L.BOLD DELIVERS SPEECH AT MEETING

Ulaanbaatar /MONTSAME/ Paying an official visit to India, the Minister of Foreign Affairs L.Bold delivered a speech at a meeting themed "Business opportunities in Mongolia" held Monday in Mumbai city. "It gives me a great pleasure to commence my official visit at the cordial invitation of the Minister of External Affairs of India with today's meeting with so many distinguished business representatives. I would like to express my sincere appreciation to the Indian Chamber of Merchants for organizing this important business forum," he said, beginning his speech. "One of the paramount priorities of Mongolia's foreign policy is to strengthen our relationship with India - our major third neighbor in the developing world. Mongolia and India embarked upon a new era of partnership when our country chose democracy and a market economy in the early 1990s. We are deeply grateful to India for lending a hand of genuine support to assist us in overcoming the many hardships encountered during that very challenging transitional period. In the supervening years our Comprehensive Partnership embracing our shared commitment to democracy has grown much stronger. Bilateral trade and economic cooperation continues to expand aggregating 43 million USD in 2010 and exceeding 50 million USD as of November 2012. However, given the rapid growth trajectories of both economies bilateral trade volumes should continue to expand exponentially predicated upon both countries' robust competitive advantages and enhanced opportunities for mutually beneficial collaboration. As one of the major G-20, nations India is one of the world's great powers and fastest growing economies. Your economy is large, deep and diversified enjoying leadership roles in information technology, steel and chemical industry, banking and finance and other expanding sectors," he said. "On our part Mongolia has enjoyed steady economic growth over recent years emerging as a lower middle income country. We enjoy an exceptionally favorable factor endowment of mineral resources such as coal, copper, iron ore and uranium. We are blessed with over 80 of the constituents of the periodic table being found in commercially viable volumes. GDP growth accelerated from 6.4 per cent in 2010 to an unprecedented 17.3 percent in 2011, one of the highest rates in the world. In 2012, reflective of the global slowdown our rate of growth slowed to around 12.4 per cent. But still surpassed the 10 billion USD threshold despite softer demand for our principal export commodities, particularly from China. Nonetheless such a double digit growth rate remains the envy of many if not all the world's leading nations," L.Bold underlined. "Our paramount public policy priority throughout the coming years is to maintain high and sustainable rates of growth notwithstanding the exogenous global economic environment in order to improve the welfare of all our citizens. We remain sanguine while never hubristic that this critical objective is within our reach as we will continue the world-scale development of our major mining projects. This is to be achieved in parallel with the further expansion of our infrastructural base and diversification of our manufacturing industry through beneficiation in order to create higher added value exports. Mongolia's Oyu Tolgoi copper, gold and silver mine, owned by the Mongolian Government and Rio Tinto, which is the world's largest unexploited copper reserve is on the cusp of initial production following the commissioning of the concentrator last December...Once it achieves steady-state production this project alone is expected to boost Mongolia's GDP by a third of its current size. Another long-awaited and most welcome future development will be the conclusion of the Investment Agreement and program for the development of the Tavan Tolgoi mining project, one of the world's largest undeveloped coal reserves with over 6 billion tons of mostly high grade coking coal. Here our strategic plan is to optimize the intrinsic economic value while expanding our own industrial and technical competencies through bifurcated operations with, one half being developed by our state owned mining company while inviting the world's leading coal industry companies to developed the other half. In addition to the Oyu Tolgoi and Tavan Tolgoi mining projects Mongolia is blessed with several other significant deposits," he said. "Notwithstanding these favorable endogenous developments, the Mongolian economy remains potentially vulnerable as a consequence of its heavy dependence upon mineral exports with their intrinsic price volatility. In addition we fulfill our entire demand for oil products by importing from a single country - Russia. With this in mind, Mongolia's Government for New Change (or Reform Government), formed following the 2012 parliamentary elections, set itself the goal of building a diversified and competitive economy, reducing reliance on the primary extractive mining sector by diversifying our industrial output and expanding the infrastructural base. To achieve these goals, the Government is planning major infrastructural and industrial development projects, such as constructing new railways and roads, developing coal processing and steel smelting industries to export more value-added products, and supporting small and medium sized business enterprises. In order to fund these crucial development projects, the Mongolian Parliament passed a resolution last October allowing the Government to issue long-term bonds, named 'Chinggis Bonds', worth up to 5 billion USD. In late November, Mongolia captured global attention when it sold 1.5 billion USD through its first government bond offering with 5 and 10 year maturities. This initial bond offering was massively oversubscribed with demand from the leading international and regional financial institutions resulting in a very attractive interest rate lower than some of the larger European economies. The enabling Parliamentary resolution authorizing the issuance of the Chinggis Bonds expressly stipulated that the capital funds raised from the bonds shall not be used to cover any future budget deficit or be allocated for social welfare purposes. Instead the funds shall expressly be used for long-term investment in large scale projects in the mining, transport, energy, communications, construction, manufacturing and financial sectors. We believe that the success of the inaugural issue of Chinggis Bonds is mostly attributable to Mongolia's political stability its dedication to democratic values: its unique endowment of rich mineral resources; and its favorable proximity to both China (the world's fastest expanding economy when measured in terms of absolute growth) and Russia's markets, as well as Mongolia's secure legal environment which continues to welcome foreign investment. This tangible demonstration of global investor confidence in Mongolia and its prospects constitutes a most welcome endorsement by the international investment community of our Government's policy and development aspirations. In turn all these developments are intended to combine to achieve the critical socio-demographic goal of enhancing the size and role of the middle class which is the key locomotive of economic growth as Mongolia seeks tofulfill its aspiration of transforming from low income nation to high income status during the immediately ensuing years while ensuring that all sectors of our society benefit from the enhanced welfare emanating from the expansion of the economy through the equitable distribution of the expanding public sector revenue base," he said. "Mongolia supports and welcomes foreign investment in all segments of our economy. It has one of the lowest tax rates and least complex fiscal regimes within the Asia-Pacific region. In addition, investors producing value added products in Mongolia enjoy tariff-free import access to the European Union market embracing over 7,200 products under the EU GSP+ scheme. All these factors offer great opportunities for increased Mongolian-Indian cooperation in the fields of mining and energy, infrastructure development, steel production, pharmaceuticals, information technology, business consultancy and use of advanced Indian professional expertise and technology. Furthermore our unique unspoiled environment and integration with nature renders us one of the world's most attractive tourist destinations where visitors are always assured of the warmest of traditional welcomes," he said. "Mongolia-Indian relationship goes so much deeper than economic cooperation. Both nations enjoy glorious histories. As Mark Twain once said, 'India is the cradle of human race, the birthplace of human speech, the mother of history, the grandmother of legend, and the great grandmother of tradition. Our most valuable and most instructive materials in the history of man are treasured up in India only!'," L.Bold underlined. "For its part Mongolia is a nation which once spanned and integrated both East and the West through its founding father, Chinggis Khaan. Chinggis Khaan and his descendants established communications, set taxes, introduced the use paper money, while promoting science, and building schools, hospitals and temples across the Mongolian empire. Equally notably, Chinggis Khaan promoted religious tolerance throughout his realm which at its nadir stretched from the Pacific to the Mediterranean and constituted the world's largest contiguous land empire. History teaches us that great empires progressively decline but the name of Chinggis Khaan endures through the culture of equitable governance and respect for law and order which is his lasting legacy. Chinggis Khaan knew that the rule of law is paramount. This is why he introduced the Ikh Zasag Code of Law and disseminated it everywhere he went. The Mongol Empire established a codified legal regime overseen by independent judges. Our forefathers knew that the fundamental roadmap for any person and any state to adopt was the rule of law," he said, adding that last year, the countries were both proud and delighted to celebrate the 850th Anniversary of the birth of our great forefather. "Mongolia and India share unique historic and cultural ties. The Great Mughal Empire was founded by the descendants of Chinggis Khaan and our shared common heritage is reflected in the architecture of the world's most iconic building, the incomparably beautiful Taj Mahal which transcends both our common cultures. The Foreign Minister said India was the first country outside the socialist block and CIS nations to establish diplomatic relations with Mongolia. Furthermore, it strongly advocated the case of Mongolia to be admitted to membership of the United Nations in 1960. Addressing the 15th UN General Assembly, India's revered first Prime Minister, Pandit Jawaharlal Nehru, declared “If they received so many countries in the United Nations then why should Mongolia stay outside it? What had she done wrong? The people of Mongolia are tranquil and her peace-loving toilers are firmly striving for progress, and it seems absolutely wrong, from the principle point of view, not to allow her to the great organization.” Mongolia and its people remain forever grateful for this support at a critical time when we sought to shake off the binds of foreign suzerainty and external influence, he emphasized. "As I have sought to explain, the people of Mongolia and India share ties that go beyond our shared diplomatic rhetoric. Our leaders have developed shared democratic values and a deep sense of mutual commitment that constantly spurs them to provide support and sustenance during times of mutual need. It is now up to us, those of us who have enjoyed the great good fortune of being entrusted with political and business leadership roles in the early years of the new millennium, to expand this rich legacy though closer cooperation to enhance our shared endowment. While thanking you for taking the time out of your very busy schedules to join our deliberations here today I would also express my sincere appreciation for your sustained and assiduous attention throughout my opening address. Mr. Delgersaikhan, the Director of International Economic Department of The Bank of Mongolia followed by His Excellency Bayaraa our greatly respected Ambassador to India, will follow with their incisive briefings focused upon Mongolia's economy. In particular they will aim to highlight the uniquely attractive prospects to be found as our business, manufacturing, real-estate, investment, banking and financial sectors expand exponentially," he said, hoping that immediately thereafter there will be time for a mutually valuable dialogue and exchange of views. "With reiterated appreciation for your kind attention. I am already looking forward to welcoming many of the distinguished delegates present today when, before too long I hope, you visit us in our Motherland of Mongolia to contribute to and benefit from your engagement in one of, if not the, most exciting of all the world's developing economies," he said.