The Cabinet decided to take organizational actions and fully ensure its realization beginning from May, 2019 regarding the standard requirement for wastewater supply to sewerage integrated network, purifying industrial wastewater up to admissible levels and re-using wastewater for technological usage.

Moreover, the Cabinet assigned relevant Ministers and officials to develop proposals to improve the legal environment and monitor implementation of standards, rules and regulations. The Central Wastewater Treatment Plant began operations in 1964. It cleans 160-190 thousand cubic meters of wastewater a day, but the plant has no silt processing facilities and therefore dries 1000-1200 cubic meters of wet silt on an open-field each day. The accumulated silt reached 900 thousand cubic meters and contaminates the environment, air and soil and negatively impacts on people’s health.

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Mongolia is in the midst of a winter phenomenon called a "dzud," when extremely low temperatures and snow make it difficult for animals to survive.

"I've seen horses frozen while standing," said Ulaanbaatar livestock trader, Ganbaatar Burjaa, 38.

"This year's dzud has been very hard."

The 709,000 head of livestock lost in the first two months of the year is a toll five times higher than the same period last year, according to the National Statistics Office.

Mongolia's winters have destroyed the livelihoods of thousands of herders, forcing them to move to the capital, Ulaanbaatar, in search of work.

Burjaa moved to the capital three years ago because of the dzud.

In total, 66 counties across 12 provinces are facing dzud conditions, with snowfall covering half the country, the National Emergency Management Agency said last week.

The government has not declared a natural disaster.

Tuyaa Chimedbaldir, an official at the emergency management agency, said given the end of the winter was approaching, the toll this year was unlikely to be as bad as the winter of 2009-2010, when 9.7 million animals were killed.

"This time, the government has worked hard to prevent and reduce the risk of the dzud," she said.

However, experts warn the dzud could still kill many animals, with a severe drought that hit 70 percent of the country last summer leaving vast numbers of undernourished livestock weak and vulnerable.

According to the Mongolian Red Cross Society, thousands of families were unable to prepare feed to sustain their animals through the winter. The society has spent 1.2 billion tugrik ($500,000 or 53 million yen) to help 4,500 herder families.

"Mongolian herders did not purchase enough fodder, so the spring season might kill animals that are tired from the harsh winter," said Bayarmaa Chimedtseren, a rangeland monitoring and evaluation specialist at the "Green Gold" animal health project run by the Swiss Agency for Development and Cooperation.

About 229,000 Mongolian families depend on animal husbandry for their livelihood. The total number of livestock reached 66.2 million as of December 2017.

Overgrazing, the degeneration of rangeland and poor land management contribute to the severity of the dzud, Chimedtseren said.

Commodity turnover increased by 248.1 million USD. Mongolia had commercial relationships with 109 countries in the first two months of the year, and foreign trade turnover reached 1.6 billion USD, with exports at 838.4 million USD and imports at 726 million USD.

Exports increased by 13.1 million USD compared to the same period in 2017, impacted by the increased export of 41.4 million USD in unprocessed and half-processed gold. The cost of consumer goods and services increased by 6.9 percent compared to the same period in the previous year.

Production in the industrial sector increased by 14.2 percent to reach 2 trillion MNT. Production in mining and exploration reached 163.2 billion MNT, an increase of 12.5 percent. This was affected by increased coal extraction, which reached 82.1 billion MNT, and increased metal ore extraction, which reached 361.3 billion MNT.

Export volumes declined 33 percent to 3.25 million tonnes, while the value of coal exports dropped 25 percent to $245.4 million in the first two months of the year, according to the National Statistics Office.

“The reason is obvious: the bottleneck at the border is causing exports to drop,” said Mogi Badral Bontoi, chief executive and analyst for Cover Mongolia.

Bonto said the number of trucks passing through the border is now a “fraction” of what it was last year.

“From the Chinese side, the customs clearing process has trucks spend more time at the border trying to get cleared,” he said.

Coal exports have helped shore up Mongolia’s struggling economy, but they have been hit by Chinese border restrictions. Trade slowed after customs authorities cracked down on the smuggling of meat and other goods into China last year.

Truck queues stretched as far back as 130 km on one border road for more than a week in October 2017, forcing Mongolia to close it down to clear traffic. Authorities plan to build a new route to cut down on congestion.

China is Mongolia’s number-one trade partner, and bought 87 percent of its northern neighbour’s total exports in the first two months of the year, including nearly all of its coal. Mongolia’s exports to China fell 3.9 percent compared with a year earlier.

Commodities other than coal fared better. Gold trading value more than doubled to $72 million while copper concentrate exports rose 11.5 percent.

Mongolia’s trade surplus reached $225.4 million during the first two months, the statistics office said.

Copyright Reuters, 2018

By the end of 2017, the value of the Mongolian securities market reached 2.4 trillion MNT, an increase of 65.5 percent (one trillion MNT) compared to 2016. Stock trading was assessed at 49.1 billion MNT in 2016, rising by 59.3 percent in 2017 to 78.1 billion MNT.

According to the Financial Regulatory Commission, although positive changes have been observed, the fact that the market's value is higher than sales and as liquidity has declined, there is a need to strengthen the primary and secondary markets, and to decelerate stock centralization.

The project identified the barriers to money and capital market development in Mongolia and provided a set of recommendations, along with a roadmap for their implementation. The project ended with a final workshop in Ulaanbaatar in December 2017 that was attended by representatives from the MoF, Bank of Mongolia (BoM), Mongolian Stock Exchange, Mongolian Securities Clearing and Settlement Corporation, International Finance Corporation and local commercial banks.

Irina Kravchenko, Head of the EBRD Resident Office in Mongolia, said during her welcome speech: “We are very pleased to assist the government in developing their strategy for the money and capital markets, which is essential for establishing a well-functioning financial system, strengthening investors’ confidence and supporting economic growth.”

Hannes Takacs, EBRD Associate Director, Local Currency and Capital Markets Development, noted during the workshop that the EBRD is welcoming Mongolia’s efforts to develop sound money and capital markets: “The EBRD is ready to further support Mongolia in attracting foreign investors to the local capital market by improving market transparency, market operations and investor protection.”

Aude Pacatte, Head of Local Currency Portfolio Management at the EBRD Treasury, said: “The roadmap for the development of money and capital markets is an important milestone, which we very much hope will be followed up with pragmatic implementation of necessary reforms. The EBRD is looking forward to continuing to work with the authorities and market participants to support and participate in the next phase of market development.”

The Financial Stability Council of Mongolia met on 9 February 2018 and discussed the final deliverables, which should be approved jointly by the BoM, MoF and Financial Regulatory Commission, according to the EBRD.

Mongolia has been an important partner of the EBRD and the Bank has invested €1,389 million there since EBRD operations began in Mongolia. With regard to technical cooperation for the capital market, the EBRD’s Local Currency and Capital Markets Development team has deepened its partnership with the MoF over the past several years and has worked on various topics including initial public offerings of state-owned enterprises.

Improving access to finance through the development of money and capital markets is one of the priorities of the Bank’s strategy for Mongolia. The Bank is currently discussing several follow-up projects with the Mongolian authorities to continue the fruitful cooperation in developing the overall financial markets.

Although Mongolia’s inflation hiked to the Bank of Mongolia's (BoM) target level in 2017, the BoM expects that the inflation will be stable in line with the objectives of the monetary policy. As reported by the National Statistics Office, the national inflation rate reached 6.9 percent and 8 percent in Ulaanbaatar city as of January 2018, due to increase in excise taxes on some products, such as tobacco and fuels.

This was mainly resulted by the 16.7 percent price increase of housing, water, electricity and fuel groups, 24.3 percent of vehicle sales price and 9.1 percent increase of tobacco price. In January, a total of 31.1 percent of consumer goods and services of 344 market basket prices increased compared to the previous month and the prices of 51 goods selected out of 100 food products was raised.

The BoM views that the metal components in copper concentration will increase and the increased investment in the non-mining sector will boost the economic growth. It is also expected that FDI, which has been slowing down in recent years, is likely to increase this year. For instance, the Governor of BoM disclosed that around USD 1 billion is expected to be brought into the economy in 2018.

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The draft amendments also dictate to cut 20 percent dividend distribution tax of non-residents to 5 percent.

According to MarketIntel, the biggest factors hindering Mongolia’s competitiveness were its foreign currency regulations, corruption, political instability, and inefficient government bureaucracy. Furthermore, laws in recent years have set high capital contribution requirements for foreign- owned companies and the Government of Mongolia’s 2013 attempt to renegotiate Rio Tinto’s Oyu Tolgoi mining contract set a dangerous precedent in the eyes of foreign companies and slowed FDI.

MarketIntel views that the tax bill is likely to be passed with some minor changes. The MPP government is obliged to bring an attractive plan to the table as soon as possible to garner public and business support. The government is already under public pressure due to its increasing unpopularity over recent fuel price increases, the failed attempt to raise the personal income tax rate in January 2018, and scandals surrounding the Erdenet Mine.