Mongolia Business and Mongolian Daily Business News

Yesterday a regular session of the Cabinet set the following issues for discussion:

Helicopter is to be bought

Last year, the Government and the Parliament set to buy 2 units of helicopters for the use of the Ministry of defense and agencies including border protection, emergency, police and other Government organizations. The first part of the helicopters-MI171E helicopter for searching and aiding was brought on the 4^th of this month. The assembly of the second helicopter which is for passenger and freight forwarding has been completed and is now under testing. It will be received next month. The remaining purchase price of the helicopters which is MNT 5.2 billion is to be provided as budget loan and the Cabinet meeting agrees that it should be repaid following the state budget determinatives. Read the rest of this entry »

Last night petroleum importers added the price of gas by MNT 250. As a result customers pay MNT 1740 for AI-80, MNT 1685 for AI-92, MNT 1885 for AI-95 and MNT 1990 for diesel. Gas provider commented on why the price was increased, “As explained by our authorities, the Government freed gas price.” And that’s why a liter gas costs USD 1.5. Petroleum price is constant in the world market however it goes up in Mongolia. Related officials explained it that Russia increased the price of petroleum product imported to Mongolia though gas price in Russia didn’t increase.

What we have to do is to make it clear from importers who don’t pay customs tariff. Following the price increase, transport microbus price went up by 2-3 times, reaching MNT 400-500.

Exhibition fair of the Democratic People’s Republic of Korea opens a fair exhibiting national pharmacy, embroidery arts, shoes and handcraft products in the IT Park. About ten organizations including International Handcraft Company, Ginseng, Kenrein and Mannyong attend the fair, strengthening bilateral collaboration of the two countries and promoting goods and products of the country. Also Ginseng Pharmacy Company, which extracts all its drugs from herbs, provided advices to customers. Well known in the world and in the country for its ginseng products, the company demonstrated ginseng tea, tiger bone spirit infusion, pills extracted from deer antler and anti-drug pills. These products are sold between MNT 4000 and MNT 287’500. The exhibition will be open until 19^th of August.

Gas price went up by MNT 150-200 last Thursday. Since we have a standard that commodity price goes up following the increase in gas price, this time people concerned that price of other goods would fly high. However, the good news so far is that price of commodity goods didn’t go up. Beef price went down by MNT 500-800 in comparison to that of 5 days ago in Bumbugur and Huchit shonhor trading centers. It is worth praising that price of meat, which showed no decrease since spring, fell down rapidly. Butchers say nothing about the price decrease however it is because of the start of schooling. Also dairy product price showed a slight decrease and price of other goods did not increase. Some salesmen say, “It would be okay in general. There is no need to increase price but the price increases when goods become scarce.” Anyways, commodity goods price will not increase in the near future however taxi price increased to MNT 400-450 per km.

As of the end of last year, our economy went up by average 8.7 percent for last 5 years. GDP per capita increased by 2.9 times, reaching USD 1.5 thousand. State budget balance showed positive indications since 2005 and share of foreign loan in GDP decreased by 2.5 times, reaching 40 percent in comparison to previous 5 years. These detailed numbers were mentioned at the seminar on Statistics on balance of payment and foreign investment position, jointly held by the Mongolbank and Ministry of Finance last Friday.

International Department of the Mongolbank reported on statistical theory and methods on balance of payment and foreign investment position, outline on foreign economy and market in the years between 2004 and 2008 and domestic currency market, which was of great interest to the participants. Read the rest of this entry »

Prime Minister S.Bayar worked in Khubsgul province during 6th and 7th of this month. After getting acquainted with activities of province administration and government agencies, Prime Minister team held meeting with civil representatives of the province, and worked in Shine-Ider and Jargalant soums. Investment amount made to the province increased dramatically and people are happy with a lot of social and economic activities.
In 2008, construction work of MNT 1.4 billion in province and MNT 218 million in soums will be distributed. Almost everyone asked about MNT 1 million to be provided by DP clarifying if it was a real promise. Prime Minister replied that not MNT 1 million but also MNT 1.5 million could be provided but fundaments must be created. “The most important priority was to modify the Minerals Law. Read the rest of this entry »

Anti-corruption agency inspected the case related to those committed to bribery and corruption in order to pass huge amount of Yuan through border of Mongolia and transferred the case to the Public Prosecutor. The court trial was held last Friday in Khan-Uul District court. The court sentenced 1-year imprisonment for T.Regzen, a customs inspector who got MNT500.000 corruption for passing 3.240 million Yuan through Mongolian border, 5-year imprisonment for Ts.Galsandamba, Intelligence officer who got MNT 1 million and 90-100 thousand Yuan corruption in Erlian, China and 6-year imprisonment for B.Otgonbayar, who corrupted them.

We got details from Mr. B.Enhhuyag, First Deputy Governor of the Mongolbank on why commercial banks halted mortgage lending.

How does Mongolbank’ raise of policy rate affect on the economy? Did commercial banks halt their mortgage lending because of it?
Mongolbank has increased its policy rate three times since last October. We conclude that lending growth, budged expenditure and money in people’s hands through investment and social aid prompted inflation. According to the survey, lending in Mongolia increase by an average 50-60 percent annually. This is much. Thus, lending should be between 30-35 percent. Read the rest of this entry »

It is said that people bought much USD due to rumors related to currency rate fall-down. We got details from M.Badam, Director of “Suvargan Del” currency exchange.

With reference to rumor on fall down of currency rate, currency exchangers and people generated much USD on hand. Is it true?
There is no change to foreign currency rate. Exchangers won’t keep much USD on hand. Money should be circulated. Few people, who believed in rumors on currency rate drop-down, came to buy USD. The Government explains it should not purposely have the currency rate fallen down and says the rumor is groundless. Immovable property rate has increased 1 fold and currency rate fell down in comparison to that of the previous year. Last year, 2-room apartment cost MNT 30 million whilst this year it reached MNT 60 million. Commercial banks stopped their lending. It is said that they are increasing savings and mortgage loan interests.
By how many percent?
Mortgage loan interest, which was 1.3 percent, will be 1.5 percent. And that’s why lending is halted temporarily.

According to the conclusion of the working group of IMF, the implementation of welfare program will boom inflation. Mongolian currency becomes weaker against foreign currency and it will heat up the consumption price of. The inflation rate reached 17.5% by January 2008. The experts concluded that money distribution and social welfare expenditure are severely affecting. If a populist program to give 50.000 MNT to citizens of Mongolia will be implemented, the inflation rate will reach beyond 20% and loaf of bread will cost far more than 1000 MNT. Therefore, IMF strongly recommends to the Government of Mongolia, not to implement any new social welfare program.