Yarmag twin bridges planned to open in November www.theubpost.mn

The construction of the Yarmag twin bridges is now 70 percent complete, according to the Ulaanbaatar Mayor’s Office.

Taking a closer look at Mongolian cashmere industry www.theubpost.mn

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

Positive signs
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 trash ban is a global recycling wake up call www.cnn.com

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.

china recycling
"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.

Insurance sector in GDP www.gogo.mn

The total assets of the domestic insurance market equals 0.9 percent of the GDP, an increase of 0.03 point compared to 2017.

Offshore assets of some Government officials disclosed www.ubinfo.mn

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.

Yuan becoming safe haven for investors amid Russia-US standoff www.rt.com

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.

Treated wastewater to be reused www.montsame.mn

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.

Mongolia, Russia agree to promote cooperation in radio frequency www.xinhuanet.com

ULAN BATOR, April 19 (Xinhua) -- Mongolia and Russia signed an agreement here Thursday to promote cooperation in radio frequency and improve communication technology services in Mongolia.

Uzbekistan to supply cars and fruits to Mongolia www.akipress.com

AKIPRESS.COM - The JSC Uzavtosanoat leadership signed an agreement with Mongolia on export of its cars and fruits, the Embassy of Uzbekistan in Mongolia said.

Infrastructure center to create better living conditions www.montsame.mn

Ulaanbaatar/MONTSAME/ S.Batbold, Governor of the Capital City and Mayor of Ulaanbaatar, worked in Chingeltei district on April 19. He saw a process of an implementation of the project to reduce air pollution and develop ger area, in particular he familiarized with the planning and location where a service center with unified infrastructure will be constructed.