USDMNT | POLITICS 101 | MONGOLIAN ECONOMIC FORUM

Ramadan Mubarak! We wish all our Muslim readers out there health and prosperity this holy month and always. May your fasting feel fast. 😌

  📌 DID YOU KNOW?

Here are some fun facts about Mongolian names:

• 663 people are named Genghis.

• Baterdene (15,494), Temuulen (13,606), and Khulan (13,321) are the most common names.

• “Munkhmainbayarpurevsaikhantungalagsukhgombo” is the longest name with 39 letters in Mongolian and 43 - in English.

• We use patronymic surnames, meaning that our last name is our father’s name. For example, Ukhnaagiin Khurelsukh means Khurelsukh of Ukhnaa, which could roughly be translated as “Khurelsukh, the son of Ukhnaa”.

🗳️ MONGOLIAN POLITICS 101

In the early 1990s, after 70 years of single-party rule during which Mongolia was a satellite state of the Soviet Union, it became a parliamentary democracy with a multi-party system.

Political parties

There are two major political parties which have been alternating as the majority party in the Parliament throughout the last 3 decades.

• Mongolian People’s Party (MPP), a successor of the communist single ruling party, that currently has 62 of 76 seats in the State Great Khural

• Democratic Party (DP) that evolved from the democratic movement of the early 1990s, 11 members of which now vote in the Parliament

Take a look at the list of all political parties here.

Legislative branch

As declared in the 1992 Constitution, “The National Parliament is the highest organ of state power, and the supreme legislative power is vested only in the National Parliament”. The National Parliament, a.k.a. the State Great Khural, has one chamber and consists of 76 members elected for 4 years. To participate in parliamentary elections, a Mongolian citizen must be 18 years or older, and live in Mongolia, meaning out-of-country voting is not allowed.

• Next parliamentary elections will be held in 2024

Executive branch 

Executive power is exercised by the Prime Minister (PM), the head of the Government. The President, who is elected by popular vote for a non-repeatable six-year term, is the head of state, but holds limited authority over the executive branch. However, the President appoints the PM after each parliamentary election and appoints the members of the Government on the recommendation of the PM.

• Incumbent president: Khurelsukh Ukhnaa (MPP)

• Incumbent prime minister: Oyun-Erdene Luvsannamsrai (MPP)

• Next presidential elections will be held in 2027

Judicial branch

The Constitution states that the judicial power is vested exclusively in courts independent of any outside influence, but in 2019, the State Great Khural passed a law that allows the National Security Council composed of the speaker of parliament, president and prime minister to dismiss judges who are "dishonest". Various civil movements, international organizations and prominent Mongolian politicians have denounced the decision, but no action was made so far.

More to digest

• Is Mongolia Heading Toward One-Party Rule?

• Mongolia: Freedom in the World 2021 Country Report

• Mongolia: BTI Transformation Index 2022 Country Report

📢 ​MONGOLIA ECONOMIC FORUM 2022

Having been suspended since 2018, the Mongolia Economic Forum is finally to resume this year under the theme of the New Revival Policy, a development policy initially proposed by Prime Minister L. Oyun-Erdene that covers comprehensive reforms in the areas of port, energy, industry, green growth, urban and rural development, and government productivity.

Pre-discussion highlights

Prior to the event, all 6 policy areas mentioned above were talked through during pre-discussion meetings from March 21 to March 29. Here are some highlights:

• National Roadmap for Sustainable Financing adopted

• Mongolia's customs system digitized by 80-90%

• ‘New ring road’ connecting Ulaanbaatar’s sub-centers to be established

Forum details: 

• Location: Government Palace, Ulaanbaatar, Mongolia

• Date: April 7-8

• To register visit the official website HERE

👀 EXCHANGE RATE UNDER SCRUTINY

One of the risks foreign investors carry is the price and cost uncertainties, as a consequence of inflation and exchange rate fluctuations. IMF highlights that Mongolia, with a narrow economic base and insufficient Forex reserves, is highly vulnerable to external shocks and needs greater exchange rate flexibility.

History of USD/MNT

After entering the market economy in 1990, Mongolia changed from fixed to floating exchange rate system during 1993 to 1995 and observed a 1083.7% hike in the price of 1 U.S. Dollar from 40 to 473.5 Mongolian Tugrik (₮). The central bank was heavily involved in ensuring the stability of MNT until 2009’s Stand-By Arrangement with IMF to allow for exchange rate flexibility in line with market conditions. Furthermore, FX auctions were implemented to improve transparency and efficiency in the domestic foreign exchange market.

Inflation and Exchange rate 

As of April 2022, USD to MNT exchange rate is ₮2970.93, experiencing a recent increase since the conflict escalation in Ukraine. Central banks forecasted that inflation, which surged in 2021 due to the pandemic and the failure of the global supply chain, will continue to rise and remain high this year due to geopolitical conditions around Russia and Ukraine. Sensitive to exchange rate expectations, Mongolia battling with 14.2% inflation has also tightened monetary policy and increased policy rates up to 9.0%.

Exchange rate determinants

Like any other price, exchange rates are determined by supply and demand. Supply comes from inflows from exports of goods and services from Mongolia and FDI. As of 2021, Mongolia’s exports main components are mineral products (81.3%), rare metals (11.1%), and cashmere products (4%). Similarly, dollar demand arises from an interest in buying foreign products and investments. We are a large importer of minerals (19.5%), machines and equipment (18.2%), transportation vehicles (17.9%), and food products (8.9%). Balance of Payments is a good way to measure the amount of capital inflow and outflow of a country. For more information check our take on Mongolia’s BoP.

Big prospects

It’s important to identify the risks of the investment and today we aimed to shed some light on the country specific risks. As the global risk appetite recovers after the pandemic, there is good news for potential retail and institutional investors if you are looking to invest in Mongolia. In terms of the financial market, Mongolia has deferred bond payments due 2022 and exhibited a stable USD/MNT exchange rate in 2021. In 2022, travel and tourism industries are expected to flourish with open borders, and the export sector is set to improve as commodity prices soar and new transportation systems are being put into effect.

For more information on the legal environment and policies check this out.

🔔 EXPORT MONGOLIA

COVID-19 has taken us by storm and shaken our world, but it’s also unleashed an extraordinarily strong trend of digitalization, which our new partner Export, International Trade Center /EITC/ didn’t fail to join. 

In 2020, the EITC launched www.ExportMongolia.org, an easy-to-navigate virtual event platform where you can:

• Visit online exhibitions with 2D and 3D pavilions

• Network with Mongolian companies by chatbots on time 

• Communicate and request private meetings with specific businesses and projects

• Take part in international and domestic virtual forums, seminars and lectures

• Participate in exhibitors’ surveys

Past events include a number of international and domestic exhibitions jointly organized with public and private institutions, such as:  

• Export Mongolia 2021 international virtual forum and expo was successfully held virtually and physically

• Mongolia-Japan Business Forum 2021 gathered more than 5000 domestic and international participants

• Patriotic Procurement - National Production Expo 2021 aimed at supporting and promoting national producers/manufacturers by increasing involvement at public and private sector procurement and creating new partnerships 

• Virtual Career Expo 2021, where 192 employer companies offered 2161 vacancies and 1248 job applicants were participated

• 100th anniversary of the establishment and development of the trade sector in Mongolia, an event that was celebrated both virtually and physically

We will be providing you with timely notifications and reports about the upcoming virtual events on the platform, so stay tuned!

*This article was prepared in partnership with EITC.

🏃 QUICK STORIES

📌 JMC Projects India visits Mongolian Oil Refinery. In 2020, JMC Projects India has been selected as the contractor to develop Mongolian Oil Refinery’s non-technological facilities and construction site infrastructure. During the meeting last month, the sides exchanged information on the construction progress and issues that need to be addressed.

📌 India’s export to Mongolia reaches $30 million. Mongolia buys a variety of pharmaceutical items, tea, sugar, telecommunications equipment, and trucks from India, while mainly exporting minerals, the amount of which totaled about $200 thousand in 2021.

📌 Foreigners can now extend their residence permit online. Starting from March 25, The Immigration Agency of Mongolia is accepting online requests for extension of 56 types of residence permit for foreign nationals residing in Mongolia for official or private purposes.

📌 53% of The Development Bank of Mongolia's loans are non-performing loans. Founded in 2011, DBM is a state owned financial institution to finance long term projects in line with the economic and infrastructure development strategy of Mongolia. During the audit hearing, the National Audit Office found that out of $605 million NPLs only $5 million was repaid.

📷 A GLIMPSE OF MONGOLIA

About: The then President of Mongolia Ts. Elbegdorj sitting among high-level foreign officials during the 11th Asia-Europe Meeting (ASEM). He’s wearing a deel, the main article of traditional Mongolian clothing, which seems to have attracted much attention from the others. 👀

11th Asia-Europe Meeting

The 2016 summit marked the 20th anniversary of ASEM and was hosted by Mongolia under the theme of “Partnership for the future through connectivity”. Participants included more than 4000 representatives from 51 countries of Europe and Asia. 

Fun facts: 

• There were at least 600 domestic and international journalists reporting on the event. 

• Mongolia’s biggest business group MCS built special “ASEM villas” dedicated to accommodate foreign officials, some of which were later sold. In fact, you can still buy one if you’re interested.

• See the adopted declarations and  relevant statements from the meeting HERE. 

ESSENTIAL LINKS

• 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)

• Are the Mongolian stereotypes true? (Real Mongolia)