TRAM studies released: Exporters highlight difficulties in employing skilled staff www.zgm.mn

Report on the unified research of European Union funded project Trade Related Assistance for Mongolia (TRAM) was disclosed last week. According to Toby Philpott, Senior Private Sector Consultant and a key expert of TRAM, 60.8 percent of surveyees consisted of Mongolian private sector representatives considered the People’s Republic of China (PRC) as the best export market for Mongolia, followed up with European Union (34.2 percent). The project, which was launched on March 7, 2018, aims at strengthening the capacity to further develop appropriate export development strategies and translate this into actual implementation through inter-ministerial coordination and enhanced engagement with private sector organisations. A total of 132 respondents from the private sector participated in the study, of which 25 percent were from wool and cashmere industry, 9 percent - meat, 7 percent - tourism, 8 percent - leather, 7 percent - textiles and 9 percent from unidentified sectors. The research considered the general export markets, regulations, times spent on activities, exporters’ knowledge, skills and resources. Furthermore, 82 percent of the surveyees were exporters and the remaining consisted of entities interested in and/ or capable of exporting; however, the officials highlighted that the study could not identify the barriers to potential exporters. In terms of favorable export markets.

Mongolian and EU representatives discuss sustainable production www.gogo.mn

The Ministry of Nature, Environment and Tourism, in collaboration with the SWITCH-Asia Sustainable Consumption and Production Facility program of the European Union, held a consultative meeting on Sustainable Consumption and Production.

Personal accident insurance compensation up by 25.3 percent www.gogo.mn

Due to an increasing number of natural disasters and accidents, personal accident insurance compensation saw an increase of 25.3 percent, reaching 15.8 billion MNT in the first seven months of 2018.

Wool processing experience of Pakistan studied www.montsame.mn

Ulaanbaatar /MONTSAME/ A theoretical and practical training themed ‘Opportunities for introducing improved experience in procurement and production of sheep wool and wool products to Mongolia’ was held at the Ministry of Food, Agriculture and Light Industry within the framework of ‘Support to employment creation in Mongolia’ project of the United Nations Industrial Development Organization (UNIDO).

Turkish educator Akçay in Mongolia applies to UN for urgent action against imminent abduction risk www.stockholmcf.org

Turkish educator Veysel Akçay, the general director of schools affiliated with the Gülen movement in Mongolia, who was abducted by the agents of Turkey’s notorious National Intelligence Organisation (MİT) on July 27, 2018, in front of his house in Ulan Bator, has called on the United Nations High Commissioner for Refugees (UNCHR) for urgent action against imminent abduction risk.

Writing a letter to UNCHR, Akçay’s lawyers requested on August 24, 2018, an urgent action to prevent his imminent illegal deportation to Turkey. The lawyers stated that the decisive actions by the UNHCR and the government of Mongolia on July 27, 2018, enabled timely release and prevented illegal transfer to Turkey of Mr. Veysel Akçay.

“We are, however, deeply concerned that initial encouraging steps by the government of Mongolia have been subsequently followed by actions, which have clearly exposed Mr. Akçay to the imminent risk of illegal transfer to Turkey. Namely, during this past week, Mr. Akçay was twice prevented from leaving Mongolia for safer third countries,” read the letter.

The lawyers added in their letter that “In addition, the authorities have also allegedly closed the investigation against the perpetrators of Mr. Akçay’s abduction on July 27, 2018. These actions are, inter alia, contrary to Mr. Akçay’s right to leave the country, including his country of residence, a right firmly embodied in the Universal Declaration of Human Rights (UDHR) and the relevant United Nations human rights treaties, voluntarily accepted and into force in the Republic of Mongolia.”

They also requested UNCHR to urge the authorities in Mongolia strongly, to ensure that Mr. Veysel Akçay, a victim of abduction under distress and at risk of another imminent abduction in Mongolia, be allowed to travel to a safe third country and until then he and his family are provided protection, necessary to deter any renewed attempt against his right to liberty and security. The lawyers also urged the UNCHR to take immediate action.

In order to take Akçay to Turkey after his abduction, a private plane was held at Ulan Bator Airport for all day on July 27. Akçay, who has worked at educational institutions in Mongolia for 24 years, is reportedly one of only a few Turkish nationals awarded the Mongolian Friendship Medal bestowed by the Mongolian state.

After reactions from Mongolian public and media, Mongolian authorities did not allow MİT agents to transfer Akçay from Ulan Bator to Turkey. The private plane had to depart the airport without Akçay.

The Mongolian Foreign Ministry had issued a statement on the abduction of Akçay and underlined that such an unacceptable act would be “a violation of Mongolia’s sovereignty and independence” and that Mongolia would strongly object to it.

The Mongolian Foreign Ministry statement had indicated that Deputy Foreign Minister Batmunkh Battsetseg met with a Turkish diplomat over the abduction case.

Akçay is married to Meryem Akçay and they have four children. Akçay works as general manager of the Empathy Worldwide Educational Institution, which has run the Turkish-Mongolia Schools (four high schools, one international school, one-day care center) established by the Gülen movement 25 years ago.

MİT abducted journalist Yusuf İnan and Salih Zeki Yigit in Ukraine, and İsa Özdemir in Azerbaijan early in July. They were transported by MİT agents to İstanbul by private plane. MİT agents had abducted six teachers in Kosovo on March over their alleged links to the Gülen movement. In cooperation with Kosovar intelligence, MİT’s abduction of the teachers sparked widespread debate and drew ire from around the world.

According to a statement made by Turkish Foreign Minister Mevlüt Çavuşoğlu, over 100 alleged members of the Gülen movement have been abducted by MİT agents abroad and brought back to Turkey as part of the Turkish government’s global manhunt.

“We have been watching these traitors for two years and have brought the leading figures of FETÖ to our country. Some of these cases were covered by the press, while others weren’t at the request of the countries involved. I can frankly say that more than 100 FETÖ-affiliated people have been brought to Turkey,” Çavuşoğlu said in an interview with Turkey’s pro-government CNN Türk.

“FETÖ” is a derogatory term coined by ruling Justice and Development Party (AKP) led by Turkish President Recep Tayyip Erdoğan to refer to the Gülen movement.

Turkey survived a controversial military coup attempt on July 15, 2016, that killed 249 people. Immediately after the putsch, the Justice and Development Party (AKP) government along with President Recep Tayyip Erdoğan pinned the blame on the Gülen movement.

Fethullah Gülen, who inspired the movement, strongly denied having any role in the failed coup and called for an international investigation into it, but President Erdoğan — calling the coup attempt “a gift from God” — and the government initiated a widespread purge aimed at cleansing sympathizers of the movement from within state institutions, dehumanizing its popular figures and putting them in custody.

Turkey has suspended or dismissed more than 150,000 judges, teachers, police and civil servants since July 15. On December 13, 2017, the Justice Ministry announced that 169,013 people have been the subject of legal proceedings on coup charges since the failed coup.

Turkish Interior Minister Süleyman Soylu announced on April 18, 2018, that the Turkish government had jailed 77,081 people between July 15, 2016, and April 11, 2018, over alleged links to the Gülen movement.

Kincora Announces New High-Grade Targets at Bronze Fox, Mongolia www.investingnews.com

Kincora Copper (TSXV:KCC) has outlined recent extensive exploration activities at its wholly owned Bronze Fox project and planned activities for the remainder of the current field season.

When paper money goes to zero value: Venezuelan hyperinflation explained www.rt.com

Inflation in Venezuela this year could top one million percent, the International Monetary Fund (IMF) predicts. This gallery puts the buying power of today's bolivar into perspective.
A kilogram of meat costs 9,500,000 bolivars, or the equivalent of $1.45.

Commercial banks in Mongolia are to disclose more about the full cost of borrowing to customers www.market-intel.mn

Key event: The Central Bank of Mongolia revised the regulation of transparency of information on banking charges, fees and the methods of calculating interest rates on 23 July 2018. These newly enforced regulations can now be found on the Central Bank’s website.

Implications: As per the regulation, the Mongolian commercial banks are now to include insurance cost, any third-party charges, and other banking fees into the cost of borrowing and fully disclose it to a borrower. In compliance with common practice in the international banking, Mongolian banks will present all interest rates to customers on an annual basis as opposed to a monthly basis.

Outlook: These new regulations are aimed at helping protect consumers from potential debt burden and become aware of true the cost of borrowing going forward. However, as the impact of these regulations is limited to commercial banks only, it may create additional compliance and marketing related costs for the banks and create a less competitive environment for them compared to the other financial institutions such as non-banking financial institutions and credit unions that are not subject to these regulations.

The Central Bank of Mongolia ordered commercial banks to fully disclose any cost(s) related to obtaining loans under MNT 100 million to customers. Previously, commercial banks stated only monthly and annual interest rates and excluded other costs such as origination fees and insurance fees from financing cost in a loan agreement. The misleading nature of this practice was criticized by customers as they were unable to discern the true cost of financing. As a result, bank regulators are now taking measures to cease the practice.

However, costs pertaining to non-banking related activities and financial discipline of a borrower are excluded from the cost of borrowing, regulations state. For instance, state registration fees, notary fees, and penalty fees caused by the borrower’s default on loan repayments are not considered in the financing cost.

According to the Financial Stability Report by the Central Bank of Mongolia published in June 2018, in Q1 2018 nominal spending of Mongolia’s average household increased by 13.3% year over year (YOY) and the debt amount per household increased by 20.9% YOY to MNT 8.0 million. Further, the report revealed that, in terms of annualized household income and debt amounts, the debt burden of the average Mongolian household reached 63.1% for the period.

This signaled an alarm to regulators and as a result, the Central Bank issued another regulation on maintaining household debt-income ratios in order to prevent households from defaulting on their bank loans. The regulation will be effective from next year.
As of now, there are 14 banks with 1525 branch offices in Mongolia providing banking services, in aggregate terms, to 927,000 borrowers and 9.1 million customers (Financial Stability Report, 2018).

In addition, there are 539 non-banking financial institutions (“NBFIs”) in Mongolia providing financial services to around 150,000 customers and their total outstanding loan amount reached MNT 768.3 billion in Q2 2018. As it is not uncommon that customers who are not qualified for bank loans go to NBFIs, the cost of borrowing from NBFIs is higher than banks and those institutions look to remain exempt from the new regulations.

Therefore, even though the banking sector is accountable for 95% of the financial sector of Mongolia, these regulations may lead to additional compliance and marketing related costs to the banks and create a less competitive environment for them in terms of profitability compared to the other financial institutions such as non-banking financial institutions and credit unions.

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Yolanda: My feelings about Mongolia has not changed www.zgm.mn

ZGM Daily had the opportunity to sit down with Yolanda Fernandez-Lommen, Country Director of the Asian Development Bank (ADB), about social projects, particularly the implementation of higher education reform, during her visit to Dornod aimag for the monitoring of the higher educational reform project. At the financing of the ADB, several projects were implemented at the Dornod University, such as the establishment of an oil laboratory, expansion of sports hall and Distance Learning Center.

-I had many positive informations and admired the result of the ADB’s higher educational project. What impressed you the most during this trip?

-I had been quite impressed myself with both projects on education. If the petroleum research center is completed and expanded, they are planning to present many important opportunities in terms of implementation. Because it is a new area that will have a very positive impact in the petroleum market, even Dornod is engaging in oil prospection. I am also confident in the university, because if they can establish it with oil companies, they can charge for the services. The regional diagnostic and blood center is also very impressive and modern. The quality of equipment is excellent and kept in very good conditions. I was also impressed with some of the numbers. They used to prepare only 40 or 50 blood products before. But now, they can prepared 240-260 products and that really saves lives. Also maternity center is a top quality facility. Particularly, these facilities are for women from remote areas and countryside. This is one of the highest standards that I have ever seen.

-What are the main purposes of ADB in investing in social projects. What results do you expect?

-Overall, the purpose of the ADB is to foster social economic development and eradicate poverty. Then the different countries on the ADB have different needs depending on the level of development. In case of Mongolia, for the social projects, our objectives are usually in line with the Government objectives. What we try to do is to increase quality of social services, also to increase the access of services. You could have very good quality services in several locations throughout the country, but the access for people living even in remote areas is very difficult. One good example, for instance, is telemedicine program. We are able to bring medical services to the very remote areas in Mongolia. In cities, we can do other things like the blood center etc. We have flexibility to address the quality in the access to key social services education, social protection and health in different ways depending on the location and needs. I would like to emphasize the idea of not only providing good quality services, but also access. One example is national transfusiology center in Ulaanbaatar, which is a huge blood center. We also develop blood units in hospitals under the same project. So, of course Ulaanbaatar is the largest in the country by far and needs more facilities, more blood etc. But when the building was created, the idea was also for this center to help provide blood products to many aimags not only Ulaanbaatar. So it has a capacity to provide blood and blood products to many aimags very quickly.

-Aside from improving teachers’ skill, one of the main purpose of the higher education project of the ADB is to give quality education to students, as well as changing their perspective. For example, a student with tenacity and willingness can be better than students with good grades. So, what do you think about the benefits of having a tenacity at the macroeconomic level?

-There is a very strong linkage between education and economic development. This is mainly through the labour market channel which is essential for any economy to grow. So, higher and stronger education background of the people in any country is better quality of the labour force that you will have. The better quality of the labour force also means that you will be more productive, which means you can produce the same things cheaper and in less time. This increases your competitiveness compared to other countries. It gives you an advantage, for instance, in terms of export goods you will produce. Also, if you are better educated, you will be more innovative and open to adopting technology. All these elements have very positive impact in the way pro-education system in any economy works and it always has a very positive impact in terms of economic growth.

-Since 1991, the ADB has been supporting Mongolian economy in many spheres. Which sector receives the higher amount of support from the ADB?

-Overall, we had the privilege to have been involved in many sectors throughout so many years. Because we are lucky to have sufficient resources to be patient in many different sectors. So, we had loan in different issues changing from education, health, social protection, regional cooperation, roads, energy and power plants. We also assisted in the preparation of the airport reconstruction, financial sector reform, public management, finance management, agriculture, natural resources and climate change etc. So we are present in many areas and every 4-5 years, we prepare company partnership strategy (CPS) and there, we decide which sectors we are going to focus in alignment with the Government priorities. So, there might be changes every 4-5 years in the share of each sector. But overall, we are present in these sectors since the very beginning in most of them. Traditionally, energy and transport in the beginning where large sectors of attention. Because of that, there was an urgent need for support to public plans. We were not good in condition. There was also an urgent need to habilitate the constructive road. There were not many roads at that time in Mongolia. But this is changing and we are thinking about a new strategy, which covers from 2017 to 2020. Perhaps the CPS shows the largest change even though we were impressed in same sectors. But we have larger locations for urban development including water. We are greening our portfolio now, turning into climate change and environmental protection. We organized many operation in these areas in the past, but we only had small support. They are now becoming important operations with agriculture and urban development. While we maintain sectors of innovation, we are also exploring new areas in CPS. For instance, where we are taking actions in gender. Both in terms of gender disparity and the declined process into support women, girls and children victims of domestic violence. Another area that is new is sustainable tourism in Khuvsgul Lake, which is the largest freshwater lake in Mongolia, and to support people with disabilities. This is the first time ADB in history of over half century doing projects of this nature, and we are pioneering in Mongolia, and are looking into disabilities from a different angle instead of the traditional angle of medical point of view. We are providing people with disabilities with skills to join and integrate themselves in the labour market. So that they can live in normal life without the need of reliant subsidies. The can have their own income and integrate into society.

One of the aspects of delays is the frequent changes in the Government staff
-Since the ADB’s operation is aligned with the Government priorities, Mongolians will be thankful to ADB’s assistance for sure. What were the main difficulties during the project’s implementation?

-We have a large portfolio which means projects are ongoing in the process of implementation. So, the amount exceeds USD 1 billion in projects. That, per se, is a large portfolio many different projects on many different sectors. Just to start with implementing so many projects at the same time on different sectors is a challenge itself. Then, we have other type of challenges; for instance, due to the harsh weather in Mongolia, construction season is very short. Cold areas like the western area maximize only about five months, South Gobi might be seven months and rest of the country might be six months. This is also a big challenge because it takes doubled time for us to build road; for instance, compared to other countries in Southeast Asia. If we miss construction season, we need to wait one or more years. Another aspectof causes and delays is the frequent changes in the Government staff and in-line Ministries. Because we work very closely with the ministries and implementation agencies like higher education projects etc. When there is reshuffle in minister, vice minister and secretariat, also staff in the technical levels, the new team has to study stuff from scratch and they are not familiar with the projects. Preparation of the project is not familiar with the ADB standards and procedures. Of course, we are complex and bureaucratic institution. We need to be health by rules and procedures. It takes time to get familiar with those procedures. So, if there is a new team, it implies that it will take time to them. If there is a change, we start again. So, that also causes delays. We need to extend completion of the operation sometimes two years or more. Generally, stability is the best thing anyone who wants to do something.

-What was your the first impression when you first came to Mongolia in 1991. If you compare that time against today, what has changed so far?

-There are things that have not changed at all, which is my feelings about the country. The first time I came to Mongolia, I thought it was the most beautiful country in the world. That is still the same today, I think. At that time, of course I was younger, more junior, as well as very enthusiastic country economist. I wanted to do my best to help Mongolia that was going through difficult economic situation after two consecutive dzuds (heavy wintering) at the time. There were many losses in life sector and then large macroeconomic imbalances required support from the International Monetary Fund. But many things have changed a lot, even outside Ulaanbaatar. Of course, Ulaanbaatar city transformation is very visible, we can see all the new buildings, supermarkets, services. It has become a very developed city. If you compare what you could buy in the supermarket today, you can find range of products from many countries in the world, variety fruits and vegetables that were very difficult to find at that time. Sometimes I remember walking for a long time to find something, maybe just to buy one apple. Now there are many types of apples everywhere. Overall economic development is spectacular. But you need to understand how much has been achieved just in the last 15 years, which is really amazing. Also, you used to travel a lot to visit different aimags that time. When I travel now, I observe many changes in the quality of life,, key public and financial services. I remember that in the Ulaanbaatar, a man with a telephone with big batteries standing in the corner. Little funny to make phone call. Now we have telemedicine.

-Some officials in charge of the implementation of higher education reform projects mentioned that the Government is planning to establish a knowledge hub in universities. In developed countries, there is a think tank centers for gathering, networking and exchanging their knowledge. But in Mongolia, we do not have such centers and scientists complain that Government is not listening to them. What do you think is needed to be done in this area?

-In the UK and US, think tank is very prominent despite the culture and their society. It is not so common in other countries including, for instance, my own country and other countries in Europe, for universities to have a knowledge hub. We prioritize efforts in terms of knowledge in universities. Secondly, there is a very close relationship between thinktank and universities. Usually, most of the staff working in think tanks are university professors. For myself, before joining the ADB, I was a university professor and was working in a think tank. It is actually an excellent combination, because in the think tank, you have more resources. Sometimes you have private sponsors, knowledge to actualize what you learn and get from this knowledge. You can share with the students in the universities in Spain. It is an opportunity to bring students what they can learn from their own research in the think tank. So the connection is very strong. There are very bright scholars in Mongolia. Think tanks and universities of any country play critical role. Difference between universities and think tank is that think tanks do not teach. Universities do the same research as them and they teach. But both are knowledge hubs. In Mongolia, you have to put more efforts in pulling the resources in a coordinated manner, maybe by merging and strengthening small think tanks of universities with existent think tanks through collaborations. Think tanks should work very closely with universities. So, I am sure it will take time.

-My last question is higher education reform project, which is expected to complete next year. How do you see the result of this nationwide project. How well is the project going so far?

-This has been a special project for us. We focused on higher education for the first time. Traditionally, the ADB is supportive to mainly primary and secondary education, as well as pre-primary education. So, this is somehow like a step forward for us to be focusing on higher education. You need to pay attention to stages starting from pre-primary like kindergarten until university. We try to cover many centers as possible in the country; however, we have limited resources. Nonetheless, we have seen very good results in Ulaanbaatar city, Dornod and Khovd aimags. I am very looking forward to the results of new areas. So, the project has been satisfactory.

Mongolia Meat Exporters Turn to Iran's Halal Market www.financialtribune.com

Amid surging demand and limited local production in Iran for halal meat and as Mongolia pushes to make more money from the huge herds of livestock that roam its vast grasslands, the latter country is tapping overseas appetite for halal mutton from the former.

Mongolia has an estimated 30 million sheep-more than New Zealand-but has until recently only managed to export a thin slice of its overall meat output. It hopes that will change, Reuters reported.

Largely because of that kind of new demand, Mongolia’s sheep and goat meat shipments hit 2,601 tons in 2017, 11 times more than 2016.

And while that was worth only around $8 million, industry officials say those volumes are likely to be just the start, with exports in the first half of 2018 quadrupling year-on-year to 775.6 tons.

"The halal meat market is growing worldwide, promising new opportunities for Mongolia," said Ochirbat Begz, executive director of Mongolia Meat Association.

Under pressure from the International Monetary Fund to diversify away from mining, Mongolia aims to turn its huge pastoral economy into a major earner, hoping its free-range organic meat will find a home on plates overseas.

Darkhan Meat Foods, along with rival meat producers Max Impex MMX.MNE and Max Market is rushing to supply mutton to Iran.

It employs around 200 workers at the site, all involved in halal mutton output and expects to double its exports in 2018 from 1,320 tons last year.

“Before contracting with an Iranian company, we only exported beef and horse meat to other countries,” said Otgon-Erdene Bavuudorj, the firm’s general manager.

During a visit to the plant by Reuters, around a thousand 18-month old sheep were slaughtered and then deboned, chopped and packed under the supervision of experts from Dana Negah Parsian, an Iranian importing company, as well as the Iran Veterinary Organization.

The mutton is then frozen and transported by truck through Russia and Kazakhstan, reaching Iran in about two weeks.

But Mongolia’s nascent halal meat industry faces a number of hurdles on the path to growth.

Erfan Esfahani, business manager with the Iranian importer, said the country still needed to improve technology at its slaughterhouses and to train more staff.

In order for meat to be deemed halal, the butcher who slaughters animals must be Muslim. Mongolia is predominantly Buddhist, but 100,000 mostly-Muslim Kazakhs account for around 3% of its population.

The nation has also struggled with foot-and-mouth disease, with an outbreak this March forcing the government to declare martial law in 12 provinces and distribute 500,000 vaccines.

Mongolia has drawn up new animal health legislation to fight such diseases, with the Iranian importers saying they were doing all they could to guarantee meat they buy is safe.

“I check sheep before slaughtering and have not seen any major problems with animal diseases, said Hamid Reza Kavosh, the head of the veterinary office in Iran’s Khuzestan Province, while at the Darkhan plant.

Another problem is the seasonal nature of meat production in Mongolia.

“Putting livestock to pasture is good in the sense that they are free to choose the best grazing area and drink clean water from nature,” said Ochirbat at the country’s meat industry body.

“But importing countries demand regular supplies, which is impossible to meet with pasture, so export-oriented farms need to be developed,” he added.

The reintroduction of trade sanctions on Iran by the United States could also cloud the horizon. Washington has warned there will be consequences for countries that do not respect the sanctions.

But Ochirbat played down such worries, saying it was still early days for halal exports to Iran.

“It’s a little business-to-business trade and not a big international cooperation or something, so it should be okay,” he said.