BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 256 - January 11, 2013

NEWS HIGHLIGHTS:

Business

Oyu Tolgoi board chairman assures of Mongolian interests;

Oyu Tolgoi's airport complete;

Erdenes-TT requests USD 200 million loan from Development Bank;

KFC to open in UB;

Miners rejoice for new border gates;

Mongolian Growth Group lists on TSXV;

BDSec pitches Mongolian securities abroad;

Wolf Petroleum prowling for big oil in Mongolia, signs PSC;

MIAT guarantees compensation for flight cancellations;

OT postpones wrongful termination hearing for lawyer change;

S&P rates Golomt at “B+” with “Stable” outlook;

Nomin takes home top honor at MNCCI entrepreneurial awards;

BPI holds quality management training;

Proposed Macmahon sale will test faith of investors.

Economy

Japan, Mongolia sign emissions-reduction pact;

Development of infrastructure in ger districts planned for spring;

Premier promises paid training;

State-owned electric company to meet energy demand in southern region;

Police warn of counterfeit yuan;

Mutton prices surge on higher gas prices;

MNT 140.4 billion local bond sale to support leather sector;

Immigration ends services fees;

Cabinet plans for 2013-2015 road construction projects;

Teaching institute initializes nationwide training;

Chinggis Khaan saw greater airline traffic in 2012;

Crime spiked in 2012;

Mongolia’s sovereign bond has teething problems;

Mongolia eyes access to sea via DPRK’s Rajin Port;

Chinese coal consumption expected to see growth in 2013;

Economist unit forecasts Mongolia second-fastest-growing economy in 2013;

2012 Year in Review;

Herders suffer cold snap and heavy snows.

Politics

Premier gives national address;

Opposition criticizes premier's words on Chinggis bonds;

BCM warns that draft Minerals Law greatly discourages investment;

MNMA hosts meeting with drafter of new Minerals Law;

Government calls for censorship of website comments;

MPs move to hasten enactment of judicial legislation;

Justice Minister's antagonizer pleads guilty;

China's investments prompt call for new rules;

Mongolia’s evolving foreign investment regime;

Thinking of investing in Mongolia? Read this first;

Legal immunities for MPs explained;

Looking for a jump-start in China.

ECONOMIC INDICATORS

MSE Top 20 Index by market Capitalization;

Foreign-listed Companies with Mongolian Assets;

Inflation;

Central bank policy rate;

Currency rates.

*Click on titles above to link to articles.

SPONSORS

Khan Bank Mongolian National Broadcasting

Breakthrough PR Oxford Business Group

BUSINESS

OYU TOLGOI BOARD CHAIRMAN ASSURES OF MONGOLIAN INTERESTS

Oyu Tolgoi LLC's chairman of the board defended the investment agreement for the enormous

copper mine, saying that the country earns more than investors in the form of taxes, royalties and

other fees.

―We will now see definitively if the Oyu Tolgoi project is profitable,‖ he said. ―It is not wise to talk

about how many shares we want from the project when the project has not even produced any

minerals yet. We all know that the public has a lot of expectations for Oyu Tolgoi.‖

The chairman also described the government's influence on the board, explaining that three of the

nine members represent state-owned Erdenes Oyu Tolgoi LLC.

―I would say that the three members—N. Bagabandi, B. Ganbold, and P. Tsagaan—are doing a great

job at fulfilling their duties to protect and ensure the interests and benefits of Mongolia.

Batsukh also commented on the recently held board meeting, of which some members had been

postponed because of disagreements over the budget. He said there was not any boycott or protest

made by board members and the board would assemble again for a meeting to resolve those issues.

Source: UB Post

OYU TOLGOI'S AIRPORT COMPLETE

Oyu Tolgoi LLC has finished construction of its Khanbumbat Airport.

The airport is located 36 kilometers from Khanbogd. It was built by Artzsuvraga, who employed

more than 700 engineers and professionals for the project. The airport's construction features a

traditional ger design with a runway length of 3,250 meters and width of 45 meters.

The airport was completed within three months of construction. It has the capacity for 240

passengers an hour while servicing passenger and cargo planes such as the Boeing 737. The cost for

construction came to MNT 2.5 billion.

Source: Unuudur

ERDENES-TT REQUESTS USD 200 MILLION LOAN FROM DEVELOPMENT BANK

Erdenes Tavan Tolgoi JSC has requested a USD 200 million loan from the Development Bank of

Mongolia.

This will be the second loan after a request by Erdenes-TT for a loan from the Development Bank

for USD 100 million. Last year the government took funds from Erdenes-TT for its Human

Development Fund, leaving it with only USD 170 million. That was enough to run its small-scale

operations only up to August of last year before it had to borrow from the bank.

[The USD 200 million] will see E-TT... stand on its feet,‖ said officials. ―We would then be able to

start paying dividends to our citizens, probably beginning in 2016.

Source: Mongolian International Capital Corp.

KFC TO OPEN IN UB

YUM! Asia Franchise Pte. Ltd. has granted Tavan Bogd Foods LLC the rights to develop and operate

KFC outlets in Mongolia.

―We have started the process for the first restaurant and plan to open by the middle of 2013. This

will be followed by three more restaurants in the second half of this year,‖ said Ts. Baatarsaikhan,

Chief Executive Officer and President of Tavan Bogd Group, the parent company of Tavan Bogd

Foods.

YUM! Brands Inc. is the world's largest restaurant company with nearly 38,000 restaurants in over

120 countries. Tavan Bogd, established in 1995, has grown into one of the largest conglomerates in

the country.

Source: Tavan Bogd Foods LLC

MINERS REJOICE FOR NEW BORDER GATES

A group of south-Gobi coal miners attended the opening ceremony of a new border gate with eight

lines at the Shivee Khuren-Ceke border point to China.

In attendance were Mongolyn Alt Group (MAK), SouthGobi Sands LLC, and Qinhua-MAK-Nariin Sukhait

to observe the event. Previously coal companies had to share a single entrance point approximately

eight meters wide. The new entrance points will allow a significant increase in import-export

activity, with two entrances reserved for in-bound traffic.

The mining firms in attendance together invested a total of MNT 2 billion for the project.

Source: Business Mongolia

MONGOLIAN GROWTH GROUP LISTS ON TSXV

Mongolia Growth Group (MGG) Ltd. announced the listing of its common shares on the TSX Venture

Exchange (TSXV) on 9 January.

The listing occurred and the symbol for the shares is YAK. Following the listing on the TSXV, MGG's

common shares delisted from the Canadian National Stock Exchange (CNSX).

―This is a very big deal, as liquidity should improve greatly and [MGG] will be more appealing to

institutional investors,‖ said BDSec JSC in a note to investors.

Separately, MGG also announced on 19 December the resignation of Genevieve Walkden as

corporate secretary and as an officer, as she could not comply with some TSXV terms. Genevieve

will remain with the corporation as director of operations for its property subsidiary, based in

Ulaanbaatar.

Source: Mongolia Growth Group

BDSEC PITCHES MONGOLIAN SECURITIES ABROAD

Investment bank BDSec JSC began meeting with investors on its road show to present a USD 100

million initial public offering (IPO) for Beren Mining Co. Ltd and a convertible loan offering for Berk

Uul JSC.

Berkh Uul is the owner of the world's largest fluorspar deposit, while Beren is an iron ore operation.

The road show began on 14 January in New York in the United States before hitting Washington

D.C., Miami, and San Francisco.

Source: BDSec JSC

WOLF PETROLEUM PROWLING FOR BIG OIL IN MONGOLIA, SIGNS PSC

Wolf Petroleum Ltd. signed a production sharing contract for a large 23,047 square kilometer

exploration block in eastern Mongolia.

About 60 percent of the surface outcrops are cretaceous aged with a high potential for source

reservoir rocks at depth. Historical gravity surveys indicate the presence of a large sub basin with a

thickness of up to 3,000 meters and a potential petroleum ―source kitchen‖ has been identified.

Currently, only two Chinese companies are producing and exporting oil on blocks adjacent to Wolf's

Sukhbaatar Block 27 and BU Blocks. Production has increased 11 times over the last five years and

the current proven reserves are over 2.4 billion barrels of oil.

Wolf plans to carry out an aggressive exploration program to complete its first three years of

contract duties within the first year. A geological and geophysical crew of up to 45 people is

planning to commence the work program on site in January.

The contract has a five-year exploration period with two possible two-year extensions and a further

five-year extension under government approval. A total of 14 years of exploration and up to 30

years of production are possible under the contract.

Wolf is now the largest petroleum exploration block holder in Mongolia, with over 74,000 square

kilometers held.

Source: Proactive Investors

MIAT GUARANTEES COMPENSATION FOR FLIGHT CANCELLATIONS

MIAT Mongolian Airlines has made a guarantee to repay travelers for canceled flights.

The international-domestic airline will make compensation for certain flights, with a sliding scale

depending on distance of travel. MIAT's guarantee has it paying USD 100 for travel of less than 1,500

kilometers, USD 150 for 1,500 to 3,000 kilometers, and USD 200 for more than 3,500 kilometers.

MIAT agreed to conditions during discussions with Mongolia's Authority for Fair Competition and

Consumer Protection (AFCCP). It first became available for passengers who were traveling to Beijing

on 22 December.

Source: Undesnii Shuudan

OT POSTPONES WRONGFUL TERMINATION HEARING FOR LAWYER CHANGE

A representative of Oyu Tolgoi LLC submitted a request to postpone a court hearing concerning a

wrongful termination suit.

The trial initiated by S. Gantuya was scheduled to take place on 9 am that day, but from Oyu Tolgoi

LLC the court received a written request for a change of their attorney. The trial was postponed

with no amended date given. According to B. Munkhdal of media group Cover Mongolia, Gantuya is

the younger sister of well-known Oyu Tolgoi-opponent in Parliament, Ganbaatar.

Gantuya claims that there was discrimination between foreign and Mongolian staff, even if they had

the same qualifications. She said Oyu Tolgoi had failed to evaluate Mongolians' working abilities.

She is set to defend herself at the court hearing, as no attorney agreed to defend her.

Source: News.mn, Cover Mongolia

S&P RATES GOLOMT AT “B+” WITH “STABLE” OUTLOOK

Standard & Poor's Ratings Services (S&P) explained its credit rating for Golomt Bank LLC of ―B+‖

with a ―Stable‖ outlook in a summary statement.

The stable outlook on Golomt reflects S&P's expectations that the bank could maintain its financial

risk profile at about the current level while pursuing its high-growth strategy. The outlook on the

bank also reflects the stable outlook on the sovereign rating on Mongolia.

S&P could raise the rating if Golomt continues to manage its credit growth, diversify its asset mix,

and maintain its record of lower credit losses than peers. This could lead to a positive reassessment

of the bank's risk position. It could also upgrade the bank if its capitalization improves substantially

or if the sovereign rating of Mongolia was raised.

Conversely, S&P could lower the rating if the bank's capitalization weakened significantly, either

due to substantial credit losses or overly aggressive expansion.

Source: Standard & Poor's Investment Services

NOMIN TAKES HOME TOP HONOR AT MNCCI ENTREPRENEURIAL AWARDS

Nomin Holding LLC won the ―Grand Prix‖ Award at the Mongolian National Chamber of Commerce

and Industry's (MNCCI's) Entrepreneur-2012 awards.

Other honors include Khan Bank LLC's ―Best Corporate Social Responsibility Implementer,‖ NBF LLC's

award for ―Best Pure Manufacturer,‖ for the Greenpreneur-2012 awards, and Juulchin Tours LLC for

the ―Gold Cup‖ award from the Confederation of Asia Pacific Chambers of Commerce and Industry.

Source: Mongolian National Chamber of Commerce and Industry

BPI HOLDS QUALITY MANAGEMENT TRAINING

USAID's Business Plus Initiative (BPI) held the Lead Auditor advanced training series for 32 trainees

in October.

At the event organizers trained a cadre of management and auditing professionals in targeted areas

related to quality management, food safety, and environment. The five-day training series also

taught essential elements of auditing.

Eighty percent of participants passed rigorous examinations, and in December BPI honored their

achievements in an awards ceremony.

Source: Business Plus Initiative

PROPOSED MACMAHON SALE WILL TEST FAITH OF INVESTORS

The rebound in some commodity prices is encouraging a number of Australian miners to bring

stalled projects back on line, and boosting the prospect for the country's mining-services

companies, too. But Macmahon Holdings—whose Macmahon Mongolia provides contract mining

services for the Tavan Tolgoi East Tsankhi coal project—is in danger of fluffing its lines.

Macmahon's share price, which halved last year, has gained more than 30 percent since the start of

2013, thanks to industry-wide optimism. In the past two days, though, the price has slipped almost

7 percent.

The problem is the proposed sale of most of Macmahon's construction assets to its largest

shareholder, Leighton Holdings, for about AUD 20 million (USD 21 million). Singapore-based

Sembawang Engineers & Co. said it wants to top the bid, but Macmahon has blocked it from doing

so. Sembawang is now threatening to sue.

It may appear at first Macmahon sold the assets to Leighton too cheaply, and may net only about

AUD 2 million from the sale after costs, including restructuring and redundancy. But the sale draws

a line under a troubled business that lacked scale and lost some key staff.

Sembawang says it is offering to pay at least USD 5 million more than Leighton for the same assets.

But Macmahon says it has an exclusive deal with Leighton that cannot be broken. The mining-

services company says Sembawang's proposal is ―unsolicited nonbinding, incomplete, and

conditional.‖

Macmahon's shareholders will get their say on Leighton's offer next month, when they vote on the

proposed sale. That will be a test of their faith in the deal, and in Macmahon's management.

Source: Wall Street Journal

ECONOMY

JAPAN, MONGOLIA SIGN EMISSIONS-REDUCTION PACT

Japan is making progress in its plan to bypass protracted U.N.-sponsored efforts to limit carbon

emissions, signing its first bilateral carbon offset mechanism Tuesday.

According to the agreement Japan signed with Mongolia in Ulaanbaatar, the mechanism is intended

to complement the U.N. Framework Convention on Climate Change, which last convened in Doha,

Qatar, in December.

Yuya Okuyama, the global warming policy director at Japan's environment ministry, said the country

is also close to signing similar agreements with Bangladesh, Indonesia, and Vietnam. Japan has said

over the past three years it was pursuing a strategy of signing bilateral pacts, as they can be more

easily reached than multilateral agreements through 2020, but this commits a limited number of

industrialized countries to cutting greenhouse gas emissions.

The Japanese government has financed 134 feasibility studies proposed by Japanese companies in

preparation for the introduction of bilateral schemes. A few of those have been conducted in

Mongolia, including a geothermal project by Shimizu Corp.

Source: Wall Street Journal

DEVELOPMENT OF INFRASTRUCTURE IN GER DISTRICTS PLANNED FOR SPRING

N. Gantumur, the head of infrastructure issues for the deputy mayor, outlined the plans to develop

infrastructure for the ger districts.

The first and foremost issue to deal with for the development of the ger districts is infrastructure,

said Gantumur. Infrastructure varies from each of the districts, with plumbing available only at

some.

One challenge will be relocating families at sites planned for development. Gantumur said most

people were willing to move into apartments. Construction firms have shown interest in the

project, especially for the Zuragt, Zuun Ail, and Central Market areas. However, the residents of

these areas will pose a challenge, he said.

―We won't take their land if they don't want to move into apartments, but they will have two

choices only: whether to move into an apartment or work on making their places connected to the

infrastructure.‖

Gantumur said the government was following examples from abroad. He said initial preparation

would begin in March with work to begin in mid-April.

Relatedly, the Asian Development Bank signed a memorandum and agreed to allocate USD 250

million for the development of Bayankhushuu and Doloon Buudal.

Source: Udriin Sonin

PREMIER PROMISES PAID TRAINING

Prime Minister N. Altankhuyag promised the Ministry of Labor would provide paid training to 6,600

individuals for work in mining, general construction, and road construction.

Altankhuyag said trainees would receive a monthly salary of MNT 190,000 during their training.

Candidates' ages will range between 24 and 40.

Particular attention will be given to training staff for the Oyu Tolgoi copper and gold mine. The

ministry has an agreement with the mine to provide candidates for a training course that OT will

provide.

Source: Udriin Sonin

STATE-OWNED ELECTRIC COMPANY TO MEET ENERGY DEMAND IN SOUTHERN REGION

The Cabinet of Ministries has decided in favor of establishing a state-owned southern region

electricity distribution network company.

The company will be utilized to meet the growing energy demands in the region. The growth in

energy needs is related to the numerous mining operations there. The company will provide for the

needs of at least 15 towns and three large mining operations.

Source: Unuudur

POLICE WARN OF COUNTERFEIT YUAN

The National Police Department has issued a warning that a slew of counterfeit Chinese yuan has

penetrated the Mongolian market.

Police officials warned that currency exchanges should be on the lookout for the fake bills, giving

three ways to tell whether a bill is authentic or not:

Checking for a watermark was the first. The watermark of Mao Zedong can be seen when holding a

bill up to a light. A watermark that does not appear clear is a sign that a bill is a fake.

Officials next recommended scratching at the hair of Mao, as an authentic bill will have texture

there.

Finally, fake bills may lack the blue-circled area underneath the denomination. The circle becomes

visible while slowly moving the bill from left to right.

Source: News.mn

MUTTON PRICES SURGE ON HIGHER GAS PRICES

The price of Mongolian mutton, the nation's staple food, rose 5.9 percent this month because of

increased gasoline costs.

Mutton prices have risen to MNT 6,614-6,800 a kilogram. The price of a liter of gasoline has reached

MNT 1,670, an increase of MNT 50 since the end of last year, according to the report.

Mongolia's Central Bank at the end of last year gave the country's fuel importers MNT 83 billion in

loans after the companies said they may have to increase gasoline prices to as much as MNT 2,010,

News.mn reported, citing O. Magnai, head of the UB-based Authority for Fair Competition and

Consumer Protection (AFCCP).

Beef prices have risen as much as 3.1 percent, goat meat has increased 3.7 percent and horse meat

has gained 0.2 percent, according to News.mn. Oil traded today near the highest level in almost

four months in New York.

The price increase for gasoline was ―reasonable,‖ the report cited Magnai as saying. He was also

cited as saying the cost for diesel and other fuels could see further increases.

Source: BusinessWeek

MNT 140.4 BILLION LOCAL BOND SALE TO SUPPORT LEATHER SECTOR

Parliament issued a decree for the issuance of a MNT 140.4 billion 5-year bond sold on 28

December.

The funds raised from the local offering will be used to provide low-interest loans to herders and

domestic leather-products manufacturers. The loans will be available only to herders participating

in cooperatives and will have no more than 7 percent interest.

Source: Unuudur

IMMIGRATION ENDS SERVICES FEES

The Mongolia Immigration Agency discontinued its MNT 5,000 to MNT 20,000 service fees and MNT

200 to MNT 1,000 form fees for customers beginning 1 January. The agency said the measures were

made to build up a fast and well-run public service for customers, and to save time and money.

Source: News.mn

CABINET PLANS FOR 2013-2015 ROAD CONSTRUCTION PROJECTS

At a recent meeting of the Cabinet of Ministers, members discussed plans for road construction over

the next few years. They agreed to construct paved roads between Ulaanbaatar and Huvsgul,

Dornod, Dundgobi, Umngobi and Bayankhongor Aimags and Chinese border point Zamyn Uud in

2013. The hope is that the roads would allow less travel time between the provinces as well as

greater safety and comfort during travel

The government also has plans to complete the construction of paved roads for Gobi-Altai, Zavkhan,

and Sukhbaatar Aimags by 2014. For 2015, the government has plans to construct paved roads

between Ulaanbaatar and Uvs, Hovd, and Bayan-Olgii Aimags.

The government is now in the midst of selecting contractors for the construction of the remaining

186 kilometers of roads in three different locations within these six provinces.

Source: Business Mongolia

TEACHING INSTITUTE INITIALIZES NATIONWIDE TRAINING

Nationwide training for teachers began on 3 January to be held until the end of the month in Hovd,

Dornod, and Arkhangai Aimags and Ulaanbaatar.

A total of 400 teachers from primary schools were expected to attend the trainings. The first

training in Ulaanbaatar was expected to have 83 teachers from 9 districts for specialized training at

the Teacher Development Palace.

The Specialized Institute for Teachers was re-established by the Ministry of Education, Culture and

Science after its formation by the government installed after last June's election. The aim for the

teaching institute is to organize country-wide trainings for kindergarten, primary, and secondary

schools. This training is the first the organization has held since its inception.

Source: News.mn

CHINGGIS KHAAN SAW GREATER AIRLINE TRAFFIC IN 2012

The number of passengers passing through Chinggis Khaan International Airport increased by 27

percent in 2012 from 2011. Cargo, too, saw a 7 percent increase.

Airport officials have attributed the rise to improved services, including renovations to the airport

for greater speed and quality of services and a larger area for international flights, more screening

machines, and two more exits for domestic flights. Officials are also planning for a larger space for

public transportation, including taxis and buses.

Source: Udriin Sonin

CRIME SPIKED IN 2012

The National Police Department reported a 20 percent increase in crime in 2012 from the year

prior.

Police authorities said 2012 saw 141,000 reported crimes, of which 22,000 were registered with

police. Fifty-eight percent of all crimes were registered in Ulaanbaatar. Bagakhangai Soum of the

Ulaanbaatar districts saw a surge in crime activity of 81 percent.

In Dundgobi, Bayankhongor, Hovd, Khentii, and Uvs Aimags, crime had fallen between 5 and 15

percent compared with 3 to 40 percent increases in the other 16 provinces in Mongolia.

Crimes involving women and children increased by 82 to 85 percent. Gang crimes have also

increased as well as domestic. Forty-one crimes involved weapons, an increase from last year. Some

are now calling for stricter controls over the sale of weapons.

Traffic crimes are also on the rise, with one of every four traffic crimes involving a driver under the

influence of alcohol.

Source: Udriin Sonin

MONGOLIA‟S SOVEREIGN BOND HAS TEETHING PROBLEMS

When Mongolia issued its debut sovereign bond in late November, international investors showed

immediate and keen interest. But a spat within the coalition government resulted in the bond's

price plummeting dramatically, threatening to completely undermine the initial positive reaction.

In the face of this setback, Mongolia has gone into overdrive in its efforts to paint the bond issue in

a positive light.

―The first sovereign issue by the Mongolian government was clearly a major success,‖ said Alisher

Ali, Chairman of Silk Road Finance. ―The sovereign bond was the largest-ever issue among all

frontier markets for a debut—the issue broke a number of records.‖

The bond's sudden slump in value of USD 7 to USD 8 came after members of Mongolia's fragile

government, the Mongolian People's Revolutionary Party (MPRP), announced that the party would

quit the ruling coalition, led by the Democratic Party, in protest at MPRP leader N. Enkhbayar's

arrest following corruption charges.

Here in Mongolia, people were actually quite surprised that the international community paid so

much attention to what was going on in local politics,‖ said Randolph Koppa, President of Trade and

Development Bank of Mongolia LLC. ―[They have] never really cared before, but since the bond, all

eyes are on Mongolia... Most people in the West do not have any idea how Mongolian politics work

yet.‖

The likelihood that the coalition government in Mongolia would fall apart, even if the MPRP decided

to withdraw, was minimal. A report by Origo Partners PLC highlighted that the threat was only

meant as a high-profile warning to the authorities by the MPRP. Moreover, according to the report,

the fact that the bonds soon rebounded shows that the market has largely ignored the potential for

further political controversy from the MPRP leading to government collapse.

Source: Euromoney

MONGOLIA EYES ACCESS TO SEA VIA DPRK‟S RAJIN PORT

North Korea is focusing on developing Rajin Port with the aim of attracting more foreign

investment. China and Russia have already secured usage rights to the port's berths, and Mongolia

has expressed interest in this endeavor, too. This indicates rising competition to use Rajin.

Mongolian Parliament Speaker Z. Enkhbold met North Korea's Supreme People's Assembly Chairman

and Korean Workers' Party Secretary Choe Tae Bok on 19 October during the latter's four-day visit to

Ulaanbaatar. Officials from both countries agreed on the future possibilities of bilateral trade and

cooperation in the fields of information technology and human exchanges.

The day after the two leaders met, the Choson Sinbo, a pro-Pyongyang newspaper published in

Japan, directly reported on the results of the talks, reporting North Korea's positive reaction to

leasing ports to the Mongolians. According to the newspaper, ―Rajin Port is the most convenient

access to the sea for Mongolia.‖

Mongolia and North Korea's cooperation on the port fits the economic interests of both. Mongolia is

interested in exporting coal and other minerals overseas, as the country is rich in underground

resources such as coal, copper, gold, and uranium. However, these resources are costly to export

since Mongolia has to rely on the Chinese and Russian railway systems. Furthermore, once freight

trains between Hassan in the far east region of Russia and Rajin begin to operate, it will make it

possible for Mongolia to transport coal directly to Rajin Port.

North Korea is most likely to lease Pier No. 2 and Sonbong Port to Mongolia, which are currently not

being used by China or Russia. Meanwhile, North Korea is looking for South Korean participation too

in the development of Rajin Port. Once inter-Korean relations improve and South Korea joins China,

Russia, and Mongolia in the development of Rajin Port, other types of economic cooperation

between these five countries is likely.

Source: DPRK Business Monthly

CHINESE COAL CONSUMPTION EXPECTED TO SEE GROWTH IN 2013

Despite a slowdown in economic growth in China, its coal output and imports have continued to

climb to record highs.

China is set to import and consume more coal in 2013 to feed its ever-growing economy. Industry

estimates suggest that the Chinese coal production and importation in 2012 neared 4 billion metric

tons. China's annual imports are some 270 million tons, of which most is imported from Australia

and Indonesia.

Last year Mongolia exported over 21 million tons of coal to China, or just half of its annual output.

Mongolia's coal exports are likely to grow following the construction of new railways and increases

in production at some of the country largest mines, including from Tavan Tolgoi.

International experts predict that China's coal imports will increase in 2013 and coal-exporting

nations such as Australia and Mongolia are set to benefit from such growth.

Source: Business Mongolia

ECONOMIST UNIT FORECASTS MONGOLIA SECOND-FASTEST-GROWING ECONOMY IN 2013

Mongolia is set to be named the second-fastest-growing economy in the world with 13.4 percent

economic growth for 2013, reported the Economist Intelligence Unit (EIU).

EIU, the Economist Group's independent analysis body, reported that demand for Mongolia's raw

materials from China would drive foreign direct investment into the country. Oyu Tolgoi, which is

set to become one of the world's largest copper projects, has been one of the chief catalysts and is

slated for commercial production to begin in the first half of 2013.

Macau, who tops the list, also enjoys tremendous growth directly because of China. The country's

main economic engine is its casinos which are expected to be filled with a slew of Chinese visitors

in 2013.

China itself is set for over 8 percent growth this year, and potentially more, depending on the

economic conditions worldwide. Meanwhile Europe stills struggles as it grapples with economic

turmoil.

Source: Business Mongolia

2012 YEAR IN REVIEW

While Mongolia can look back on a year that began with high expectations for a steady rise in

mining-generated wealth, reports of slowing growth and concerns among investors about the risk of

resource nationalism cast a shadow over the second half of 2012.

The USD 1.5 billion government bond released in November demonstrated that investor interest in

the country's vast coking coal and copper mine—and a strategic location near China and Russia—is

still strong. The offering was 10-times oversubscribed, attracting some USD 15 billion in bids, nearly

twice the gross domestic product (GDP) of 8.5 billion.

While the adoption of a Foreign Investment Law in May tightened approval requirements for

international companies has so far failed to weaken investor interest, the new requirements,

combined with a possible restructuring of a crucial deal with global mining giant Rio Tinto PLC,

could make investors more cautious in 2013. The controversial law has been described by some as a

form of ―resource nationalism.‖

Critics also noted that Mongolia's vulnerability to a downturn in commodities exports was exposed

by a drop in demand from its biggest customer, China, in 2012. Mongolia's expansionary fiscal policy

was also blamed for double-digit inflation and balance of payments pressures.

2012 witnessed a wave of confidence in the banking sector. However, banks' liquidity dropped from

50 percent in January 2011 to under 40 percent at the start of 2012. In May, Moody's downgraded

the ratings of four banks to B1, citing a ―relatively low level of cross-border diversification in their

operations.

The stock exchange also struggled in 2012, with the Wall Street Journal reporting in November that

its worth had fallen 30 percent. As for the country's two largest mining projects, the selection of

companies to develop the Tavan Tolgoi West Tsankhi coal project was delayed and the Oyu Tolgoi

copper mine has seen royalty and tax hikes that were outlined in the proposed 2013 budget.

Source: Oxford Business Group

HERDERS SUFFER COLD SNAP AND HEAVY SNOWS

Mongolia has been gripped by an extreme cold snap coupled with heavy snows, which have

disrupted the life of herders in rural areas, local media reported Saturday.

Strong winds and a dramatic fall in temperatures have hit a large part of Mongolia. In some areas,

the lowest temperature has plunged to minus 50 degrees Celsius, the report said. The National

Emergency Management Authority said Friday that over 80 percent of the Mongolian territory was

covered with snow that could be as thick as 1.3 meters in worst-hit areas. It has become impossible

for livestock to find grass on the snow-covered pasture land in 55 counties of 15 provinces

nationwide, the authority added.

Roads in some areas are also cut off by heavy snow and over 3,000 herders in rural areas could not

get medical assistance from outside.

The Mongolian government has sent working groups to disaster areas to assess the situation and

conduct rescue operations. Local authorities have also been ordered to take immediate actions to

restore road traffic.

Source: Shanghai Daily

POLITICS

PREMIER GIVES NATIONAL ADDRESS

Prime Minister N. Altankhuyag gave a report on current conditions within the nation.

Altankhuyag said the country had an average of 60 centimeters of snow in 15 provinces, with as

much as 130 centimeters in some areas. He reported that 27,189 families were suffering the worst

of the winter conditions. Meanwhile, energy consumption reached its peak points beginning in

October, he said, adding that energy delivery was functioning normally

The premier also addressed rumors that the USD 1.5 billion bond issuance made last year had put

the government under great debt, saying the rumors were untrue and that the Central Bank was

responsible for reducing negative effects from the debt sale. Also, a policy council has been

established to ensure that the funds from the sale are spent effectively and achieve the original

aims of the fund raising. This includes the construction of 1,800 kilometers of rail and paved roads

to connect six provinces with Ulaanbaatar. Altankhuyag said every project would undergo thorough

deliberation by the policy council.

Source: Montsame

OPPOSITION CRITICIZES PREMIER'S WORDS ON CHINGGIS BONDS

The Mongolian People's Party (MPP) criticized the prime minister's description of the USD 1.5 billion

bond offering made in his national address in a press conference, saying the MNT 6.7 trillion in

foreign debt will have unwanted pains for the nation.

The statement was made by a task force established by the MPP a week prior to the premier's

statement. It took issue with the statement - ―The bonds will not create debt pressures in

Mongolia‖ during his address to Mongolia on the current standing of the nation. They said Mongolia

would have to pay MNT 270 million a day, or what it would cost to construct a new kindergarten

every two days. During an interview the Bank of Mongolia Chairman N. Zoljargal said the

government and Central Bank failed to cooperate on the offering, and the projects to be agreed

upon are still under discussion.

Finance Minister Ch. Ulaan responded, saying the burden would be handed over to private

companies.

―The responsibility of paying back the bond interest is with the companies that acquire the loans

through the government,‖ he said. It is estimated that the state budget will not face pressures

because profitable projects are to be financed. But, if the companies who receive loans cannot pay

them back, the pressures will be felt in the state budget.‖

Source: UB Post

BCM WARNS THAT DRAFT MINERALS LAW GREATLY DISCOURAGES INVESTMENT

The Business Council of Mongolia (BCM) delivered a letter to President Ts. Elbegdorj's office

criticizing a proposed mining law that it says would ―greatly discourage‖ investment.

The letter, sent on 7 January, also said the proposed legislation would ―halt current mineral

exploration and development‖ and ―make the minerals industry economically non-viable.‖

The proposed mining legislation would need to be passed by Parliament to become law. Ch.

Saikhanbileg, Cabinet Secretary, said the proposed law was drafted by the President's Office and

declined further comment.

Source: Bloomberg

MNMA HOSTS MEETING WITH DRAFTER OF NEW MINERALS LAW

The Mongolian National Mining Association (MNMA) hosted a discussion on January 3 regarding the

draft Minerals Law after the new version of the minerals resources law was made public by the

President‘s Office.

Attorney B. Munkhtuya, the head of the working group that developed the draft law, explained the

law and answered delegate questions at the meeting.

An open public hearing is being scheduled for Friday, January 18, to accept comments from the

public on the draft law.

Source: News.mn

GOVERNMENT CALLS FOR CENSORSHIP OF WEBSITE COMMENTS

The Cabinet of Ministers has moved to establish a system of controls for comments on websites.

The Press Department reported that the government would establish a system that it says would

make the comment sections on websites run more smoothly. The Information, Communications

Technology and Post Authority has been tasked with designing the software for the system and

providing technical solutions while delegating regulations for websites.

The regulations would prohibit any insulting, threatening, immoral or criminal comments. The

Communication Regulatory Commission has banned the use of certain words already, but has largely

been ignored by users.

In response the Mongolian News Website Association submitted a statement in opposition to the

move by government to President Ts. Elbegdorj and Prime Minister N. Altankhuyag. The statement

says the move would undo 22 years of the government's credibility as a democracy. It adds the

decree violates the personal freedoms of the media and is a direct violation of free speech.

Source: News.mn

MPS MOVE TO HASTEN ENACTMENT OF JUDICIAL LEGISLATION

MPs have backed a motion to hasten the implementation of legislation bolstering the judiciary

system.

The motion would push forward initialization of the legislation to 15 April 2013. The law is set to

introduce greater transparency in the courts and divide responsibilities to provide greater

efficiency. Its proponents hope the legislation will help magistrates and the court system follow the

role set out by the constitution more closely and grant greater independence.

Source: Montsame

JUSTICE MINISTER'S ANTAGONIZER PLEADS GUILTY

A suspect who was believed to be the writer of a threatening letter to Kh. Temuujin, Minister of

Justice, pleaded guilty to a court.

A confirmed source said the letter was written by the wife of a former head of the Court Decision

Enforcement Office. The suspect, N. Narantuya, who worked as an assistant at the Secretariat of

Parliament, pleaded guilty. Afterwards, Narantuya's husband and three sons, who worked as police

officers, were fired.

Source: News.mn

CHINA'S INVESTMENTS PROMPT CALL FOR NEW RULES

The political furor that accompanies many overseas investments by China Inc., similar to that seen

when a state-owned Chinese firm attempted to purchase a majority stake in SouthGobi Resources

Ltd., is easy to understand. What to do about the investments is a lot more complicated.

Unlike private firms, China's state-owned enterprises serve two masters: the Communist Party and

private shareholders. And the party holds the trump card, because it, not the board, appoints chief

executives. Western policy makers suspect such investment may be a ―potential Trojan horse,‖ as

the United States-China Economic and Security Review Commission put it last fall.

Barring investments from such firms would be a loser economically, cutting off wobbly economies

from a rich source of funding. Instead, the United States is trying to use negotiations over a Pacific

free-trade pact, called the Trans-Pacific Partnership (TPP), to formulate rules governing the

behavior of state-owned firms. China is not a party to the talks, but the United States hopes Beijing

would ultimately agree to whatever limitations the pact imposes on state-owned firms so that

Beijing could become a TPP member and benefit from tariff cuts and other deals the parties strike.

However, the United States is losing leverage against the increasing importance of the Chinese

economy and negative opinions over TPP from China.

Robert Kimmitt, former deputy U.S. Treasury secretary, is quietly talking up an alternative: create

a round of negotiations to deal specifically with the issues raised by state-owned firms. The effort

tamped down criticism of the funds in Western countries, which were eager for sovereign-fund

investments after the global financial crisis. Christopher Balding, a sovereign-funds expert at Peking

University's HSBC business school, said these funds are now more willing to release annual reports

and other information. The Santiago principles were part of the funds' efforts to adopt ―best

international practices,‖ he said.

However this would be overly complicated, and given the importance of state-owned firms to global

trade the World Trade Organization (WTO)—an organization more or less trusted by all parties—

would probably make more sense than the IMF as a venue for such talks.

Source: Wall Street Journal

MONGOLIA‟S EVOLVING FOREIGN INVESTMENT REGIME

Mongolia's new regime, with its displeasure toward large deals involving state-owned Chinese

companies, is actually similar in its intentions to Australia's and Canada's in distinguishing private

and state-owned bids. But there is a key difference: in Australian or Canada, decisions on foreign

direct investment is made in the context of a stable and predictable regulatory regime. Stability in

Mongolia has not been a strong suit.

Many non-Mongolians have focused on ―resource nationalism‖ to explain the new laws to understand

the now-lifted detention of Sarah Armstrong, an Australian lawyer for SouthGobi Resources Ltd. But

where foreign investors see resource nationalism, Mongolians see an attempt to preserve the

resource wealth of their country and to reap the benefits for current and future generations.

Still, there is some element of knee-jerk nationalism from Mongolia and its Parliament. Some

leaders ignore the fact that ownership of mineral resources does not necessarily lead to profit.

Mongolia needs some of the skills, technologies, and capital that foreign investors can provide.

But corruption—not political rhetoric—is the greatest hurdle to the development of a successful

regulatory regime. Also, Mongolia still lacks the capacity to make good policy. Further, Mongolian

policy makers need to be more aware that the perception of regulatory initiatives abroad is often as

important as the reality. They also need to be thinking longer term regarding investments. The

current boom will not last forever.

Author Julian Dierkes is associate professor at the Institute of Asian Research at the University of

British Columbia. He is the editor of Change in Democratic Mongolia— Social Relations, Health,

Mobile Pastoralism, and Mining.

Source: East Asia Forum

THINKING OF INVESTING IN MONGOLIA? READ THIS FIRST

The mineral deposits under Mongolian soil could soon be governed by a radically different

regulatory framework—if a new draft of the country's Minerals Law is passed in its current form.

The new draft was published by the Mongolian government in December, and makes far-reaching

changes to the way mining and exploration licenses are awarded and maintained. It mandates that

Mongolian citizens must hold a 34 percent equity stake in all mining projects and gives state-owned

companies a pre-emptive right to any mining or exploration licenses transferred from one entity to

the other, according to a summary from law firm Hogan Lovells.

The reaction from Mongolia's business community has been apoplectic. Earlier this week the

Business Council of Mongolia (BCM) sent a letter to the president warning that the law ―threatens to

shut down the entire minerals industry of Mongolia.‖

―The impact of the draft law on the minerals industry will be to halt current minerals exploration

and development in Mongolia and greatly discourage any further investment...‖ reads the

statement.

The draft Minerals Law could still change significantly before it is passed, and BCM is no doubt

hoping that parliamentarians will heed these warnings as they amend the law in coming months.

However members of Parliament will also have to take in account voters who are worried that

Mongolians are not seeing the benefits of the minerals being extracted.

The debate over the news Minerals Law will be further influenced by the upcoming presidential

election in June. The Democratic Party, which leads the coalition government and controls

Parliament, will be working to ensure re-election for current President Ts. Elbegdorj. Their

constituents may not see things the same way as BCM does.

Source: Financial Times

LEGAL IMMUNITIES FOR MPS EXPLAINED

MP Ts. Tsolmon, the head of the National Security and Foreign Policy Committee, explained the

legal immunities Parliament seat holders have.

Tsolmon said the immunities were necessary because of the instability of the legal system. Some

accusations could be politically motivated and politicians need some protections, he said.

―The United States doesn't have this immunity because their legal system is very reliable, but they

worked on it for 200 years.‖

He said any MP who had committed a crime in public would have no legal protections. However, any

crimes made due to political pressures from an opponent or accusation made before an election will

have immunity granted. He said immunity was necessary as the courts would need more time to

collect evidence.

Source: Zuunii Medee

LOOKING FOR A JUMP-START IN CHINA

Here is my prediction about China: The new paramount leader, Xi Jinping, will spearhead a

resurgence of economic reform, and probably some political easing as well, Mao's body will be

hauled out of Tienanmen Square on his watch, and Liu Xiaobo, the Nobel Peace Prize-winning

writer, will be released from prison.

Here is my case for Xi as a reformer.

First, it's in his genes. His father, Xi Zhongxun, was a pioneer of economic restructuring and publicly

denounced the massacre of pro-democracy protesters in 1989. Xi's mother chooses to live in

Shenzhen, the most capitalist county in the country. It helps that the bar is low for Xi: he follows

President Hu Jintao, who is widely regarded in China as a failure. Even government ministers

complain that he squandered his 10 years as leader. Today there is pent-up demand for change.

Xi is trying to send a message that he is different. His first act upon becoming Communist Party

general secretary in November was to replicate a famous ―southern tour‖ by Deng Xiaoping in 1992

that revived economic reforms. Xi and his team have also startled officials by telling them to stop

reading empty speeches at meetings.

He would probably prefer to accelerate economic change while minimizing political relaxation, but

that is increasingly difficult as China develops an educated, worldly and self-confident middle class.

Over the years, most of China's neighbors [including Mongolia -ed] have become more democratic,

and now even Myanmar is joining the parade. How can mighty China be more backward that

Myanmar?

Granted, there is evidence to counter my optimistic take. Most troubling, the authorities are

cracking down on the Internet. Right now a fascinating test case is unfolding: a senior propaganda

official censored a New Year's message in a major Guangdong newspaper, and now journalists are

publicly demanding that he be fired. Xi is also more nationalistic that Hu, and I worry that a

confrontation with Japan over disputed islands could escalate out of control—in which case all bets

are off. Still, the pre-eminent story of our time is the rise of China, and I'm betting that in the

coming 10 years of Xi's reign, China will come alive again.

Nicholas D. Kristof, a columnist for The New York Times since 2001, writes op-ed columns that

appear twice a week.

Source: New York Times

ANNOUNCEMENTS

COAL MONGOLIA 2013, 21-22 FEBRUARY, SS CONVENTION CENTER

The third Coal Mongolia 2013international conference and exhibition will be held from 21 to 22

February at the SS Convention Center.

Organizers have partnered with the Ministry of Mining for attendees to have their questions

answered from keynote speaker Minister of Mining D. Gankhuyag as he asks where are we now, in

regard to the coal industry. Support comes from the government with the Ministries of Energy;

Economic Development; and Environment and Green Development are also participating as well as

private sectors with Mongolian Mining Corp. (MMC), Hunnu Coal Ltd., Aspire Mining Ltd. and others.

With over 1,000 delegates from 300 companies from 20 countries expected, don't miss out on the

chance to create new business relationships and reconnect with existing contacts at Magnolia's

premier coal industry event. Register before 15 January and save USD 300. BCM is a supporting

organization of Cola Mongolia 2013.

For more information: Log on www.coalmongolia.mn; telephone:70115590; or email:

info@coalmongolia.mn.

___________________________________________

INTERNATIONAL MINING INVESTMENT, SERVICES AND EQUIPMENT TRADE FAIR “PDAC 2012”

MARCH 3-6, 2013. TORONTO, CANADA

The Business Council of Mongolia with support of the Trade Department of Canadian Embassy is now

registering Mongolian business delegation to participate to International Mining Investment, Services

and Equipment trade fair ―PDAC 2013‖ which will be organized in Toronto, Canada from March 3 to

6, 2013.

This four-day annual Convention held in Toronto, Canada has grown in size, stature and influence

since it began in 1932 and today is the event of choice for the world‘s mineral industry. In addition

to over 1,000 exhibitors and 30,000 attendees from 125 countries, it allows you the opportunity to

attend technical sessions, short courses as well as social and networking events.

The program includes also business and entertainment activities in Toronto.

Please contact at 317027, 99197985 or otgoo@bcmongolia.org, for registration and additional

information about the event. Registration deadline is 6:00PM, January 15, 2013.

___________________________________________

MINES AND MONEY HONG KONG, 18-22 MARCH

Mines and Money Hong Kong is where mining companies from around the world come to raise capital

in Asia and meet with investors from Hong Kong and mainland China.

Cementing its position as a major fixture on the global mining investment circuit, Mines and Money

Hong Kong 2013 will bring together over 3500 institutional investors, mining entrepreneurs, brokers

and investment analysts for five days of high-value networking, investment analysis and deal-

making, from 18-22 March.

Click here to read delegate feedback on the 2012 event and learn why the industry views Mines and

Money Hong Kong as a ―must-attend‖ event.

The exhibition floorplan for Mines and Money Hong Kong 2013 is already filling up fast – click here to

see the list of mining companies already signed up to showcase their projects and investment

opportunities at the event.

Bringing together more investors and investment opportunities than ever before, Mines and Money

Hong Kong 2013 is an event you will benefit from attending.

What‟s new in 2013?

Enhanced pre-event networking to facilitate meeting arrangement

More in-show meeting rooms to facilitate one-2-one meetings onsite – (sold out in 2012)

Extended exhibition to provide space for 320+ mining companies to showcase their projects and

growth prospects – (sold out in 2012)

Larger venue for the black tie Mines and Money Hong Kong 2013 Asia Mining Awards Gala Dinner –

(sold out in 2012)

Dedicated investor invitation team to ensure maximum investor attendance

Mines and Money Hong Kong will also provide…

A high-level conference covering the most relevant topics for your business

Leading international speakers from across the mining and investment sectors

Project spotlight presentations showcasing a wide array of mining investment opportunities

Superb networking opportunities with decision-makers at the highest level

A bustling exhibition offering business opportunities at every turn

The largest gathering of investors focused on the mining sector in the Asia-Pacific region

As usual, BCM is supporting this event and members will get 15% discount for registration.

___________________________________________

“MM TODAY” on MNB-TV, Friday‟s at 19:15

BCM is pleased to announce that Mongolian National Broadcasting continues its cooperation with

BCM on ―MM Today‖. This English news program is aired every Friday for 10 minutes and is

scheduled from 19:15 to 19:25 tonight. Tune in to watch this program that reports stories from

today‘s BCM NewsWire.

___________________________________________

BCM‟S MINING SUPPLY CHAIN DATABASE

The new version of BCM‘s Mining Supply Chain Database is in use. Following the initiative of Oyu

Tolgoi LLC, the BCM has maintained the Mining Supply Chain Database since March 2009. The latest

version of the database is totally upgraded as to its content and use of information technology

opportunities.

As of December 31, suppliers registered on the database totaled 1,405. During 2012, 251 new

supplier entities joined the Database and 236 prior supplier registrants updated their company

profiles. In addition, 22 buyers were also registered and 82 tender announcements were posted.

We invite all Mongolian mining suppliers and buyer companies to join the Mining Supply Chain

Database. Please visit here for registration—FREE!

If you have any questions regarding the database, please contact Undral at undral@bcmongolia.org

or 317027.

BCM WEBSITES

MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS

The ‗Presentations‘ section on BCM‘s Mongolian website can be reached via bcm.mn/itgeluud.

Just posted are ―BCM Memorandum on Draft Minerals Law‖ prepared by BCM‘s Legislative Working

Group; ―Mongolia: Year in Review 2012‖ by Oxford Business Group.

As a key component of BCM‘s Mongolian website, articles from the ‗News‘ section and the

government website Open-Government.mn are regularly updated.

___________________________________________

ENGLISH WEBSITE: 'PRESENTATIONS', 'MONGOLIA REPORTS', „MONGOLIAN BUSINESS NEWS‟,

„PHOTO GALLERY‟

On BCM‘s English website, the ―Resources‖ and ―Presentations‖ sections are available. The

following 5 presentations were added from the BCM December Monthly meeting:

•Bayarmaa A., Carbon Finance Specialist, Clean Energy LLC, Newcom Group ―Case of Salkhit wind

farm CD CDM project

•Tsendsuren Batsuuri, Head of CDM National Bureau, Climate Change Coordination Office, Ministry

of Environment and Green Development – ―Carbon Market Mechanisms: current status and

opportunities for Mongolia‖

•Adrienne Youngman, Executive Director, Mongolia Talent Network – ―Human Talent In Mongolia‖

•Jan Hansen, Senior Country Economist, Mongolia Resident Mission, ADB and Enerelt Enkhbold,

Associate Investment Officer, MNRM, ADB – ―Outlook for the Mongolian Economy―

•Efrain J Laureano, Chief of Party, Business Plus Initiative - BPI – USAID Contractor - "Supplier

Development in Mongolia‖

Please also note 25 presentations from the Mongolian Investment Summit 2012 on 30-31 October in

Hong Kong; recent postings from BCM‘s 5 November and 24 September monthly meetings; and 9

presentations from Discover Mongolia 2012.

The ―Mongolia Reports‖ section includes – ―BCM Memorandum on Draft Minerals Law‖ prepared by

BCM‘s Legislative Working Group; ―Mongolia: Year in Review 2012‖ by Oxford Business Group;

―Mongolia Business Owner and CFO Survey result‖ by BDSec JSC; ―The fiscal regime for mining - a

way forward‖ by IMF Fiscal Affairs Department; ―Mongolia-a supplement to Mining Journal‖ from

Mining Journal October, 2012; ―Macro Overview‖ September, 2012 by EPCRC; ―Taxes for Expatriates

in Mongolia‖ from PricewaterhouseCoopers and the ―2012 Mongolia Investment Climate Statement‖

by the Economic and Commercial Section of the U.S. Embassy.

BCM's English website includes the ―Mongolia Business News‖ section where the Open Letter to

Parliament and Government is available for download.

BCM continuously posts news stories and analysis of relevance to Mongolia at ‗Mongolian Business

News‖ before they are all put together each week for Friday's weekly NewsWire.

The ―Photo Gallery‖ contains photos from the 5th Anniversary BCM Gala dinner on November 5.

The BCM NewsWire will continue to be issued each Friday, incorporating items already on the home

page for a consolidated account of the week‘s events.

___________________________________________

SOCIAL NETWORKS WITH BCM

The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.

Keep up to date on the latest business deals in Mongolia and how the climate for investment is

improving each day with BCM.

Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better

business environment in Mongolia today.

Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-

MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in

the NewsWire with the community.

Hear breaking news and announcements as they happen when you follow BCM on Twitter at

http://twitter.com/#!/bcMongolia.

We have now 835 fans on our Facebook fans page, 1,013 connections on LinkedIn network, and 547

followers on Twitter.

Of course for news information, interviews, event photos, and announcements regarding our

organization, visit the official BCM website at www.bcmongolia.org and www.bcm.mn.

BCM WORKING GROUP NEWS

BCM‘s Legislative Working Group sent a Memorandum on the draft Minerals Law to Mr. P. Tsagaan,

Chairman of the Office of the President, on 7 January 2013.

Please click on the following links to read BCM‘s cover letter and the complete BCM Memorandum

on draft Minerals Law:

1. BCM Minerals Law draft Comments detailed analysis

2. Cover Letter & Summary of BCM Memorandum

3. МБЗ-өөс Ашигт Малтмалын тухай хуульд өгсөн санал, зөвлөмж

4. МБЗ-өөс МУ-ын Ерөнхийлөгчийн Тамгийн Газрын дарга П. Цагаанд илгээсэн захидал

Please contact: erka@bcmongolia.org

ECONOMIC INDICATORS

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

November 30, 2012 *14.4% [source: NSOM]

*Year-over-year (y-o-y), nationwide

Note: 14.2% y-o-y, Ulaanbaatar city, November 30, 2012

CENTRAL BANK POLICY LOAN RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

March 19, 2012 12.75% [source: Mongol Bank]

April 18, 2012 13.25% [source: Mongol bank]

CURRENCY RATES – January 10, 2013

Currency Name Currency Rate

US dollar USD 1,397.05

Euro EUR 1,825.32

Japanese yen JPY 15.94

British pound GBP 2,238.42

Hong Kong dollar HKD 180.15

Chinese Yuan CNY 224.48

Russian Ruble RUB 46.06

South Korean won KRW 1.32

Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is

selected from various news sources. Opinions are those of the respective news sources.