MONGOLIA-JAPAN TRADE | LOW FEE, BETTER RETURNS | E-VISA

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💰 MONGOLIA-JAPAN TRADE RELATIONS

It’s been 50 years since Mongolia and Japan established diplomatic relations in 1972. Within that time, Japan has become one of our major economic partners and made a significant contribution to the development of our country. And Mongolia seems to have stuck more to the receiving end of this partnership than the giving one.

Much in demand: Japanese cars and education

In the first quarter of 2022, Mongolia’s exports to Japan reached $3.6 million, while trade in the opposite direction hit $139.4 million. The main reason for this asymmetry is the popularity of Japanese cars among Mongolians - 6 of the 10 most common vehicles in the capital are Toyotas, with the most common one being Toyota Prius.

• Needless to say, passenger cars and trucks made up as much as 75% of Japan’s exports to Mongolia in Q1 2022.

Another thing that we really love about Japan is, perhaps, its education. The Monbukagakusho Scholarship, for instance, is extremely sought after and the students who manage to receive it are highly respected among their peers. There are also a number of secondary schools in Ulaanbaatar that have Japanese curricula - some of them even require their students to wear Japanese uniforms.

• As of now, there are more than 3,100 Mongolian students currently studying in Japan.

What does Mongolia sell to Japan?

Our main export items to Japan are animal products (guts, bladders, stomachs), electric furnaces and ovens, and other mechanical appliances and equipment. The rest are mostly clothing items, such as coats, knitted blouses, cashmere scarves, etc.

Overall…

Our trade relations with the Japanese are conspicuously lopsided because right now, we don’t really have the stuff they would actually import from us in large amounts. So it could be said that the Economic Partnership Agreement signed in 2015 and the relevant trade perks have been more beneficial to Japan than to Mongolia. On the one hand, it may mean that we closed a bad deal, but on the other hand, it really should be an incentive for us to try to sell our own products and services to Japan.

For those who’d like to know more about the bilateral relations between the 2 countries, check out this article. It will give you a more holistic perspective on the matter.

📢 ULAANBAATAR GRAND SLAM-2022

The IJF World Tour is a worldwide top-tier judo tour, organized by the International Judo Federation since 2009. As part of the tour, a Grand Slam tournament is to be held in Ulaanbaatar with 165 competitors from 25 different countries.

The details:

• Duration: June 24-26

• Location: Steppe Arena, 8th Khoroo, Ulaanbaatar, Mongolia

• Tickets: available at the Central Sports Palace

LOWER FEES, BETTER RETURNS

The Mongolian Stock Exchange (MSE) has recently announced a significant reduction in registration and filing fees and other expenses, such as fees for exchange services. It is the latest of their many measures to support institutional investors and the overall capital market development in Mongolia.

Significant fee reductions:

• Mutual fund registration fee reduced to 0.25-0.5% (prev 1.0%)

• Annual fee for exchange services decreased to 0.05% (prev 0.1%)

• Initial stock filing fee dropped by 10-40%

• Company bond and asset-backed securities’ filing fees decreased by up to 36%

• No primary offering fee for stock or fund share trading

Nurturing an infant sector

Institutional investors are what Mongolia’s capital market has long lacked for. Thankfully, some crucial progress has been made in the last several years.

The first mutual fund, National Privatization Fund (MSE: ХОС), was established just 2 years ago while the second mutual fund, Mandal Future Growth (MSE: MFG), was established last summer. Both are closed-end funds and have already attracted 10,000 retail investors in total, proving great demand among the public.

This year, the FRC registered two open-end funds for the first time. To your knowledge, closed-end fund shares are traded among investors on an exchange with a fixed number of shares while open-end fund shares are bought and sold by the fund itself with no fixed number of shares.

Furthermore, the MSE approved new regulations on ETFs and market makers. We expect the first ETF and market maker to be established later this year.

What does it mean for foreign investors?

• Lower fees, better returns: Obviously those fee reductions will cut costs and bring more profit not only to Mongolians, but also to foreign investors, making the market more attractive overall.

• Easier entrance: The biggest difficulties of entering any stock market are finding great investment opportunities and making decisions on your own. As for the MSE, it’s even more difficult because Mongolia is an unknown terrain for many. But now it’s much easier since you can invest in Mongolia through institutional investors.

• Lower risk: Investing through institutional investors, such as mutual funds, will reduce all kinds of risks significantly. Also, the advance of institutional investors will make the current market more efficient.

Lastly, if you don’t know what to do, reach out to one of the asset management companies or brokerage firms. Most of them are heavily focused in attracting foreign investors, so you can get more insights directly from them.

🏛️ DATA STORY

The Mongolian National Chamber of Commerce and Industry has recently surveyed 51 companies that made it to the top companies’ list for 2021 on whether they are interested in going public. Although 52.9% of them are aware of its financial benefits, 58.8% are not interested in offering shares to the public at all. It's no wonder only 8 out of 100 of Mongolia’s top enterprises are public companies.

🏃 QUICK STORIES

📌 MOU to be signed with Starlink. The news came after the meeting between Secretary of State of the Ministry of Digital Development and Communications B.Bolor-Erdene and COO of SpaceX Gwynne Shotwell held on June 2.

📌 Steppe Gold’s gold production reaches 3,800 ounces in May. This compares to the output of 3,370 ounces in April and 1,532 ounces in March. Considering such a steady increase in production, the company is likely to report a significant revenue growth in Q2 2022.

📌 Bishop in Mongolia to become world’s youngest cardinal. Bishop Marengo has spent the past 19 years serving as a Consolata missionary priest in Mongolia. He will be elevated to cardinal in August, becoming the youngest cardinal in the world at the age of 48.

📌 Erdenes Solutions JSC to issue additional shares. The Financial Regulatory Commission approved the company’s decision to issue additional 18,521,598 shares worth $0.003 each to raise $0.6 million. Erdenes Solutions (AMT) is an information technology company that provides services to financial institutions, such as brokerage firms, banks and NBFIs.

🌊 A GLIMPSE OF MONGOLIA

About: Located near the northern border of Mongolia, Lake Khuvsgul is our largest freshwater lake. It’s 136 kilometers long, 262 meters deep, and holds almost 70% of the country's freshwater reserves.

The lake and the surrounding area are parts of the Khuvsgul National Park established in 1992. One of the most favorite destinations among local and foreign tourists, It’s home to more than 68 species of mammals, 244 types of birds, and 800 different kinds of trees.

❗ TOP NEWS

• Land Breeze Agrees to Sell Its Interest in SouthGobi. (Yahoo! Finance)

• Turquoise Hill Acknowledges Receipt of Notice of Arbitration from Entrée Resources Ltd. (Financial Post)

• ‘Stalwart Esports’ team becomes South Asian champion. (MONTSAME)

• State-issued email addresses to be introduced this year. (MONTSAME)

• Hollywood project Godsend to film in Mongolia end of 2023. (KFTV)

• Holy See and Mongolia: 30 years of good relations. (Vatican News)