Mongolia's economy will grow by 5.8% in 2023, 6.2% in 2024 and 6.4% in 2025, the World Bank said in the latest report.

Inflation is expected to moderate slightly in most countries in East Asia and the Pacific, depending on slowing global commodity prices, improving food supplies and realistic inflation expectations.

Inflation rates are expected to remain high in Laos and Mongolia, the report noted. In particular, factors such as currency depreciation and high prices for imported goods and products will continue to affect the economy.

Tight monetary policy is also expected to continue beyond 2022, which will curb economic growth in near future.

A slowdown in Chinese production will cause damage to regional commodity exporters including Indonesia, Mongolia, Myanmar and the Solomon Islands, leading to lower commodity demand and prices.

BEIJING/SINGAPORE, Jan 12 (Reuters) - China's imports of Mongolian coking coal may rise to a record in 2024, after more than doubling in 2023, on improving transport links and its lower price versus domestic and international supplies, traders and miners said.

China is the world's biggest steel producer and coal importer and a shift to abundant Mongolian supplies could come at the expense of Australian imports of the steelmaking ingredient. Australia, the world's second-biggest coking coal miner, was China's largest supplier until a 2020 diplomatic dispute.

This year's coking coal imports from landlocked Mongolia may rise more than 10% as newly expanded road links enable more truck traffic, a Beijing-based coal trading executive estimated. China imports Mongolian coal mostly by truck through seven ports along a border that stretches more than 4,600 km (2,858 miles).

Beijing and Ulaanbaatar have simplified customs clearances to bolster coal imports, which have been hindered by transport bottlenecks, said several Chinese coal traders. More truck lanes have been added at land ports and customs staff have been asked to expedite document checks, while automated vehicles are being deployed to move coal across the border to warehouses on the Chinese side, said the Beijing-based executive.

"The expanding trade is very much driven by the two governments," said a Singapore-based senior Chinese coal dealer.

"During the Australian coal ban, the Chinese government looked to Mongolia as a prospective replacement and has since worked on improving the transport links," said the trader.

Australian coking coal imports plunged when Beijing slapped an unofficial ban on several commodities after Canberra called for an investigation into the origins of the COVID-19 pandemic, although trade resumed last year as relations warmed.

To bolster Mongolian imports, authorities in the Chinese border town of Ganqimaodu, the entry point for nearly 60% of China's Mongolian coking coal, invested 40 million yuan ($5.58 million) in 2023 to improve infrastructure, according to Chinese state media.

As a result, in the first week of December, an average of 1,136 trucks crossed each day at Ganqimaodu, data from Haitong Securities showed, up 39% from a year earlier.

CHEAPER MONGOLIAN COAL

Thinning margins at Chinese steelmakers caused by the downturn in China's property sector have boosted the demand for cheaper Mongolian coal, analysts said.

"Both Chinese domestic and other major international coking coals are unaffordable to Chinese steel mills, who have been struggling to make ends meet," said Simon Wu, a consultant at Wood Mackenzie.

Mongolian coking coal was imported at an average of 974 yuan ($135.98) per ton last year, some 20% below Russian coal and half the cost of Australian coal, a Reuters analysis of Chinese customs data shows.

China's imports last year of Mongolian coking coal likely topped 50 million metric tons, traders estimated, doubling 2022 levels and dwarfing the 2.3 million tons imported from Australia recorded by Chinese customs in the first 11 months of the year.

The import boom has boosted shares of top Mongolian producer Tavan Tolgoi JSC (TTL.MNE) by more than double since the start of 2023, and shares of Hong Kong-listed Mongolian Mining Corp (MMC) (0975.HK) have more than tripled over the same period.

MMC, with two mines in the southern Gobi, expects to operate near full capacity this year, matching the 1.6 million to 1.7 million tons of coking coal it shipped to China each quarter in 2023, CEO Battsengel Gotov told Reuters.

In 2022, Mongolia completed a 30 million to 50 million ton per year rail line from Tavan Tolgoi to the town of Gashuun Sukhait, across the border from Ganqimaodu, but it has not been linked to China's rail network.

"The next important task will be to complete the cross-border railway interconnections," said MMC's Gotov.

New railway lines are expected to increase Mongolia's railway export cargo volume of all types of goods from 8.2 million tons in 2023 to 80 million tons by 2030, according to data cited by China's People's Daily in December.

($1 = 7.1626 Chinese yuan renminbi)

Reporting by Chen Aizhu in Singapore and Andrew Hayley in Beijing; Editing by Tony Munroe and Christian Schmollinger

Central Asian countries, Afghanistan and Mongolia raised their imports of Russian fuel by around 28% in 2023 to almost 6 MMt, partially offseting a decline in Russian supplies to Europe, according to traders and industry data.

Russia has drastically cut supplies of commodities, including oil and gas, to Europe amid deteriorating relations over the conflict in Ukraine.

Afghanistan's Taliban government doubled purchases of Russian liquefied petroleum gas (LPG) last year to 103,850 tons, while Russia tripled gasoline exports to the country in 2023 to 325,000 tons, according to the data.

Russia has not formally recognized the Taliban as the legitimate government in Afghanistan, but was one of the first countries to make contacts and clinch business deals with the group following its return to power in 2021.

A year later, Afghanistan and Russia signed a deal for gasoline, diesel, gas and wheat supplies after Moscow offered the Taliban administration a discount to average global commodity prices.

The move was the first known major international economic deal struck by the Taliban since it returned to power.

Russia supplies fuel to Central Asia mainly via railways, while pipeline exports of diesel to the region account for some 9% of total deliveries to the ex-Soviet republics of Kyrgyzstan, Kazakhstan, Tajikistan and Uzbekistan.

Russian oil pipeline monopoly Transneft said this week that it increased fuel supplies to Central Asia by 29.3% to 530,000 tons in 2023.

According to traders and industry data, Russian gasoline exports to Central Asia, Mongolia and Afghanistan jumped by a third last year to 2.441 million tons.

Supplies of diesel to those markets increased by 26% to 2.943 million tons, while flows of jet fuel rose by 21% to 554,000 tons.

Fuel oil exports jumped 2.8 times to 719,500 tons, while bitumen and LPG deliveries doubled to 500,000 tons and 469,000 tons respectively.

Mongolia accounted for most of Russian motor fuel supplies. It imported 708,000 tons of gasoline via railways last year, an increase of 12%. Its diesel purchases rose 39% to 1.222 million tons.

U.Khurelsukh, President of Mongolia, gave an official invitation to the heads of state of the two neighboring countries, China and Russia, to pay a state visit to Mongolia this year.

Vladimir Putin, President of Russian Federation, and Xi Jinping, President of People’s Republic of China, sent new year wishes to U.Khurelsukh, President of Mongolia, and wished him success in work. They also sent new year wishes to all the people of Mongolia and wished Mongolia prosperity and well development.

During the "Belt and Road" conference held in China in October 2023, U.Khurelsukh, President of Mongolia, held meetings with Vladimir Putin, President of Russian Federation, and Xi Jinping, President of People’s Republic of China, and finalized mega projects such as transferring natural gas pipeline through Mongolia, trade tax reduction, and the start of the Erdeneburen hydroelectric power plant project.

The implementation of Resolution No. 07 of 2022, "On Giving Directions to the Government," to support the production of domestic milk and dairy products and increase the Government's support to the sector" was reported to the Standing Committee on Industrialization Policy of the State Great Khural on the 9th of this month.

According to the report by Deputy Minister of Food, Agriculture, and Light Industry M.Gankhuleg, currently, 63.2 percent of milk and dairy products are sourced domestically, and the rest are imported from abroad. He mentioned that efforts are being made to increase and continue providing incentives for milk. Initially, the milk incentive applied only to cow's milk, but starting from November of last year, it has been extended to all types of milk. As of today, MNT 1000 is given for 1.0 liter of milk to 24 factories and workshops in 10 aimags. As part of the "Food Revolution" program initiated by President of Mongolia Khurelsukh Ukhnaa, 22 types of equipment for the production of milk and dairy products were exempted from customs duties. In 2023, loans for circulating capital and investment were granted to more than 1,800 enterprises in the food industry through 10 commercial banks. The five-year loans with a 6.0 percent interest rate for the purpose of establishing intensive dairy farming have been allocated to 49 citizens and enterprises totaling MNT 5.6 billion out of the budgeted MNT 34 billion. Additionally, loans totaling MNT 18.8 billion were granted to eight enterprises for the construction of baby milk and formula processing plants.

In connection with the presentation on the implementation of Resolution No. 07, members of the State Great Khural asked questions. To increase the supply of liquid milk to national industries, Member of the State Great Khural J.Batjargal spoke about the development of intensive farming in agricultural areas, milk collection, the development of high-yielding animals, improvement of breeds, and production of import-substitute products. Meanwhile, Member of the State Great Khural Ts.Tuvaan mentioned that the milk incentive has been effectively implemented since 2020 and stated that it is necessary to extend the incentive period to increase the milk supply in the cool season.

G.Ganbold, Member of the State Great Khural and Chairman of the Standing Committee on Industrialization Policy touched on the inclusion of incentives for locally operating dairy factories and workshops. He warned that it would be impossible to monitor if the incentives were flattened and advised that the regulations should be improved in more detail.

Subsequently, at the meeting of the Standing Committee on Industrial Policy, information was presented about the implementation of the directions given by the Standing Committee on optimizing the financial structure of the state to support small and medium-sized industries, increasing resources, expanding the market, and increasing sales. The Ministry has studied the international experience of the modern financial structure and system for supporting small and medium-sized industries and has developed a proposal for the establishment of a Small and Medium-sized Industry Corporation, submitting it to the relevant departments.

As part of the '10-billion program to protect health and recover the economy' related to supporting jobs a total of MNT 2.0 trillion was provided to 25,000 borrowers in the small and medium industry sector, protecting 110,000 jobs, said Deputy Minister of Food, Agriculture, and Light Industry M.Gankhuleg. The Government's implementing agency, the Department of Small and Medium Enterprises, granted MNT 88 billion in loans from 2020 to 2023. Additionally, the Government approved the decision to exempt new equipment from customs duty until the end of 2026 to update the technology of small and medium enterprises. As a result of the establishment of working groups in four aimags in charge of ensuring the participation of small and medium-sized enterprises in the supply chain of mining companies and major projects, the sales in 2023 reached MNT 4.6 billion in the four aimags while nationwide procurement was more than MNT 200 million in 2019.

Members of the State Great Khural, namely N.Naranbaatar, J.Batjargal, and T.Aubakir, posed questions and made statements related to the implementation of the resolution by the Standing Committee. They articulated their positions on the stability of cooperation between large companies and small and medium-sized enterprises, the repayment status of loans and financing, the enhancement of the loan guarantee system for small and medium-sized enterprises, the augmentation of resources, encouragement of repayment through interest discounts, and the development of small and medium production clusters.

G.Ganbold, Chairman of the Standing Committee on Industrial Policy, advised paying attention to the "10-billion program" and the repayment of loans to small and medium enterprises.

Mongolia’s parliamentary election in June 2024 will be a pivotal moment for the country’s democracy. The newly enlarged legislative branch hopes to strengthen the country’s multi-party governance, but there is still a certain level of instability in the electoral system and low voter representation.

The 2024 elections will be the first since the recent constitutional amendment in May 2023, which increased the number of parliamentary seats from 76 to 126, with 48 of those chosen by proportional representation.

Preparations are underway to implement those changes. In December, Mongolia’s electoral districts were shuffled and merged, reducing the number of districts from 29 to 13. As a result, the next parliament will be able to focus on regional and national development rather than local election district-based interests. Another hope is that the expanded 126-seat legislature may create more opportunities for parties to include female candidates as part of the institutionalization in political parties.

However, there are noteworthy nuances to this change that pose a couple of challenges for Mongolia’s multi-party election system.

For example, under existing law, election campaigns can only occur within a designated 14-day period. That is made more challenging with larger districts, but it cannot be changed at this point, as election law cannot be altered six months before elections.

One major issue in that regard is the cost of campaigning. For a large district, such a short campaign timeframe will increase the cost of election campaigns. Moreover, in larger districts, candidates will need more time and energy to connect with voters. In this case, disabled people, people who live in remote areas, and other disadvantaged groups are likely to get left behind.

Given the 14-day campaign, even basic introductions will be difficult to achieve, let alone fostering real chances for voters to ask questions about a candidate’s agenda. This also presents an additional challenge for newer and younger candidates to stand out in comparison to previously established politicians.

For example, voters in some districts will have to choose between 100 and 300 candidates for 10 seats. Voters will most likely struggle to find enough reliable information about parties and candidates in 14 short days. Social media campaigning will play a major role in this election, as the younger generation is spending most of their time on social media.

Unfortunately, since Mongolia’s democratization in 1992, abrupt political changes have become a tradition. These changes have impacted proportionality as well as the women’s quota.

The Mongolian People’s Revolutionary Party (now the Mongolian People’s Party) held 92.1 percent of the parliament seats in 1992, 94.7 percent in 2000, and 59.2 percent in 2008.

The 2008 parliament built a coalition government consisting of 45 MPP legislators, 28 DP legislators, and three independents. It introduced a mixed electoral system, which was used for the 2012 election. That poll was an exception; it made significant advances in the representation of women, with the election of 11 female deputies, and extending voter rights to Mongolian nationals living abroad.

This system was only used once, however. The parliament changed the system shortly before the 2016 election to a single candidate elected from a single district. The electoral districts were then gerrymandered. Mongolia returned to block voting in 2020. Both of the next two elections gave the MPP supermajorities and significantly increased disproportionality. For example, in the 2016 election the MPP won 85.5 percent of seats with just 46.5 percent of votes.

As a result of these abrupt electoral changes, the MPP ruled for 24 of 32 years and was elected with a supermajority in both 2016 and 2020. Since 1992, the Democratic Party has only had a bare majority twice, after the 1996 and 2012 elections.

The Democratic Party’s dismal losses in the 2016 and 2020 elections were an eye-opener for the party. The recent shuffling and the changes in party structure have helped the party to restructure and reunite party members while welcoming new, younger faces.

Besides frequent electoral changes, another worrying trend in Mongolian parliamentary elections is decreasing voter representation. The 2023 United Nations Development Program (UNDP) report on youth participation in electoral processes highlighted the importance of “promoting the participation of a diversity of young people during elections,” which includes mechanisms to expand opportunities for youth with disabilities to be informed and inclusive in voter representation.

In Mongolia’s case, young people have a negative perception of politics. Ongoing corruption cases – such as those involving the “coal mafia,” missing education loans, development banks, small-and-medium enterprise loans, and the latest, the green bus fiasco – encircle political figures. This can explain why the younger generation remains disillusioned with and disinterested in politics.

At the same time, without the participation of young people, the older generation remains in power and the interest groups stay intact. Mongolia’s fundamental challenge in the upcoming political scene is the weakly institutionalized political parties. The struggle for power and resources within parties is the primary factor that breeds corruption and prevents policy rationale.

The recent enlargement of the legislative branch, while embracing progressive agendas, also aimed at strengthening the political parties’ credibility and raise accountability for party members and their electable profiles. The hope with the enlarged legislative body is that political parties themselves are responsible for promoting more female candidates and implementing equality and other social measures.

Multiparty governance, in theory and practice, must result in more balanced economic policies, less controlled media, greater support for the middle class, and less corruption. On a civil society level, multiparty governance should provide a favorable environment for the protection of human rights, greater control over public institutions and the public budget, transparency, and visible progress toward the consolidation of democracy. Every election in Mongolia serves as a reminder that the democratic revolution of the 1990s was a choice, not a miracle.

BY: Bolor Lkhaajav

Bolor Lkhaajav is a researcher specializing in Mongolia, China, Russia, Japan, East Asia, and the Americas. She holds an M.A. in Asia-Pacific Studies from the University of San Francisco.

Enkhbaigali Byambasuren

Enkhbaigali Byambasuren is a professor, researcher, and former adviser to the President of Mongolia.

Abnormally cold weather will persist in most of Mongolia, the National Agency for Meteorology, Hydrology, and Environmental Monitoring reported on Tuesday.

Temperatures will drop to -38°C in some places from January 13.

Mongolia's National Emergency Management Agency urged drivers to be careful on rural roads due to heavy snowstorms and zero visibility, and nomadic herders to take extra precautions on pastures.

The air temperature during Mongolian winters can vary from -25°C to -45°C.