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http://zgm.mn/post/4283/

Third neighbor policy on Mongolian-Japanese relations (1)

Third neighbor policy on Mongolian-Japanese relations (1)
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http://zgm.mn/post/4283/
  • OT’s All Injury Frequency Rate (AIFR) was 0.16 per 200,000 hours worked in 2019
  • It has been 48 years since the establishment of the Mongolian-Japanese diplomatic relations
  • Mongolia had also set a goal of expanding relations and cooperation with Japan as one of its foreign policy priorities, and this has been implemented by the Government of Mongolia
  • Defense cooperation between Mongolia and Japan had improved significantly in 2019. Takayuki Onozuka, Vice Chief of Staff of Japan Ground Self Defense Force, paid a visit to our country
  • Japan has established the Strategic Partnership with Mongolia first (2010) and also the first country to establish free trade agreements (the Economic Partnership Agreement or EPA). Implementation of the agreement is moving forward one step

Mongolia’s one of the important bases of foreign policy is to strengthen ties with leading countries around the world and ensure their economic interest in Mongolia; it has been implementing successfully. In the framework, Mongolia is working to level up foreign relations with Japan to the 21st century’s “Comprehensive relationship”. Since the establishment of diplomatic relations between Mongolia and Japan in 1972, cooperation has been continued to develop steadily. The 40-year history since the establishment of diplomatic relations between the two countries can be divided into two, each with 20 years. During the first 20 years, the two countries’ political system was different, but it was possible to begin a cultural relationship and maintain a normal atmosphere of communication. Since 1990, Mongolia mainly focused on economic cooperation as it began pursuing a multilateral independent foreign policy by choosing democracy and open market. In the last 30 years, in which bilateral relations between Mongolia and Japan had developed dramatically, Japan had continued a policy of supporting Mongolia’s democracy in bilateral relations and internationally since 1991. Mongolia had also set a goal of expanding relations and cooperation with Japan as one of its foreign policy priorities, and this has been implemented by the Government of Mongolia. In this regard, I would like to express my views on why Japan is important to Mongolia, why it should be a third neighbor, and how Japan perceives our interests. A little introduction. A neighbor is a country that is geographically has a common border. Russia and China are Mongolia’s direct neighbors. So the concept of expanded neighbor is geopolitical. There is another important point which is a strategic neighbor. Putting the these two together, we call it the third neighbor. The year 2019 will remain in history as the third-party strategic relationships has been balanced over the time. As with the new phase of Mongolia- U.S relations (signed strategic partnership agreement), the Mongolia-Japan relations have significantly moved ahead as well. The recent political high-level visits of Mongolia and Japan encouraged to maintain the frequency of official talks and make it more often. President Battulga Khaltmaa and Prime Minister Abe Shinzo hold summit meetings regularly. Prime Minister of Mongolia Kurelsukh Ukhnaa visited Japan in late 2018 and attended the enthronement ceremony of the new Emperor of Japan in 2019. After attending the ceremony, he also met Prime Minister Abe Shinzo. In a statement of Prime Minister Khurelsukh’s visit in 2018, “The sides evaluated the implementation of the “Mid-term Action Plan” and mentioned that the relationship has been growing stronger in a broad range of fields such as trade, economy, culture, and public exchange”. Expressing satisfaction with the strengthening relations within the framework, Mongolia notes the relationship with Japan as a “region of politics, security, and defense.” It proves that Japan is the third neighbor of Mongolia in terms of politics. Mongolia supported Japan’s efforts to consolidate the “Free and Open Indo-Pacific Strategy” proposed by Mr. Abe. Foreign Minister of Japan T. Kono visited our country in the summer of 2019. It has been 48 years since the establishment of the Mongolian-Japanese diplomatic relations. After Mongolia has transitioned to a democratic society, the relations between the two countries have been consistently developing. From third neighbor countries, Japan has established the Strategic Partnership with Mongolia first (2010) and also the first country to establish free trade agreements (the Economic Partnership Agreement or EPA). Implementation of the agreement is moving forward one step further as Mongolia successfully hosted the Japan-Mongolia Business Forum, “Invest in Mongolia” in Tokyo. Defense cooperation between Mongolia and Japan had improved significantly in 2019. Takayuki Onozuka, Vice Chief of Staff of Japan Ground Self Defense Force, paid a visit to our country. The defense cooperation between the two countries was further enhanced by the signing of a Memorandum of Understanding in 2012. It expanded the level and direction of cooperation. As part of Japan’s Capacity Building Assistance Program, we have successfully identified two main areas: military engineering and a military hospital. In 2014- 2016, the first phase had started to increase military engineering capabilities, and in 2017, the second stage commenced with joint training and internship. In the future, the two countries will work in many areas, including training military personnel and experience in peacekeeping. It would seem right to give some explanations on why relations with Japan are so important to our country. The following logic emerges when we consider the power balance in the world, the general atmosphere of international affairs, regional relations and cooperation, as well as the external environment around Mongolia. Mongolia is actively working with the United States, Japan, and Western Europe, which are considered to be third parties to prevent the country from becoming too close to Russia and China, not to be too dependent on its northern neighbor and to support the democratic process in Mongolia. In Mongolia, foreign policy can be considered a de facto neutral foreign policy. China, Russia, as well as Japan and the United States are intensifying their efforts to attract Mongolia. Mongolia classifies them as the two direct neighbors and the third strategic parties. 

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Third neighbor policy on Mongolia-Japan relationship

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  • Japan is the fourth largest country that invests in Mongolia and the fifth largest foreign trade partner
  • Mongolia has set a goal of expanding relations and cooperation with Japan as one of its foreign policy priorities, and the Government of Mongolia had implemented it in its action programs
  • The President of Mongolia, Battulga Khaltmaa has not yet visited Japan as of the beginning of 2020 since he was elected in 2017. However, he began the practice of conducting regular bilateral meetings with the Prime Minister of Japan, Abe Sinzo during the Eastern Economic Forum
  • Japanese private companies have been openly expressing their aspiration to partner with Mongolia. We must see this as a great opportunity. Japan's Mitsui, Sumitomo, Mitsubishi, and Itochu have proposed investing in major mining fields, such as Oyu Tolgoi and Tavan Tolgoi. Japan's superstar, world-class entrepreneur and chairman of SoftBank Group, Masayoshi Son has set up a renewable energy company with Mongolian company Newcom
  • Mongolia had officially started to receive Japan’s Official Development Assistance (ODA) in 1987. The governments of the two countries negotiated and set priorities for development assistance in Mongolia in 1997, and in 2004 the Government of Japan developed a ODA program to Mongolia. Then, in 2011, the program was updated

Mongolia-Japan relation is a classic example of the continuity and expansion of Mongolia’s foreign policy, during all the presidency, the MPs and governments of our country. This is a page from the past 30 years of history. Over the last two years, with a turning point in bilateral relations, the Government of Japan has announced a policy to support Mongolia’s democracy and reforms in bilateral relations and internationally in 1991; the Prime Minister of Japan visited Mongolia for the first time in the year. Since then, cooperation between the two countries has been consistent. Mongolia has set a goal of expanding relations and cooperation with Japan as one of its foreign policy priorities, and the Government of Mongolia had implemented it in its action programs. There was no ruling party or government to curtail relations with Japan. There are differences in domestic politics from the political parties, but foreign policy, in particular to the third neighbor, Japan, has continued to be inherited. The Mongolia-Japan joint declaration on building a Partnership of Friendship and Cooperation for Peace and Development, first introduced in 1998 by the President of Mongolia, Bagabandi Natsag during his visit to Japan, stated the principle of developing bilateral relations in the framework of a comprehensive partnership for the 21st century. That concept came to effect, and the Partnership moved forward, reaching a Strategic Partnership in 2010. The two countries are now establishing strategic partnership relations of the 21st century. Mongolia-Japan relations are now expanding in all fields. For example, political talks are on going, mutual understanding is growing, and high and summit visits are being intensified. The following is a list of the most visited destinations of Mongolian side to Japan: The President of Mongolia was invited to the enthronement ceremony of the emperor of Japan in 1991 and visited the country in 1998, 2003, 2007, 2010, 2014, and in 2015 participated in the Nikkei Newspaper International Forum, Asia’s Future. The Prime Minister of Mongolia visited Japan in 1992, 1994, 1997, 2001, 2006, 2009, 2012, 2013, 2015, 2016, 2018, and participated in the enthronement ceremony of the emperor of Japan in 2019.The Speaker of the Parliament visited Japan in 1994, 1999, 2002, 2008, 2011, 2015, 2016, 2017 and participated in the international forum “Asian Future” of the Nikkei newspaper in 2019. From the Japanese side, the Prince of Japan Akishino visited in 2002, the Crown Prince of Japan in 2007. The Prime Minister of Japan visited the country in 1991, 1999, 2006, 2013, and 2015, and again in 2016 when he was invited to attend the XI ASEM Summit. Specifically, Mr. Abe Shinzo visited Mongolia three times as Prime Minister of Japan. The Chairman of the House of Councillors of Japan visited our country in 1992, and the Chairman of the House of Representatives in 2017. From the Japanese side, it may appear to be few visits at the parliament speaker level, but many visits have been made at the level of the Deputy Speaker of the Parliament, the Standing Committeeпs Chairman, the Chairman of the Group and the Representatives of Parliament. The President of Mongolia, Battulga Khaltmaa has not yet visited Japan as of the beginning of 2020 since he was elected in 2017. However, he began the practice of conducting regular bilateral meetings with the Prime Minister of Japan, Abe Sinzo during the Eastern Economic Forum, which takes place in Vladivostok, Russia, on September 9, 2017. The Mongolian-Japanese Foreign Ministry has been holding regular policy consultations since 1996. The Mongolia-Japan-U.S trilateral meeting is also being held regularly. The sides discuss regional issues, strengthening cooperation between Mongolia, Japan, and the United States, as well as regional issues during the meeting. The latest meeting, which took place in January 2020 in Washington, D.C. has reaffirmed the commitment of three sides to strengthen Mongolia’s relations with Japan in the context of Mongolia’s third neighbor policy, as well as the parties’ views on the Indo-Pacific region. Mongolia, Japan, and the United States present their proposals on regional development, including the Indo-Pacific perspective, and work together to build a prosperous and peace-loving region with the sovereign and democratic nations. The three sides appreciated the fact that the United States has become Mongolia’s strategic partner in 2019, as well as Japan, and expressed its intention to further strengthen the strategic partnership. The three sides are working to strengthen Mongolia’s business environment, especially its capacity to attract investment from Japan and deepen its economic partnerships by increasing its cooperation in energy, e-economics, and cybersecurity. I would acknowledge that Mongolia-Japan economic cooperation has left behind active political ties. Mongolia leads other countries with Japanese loans and grants per capita. Japan is the fourth largest country that invests in Mongolia and the fifth largest foreign trade partner.Mongolia had officially started to receive Japan’s Official Development Assistance (ODA) in 1987. The governments of the two countries negotiated and set priorities for development assistance in Mongolia in 1997, and in 2004 the Government of Japan developed a ODA program to Mongolia. Then, in 2011, the program was updated. We have the following priority areas in our country: 1.to support sustainable mining development and strengthen governance; 2.reduce poverty and improve living standards; 3.Improve the infrastructure of Ulaanbaatar city. However, both sides expect further mutually beneficial co-operation over the next ten decades. In other words, if Mongolia’s economy boom for some years as a result of its natural resource exports, and if it continues to grow, it will reduce Japan's grants and increase co-operation and investment. Japanese private companies have been openly expressing their aspiration to partner with Mongolia. We must see this as a great opportunity. Japan's Mitsui, Sumitomo, Mitsubishi, and Itochu have proposed investing in major mining fields, such as Oyu Tolgoi and Tavan Tolgoi. Japan's superstar, world-class entrepreneur and chairman of SoftBank Group, Masayoshi Son has set up a renewable energy company with Mongolian company Newcom. Masayoshi Son is successful in the field of information technology, according to Forbes Magazine, ranked second in Japan and 127 in the world. The Japanese expressed interest in implementing satellite projects, supplying railways, railway steel and steel wheels to Mongolia. One common problem is that we, as Mongolians, need to work on the use of the Tavan Tolgoi coal deposit, as well as the making involvement, and strengthening of Japanese companies in major infrastructure and energy projects. Japan, the U.S, and India with “strategic partnerships” are our third neighbors. It is Mongolian interest that Mongolia’s foreign relations eventually equate with the Eternal Neighbor, including Russia and China, into an “equilateral” triangle. The side of third neighbors to be larger and closer is one of Mongolia’s foreign policy goals. I would like the Government of Mongolia to provide this interest and promptly encourage Japan to invest in large mining areas of Mongolia.

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Batmunkh Batkhuu: We need to create a reserve without halting coal mining

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Domestic coal export companies have faced great challenges these days. One of the representatives of those companies, Batmunkh Batkhuu, Chairman of Big Mogul Fund, emphasized that as a mining dependent nation, the government of Mongolia should pursue trade policies and implement a program to support private sectors. Additionally, he noted that companies need to stock up coal during the quarantine. 

-Big Mogul Fund exports coal through the border crossing in Zamiin-Uud. How did China's procurement affect the import of Mongolia? 

-Currently, the ports of Erlian and Zamiin Uud have not been suspended for export and import transportations. However, restricting the movement of citizens tend to affect export. We were planning to export nearly 300,000 tons of coal concentrate this year however, the situation is unpredictable as China’s economy continues to shrink. 

-The researchers believe that imports will increase significantly to recover the industry loss when the Covid-19 stops. How does your company estimate the risk? 

-China’s economy has not been collapsed with decline in both supply and demand before. The country’s supply and demand had declined simultaneously. As of today, China is the largest exporter in the world and the second-biggest importer. It seems that economic conditions are being measured as with the SARS, which happened about ten years ago. But at that time, China’s economy was much smaller than it is now and its impact on the global economy was negligible. Also, China’s large labor force migrates through Wuhan, from north to south. The cessation of millions of labor migration has made it impossible for a coastal industrialized zone to be restored quickly. 

-How long do steel factories and power plants take to restore after infection ends? 

-Our company is a thermal coal exporter. But we are not big enough for China’s market. It is impossible to live without electricity so that the industry is likely to be recovered quickly. 

-After quarantine, how will the commodity price effect on the regular operation of the plant? 

-Obviously, it positively affects commodity prices and creates growth. Thus, we have to prepare the amount of material reserve.

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Erdenes Mongol's bond to settle pension loan debt

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  • The company is planning to sign agreements of MNT 695 billion with commercial banks shortly
  • Bank of Mongolia informed that an outstanding pension loan balance amounted to MNT 776 billion, as of November 2019.

Erdenes” bonds have been issued under the guarantee of the Development Bank of Mongolia in connection with the pension loan payments, said CEO of Erdenes Mongol LLC, Gankhuu Purevjav. Within the framework, the company is planning to settle agreements of MNT 695 billion with commercial banks shortly. Erdenes Mongol’s bond has a 6 percent yield which will mature in six years. Following the President of Mongolia Battulga Khaltmaa’s announcement in his New Year’s address, the Parliament, on January 10, approved the law on one-time cancellation of pension-backed loan debts. The law approved elders who took a loan to continually receive their pensions from the beginning of this year. According to the law, the Government of Mongolia (GoM) decided to repay the pension loan debts up to MNT six million at once. “The relevant research on interest rates differences and losses has been made. Sides have concluded their decision,” said Governor of the Bank of Mongolia Lkhagvasuren Byadran. Khan Bank and State Bank of Mongolia have represented other commercial banks in the several meetings on one-time cancellation of pension loan. Khan Bank sought to resolve issues without harming the interests of its 2.4 million depositors and pledged to settle the pension loans as required by law by February.

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General budget revenue amounts to MNT 67.2 billion in January

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In January, state budget revenue reached MNT 67.2 billion which had a deficit in 2019. Budget revenue increased however, its surplus declined compared to the previous year. Government expenditure turned MNT 40 billion eliminating budgets of local, social insurance and human development. The total of grants and income amounted to MNT 767.7 billion while expenditure and net lending reached MNT 641.3 billion. The tax revenue went upward mainly affected by budget exceed expenses. Tax revenue reached MNT 656.4 billion, increased by 4.8 percent compared to the same period of the previous year. This growth was mainly driven by a rise of 63.9 percent in value-added taxes, and 4.1 times increase in the property tax year on year. It is estimated that the budget deficit is MNT 2 trillion to 5.1 percent of GDP in 2020. After that new risk has followed up. According to the government’s decision, coal export completely suspended through ports of Gashuunsukhait, Shiveekhuren, Bichigt, and Bulgan until March 2, 2020. In the first two months of 2019, Mongolia exported 1.9 million tons of coal, gaining export revenue of USD 163.4 million. Both Mongolia and China’s traditional celebrations occurr in February. Same as last year, it is estimated that Mongolia will lose USD 163.4 million in coal exports due to government sanctions.