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http://zgm.mn/post/798/

Hysterical biography of lawmakers

​Mongolian Parliament from time to time pays too much attention to minor issues​

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http://zgm.mn/post/798/


Then-Foreign Minister Zandanshatar Gombojav was identified as a “traitor”. He was blamed for concluding a secret negotiation to bury uranium wastes in Mongolia with the Americans and Japanese and claimed to have received generous bribe for this. Actually, no such thing has ever happened. No such explicit and secret negotiation were conducted anywhere. This was a deliberate policy not to have uranium exploration in Mongolia and agitate Mongolians enough to chase foreign investors through rumors and slanders. The open financier was a Japanese citizen with Korean ethnicity. It is possible that Russians may have commissioned all this. This attempt to chase out foreign investors from Mongolia was overwhelming and achieved huge and unexpected success. Member of the Party and comrade Zandanshatar Gombojav is a very sensitive person who made his career from an economist of a state-run-collective farm to the Foreign Minister of Mongolia. He thinks that preventing foreign occupation in the motherland is his duty and named it the Foreign Policy of Mongolia. He began acting very rough towards American and Japanese officials, completely avoiding them.

If met by an accident, he acts as if he is barking at them. He widely promotes his behavior domestically. He put on a face of a patriot and initiated a law to stop and curb foreign investment in order to prove he had nothing to do with the uranium when the election was nearing. Who would not partner with him in this noble cause? There is another important patriot named Byambatsogt Sandag. Also Enkhbold Nambar, who led Mongolia’s foreign relations before Zandanshatar Gombojav. They all got together to develop a serious law to restrict foreign investment in the minerals sector and allow parliament to review each investment case and provide special permit. Inviting Batbayar Nyamjav, who is reportedly a specialist in such adventures, also had a purpose. This idiot is capable of doing anything. The draft law was reviewed and became more strict. Its scope covered telecommunication, banking and financialsectors. They locked the door of Mongolia and sealed it. Now, let us all enjoy behind that locked door for eternity. It did not take long for the results to emerge. Those who invested in Mongolia began to run away quickly. Those who planned to invest realized that they will be robbed and escaped too. Mongolia’s export plunged 60 percent within a short time and the economy began to deteriorate.

Mongolia was announced as a country with the most unreliable investment environment. According to experts, Mongolia was forecasted to go bankrupt in 2013. It is possible as 90 percent of its revenue sources are locked and sealed off. This was done by the law. Large companies, which already invested, have froze their assets. Western companies like “Rio Tinto” and “Centerra Gold” and “South Gobi“ froze all their activities fearing further risks. Activities of domestic producers weakened and many were shut down. Cash flow was disrupted in the country. Construction, communication and other business sectors began to fall on their knees regardless of their size. I even heard that snuff tobacco box sellers complained about low price of snuff boxes because of coal. Thisis not the first or last example of how unaccountability hurts and damages national economy and even deteriorates further. Somebody initiated a madness to distribute cash before 2004 election and he was even proud of this. Further on, this became like a socialist competition. Cash incentive was initially started with a naive name ”incentive for children”, then it covered marriage and biological phenomenon of giving birth and then ended up with cash distribution for old people and public. Several billions of USD were spent on cash incentive.If it was used for infrastructure, education and economic reform, Mongolia would have been a different country today. Everybody says let us not depend on mining, let us develop other economic sectors. Money is the foremost requirement to do that. How are we supposed to develop other sectors when the mining sector is being blocked at its peak, draining all the revenues down the sink and publicly partying with what little remains.

• Rumors and slanders about burying uranium wastes were a deliberate policy on chasing foreign investors.

• Some patriots' law that covered telecommunication, banking and financial sectors closed the door of foreign investment for Mongolians.

• When Mongolian economy was saturated with cash and was developing to a new height, 68 percent windfall tax law was approved.

When Mongolian economy was saturated with cash and was developing to a new height, 68 percent windfall tax law was approved. It brought almost no revenue; however, it became a giant measure to scare away foreign investors. The outcome of this law emerged quickly and in 2007, the number of foreign invested companies dropped by 20.9 percent. Then there was the 2008 crisis. Also, production and sales of some commodities like gold criminalized. Initiator of this law is not a sane person. That insane person planned to raise USD 1.5 billion government bond with a high interest rate without any clear plan, creating a long queue outside his office asifit is his own. He spoke about supporting his former party of Mongolian National Progressive Party and reviving the faction, as well as cutting economic ties with Seoul, saying Koreans are abusing our women. It is reported that he said the bond was sold successfully because he held a fire worshipping ceremony and called for the public to organize fire worshipping ceremonies. He even said foreigners do not know how to make economic estimation and said they should learn from his daughter. He said he found this great idea while surfing yahoo search and said he will test it in Mongolia.

This is not a funny conversation of a psychiatric hospital. It was not even a joke. This was a serious talk held in Mongolia’s legislative body, a place where state policy is determined and wealth is distributed! All this crazy actions ranging from Law on Strategically Untouchable Deposits, which damaged the whole economy, to Law on Banning Immorality and Licentious Activities, Law Against Alcoholism and Smoking, Law on Pressuring Rich and Taxing their Savings, Law on Taking Care of Old and Children and Law on Cash Distribution and Awarding Marriages in order to support population growth were originated from his asylum. Initially, these acts looked very fair and patriotic. But in reality, these were the nonsenses that attacked emerging democratic system and pushed the public to commit illegal actions and caused enmity among social classes. Responses to these nonsenses were also very simple. Is it right to drink vodka; why can we not love our motherland; justice should be protected; are you going to turn your daughter into a prostitute etc. Some keen-eyed people see that the percentage of insane people in the Parliament rises after every election. That is in terms of medical science. Those stupid, rude and ignorant people who likes to become lawmakers repeatedly under the ”justice” mask are filling up the top legislative body. Initially, there were only one or two such people and then, they multiplied and became a group.

Maybe, the “Egiin river power station’s 13” were the first of such group. The next was the group of people who persuaded Oyun Sanjaasuren, who was abroad for many years and did not know much about domestic situation, to form a separate political party by saying “we saw how the democratic party members killed your brother with our own eyes” and played their politics. Groups after that had a purpose of competing with corruption,stealing for their own benefits rather than for political purposes. It is common to use naive idiots who have mental problems or want to be loved by the public in such manners. About dozen companies who faced a huge loss by investing in mining deposits figured out a way to get compensation from the State. They drafted a law on banning exploitation of earth along river basins and gave it to an idiot of a lawmaker. According to this law, the state will be responsible for the losses. Hundreds of licenses were suspended. Even companies from Gobi desert became eligible to be included in this on their own request under the pretext that there could be water and spring under the Gobi soil. Compensations for these companies reached USD 8 billion, which exceeds the GDP at the time. That so-called patriot who submitted this law, is the one who cut down and exported trees from Tuj pine forest to the People’s Republic of China. Do you remember those people who show up every night on TV talk show program “never ending conversation”?

They repeatedly talked about isolating this country from the rest of the world and harming the economy and not accumulating the revenue and distributing it for several years sounded like sophisticated plan of countries that are hostile to Mongolia. At that time, they were just hoping to become a mere lawmaker. However, after the election, they all got promoted to administrators of the State Budget. Promise is a promise. The man who became the mining minister immediately announced that foreigners will be chased out from Mongolia in order to realize his pledge and this was immediately translated into 23 languages of the world. It set a new record for the Mongolian literature. The book “Mongolian secret history” being translated into 13 languages is now an old record. Mongolian Parliament pays too much attention to minor issues from time to time; for instance the Parliament held serious discussions over the President Ochirbat Punsalmaa’s choice of word “luxurious” during a party, and MP Ganbold eating a head of sheep in front of foreigners during one reception. However, they were silent when mental asylum patients repeatedly defiled the economy of Mongolia. Parliament is a place where they can do anything they want. In his “Divine Comedy”, Dante wrote “the hottest places in hell are reserved for those who, in time of great moral crisis, maintain their neutrality. Many lawmakers who are sane, have good education, and considered just by the public, sits idly when laws and regulations that could harm the country is being passed by idiots although they have sworn duty before the public. If what Dante said was true, these sinners will go to the cruelest places from the three chambers of the hell.

2013.5.5


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Inflation rises above BoM target

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National Statistics Office (NSO) released the year-end preliminary results of social and economic situations of Mongolia yesterday. The year-end economic indicators were mostly positive as expected thanks to mining sector boom and the implementation of the International Monetary Fund program; however, inflation peaked above the Bank of Mongolia’s (BoM) target level for the second month in December 2018 following the rise in fuel prices and consumption.

2018 was rather generous for Mongolia considering the fact that the economy grew by 6.3 percent in the first half. At the time, the Asian Development Bank highlighted that this was “driven by the expansion of investments in the mining sector and an increase in household consumption on the back of improved household loan grants.” As mentioned, consumer loan played its role in the economy. However, growing inflation is drawback for increased consumption. Consumer loan pushes households to pay three-quarters of their income to loans, creating a situation where the consumer could face bigger risk from the loan repayment.
According to the report, the inflation measured by the national consumer price index increased by 8.1 percent from the previous year. NSO explained that the growth was mainly contributed by increases in prices of food and non-alcoholic beverages by 9.1 percent and alcoholic beverages and tobacco by 8 percent, transport by 9.7 percent, housing, water, electricity, and fuels by 16.3 percent, and health by 11.4 percent.

The Monetary Policy Committee reached a decision to limit household debt-to-income ratio at 70 percent and set the maturity of non-mortgage commercials to not exceed 30 months, which took effect on January 1, 2019. Plus, petroleum price was lowered by MNT 100 this week; thus, economists expect the inflation to stabilize in the upcoming months.

Additionally, the total trade turnover reached USD 12.9 billion as of December 2018, of which exports totaled USD 7 billion and imports - USD 5.9 billion. Compared to the same period of the previous year, export increased by 13.1 percent and import by 35.5 percent. Money supply reached MNT 19.5 trillion in November, displaying MNT 3.6 trillion growth (4.4 percent) year over year. The currency issued in circulation totaled MNT 968.6 billion, an 8.2 percent increase. Additionally, the nominal average exchange rate of the MNT against the USD announced by the Bank of Mongolia depreciated by 8.4 percent from the previous year and fell 3.8 percent against CNY.

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Dissolution of consortium suspends Fifth Thermal Power Plant construction

2019 dubbed Smart Energy System year

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Minister of Energy Davaasuren Tserenpil announced 2019 as the year for smart energy and disclosed the current situation of certain energy projects, including the constructions of the fifth thermal power plant and hydropower plants during a press conference yesterday.

Mr. Davaasuren addressed, “I, hereby, announce this year as the year for Smart Energy System. The entire world is adapting to the usage of a smart system. We have to follow this practice. This will allow us to settle various issues. In doing so, we will involve top-notch programmers, technicians, and engineers, as well as all the government bodies in the energy sector.”

Within the frame, electricity and heat measurement instruments will be installed in power plants, which will drastically reduce the risks of accidents and delays. For instance, the ministry is planning to cooperate with the Russian Federation to install a smart system in turbine generators. The cost is currently unidentified and will be set soon as the ministry assigned tasks to the boards of implementing companies.

According to the ministry, the construction of the Fifth Thermal Power Plant has been suspended due to the dissolution of the consortium. Therefore, the ministry plans to increase the capacities of currently existing power plants. For example, the feasibility study of expanding the capacity of the Second Thermal Powerplant to 300MW has been completed. Additionally, Mr. Davaasuren noted that the night-time electricity discount will further continue in 2019- 2020.

As for the Erdeneburen Hydropower Plant, the ministry has reportedly settled the project financing and is planning to commence the construction this year. However, the Egiin Gol Hydroelectricity project is on a hold-up due to environmental issues. The minister highlighted that the completion of these two hydropower plants will create a fully independent electrical system.

On the air pollution reduction actions, the ministry announced to install a 4 kWh heating equipment in 42,000 households in Ulaanbaatar city.

ENERGY SECTOR FACES MNT 20 BILLION LOSS ANNUALLY

According to the Director General of the Energy Regulatory Commission Tleikhan Almalik, the base electric charge did not change since 2015. Currently, Mongolia is purchasing electricity at MNT 32,000 per kWh and is selling them to private entities at MNT 9,000 per kWh. The annual loss of the energy sector is currently over MNT 20 billion. With the exception of coal, all the materials and equipment are imported, and due to the increase in foreign exchange rates, the deficit has further piled up. Therefore, the commission is planning to revise the base charge this year.

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Parliament forms quorum after two months

MP Ulaan Chultem appointed as the Minister of Food, Agriculture and Light Industry

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After prolonging the lawmaking process for about two months, the Parliament finally formed a quorum last week. With multiple urgent items of high importance on the order list, the Parliament appointed Ulaan Chultem as the Minister of Food, Agriculture and Light Industry.

Next on the order list was the suspension of some Parliament members’ special rights who have involved in Small and Medium-sized Enterprise Development Fund embezzlement allegations. The Prosecutor General of Mongolia Enkh-Amgalan Magvannorov submitted a bill on suspending the rights of four Parliament members. Although a number of public servants related to the case were detained, the Parliament viewed that the loans of four MPs, namely Soltan Gombojai, Damba-Ochir Dorjdamba, Undarmaa Batbayar and Enkhbold Luvsan, drawn from the SMEDF are in line with the law of Mongolia.

At the plenary session, Mr. Enkh-Amgalan addressed, “We are investigating everyone related to funds. This is a very large-scale investigation. It is taking time because of the lack of staff. Only 25 people are working on each loans granted from the SMDF and the  Independent Authority Against Corruption is investigating the fund. There are many others, including Animal Husbandry Fund and Agriculture Support Fund.”

Additionally, the end to public demonstration on ousting the Speaker was followed with the meeting of Standing Committee on State Structure last friday. The committee held discussion on President-initiated bill on Parliament Session Procedures, which allows the Parliament to oust the Speaker with the majority votes from Parliament members. Accordingly, the bill will be discussed by the Parliament this week. The ratification of the bill lead to potential dissolution of the Parliament as Democratic Party caucus began collecting signatures for a petition to oust the Speaker.

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Higher gold royalty poses threat to FX reserves

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Due to consecutive failure to form the quorum, the Parliament has delayed its plenary sessions for two months. One of the key items on the order list was a bill on extending 2.5 percent gold royalty for another three years, which was supposed to be ratified before the turn of the year. Thus, gold tax will now be set at pre-revision level at 5-10 percent, depending on the global price of gold.

According to a study conducted by the Bank of Mongolia (BoM), higher royalties lead to  lower gold purchase, which ultimately affects foreign exchange (FX) reserves. For instance, gold tax was at an unbearably high level of 68 percent with the sudden income tax in 2006-2013. As a result, gold purchase fell from 15.5 tons to 2.1 tons by 2010. In other words, the BoM’s treasury fund was almost drained empty.

Officials explain that the sudden income tax, which raised gold tax from 5 percent to 68 percent, was due to boom in copper price; however, the decision had more adverse effects than its benefits as the number of artisanal miners drastically increased as a result.

The 2.5 percent gold royalty was approved in 2014. The result was almost immediate as gold purchase consistently increased in an annual amount, reaching a record high of 22 tons last year, which is 10 percent higher than the previous record in 2017, expanding FX reserves by USD 800 million to a 15-year record.

Therefore, the increased gold royalty is raising concern over a potential tax avoidance of gold producers, reduced gold purchase and increased illegal transportation of gold. A spokesperson of the BoM previously stated, “This law was ratified to boost the economy that was collapsing in 2014. The 9 percent royalties will increase budget revenue by only MNT 50 billion. BoM views the 2.5 percent royalties should be extended by at least 3 years.” BoM estimates to increase foreign exchange (FX) reserves by USD 750 million this year. The 2019 Monetary Policy Guidelines ratified by the Parliament stated to increase FX reserves to USD 6.5 billion in the middle-term.

As for other countries, gold royalty stands at 3 percent in the U.S, 5 percent in Brazil, 4 percent in Indonesia and 2.5 percent in India. This shows that the current 5-10 percent tax is higher than average. 

Miners and investors seek favorable tax environment. China, for instance, deduct only CNY1.2-7 per ton of gold depending on the capacity of the mine, technical conditions and locations, as well as 2 percent royalty on import golds.