Coal output of SouthGobi reaches 90,000 tons since export resumption www.zgm.mn

The border closure has adversely impacted sales and cash flows of Southgobi Resources Ltd. in the first and second quarters of 2020. Since the Shiveekhuren­-Sekhe border resumption, the company has been exported approximately 90,000 tons of coal within one month. In accordance with the company’s statement, coal will not be mined in May since existing coal has been purchased from the warehouse. SouthGobi also ceased major mining operations since February 11. The volume of coal export through Shiveekhuren-Sekhe is lower than usual and limited. China expects that fall in coal export will continue to affect the company’s revenue, cash flow, and profit. Southgobi Resource Ltd predicted a loss of USD 18 million in the first quarter of 2020 and the company’s net income stood at USD 2.1 million during the same period of the previous year. SouthGobi Ltd. shares traded at HKD 0.6 on the Hong Kong Stock Exchange, showing no fluctuation.

MNCCI: Pandemic impact on construction industry remains high www.zgm.mn

According to a survey by the Mongolian National Chamber of Commerce and Industry (MNCCI), the COVID-­19 epidemic is affecting construction businesses, with an average of 96 percent of respondents saying it has had a “moderate to severe impact on operations”. About 48.7 percent of the respondents said that the pandemic had a severe impact on the construction business, while 28.2 percent admitted that it had a moderate impact. In terms of its impact on employment, 51 percent of respondents said it had a notable impact on the construction sector. The Mongolian Builders Associ­ation had previously reported that the construction sector is facing a shortage of professional staff. Industry experts also assume that COVID-­19 could lead to further job losses as some facilities in the construction sector come to a standstill.

Mongolia’s effort against money laundering and financial crime praised www.montsame.mn

Ulaanbaatar /MONTSAME/. On April 30, Governor of the Bank of Mongolia (BoM) held a meeting with the Ambassador Extraordinary and Plenipotentiary of the U.S. to Mongolia Michael S. Klecheski.

Mongolia: Protecting consumers from unfair pricing during COVID-19 www.idlo.int

The effects of the social and economic fallout from the current COVID-19 crisis will be felt long after the pandemic itself has ended. In some countries, however, there are already encouraging signs of government efforts to mitigate some of the negative impact.

In Mongolia, IDLO has been working since February 2019 with the European Bank for Reconstruction and Development (EBRD) to strengthen the capacity of the government agency in charge of competition, the Authority for Competition and Consumer Protection (AFCCP). Steps are already being taken by the AFCCP to try and protect consumers against price hikes being introduced by companies taking advantage of the COVID-19 crisis.

On 12 February 2020, the Government of Mongolia passed a resolution, tasking the AFCCP to take measures to prevent and combat excessive pricing, creating artificial scarcity, misleading advertisements, commodity overstock and speculation in an emergency situation.

“The AFCCP has established taskforces to conduct inspections for commodities supplies and sales at trade centers, food factories, local markets, grocery stores and pharmacies in Ulaanbaatar. Inspectors investigate breaches and issue warnings for companies and traders to not exploit the current situation to take advantage of people. Most importantly, the public should stay calm and not believe misleading advertising,” said Mr. Lkhagva Byambasuren, the Chairman of the AFCCP at a press conference on 17 March 2020.

A number of companies have been fined under Mongolia’s competition laws for adopting anti-competitive practices while the AFCCP has taken legal action and is making sustained efforts to raise awareness among the public of the dangers of price hiking for essential goods.

Two nationwide supermarket chains were fined 20 million MNT (US$7,185) each for more than doubling their prices for lamb and beef from 1,500 MNT (53 cents) per kilo to 3,500 MNT (US$1.20) between 10-20 March 2020. For citizens of a country like Mongolia, with a relatively small population of just 3.3 million, large livestock supplies and per capita meat consumption of 16.4 kilos, such increases are seen as particularly unjustified.

Other companies under scrutiny were in the pharmaceutical sector, with one large chain of pharmacies being fined 6 million MNT (US$2,155) for illegally selling “N95” face masks, amid accusations of price fixing, non-transparency, and discrepancy between cash receipts and income statements. Several others were also fined for almost tripling their prices for hand sanitizers from 4,500 MNT (US$1.60) to 11,500 MNT (US$4.10).

The AFFCP has now asked license issuing state authorities to improve their oversight of compliance requirements and to revoke the licenses of business entities found to be non-compliant with Article 13 of Mongolia’s Law on Licensing and Article 13.4 of the country’s Competition Law.

“When the Mongolian Government first declared a state of high alert on 13 February 2020 closing universities and schools, restricting public gatherings and movements at border crossings with the People’s Republic of China, and when the first coronavirus cases were confirmed in the country on 10 March 2020, the price of commodities rose more than 50% within 1-2 days, creating panic and artificial demand. The AFCCP took immediate action by informing the public about sufficient reserves of products and resolved the issue quickly. Providing accurate information through a single channel to the public is vital,” said Ms. Tserendulam Shagdarsuren, Head of the Consumer Protection Division of the AFCCP.

On 15 March 2020, on the occasion of World Consumer Rights’ Day, the AFCCP also established a free customer service hotline for people to report complaints. Since then more than 1,600 calls have been received and the AFCCP is working to resolve the issues identified.

As part of its efforts to combat the COVID-19 crisis, and in light of its 4,700 km shared border including 13 crossing points with the People’s Republic of China, the Mongolian Government declared a state of high alert on February 13, 2020 and introduced strict measures to prevent and control the spread of the virus. As of 29 April 2020, the country had 38 confirmed cases of COVID-19 and no confirmed fatalities.

In February 2019, IDLO began implementing the project, “Competition in Mongolia: Legal Reform and Institutional Capacity Building”, with the support of EBRD. The overall aim of this three-year project is to foster free market competition by providing technical assistance to the AFCCP to draft amendments to the Advertisement Law, develop a digitized decisions database, build capacity of senior managers and inspectors, strengthen internal advocacy and increase cooperation between the AFCCP, sector regulators and the judiciary to enhance the competition framework in Mongolia.

Sheep diplomacy and a troubled economy: Mongolia amid COVID-19 www.fes-asia.org

Balancing two mighty neighbours is part of the DNA of Mongolia’s diplomacy and economic relations. The country’s economy depends heavily on trade with China and Russia. As demand is decreasing during the pandemic, the most vulnerable are expected to be hit hardest.

For Mongolia, landlocked between Russia and China, it has always been important to have good relations with its neighbours. Economically, Mongolia is more dependent on China to the south, which shares a 4,700-km border and takes almost 90 per cent of its exports, mostly coal and copper. Thus, the spread of COVID-19 in China poses particular challenges to the country. Mongolia has had to maintain good relations with Beijing to keep its economy afloat, while preventing the pandemic from spreading within its territory.

At the same time, Mongolia enjoys traditionally close relations with Russia to the north, dating back all the way to the Communist era. Cross-border trade, energy cooperation and a largely favourable view of Russia among Mongolians are the pillars for the bilateral relationship.

Sheep diplomacy

When COVID-19 started spreading in Wuhan, the Mongolian government took drastic measures to contain the coronavirus that causes the disease. Well before the first imported case of COVID-19 was confirmed, the government shut the border with China, cancelled international flights, closed all educational facilities and even cancelled the Tsagaan Sar (Lunar New Year) national holiday.

When President Battulga Khaltmaa announced a sudden visit to China in late February, a number of people opposed it initially for fear of coronavirus infection. However, during his five-hour visit, the President was warmly welcomed by his Chinese counterpart Xi Jinping as the first foreign head of state to visit China since the outbreak of COVID-19. The Chinese public expressed particular gratitude for his donation of 30,000 sheep as a neighbourly gift from a strategic partner.

President Battulga’s so-called sheep diplomacy received overwhelming positive comments on Chinese social media. The topic “Mongolian President donated 30,000 sheep to China” received more than 100 million views on Sina Weibo. International affairs expert and former diplomat Dashdorj Bayarkhuu considers this visit as a “diplomatic victory for a small state” and a “smart move to promote Mongolia’s positive image to the Chinese people”. Luguusharav Byambakhand, an independent researcher focusing on international affairs, sees this visit as a “soft power policy success for Mongolia in winning over the hearts and minds of the Chinese”. Dr. Jamsran Bayasakh, prominent sinologist and former director of the Institute of International Affairs at the Mongolian Academy of Sciences, shares a similar view on the importance of this visit amid the current crisis, but he is somewhat critical of the Ministry of Foreign Affairs for not being sufficiently proactive, letting the president take up the reins instead.

Though the livestock will not actually make the trip until the autumn, when they are in best physical condition, the sheep diplomacy move has certainly helped to improve the Mongolian president’s image in China. Back in 2017, he won the presidential election on the back of anti-China rhetoric, with Beijing’s Global Times at the time voicing concern over “narrow-minded nationalism”. Moreover, it has greatly helped to solidify the strategic partnership between the two countries, to improve political and economic relations and to deepen mutual understanding between the Chinese and Mongolian people.

Economic challenges on all fronts

When the Mongolian State Emergency Commission decided as early as January to close schools as well as restrict public gatherings and visits of bars and restaurants, the impact was felt quickly. According to officials figures, over 70 percent of companies operating in Mongolia are small and medium enterprises in the service industry. Due to quarantine measures and fall in foreign trade levels 60,000 companies have reported a decrease in business revenue. These are facing challenges in servicing bank loans, tax obligations, and staff salaries, resulting in staff lay-offs or leave without pay.

The export of commodities to China, Mongolia’s main source of revenue, was also severely disrupted for some weeks but was recently resumed with additional precautionary measures for ensuring the health of Mongolian truck drivers entering China. At the same time, commodity exporters like Mongolia, continue to feel the pain resulting from the oil price war between Russia and Saudi Arabia and collapse the oil price.

The poverty level in Mongolia has decreased but remains at 28.4 percent as of the end of 2018, according to the National Statistics Office. An additional 15 percent of the population are considered vulnerable to falling into poverty. Those parts of the population will suffer the hardest from an economic decline that is sure to materialize.

Rolling out the government’s rescue package

Prime Minister Ukhnaagiin Khurelsukh announced in the beginning of April the government’s package of measures to overcome the economic difficulties and support for businesses and households.

This package of measures is estimated to cost MNT 5.1 billion (USD 1.9 million), subject to further debates in the parliament. These measures include the following:

Employers and employees of private companies as well as voluntary contributors to the Social Insurance Fund will be exempt from contribution obligations for the upcoming six months;
Companies with a taxable income less last year of less than MNT 1.5 billion (approx. 270,000 USD) will be exempt from corporate income tax for the upcoming six months;
Employees of companies who lost revenue because of quarantine will receive wage support of MNT 200,000 (approx. 75 USD) per month for the next three months for each employee retained on the payroll;
Child money received by each child (MNT 20,000 per month per child aged 0-18 years) will be increased by MNT 10,000 (approx. 4 USD) for the next three months;
Low-income households who are unable to pay electricity bills will not be subjected to electricity restrictions.

United in resilience

It remains to be seen whether these measures will be sufficient to provide a safety net for Mongolia’s fragile economy. What is certain though is that Mongolians have weathered many storms and hardships throughout their proud history. Up until today, more than 300,000 herders continue to cherish the traditions of a nomadic lifestyle, under some of the harshest climatic conditions on the planet. Resilience is probably the biggest asset of Mongolia’s people.

Oyunsuren Damdinsuren is a senior lecturer at the School of International Relations and Public Administration, National University of Mongolia.

Enkhbayar Namjildorj is a lecturer at the National Academy of Governance, Mongolia.

Tesla's Elon Musk calling coronavirus lockdowns 'fascist' overshadows profitable quarter www.reuters.com

(Reuters) - Tesla Inc’s (TSLA.O) outspoken CEO Elon Musk on Wednesday called sweeping U.S. stay-at-home restrictions to curtail the coronavirus outbreak “fascist” as the electric carmaker posted its third quarterly profit in a row.

His remarks overshadowed an otherwise successful quarter that took many investors by surprise as automaker peers were hit by a slump in consumer demand and forced factory shutdowns.

Shares of the company were up 8.8% at $871 in extended trade.

Tesla’s profitable quarter comes just a day after Detroit-based rival Ford Motor Co (F.N) reported a $2 billion first-quarter loss and forecast losing another $5 billion in the current quarter as the coronavirus pandemic hits demand.

General Motors Co (GM.N) on Monday suspended its dividend and share buybacks and will report earnings May 6.

How Tesla fares in the current quarter and the remainder of the year will be an important test of the company’s durability. If Tesla can limit its losses, or even continue its profit streak and outperform legacy automakers, it will be in a stronger position to take sales from rivals weakened by the coronavirus disruption.

Tesla produces a fraction of the cars of its rivals but has a much larger stock market value on expectations of tremendous growth.

On the biggest disruptions to Tesla has been the government-ordered shutdown of its factory in Fremont, California, which sits idle since March 24 with stay-at-home orders running until at least May 31.

On a conference call on Wednesday, Musk said he did not know when Tesla could resume production in California and called the state stay-at-home order a “serious risk” to the business.

“To say that they cannot leave their house and they will be arrested if they do, this is fascist. This is not democratic, this is not freedom. Give people back their goddamn freedom!”

Late on Wednesday, the Tesla CEO doubled down on his stance, in response to a journalist’s tweet that quoted Musk’s remarks of calling the stay-at-home orders fascist. “Hell yeah!!”, Musk said on Twitter.

Musk tweeted on March 6 that “the coronavirus panic is dumb” but later offered to supply hospitals with free ventilators.

Tesla said it could not predict how quickly vehicle manufacturing and global supply chains will normalize, saying it would revisit full-year guidance for net income and cash flow when it reports current-quarter results in three months.

Musk said that while other carmakers were cutting back, Telsa was ramping up investment. He said Tesla might announce the location of a new U.S. factory in one to three months.

Tesla in January said it expected positive quarterly cash flow and positive net income going forward. The company on Wednesday did not update its previous forecast of delivering half a million vehicles by the end of 2020.

The COVID-19 pandemic caused by the new coronavirus has disrupted demand for cars, with automakers including Tesla forced to furlough workers and close factories.

Vehicle demand in the United States has dropped as much as 80% in some hard-hit areas in March, but some analysts said sales appeared to recover slightly in April.

Tesla on Wednesday said it expected production at its vehicle factories in Fremont, California and in Shanghai, China to ramp up gradually through the second quarter.

The company said operations at its Shanghai plant were progressing better than expected, with production rates of its Model 3 sedan expected to hit 4,000 units per week, or 200,000 per year, by mid-2020.

But of the $5.1 billion in overall automotive revenue, nearly 7% were due to regulatory credits - money Tesla receives from other automakers that buy the company’s carbon emissions credits to meet stricter regulation. Revenue from those credits nearly tripled from the last quarter.

Hargreaves Lansdown analyst Nicholas Hyett also flagged that Tesla’s free cash flow was negative last quarter and improved only modestly on a yearly basis.

“The immediate future doesn’t look like the ideal time to be selling premium priced cars, so perhaps it’s no surprise guidance has been paused,” Hyett said.

Tesla said its free cash flow had been impacted by growing inventory due to coronavirus shutdowns.

Tesla shut down the California factory just as it was ramping up production of its new electric crossover utility vehicle Model Y, which it expects to generate record demand and higher profit margins.

Tesla on Wednesday said the Model Y was already contributing profits, marking the first time in the company’s history that a new vehicle is profitable in its first quarter.

Excluding items, Tesla posted a profit of $1.24 per share. Analysts had expected a loss of 36 cents per share.

Tesla shares are up 91% for the year to date as of Wednesday’s close, after recovering from a sharp slump in March.

The Tesla CEO in particular appeared critical of the coronavirus-related restrictions in California as he agreed with a tweet suggesting the state’s hospitals were laying off staff and going bankrupt. He also referenced data saying hospitals in California “have been half empty”.

Musk seemed to be supportive of the way the lockdown was being lifted in Germany as the European nation began to gradually and tentatively reopen.

“Very sensible,” Musk tweeted late on Wednesday responding to a media report on how Germany was lifting its restrictions.

Reporting by Akanksha Rana in Bengaluru and Tina Bellon in New York; additional reporting by Kanishka Singh; Editing by Joseph White, Lisa Shumaker and Gerry Doyle

Mongolia approves Law on Pandemic Preparedness and Response www.news.mn

Mongolian State Great Khural (parliament) approved the Law on Pandemic Preparedness and Response in answer to the economic and social impact of coronavirus as well as the growing threat of an outbreak of infectious diseases in the future. The bill was presented by MP J.Enkhbayar and MP Kh.Nyambaatar.

Mongolia reports no new COVID-19 cases www.xinhuanet.com

April 29 (Xinhua) -- Mongolia conducted 315 tests for COVID-19 on Tuesday, with the results all returning negative, according to the country's National Center for Communicable Disease (NCCD).

Mongolia: Criminalization of defamation is another disturbing attack on media freedom, threatening anti-corruption efforts www.transparency.org

Transparency International and ARTICLE 19 today called on the Mongolian government to take urgent legislative action to address an increasingly dangerous environment for independent media in the country.

In January, Article 13.14 of the Mongolian Criminal Code came into effect. This provision stipulates that disseminating false information can be punished by fines equivalent to approximately €300 - €900 Euros, 240 - 720 hours of community service, or restriction of the right to travel for one to three months.

Mongolian press freedom and anti-corruption activists are concerned that the law does not define the term ‘false information’. In practice, they say, police, prosecutors and judges involved in criminal defamation cases are not considering the accuracy of information reported in the media or proving that it is false when charging people under the law.

Article 13.14 should be urgently repealed, the organisations said.

Previously in Mongolia, defamation cases were brought under Article 6.21 of the Law on Administrative Offences. In the first few months of this law coming into effect in late 2017, over 100 journalists were charged, many in cases brought by politicians.

“Unfortunately, Mongolian public figures do not seem to accept that tolerance of criticism and accountability for their actions is part of the job,” said Ilham Mohammed, Asia Pacific regional advisor at Transparency International. “Previous defamation laws were widely used by politicians and business groups to silence critical voices, and now harsher, criminal legislation looks set to continue that trend with potentially dire consequences for independent media voices in Mongolia.”

In addition, Mongolia's 2017 law on state and official secrets allows virtually all information to be classified as a state or official secret, leading in some cases to the prosecution of journalists exposing corruption. The country's Law on Access to Information has not yet been fully implemented, almost a decade after being passed into law.

Furthermore, without an urgent change in course, legislation governing non-profit organisations expected to take effect in May 2020 will impose taxes on non-profits and subject them to government approval.

Transparency International and ARTICLE 19 urged Mongolia’s leaders to recognize that access to information, freedom of association, and free and independent media are fundamental pillars of any democracy and essential for combatting corruption. The government of Mongolia must ensure that its citizens are able to express themselves in line with rights guaranteed by the country’s constitution.

ENDS

Notes to editors

Anti-corruption and media freedom organisations in Mongolia include:

Transparency International Mongolia

www.transparency.mn ; info@transparency.mn

Globe International Center

globeinter.org.mn ; globenews@globeinter.org.mn

For any press enquiries please contact
Transparency International press office
T: +49 30 34 38 20 666
E: press@transparency.org

Mining companies encounter stock decline www.zgm.mn

According to the trade performance index, MSE listed mining companies have faced a sharp decrease and inactive in share price during the period of border ban due to COVID-19. In particular, MSE tier-I listed Tavan Tolgoi JSC’s share price has been lowered by 35.3 percent within nearly three months, and market value lessened by MNT 121.2 billion. During the same period, the shares of MSE tier-II listed Aduun Chuluun JSC decreased by 26.4 percent, and the market capitalization dwindled by MNT 1.2 billion. However, Bayanteeg JSC’s shares declined by 12.2 percent and were traded only six times on MSE since February, while Berkh Uul JSC’s shares were traded only once during active trading froze. In addition, the construction industry is suffering badly from the looming recession either. In terms of MSE tier-II listed Arig gal JSC, the share price dropped by 9.3 percent since the border restriction. According to the Mongolian National Chamber of Commerce and Industry (MNCCI) survey, light industry companies are next in line which revenues falling by more than 40 percent.