Archive for ‘Economy’

Dalanzadgad Expected to Have Highest GDP Per Capita

By , 21 April, 2011, No Comment

Dalanzadgad is the capital of the South Gobi province and fastest growing provincial capital in Mongolia.

Our Firm (Eurasia Capital) estimates that the population of Dalanzadgad will quadruple in the next five years and by 2015 this town will enjoy the highest GDP per capita in Mongolia. South Gobi is home to two crown jewels of Mongolia: Tavan Tolgoi, the world’s largest untapped coking coal deposit and Oyu Tolgoi, the world’s largest undeveloped copper & gold mine.  We anticipate Dalanzadgad becoming a regional center for dozens of mining companies and hundreds of firms in multi-billion dollar mining supply chain.

FYI, Erdenet, the second largest city in Mongolia has estimated US$6,400 GDP per capita, the highest in Mongolia.  Erdenet is the capital of the Orkhon province, founded in 1975 as a new industrial center after discovery of the world class Erdenet copper mine in 1974. Erdenet is home to Erdenet Mining Corp., Mongolia’s largest company, biggest taxpayer and exporter, and accounts for 13% of the country’s GDP.

Source: Eurasia Capital

Proposal to Change Personal Income Tax System

By , 13 July, 2010, No Comment

An MPRP MP, Mr. D.Baldan-Ochir, has told reporters that he would soon submit a proposal for wide ranging changes in the tax system.

He wants all citizens to be included in a general data base, where everybody’s income and assets will be registered. No income can be concealed, putting an end to the rampant tax evasion and bribery in today’s Mongolian society. The database will also help in the efficient delivery of social welfare benefits.

Mongolians “hardly ever volunteer information” on their sources of income or pay taxes on their total earning, he claimed. A “tax education” program to raise popular awareness has been initiated in partnership with JICA. This will include school lessons on the tax system and the duty to pay taxes.

A series of discussions are planned with the civil society, government officials, citizens and professionals to devise practical suggestions on reforming the personal income tax system.

Source: Unuudur; highlighted in the BCM Newswire by Business Council of Mongolia

Ulaanbaatar Air Pollution Level Increased by 28 Percent

By , 31 May, 2010, No Comment

ULAANBAATAR – According to a working group, air pollution level of Mongolia’s capital city has increased by 28% despite efforts.

A working group led by MP D.Terbishdagva has found during its evaluation of the impact of programs aimed at reducing air pollution that only MNT8.2 billion was spent on them last year, despite a Parliamentary resolution in 2007 allocating MNT50 billion annually from the State budget. It also found that the pollution level, far from going down, has actually increased by 28%. The group has recommended more coordination among the organizations responsible for the work and has also called for more accountability.

Source: Unuudur; highlighted in the BCM Newswire by Business Council of Mongolia

Survey Says Unemployment, Standard of Living, & Inflation the Major Problems

By , 30 May, 2010, No Comment

The majority of respondents in a survey carried out by Sant Maral Foundation in April said unemployment is the main problem in Mongolia today.

While 38.6 percent held this view, 21.1 percent said the standard of living is the main problem, while 8 percent believe inflation is the key issue. The representative sample of 1,200 respondents from Ulaanbaatar and from Dornogobi, Dundgobi, Zavkhan, Khentii and Arkhangai aimags was collected from April 16 to April 23. The survey is sponsored by the Konrad Adenauer Foundation of Germany.

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Mongolia’s 2010 State Budget and Talks of Revision Amid Inflation Concerns

By , 23 May, 2010, No Comment

Sensitive financial issues were discussed at a “secret” meeting on Monday attended by members of the Standing Committee on the Economy, and representatives of the International Monetary Fund, the MongolBank, and the National Statistics Office. They talked mainly about the budget deficit and the threat of inflation.

The Finance Ministry has proposed revisions to the 2010 budget following the increase in the price of copper and gold. If this has meant MNT 364.2 billion in extra revenue, the decision to increase the salary of civil servants by 30 percent, and reinstatement of the child allowance will lead to more expenses. Some new public projects have also been proposed. Taken together, these will take the budget deficit beyond the proposed 5% of GDP as stipulated by the IMF.

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MP’s Urge Prime Minister to Curb Corruption

By , 10 May, 2010, No Comment

In an open letter to Prime Minister S. Batbold, two Democratic Party MPs, Hero of Mongolia E. Bat-Uul and Mr. Ya. Batsuuri, have lamented the unchecked growth of corruption, bribery, and bureaucracy in government organizations, greatly hindering economic progress and the development of a democratic ethos. If no corrective action is taken, the trend will eventually disgrace the nation on the international stage, they feel.

Political parties and leaders talk a lot about action against corruption during elections, but allow it to thrive when they are in a position to take remedial action. Hidden business deals involving high officials, their fingers in the pie in any major budgetary investments, and misuse and abuse of the funds of state owned businesses have got out of control and reached proportions that endanger national security. Citizens wait in vain for signs of official action, but there is no change in the authorities’ apathy.

Reminding Mr. Batbold that in a democracy people’s feelings cannot continue to be ignored, the two MPs have urged the Government to come out with a comprehensive statement on its stand on the matter. As a first step, they have said, companies and organizations like Erdenet Copper, Ulaanbaatar Railway, MIAT, and the Civil Aviation Authority of Mongolia should immediately have their accounts audited by firms with international exposure.

Source: Udriin Sonin; highlighted in the BCM Newswire by Business Council of Mongolia

Economists Not At Ease with Giving Away 1.5 Million to All

By , 17 April, 2010, 1 Comment

Several economists have expressed their reservation about the Government’s announcement that every Mongolian citizen will receive MNT1.5 million by 2012.

Mr. Ts. Demberel appreciated that both parties were in a bind, having made this the basis of their election campaign. However, it still will be unwise to distribute so much cash. “Most of this will end up in the hands of Chinese manufacturers, and a much better decision would have been to spend it on infrastructure that benefits all,” he said.

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National Debt Equals State Budget

By , 16 April, 2010, 1 Comment

Finance Minister S.Bayartsogt has said that the total foreign debt of Mongolia has reached MNT2.8 trillion, equal to the whole annual state budget. Of this 31.7 percent is in USD, 26.5 percent in Japanese yen, 28.1 percent in euro and 13.7 percent in other currencies. He was speaking at a joint meeting of the Standing Committees on the Economy, on Security and Foreign Policy, and on the Budget which discussed a loan offer from Monaco, and a draft cooperation agreement with the Asian Development Bank for additional financing on a project to develop regional roads.

Both drafts were approved and would now go to Parliament, but several MPs expressed their unhappiness with aspects in both. Some felt that Monaco, with which diplomatic relations were established only two years ago, is offering assistance worth no more than MNT30 million only to help it join the European Union. The ADB loan carries a low interest but has preconditions which make it less acceptable than high interest loans. Mr. Bayartsogt stated that Mongolia will no longer take loans with such preconditions.

Source: Undesnii Shuudan; highlighted in the BCM Newswire by Business Council of Mongolia

Mongolia Social and Economic Indices February 2010

By , 23 March, 2010, 1 Comment

ULAANBAATAR, MONGOLIA – The National Statistics Office has published social and economic data. All figures are for February alone or for the first two months in 2010 and, unless otherwise mentioned, all comparisons are with the corresponding period in 2009.

CPI

The consumer price index rose 3.0 percent over January, 5.4 percent over the end of 2009, and 8.3 percent over February 2009.

State budget

The overall balance in the General Government budget in the first two months of 2010 showed a deficit of MNT51.4 billion, MNT 0.8 billion less than in the same period of the previous year, mainly because revenue increased 53.8 percent more than did expenditure.

The current account deficit was MNT36.6 billion. Tax revenue was 74.8 percent more than in 2009. Windfall profits tax yielded 227.4 times more, corporate income tax 2.2 times more, and value added tax 34.6 percent more. Non-tax revenue was up by 91.3 percent.

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Central Bank Confirms TDB in Good Shape, After Rumors Cause Concern

By , 22 March, 2010, 1 Comment

The Central Bank has said it sees no reason to worry about the health of Trade and Development Bank (TDB). The bank administration has also strongly denied there is any problem whatsoever. The reassurances were found necessary after the city had been abuzz with rumors about the bank, with customer confidence continuing to be low following what happened at Zoos and Anod banks.

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Only Economic Diversification Can Assure Survival, Says Former PM

By , 13 March, 2010, 2 Comments

Former Prime Minister D. Byambasuren does not see any “quick exit from the present economic crisis, even if some superficial indications may look promising”.

The distribution of cash has led to an overall increase in prices of items in daily use. Banks are still troubled with outstanding loans and the long-term impact of the dzud will be clear only with time. Livestock is the economy’s key sector and difficulties there will be felt in many areas of life: herders’ livelihood, the consumer market, and health of the banking system. Herders, he felt, are not receiving adequate support, but abandoning them will have disastrous consequences.

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2009 Highlights, Coping with Winter Weather, & Money to Citizens

By , 13 January, 2010, 4 Comments

Mongolia Business Podcast Summary: Mongolia’s 2009 business news highlights; Coping with winter weather in Mongolia; Parliament approves 324 billion tugrugs in handouts to citizens

Mongolian Ice Game "Musun Shagai"

Mongolians playing a traditional Mongolian ice game called "musun shagai", which literrally means "ice ankle bone".

Mongolia Business Podcast Highlights: Parliament recently approved to allocate 324 billion tugrugs, roughly 220 million USD, which essentially gives money away to Mongolian citizens.  Human Development Fund distribute 120,000 tugrugs for each citizen, 70,000 before Tsagaan Sar, or Mongolian New Year, and 50,000 tugrugs after the Tsagaan Sar…

SouthGobi Energy Resources may spend up to $800 million USD to improve operations and better supply customers in China…

Some big events in 2009 were headed by the signing of Oyu Tolgoi (OT) agreement on October 6, 2009, a very good auspicious day.  There was a collapse of two major banks and a merger of two other banks.  In March 2009, Mongolian tugrug fluctuated from 1100 tugrugs to up to 1700 tugrugs before heading back down to 1500 tugrugs.  Prime Minister Bayar resigned…

Weather in Mongolia is currently -30 to -40 degrees Celsius (-40 degrees Celsius is -40 degrees Fahrenheit).

How do we cope with it?

  1. Stay inside.
  2. Dress with too many layers or wear fur
  3. Eat Mongolian diet

Why Mongolians crank up the heat to about 25 degrees (85 Fahrenheit) inside?  It’s freezing outside, but people are wearing shorts inside…. Black stuff on roads is the ice.  Another tip to stay warm?  Turn into a ninja.  Only show your eyes and cover everything, wear layers of clothing, eat mutton, and don’t go out too much…

Click here to listen to entire podcast episode: Mongolia Business podcast by Mongolia Business Blog (MBB)

Current Macro-Economics and Mongolia’s Banking Sector

By , 11 December, 2009, 1 Comment

Mr. B. Enhhuyag, First Deputy Governor of Bank of Mongolia, “Views on Current Macro-Economics and Mongolia’s Banking Sector” “PART ONE of BCM Meeting Highlights”

On Monday, December 7, 2009, Business Council of Mongolia (BCM) held its last meeting of the year.  Guest speakers Mr. B. Enhhuyag, First Deputy Governor of Bank of Mongolia and Mr. Eric De SEZE, General Director & CEO of Areva Mongolia discussed “Views on Current Macro-Economics and Mongolia’s Banking Sector” and “Nuclear Energy and Uranium”, respectively.

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James Passin Bullish on Mongolian Stock Market

By , 26 November, 2009, 2 Comments

Today, while going through some articles on Mongolia, I ran across an article that happened to cover the Mongolian stock market by a stock market guru named James Passin.  It was a lucky find as the article mostly talked about Berrylium.  Anyway, please read on.

As you will find, James is very bullish on the local Mongolian stock market.

Source:

Mongolian Stock Market Overview

TER: Any other regional international plays that you can discuss with us?

JP: Ivanhoe Mines Ltd. (NYSE:IVN, TSX:IVN) , the Canadian exploration company, finally executed an agreement with the Mongolian government with respect to the development of Oyu Tolgoi, the world’s largest undeveloped copper mine. This is a massive mine that will generate $5 billion of revenue per year for over 50 years. While this is a positive development of Ivanhoe, a stock that we’ve been trading from the long side all year, it will be much bigger story for the Mongolian stock market.

Mongolia GDP is only about $5 billion, so Oyu Tolgoi, or OT as the mine is called, will transform the prospects for employment and per capita GDP growth. A great wall of domestic liquidity will support the local stock market, creating a new bull market which will last for decades. The local stock market currently has depressed valuation and almost zero liquidity. Mongolia has structural similarities to other emerging markets that started out with very low market capitalizations, such Vietnam or the smaller Gulf states. There are 24 mineral projects that have been deemed strategic by the Mongolian government and that represent potential sources of commodity exports. The Ivanhoe deal marks the beginning of the Mongolian mining boom and I think the most leveraged long-term way to play this mining boom is through the local stock market.

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H1N1 Causing Food Price Inflation – Mongolians Are Not Happy

By , 17 November, 2009, 6 Comments

Sea-Buckthorn

Seabuckthorn prices have increased by 1500-2500 tugrugs per kilo in Mongoolia

Due to the outbreak of H1N1, there is increased demand for food products that enhance body’s immune system and help fight against the flu.  As a result, pricing for garlic, sea-buckthorn, “aarts”, and horse meat have seen inflationary pricing over the last few weeks.  News coverage has been high as locals have been quite upset and have demanded price controls.

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