🏛️ BUDGET AMENDMENT | REAL ESTATE MARKET | NEW PARTNERSHIPS

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Hey there! We’re happy to announce our new partnerships with GerHub and Binance 😎

For the next few weeks, you’ll be reading our special section focused on raising awareness about social and environmental issues in ger districts of Mongolia in partnership with GerHub.

We would also like to thank Binance for choosing us to spread the news about their latest competition on the topic of inclusive finance.

📌 DID YOU KNOW?

Mongolian mental athletes rank quite high in the world. Here are some mind-blowing facts:

• Mongolia won the team champion in the 30th World Memory Championships, with N.Munkhshur winning the gold medal and T.Tenuun - the bronze.  (WMC)

• N.Munkhshur also took first place in the 2017 World Memory Championship, 2017 World Adult Memory Championship, and 2016 World Junior Memory Championship. (WMC)

• B.Shijir-Erdene holds the world record for speed cards — 12.74 seconds.

• 6 of the 10 highest-ranking competitors are Mongolian. (International Association of Memory)

🏛️ Mongolia to amend 2022 budget

Global inflation and commodity price hikes have led many countries to reconsider their policies in 2022. The Mongolian government is taking necessary steps to relieve the pressure on citizens by implementing cost-saving measures in the Bill to make amendments to the 2022 Budget Law of Mongolia.

Aiming for recovery

It would not be amiss to say that the Ukraine conflict and the lasting effects of the pandemic were not well anticipated in the global expectation of 2022. With the growing likelihood of disruption in budget revenue, the government of Mongolia is re-evaluating its expenditures, taking all possible measures to prevent food shortages and price increases, protect citizens' incomes, and resolve pressing social issues. The Bill on budget cuts sets obligatory restrictions on the activities of all levels of budget organizations, state-owned and partly state-owned legal entities.

Measures taken

Other Bills in motion include Bills to amend the Social Insurance Fund, Future Heritage Fund, Bill on Budget saving, and Bill on repayment of 50% of Social insurance premiums to some insurers. These laws estimate a total of an $80 million cut in expenditure. Combatting the high commodity prices due to disrupted global supply chains, key food items will be exempt from customs and value-added taxes until the end of the year. Furthermore, to promote decentralization, there will be tax breaks for companies that provide jobs to job seekers and reduce unemployment in rural areas.

Budget structure

According to the preliminary results of Q1 2022, the balanced revenue and grants were increased by $300 million to $1.17 billion, showing a 35.8% YoY growth. In contrast, total expenditure and net lending reached $1.24 billion, with a 40% increase from Q1 2021. Mongolia’s total budget expenditure remains high, driven by higher social welfare spending and millions pumped into the economy during the pandemic to keep individuals and businesses afloat.

Road ahead

As the budget deficit widens, the need to raise bonds in foreign markets will increase. Although there are no high-yield payments this year, Development Bank bonds and government bonds are expected to be repaid in 2023-2024. With the $8.8 billion government debt equaling 63% of GDP, it’s the right decision to tighten the government spending in 2022 under new expectations.

📢 ​​2022 ASIAN WRESTLING CHAMPIONSHIPS

As you may already know, Mongolians are good at many kinds of fighting sports, but this time we’re not really bragging about our athletic capabilities 🙊, but simply letting you know that Mongolia successfully hosted the 2022 Asian Wrestling Championships in cooperation with the Asian Associated Wrestling Committee last week.

The details:

• Participants included more than 250 Greco-Roman and freestyle wrestlers from 22 countries and regions.

• It was the 35th edition of Asian Wrestling Championships of combined events.

• Japanese athletes won the most medals: 9 gold, 2 silver, and 8 bronze ones.

• The event took place at the Buyant Ukhaa Sport Palace.

If you’re into wrestling, taking a look at the battles might be worthwhile.

📈 A LOOK AT REAL ESTATE MARKET

In March 2020, the Financial Regulatory Commission (FRC) of Mongolia approved "Procedure for Licensing, Permitting, Authorization and Registration of a real estate brokerage company", thereby setting the framework for a thriving real estate market. Let’s see how far the market has come today.

A look at the Market

The real estate market is one of the sectors directly dependent on economic growth and living standards, accounting for about 6% of Mongolia's GDP. This percentage has been decreasing since 2015, however, we could expect it to increase as real estate brokerage firms proliferate and more people invest in the market.

The number of firms in the market is steadily growing, with 248 real estate brokerages operating in Mongolia in 2021, which is an increase of 48.5% compared to the same period of last year. Also, the number of staff working in the industry has been rising year by year, and comprehensive asset management services are expected to develop in the future.

Heavy international investments

Foreign investments are pouring into the Mongolian real estate market. In the 2021 fiscal year, 248 brokerages with special authorization operated with an equity capital of $6.7 million from 366 shareholders, an increase of 4.9% compared to the same period of the previous year. Surprisingly, 79% of the total equity capital is foreign investment, of which $4.9 million or 74% is US investment. The rest consists of 21% Mongolian, 4% South Korean, 1% Japanese investments.

A look at Revenue

In 2021, real estate brokerages have completed a total of 6,274 transactions, with 1.3 million sq. m of real estate valued at $278 million. Of total transactions this year, 45.2% was between 100 and 50 sq. m and 40.9% was 50 sq. m and under.

In just the 4th quarter of 2021, a total of 543,298 sq. m of real estate worth $77.9 million was sold. If we classify this by type:

• 89.4% or $69.64 million was residential (104,519 sq. m);

• 6.9% or $5.38 million was commercial (138,072 sq. m);

• 2.4% or $1.87 million was land (299,740 sq. m);

• 1.2% or $0.93 million was industrial (921 sq. m).

Total revenue generated in the real estate market reached $12.27 million this year, increasing by 80.9% from $6.78 million last year. Moreover, Net Income increased more than 8-fold from $54.96 thousand to $479.58 thousand.

Housing prices on the rise

Housing prices in Mongolia have been rising considerably in recent years. As of last month, the average new housing price per sq. m in Ulaanbaatar was $1,017.62 with the highest in Khan-Uul district ($1,105.69) and the lowest in Songinokhairkhan district ($792.57). This is an increase of 3.7% from the previous month and 20% compared to the same period of the previous year, according to the National Statistics Office.

A look at the Mortgage market

The mortgage market continues to grow. The issuance of soft mortgage loans increased by 143% in 2021, reaching $319 million. In previous years, this number was between $81.54 and $130.46 million. Bank-financed mortgage lending also increased by 25%. Additionally, a total of 104,000 people were covered by mortgage loans last year, most of them with a monthly income of $326.16 to $815.40.

👪 DATA STORY

As of Q4 of 2021, 719k employees of 46k enterprises paid social insurance, with the organizations contributing 12.5​​-14.5% and the employees 11.5%. The Prime Minister promised to reimburse 50% of social insurance premiums after deducting health insurance premiums to non-government and non-mining sectors by the end of the year. The decision will result in a 12.9% decrease in the SIF’s revenue, which has been consistently below the expenditure for the past decade. This money will result in higher money in circulation and could potentially flame the inflation, not halt it.

According to The World Bank, Mongolia has a relatively generous pension scheme with high levels of coverage and unsustainable fiscal costs. Costs are projected to increase from 2.8% of GDP in 2020 to 6.8% in 2030, and they are suggesting a slow reform to reduce the anticipated growth in fiscal costs.

🧠 TACKLING AIR POLLUTION WITH DESIGN

As you see from the picture above, the burning of coal, and other solid fuels in ger areas is the main source of air pollution in Ulaanbaatar. And if we follow the causal chain of this problem, it’s clear that the residents living in these districts are involuntarily generating pollutants just to stay warm during the brutally cold winters.

So, why not make their gers warm on their own?

This is exactly what GerHub is working on! Since 2017, they have been studying and monitoring ger households in cooperation with a number of international and domestic partners, including:

• Stanford University and University of Pennsylvania

• UNICEF Office of Innovation and Mongolia Country Office

• The North Face

• Arc’Teryx

• KieranTimberlake

What are they working on?

Simple - improving the design of the ger, that is, insulating it where most of its heat loss occurs: the oculus, door, and floor. This way there wouldn’t be much necessity to burn fuels. What’s remarkable is that they focus on designs that can be created with locally available materials and affordable for ger dwellers.

This is what we call an innovative approach!

*This article was prepared in partnership with .

🏃 QUICK STORIES

📌 Zijin Mining announces strategic partnership with Xanadu Mines. Chinese miner Zijin Mining Group plans to acquire a 19.9% stake in Xanadu Mines, a Mongolian copper and gold exploration company. The company also agreed to purchase a 50% stake in Xanadu’s subsidiary Khuiten Metals for $35 million.

📌 Gobi (GOV) sales reached $8.5 million in the first quarter. Revenues rose 54% YoY thanks to increasing prices for finished goods sold domestically. Sales of its subsidiary in Europe reduced by 9%, whereas its branches in the United States and China reported growth compared to the same period last year.

📌 In 2021, 30% of Mongolians aged 15 and over were online shoppers, having purchased goods and services online. The majority 53.6% of transactions were made with debit cards and e-transfers, followed by 25.8% - using mobile account transfers. 55.7% of e-commerce shoppers bought shoes, clothes and sports goods, while 46.2% - household goods and furniture.

📌 Cooperation agreement for crude oil pipeline construction signed. The deal was sealed with China’s state-owned Norinco International Cooperation that will complete the project within three years. The pipeline will be used to transport crude oil from Dornod province to the Mongolian Oil Refinery in Dornogovi.

🔔 SPONSORED BY BINANCE

Binance and Unleash HACK Mongolia have announced a joint competition under the theme “The role of blockchain in inclusive finance”, where participants are urged to share their opinion on the matter. The 10 winners will receive a $25 Binance gift card or a mystery box.

How to participate?

• Open a Binance account.

• Submit the participation form.

• Take a picture of the Binance app against a background that’s clearly Mongolian. Take a look at the example below.

• Post your image on Instagram and tell us why you think blockchain and digital assets would help with inclusive finance in the caption.

• Follow and tag @binancemongolia and @binancenfts.

• Add the following hashtags in the caption: #BinanceMongolia, #BinancexUNLEASH, #binancenfts.

Deadline: May 8, 08:00 (UTC+8)

PS: Your Binance account must be KYC-verified with information regarding your residence in Mongolia. Also, the authorship of the image remains with the participant, but its copyright will be transferred to Binance.

Good luck!

📷 A GLIMPSE OF MONGOLIA

About: More than 7,500 people participated in the “Investment Expo 2022” last Saturday in search of better financial returns amid low deposit rates and high inflation.

Highlights:

• 6 companies, including Monos Khuns (MFC), Tumen shuvuut (TUM), and Mandal Insurance (MNDL), held their shareholders meeting during the event.

• Commercial banks of systematic importance that were recently required to go public by the new amendment to the Banking Law, were also present at the expo, offering information on their upcoming IPOs.

• There were multiple companies from the OTC market, implementing a more direct approach of attracting participants to their own booths.

• Simple, for instance, set up a “Simple bar”, at which you could get financial advice from professionals while sipping some cocktail made by a known bartender.

Considering the event hall was practically full - maybe even overcrowded - throughout the whole program, it’s clear that Mongolia’s population, or at least that of the capital, is getting more and more familiar with the stock market and its opportunities. However, people’s attraction to the event could also be interpreted in a different way. They might just be very sure that in the given economic conditions their money is going to drastically lose value over time, unless they start investing and generally become smarter in preserving the amounts they’ve managed to gather.

ESSENTIAL LINKS

• Isaac Schwartz at Asian Investing Summit 2022 on Mongolia. (MOI Global)

• Not sure where to eat in Ulaanbaatar? Food and drink reviews in English. (Dodddo0)

• What Genghis Khan's Mongolian sounded like? (NativLang)

• Risks UK businesses may face in Mongolia. (GOV.UK)