First Group of North Korean Workers Leaves Mongolia Amid Sanctions www.rfa.org

The first group of North Korean workers earning foreign currency for the Kim Jong Un regime in Mongolia has returned home following sanctions brought in response to Pyongyang’s most recent nuclear test, according to sources, who said most of the remaining laborers will have left by early 2018.

North Korea conducted its sixth nuclear test on Sept. 3 and claimed to have detonated a hydrogen bomb. Later that month, the United Nations’ Security Council adopted resolutions prohibiting any country from accepting North Korean workers in response to the test, and on Dec. 22 passed an additional resolution requiring North Korean workers abroad to return home within two years.

A source in Mongolia told RFA’s Korean Service Wednesday that Mongolian authorities had stopped issuing one-year visa renewals for North Korean workers, who mainly earn foreign currency in construction in the country, and said that a group of them had recently left on a train from the capital Ulaanbaatar.

“North Korean workers got on a Beijing-bound train in Ulaanbaatar not so long ago,” he said, referring to the capital of neighboring China, where the workers will transfer and continue their journey home by rail.

“It seems like the rest of the workers will be pulled out by early next year.”

It was not immediately clear how many North Korean workers had left in the group.

The source, who is familiar with foreign investment in Mongolia and spoke to RFA on condition of anonymity, said that Mongolian authorities had asked the North Korean workers to leave to ensure that Ulaanbaatar was in compliance with the U.N.

“Due to the U.N. resolution, Mongolian construction companies are not able to sign new contracts with North Korean workers,” he said.

“Mongolia is in need of large-scale foreign investment, and it wouldn’t be easy to bring in investors if there are North Korean workers in the country.”

‘Faithful and skillful’

Firms in Mongolia began hiring large numbers of workers from North Korea in 2008 amid a construction boom, and Ulaanbaatar and Pyongyang reached an agreement to send as many as 5,300 North Koreans there over the next five years.

But the number of North Koreans in Mongolia has dropped annually since a high of more than 2,100 in 2013, when the country began dealing with an economic crisis. As of November 2017, nearly 1,200 North Koreans were employed in Mongolia.

Construction firms prefer to hire North Koreans because they work long hours for little money, a source in Mongolia’s construction industry told RFA.

Their North Korean handlers also routinely forbid them from leaving the construction sites, where they sleep and eat, enduring poor living conditions.

“North Korea workers were popular at construction sites because they were faithful and skillful,” said the source, who also asked to remain unnamed.

“[The workers] were hoping they might be allowed to stay in Mongolia up until the last minute before they left.”

According to a U.N. estimate from September, around 100,000 North Koreans working abroad send some U.S. $500 million in earnings to Pyongyang annually.

Most of the workers are stationed in Russia and China, where they regularly work more than 12 hours per day for wages they see as little as 10 percent of, after the Kim regime takes its cut.

Other North Koreans in Mongolia find work in cashmere factories and as acupuncturists or practitioners of Korean traditional medicine.

Research report released on the "Possibility of listing domestic commercial banks on the stock exchange" www.mse.mn

The Financial Stability Council held its regular meeting on 25 December 2017 at the Financial Regulatory Commission (FRC) and discussed the “Overview of Non-bank Financial Sector” and the research report on “Possibility of Listing Domestic Commercial Banks on the Stock Exchange” conducted by an independent research group.

EBRD and EU support fruit juice producer in Mongolia www.ebrd.com

Mongolia has some of the harshest winters on earth. Its wildlife has adapted well to temperatures that can plummet below -40C – with cashmere goats, sheep and yak growing their well-renown dense layers of fur.

But for humans, this is a different story: it’s a climate where an extra vitamin boost can be vital to get through the long cold season.

This is Vitafit’s business: the family-owned company produces various fruit juices and dairy products – with success. It has expanded its product range significantly over the last ten years and is the only Mongolian producer able to compete with the global brands dominating the sector.

The EBRD has been a long-time partner supporting Vitafit’s growth. Several loans totalling US$ 16.9 million helped the company to modernise its equipment and build a new warehouse.

This meant that Vitafit could increase its capacity and at the same time offer new, high-quality products to Mongolian consumers.

Going global

“The EBRD’s support came at critical stages in our development when our business was ready to expand further,” said Bolorsaikhan Sodnom, Vitafit’s CEO. “The investments helped us not only to remain locally competitive, but they also allowed us to explore new opportunities for our goods on foreign markets.”

Vitafit’s Goy brand, for example, has developed a loyal following, not only in Mongolia, but increasingly across Asia. The seabuckthorn, blackcurrant and cranberry juice are now exported across Japan, South Korea and China.

“We also introduced some new dairy drinks and desserts in Mongolia to offer a more diverse range of products to our local customers,” he added.

This includes a new flavourful milk drink, various fruit yogurts and Pororo sirok, an icy curd with different fillings. The latter dessert has become particularly successful and a favourite among both youngsters and adults.

Strong local links

In the dairy sector, the company also sets new standards in Mongolia when it comes to obtaining raw milk and improving links between producers and suppliers.

Its representatives travel with specialised trucks to collect raw milk from herders, ensuring that the product travels in a sterile environment. They then deliver it to rural collection points for sterilisation.

This helps farmers to be less dependent on traders. It increases the milk quality, as it cuts down on inadequate transportation and reduces collection time for a perishable product, while ensuring at the same time better prices for the farmers.

The EBRD also matched the company with an expert consultant to help it establish a concrete vision for its business, good organisational structure, proper corporate governance and improved human resources and reward system.

“Our investment in Vitafit is a good‎ example of the EBRD’s continued efforts to support diversification of the Mongolian economy, which is one of the main Bank’s strategic objectives in the country,” explained Irina Kravchenko, Head of the EBRD’s Ulaanbaatar office.

“We support a full range of companies and projects to achieve this goal across the country – from wind farms to cashmere producers, electronics and engineering businesses to ice-cream makers.”

In total, the EBRD provides €52.7 million in investments to help develop small and medium-sized enterprises in Mongolia and the EU supports this project with €9.3 million in funding.

The two partners aim to provide these businesses with access to finance and know-how, while building a business environment conducive to investments in this vital market segment.

“This is an example of how the European Union and the EBRD carry out joint activities to support job creation and economic diversification in Mongolia. It is also an example of how we support SMEs in strengthening their corporate governance and Human Resources management. This benefits the company and its employees,” said Marco Ferri, Chargé d’Affaires of the European Union Delegation to Mongolia.

Mongolian capital sees severe air pollution www.xinhuanet.com

ULAN BATOR, Dec. 27 (Xinhua) -- The Mongolian capital city of Ulan Bator on Wednesday saw solid particles in the air reaching dangerous levels, with the most-polluted area registering an amount almost 13 times above the safety level set by the World Health Organization (WTO).

There were "catastrophic pollution" at five locations in Ulan Bator, including the Bayankhoshuu slum district at 898 mg per cubic meter, and the Tolgoit slum district at 513 mg per cubic meter, according to the country's national agency for for meteorology and environment monitoring.
The city is no stranger to severe air pollution during winter in the past two decades, given its unfavorable meteorological conditions for pollutants to dissipate, and the heavy-dependence on coal in the large Ger areas surrounding the metropolitan region.
More than 800,000 residents, over half of Ulan Bator's population, live in Ger districts. Most of them came from provinces to find a job in the capital city of Mongolia.
Tight on money, some of them burn plastics and old tires to stay warm and to cook their meals during the long winter.
Since 2000, the Mongolian government, supported by various international organizations including the World Bank and the Asian Development Bank, has spent millions of dollars on programs to reduce air pollution.

Centerra Gold halts mill operations in British Columbia due to lack of water www.mining.com

Canada's Centerra Gold (TSX:CG) issued a media statement where it explains that it had to suspend mill processing operations at its Mount Milligan copper-gold project in central British Columbia due to insufficient water resources. The stoppage is expected to last until the end of January 2018.

Herders to receive benefit amounted to MNT 22.4 billion www.montsame.mn

Ulaanbaatar /MONTSAME/ As of December, 2017, herders sold a total of 20111 kg wool to domestic manufactures and 86465 herders are eligible to receive incentive amounted to MNT 22.4 billion. 

December 27, 2017 trading report www.mse.mn

On December 27, 2017, 1,018,081 shares of 28 firms listed as Tier I, II, and III were traded. 5 companies’ shares increased in price while those of 21 companies decreased and 2 companies unchanged. Nogoon Khogjil Undesnii Negdel /JLT +14.98%/ and Jinst Uvs /JIV +14.97%/ were the top performers whereas Uvs Chatsargana JSC /CHR/ was the worst performer, decreasing 13.49 percent.

Mongolia’s Modernizing Military www.thediplomat.com

Mongolia’s land-based military has faced many modernizing challenges and opportunities throughout history. The ancient Mongol army, like other great armies, whether the Greeks, Romans, or Ottomans, had its strengths and weaknesses, its historical glories and bruises. When discussing the modernization of Mongolia’s military today, a number of historical aspects remain crucial in shaping military principles, core values, and social influences. These historical aspects link to the fundamental changes, progress, and sometimes regressions of Mongolian military affairs and military diplomacy.

At its peak, the empire of the Mongols stretched from eastern Europe to eastern Siberia and the Korean Peninsula, connecting and bridging cultures, societies, and ideologies. When the Mongol army conquered new areas, it provided the empire with a modernizing opportunity: to gain access to new goods and services, exotic cultures and societies, and, most importantly, access to new military equipment, tactics, and strategies. The Mongols used traditional nomadic weaponry for centuries. The mastering of horsemanship, archery, and the introduction of steel and hooked lances were all part of the modernization of the ancient Mongol military.

Meanwhile, the Mongol conquests of Marv, Balkh, Bukhara, Samarkand, Kashgar, Turpan, Khotan, and many more capitals during the 13th century increased ethnic and cultural diversity under the Mongol empire. This historical interconnectedness paved the way for modern Mongolia to pursue political, economic, and military diplomacy with countries around the world.

In addition to Mongolia’s traditional military principles, Mongolia’s relationship with neighbor Russia became the main source of learning, technology, weapons, and strategies. From Russia, Mongolia learned both the positive and negative aspects of a top-down military structure and military institutionalization. Russia-Mongolia military ties grew strong during Mongolia’s struggle against the Qing dominance in 1911, but improved significantly during World War II. During the war, the Japanese invasion of Inner Mongolia and Manchuria allowed Stalinist Russia and Mongolia to strengthen their military ties while combating Japanese expansion in East Asia. It was the Mongolian army that supplied the Russians with horses, wool, and furs during its winter wars. Accordingly, on the 72nd anniversary of “Victory Day” on May 7, 2017, the Russian government built a large bronze war horse monument commemorating the Mongolian war horses. Mongolia’s involvement in World War II modernized its military capabilities, despite its Soviet satellite state status.

When looking at the modernization of Mongolia’s military and its social impacts, we must analyze both its foreign and domestic contributions. At home, the Mongolian military has a great responsibility to build infrastructure, schools, and hospitals. In a way, the military bridges the gap between government and civilians by constructing the necessary pieces of a modern society.

The National Center for Emergency and Disaster Relief is an important part of the military. According to the government’s official portal, through the NCEDR the military serves as first-responders for earthquakes, wildfires, and forest fires; contagious diseases; and snow and dust storms as well as severe winters (known as zud). The National Center for Emergency and Disaster Relief’s programs have produced humanitarian medics and construction engineers who build schools, hospitals, and emergency centers, especially in rural areas like Gobi-Altai, Bayan-Ulgii, and Orkhon provinces.

Despite these duties at home, Mongolia’s military is also active abroad. Mongolia’s foreign policy objectives coupled with military diplomacy have played a fundamental role in augmenting military relations with a number of countries. Mongolia’s involvement in international missions and peacekeeping operations reflect Mongolia’s historical and contemporary principles and core values. Supporting, advocating, and actively contributing to world peace is also part of the military modernization process.

According to Colonel T. Narankhuu, Mongolia’s defense and military attache to the Embassy of Mongolia in Washington D.C, “As of now, Mongolia has military diplomacy [relationship] with the U.S., Japan, Germany, and 30 other countries and has a close military-technology accord with Russia, China, Turkey, Ukraine, and Belarus.”

Since 2001, the Mongolian military has been involved in the American-led coalition’s counterterrorism efforts in Iraq and Afghanistan. According to First Lt. Mark Larson, writing from the 10th Division in Kabul, “The Mongolians, for certain, provide the most extraordinary example of international support. That Mongolia — a landlocked country of just three million people, nearly half of whom still lead a nomadic life — provides any aid at all to the international force is remarkable.” In 2006, Mongolia became the first country to host a multinational military training in the Northeast Asia region, the U.S.-supported “Command Post Exercise and Field Training Exercise with Global Peace Operations Initiative (GOI).”

Mongolia also helps protect women and children from armed militias through UN Peacekeeping Operations in the Middle East and North Africa (MENA). According to the 2016 Ranking of Military and Police Contribution to UN Operations report, Mongolia ranks 30th out of 123 countries with 950 peacekeepers operating in MENA countries.

Mongolian peacekeepers in MENA countries have been recognized by the international community; more than 850 Mongolian peacekeepers, stationed in South Sudan, were awarded the UN Medal in May 2017. Earlier, in March 2017, Srg. T.Buyanzul and O. Tsend-Ayush, from the Mongolian Battalion, saved a 2-year-old Sudanese boy from a war zone. Following this case, in July 2017, 22 armed men made an attempt to break into the refugee camps and were caught by Mongolian peacekeepers. These cases illustrate both the modernization of Mongolia’s military as a whole and its contribution to the global peace.

Mongolian Embassy’s delegation visits Hoa Binh province www.baohoabinh.com.vn

(HBO) – A delegation from the Mongolian Embassy in Vietnam and the Vietnam-Mongolia Friendship Parliamentarians’ Group led by Ambassador Dash Bilegdorj paid a working visit to Hoa Binh province on December 15. The delegation had a working session with Tran Dang Ninh, Permanent Vice Secretary of the provincial Party Committee and Chairman of the provincial People’s Council; and Bui Van Khanh, Vice Chairman of the provincial People’s Committee.

Increases in personal income taxes reveal underlying systematic issues with fair taxation in Mongolia www.theubpost.mn

Beginning on January 1, 2018 Mongolia will introduce a new tax bracket system for the personal income tax. The new tax bracket system intends to replace an old system which imposed 10 percent to all citizens regardless of their income. Most would agree that tax reform in Mongolia has been long overdue but Cabinet’s proposed amendment has been met with fierce opposition. Many unions, including the Oyu Tolgoi mine workers’ union and other businesses have publically opposed the decision and have staged protests.

The Ministry of Finance has justified the move, clarifying that the increases in the personal income tax would only affect eight percent of the population. Of Mongolia’s 900,000 registered taxpayers that pay a personal income tax, 92 percent will be unaffected by the increases and will pay the 10 percent they are accustomed to. Tax breaks for the lowest earners will increase also as part of the new tax bracket system. These are all within the terms that were agreed upon with the International Monetary Fund when Mongolia requested to be enrolled into an extended fund facility.

Delving deeper beyond the surface into the tax increases shows us that the measure is not baseless and is in line with IMF’s core values of mitigating the impact of some reform measures on the most vulnerable in society. Tax breaks for the lowest earners will be increased on a step-by-step basis. In 2018, the lowest tax bracket will enjoy a 120,000 MNT tax break. The tax discount will be gradually increased each year, ultimately reaching 240,000 MNT in 2021.

Collecting taxes, especially the personal income tax, based on income brackets is not a new idea and is employed by countless countries around the world. Some might ask then if only eight percent of workers will be affected and if a similar system is employed around the world, why are people still opposed to the increase?

Logically, people who will be most affected by the tax increases will be the most opposed. It is quite rare for any government anywhere to increase taxes and for it to be unopposed.

The Mongolian Association of Woman Business Owners has publically criticized the decision as an impediment to the people’s opportunity for growth and prosperity in addition to being detached from reality.

For some, their opposition stems from the fact that their albeit high-income is the only source of income for a family. For miners, the long working hours and time spent away from the families justifies their relatively high-income salaries and they have been the most vocal opponents of the tax bracket system.

In 2017, revenue from the personal income tax is estimated to be 43 billion MNT. With the introduction of tax bracket system, revenue will jump to 88 billion MNT in 2018 and 84 billion MNT in 2019. Accordingly, the new tax bracket will only supplement an additional 40 billion MNT to the state budget, hardly enough to put a dent in the 737 billion MNT state budget deficit.

However, the issue is not only just that certain high-income individuals will pay higher taxes.

Increasingly, discussion around the issue has transformed into a debate about equal and fair taxation. In theory, a tax bracket system is a fair system of taxation but only if it is imposed fairly and evenly amongst the population. One large segment of Mongolia’s population has been consistently and systematically omitted and unofficially exempt from taxes and more specifically the personal income tax. Taxation of informal sectors has been a common issue for many developing countries and Mongolia is no exception.

There is a bigger systematic reason for the blatant tax exemption that herders enjoy. While the number of herders has been decreasing consistently as rural to urban migration increases, they still remain a major voter base. While the interests of herders might not be at the forefront in Ulaanbaatar, Mongolia still has 20 other provinces. In the majority of those provinces, livestock production is the main source of income and therefore voters tend to vote for politicians that promise to not impose taxes on herders.

The ruling Mongolian People’s Party won a 65 majority seat in Parliament mainly thanks to its platform that it would not create any additional taxes, it was obvious that appeasing to herders was a major reason for its landslide victory.

Herders, along with traders in the city’s markets account for a large unregulated untaxed sector in the economy. In theory, traders and herders alike should all have to pay taxes. Herders and their children all enjoy public services such as education, health insurance, and welfare that is funded by taxpayers without contributing their share.

Deliberately exempting herders from taxes for political gain has created a bad precedent and ultimately concentrated the majority of the tax burden on the 900,000 workers paying a personal income tax.

Admittedly, herding is a tough business in which the herder is solely responsible for any liabilities. It is a sector which can be devastated by weather or natural disease. However, since the transition into a market economy, Mongolia has seen development of whole economic sectors dependent on livestock products from herding as herders are not only subsisting on livestock but profiting.

While this may not be true for all herders, many wealthy herders benefit from not having to pay taxes. In many ways, Mongolia’s reluctance to impose taxes on herders can be likened to the United States’ reluctance to tax churches and religious organizations. A sense of traditional values and morals have become an impediment to fair taxation. In a world where herders are tugrug billionaires and churches are multi-billion dollar businesses, it is irrational to exempt a huge segment of the economy.

Many politicians have tried to skew the argument into something cultural, arguing that imposing taxes on herders would threaten the Mongolian way of living. However, as argued by economics professor G.Khashchuluun at the National University of Mongolia, at the very least, we need to tax herders that have thousands of livestock.

Another argument is that the Constitution states that pasture in Mongolia belongs to the state, classifying it as a natural resource as same as coal or petroleum. Therefore, mining companies and herders both use resources owned by the government for profit but only the mining companies pay taxes.

However, taxing herders is not the be-all and end-all solution to Mongolia’s taxation system. As a whole, the system in which taxes are determined and collected need to be more comprehensive.