar proposes to address this issue by,
Making the government accountable;
Reducing and eliminating unemployment;
Reducing and eradicating poverty.
And how exactly would a president achieve that?
The remaining sections of Ganbaatar’s platform do seem more closely focused on some of the roles that the president takes on. The second part addresses justice and the judicial system. When he talks about “public interest” (part three) and national pride (part four), these are all broad claims about the direction of the country where the moral and symbolic leadership seems of a president seems more appropriate than in the concrete fight against unemployment. The platform largely continues in this vein, though that also means that it is exceedingly vague, sometimes even poetic in its aspirations.
In structure, Enkhbold’s campaign platform is built more like Battulga’s than Ganbaatar’s. That is, he similarly starts with some very broad aspiration of his mission as president and some issues grouped under “National Unity, Mongolian Pride”.
After that discussion, a long list of issues that Enkhbold would hope to tackle follows. Where the first set of issues refers to the judiciary, the connection to the tasks of a president is fairly direct. But further down that list, for example in a section on “Middle Class – Wealth Creation”, it is less clear what the connection to constitutionally specified tasks for the president is.
Of course, Enkhbold would serve as a president with the collaboration of an MPP-led government and legislature, so he would be more likely to be able to implement some of his goals by collaborating with the government, but not necessarily through the nature of the presidency.
Of course, the president does have the right to introduce legislation in the Ikh Khural. So, in some ways, he would be able to pursue an agenda on topics where s/he has no direct involvement. But is that what Mongolians are looked for, namely an alternative legislator who is not involved in the implementation of the legislation s/he introduces?
The president also chairs the National Security Council. Given the mandate of the NSC to safeguard the country, it has previously made statements on health care, the environment and other issues that are deemed closely linked to the welfare of the nation. So, statements on these topics by Enkhbold and Battulga could be interpreted to fall roughly into the portfolios addressed by the NSC. At the same time, the NSC itself is not an implementing body and relies on the government to actually do the things it maps out.
Audit of Electoral Campaigns
I’ve always been very interested in provisions in Mongolia’s election laws that require an audit and approval of electoral platforms by the General Election Commission. This is in part to present a situation like 2008 where the MPP and DP outbid each other in cash grants that they promised the population. Not only do platforms have to be approved, but candidates actually have to stick to these approved platforms in the campaign. Good idea, no?
Yet, all the examples of items in electoral platforms above suggest that this audit does not check electoral platforms on the question whether the president is actually in a position to affect the change that s/he has promised.
Coming Constitutional Reform
Will this mismatch between the constitutional role of the presidency and the campaign platforms matter?
There other factors in this election that will probably have a greater impact on the likelihood of constitutional reform. But that’s a topic for another post, I think.
This blog post started with a conversation I had with a member of the diplomatic corps in Ulaanbaatar who pointed out the mismatch between constitutional powers of the presidency and the campaign platforms....
Mongolia is to get a new international airport next year. The $580 million project, overseen by the Japan International Cooperation Agency, is a large investment for a country of only 3.1 million people and a gross domestic product of just $12 billion.
Yet unless the government liberalizes the country's aviation market and stops coddling state-owned MIAT Mongolian Airlines from competitors such as Air Astana and Turkish Airlines, air traffic is likely to continue to stagnate and the new airport will become a white elephant.
Ulaanbaatar's existing airport handled fewer than 1 million passengers last year. The new airport, about 50km outside the capital, will have capacity to initially handle 3 million passengers a year and up to 12 million passengers once construction is fully complete.
Mongolia's aviation market has tremendous growth potential but under the government's current restrictive policies, it is unable to spread its wings. International traffic has been stagnant at approximately 800,000 passengers a year since 2012. Yet the authorities are refusing to allow Kazakhstan's Air Astana to launch flights to Ulaanbaatar or permit Turkish Airlines to increase capacity to enable nonstop services from Istanbul.
Turkish carriers are currently limited to offering a paltry 500 seats a week under the air services agreement between the two nations. Turkish Airlines wants to double its capacity to Mongolia by launching two weekly nonstop wide-body flights from Istanbul to Ulaanbaatar while maintaining three weekly one-stop flights via Bishkek, Kyrgyzstan.
Flag carrier MIAT has objected to Turkish Airlines' request. Nonstop Turkish flights from Ulaanbaatar to Istanbul would impact MIAT's European business, particularly from Germany, the largest Western European source market for Mongolia's tourism industry and also a popular destination for Mongolians.
MIAT also has raised repeated objections to Air Astana's plans. The Kazakh flag carrier announced plans in February 2016 to launch three weekly flights from Astana to Ulaanbaatar four months later and began selling tickets. However, Air Astana had to a cancel the launch just two weeks before the planned first flight after what it described as an "ungrounded revocation of permission" by the Civil Aviation Authority of Mongolia. Air Astana has since reapplied for permission, with an eye toward starting flights by the end of 2017, but seems unlikely to gain approval given MIAT's opposition.
Air Astana would rely heavily on transit traffic to Europe, given that demand for flights between Ulaanbaatar and Astana is itself relatively small. This means Air Astana would be competing with MIAT's services to Russia and Germany. Turkish Airlines, which has an extensive network in Germany and Europe overall, would also become a much stronger competitor in the Mongolia-Germany and Mongolia-Europe markets if it were able to launch nonstop flights to Ulaanbaatar.
MIAT offers one-stop flights to Berlin via Moscow and seasonal flights to Frankfurt. It covers the rest of Europe via Moscow using codeshare partner Aeroflot. As such, MIAT and Aeroflot now enjoy a near monopoly over the Mongolia-Europe market. The only other options for passengers heading between Europe and Mongolia are to use Turkish Airlines with two stopovers or to backtrack via Beijing or Seoul with Air China or Korean Air, respectively.
New showcase international airport will go to waste without competition
Mongolia is currently served by only five foreign airlines, which carried a total of 360,000 passengers via Ulaanbaatar last year. MIAT is a tiny flag carrier, carrying less than 400,000 passengers to seven destinations with a fleet of four aircraft.
Mongolia also has two privately owned regional airlines, Aero Mongolia and Hunnu, which operate domestically and to destinations in neighboring China and Russia using turboprop planes; MIAT has not operated domestic flights for more than a decade. The domestic market is small, with only 230,000 passengers travelling in 2016 though the country has 23 airports.
Nonstop flights from Astana and Istanbul would be beneficial economically and certainly boost tourism to Mongolia. The limited services at Ulaanbaatar and MIAT's near-monopoly result in higher air fares and long travel times to several important source markets. Partly as a consequence, European visitor numbers have been stagnant for the last 12 years.
Mongolia needs to realize that increased tourism would have an overall economic benefit far greater than the negative impact on the country from rising competition for MIAT. In addition to new nonstop routes, a more open market should also help attract higher demand from Seoul, the busiest international route from Ulaanbaatar.
Visitor numbers from South Korea and Japan have been flat over the last decade. Asiana Airlines, South Korea's second-largest carrier, has not been able to launch services to Mongolia due to restrictions in the air services agreement between the two countries. MIAT and Korean Air have a codeshare partnership on the Ulaanbaatar-Seoul route which has resulted in an undersupplied market with high average fares.
Ulaanbaatar could also potentially support service from a Gulf airline and several Asian low-cost carriers, including ones from China, Japan and Southeast Asia. Budget airlines would stimulate demand both in the outbound and inbound markets, potentially leading to an influx of visitors and making it more affordable for Mongolians to travel abroad. South Korea's Air Busan last year became the first low-cost carrier to serve Mongolia but its service is limited to two weekly flights to Ulaanbaatar from Busan. The much bigger Ulaanbaatar-Seoul route remains protected.
The new airport's Japanese financiers are understandably pushing for greater openness. Without a change in government mindset, the new airport will be underutilized and it could be difficult to pay off the debt incurred for its construction.
The government must also open up ground handling at the new airport to competition. MIAT has the only ground handling license at the existing airport and will at least initially be the only handler at the new airport. Ground handling is likely a revenue churner for the otherwise unprofitable MIAT, which has so far successfully argued against the authorization of another handler as it has outstanding loans on its equipment. This is another example of ill-advised protectionism, which is stunting growth in the wider market.
Mongolia's aviation sector has underperformed for far too long. With a new airport about to be completed, it is time for the government to liberalize the market....
TOKYO -- Japan's mobile carriers are gearing up for the global shift to fifth-generation wireless communications.
The new technology offers a chance for Japan to re-emerge as a key player in the industry. For this to happen, Japanese companies will have to take an active role in the development of 5G technology and its application, and the government and mobile carriers should support these efforts.
The successor to 4G is expected to be widely available globally by 2020, dramatically raising transmission capacity and creating new possibilities for networks. For Japan, that target year conveniently coincides with the Tokyo Olympics, providing a valuable opportunity to showcase its technology to the world.
The new 5G technology promises ultrahigh-speed, ultrahigh-capacity wireless transmission. In particular, it will reduce the time lag between sender and receiver to just thousandths of a second for many applications. These fast transmission speeds are crucial if the internet of things -- a huge network of internet-enabled devices -- is to reach its full potential.
Mobile carrier NTT Docomo began trial runs in May of ultrahigh-definition 8K video at Tokyo Skytree tower in collaboration with Tobu Railway. The company is also experimenting with control systems for self-driving buses using 5G on the Kyushu University campus in a joint project with DeNA, an internet services provider.
On May 29, Kazuhiro Yoshizawa, president and CEO of Docomo, highlighted the new business opportunities 5G will create in a keynote speech to the Global Digital Summit 2017, a Tokyo event co-hosted by Nikkei Inc. and Japan's communications ministry. "We don't just want to provide telecommunications services, we also want to create new ecosystems by working with various businesses," Yoshizawa said.
Rival KDDI is also putting 8K video through its paces, sending images to a moving bus. Another player, SoftBank, is experimenting with self-driving buses using 5G in Nanjo, on the southern island of Okinawa.
There are five important issues that need addressing if Japan's 5G strategy is to pay off. The first is rapid development of technology. Both the International Telecommunication Union and Japan have set a deadline of 2020 for putting the technology to widespread, practical use. But overseas carriers are not letting themselves be bound by that timetable. They are pushing ahead with trials in hopes of creating industry standards. Japanese players must keep an eye on these developments.
Second is the issue of technical compatibility. Japanese technology is not readily adaptable to the 24 gigahertz to 86GHz frequency band that was agreed to for 5G by the ITU. Japanese carriers have been forced to go along with U.S. and European standards established in 5G trials. This is an area where the government should take the lead to protect the interests of Japanese industry.
The third issue for Japan is encouraging software development. At present, the world leaders in 5G are device makers such as Sweden's Ericsson, Nokia of Finland and China's Huawei Technologies. These are the companies that provided the technology for the trials conducted by Japanese carriers.
While it may be wise for Japan to enlist the support of these companies in building communications infrastructure, such as upgrades to mobile base stations, it should also encourage its own tech companies, such as NEC, to develop their own technologies for linking devices so that they can compete in the global marketplace.
Fourth is the question of how best to integrate telecommunications and broadcasting, an issue that has already been debated in Japan. The communications ministry has set a target for full-fledged introduction of 4K and 8K broadcasts by 2020, the same as for 5G. The ministry envisions use of communications satellites and broadcasting satellites for these ultrahigh-resolution video specifications, but 5G is a more viable option as it has broader applications and is more readily adaptable to a paid services model than is broadcasting technology. The government should rethink how telecommunications and broadcasting can be integrated for optimum results.
Finally, rules must be worked out for the use of data, and steps taken to enhance security as 5G transforms the network landscape. The amended personal information protection act, which addresses the use of big data, went into effect in late May. The new rules make it easier for businesses to take advantage of the huge amounts of data obtained from smartphones. But as 5G greatly expands data transmission capacity, traffic will grow apace.
It will therefore be necessary to set rules on who owns the data, and the scope and purposes for which it can be used in specific applications, such as internet of things and health care....
Amazon has announced plans to acquire leading US organic food grocer Whole Foods Market for $13.7 billion. The e-commerce giant is making a huge bet on physical stores and the business of food.
In a deal that is set to be sealed in the second half of the year, Amazon will pay $42 per share in cash for the upmarket grocery chain.
On Thursday, Whole Foods shares were halted at $32.77 in premarket trading, while Amazon's shares were up 0.5 percent at $969.
Whole Foods’ co-founder and chief executive officer John Mackey will continue to run the chain with the headquarters of the company to remain in Austin, Texas, the companies said.
Whole Foods has been put under pressure by Jana Partners, one of the investors, and money manager Neuberger Berman. They criticized the company for poor performance and suggested the chain be sold.
“This partnership presents an opportunity to maximize value for Whole Foods Market's shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers,” said Mackey in a statement.
This is Amazon's second attempt to take over the grocery chain, according to a source familiar with the situation, as quoted by Bloomberg.
“Amazon clearly wants to be in grocery, clearly believes a physical presence gives them an advantage. I assume the physical presence gives them the ability to distribute other products more locally. So theoretically you could get five-minute delivery,” said Michael Pachter, an analyst at Wedbush Securities Inc.
Russia's largest bank has launched a pilot program which could see cash delivered by drone.
Sberbank made its first drone-assisted delivery on Thursday, Lev Khasis, the first deputy chairman of the bank's board, said.
The money was carried 10 kilometers in a secure container from Sberbank's cash center to a waiting van, Khasis wrote on social media. He reported that the drone reached speeds of 180 kilometers per hour.
Sberbank CEO German Gref announced the drone delivery pilot scheme in May, but warned excited consumers that "a lot of questions" still needed to be answered before the technology could be put into general use.
The President of the Asian Infrastructure Investment Bank says the organization is keeping the door open for the United States and Japan to join.
Both countries have maintained a cautious stance on the bank, saying they have concerns about the transparency of its operations.
AIIB President Jin Liqun held a news conference following the organization's second annual meeting in Jeju Island, South Korea, on Saturday.
He said that the AIIB has approved 2.49 billion dollars in finance for 16 projects in 9 countries in Asia and the Middle East since its founding in 2015.
In response to South Korean President Moon Jae-in's call for investment in North Korean infrastructure, including a railroad linking the countries, Jin said the bank's committee should decide when investing in a non-member state.
The AIIB says it has added 3 new members, bringing the total to 80.
The founder of Chinese e-commerce giant Alibaba, Jack Ma, says his company will be worth more than the world’s fifth-largest economy by 2036. Alibaba is already bigger than some countries, including Sweden, Poland, Iran, Norway, and Austria.
“If a company can serve two billion consumers, that is one-third of the total population of the world. If a company can create 100 million jobs, that is probably bigger than most governments can do. If a company can support 10 million profitable businesses on its platform, this is called an economy,” Ma told company investors at Alibaba’s headquarters in Hangzhou, as quoted by South China Morning Post.
Alibaba wants to earn $1 trillion in gross merchandise volume by 2020 to become the world’s 16th or 17th largest economy, bigger than Turkey or Saudi Arabia.
In 2036, Alibaba would become the № 5 economy in the world, just behind the United States, China, EU and Japan, according to Ma. The company will have created 100 million jobs by that time, he added.
Alibaba had roughly 450 million active annual buyers on its China marketplaces in the financial year that ended March 31.
The company unites a family of internet-based businesses, which enables its users to buy or sell anywhere in the world. It has developed businesses in consumer e-commerce, online payment, business-to-business marketplaces, and cloud computing, and has started developing mobile apps, mobile operating systems, and internet TV.
On Wednesday, on June 14, in the Mongolian capital of Ulan Bator the world's largest plant for the production of cashmere, Gobi, caught on fire. The alert reports about the fire were recorded in local emergency services at 22:46 local time.
Eleven fire brigades (more than 200 firefighters) of the capital of Mongolia have been fighting the fire throughout the night.
No potential causes of the fire at the plant have been announced yet. According to preliminary data, the fire broke out due to repair activities carried out on the roof.
Sources say struggling Japanese auto parts maker Takata is taking final steps to file for bankruptcy as early as this month. The company is one of the world's top 3 airbag producers but has been involved in a worldwide recall since 2013.
The company posted its biggest net loss ever in fiscal 2016 due to mounting costs stemming from the recall.
It's said to be filing for bankruptcy to get financial backing worth an estimated 1.8 billion dollars from US auto parts maker Key Safety Systems.
In January, Takata agreed to pay one billion dollars in penalties to settle charges with the US Justice Department over faulty airbags.
Takata airbags were responsible for at least 11 deaths, as well as injuries to 2 people in Japan.
Company officials decided to sell off subsidiaries and seek a sponsor to help rebuild the firm.
The 13th high-level meeting of Chambers of Commerce and Industry of Mongolia, Russia and China is being held in Ulaanbaatar. Over 300 business delegates of the three countries are exchanging views on trilateral trade cooperation and investment and defining their future goals.
The Mongolian Chamber of Commerce and Industry announced the year of 2017 as ‘Year of Facilitating Trade’ and the Mongolian side has a position to ease procedures and acts related to cross-border trade, costs, required documents, inspections and controls after negotiating with the neighbor countries.
The meeting is being attended by chairman of the Mongolian Chamber of Commerce and Industry Mr B.Lkhagvajav, Chairman of Chamber of Commerce and Industry of Russian Federation Mr S.N.Katyrin and Vice Chairman of the China Council of the Promotion of International Trade Mr Wang Jinzhen.