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Auditor turns to Prosecutor over air pollution-related cases

First-ever general hearing on air pollution takes place

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http://zgm.mn/post/1936/


Under the initiatives of the President Battulga Khaltmaa, the first-ever general hearing on air pollution reduction measures was held yesterday, during which the Deputy General Auditor Oyunbileg Sanjaadorj informs that a list of authorities responsible for misuse of air pollution budget has been submitted to the Prime Minister and related officials, and related cases on six private entities have been sent to the General Prosecutor.

At the meeting, MP Eldev-Ochir Lkhagvaa, who chaired the hearing, did not allow the President or public representatives for inquiries when approving the procedures, which led to criticisms that the hearing turned into a regular meeting of a standing committee.

The purpose of the hearing was to discuss the spendings of air pollution reduction activities and decide on firm solutions to tackle the issue. For instance, the President formed a research team to study the most efficient options to tackle air pollution in Ulaanbaatar last year. The team concluded that the best solution was to accommodate the 200,000 households living in ger districts to the currently available apartments for 110,000 households. Accordingly, the President has issued a request to ratify a housing policy that will allow no-interest loans for ger district households.

As the initiator, the MPs allowed the President to address the hearing once, in which he remarked, “We all know the current situation of air pollution. We have to decide on solutions here. Rural development is one of the solutions to migration-driven air pollution. Not smogless stoves. We need firm actions.”

Owing to the fact that both the President and public representations were silenced, the hearing continued with presentations on air pollution reduction actions. Ms. Oyunbileg criticized, “The air pollution reduction actions since 1995 were non-correlated. Both foreign and national projects failed to show notable results. The distribution of enhanced stoves was inefficient. The stoves failed to perform as planned because of improper use. Results of discounted insulation remain vague due to the lack of studies on results. Same goes to the annulment of night-time electricity tariff. A research was conducted on air pollution reduction, but the results were not evaluated and the research was never used on any projects.”

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Naadam opening to be performed for foreign visitors

The standard ticket price is MNT 16,000-24,000

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Naadam Festival 2019 will be held at the National Amusement Park at 21.00 pm for foreign visitors. The official opening ceremony of the Naadam Festival takes place at the National Sports Stadium in Mongolian. Therefore, foreign tourists cannot fully understand the meaning of content. This year, the Ministry of Environment and Tourism decided to re-organize the opening as Naadam Night show in English.

Also, there is a problem of lack of opening ceremony ticket. National Sports Stadium has only 12,300  seats and finding tickets is a big problem tourists face every year. A total of 15,000 tourists submitted a request to watch Mongolia’s traditional festival opening ceremony. However, around 1500 tickets were allowed to the tourists. This year, the standard ticket price is MNT 16,000-24,000 the same as the last year.

“The Stadium has 13,500 seats, and tourists can receive 3500 of it. This is our capability. If we allow all the tourists who want to attend the opening of the Naadam Festival to enter the Central Stadium, Mongolians cannot watch their traditional festivals. We are aiming to receive one million foreign tourists in 2020, making an effort to improve sanitation standards in tourism zones,” the Minister of Environment and Tourism Tseerenbat Namsrai said to the press.

In Mongolia, the tourism season starts in May, and travelers tend to attracted by Naadam Festival. There is statistical data on an average of 450,000 tourists visit Mongolia annually. However, according to the officials, the number of tourists visiting Mongolia only exceeds 90,000 per year.

Tourists came to Mongolia decreased by 4.8 percent last year

During Naadam, National Sports Stadium become extremely crowded, due to the centralized trade and trade services. “730 organizations, which include food, souvenirs, handicrafts, and other trading will work in the stadium and Khui Doloon Khudag. Under General Manager of Ulaanbaatar’s order related to Naadam, the Metropolitan Professional Inspection Department, Police Department of Ulaanbaatar city, and the Mayor’s office of all districts will jointly work in maintaining security,” said the spokesman.

The number of tourists came to Mongolia last year decreased by 4.8 percent. The decline in tourists from China and Australia was the key factor to it. Although the total number of tourists has dropped, tourists from Ukraine and Hong Kong have risen. In particular, the tourists from Ukraine increased by 37.2 percent compared to last year. Traveling flow between the two countries has doubled since the adoption of the non-visa law to Russia.

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Mongolia faces needs to boost budget revenue

Experts see possibilities to increase tax income

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Budget revenue of Mongolia is at risk due to tax deficit, deduction, and discounts for mining investors. Furthermore, the Extended Fund Facility program will expire in the coming year, threatening the budget decrease. As a result of the need, officials propose the possibility to increase budget revenue by setting up the right tax policy.

One out of every MNT 10 of Mongolia’s tax revenue goes to discounts and exemptions. In the last four years, tax deduction and exemptions to citizens and entities of Mongolia equal to nearly four trillion tugriks. The volume has increased, and exceeded one trillion tugriks this year. This number is expected to reach MNT 1.2 trillion next year, according to the 2019 budget. Currently, there are over 40 discounts and 180 exemptions nationwide.

As of 2018, there are 1.2 million working population in Mongolia

Taxes are the main source of Mongolia’s budget revenue, which accounts for 80 percent of it. However, the country can not fully obtain its tax. The tax deficit equals MNT 800 billion. As of 2018, there are 1.2 million people, who are working in Mongolia of which 650,000 are paying social insurance. The rest of the working people are receiving social and civil services without paying social insurance. This may lead the country to inequality of social allocation.

More specifically, government revenues are mainly generated from taxation and royalties from the mining industry, but the country provides benefits to direct mining investors by showing VAT and profit discounts. International organizations have also warned the need to organize such tax breaks. According to the World Bank, the detailed study of these preferences, goals, and economic feasibility is required.

In 2017, Mongolia received an extensive bailout package from the International Monetary Fund (IMF) under its Extended Fund Facility (EFF). Since taking the IMF loan, Mongolia has had a good economic situation. When the three-year financial program expires in 2020, the revenue sources will decrease gradually and spell risk to the budget.

In order to expand budget revenue, Mongolia needs the policy which enables the government to identify unregistered and potential taxpayers and enhance accountability in tax administration. The experts also underscored the importance of simplifying tax payments, using electronic invoices, improving taxation and information strategies.

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BoM’s gold purchase falls short of previous records

Annual gold purchase almost doubled in 2018, reaching 22 tons

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The Bank of Mongolia (BoM) purchased 6 tons of precious metals in the first of 2019, down 846 kg or 12 percent from the same period last year. The decline was mainly due to the expiration of the productive period of low royalty taxes on gold with the 2014 amendments to the Minerals Law, according to the officials. The average price of 1 gram gold at the BoM was MNT 658.22 as of June 28.

The 2.5 percent of discounted royalty on gold mining expired on Jan 1. From then on, 5 to 10 percent royalty taxes on gold mining have been imposed on miners, driving in the central bank’s gold purchase down 71.6 percent yearon-year from January to March.

Mongolia‘s parliament has set the gold royalty at a 5 percent rate to recover the BoM’s gold purchases.

Gold purchase by the Bank of Mongolia has been increasing sharply thanks to the discounted royalty on gold mining, the central bank said in a statement, noting that it has purchased a total of 5.2 tons of gold since the new rate came into force on April 8.

Purchasing gold is said to be one of the key instruments for the Mongolian central bank to increase its official foreign exchange reserves. The central bank of Mongolia purchased only 12.7 tons of gold in 2014. Thanks to the low royalty taxes on gold with the 2014 amendments, its annual gold purchase almost doubled in 2018, reaching 22 tons, according to the BoM.

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Mongolia may miss out on 2019 coal export target

Coal export of Mongolia remained 20-30 percent behind plan

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China's coal import, which accounts for most of Mongolia’s coal exports and a substantial proportion of world coal consumption, increased 30 percent, reaching 29.6 million tons in the last five months, according to China’s General Administration of Customs. However, the country’s coking coal import has declined 2.4 percent to 5.92 million tons in May compared to the same period of the previous year.

As a result, Mongolia’s coal export to China dropped 8.9 percent to 3.68 million tons. Mongolia exported a total of 15 million tons of coal earning USD 1.2 billion in the first five months of 2019, which is only equal to 35 percent of 2019 export target of 42 million tons.

Australia’s coal export also slumped by 5.5 percent to 5.25 million tons, due to the relationship between the two countries. Australian coal exports have faced border crossing bans, after the country refused to use Huawei’s 5G service. Coking coal accounted for 26 percent or 1.38 million tons, which is the poorest performance since February 2019.

In the meantime, the coal export of Russia to China, the world's sixth largest coal producer ranked after China, the United States, India, Australia, and Indonesia, rose 64 percent to 3.93 million tons. 15 percent of it or 596,000 tons were coking coal. Indonesia also saw 46 percent of growth in its export selling 13.2 million tons of coal.

According to the Ministry of Mining and Heavy Industry (MMHI), the export of Gashuunsukhait port is in the range of previous years and coal export from Shiveekhuren port reached 50 percent of the estimated amount. As a result, Mongolia’s coal export remained 20-30 percent behind plan. In the second quarter of last year, the country lost its opportunity to export two million tons of coal, due to the C lisence at ports between China and Mongolia.

Experts predict China’s demand to stay at last year’s level. The second biggest economy of the world’s coal imports declined in the second half of the last two years, signalling concerns that Mongolia may fall short of its ambitious goal.