Tag Archives: Trade

Mongolia’s Role in the New Silk Road



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When China held its Belt and Road Forum for International Cooperation in Beijing May 14 to 15th, China’s President Xi Jinping welcomed Mongolia’s efforts to help link the European and Asian economies.

China welcomes cooperation with Mongolia in areas of trade and investment, agriculture, industrial growth, and energy development. President Xi suggested that China Belt and Road Initiative complements Mongolia’s own Prairie Road development initiative. Cooperation is also important to promote a China, Mongolia, Russia economic corridor.

President Xi advocated for a study of establishing a Free Trade Zone on the Border wth Mongolia, and increasing economic cooperation between the countries, including cooperation on major mineral industry programs and infrastructure.

Prime Minister Erdenebat of Mongolia indicated cooperation with China is a Priority for Mongolia, and said China’s Belt and Road initiative is important for promoting development in Mongolia. According to Erdenebat, Mongolia may play an important role as a link between Europe and East Asia.

Mongolia is well placed between major powers Russia and China to serve as a conduit for economic and cultural exchange. Mongolia suffers from a lack of population compared to its large southern neighbor, however, Mongolia’s rich mineral resources mean Mongolia will be able to generate foreign interest and income for years to come. With budgetary reform in Mongolia well underway, further integration with China and Russia is one more positive development for the future of the Mongolian economy.

Foreign Exchange in Mongolia



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Financial Regulatory Commission (the FRC) and Bank of Mongolia (Mongol Bank), which serves as the central bank of Mongolia, are authorized to regulate Foreign Exchange (ForEx) trading within Mongolia. The Law on Currency Settlement is the primary legislative authority as to conduct of ForEx in Mongolia.

The currency market of Mongolia operates on the basis of supply and demand and consists of the currency exchange activities of the authorized banks, exchanges and brokerage companies.

Mongol Bank is permitted to buy currencies and gold bullion from domestic and foreign banks, as well as from business entities, other organizations and from individuals. Mongol Bank’s primary official purpose for such purchases is management of currency and wealth reserves of Mongolia. Mongol Bank may likewise sell foreign currency and gold from its reserves as part of efforts to maintain the general stability of the Tugrug (the currency of Mongolia).

Mongol bank acts to fix the official exchange rate of the Tugrug, and to provide guidance as to the same. These fixed rates are set in relation to currencies which are bought and sold on the currency market by commercial banks on a comparative basis against a stable foreign currency used in foreign commerce by a majority of countries. The rate fixed by Mongol Bank is used in the State budget and for customs purposes.

An increase or decrease in the Tugrug exchange rate by 5 percent or more from the previous day shall be brought to the attention of the Prime Minister of Mongolia. This is only report and the Prime Minister has no authority to personally order or to prevent the Governor of Mongol Bank from increasing or decreasing the Tugrug exchange rate in accordance with market conditions.

Mongol Bank also sets various rules and regulations regarding foreign exchange activities, including as to FX swaps, forward transactions, and Forex auctions.

Commercial banks are able to establish their own exchange rate for using Tugrugs to buy and sell foreign currencies based on market conditions. Likewise the bank sets its own rate of commission.

Upon obtaining a license from Mongol Bank, Mongolian Commercial banks are allowed to facilitate non-cash transactions in foreign currency, buy and sell foreign currency in cash, establish and operation accounts in foreign currency (and pay required interest), provide credit and provide guarantees in foreign currency.

A Non-banking financial company may trade foreign currency after obtaining a license from the FRC.

Mongolia and Vietnam Promote Trade in Goat Meat



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Vice President of Vietnam, Mrs. Dang Thi Ngoc Thinh, visited Mongolia for an official visit from May 07 -10. While in Mongolia, she participated in the Mongolian Vietnamese business forum in Ulaanbaatar on May 09. Mrs. Dang Thị Ngọc Thinh gave a presentation at the opening ceremony of the business forum discussing trade, investment and economic cooperation between Mongolia and Vietnam.

Vietnam’s trade volume with Mongolia is estimated at USD 59 million in 2016 alone. The trade includes over USD 40 million in race, sugar, canned foods and telecommunications equipment imported to Mongolia. Mongolia and Vietnam seek to increase cooperation and trade in natural resources and agricultural goods, which Mongolia is well placed to export to Vietnam.

Three main issues were touched on during the official talks between Vietnam’s Vice President and the Prime Minister of Mongolia. These included promotion of defense ties and cooperation between law enforcement agencies.

Also discussed was increased export of Mongolian meat products to Vietnam, particularly goat meat. Mongolia is scheduled to export 20 tons of goat meat to Vietnam this year, and trade is expected to grow significantly.

The agreement on export of goat meat highlights one of Mongolia’s current strengths in agricultural production of meat and dairy. The sector is ripe for foreign investment, including funding, technologies and techniques.

What’s Happening In Mongolia’s Meat and Dairy Industry?



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The Mongolia Ministry of Food, Agriculture and Light Industry hosted a training and discussion event on January 09 2017 with presenters offering insights into a new powdered milk processing plant. The new plant comes right on time as Mongolia’s Meat and Milk Campaign started January 01, 2017 in hopes of increasing access to high quality meat and dairy products for all Mongolians.

Prime Minister J. Erdenebat met with diary entrepreneurs, local farmers, and researchers to discuss the meat and dairy industry in Mongolia.

The new facility will have the capacity to produce 600 liters worth of powdered milk in a single 8 hour day. The Prime Minister suggested that such plants should increase, hoping to stabilize prices for dairy products by establishing state of the art facilities around Mongolia. This would help to provide job security for the nation’s diary farmers who will be sure to have easy access to serve local demand.

With the needs of Mongolia’s population met, an increase in dairy farming and factories would power important exports of key dairy products. Such exports may be especially lucrative with China just south of the border with an increasingly wealthy population craving high quality natural and organic meat and diary products.

LehmanLaw Mongolia is knowledgeable about the Mongolia diary industry, and the legal issues encountered when starting up a new agricultural operation in Mongolia. Give us a call for an initial consultation to see how we can help guide you through Mongolian laws to take advantage of the unique opportunities of the Mongolian dairy boom.

Prime Minister Discusses Future of Mongolian Cooperation With Eurasian Economic Commission



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On February 2-3, Mongolian Prime Minister J. Erdenebat met with a representative of the Eurasian Economic Commission (EEC) for talks promoting economic cooperation between the EEC and Mongolia.

In the meeting, Mongolia indicated that it hoped to establish a Free Trade Agreement with the EEC. The EEC representative supported the PM’s proposal, suggesting a formal decision would be seen from the EEC relatively soon. As trade between Mongolia and the EEC has been stable but stagnant for several years, the EEC hopes to organize a business forum for entrepreneurs from EEC member states, and Mongolian organizations.

The Prime Minister was quick to agree and assured EEC companies there are great business opportunities in Mongolia, and made clear that the Mongolian Government is currently making efforts to improve its agricultural sector, including exports to EEC states.

The sides agreed to work to strengthen collaboration in establishing regulations and raising standards in veterinary, sanitation, and quarantine regulations and practices. There was also mutual agreement to promote joint training, and business seminars in Mongolia.

The meeting ended with an agreement on protocol for a second meeting to be held this year In November, and developing an action plan for joint working groups, which will include provisions to facilitate cooperation in transportation and infrastructure.

LehmanLaw Mongolia is pleased to learn of the government’s continued focus on developing the Mongolian economy through increasing trade and promoting the agricultural sector, as well as development of Mongolian infrastructure.

By any other Name, Would Champagne Taste as Sweet?



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So what does it mean to be made in Mongolia? Or anywhere else for that matter? In Mongolia the protection of Geographical indications is governed by the Law on Trademark and Geographical Indication which has taken effective on July 25th, 2010. Under the law, “geographical indication” refers to any geographical indication of a product’s manufacturing country, area and territory where quality, reputation and other characteristics are defined by factors relating to the nature of the territory, climate condition or local practice.

Forms of geographical indication are expressed in single geographical names of territory that determine the origin of the goods and products, or a combination of the name of the goods and products with a territory. However, general names for goods and products of a territory within Mongolia are not considered as geographical indicators. Moreover, geographical indications are tools for protection of local industry by creating the suggestion that similar goods produced in other geographic regions will not have the same characteristics or quality. Champagne is only champagne, if it is from Champagne, France, otherwise it is sparkling wine.

Under Mongolian law, a community, association or organization of unified manufacturers of goods and products of a local region apply for geographical indication protection in writing as specified in regulation set by the Intellectual Property Office. The Intellectual Property Office examines the application within six months of filing the application. This term may be extended up to six months if required. If the Intellectual property office decides to register a geographical indication, that geographical indication shall be entered in the State register and a Certificate of Geographical Indication shall be issued. The protection of geographical indication is not limited for definite periods and is valid from the filing date of the application.

Mongolia has several traditional products that originate from its nomadic culture and its extremely continental climate. There are over 20 products which have been protected by geographical indications in Mongolia, for example dairy products, meat products, pure water and sea buckthorn. A few years ago, Champagne, the famous French drink received protected in Mongolia as a geographical indication. Accordingly, Champagne is protected against misrepresentation or infringement. This demonstrates that foreign geographical indications can be duly protected in Mongolia.

Free Trade Ties Between Mongolia and China Growing



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In May this year, China’s Minister of Commerce Gao Hucheng led an economic and trade delegation from the PRC in a visit to Mongolia. The delegation met with Mongolian Prime Minister Saikhanbileg to discuss facilitation of trade between Mongolia and China. During the meeting of the China-Mongolia Economic and Trade Joint Committee, the two sides reached broad consensus as to several areas of cooperation.

At the meeting, Minister Gao indicated that China would like to actively promote cooperation, accelerate the establishment of a China-Mongolia-Russia economic corridor, and promote the construction of free trade zone with cross-border economic cooperation zones, and generally promote the sustained and healthy development of bilateral economic and trade relations.

The Mongolian side noted that Mongolia attaches great importance to relations with China, and regards China as a good neighbor, good friend and reliable partner. Mongolia will strengthen cooperation with China is several areas, including to accelerate the establishment of a free trade zone, and promoting cooperation in the development of mineral resources, energy and animal husbandry. Mongolia and China will work to facilitate trade.

The parties expect the construction of a Free trade zone between Zamiin Uud and Ereen hot (aka Erlian) to be completed by the end of this year, 2016. The Free trade zone will cover almost 18 sq.m on Mongolian and Chinese border. About 50 business entities from China and Mongolia will operate in the zone. According to the bilateral agreement on establishing cross-border economic cooperation zone, Mongolian and Chinese export and import taxes will be zero within the zone.

Mongolia and Japan Enter Economic Partnership



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On 8th of May 2016, Governments of Mongolia and Japan exchanged a diplomatic note verbale on implementation of the Mongolia-Japan Economic Partnership Agreement (EPA). Accordingly, the agreement entered into force starting from 7th of June 2016.

The agreement seeks to increase trade of goods and services, encourage investment and people-to-people relations between the two countries. It is also an important part of Mongolia’s efforts at strengthening its own regional economic integration. The agreement enables Mongolia to attract investment and adopt know-how from Japan, export its goods and services to Japan and to third markets and to further link itself with regional economies and production chains.

The agreement covers liberalization of 5700 tariff lines from Mongolian side and 9300 tariff lines from Japanese, enabling Mongolian businessmen to supply goods originating from Mongolia to Japanese market ate preferential tariff rates.

The annual monetary circulation in trade between Mongolia and Japan is generally between USD 300 million to USD 500 million, which is equal to 3-4 percent of the entire international trade of Mongolia. The parties expect this number to grow due to the positive effects of the new EPA agreement.

Mongolia’s Economy is Global: Trades with 136 countries



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The National Statistics Office of Mongolia has recently released a report detailing Mongolia’s vital trade statistics. The report indicates that Mongolia has traded, either exported to or imported from, 136 separate countries over the first seven months of 2016. The total turnover from trade during this period is over 4 billion USD.

Exports are said to comprise USD 2.54 billion during the period while imports are at 1.83 billion. The total turnover from trade appears to have decreased by 12% (USD 647.4 million), compared to the same period last year. That amounts to a 17% (376.2 million) reduction in imports and 9.6% (271.2 million) reduction in exports.

Overall, the balance of trade surplus at this point in 2016 stands at USD 709 million, and increase of USD 105 million over 2015.

We are looking for the trend in decreased overall trade to be reversed as Oyu Tolgoi’s underground gold and copper mining operation ramps up.