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Mongolian and Japanese calligraphers come together - UB Post

Google News Mongolia - Wed, 2013-07-24 15:42

Mongolian and Japanese calligraphers come together
UB Post
Mongolian and Japanese calligraphers opened a calligraphy exhibition at the Mongolian National Art Gallery on July 22. Calligraphy has been developed and valued in both Japan and Mongolia. Ancient masterpieces are hanging on the wall of ...

Categories: News

Belarus, Mongolia to hold talks on abolition of visas - News of Belarus

Google News Mongolia - Wed, 2013-07-24 15:33

Belarus, Mongolia to hold talks on abolition of visas
News of Belarus
MINSK, 23 July (BelTA) - President of the Republic of Belarus Alexander Lukashenko signed a decree on 23 July to approve the draft intergovernmental agreement with Mongolia on abolition of visas between the two states as a basis for further talks ...

Categories: News

Maleny medic is taking medicine to Mongolia - Noosa News

Google News Mongolia - Wed, 2013-07-24 11:46

Maleny medic is taking medicine to Mongolia
Noosa News
MONGOLIA is a long way from his Maleny home, but Chinese medicine practitioner Anthony Brown is ready for a challenge. Next month Mr Brown will take part in a humanitarian medical project, swapping his clinic for a traditional Mongolian yurt, to ...

Categories: News

Electricity prices to increase in Mongolia - M.A.D

Google News Mongolia - Wed, 2013-07-24 10:45

Electricity prices to increase in Mongolia
M.A.D
The Energy Regulatory Commission of Mongolia announced that from 5th August 2013 electricity prices will be increased. The Mongolian energy sector faces a loss of over 60 billion MNT if it continues to use the current system and electricity tariffs ...

Categories: News

Mongolia to take over Savings Bank - M.A.D

Google News Mongolia - Wed, 2013-07-24 10:39

Mongolia to take over Savings Bank
M.A.D
Savings Bank, Mongolia's fifth-largest lender, has been declared insolvent after affiliated companies defaulted on loans, and will be taken over by a state-owned competitor, the central bank said. Mongolia to take over Savings Bank. Savings Bank ...

Categories: News

Oliver and Antoine all set for Mongolia adventure - Evesham Observer

Google News Mongolia - Wed, 2013-07-24 07:04

Oliver and Antoine all set for Mongolia adventure
Evesham Observer
The pair, who will travel as team Alphabadger, will set off from London in front of their friends and family and once across the Channel will travel through numerous locations and experience different cultures along the way before arriving at Mongolia ...

Categories: News

N. Koreans nabbed for smuggling medicine in Mongolia - Yonhap News

Google News Mongolia - Wed, 2013-07-24 03:15

N. Koreans nabbed for smuggling medicine in Mongolia
Yonhap News
SEOUL, July 23 (Yonhap) -- North Koreans carrying diplomatic passports were caught smuggling medicine by Mongolian customs officials, a report said Tuesday. The UB Post monitored in Seoul said two people caught were on an international train running ...
Two N. Koreans caught in Mongolia for smuggling medical goodsArirang News

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Categories: News

Mongolia to Take Over Savings Bank as Fifth-Largest Lender Fails

Business Mongolia - Tue, 2013-07-23 14:45

Savings Bank, Mongolia’s fifth-largest lender, has been declared insolvent after affiliated companies defaulted on loans, and will be taken over by a state-owned competitor, the central bank said.

State Bank will take over Savings Bank’s 503 branches starting today, Danjilaa Ganbat, director of the banking supervision department at Mongol Bank, said at a press conference in Ulaanbaatar yesterday. Savings Bank was owned by Just Group, a holding company based in the capital, whose other assets include Just Oil LLC. The takeover is the first by the government since 2009.

With 1.7 million customers in a nation of 2.9 million, Savings Bank accounts for about 8 percent of active banking assets and 55 percent of government financial services, such as disbursement of pensions and payment of utility bills, according to the central bank. Other lenders are healthier, said Dambadarjaa Jargalsaikhan, an economist and commentator on television show De Facto.

“The central bank now has things in control,” Jargalsaikhan said. “I don’t think all the banks are like this but we should draw certain lessons. There was too much risk on one individual and there was a problem with poor corporate governance and conflicts of interest.”

Sharavlamdan Batkhuu, Just Group’s controlling shareholder, and other companies in the group have defaulted on loans since 2011, Ganbat said.

Batkhuu didn’t reply to an e-mail seeking comment. Savings Bank didn’t answer a phone call or comment when a reporter visited the lender’s office yesterday.

Coal Exports

Mongolia’s resource-based economy has been hit by a decline in coal exports, which plunged to $542.4 million in the first six month of the year from $1 billion a year earlier. Total first-half exports fell 10 percent from a year earlier.

The World Bank in April cut its forecast for Mongolia’s 2013 economic growth to 13 percent from 16 percent, citing declines in exports and foreign investment. FDI in the first five months of the year reached $1.21 billion, down from 1.47 billion during the same period last year.

Savings Bank is the third lender to be taken over by the government, following Anod Bank JSC in 2008 and Zoos Bank JSC in 2009. The lender has losses of 180 billion tugrik ($122 million) and its working capital is 94 billion tugrik lower than its assets, the central bank said.

All 503 Savings Bank branches of Savings Bank were closed yesterday as the assets moved to State Bank, Ganbat said. While the process should be complete by 9 a.m. today, there may be some delays, he said.

State Bank was formed by the government in 2009 to hold Anod Bank and Zoos Bank and functions like a commercial lender. Mongol Bank is the nation’s central bank.k,

Source: Bloomberg

Categories: News

Dozen Arrested After Inner Mongolian Herders Clash With Police - Radio Free Asia

Google News Mongolia - Tue, 2013-07-23 07:22

Dozen Arrested After Inner Mongolian Herders Clash With Police
Radio Free Asia
About a dozen ethnic Mongolians were arrested and several others injured in weekend clashes with police after a herder was assaulted by a group of drunken Han Chinese in northern China's Inner Mongolia region, an overseas rights group said Monday.
Herders Blocked From Travel to BeijingMENAFN.COM

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Categories: News

Mongolia to Take Over Savings Bank as Fifth-Largest Lender Fails - Bloomberg

Google News Mongolia - Tue, 2013-07-23 00:20

IVCPOST

Mongolia to Take Over Savings Bank as Fifth-Largest Lender Fails
Bloomberg
Savings Bank, Mongolia's fifth-largest lender, has been declared insolvent after affiliated companies defaulted on loans, and will be taken over by a state-owned competitor, the central bank said. State Bank will take over Savings Bank's 503 branches ...
Mongolia's State Bank to take over 503 Savings Bank branchesIVCPOST

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Categories: News

Backpackers' diaries: horse riding in Mongolia - The Guardian

Google News Mongolia - Mon, 2013-07-22 14:01

The Guardian

Backpackers' diaries: horse riding in Mongolia
The Guardian
In Mongolian," Ganbaa explains, "the word for "ride a horse" and "fall off a horse" is the same." Gulp. My son and I are in Hatgal, a cluster of log cabins and gers, the felt tents the Turks call yurts and the Chinese call "Mongolian buns", from where ...

Categories: News

Mongolia grants 1-year contract to mine Tavan Tolgoi west block

Business Mongolia - Mon, 2013-07-22 13:47

(Reuters) – Mongolia has lined up three local firms to mine the West Tsankhi block of the giant Tavan Tolgoi coal mine for a year, an executive at the state-owned mining company said on Friday, as the country aims to boost coal output.

Mongolia is racing to start producing coal from the long-delayed project as it is under pressure to plug a budget gap and help pay down debt to Aluminium Corp of China (Chalco) amid a sharp downturn in coal prices.

Delgersaikhan Tsagaan-Uvgun, head of mine planning and technical coordination of state-owned Erdenes Tavan Tolgoi, said the company has finalized a one-year contract for mining at the 888 million-tonne West Tsankhi block to a consortium of three local companies.

The Mongolian firms Khishig Arvin Industrial, Mera, and Mongolian National Miner make up the Mongol Uurkhaichid group, which means Mongolian Miners in English, and will together begin work at the deposit this weekend.

The deposit is owned by Erdenes Tavan Tolgoi, which has contracted out work at its East Tsankhi deposit to Australia’s Macmahon Holdings and Germany’s BBM Operta.

The company said it expects to mine a total of 5-6 million tonnes this year at the east block and 2 million tonnes at West Tsankhi.

Erdenes Tavan Tolgoi owes Chalco $170 million, the outstanding amount from a total debt of $350 million from an off-take agreement it signed with Chalco in 2011 to be paid in coal exports.

The company expects to repay the sum by December this year, according to an interview with Chief Executive Yaichil Batsuuri on the news website Business-Mongolia.com in June.

Chief Financial Officer Batdorj Enkhbat told Reuters that the company was in talks to export coal to new international markets, such as Japan or Korea, as the landlocked country looks to ease its dependence on China.

Mongolia’s massive neighbour consumes more than 90 percent of all minerals produced in the country.

Erdenes Tavan Tolgoi has not yet given up on trying to come up with a strategic agreement with international stakeholders to develop the West Tsankhi block, but that plan has been held up by political debate over foreign investment.

The Mongolian government backtracked on awarding rights to West Tsankhi in 2011 to a consortium including Peabody Energy and China’s Shenhua Group after rival bidders from Japan and South Korea branded the decision unfair.

Source: Reuters

Categories: News

Mongolia does not want the project financing

Business Mongolia - Fri, 2013-07-19 22:35

Business-Mongolia exclusively covered issues revolving around the world renowned Oyu tolgoi. It has been several times that we have reported on project financing for the 2nd phase of the project. The dispute is still ongoing despite the shipment commencement. Erdenes OT, Executive Director Ts.Sedvanchig himself made it clear that there are at least 22 issues to resolved between the shareholders.

One of the major issue besides the cost overrun, or interconnected issue, is the project financing. The project is already exceeded by USD2 billion from its planned initial investment. The latest figure we have is USD6.49 billion. Phase II + expansion is going to cost the project USD11 billion. OT LLC told the press that Phase I and II net cost will be USD13 billion. However, our research indicated that we are looking at overall cost of USD18 billion including the investment from revenue.

Rio Tinto is seeking to raise the needed investment from international financial institutions, commercial and export, import banks. We have mentioned many times about the issue on our website if you click on the tag at the very below (Rio Tinto, IFC, OT LLC, Oyu Tolgoi). Each entity would provide USD200-300 million and up to USD4 billion overall. Rio Tinto is also coming into play as a lender besides being a shareholder. It believes that it would create competition among commercial banks to lower the interest rate. However, the prolonged project financing that has been under discussion for over 3 years hasn’t been closed yet. Bankers have convened several times during these years and re-started the negotiation again after Rio Tinto took over Turquoise Hill Resources.

Despite the cost born over 3 years for lawyers, financial advisers and due diligence, over USD50 million is spent, Rio Tinto still pushes for strategic move of involving as many parties as possible to the project. Mining Minister D.Gankhuyag was clear on the issue. We do not support it, especially when the over spending on cost is not justified and proved. Still, Rio Tinto is pushing with its proud A3 rating from Moody’s. Also, it promises the Mongolian government that the project financing will greatly benefit the country’s overall investor confidence and lower rate of shareholder loan stated in the Investment Agreement, 6.5+LIBOR.

Mongolian government looked at the project financing terms and financial models, and it is not happy about it. The charge from Rio Tinto will exceed USD3 billion just over decade alone. Transaction fees from banks are too high. Also, it is not guaranteed that the interest rate will be lower than 6.5+LIBOR. Even if it is low, can it be low from Chinggis bond of ~5%? Bond market clearly estimates the investors confidence in the country. With the Rio Tinto A3 guarantee can it be around 3-4%+LIBOR?

Without even mentioning the outstanding 22 issues, Rio Tinto is ready to pledge the licenses to the lenders which the government doesn’t approve. Also, still the updated Feasibility study has not been approved by the Minerals Council by the law requirement. We didn’t even get into the 2% royalty that has been derived from BHP, that has been boughtback by Turquoise Hill Resources for USD37 million back in 2006. The parent company is claiming the royalty right from OT LLC. Besides the piling debt, OT LLC threatens Mongolian interest with Entree Gold Inc. Also, an unclear license and Earn-In Agreement that frustrates the politicians.

Considering the issues mentioned above, it is too early to discuss the involvement of third parties into the project. That is why, we, Business Mongolia research team, believes that Mongolia does not want the project financing at the current state.

 

Categories: News

Mongolia’s war against corruption

Business Mongolia - Thu, 2013-07-18 16:23

Recently, Transparency International’s Global Corruption Barometer surveyed that 86% of the residents think that government officials are corrupt ranking Mongolia into second place after Liberia. It is a disappointing result for the young democracy as it is warring against corruption for some time even creating an independent agency dedicated fighting corruption in the country. President Elbegdorj Tsakhia promised to intensify the fight on his inauguration recently after he was re-elected for the second term.

Perhaps the biggest fish was the former president Enkhbayar Nambar, a MPP member. The corruption cases increased after the DP won the parliamentary election. Shocking numbers were reveled on these cases. USD17 million was found in the apartment of former State Secretary of the Ministry of Health, MNT14 billion recovered in the account of former department head of Tax Authority, also former MPP secretary had 26 accounts that had transaction of over USD300 million over the years.

On one hand we can see these corruption cases as fight against corruption, however, in the other hand, it can be seen as a fight against the former ruling party, MPP. Practically, MPP has dominated the political scene for over a decade. The mess, mismanagement, and corruption of the past years is being reveled.

However, we cannot avoid mentioning MP S.Bayartsogt, who have admitted of having an undisclosed Swiss account and a company in BV. He is a long-standing DP member, and a former Finance Minister when the OT agreement was signed. After it was revealed that he didn’t disclose the account in his income report, he was just resigned from his position as a vice speaker. The Prosecutor’s office denied his revocation from the parliament. Still, the president publicly announced that S.Bayartsogt should resign from the parliament and go through the investigation voluntarily.

Another MPP member T.Bilegt who was a Chairman of City Council a close affiliate of N.Enkhbayar is being accused of state property embezzlement. He ran away after N.Enkhbayar was arrested and came back after two years after those charges were dropped from N.Enkhbayar. Few hours after his return he was arrested and put under investigation. He claimed that he never knew that he was wanted by police and interpol. In connection to his return, N.Enkbayar’s wife O.Tsolmon was questioned and all of N.Enkhabyar’s family properties are sealed. Journalists are reporting that perhaps there were new developments on T.Bilegt’s charge.

Before the presidential election, some MPs have asked to audit Erdenet JVC as it is a giant state-owned mine that has been in operation for years. Ch.Ganzorig, General Director of the company has been arrested recently after Naadam festival. The assumed charges are guaranteeing loan for private companies in the amounts of millions.

Mongolia’s war against corruption continues in the scale that has never been seen before.

 

Categories: News

In tax case, Mongolia is the mouse that roared

Business Mongolia - Thu, 2013-07-18 14:46

(Reuters) – Turquoise Hill Netherlands is a little-known Amsterdam-based company with three employees, no office, and not even its own mailbox. To the government of Mongolia, though, the company represents billions in taxes that it will never see.

Turquoise Hill was created in 2009, five years after Mongolia and the Netherlands signed a tax treaty to avoid double taxation and boost investment in Mongolia. But in 2011, Mongolia decided to cancel the pact, arguing that it would cost the country income from one of the most lucrative gold and copper mines in the world.

The move was rare – tax experts say only a handful of such deals between countries have ever been cancelled – and it highlights a big contradiction.

The Netherlands, which has more than 90 such treaties globally, spent roughly 13 million euros ($17 million) on three aid programs to Mongolia in 2009 and 2010. Globally its aid budget is about $5.5 billion – the fifth most-generous rate among rich nations at 0.71 percent of Gross National Income, according to the OECD. At the same time, Europe’s fifth largesteconomy hosts some 12,000 companies like Turquoise Hill through which multinationals channel about $10 trillion both in and out of the country largely to avoid taxes, according to a June report by Amsterdam University.

The Netherlands may help countries like Mongolia with aid, but it also undermines development in poor countries by making it easier for companies to cut taxes.

In the Mongolia case, a big beneficiary was Anglo-Australian mining giant Rio Tinto. Toronto-listedTurquoise Hill Resources, named after the giant Oyu Tolgoi open pit mine in the Gobi Desert, is 51 percent owned by Rio Tinto. Oyu Tolgoi means turquoise hill, and the Toronto company in turn owns 66 percent of the project, with the government holding the rest.

The mining unit has so far spent $6.49 billion on the mine, which Rio Tinto believes will become the third largest for copper in the world. That investment amounts to more than half the size of Mongolia’s $10 billion a year economy.

Mongolia’s decision to unilaterally end its tax deal with the Netherlands – it also broke off similar deals with Luxembourg, Kuwait and the United Arab Emirates at the same time – was based on a reassessment of the fairness of the agreements. “We started to question why these countries would have greater advantages in Mongolia than us,” said Vice Finance Minister Surenjav Purev.

Under normal circumstances, Mongolia would levy a 20 percent withholding tax on dividends paid by mine companies. But the dual taxation agreement allowed Dutch-registered firms to channel income from dividends, royalties and interest earned in Mongolia through their Dutch company, so pay no withholding tax. Other Dutch treaties with states that charge little or no tax, such as Bermuda, let companies move that money on from the Netherlands to tax havens.

Terminating the treaty means firms that use countries like the Netherlands to channel tax-freeearnings from Mongolia could lose the tax benefits, or be forced to seek a different low-tax route.

However, a Rio Tinto spokesman told Reuters in an email that the cancellation of the Dutch treaty will not affect Oyu Tolgoi’s use of its Dutch holding company, because the firm has a separate investment agreement with Mongolia which “stabilizes” treaties that were in force in 2009. Rio Tinto said it has and will continue to pay all taxes due under Mongolian law.

Mongolia’s termination was noticed in tax circles at the time but not more widely, and comes as developing nations are increasingly concerned about the help that rich countries give big firms to avoid taxes. Last year, Argentina terminated treaties with Switzerland, Spain and Chile. Zambia’s new government is also reviewing bilateral treaties.

The Dutch say they strive to be fair on tax. Their latest tax policy, outlined in 2011, calls for “a fair fiscal system” in developing countries. “Good taxation plays an important role in strengthening the legitimacy of the recipient government,” it said. The Dutch Ministry for Foreign Development says its tax treaties help developing countries attract investment and “can lead to significant economic effects.”

But for people like Dendevsambuu Onchinsuren, Country Managing Partner at accountants Deloitte-Onch LLC in Mongolia’s capital Ulan Bator, the Dutch are part of the problem. “In general, if there are more companies working in Mongolia through the Netherlands, there is the risk of losing tax revenue,” she told Reuters in the sail-shaped Blue Sky Tower in the city’s financial district. “In terms of the amount of investment, it’s significant to our economy.”

As international pressure mounts for countries to stem tax avoidance, the Dutch are now considering whether their treaties do more harm than good. Dutch State Secretary of Finance Frans Weekers said he was already reviewing tax treaties with five developing countries to determine if they may be unfair, and will re-negotiate if they are. So far he is not looking at the Mongolia case, but Finance Ministry spokesman Remco Dolstra said that Weekers plans to visit soon and will discuss the matter.

Tax evasion was never the aim of the tax treaties, Dolstra said. “It was meant to bolster trade ties.”

“The use of a Netherlands-based investor (Turquoise Hill) was entirely transparent at the time,” Rio Tinto said in a statement. “It was done with full knowledge of the government of Mongolia.”

SPECIAL FINANCIAL INSTITUTIONS

The Netherlands started cutting treaties on tax in the 1950s. The country which four centuries ago produced one of the first multinationals, the Dutch East India Company, would often include tax breaks that were attractive to international firms.

Dutch corporate income tax, at 25 percent, is relatively high. But exemptions and bilateral deals reduce it sharply. Today the Netherlands is a centre for “treaty shopping” – where multinationals pick and choose locations depending on the tax benefits, which can often reduce effective tax rates to below 10 percent.

Those deals have attracted thousands of firms, including 80 of the world’s largest, to set up brass-plaque companies in the Netherlands, according to the report by Amsterdam University’s Centre for Economic Research (SEO), which was commissioned by the business community to measure the sector.

Most have no material presence, factories, advisers, or employees. Some, such as Turquoise Hill Netherlands, don’t even have their own brass plaque. Officially known as Special Financial Institutions (SFIs), they perform financial roles like holding assets for multinationals, channeling funds into foreign investments, or shifting profits to tax havens.

Rio Tinto has used the Dutch shell structure to channel investments into Mongolia: Turquoise Hill and a subsidiary, Oyu Tolgoi Netherlands B.V., are among financial holding companies it has used. Regulatory filings show that Oyu Tolgoi Netherlands has built up nearly $1.5 billion in financial assets since 2009, even though the first trucks laden with copper concentrate only left the mine earlier this month. Oyu Tolgoi has not been operating long enough to generate profit, so no dividends have been paid out yet on which it could save tax.

The use of the tax treaty with the Netherlands does not affect the taxes that Oyu Tolgoi pays to the Mongolian Government, a spokesperson for Turquoise Hill said. By the end of June 2013, Oyu Tolgoi had paid over US$1.1 billion in taxes, fees and other payments. “It created more jobs than any other company in Mongolia, and was the second highest taxpayer in the country in 2012,” Rio Tinto says on its website. “The benefits for Mongolia will be even greater now that shipments have commenced as royalty payments and increased income from taxation flow to the government.”

That said, “the cancellation by Mongolia of its tax treaty with the Netherlands will have no impact on any dividends paid by Oyu Tolgoi in the future,” Rio Tinto said. The Mongolian government agreed with Rio Tinto in 2009 to “tax stabilisation measures that included the stabilisation of tax treaties then in force.”

A handful of other Dutch-registered holding firms also hold hundreds of millions of dollars in assets associated with Mongolia.

$1 BILLION A YEAR

The registered address of Turquoise Hill Netherlands Cooperatief U.A. is in a concrete and glass-fronted tower on a busy traffic junction between a suburban rail station and a motorway entrance in Amsterdam. The building is also the official address for companies with names such as CM Balkans, CMI Africa Holdings and Tiger Global PIP Holding.

Like 75 percent of Dutch SFIs, Turquoise Hill’s affairs are looked after by a trust company, Intertrust Group, which declined comment. Rio Tinto said Intertrust provides three contracted employees dedicated to Turquoise Hill, but when Reuters visited, Intertrust’s receptionist knew nothing about them. No employees for the other companies could be located for comment.

The Centre for Research on Multinational Corporations (SOMO), an Amsterdam-based group that campaigns against tax avoidance, found in another recent study that multinational corporations in 28 developing countries, from Brazil to Kazakhstan, used the Dutch tax system to save $1 billion a year on dividends and interest payments alone. That is money that would otherwise be paid to those countries in withholding tax, and is equivalent to around one-fifth of the Netherlands $5.5 billion budget for development aid this year.

“We provide aid to developing countries, but at the same time we make it impossible for them to generate their own income,” says Jesse Klaver, a member of parliament for the Green Left party. “It’s harmful and unacceptable for us to help multinationals make profits at the expense of developing countries.”

For the Dutch, too, the benefits are ambiguous. The sums involved in its network of brass-plaque companies may sound enormous – money flows are more than 10 times annual Dutch GDP – but the country is little more than a means of transit for most of that. The 12,000 Special Financial Institutions contributed 3.4 billion euros to the Dutch economy, the SEO report said – that amounts to less than half a percent of Dutch GDP. They account for 13,000 full-time employees.

With the benefits flowing to just a select few, the sector is raising questions at home. “In the Netherlands, ordinary citizens pay an average of 39 percent in taxes,” said MP Klaver. “It’s a hard sell, during a time of belt tightening, to have workers or greengrocers pay such high taxes when a large corporation pays almost nothing.”

BOLD GESTURE

The stakes are even bigger for impoverished Mongolia, a former Soviet state of 2.8 million people, 30 percent of whom lived below the poverty line in 2011, according to the Asian Development Bank.

Mongolia, whose tax revenues rose sharply between 2009 and 2011, has had little experience of corporate taxation since it opened up to the outside world in 1991. Its Vice Finance Minister Purev said that as much as 10 billion euros were invested in Mongolia from the Netherlands in 2010, which at the time was already equal to more than twice the country’s GDP and an increase from 4 billion euros in 2004. That wasn’t because the Dutch specialise in mining, Purev notes.

“We do understand that it is vital to have double tax treaties,” he told Reuters through an interpreter in his spacious office overlooking Ulan Bator’s government buildings. “We need … double tax treaties that are for Mongolia.”

The Mongolian finance ministry said it was impossible to say how much tax revenue it stood to lose because of the Dutch agreement. If Oyu Tolgoi had not used Netherlands as its tax base, it could have used another centre, and taxes vary.

Mongolia first contacted the Netherlands in March 2011 to request changes to the tax agreement. Three months later, it received a reply, said Purev: No.

Mongolia then sent five different proposals to amend the treaty. In December 2011, the Netherlands agreed on one change: to allow Mongolia to tax dividends at 5 percent. Mongolia said that was too little, too late. “It was at that point that we decided to cancel,” said Purev. Parliament passed the legislation needed in September 2012 and it takes effect in January 2014.

Dolstra, the Dutch finance ministry spokesman, said the Netherlands would have preferred to amend the treaty and “regretted the decision.”

In 2012, the International Monetary Fund said Mongolia should consider “selectively re-negotiating” more than 30 tax treaties which are potentially harmful to tax revenue. Terminating should be an ultimate remedy to force negotiations if agreements are potentially harmful, it said. It declined to say if the treaty with the Netherlands is unfair to Mongolia, but the OECD has in the past said the Dutch treaties with poor countries may deny them important tax revenue.

“The Dutch government’s claim that treaties are beneficial for developing countries is simply not true,” said researcher Katrin McGauran at the Centre for Research on Multinational Corporations. “Dutch tax treaties have a seriously negative impact on poor countries’ revenue and there is no evidence that these tax losses are compensated with an increase in investment as a result of having DTAs,” or double tax agreements.

Roel van der Meij, a spokesman for the Dutch finance ministry, said the treaties improve developing countries’ finances by reducing the risk the same income will be taxed twice, as well as boosting cooperation and legal certainty for investors. “Developing countries regularly request tax treaties,” he said.

Mongolia is not so sure. It is also revisiting its arrangements with other countries. “We will be implementing for Mongolia a standard tax treaty form,” said Purev. “We are issuing a new investment law for foreign investors for the coming period.”

Once that is in place, tax treaties may follow if “we can come to an agreement to abolish any disadvantages.”

Mongolia’s massive mine will reach full production by 2021. To prepare for that, it wants to seal deals on tax which do not, in the words of opposition presidential candidate Natsag Udval, make its people “weak, pessimistic, not confident or self-reliant.

Source: Reuters

Categories: News

Mongolia’s ‘wolf economy’ wary of ‘resource curse’

Business Mongolia - Mon, 2013-07-15 20:48

The Genghis Khan Equestrian Statue tells plenty. The 131-foot stainless steel behemoth towers over the wind-swept Mongolian steppe 30 miles east of the capital city of Ulan Bator.

Built and paid for by a private tour company, the statue honors the founder of a great transcontinental empire. It also exemplifies the newfound pride Mongolians feel about recent democratic and capitalist reforms that have transformed their country.

The sparsely populated nation of 3.2 million discovered in recent years it had a cornucopia of iron, coal, copper and silver, even ultra-rare ore like uranium and fluorite. The estimated value of it all runs into the trillions of dollars.

Instead of jubilation, Mongolia’s recent windfall from mineral resources caused a lot of hand wringing among its political class and fierce debate in recent elections. After the so-called “resource curse” laid low energy-producing nations in the 1990s, Mongolians worry resource wealth could actually hinder economic growth, as well as exacerbate corruption and atrophy in other economic sectors.

“Of course we understand the risks,” said Mongolian Ambassador to Korea Baasanjav Ganbold in an interview on July 1 at his office in Hannam-dong, Seoul.

“Mongolia is working hard on the country’s legal framework for investment in its strategic sectors including mining. (The legal framework) should be very finely tuned so that regulations do not to scare off foreign investors but, at the same time, also establish clear limits.”

From jagged 14,000-foot mountain peaks in the west and north, slopping south and east into rolling steppe, the country is estimated to have about 130 billion tons of coal.

Mongolia is getting rich quick. It averaged annual economic growth of 4.5 percent since independence and democratic reforms in 1991 but, since 2004, that number surged to 9.4 percent.

Mongolia had the fastest-growing economy in the world in 2011 with a 17.5 percent growth rate. Though it tempered somewhat, the economy still grew 12.3 percent last year, the world’s fourth-fastest rate. Good times have compelled some to dub Mongolia a “Wolf Economy,” inspired by the Asian Tiger moniker of the 1980s.

The country had per capita income of more than $3,000 in 2012, a huge increase from just $450 in 2000.

Fast money means the country faces tough challenges in the form of corruption ― as part of the “curse” ― and the benefits of the boom economy not being shared evenly. Some 30 percent of the population still lives below the poverty level of $1.25 a day.

Transparency International ranked Mongolia 94th out of 176 countries surveyed in its 2012 Corruption Perception Index. Among the 28 nations in TI’s Asia-Pacific grouping, Mongolia was 14th.

On June 26, Mongolian President Tsakhiagiin Elbegdorj eked out reelection with 50.23 percent of the vote, just barely preventing a runoff against rival candidate B. Bat-Erdene who garnered 41.97 percent.

The election was essentially a referendum on Elbegdorj’s pro-foreign investment strategy to develop the country’s mining sector and his campaign against corruption. Ganbold said Mongolia could avoid the resource curse.

“Mongolia’s advantage is that the general public is very aware and conscious of what is happening in the economy. Mongolia’s press is free and the legislature is careful,” Ganbold said. “So, together these three factors ― public awareness, an aggressive press, and an active legislature ― will guarantee that the economy will go in the right direction.”

Mongolia is a landlocked nation closed in by China and Russia. Since the 1990s, it has tried to counterbalance the influence of its two big neighbors against so-called “third neighbor” countries.

“Mongolia has always emphasized developing relations with those countries that lie beyond our immediate geographical borders, countries such as Japan, the U.S. and European and Southeast Asian nations,” he said.

As director-general of the Asia-Pacific Affairs Division of his country’s foreign ministry, Ganbold helped guide Mongolia’s “third neighbor” policy from 2008 to 2013.

Ganbold is a Moscow-trained Korea expert with experience working as a diplomat in North Korea from 1989-1993. He arrived here at his current posting in February, and described South Korea as one of Mongolia’s most important “third neighbor” countries.

Two-way trade between Mongolia and South Korea totaled $500 million in 2012, making Korea Mongolia’s fourth-biggest trading partner after China, Russia and Japan. Korea is also Mongolia’s seventh-largest investor with cumulative investments of $300 million.

Korea is involved in major projects including Samsung E&C’s plan to build a new international airport in Ulan Bator scheduled to be completed in 2016. POSCO is now putting the finishing touches on a deal to build Ulan Bator’s fifth coal-fired power plant.

Korean companies will also get a piece of a sprawling $10 billion development project in Sainshand that will include coking coal plants, a copper smelter, factories producing iron pellets and cement and facilities to process food and make clothes.

Located in the eastern Gobi steppe, 300 miles southeast of Ulan Bator and halfway to Beijing, China, the thinly populated Sainshand looks to be transformed into a mammoth industrial park that will also include a power distribution network and a wastewater facility.

Ganbold said bilateral relations got a boost when former President Lee Myung-bak visited in August 2011. Lee upgraded ties to a “comprehensive partnership.”

People-to-people exchanges are at a moderate level with about 100,000 people traveling between South Korea and Mongolia in 2012. Some 26,000 Mongolians live and work in South Korea and an additional 5,000 study here at universities around the country. About 3,000 Koreans live in Mongolia.

Source: Korea Herald

Categories: News

MPP Renewal – Conference to be held on 20th of July

Business Mongolia - Mon, 2013-07-15 11:47

The oldest party in Mongolia – Mongolian People’s Party will hold its conference on 20th of July, 2013. It will discuss the results of the presidential election. Also, the renewal movement of the party will discuss if the current heads of the party should be held responsible and resign from their posts as secretaries and chiefs.

The party’s difficulties became apparent after it lost 3 major elections in a single year, parliamentary, local representatives and lastly, presidential. In the parliamentary election which it lacked the people’s support to become the majority after it was divided into 2 parties MPP and MPRP respectively. Number of influential leaders took off to side with the ex-president Enkhbayar Nambar who is currently serving time due to his corruption allegations.

Traditionally, the party chief becomes the presidential candidate, however, this year, MPP members voted that a former wrestler and champion to run for the president instead of the party chief. It caused scrutiny from the people, questioning the party’s leadership under U.Enkhtuvshin.

Some political analysts calculated that after the local representatives election the current heads of the party will be replaced by U.Khurelsukh and his affiliates – which didn’t happen.

The renewal movement within the party is fiercely calling for a change of leadership and strategies of party. Also, on 20th at the conference, date of the grand summit of the party will be established.

Now, it is up to the new generation of the party if they can renew their party and re-gain the people’s vote-trust or rust out from the country’s political scene.

Categories: News

5000 Mongolian folk dancers gather at Sukhbaatar Square

Business Mongolia - Sun, 2013-07-14 00:31

The Guinness World Record of the “Wonder of Mongolian National Wrestling” was registered officially to the Guinness World Record and it was announced that Mongolia held the Wrestling Tournament Record according to the official site of the Guinness World Record last year.

This year almost 5,000 traditional dancers from 21 aimags and the City have gathered at Sukhbaatar Square to perform a Mongolian folk dance in the effort to hold a Guinness World Record for the folk dance which represent Mongolians unique culture and heritage from the ancient days.

The Mongolian ethnic folk dance is undivided part of Mongolians` character, feature and personality.

The Mongolian folk dance involves over 4000 motions whereas gymnastic involves 2000 motions.

Mongolian folk dancers, including over 10 ethnic groups dressed in their own traditional costumes, have gathered  to set the Guinness World Record with the unique cultural heritage. These 5000 dancers will conduct a huge performance.

Among them  there are participants from three years old to eight years old who have their very own country style. According to the organizers of the event almost 80 percent of the Mongolian folk dancers are young.

The Mongolian folk dancers who believe that such an act is a historical event are planning to register to the Guinness World Record on July 10th just before the big days of Naadam.

Categories: News

Mongolia president sworn in pledging rapid development

Business Mongolia - Thu, 2013-07-11 20:18

Mongolia’s re-elected President Tsakhia Elbegdorj was sworn in Wednesday, promising rapid development amid a resources boom.

The ceremony was held outdoors for the first time, in front of a huge statue of Genghis Khan in Ulan Bator.

Several thousand supporters cheered after Elbegdorj, 50, wearing a long white traditional deel and white hat, took the oath before the image of the warrior who unified the nation 800 years ago and went on to build an empire stretching across Asia.

The Soviet-trained former military journalist and Harvard graduate helped overthrow Mongolia’s 70 year-old one-party system in 1990, and has twice served as premier. He was first elected president in 2009.

Mongolia is one of the world’s most sparsely populated countries but is enjoying a huge resources boom. In his speech Elbegdorj promised years of rapid development to come, including cheap ecologically friendly power and a new railway.

Roads would be built from each region to Ulan Bator, and the capital would have highways and a metro. “New towns will be built in Mongolia,” he added.

Elbegdorj, of the Democratic Party, won last month’s poll with 50.23 percent of the vote, ahead of wrestling champion turned lawmaker Badmaanyambuu Bat-Erdene on 41.97 percent.

The country’s first female presidential candidate Natsag Udval took 6.5 percent.

Source: FoxNews

Categories: News

President’s inauguration will be public

Business Mongolia - Tue, 2013-07-09 15:37

By the law, president has to take an oath before the parliament members. However, this year, parliament made the necessary changes in the law allowing president to inaugurate in public. The ceremony will take place just before the Naadam day, on 10th of July, in front of the Chinggis Khaan statue located in the parliament building.

Ceremony will include military parade and entertainment programs coinciding with Naadam. President’s adviser stated that it will attract tourists and will be a good gesture for the rest of the world.

The Western-style public inauguration is the first to happen in democratic Mongolia. Elbegdorj Tsakhia will serve the second-term in presidency.

Categories: News
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