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http://zgm.mn/post/2817/

Mongolia faces need to prevent potential greylisting

Performance in the 11 targets can be improved over five years

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http://zgm.mn/post/2817/


In 2017, FATF applied enhanced due diligence for Mongolia and gave 40 recommendations to implement in connection with Mongolia’s failure of meeting 11 targets of the direct implementation section. If the country fails to complete the tasks, it will drop into the grey list, increasing the possibility of falling into the blacklist.

Mongolia managed to get out of the Financial Action Task Force (FATF)’s grey list in 2014 after taking action to combat terror funding and money laundering. At the time, it had no direct impact on citizens and enterprises due to the simple international control and small economy of the country. If we get into the grey list, all foreign transactions and foreign investments will halt, lowering the credit rating.

However, the performance in the 11 targets can be improved over five years, according to the officials. It is crucial to prove that Mongolia’s AML/ CTF system will be solid through 2022 at least. 40 recommendation of FATF is a concern to the whole nation, including the government bodies on all levels.

Mongolia became a member of APG in 2004 and passed its Law on Combating Money Laundering and Terrorism Financing in July 2006. Since then, it has been intensifying actions to eliminate and prevent this type of crime.

Bank of Mongolia (BoM) is paying special attention to this issue, assigned a working group to present the report on AML/CTF measures. The working group will report the fulfillment of FATF’s recommendations before the APG annual meeting in late August in order to prevent greylisting.

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Amartuvshin: Mongolia’s economy is smaller

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The Boao Forum for Asia was held in Ulaanbaatar on August 19- 21, discussing several crucial issues in the region. Amartuvshin Otgondavaa, President of Mongolian National Chamber Of Commerce and Industry (MNCCI) gave a brief interview to talk about the significance of the forum and planned projects of the chamber.

-What was the chamber’s main role in the forum? What are the chances to enhance trade and economic cooperation in the region?

-In terms of population and increasing consumption, Asia is one of the important regions in the world. We should focus more on Mongolia’s participation in the region’s integration. Mongolia’s economy is smaller than the other countries in Asia. It’s important to invest in the mining industry effectively. Also, Mongolia can benefit from economical integration through developing the other sectors, including, education, health, IT, and agriculture.

-Recently, some mining companies’ licenses were revoked. What is your opinion on this?

-It’s about lacking connectivity between the government and local entities. And investment needs time. Instead of interfering with mining companies, the government should improve its connectivity with middle-level administrations of the provinces. Private entities are not responsible for the order that has been made already. On the other hand, it’s not right to blame the entire business sector for the illegal activities of a few companies.


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Market value up 4.83 percent in H1

Government securities trading 8.76 percent of the total trade

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Market value increased by 4.83 percent, to MNT 2.6 trillion in the first half of 2019. Total of 376.9 million shares worth MNT 82.3 billion was traded at the primary and secondary market in the reporting period. 79,800 government securities worth MNT 7.9 billion were traded Trade at the Mongolian Stock Exchange (MSE) totaled MNT 90.2 billion, increasing by MNT 12.1 billion or 16.1 percent compared to the same period of last year. Stock trading accounts for 91.24 percent or MNT 82.3 billion, government securities trading 8.76 percent or MNT 7.9 billion of the total trade.

The MSE has registered 4 new securities companies in the reporting period, and trading in the primary market totaled MNT 42.5 billion, three times higher than the same period of last year. In order to ensure compliance with the obligations of registered companies, MSE excluded 22 companies from registration due to non-performance of their obligations under the law.

Even though the primary market trade for Government securities was not active, MNT 994.4 million of income was generated and cost reached MNT 716.9 million, totaling the net income at MNT 277.4. In its financial statements, the deficit of MNT 204.6 million has been confirmed as a pre-tax loss. Compared to the same period of the previous year, total revenue increased by 25.3 percent, trading fee income sore by 34.6 percent and fee service fee grew by 24.6 percent respectively. A total of MNT 274.9 million were spent on the state budget which is 25.1 percent higher than the previous year.

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Petro Matad caps permitting progress for Mongolia wells

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Mongolian oil explorer Petro Matad Ltd has completed all processes for obtaining the land permits for the Heron and Gazelle well sites. The company is now waiting for the final signature from the local governor to allow the permits to be issued.

In the meantime, operations are continuing as normal at the Heron well site and based on current performance the drilling and logging of Heron-1 are forecast to be completed around 9 September, Petro Matad said.

The company’s operations at Red Deer are proceeding as planned, with the well reaching its intermediate casing point and preparations underway to drill the next section.

The Heron, Gazelle and Red Deer wells are all situated in block XX in eastern Mongolia. Shares in Petro Matad were up 4.5 percent at 7.52 pence on Tuesday in London.

Petro Matad is the parent company of a group focussed on oil exploration, as well as future development and production in Mongolia. At the current time, Petro Matad holds 100 percent working interests and the operatorship of three Production Sharing Contracts with the Government of Mongolia. Block XX has an area of 10,367 square kilometers in the far eastern part of the country, and Blocks IV and V have an area of 29,062 square kilometers and 21,143 square kilometers, respectively, in the central-western part of the country.

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Service sector spurs economic growth

Competition in the trade and services sector has been rising rapidly

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Mongolia’s GDP growth is showing good performance in 2019, as the service sector improves. Competition in the trade and services sector has been rising rapidly, and demand for human resources in the field is increasing. As the players grow, new management, quality of service and standard is approaching the world standard step by step. Public service, hotel, and domestic trade that are included in the service sector have increased, according to the National Statistics Office (NSO).

Trade revenue totaled MNT 10.8 trillion in the first half of 2019

In particular, trade revenue totaled MNT 10.8 trillion in the first half of this year, up 23.1 percent over the same period of last year. The retail sector, particularly, online retailing is expanding its scale in the market.

Following the downturn in mining commodity prices, the hospitality industry, especially the foodservice revenue drops. However, it increases as coal prices improve. For example, in the first half of this year, the catering industry’s income reached MNT 217.3 billion, up by 15.6 percent compared to the same period of the previous year. Also, the restaurant revenue grew by MNT 22.6 billion in the reporting period, triggering the GDP to increase.

The industry revenue for hotels rose 40.7 percent, to MNT 66.4 billion in the second quarter of 2019. The number of visitors reached 372,000, up by 70,000 over the previous year. There has been a growth in the hospitality industry in 2018, and this has also shown an increase, supporting the economy.