Mongolia’s Local Leaders Essential to Urban Service Delivery www.asiafoundation.org

In Mongolia’s 2016 parliamentary elections, the opposition party won a landslide victory—taking 65 of the 76 seats, on a promise to boost the economy and tackle poverty. In 2011, Mongolia’s economy grew by 17 percent and attracted billions of dollars in foreign investment. Now, the country is in a state of financial crisis.

For years, Mongolia’s resource-dependent economy outpaced most of the world. But a decline in commodity export revenues and foreign investment sent growth to just 1 percent last year. Many see the opposition party’s win as a reflection of citizen frustration with a slumping economy and rise in unemployment. In the capital, Ulaanbaatar, where much of the city’s growth is taking place within its ger areas, which are sprawling, unplanned neighborhoods now home to 60 percent of the city’s total population, poor access to public services has risen as another major concern. While elected leaders set their priorities at the national level, unelected community leaders are playing an essential role in the delivery of public services in local areas.
Mongolia community mapping
According to an Asia Foundation survey, most people look to local, unelected leaders for assistance with public services. Here, local leaders are trained on how to use community maps to improve service delivery.
Mongolia’s civil service lacks a government-led, centralized personnel management agency, leaving the day-to-day management responsibility to respective budget and ministerial entities. Instead, Mongolia exercises the use of a Civil Service Council (CSC), which is an independent body that reports directly to Parliament. The CSC is tasked with personnel oversight, policy, and personnel management functions. This includes the monitoring of the civil service to assure adequate control of its functioning and the enforcement of its rules.
Ulaanbaatar has three levels of municipal administration: The Capital City mayor’s and governor’s office, nine district centers, and 152 khoroo offices. The khoroo represents the smallest sub-administrative unit within the city’s confines and is where citizens most frequently request services. According to a recent survey conducted by The Asia Foundation of 866 residents of Ulaanbaatar, more than half of respondents (53.2%) said that they seek out khoroo governors and staff if they need information and have complaints regarding public services. Interestingly, 42.5 percent of respondents said that they would seek out kheseg (neighborhood) leaders, who are community administrators serving local neighborhoods within a khoroo. According to the same survey, kheseg leaders are the preferred method for citizens to receive information regarding all government related public administrative services.
While the Capital City Governor and Mayor’s Four-Year Plan (2016-2020) places greater importance on training programs for its civil servants, there remain shortcomings. In the past, efforts to improve the performance of civil servants have lacked a comprehensive training framework to guide and provide continuous professional development to the city’s civil servants. Though training materials exist for some khoroo-level staff and administrators, they are neither standardized nor kept up-to-date. There is also no discretionary budget allocated at the khoroo-level for training.
Essential public services are delivered at the khoroo-level, including permanent address references, issuance of identification certificates, and reference materials for the unemployed. As a result, the lack of training at this level of municipality can impact the quality of services being rendered. Since khoroo staff receive ad hoc training, they often remain dependent on district staff for assistance, creating bottlenecks in terms of service delivery. Further, since kheseg leaders are not considered civil servants, they receive even less access to formal training and in terms of incentives, they receive modest remuneration, which can vary by district. Despite these administrators making barely above the minimum wage, they are often tasked with critical responsibilities such as gathering census data, registering citizens, health awareness, and as such, remain essential conduits for local support to citizens.
The Asia Foundation is working with the city to help train khoroo civil servants and administrators. In April and May of 2017, we organized the first-ever city-wide training for 1,412 kheseg leaders of the 152 khoroos of Ulaanbaatar, with a cost-sharing model with the Ulaanbaatar City government. The three-day workshop included trainings on improving workplace efficiency, communication skills, collecting data and evaluation skills, basic legal knowledge, and citizen participation and monitoring. Overall, the response from participants was overwhelmingly positive, and the Foundation plans to hold refresher trainings in 2018.
To ensure sustainable and inclusive growth, Mongolia must focus on improving its human capacity in the public sector. Trainings such as these are a critical first step toward empowering civil servants to better serve their communities. By enhancing the capacity of front-line administrators, this can systematically improve transparency and accountability of the government.

Pasture degradation threatens Mongolia's cashmere industry www.asia.nikkei.com

NOMGON SOUM, Mongolia In the Mongolian Gobi Desert, Batchuluun's herd of more than 1,000 goats produces valuable cashmere wool that enables him to support a family of five in a traditional ger, or tent. It is equipped with solar panels, a TV and smartphones, and a Kia Frontier truck is parked out front.

But the nomadic herder is most proud that he is passing on this traditional way of life to the next generation. His middle son dropped out of school to return to the ger and take up herding.

"Our herding culture is thousands of years old in Mongolia, and I am very happy that he will continue," he said.

Proud though he is of his traditional lifestyle, it is threatened by its own success. The cashmere trade that underpins the herder economy is leading to widespread pasture degradation and desertification, putting the long-term sustainability of the industry in doubt. Some 70% of Mongolia's pastures, which make up over 70% of the country's landmass, are showing signs of degradation, according to research by the Wildlife Conservation Society Mongolia, while 2% are severely degraded.

"The main reasons for pasture degradation are livestock density per area and too little movement in summer," said botanist Bolor-Erdene Lkhamsuren, a rangeland specialist with WCS.

A worker on a farm in Mongolia's Omnogovi Province uses a comb to gather fine cashmere fibers from the hair of a bound goat. (Photo by Tim Ferry)
Mongolia is the world's second-largest producer of raw, or washed, cashmere. Exports of raw and processed cashmere amounted to nearly 9,000 tons in 2015, according to a report by Mongolia International Capital Corp. -- a compound annual growth rate of 36.3% since 2006. Herders generally sell their cashmere to dealers, who this spring paid anywhere from 65,000 to 100,000 tugrik ($26-$41) a kilogram, according to Mongolia's National Statistical Office, depending on the month and region. More than 25.5 million goats are being raised in the country.

Several nongovernmental organizations are involved in educating herders on better pasture management techniques and the value of focusing on product quality rather than quantity.

INCENTIVE TO CHANGE WCS Mongolia recently concluded its second annual direct buy of cashmere at the Nomgon soum (an administrative district) center in Omnogovi Province, in which it offered an incentive payment about 15% above the market price in exchange for a pledge by herders to engage in more sustainable practices. The incentive payment is "to demonstrate the concept that you can get paid more if you make the effort and do certain activities differently," said Onon Bayasgalan, coordinator of the WCS project.

The results of the sale were promising, and in only its second year the program attracted around 100 herders. Many more are looking to join next year.

One of the sustainable practices is adhering to a pasture use agreement, a pact made among groups of herders to prevent overgrazing and degradation. Nearly all of Mongolia's territory is public land, and herders are free to move their camps and herds as they see fit. But herders are also tightly regulated by tradition, with families claiming priority in recognized winter and summer camps. Herders move their herds from two to 20 times a year, depending on the rains and available fodder, and many say they are seeing degradation.

Through an established cooperative in the region, the WCS team helped to organize herders into groups of 10 families to map out their traditional pastures and coordinate more effectively. "Pasture rotation is the main solution," said Onon.

Pasture use agreements are also being deployed by other NGOs, including France's Agronomes et Veterinaires Sans Frontieres and Switzerland's Green Gold, as well as the Sustainable Fiber Alliance, a local community organization set up by Una Jones, a Mongolian who witnessed environmental devastation during the country's transition from socialism to a market economy in the 1990s. But the reach of these groups is limited, and even in regions where they are operating, not every herder will join.

NGOs envision a day when independent auditors will certify herders as engaging in sustainable practices for higher prices, akin to the "Fair Trade" system for coffee and other goods, but this remains years away.

Some herders, including Batchuluun's neighbor, Dalaisaikhan, suggest a tax on herds over a certain size. "If there is a tax on goats over 500 head, that would be good for Mongolia's economic development and would serve to limit herd sizes," Dalaisaikhan said, even though his own herd numbers more than 700 head.

Questions also remain about the scale of demand for higher quality cashmere. The high end of the luxury market has shrunk relative to the surging "fast fashion" market, and demand for high-quality cashmere has not kept pace.

Much of Mongolia's cashmere is exported for use in production overseas, despite ongoing regulatory reforms and investment in the local textile and apparel industries. An estimated 70-90% is sent to textile and garment mills in neighboring Inner Mongolia, a Chinese autonomous region, which receive state subsidies and produce 70% of the world's cashmere garments.

BUILDING VALUE However, recent legislation now prevents raw cashmere from being exported before it has undergone at least minimal processing, helping to build up a larger local processing and manufacturing industry. Several local cashmere apparel makers have achieved sizable international sales of locally produced clothing, including Oyuna, which contracts its designs to local manufacturers, and the Gobi Corp., a vertically integrated Mongolian manufacturer that operates outlets around the world.

A worker collects washed cashmere at a cashmere processing factory in Ulaanbaatar. © Reuters
U.S.-based startup Naadam Cashmere takes a different approach to sustainability by buying directly from herders in Mongolia in exchange for exclusive access to their cashmere. According to Matt Scanlan, chief executive and co-founder of Naadam, "No amount of nonprofit work will replace buying cashmere for business. We want to build a sustainable market."

The value of Mongolian cashmere apparel exports increased to $9.6 million in 2016, according to research by MICC, up nearly 200% since 2009, although still a small slice of the $4.3 billion global cashmere apparel industry as measured by Bain & Co.

Desertification is not the only threat to Mongolian herders' livelihoods. Global climate change has increased the severity of the dzud -- intense cold fronts that kill large numbers of animals. Early snows last winter, following an unusually dry summer, are estimated to have killed up to 6% of the livestock in affected regions. An outbreak of the infectious disease peste des petits ruminants, also known as sheep and goat plague, is also said to have impacted herds.

Jones said the SFA is working on building resilience into herder communities to help them withstand these impacts. "We support herding families and communities in how to identify risks and how they can be managed during difficult winters," she said.

Jones, who founded the SFA after research in Mongolia and Europe on cashmere supply chains, said she aims to bring together herders, manufacturers and environmentalists. "We want to increase the availability of sustainably produced cashmere to the world market that safeguards the livelihood of herding families and promotes high-quality cashmere fiber," she said.

Japan and Mongolia agree on North Korea response and economic cooperation www.japantimes.co.jp

VLADIVOSTOK, RUSSIA – Prime Minister Shinzo Abe and Mongolian President Khaltmaa Battulga agreed Wednesday to cooperate in dealing with North Korea’s rising nuclear and missiles threat as well as economic matters.

Centerra Gold shares soar on Kyrgyz settlement talks www.mining.com

Canada's Centerra Gold (TSX:CG) on Wednesday outlined the terms of advanced negotiations with the Kyrgyz Republic in its drawn out environmental dispute over the firm’s Kumtor gold mine in the central Asian nation.

Consumer Inflation Expectations Survey Shows Positive Signs www.mongolbank.mn

Mongolbank has conducted its quarterly “survey on the consumer inflation expectation” and the results have showed there is a growing expectation that the tugrug will appreciate against the foreign currency. Furthermore, there are other positive expectations, such as slight decrease in interest rates and improving overall economic performance.

Consumers expect the inflation to be 3.4% by qualitative method, 4.1% by quantitative method, and 5% for sensitivity-based inflation expectations, in Q4 2017.

Mongolia and Bhutan to increase cooperation www.news.xinhuanet.com

ULAN BATOR, Sept. 6 (Xinhua) -- Mongolian Foreign Minister Tsend Munkh-Orgil met with his visiting Bhutanese counterpart Lyonpo Damcho Dorji here on Wednesday on bilateral cooperation.

Noting that Mongolia and Bhutan have a common historical and cultural base, both foreign ministers agreed that the two landlocked countries need to strengthen bilateral, regional and international relations.
Dorji said that Bhutan is ready to boost cooperation with Mongolia in the agricultural, tourism, and health spheres. He also suggested Mongolia to develop a route for Mongolian tourists to Bhutan and to enhance cultural exchange.

Abe meets Mongolian president www3.nhk.or.jp

Japanese Prime Minister Shinzo Abe had a meeting with Mongolia's new President Khaltmaa Battulga on an island in the south of Russia's Far Eastern city of Vladivostok. It was their first meeting.

Russian Flight Attendants Win Aeroflot Discrimination Case www.themoscowtimes.com

Moscow City Court has ruled in favor of Russian flight attendants in their suit against Russia's largest airline Aeroflot from discriminating against large women, Russian media said citing the court’s press service.

North Korean workers dies after fall from 6th floor www.news.mn

A North Korean worker was killed at a building site Monday (4th of September) when he fell from a sixth floor window of an apartment, officials said. The 27 year-old worker fell to his death at 8:00 p.m. at the Delgerekh residential block in the Khan-Uul district of the Mongolian capital, Ulaanbaatar.

Australian jailed for alleged fraud in Mongolia www.news.mn

The Mongolian Police and Prosecution Authorities finally completed the investigation of the criminal case committed by Mohammed Ibrahim Munshi, citizen of Australia and UK. The investigation took more than 2 years to finalize the fraud of Mohammed Ibrahim Munshi who used the mineral licenses of Mongolia and raised huge amounts of funds from foreign and domestic investors deceiving them that license holder company would be selling its shares at the international stock exchanges and who fled from the investors until today. Back in 2015, Monnis International LLC filed a claim to the Police Authority and investigation had been launched. The criminal court of Mongolia has issued its verdict on Mohammed Ibrahim Munshi’s fraud case in July 2017.

The Primary Criminal Court of Khan-Uul district deemed that Mohammed Ibrahim Munshi should be called as guilty for his actions committed repeatedly to deceive properties of others, swindling others, misleading others through hiding the truth about the situation. The court verdict includes penalties to be taken, including 11 year of imprisonment for his actions, to compensate loss of MNT31 billion incurred by Monnis International and to put restriction on the right of possessor to transfer the mining licenses of some deposits.

Foreign media was also publishing stories about Mohammed Ibrahim Munshi’s fraud on raising funds from highly reputable international investment funds, companies and individuals claiming that he would jointly own deposits in Mongolia and make IPOs. For instance, Malaysian media had been covering stories on Government’s Pension Fund of Malaysia whereas 4 billion ringgits were transferred to Gobi Coal of Mongolia and mysteriously disappeared.

He is the person who stepped into Mongolia as a foreign investor, expanded his network, obtained licenses for number of mineral deposits and raised immense funds without trading a single share at the stock exchange. Perhaps, investors invested their money were trusted not in Mohammed Ibrahim Munshi, but to Mongolian wealth and minerals. He obtained from the relevant authorities licenses for over 80 Mongolian mineral deposits through its offshore companies registered in BVI and its subsidiaries registered in Mongolia. Mohammed Ibrahim Munshi developed “on paper” projects and raised funds for coal mines in Shinejinst of Bayankhongor aimag, Zeegt in Gobi-Altai, iron ore deposit in Arkhangai and more. But until today the deposits were not utilized appropriately and no dividends were given to the investors who were long waiting for their profits. Basically, it was found that all the money he raised from the ghost projects were transferred to his offshore companies’ accounts.

Gobi Coal and Energy, registered at BVI raised over USD 180 million from investors. The list of investors who had trust in Mohammed Ibrahim Munshi’s story include over 100 foreign and domestic investors such as Aabar foundation of UAE, Pension Fund of Malaysian Government, World Capital Group of the USA, Origo Partners PLC of PRC, Mount Kellet international investment fund, Monnis International of Mongolia. Mohammed Ibrahim Munshi attested during the court session that an internationally recognized Aabar foundation invested over USD90 million into Gobi Coal company. Apparently he used his personal connections with Joseph Borkowski, an advisor to the Secretariat of the foundation as the sources confirm that Joseph Borkowski is one of four Board of Directors of Gobi Coal, BVI. It also raises a suspicion that the Aabar foundation has made its decision to invest into Gobi Coal not meeting and learning existing shareholders’ concern about the project.

Mohammed Ibrahim Munshi was kept telling to the investors that “license holder company’s shares would be sold on reputable stock exchange within one year” since 2008 but failed to take any steps forward as the financial activities of his offshore companies wouldn’t even comply with the minimum requirements of any stock exchange.

During the investigation it was also revealed that money raised on behalf of the offshore companies using the Mongolian wealth were transferred back and forth between the bank accounts to be shown that the money were invested in Mongolia. Moneys transferred to Mongolia from the offshore accounts were mostly spent as management fees, service fees, advisory fees, employee bonuses, and wages in incredible large amounts, however, most of them were transferred to the accounts of his wife D.Uranbileg based on the fake contracts and arrangements. The police also confirmed that over 20 companies with the same or similar names as his offshore companies were registered with Registry of Legal Entity in Mongolia all of which were established on his wife and her relatives’ names.

When the investors who carried the loss demand money from Mohammed Ibrahim Munshi, he had been providing the same comment to jeopardize the name and reputation of Mongolia telling them “the corrupted Mongolian state ceases our operations and kicking out the foreigners, it’s very risky to run a business in Mongolia. All of us facing losses”.

Although the foreign investment may gone down due to economic conditions and legal environment, perhaps 10-20 percent of foreign investment are gone away because of erroneous information and intentional actions of swindlers such as Mohammed Ibrahim Munshi pretended to be called as a foreign investor.

The Police investigation and the court’s decision on Mohammed Ibrahim Munshi’s fraud case prove that not every individual called to be a foreign investor can be trusted, as well as the relevant authorities and organizations must be attentive to disclose the true information about the swindlers playing with the trust and money of others and share the lesson learnt.