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Ulaanbaatar /MONTSAME/ The Central bank of Mongolia adopted a Regulation on Digital Currency to create legal environment of coordination of digital currency and its activities which has been defined in the Law on National Payment System, and to protect customers through establishing safe and reliable digital currency system.
The regulation defines who will participate in digital currency system and how, process of getting permission, rights and duties of customers and service providers. It also expected to support further development of FinTech technology and payment system.
ULAN BATOR, April 23 (Xinhua) -- A total of 705,000 foreign tourists visited Mongolia in the first quarter of 2018, up 11 percent from the same period last year, data from the National Statistical Office of Mongolia showed Monday.
Russia and China contributed the highest number of foreign tourists to the country in the first three months of this year, respectively accounting for 36 percent and 32.6 percent of the total.
Among the leading sources of incoming tourists for Mongolia, South Korea registered robust growth, up 15.7 percent from last year to reach 7,157 during the period.
Central Asian financial markets lacked clear direction after a maelstrom of political, economic, banking system, and international lender cross-currents punctured early year euphoria.
Only Kazakhstan is in a benchmark frontier equity index on the MSCI, while Azerbaijan and Mongolia external bonds are tracked on JP Morgan’s off-index NEXGEM list, Atimes reported.
In recent weeks Azerbaijan’s President Ilham Aliev won another term in a controversial election with suspect margins and turnout; Kazakhstan’s currency was battered in the wake of post-US sanction ruble selloff; and Mongolia got a mixed review under its International Monetary Fund program on lingering fiscal and financial system risks.
Into the half year the specter of a repeated commodity crisis has abated, but the Asian Development Bank cautioned in its sub-regional forecast about output slowdown as government succession paths remain messy or murky.
Official statistics put first-quarter growth at 2.3%, with non-oil outperforming the hydrocarbons sector, although agriculture, construction and tourism all fell. The ADB predicts below 2% expansion for the year and 7% inflation with post-devaluation exchange rate stability, as the current account surplus tops 6% of GDP.
Foreign direct investment was over $5.5 billion in 2017, 85% concentrated in energy and the Shah Deniz field in particular. The manat has been steady at 1.7/dollar, and the share of bank deposits in that unit roughly doubled to 40% the past year. The central bank cut the refinancing rate 2% to 11% in April and assured the public of ample cash on hand after spillover from Russia and Turkey troubles.
However, the restructuring of giant International Bank, to be prepared for privatization, is proceeding slowly as assets slipped below $5 billion awaiting foreign creditor approval of a $3.3 billion workout proposal.
Kazakhstan shares were up almost 20% on the MSCI frontier gauge in the first quarter, as growth came in stronger than expected at 4% with good mining and manufacturing contributions. Higher oil prices and production joined with trade diversification to new markets like Vietnam to help the balance of payments and foreign reserves, with the latter at $90 billion including the separate stabilization fund.
The central bank is easing as inflation may drop below the 5-7% target band, and it dismissed the 3% tenge decline over the week tighter US sanctions were imposed against Moscow as a bump.
Bank fragility stayed in the spotlight as parliament passed a bill to close capital flight loopholes, and another round of foreign currency to tenge mortgage conversion was completed using the pre-devaluation rate.
The Halyk-Kazkommertsbank merger timetable slipped to the second half of the year and Standard & Poor’s kept KKB at “B+” credit watch, as it called the combination a “challenge under weak economic conditions.”
The state airline, uranium producer, and telecom operator will soon be offered in stock exchange IPOs, and officials travelled to China on a promotion tour, but investment adviser Rothschild urged a quicker pace of $70 billion sovereign wealth fund divestment including pre-offering sales.
Mongolian bonds rose as the country got a third IMF tranche under its overall $5.5 billion donor package, following a growth upgrade to 5% on flagship copper project expansion.
However, the government demanded the extradition of the former prime minister from the US to face corruption charges, and the IMF warned of still outsize public debt at 85% of GDP.
Double-digit bank bad loan levels and credit increases also endure, as legislators debate an interest-rate cap for borrowers that could again pave the way for Central Asia’s familiar boom-bust saga....
The construction of the Yarmag twin bridges is now 70 percent complete, according to the Ulaanbaatar Mayor’s Office.
Mayor of Ulaanbaatar S.Batbold visited Yarmag last Friday to check on the construction of the new Yarmag twin bridges. Reportedly, the bridges can become operational by November now that the old bridge is undergoing repairs and the construction of the new one is almost complete.
The new bridge next to the old Yarmag Bridge will be 250.2 meters in length and 20.5 meters in width. The twin bridges will have six lanes in total, two on the old bridge and four on the new bridge. The original deadline for the project was January 31, 2019 but following orders from the Ulaanbaatar administration, the contractor has speeded up its work in order to open the old bridge by July 11, before the National Naadam Festival.
By doing so, Ulaanbaatar city officials hope to decrease traffic during the National Naadam Festival — one of the busiest times in the year for Ulaanbaatar and throughout the country.
Mayor S.Batbold reviewing construction work at Yarmag Bridge
When Mayor S.Batbold asked about the technological regime and the possibility of finishing before the deadline, the head inspector leader of the advisory company said, “The construction of the bridges is being completed quite fast but according to plan. The preparation work for (the new) bridge started on March 20. We’re planning to open the main section before the National Naadam Festival.”
He added that the construction team is working 24 hours a day but in shifts.
“This bridge over Tuul River, which flows through the capital, was commissioned in the early 1960s. It’s almost 60 years old,” the mayor noted. “Old bridges such as Yarmag, and Sonsgolon and Bayanzurkh are being renovated. Zaisan Bridge is the only one left. A marvellous blueprint has been made for Zaisan Bridge since it’s located in the heart of the city. We plan to complete this work with the city budget. This way, all bridges over Tuul River will get rebuilt.”
Subroads connecting to the bridges are set to open in October.
The Yarmag Bridge is the largest northwest entry to Ulaanbaatar which links it to the New Ulaanbaatar International Airport. The development of the Yarmag twin bridges is significant to the city’s plans to transform Yarmag area into a new business center. The construction of the new bridge began in May last year.
“The Yarmag twin bridges will add a new touch of color to Ulaanbaatar. It will not be an ordinary single bridge but a twin bridge linked to the back of a mountain. It branches out to routes heading to the intersection across theThird Thermal Power Plant, city center, and Gurvaljin Bridge. The Ulaanbaatar Road Development Office is overseeing the construction work,” stated S.Batbold.
Cashmere is Mongolia’s third largest official export, after copper and gold, and provides income to over 100,000 people, 90 percent of whom are women, and 80 percent are people below the age of 35.
Currently, there are about 150 wool and cashmere factories active in Mongolia.
Local and international experts assessed that the quality of raw cashmere has degraded over the years due to the lack of a proper national strategy for livestock health and gene pool and herders’ interests to grow goat population rather than produce high-quality products. The priority to increase the number of adult goats has led herders to neglect the quality of raw materials from goats and thicken the average fiber diameter for cashmere, which is attributed to slight decline in production and revenue.
In Mongolia, herders gather fine cashmere fibers from bound goats in March and April. Mongolia has an estimated total of 27 million goats and an annual cashmere production capacity of 9,400 tons. This spring, herders are selling their cashmere to dealers for an average price of 105,000 MNT per kg, which is almost 40,000 MNT higher than last year’s price, indicated reports of the Mongolian Agricultural Commodity Exchange (MACE).
However, domestic producers are facing financial difficulties in gathering raw cashmere for their production and herders have stated that foreign companies are directly approaching them for exclusive high-quality cashmere.
Although they wish to support local producers, some herders said that they find offers by foreign companies tempting, especially because they offer to pay upfront in cash.
This type of cash is beneficial to foreign companies as it allows them to pay much lower tax without being charged with the customs tax, according to the Ministry of Food, Agriculture and Light Industry. This isn’t the first time, foreign businesses have cooped up this type of beneficial negotiation for their side. In fact, it’s been ongoing for almost a decade, according to some dealers. Like so, Mongolia continues to let golden opportunities to gain high profits slip away by exporting raw and washed cashmere without refining.
As a result, local producers face a shortage of raw cashmere and utilize less than 60 percent of their full capacity, which immediately impact productivity, workers’ wages, and thus, the number of people interested in working in the sector.
To resolve these challenges, the government launched the Cashmere Program in February this year.
Silver lining for cashmere
Both public and private sectors are expecting major changes in the Mongolian cashmere industry over the next four years and hoping for large booms in the following years now that a new Cashmere Program is underway.
The four-year program focuses on domestic production of final cashmere products, technological innovations, and financial support for cashmere producers.
“Now that washing and combing processes of cashmere production have been upgraded, the program focuses on supporting the next stages — spinning process, yarn production, production of knitted products, and exportation. In particular, its main idea is to keep domestically producible cashmere, use it to make final products within the country, and reduce exportation of cashmere of low-level processing, or washed cashmere,” stated First Deputy Chief Executive Officer of Development Bank of Mongolia Ch.Enkhbat.
The government expects the program to help keep 5,500 existing jobs in the textile industry, while creating 3,600 new jobs. It forecasts that the production and export of final products will surge by 5.7 times by the end of the program.
Other expected results include increased investment and discounted loans to cashmere producers, launch of eco-friendly final cashmere products capable of competing on the global platform, establishment of a testing and research institute, and diversified services provided by professional agricultural associations.
The Cashmere Program will be implemented in two phases. The first phase is from 2018 to 2019. During this period, the government plans to use 40 percent of total raw cashmere in domestic production, improve current legislation on cashmere production and sales, increase production and export volumes through accurate financial support to businesses, advance final-level processing, promote clustering, enhance reputations of Mongolian cashmere, and strengthen the preparation system of raw materials.
The second phase will run from 2020 to 2021. Targets for this period include increasing the volume of raw cashmere used in domestic production to 60 percent, and improve productivity and quality of final cashmere products using advanced technologies.
The funding for the project will be sourced from the state budget, provincial budgets, foreign loans and aid, and government securities.
Ch.Enkhbat said, “The program will run for four years. For starters, we plan to provide working capital investment for a period of two years depending on production stage to make it possible to evaluate and fix errors on the go. In specific, the cashmere combing industry will receive a working capital investment for six to eight months, while knitting – final processing – will receive investment for up to two years. Additional investment will be allocated depending on results and if a company managed to operate normally without errors.
“The investment for technological innovation, on the other hand, will be provided for no less than five years. The interest rate for working capital investment has been set at 12 percent a year. This rate can depreciate depending on the economic situation and budget.
For example, it’s possible to reduce the interest rate next year if the government supports the program and allocates a budget for filling the interest rate gap. The interest rate and duration vary for technological innovation loans because it’s possible to get discounted loans from Exim Banks of cashmere technology producer countries. Hence, loan interest rates and duration will be more favorable for producers.”
The performance of the program will be determined based on the following criteria.
¹ Criteria Baseline (2017) Target (2021)
1. Washed cashmere export 5,409.7 tons 2,632 tons
2. Combed cashmere 571.4 tons 1,579 tons
3. Knitwear 915,600 pieces 2.2 million pieces
4. Permanent jobs 5,582 9,110
The National Statistics Office reported that 12 percent of all cashmere resources were processed last year, attributing to 2.3 percent of the national industrialization, seven percent of industrial processing, and 55 percent of light industry.
GDP growth contribution from agriculture in Mongolia increased to slightly over 2.25 trillion MNT in the fourth quarter of 2017 from 1.82 trillion MNT in the third quarter of 2017. GDP from agriculture averaged 992 billion MNT from 2010 until 2017, reaching an all-time high of 2.25 trillion MNT in the fourth quarter of 2017 and a record low of 45.96 billion MNT in the first quarter of 2011.
Last year, Mongolia produced 5,413 tons of washed cashmere, 509 tons of combed cashmere, and 915,000 pieces of knitwear. The majority of production was first stage processing, with final product manufacturing only accounting for 10 percent. The government is certain that 19.8 million tons of knitwear and textile products can be exported for a total of 2.2 trillion MNT to 4.3 trillion MNT in sales if Mongolia begins to process and refine its cashmere through the Cashmere Program.
Mongolia’s GDP from agriculture is projected to be 566 billion MNT in the first quarter of 2018, according to a trading economics poll.
The Cashmere Program is already showing good results, peaking the price of raw cashmere from 49,700 MNT per kg in January 2017 to 105,000 MNT in April 2018.
Strides to globalize cashmere trade
MACE sealed a deal with China’s Bohai Commodity Exchange (BOCE) on March 30 to open a new online platform for global trade in an effort to boost profit from sales of wool to some of the world’s priciest luxury fashion companies.
MACE said the platform should begin trading in mid-April. Until now, traders had to be physically present to buy cashmere from only permitted cashmere trader in Mongolia.
The exchange said trading in agricultural products and also coal and copper could follow at a later date. But cashmere currently accounts for around 90 percent of the exchange’s total trade. In 2017, 7,000 tons of washed cashmere were sold on MACE with a total value of 521 billion MNT.
“Cooperation with the BOCE is opening up a market for Mongolian commodities not only in China but to other countries as well,” remarked B.Chuluunbaatar, the general manager of the MACE.
“Italian buyers will be able to buy Mongolian cashmere via BOCE, for example. The online platform allows factories to purchase Mongolian cashmere through the exchange directly, without sending their representatives to Mongolia.”...
China's trash import ban is giving the global recycling industry an enormous headache. The flip side: the world has finally been forced to rethink its approach to waste.
Beijing has last year banned the imports of 24 varieties of solid waste, including types of plastic and unsorted paper. On Friday, it extended the ban to dozens more types of recyclable materials, including steel waste, used auto parts and old ships.
The ban has terrible consequences for some places. A town in Australia has been sending recyclable waste to a landfill because it can no longer afford to recycle it.
In the UK, hoards of low-grade plastic have been hanging around in storage, eventually heading for incineration.
The US Institute of Scrap Recycling Industries warned the ban is disrupting global supply chains and may lead manufacturers to use new materials rather than recycled ones.
But experts say the ban has been a massive wake-up call for countries like the United Kingdom, United States, Australia, Japan and others who relied on China to buy and handle their trash from them.
The Institute of Scrap Recycling Industries said 31% of America's scrap commodity exports was sent to China in 2017. In the UK, almost all of recycled plastic used to be sent to China and Hong Kong for processing.
With China shutting its door on foreign garbage, several countries, including the UK have started talking about imposing taxes on some plastic items to make people use fewer materials.
Others, like Australia, have invested tens of millions of dollars to help local councils with the waste crisis.
Simon Ellin, the chief executive of the Recycling Association in the United Kingdom, said the ban is prompting more investment into recycling technologies.
That's because China and other countries, including European countries, will still buy high-quality scrap material that can be recycled into new items. It's just the low-grade, more polluting stuff China doesn't want.
Other countries, including India, Indonesia, Vietnam, Germany and the Netherlands, have stepped in to buy some of UK's trash, although at lower prices -- and not all of it.
"Some low-grade materials, plastic especially, that are collected at curbside in the UK have proved more difficult to move, because there isn't a market to move all of this material," he said, adding these materials are currently stuck in storage facilities, while some might be burned, rather than recycled.
He said that knowing the country would no longer be able to ship poor-quality recycling materials to China, its biggest buyer, meant the UK recycling industry had to start changing. Others will follow.
"It is inevitable that in the future, other countries will follow China, looking into bringing similar quality standards, so the quality of our material has to be better," he said.
"Slowing the [recycling] process down allows us to produce better-quality materials. Companies are adopting higher standards and much more stringent processes. There is more investment in technology," he added.
In Ellin's mind, the ban is a good thing, that will eventually force the entire supply chain to change, from the initial design of the product, to local waste collection authorities, to the companies that sort and recycle trash....
The total assets of the domestic insurance market equals 0.9 percent of the GDP, an increase of 0.03 point compared to 2017.
According to the international standard, insurance constitutes approximately seven percent of GDP in most countries. By the end of 2017, the amount of personal insurance reached 44.6 thousand MNT, an increase of 21.4 percent over the previous year.
A Reos Partners consultant reported that there is a lack of basic knowledge about insurance among citizens in Mongolia. GIZ from Germany is implementing a one-year project to improve insurance access.
Insurance companies earned a total of 144.3 billion MNT in insurance premiums in 2017.
According to the information released by the Independent Authority Against Corruption of Mongolia (IAAC), a total of 20 Government officials notified to the IAAC of their declaration and transfer of assets in offshore countries and territories. Under the relevant law, the Government officials were ordered to close and drawback deposits from offshore zone banks, terminate the operations of legal entities, and sell, transfer, or revoke licenses of moveable and immoveable properties before April 6, 2018. During the designated period, two MPs, namely Batbold Sukhbaatar and Tsogtbaatar Damdin, Director of Financial Reporting and Accounting Departments of Bank of Mongolia, reported that they have transferred their company shares owned by their relatives in the offshore zone, including British Offshore assets of some Government officials disclosed Virgin Islands and Isle of Man, a self-governing British Crown dependency in the Irish Sea between England and Ireland, to others in 2015 and 2017.
Also, an official from the General Police Department reported that he closed his official use accounts in Hong Kong for IAAC registration. In addition, another 16 officials, who run official duties in foreign countries in the offshore zone and opened bank accounts for study and medical purposes, have deposits, and/or own movable and immovable properties, reported their declaration of assets in a written statement to the IAAC. The disclosed list also includes two MPs, Enkh-Amgalan Luvsantseren whose daughter studies in Singapore, and owns an apartment and credit account there, Delgersaikhan Borkhuu who has two bank accounts in Switzerland. The others include Director General of the Customs General Administration of Mongolia, an officer at IAAC whose relatives own bank accounts in Hong Kong and Ireland, as well as officials from embassies, consulates and representative offices in the offshore zone.
Chinese assets have recently seen a significant inflow of investments after relations between Russia and the US took a turn for the worse, making investors search for a safe place for their cash.
The Chinese yuan is becoming a safe haven for global investors, Larry Brainard, TS Lombard chief emerging markets economist, told Bloomberg earlier this week. The analyst said that Chinese assets received a boost amid the sharp deterioration in Russia-US relations.
The yuan becomes a protecting asset when geopolitical risks intensify, as the Chinese government commonly remains neutral towards such conflicts, the head of analytics department at Grand Capita, Sergey Kozlovsky, told RT.
“The dynamics of the Chinese market this week has really confirmed the idea of safe haven,” the analyst said. “After a decrease in tensions, investors began to partially fix positions on Chinese securities, returning, for example, to Russian assets, which are more promising after the recent collapse of the ruble and the Russian stock market.”
The Chinese currency is currently one of the most attractive assets among foreign-exchange holdings, according to the head of AMarkets Analysys Department, Artem Deev, who also expects the yuan to become a safe haven.
“After all, the People’s Bank of China has managed to obtain for yuan a status of a reserve asset. Skeptics said that it is not enough to launch the currency into the orbit, it’s vital to support it,” he told RT. “And just several weeks ago, China made another breakthrough, launching national yuan-denominated crude futures and gold futures contracts denominated in yuan.”
The step will reportedly encourage investors to gradually replace dollar reserves with yuan reserves, inevitably bolstering the Chinese currency. According to Deev, this factor is one of the major drivers for the yuan gaining safe haven status.
In 2016, The International Monetary Fund included the Chinese yuan in the Special Drawing Right (SDR) alongside the US dollar, the Japanese yen, the euro, and the British pound. SDR is supplementary foreign-exchange reserve assets that is defined and maintained by the Washington-based organization. The inclusion of the yuan was considered an important step in the integration of the Chinese economy into the global financial system. The yuan is currently number three in the IMF basket, after the dollar and the euro.
Ulaanbaatar /MONTSAME/ A draft of ‘Program on ensuring safety of water supply for Ulaanbaatar citizens and improving sanitation facilities’ was approved by Ulaanbaatar city Governor's Council on April 19 and will be submitted to the People's Representative Meeting of the Capital city.
General Manager of Ulaanbaatar city T.Gantumur introduced the draft to the Governor’s Council during its meeting.
The draft was worked out by relevant professional organizations with aims to ensure safety of water supply and reduce pollution caused by sewage which has harmful effects on citizens’ health and environment. 144 works are planned to be realized between 2018 and 2021 in the frames of revised program with nine objectives.
The revised program is significant that it is included bigger policy and constructional activities such as integrated solutions for sewage facilities, reusing recycled water released from leather processing plants and waste water treatment plant for power plants and irrigation of urban green spaces.