🎥 SHOOTING IN MONGOLIA? | DISTORTED ECONOMY | INSURANCE INDUSTRY

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Tired of cars? If you’re currently in Ulaanbaatar, don’t forget that May 28 (Saturday) is a car-free day. Grab your skateboard or bike, and enjoy some freedom from the deafening noises of traffic.

📌 DID YOU KNOW?

Mongolia’s food service industry:

• As of 2020, there were around 8,500 businesses operating in the field.

• 18.5% of them were restaurants, 15.7% - bars, 4.7% - cafes, and the rest - cafeterias, fast food places, and other food service providers. (MOFA)

• In 2021, the industry’s revenue stood at $232 million - an 8.9% increase from the previous year. (NSO)

• Q1 2022 saw as much as 55.8% growth, with $69 million generated in revenue. (NSO)

📌 MSE WEEKLY

• A total volume of 8.7 million and $0.7 million worth of shares was traded last week on MSE. TOP-20 Index declined by 0.87% last week to 34,479.54, $1.59 billion market capitalization.

• The most traded stock was Central Express CVS (CUMN) in both volume and value. A staggering 6.4 million shares worth $0.4 million were traded, increasing their share price by 4.4%.

• Erdene Resource Development (TSX: ERD, MSE: ERDN) announced Q1 results and provided an update on Khundii Gold district projects last week, which surged their share price by 31.8%.

DISTORTED ECONOMY

Mongolia’s first quarter key macroeconomic indicators are out. It doesn't look good just like the global economic situation but here are some nuances that you should know.

Key figures

• GDP: $3B USD, a 3.8% decrease from Q1 2021.

• 30% - 37% fall in the Mining, Construction, and Transportation sectors.

• 7% - 15% growth in the Agriculture, Telecommunications, and Retail sectors.

• Export: $1.65B, Import: $2.12B

Up till now

The main reasons for the poor performance in Q1 are due to China’s ongoing border restrictions thus a consequent decline in exports. Moreover, global economic spill-overs from the war in Ukraine such as inflation, increasing oil prices, and supply bottlenecks from import disruptions with the country’s main trade partners, Russia and China, have led to inflationary pressures.

Current situation

Given the circumstances, the IMF states that facing increasing inflation, unemployment, and decreasing economic growth, Mongolia might be headed towards stagflation. Mongolia’s foreign reserve has been falling every month since 2022 started, reaching $3.3 billion in April. Meanwhile, Q1’s growth in retail was largely due to the full lift of embargoes and restrictions on businesses in Mongolia. This goes to show that even with 14.4% inflation, the lasting effects of the pandemic have yet to disappear.

Future prospects

Fitch Ratings has affirmed Mongolia's Long-Term Foreign-Currency Issuer Default Rating at 'B' with a stable outlook. While Mongolia’s near-term growth remains subdued at 1.2% , medium-term growth is looking positive at a projection of 6.3% in 2023 and 6.8% in 2024. Their concerns lay with Mongolia’s low reserves and high public debt, of which about 95% of it is denominated in foreign currency. The Government is trying to increase reserves, resume exports without imbalances and maintain a favorable business environment conducive to robust FDI inflows. Unfortunately, it is easier said than done.

With a mindset on reviving economic activity, Mongolia has started to take many effective measures to attract tourists and investors alike after fully opening the borders, such as allowing South Korean citizens to enter the country without a visa for 90 days from June 1. On top of that, the number of air passengers in the first 4 months of the year reached 181,000, a 5.5 times increase compared to 2021.

📢 STATE WITHOUT A SEAL

“State without a Seal” is Mongolia’s most acclaimed tragedy about a Hun Dynasty king, who sacrifices his loved ones to save his throne from traitors. The play was written in 1998 by one of the most prominent Mongolian writers, B.Lkhagvasuren, and reminds the audience of how sacred the state and state-building should be.

One-time chance

A special performance with English subtitles of the play will be held in June for expats and foreign visitors. It’s a golden opportunity to not only get acquainted with Mongolia’s theatrical scene, but also get a glimpse of the internal intricacies of our ancient statehood.

The details:

• 📅: June 2, 2021

• ⌚: 7:00 pm

• 📍: National Academic Drama Theater, Ulaanbaatar, Mongolia

• 📱: +976 9090-5045

• 🏷️: ₮80,000 - ₮100,000

*Tickets are only available at the box office of the theater.

🎬 SHOOTING IN MONGOLIA?

Are you a cinephile? If yes, then you’re probably super excited about the 75th Cannes Film Festival that’s taking place right now. Mongolians are excited too. We might not be all movie buffs, but there’s a different reason.

The Minister is there!

Nomin.Ch, our Minister of Culture, is leading a delegation of Mongolian filmmakers and other industry stakeholders at the event, where she’s launching the new Mongolian National Film Council (MNFC).

• The MNFC will hold an exhibition at the Marché du Film (organized in conjunction with the Cannes Festival) until May 25, providing daily presentations and cultural entertainment at their booth.

More about MNFC

The council is aimed at managing foreign film production incentives, and other legislative measures to support the industry’s growth in Mongolia within the Promotion of Cinematography Law.

For global film producers

Here’s what you can expect from the law if you decide to shoot your film in Mongolia.

• Tax incentive of 30% for a spending of $500,000 or more with a three-month visa for the whole film production team

• Additional 10% for works that highlight Mongolian culture and heritage

• 5% rebate for the salaries of foreign artists and other team members

Sounds good, right? Note that you have to apply first to be able to enjoy all these reimbursements. Applications must be submitted 14 days before filming and will be reviewed by MNFC.

Fun facts:

• The Korean drama “Crash Landing on You” was partially filmed in Mongolia. (The complete list of movies filmed here)

• There are a number of international film festivals organized in the country, such as the Ulaanbaatar International Film Festival and the Golden Ger International Film Festival.

• On average, 40 new films are released each year.

🏛️ DATA STORY

Overall, insurance companies in Mongolia generated $1.1 billion in profits within the first three months of 2022 - a 76% decrease from last year’s $4.6 billion. It’s clear that in the current higher inflationary environment, expenses for insurance operations and claims are increasing, resulting in lower profits.

🏃 QUICK STORIES

📌 Foreign exchange reserves decline 4 consecutive months. According to the Central Bank of Mongolia, the official foreign exchange reserves decreased to $3.3 billion in April, down 32.2% from a year earlier. At that time Mongolia had a record $4.89 billion in foreign reserves.

📌 Mongolian actors to perform in English for first time in US. The Mongolian play under the title “73 hours” will be performed in various countries across the world later this year, including the U.S., Germany, Sweden, Russia, Austria, South Korea and Japan.

📌 USAID launches new energy governance program in Mongolia. The $12-million program will provide access to reliable electricity and facilitate sustainable economic growth in the country. USAID will also advance the use of clean alternatives to help improve air quality.

📌 Samurai Bond to be paid before maturity. Development Bank of Mongolia has announced an early settlement of the JPY 30 billion Samurai bond maturing in December 2023. Both guarantees, the Government of Mongolia and JBIC, have permitted the early payment.

🐕 A GLIMPSE OF MONGOLIA

Hold the dog! This is what Mongolians call out when they approach a ger in the countryside. Most families who live there have a dog that helps them herd their livestock. These working canines are usually the Bankhar, a dog native to the Mongolian steppes shaped through thousands of years of coexistence with nomadic herders.

Sadly, very rare

During the Communist era, the number of Bankhar dogs sharply decreased as people relocated to cities and a strict dog control policy was introduced. Currently, there are multiple initiatives aimed at preserving these livestock protection dogs, such as the Mongolian Bankhar Dog Project.

Good to know

• A Bankhar pup can cost up to $3,500.

• Many people confuse Bankhar dogs with Tibetan mastiffs, but they are genetically different from each other.

TOP NEWS

• Turquoise Hill to receive debt funding from Rio Tinto as it evaluates $2.7 bln offer. (Reuters)

• Can Digital Governance Strengthen Mongolia’s Democratic Institutions? (The Diplomat)

• The youngest member of Mongolia's government is making space for women in tech. (TIME)

• Mongolia: Concluding Statement of 2022 IMF Staff Visit. (IMF)

• ‘Princess Khutulun’ film to screen in Latin American countries. (MONTSAME)

• Mongolia’s Film and TV Location Incentives Are Ready for Use. (Variety)

• Mongolia to exempt import tariffs for certain food products to ensure price stability. (XINHUA)

• Sister city relations established between Ulaanbaatar and Chongqing. (MONTSAME)