The Central Regional Development Conference is taking place in Darkhan.

Minister of Finance B. Javkhlan presented the policies and activities pursued by the Parliament and the Government to support the development of the central region.

To promote the development of the central region, the government plans to expand economic relations with other countries, integrate into a unified transport and logistics network, and diversify through intensive agriculture and manufacturing. The goal is to become a region producing and exporting "HEALTHY FOOD" that fully meets domestic demand.

For this purpose:

Increase energy supply, improve road connectivity, and enhance transport logistics.

Support the development of free zones and border checkpoints.

Introduce innovations and technologies.

Establish green and eco-friendly residential areas.

Strengthen human resources.

Under the goals of regional development, the following results are projected for the central region by 2030:

Regional GDP will reach 10-15 trillion MNT.

GDP per capita will reach $8,410.

The Human Development Index (HDI) will rise from the current 0.73 to 0.852.

The population will grow from 307,000 to 405,000.

The Government of Mongolia and the Asian Development Bank (ADB) are jointly implementing new projects to increase renewable energy sources in the western region of Mongolia.

Specifically, energy storage stations have been constructed and commissioned to connect solar and wind power plants with a total capacity of 40.5 MW to the Altai-Uliastai energy system. Moreover, a 5 MW solar power plant constructed in Uliastai generated about 18 million kW of electricity over the past two years. Due to the collaboration of the Government of Mongolia with the ADB, 10 MW solar power plants are operating in Yesunbulag soum, Gobi-Altai aimag, and Murun soum, Khuvsgul aimag, while a 0.5 MW hybrid system has been installed in Altai soum, Gobi-Altai aimag, which are all generating stable electricity. Furthermore, a 135 kW ground-based heat pump system has been installed to cover the heat supply of Kindergarten No. 1 in Jargalant soum, Khovd aimag, which serves as an environmentally-friendly and energy-efficient solution by reducing coal consumption and carbon emissions.

Project coordinator and engineer B. Sugar emphasized, “As part of the projects to increase renewable energy sources in remote areas far from the Central Energy System implemented by the Government of Mongolia and the Ministry of Energy, solar power plants are being built and put into operation with the concessional loans from ADB. These power plants serve as the second largest energy source of the country, generating 17.2 million kWh of electricity annually and providing clean energy to the residents of the western region.”

Could you introduce the technology that utilizes geothermal energy in the western region? What makes it a distinctive energy source?

Ground temperature increases with depth. For example, the temperature rises as we drill 2-3 km deeper. In general, the soil heat is about 2-5 degrees Celsius, however, the soil does not release or store heat. Therefore, to absorb the heat, a heat-conducting object should be inserted into the ground. Afterward, the object is put into a fluid to be boiled at a certain temperature. The efficiency of this process depends on the heat pump and absorption pressure. Heat condensed at 40-50 degrees Celsius is used for heating buildings. Basically, the initial cost, expenses, and investment for this technology are high.

This technology seems important as it abolishes the traditional brown energy. How could this technology be further improved?

Geothermal energy is already being utilized in several areas in Mongolia, including residential areas like the “ASEM Villa,” near Dulguun Nuur and Nogoon Nuur, as well as in Tuv aimag. In some areas, the system is working well, but in our conditions, there is a high risk of freezing. Currently, pilot projects are being implemented in the western region.

In addition to the projects in the western region, the Government of Mongolia and the Asian Development Bank are collaboratively implementing a Project on the “Large-Scale Energy Storage for Grid Use.” The total cost of this Project amounts to USD 114.95 million, of which:

USD 100 million- concessional loans from the ADB;

USD 3 million- grant aid from the ADB- USD;

USD 11.95 million- allocations from the Government of Mongolia.

With the Large-Scale Energy Storage project implemented, about 20 thousand households in the Capital city will be prevented from electricity shortages during peak hours.

Under the Project, 51.1 million kWh of electricity was supplied to the Central Energy System through the Songino substation from December 2023 to October 2024. According to Project Coordinator M. Naranbat, the Large-Scale Energy Storage, with a capacity of 80 MW/200 MWh, will be installed and operated in the 32nd khoroo of Songinokhairkhan district by December 2024.

A magnitude-5.1 earthquake occurred in southern Khovsgol Province, near its border with Arkhangai Province, at around 04:34 Nov. 28. The epicenter was approximately 109 km (68 miles) south-southwest of Tsengel. The tremor occurred at a depth of about 10 km (6 miles), and light shaking was probably felt in parts of north-central Mongolia. There have been no initial reports of damage or casualties as a result of the earthquake; significant damage is unlikely. It could take several hours until authorities can conduct comprehensive damage assessments, especially in remote areas. Aftershocks are likely over the coming days.

Officials may temporarily shut down transportation infrastructure in the tremor zone to check for damage. Minor disruptions could occur during shutdowns, but service will likely resume quickly if no damage is found. Utility outages are possible, particularly near the earthquake's epicenter.

Mongolia is ramping up efforts to enhance its tourism industry by drawing more foreign visitors throughout all four seasons of the year, according to a statement released by the government's press office on Thursday.

With a strongly continental climate characterized by long, harsh winters and short summers, Mongolia has traditionally faced seasonal limitations in tourism.

To overcome this challenge, the government has introduced several key measures, including plans to reduce airfares by up to 40 percent during off-peak seasons, develop airports in major tourist destinations, and promote cross-border tourism. These initiatives aim to position Mongolia as a year-round destination, offering diverse attractions in every season, said the press office.

The government views tourism as a vital sector for diversifying Mongolia's economy, which has long been reliant on the export-oriented mining industry.

In line with this goal, Mongolia has designated 2023-2028 as the "Years to Visit Mongolia," setting an ambitious target to attract at least 1 million foreign tourists annually.

In 2023, the country welcomed over 650,000 foreign tourists, generating 1.2 billion U.S. dollars in revenue from tourism. The upward trend has continued in 2024, with a record-breaking 680,711 foreign visitors arriving by October, marking a historic high for the sector.

As of November 25, 2024, the official foreign exchange reserves of Mongolia exceeded USD 4.9 billion, an increase of USD 38.8 million or 0.8 percent compared to the beginning of this year. This is the amount that satisfies the country's foreign exchange-paid import needs for 5.1 months, according to the Bank of Mongolia.

The increase in foreign exchange reserves was mainly due to the improvement in the USD flow into Mongolia, including export revenues and foreign direct investment. Specifically, export revenues reached USD 13.4 billion at the end of October, an increase of about USD 800 million from the previous year. The total export is constituted of:

• 55 percent hard coal,

• 19.8 percent copper concentrate,

• 6 percent gold export.

Exports of mining and mineral products are expected to continue to grow by the end of the year. International credit ratings agencies such as Fitch and Moody's have upgraded Mongolia's credit rating outlook to "B Stable." Due to the improvement in the country's credit rating, the ratings of commercial banks have also improved, and they are starting to attract affordable business and green loans from international markets.

Due to major projects to be implemented by the Government, investment in Mongolia is anticipated to increase. Official sources have reported that the country's foreign exchange reserves are expected to exceed USD 5 billion by the end of 2024.

The Government of Mongolia, the Ministry of Culture, Sports, Tourism, and Youth, and the Mongolian Youth Union NGO jointly organized the “Mongolian Citizenship Oath-Taking Ceremony” for the 22nd year.

The event is organized under the auspices of the Prime Minister of Mongolia on November 26 of each year, the historic day of the Proclamation of the Mongolian People’s Republic and the Adoption of the First Constitution, to “instill patriotism, respect for the state, and be honest and proud of the nation's history and culture while realizing the responsibilities to the country and people.”

Prime Minister Oyun-Erdene Luvsannamsrai congratulated the citizens of Mongolia who received their citizenship certificates on this day, saying, “We are the continuation of the heroic history of the Great Mongol Empire, stretching from Siberia to India, from Vietnam to Hungary, and from Korea to the Balkan Peninsula. We also must not forget the bitter history of our empire being divided into parts, losing our independence, and suffering under the rule of the Manchu Qing Dynasty for more than 200 years. Citizens who devote themselves to the development of their country and protect and cherish their freedom, independence, history, culture, and heritage will remain in history over centuries.” The Premier recalled the great deeds of Da Lama Tserenchimed, Chin Van Khanddorj, Sain Noyon Khan Namnansuren, Manlaibaatar Damdinsuren, Khatanbaatar Magsarjav, and the leaders of the People’s Revolution and the brave patriots of the past.

“On this day in 1924, with its first Constitution, we became the second Republic in Asia to prioritize the rights of the people, and one of the first countries in the world to grant women the right to vote. The Constitution stipulates that natural resources are owned by the people, state institutions are established on the principle of democratic elections, as well as keeping the right to practice religion open and separating religious affairs from state affairs. Mongolia became the 101st full member of the United Nations on October 27, 1961. Since then, Mongolia established diplomatic relations with all UN member states and has become an “Oasis of Democracy in Asia,” noted the Prime Minister in his address to 16-year-olds, calling on them to contribute to the development of their country, honor and promote its history, culture, and independence.

This ceremony of taking the oath of citizenship of Mongolia coincided with the 100th anniversary of the adoption of the first Constitution. There are 62,668 young people in Mongolia, turning 16 this year.

The oath-taking ceremony for Mongolian citizenship was held in the "Ikh Mongol Hall" of the State Palace of Mongolia and in nine districts of Ulaanbaatar and 21 aimags with the participation of around 850 student representatives.

On November 22, 2024, the Ministry of Health of Mongolia and the Medicine and Medical Devices Regulatory Authority signed a procurement contract with South Korean pharmaceutical company DongKoo Bio & Pharma. This marks the beginning of improving the quality and safety of medicines distributed in Mongolia while providing access to effective and affordable medications.

Minister of Health Munkhsaikhan Togtmol stated, “The Government is implementing a policy to purchase high-quality medicines approved by the World Health Organization (WHO) at low prices from countries with strict medicine regulations. Based on international experience, agreements of this nature both decrease future medical costs and increase the variety of medicines available to citizens. Mongolia will use this model to secure the availability of affordable quality-assured medicines.”

As part of this initial procurement contract, DongKoo Bio & Pharma will supply five types of medicines to Mongolia, including medicine for diabetes, hypertension, blood thinning, and antifungal applications. These medicines will be priced on average 50 percent lower than the customs value of medicine with the same composition. Additionally, citizens will be able to access these medications from the Health Insurance Fund with subsidized costs.

Recent amendments to the Law on Medicines and Medical Devices, the Law on Procurement of Goods, Works, and Services with State and Local Property Funds of Mongolia have established a legal foundation for the direct procurement of quality-assured medicines, medical devices, bioactive products, and vaccines from international organizations and foreign manufacturers.

In September 2024, Minister of Health Munkhsaikhan Togtmol visited the Republic of Korea to meet with pharmaceutical manufacturers from countries with strict regulatory and monitoring standards, recognized by the WHO. During his visit, the Minister of Health negotiated to supply Mongolia with effective medicines at reasonable prices. Following these negotiations, the Ministry of Health announced the finalization of price agreements with four well-known pharmaceutical companies in the Republic of Korea, where the purchase of 18 types of medicines currently subsidized by the Health Insurance Fund would be provided to citizens.

The United States announced sanctions Thursday targeting dozens of Russian banks, including Gazprombank, the largest remaining bank yet to face U.S. action, as part of its efforts to weaken Russia’s capacity to wage war on Ukraine. Gazprombank, a major conduit for Russia’s military finances, was among more than 50 internationally connected Russian banks sanctioned by the U.S. Treasury.

Almost 80 percent of Mongolia’s oil payments go through this bank. Therefore, the Ministry of Finance of Mongolia took urgent action and contacted the US Treasury Department to obtain a “COMFORT LETTER” from the US Treasury Department stating that oil payments from Mongolia are not subject to this.

Here is the “COMFORT LETTER” from the US Treasury Department:

“We understand that Mongolia is facing difficulties in making payments to Russia related to essential imports, particularly energy, and that Mongolian financial institutions (including the Bank of Mongolia) may rely on Gazprombank JSC and its six foreign subsidiaries noted above (collectively, “Gazprombank”) to make payments for energy, specifically crude oil, petroleum products, electricity, and natural gas. In light of Mongolia’s unique and challenging energy situation, its efforts to abide by U.S. sanctions, and the limited alternatives for obtaining and paying for energy, OFAC is providing this guidance that non-U.S. persons would not be exposed to U.S. sanctions under E.O. 14024 for transactions involving Gazprombank that are ordinarily incident and necessary to payments for crude oil, petroleum products, electricity, and natural gas for consumption within Mongolia. Non-U.S. financial institutions would not risk exposure to U.S. sanctions under E.O. 14024 for processing such payments involving Gazprombank. This guidance is valid until June 30, 2025.”

Upcoming Changes to Mongolian Double Tax Treaties (DTTs)

The Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting, commonly known as the Multilateral Instrument (MLI), is a dynamic tool designed to modify existing tax treaties in line with a jurisdiction's policy preferences for implementing BEPS measures. The MLI, developed by the Organisation for Economic Co-operation and Development (OECD), aims to address issues such as hybrid mismatches, treaty abuse, artificial avoidance of permanent establishment (PE) status, and the resolution of international tax disputes.

Mongolia's Implementation of the MLI

Mongolia has taken significant steps towards implementing the MLI by including all its effective DTTs as Covered Tax Agreements (CTAs). However, it is important to note that some of Mongolia's DTT partners have either not joined the MLI or have not listed the Mongolian DTT as a CTA in their MLIs. As a result, it is anticipated that 19 of Mongolia's DTTs will be modified under the MLI starting from 2025.

Implications for Taxpayers

The adoption of the MLI will significantly impact the application of DTTs. Specifically, the benefits of DTTs will not be applicable if, considering all relevant facts and circumstances, obtaining the DTT benefit was one of the principal purposes of any arrangement or transaction. Therefore, taxpayers should review their international operational, financial, and holding structures, arrangements, and transactions in advance to prepare for the introduction of these new rules.

Source: https://www.pwc.com/

India's JSW Steel (JSTL.NS), opens new tab and state-run Steel Authority of India (SAIL) (SAIL.NS), opens new tab are in talks with Mongolian authorities to import two shipments of coking coal, two sources with direct knowledge of the matter said.

JSW Steel, the country's biggest steelmaker by capacity, plans to buy 2,500 metric tons, while SAIL aims to import 75,000 metric tons of the steelmaking raw material from Mongolia, said the sources who requested anonymity as the plans are not public.

Both JSW Steel and SAIL would import Mongolian coking coal either via Russia or China, said the sources.

"We are just trying to understand how the logistics work," SAIL Chairman Amarendu Prakash told Reuters when asked if the company was looking to receive a shipment from Mongolia.

SAIL was exploring sourcing coking coal from Mongolia to diversify its suppliers, it said in an emailed statement to Reuters.

India, the world's second-largest producer of crude steel, meets 85% of its coking coal requirements through imports.

Late last year, erratic weather conditions hit coking coal supplies from Australia, which accounts for over half of India's coking coal imports of around 70 million metric tons a year.

Since then, Indian steel mills have been seeking to source coking coal from other countries.

Last month, a source said India was exploring ways to import regular supplies of Mongolian coking coal via Russia to reduce reliance on supplies through China.

The Dow added about a third of a percent, while the S&P 500 and Nasdaq each added roughly six-tenths of a percent.

Industry officials say landlocked but resource-rich Mongolia can offer superior grades of coking coal at relatively lower prices to India, which is witnessing strong steel demand driven by rapid economic growth and increasing infrastructure spending.

Mongolian coal is about $50 a metric ton cheaper than the Australian supplies, they said.

India's Jindal Steel and Power (JNSP.NS), opens new tab is also keen to source coking coal from Mongolia, one of the sources said.

India's JSW Steel and Jindal Steel and Power didn't respond to Reuters emails for comment.

The Indian government is working to help steel companies diversify imports to avoid over-reliance on specific countries, commodities consultancy BigMint said.

India imported 29.4 million metric tons of coking coal during the first half of the fiscal year, up nearly 2% from a year earlier, the consultancy added.

Reporting by Neha Arora; Editing by Mayank Bhardwaj and Christina Fincher