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http://zgm.mn/post/231/

Smartphone demand shifts to app businesses

Information Technology industry revenue total MNT 1.07 trillion

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http://zgm.mn/post/231/

The fast expansion of global smartphones market had massive surge in Mongolia's IT industry as 3G data usage grew by 51 percent, (from 17.4 terabyte to 26.3 terabyte) last year, according to the Communications Regulatory Commission of Mongolia (CRC). The CRC has recently released the 2017 key indicators of telecommunication sector. The report shows that number of active mobile users reached 3.9 million in 2017, a 12.2 percent growth compared to 2016. Smartphone users in Mongolia totalled 2.4 million, of which 71.9 percent were Android OS users, while iOS users amounted to 21.7 percent. The demand is relatively high for a small economy. Experts expect mobile services to grow faster as they envisage the economy to pick up in 2018-19, highlighting that mobile services have expanded in Mongolia even during economic difficulties.

However, demand is becoming one of the major challenges for global smartphone industry as users tend to hang on to their phones longer. It is because big leaps in features, such as better cameras are no longer significant for consumers. Google’s vice president and product manager Mario Queiroz said last year, “We are getting to the point where photo quality is already so good that the focus is turning to the smarts that you build beyond that.” As such, the fall in smartphone demand is leading a constant growth for app businesses. Over the years, several innovative models emerged in Mongolia, such as financial service app LendMN and UBCab taxi service. As a developing country, the app market in Mongolia is fairly young, but commercial banks’ engagement in fintech apps provide favorable payment infrastructure. For example, Trade and Development Bank’s Most Money app provides easier credit purchase for prepaid mobile devices. In 2017, IT industry revenue totalled MNT 1.07 trillion, half of which was by mobile network. Investments in the IT sector amounted MNT 173.2 billion, while taxes generated from the sector accounts to MNT 150.2 billion.


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Ts.Davaasuren: OT sat idle for 5 years after power plant permit

​Review of working group on OT may include termination penalty of PSCA ​

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Earlier this week, the Minister of Energy Davaasuren Tserenpil gave an interview to a local media outlet “iToim.mn” on recent scandalous deals in the energy sector, including the Power Sector Cooperation Agreement (PSCA) with Oyu Tolgoi, and expressed Mongolia’s position on them.

-Will the Government renegotiate Eastern Energy System agreement? Why was the contracted get terminated?

-The agreement violated the article 7.3 of the Investment Agreement, which states to draw electricity from the territory of Mongolia within four years of operation. In other words, the Parliament-consented agreement was hard to amend for the Cabinet without having to negotiated with the Parliament. Thus, the agreement was terminated. Arnaud Soirat, Chief executive of Copper and Diamonds of Rio Tinto Group, said some uncanny remark that the company will establish the plant if the Cabinet issues a demand to draw electricity domestically within four years. That mister still do not understand the Investment Agreement. They accepted that responsibility under the investment Agreement. They were obliged to draw electricity within four years after commencing operations due in 2017. I do not understand what this mister meant by “issuing a demand”.

Generators with over 240MW cannot be installed in Mongolia

-It seems that the location of the power station is currently under discussion?

-I am curious about that. They received a 5-years permission to build the station at the mine from our ministry in July 2012. The permit was expired in 2017. Nothing has been done within that period. They should stop playing with the Government of Mongolia. They did not lift a finger before the Southern Region Power Sector Cooperation Agreement. The 2014 Tavan Tolgoi negotiation was also the same. Therefore, the Cabinet decided to terminate the contract.

-Will the Tavan Tolgoi coal-fired power station project continue?

-The Parliament and Cabinet expressed their position that Mongolia will build the power plant based on Tavan Tolgoi residual coal deposits. It is up to them to select the three options proposed through the Investment Agreement.

-Although Oyu Tolgoi promised to draw power from Mongolia within four years after commencing operations, they violated the agreement. Will they be held accountable for that?

-The Government established a working group on some issues concerning high loan interest, tax act and violation of investment agreement. The group may report their review on that.

-What about Baganuur power station? Are there are talks on terminating the agreement? There are rumors that the Government will go under MNT 512 billion debt if the contract is terminated.

-As for the compensation, there are talks about potential risks with that amount. It does not mean we are obliged to pay them. The thing is, some compensation may come up after the contract termination. It does not mean the power station’s high technology is not incompatible to Mongolia. They are planning to install high-capacity generator that are not suitable for Mongolia’s system. Generators with over 240MW cannot be install in Mongolia. Because we manage our system by drawing 240MW power from the Russian Federation. We will not be able to manage higher generators. The contract was negotiated regardless of the incompatibility. We demanded the investors to install a system compatible with Mongolia. We did not discuss any termination of contract.

-Democratic Party’s group in the Parliament made a statement demanding the Cabinet’s dismissal. What is your position on this?

-Cabinet penalized the related officials regarding the issues around the Ministry of Road and Transport Development. The officials themselves resigned from their position, acknowledging their responsibility.

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Salary discussion may return as Labor Minister hints of a draft

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Cabinet held its regular session yesterday and approved the appointment of Khaltar Luvsan, Vice President of Ulaanbaatar Railway Joint Stock Venture, as the Deputy Minister of Road and Transport Development. The session also touched upon the establishment of Development center for the Disabled, electoral budget of the repolling and national program on children’s dental care. After the session, Minister of Labor and Social Protection Chinzorig Sodnom informed that he is planning to organize a trilateral meeting with the Government and Confederation of Mongolian Trade Unions. He then highlighted that he will be presenting a bill on salary raise to the Cabinet next week.

GOVT TO BOOST EMPLOYMENT BY TRAINING THE DISABLED

At the initiative of the Prime Minister Khurelsukh Ukhnaa, the Cabinet issued a resolution to establish a Development Center for the Disabled (DCD). In doing so, 35 employees of Rehabilitation and Training Center will be transferred to the the DCD without having to allocate extra financing from the State Budget. According to statistics, 103,630 people, which equals 3.3 percent of the entire population, is currently disabled and 42 percent of households that have a disabled member are poverty-struck. Only 28 percent of disabled people between the age of 15 and 59 are employed and 43 percent of 6-18 years old children are illiterate.

MNT 390 MILLION ALLOCATED FOR REPOLL

Cabinet approved to allocate MNT 390 million for the repolling in the 42nd electoral district at the session. The electoral budget will be financed from the Cabinet’s reserve fund, of which MNT 228.1 million will be spent on the Parliamentary repolling, while the remaining MNT 162.5 million has been allocated for the reelections of Citizens’ Representative Khural of Bulgan, Dornogobi, Dornod, Sukhbaatar, Orkhon, Khentii, Zavkha and Gobi-Altai aimags according to the Cabinet.

NATIONAL PROGRAM ON CHILDREN'S DENTAL HYGIENE

Healthy Teeth - Healthy Children program to be implemented nationwide in 2018-2022. The program financing of MNT 37 billion is expected to be allocated from the State Budget, foreign aid, investment, public, private sector partnerships and other sources. By maintaining sustainable financing and developing cooperation of multiple sectors, the program aims to improve the quality of children’s dental care service and reduce dental prevalence of children by 30 percent and cavity by four points. The decision is related to the increased dental problems among children. A study conducted in 2011 shows that around 87-96 percent of 5-6 years old children 65.3 percent of 12 year olds and 67.5 percent of adults had cavity and experts perceive the number has increased in recent years. Presently, a total of 1049 dental clinics operate throughout the country, of which 77 percent of them are state-owned. The Cabinet highlighted to supply necessary equipment, workforces to local clinics and support welfare and insurance for the public.

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Economy grows 6.3 percent on the back of consumer sector

​Average income of households rises 13.7 percent compared to last year​

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National Statistics Office released the preliminary results of social and economic situations of 2017. Driven by the upswing in tax revenue, goods and services, the economy grew to MNT 8 trillion, a 6.3 percent growth. In details, service sector grew 5.8 percent to MNT 184.9 billion, wholesales and retail - 9 percent to MNT 73.7 billion, net taxes on products - 21.4 percent to MNT 192.1 billion. The monthly average income of household jumped 13.7 percent year-over-year, to MNT 1.1 million. Key drivers were the average salary growth of MNT 46.4 thousand and MNT 28.5 thousand or 41.7 percent raise in income from non-agricultural production and services. The household expenditures averaged at MNT 1.1 million, which is MNT 96.7 thousand or 9.7 percent higher than the same period of last year. This was driven by an increase of MNT 73.1 thousand or 9.7 percent in non-food expenses and services and other expenditure. In the first 7 months of 2018, total equilibrated revenue and grants of the Government Budget reached MNT 5 trillion, and total expenditure and net lending amounted to MNT 4.8 trillion. As such, the budget balance totalled MNT 291.3 billion in surplus. Another highlight was the 33 percent surge (year-over-year) in tax revenue, reaching MNT 4.5 trillion. Specifically, value added tax revenue hiked 34.1 percent, income tax - 31.5 percent, excise taxes - 68.5 percent, social welfare income - 20.5 percent, others - 33 percent and revenue from foreign activities jumped 39 percent. The State revenue accounted for 79.6 percent of tax revenue, 10.3 percent of non-tax revenue, 7.3 percent of the future heritage fund and 2.8 percent of stabilization fund. In the first 7 months of 2018, total expenditure and net lending of the General Government Budget amounted to MNT 4.8 trillion, increased by MNT 271.9 billion or 6.1 percent compared to the same period of the previous year. The General Government expenditure and net lending accounted for 84.3 percent of current expenditure, 11.8 percent of capital expenditure and 3.9 percent of net lending. In addition, inflation increased by 5.5 percent in July.


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Deputy of “Absent” ministry appointed

​Vise President of Ulaanbaatar Railway to serve as the Deputy Minister of Road​

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Board of Mongolian People’s Party (MPP) convened yesterday to discuss the replacement for the Deputy Minister of Road and Transport Development and appointed Khaltar Luvsan, Vice President of Ulaanbaatar Railway Joint Venture Company. Aside from Mr. Khaltar, Amarsanaa Baatar, who ran in the Parliamentary election, and Galsandondog Damdin, former Governor of Khovd aimag, were named as potential candidates. Last week, the Cabinet dismissed the Minister of Road and Transport Development, his deputy and state secretary. Although the minister’s dismissal has to go through the Parliament, the Cabinet has the right to appoint and dismiss the deputy and state secretary. In addition, the Cabinet has appointed Mergen Rentsen, Head of Policy Implementation and Coordination Department of the Ministry of Road and Transport Development (MRTD), as the State Secretary of the Ministry. Resignation of Bat-Erdene Jadamba, former Minister of MRTD, is yet to be confirmed as the law requires the Parliament’s approval. Deputy Prime Minister Enkhtuvshin Ulziisaikhan who is also appointed as the Acting Minister of MRTD explains that the decision was a measure to prevent further delay of the ministry. He added that he will pay extra attention to staff selection process. The ministry was also ordered to prepare reports on investment plan performance, 2019 budget plan, construction of Khushig Valley airport, Transportation and Logistics Center in Umnugobi aimag, road construction in Ulaanbaatar-Darkhan-Altanbulag route, rehabilitation of bridges, and winter preparation.