Mongolia Brief February 5, 2015 Part V

‘Modern time’

By B. Narantuya

February 5 (UB Post) The “Modern Time” joint exhibition by artists J.Shijirbaatar and N.Nasanbat is on view through February 12, at Mongolian National Art Gallery. The opening of the exhibition was held on February 5, and the show includes over 20 pieces by the artists.

Each of the two artists expresses their own unique vision through their artistic works. “We aimed to show the memories of the past through our paintings,” said artist N.Nasanbat.

“We, both artists, create work in the style of contemporary art. This time, the main theme of the exhibition was portraiture. We wanted to show the relationship between modern photographs and fine arts, and then how to connect the paintings with contemporary and realist styles of art. J.Shijirbaatar used many techniques in his paintings. There are some critical elements as well as memorials to the past. I created my paintings only with oil on canvas, while J.Shijirbaatar used mixed media techniques in his paintings,” said artist N.Nasanbat.

Mainly large-scale paintings, which take a lot of time and work to create, are presented in the exhibition. Through “Modern Time”, the two artists are making a strong contribution to fine arts as young artists.

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14 billion MNT goes up in smoke for Baganuur fuel factory

February 5 (UB Post) Ulaanbaatar is filling with smoke, and the smoke is poisoning the lungs of city residents. Some people see Ulaanbaatar’s pollution problem as a business opportunity and they are getting wealthier from it.

Directors and staff of the Clean Air Foundation were accused of “eating” money by saying they were reducing pollution in Ulaanbaatar, and were later penalized. The Independent Authority Against Corruption is still investigating people who are “eating” money through the Coal Project.

Some people took 14 million MNT from the state to build a smoke-free fuel factory and suddenly disappeared. The Ministry of Minerals and Energy announced a tender to build a complex factory to produce half-coke briquettes five years ago. Amore International and Russian engineering company Sibtermo won the tender and signed a contract on July 9, 2010.

According to the contract, the companies were responsible for building a factory with the capacity to produce 210,000 tons of half-coke briquettes each year, with support from Thermal Power Plant No. 2. The companies were also supposed to enlarge the coal-receiving area and change the fourth and fifth furnaces of Thermal Power Plant No. 2.

The cost of establishing the smoke-free fuel factory was said to be 16.8 billion MNT. Amore International received five billion MNT in 2010 and nine billion in 2011 from the Ministry of Minerals and Energy for implementing the project. But the company never finished the factory and the contract expired.

Mongolians have been waiting for this coking coal for years. The company had this to say about the unfinished factory, “Coal quality produced by the factory in the Baganuur District has changed, and it hasn’t been filtered well.”

Amore International transferred 3.04 billion MNT to its account without any authorized approval. An audit proved this. Under the project, Thermal Power Plant No.2, a state-owned utility, stopped producing smoke-free coking coal due to renovated furnace no. 5 and new equipment failing to provide benefits.

The Audit Office of Ulaanbaatar said completion of the coking coal factory is at 83.9 percent.
It is obvious that the state didn’t give 14 billion MNT to Amore International to fail to complete the smoke-free fuel factory in time. The Standing Committee on Budget of the State Great Khural, Ministry of Mining, Ministry of Energy, and Ministry of Finance requested that the Mongolian National Audit Office review the auditing results of the factory investigation.

As stated in the audit, “Amore International took money for furnace no.4, which should have been equipped with energy technology. The Audit Office checked the expenses for the smoke-free fuel factory, but they did not match the budget stated in verified documents. Approving the budget and blueprints of the factory project, while the pre-feasibility studies were not complete, violates the Law on Budget and Law on Construction.”

The Financial Crime Investigation Department of the State Investigation Agency initiated a criminal case against director of Amore International P.Baatarsuren, who violated criminal law in 2013. His case has been investigated for one year. According to the investigation, Amore International received financing of 14.6 billion MNT from the state during the implementation of the factory project.

Although the Audit Office proved illegal actions were taken by Amore International, the State Prosecutor’s Office dismissed the case against Amore International. How did this happen?

Source: Unuudur

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Buying local is spending smart

By Michelle Borok

February 5 (UB Post) In times of crisis, the most productive thing to do is to look inward. Batten down the hatches, determine what resources you have on hand, and how you can become self-sufficient to ride out hard times.

As a landlocked country sharing a border with only two countries (each with dominant economies), and limited agricultural resources, there are some built-in setbacks to self-sufficiency, but nothing insurmountable. And besides, Mongolia has persevered between its two neighbors for thousands of years. There’s no reason why that legacy can’t continue if the right choices are made.

SPENDING WISELY

In a free market economy, decisions are made with dollars – or in our case, tugrug in decline against the dollar. Campaign donations determine elections, consumer spending determines leaders in the industry, and market demands determine what ends up on store shelves. Aside from the corruption of campaign donations, these are still burgeoning ideas here, with many issues that consumers want to see resolved.

The movement to strengthen local economies by supporting local businesses often uses the catchphrase “buy local”. It has been applied to commercially driven initiatives to support small business owners, and is a common marketing tool used by national industries, best employed when there is regulation of standards set for certifying domestic production. Presently, Mongolia is lacking such institutional standards and well-organized initiatives. Producers and the NGOs that support them are left with holding press conferences with local media, hoping that a two minute report in the evening news or a brief story in print or online will carry their appeal to consumers and politicians.
The Mongolian People’s Party is now calling for buying local when using state funds on products and services procured by the government. As big as the government is, that could create tremendous benefits for local businesses utilizing domestic resources and labor, but setting an example for the public is just the beginning of measures that should be taken by the state to effect consumer trends.
More effective state and industry coalition initiatives to encourage the public to purchase domestic products year-round are needed. Sadly, the biggest push for buying local in Mongolia has come from nationalist movements, and the appeals to the public have been built on cultural bias and rumors, rather than on industry and consumer data.

At the end of December, The UB Post conducted a reader poll to gauge interests and concerns about buying local in Mongolia. Nearly 94 percent of our respondents said they wanted to see more local products available in markets, but when asked how important it was to them to buy local, support wavered. The response from our polled readers could suggest a lack of information offered about how buying locally made products impacts consumers and the economy, or it could point to concerns about the legitimacy of claims about where products originate, even those labeled “Made in Mongolia”.

POINT OF ORIGIN

As developing countries around the world gain a stronger foothold in the global market, imported products take on greater value. Imports can become markers of status, development, and financial security. Imports can also provide the raw materials for domestic manufacturing of goods.

As they once were when they were “black market” items, without legal importation and distribution channels, imported items can be considered a sign of luxury and financially mobility in many parts of the world. But whether it’s apparel, construction materials, or groceries, shopping at markets in UB that almost exclusively stock imported items, imports almost always mean higher prices. Buyers can sometimes find deals from “black market” vendors who dodge customs regulation and bring in products for resale, but prices fluctuate, inventory is irregular, and these retailers can be hard to find.

While some countries of origin are trusted and preferred, others are looked upon with distrust. Canadian, U.S., and German importers have capitalized on claims of reliability, durability, and superior quality of their products up against competitors from China, Russia, and Korea, but consumers pay premium prices for these less widely distributed national brands.

Popularity with consumers can drive ambitious local producers to create domestically made versions of imported goods. But before competition stimulates that kind of commercial innovation, a flood of imports in the market can often drive the market for local goods down.

When we asked our readers if they would choose local products over imports if they were clearly labeled as local, only 70.8 percent of our respondents answered “yes”, and 25 percent of our respondents answered “maybe”.

CONSUMER TRUST

Supermarkets all across the Asia-Pacific provide customers with a nearly limitless selection of goods from across the globe. Increased outsourcing means that a brand from “Country X” may be licensed by “Country Y” but produced in “Country Z”, leaving you with an American cracker sold by a Korean company and made in China.

Without well managed regulations for providing consumers with product information and accurate labels -not just sticking translated labels on top of the original packaging, consumers are left with blind trust that the things they are buying come from the places retailers say they are. Black market imports leave even more to chance without the standards and screening of certified retailers for imported brands or quality control.

Of course, even with domestic products, quality control standards are still lower than what consumers hope for. Stories about domestic producers taking shortcuts are just as common as scandals about subpar foreign goods. Thankfully, some domestic manufacturers are investing in raising production standards with an eye on export, but state inspectors have a lot of catching up to do to put in the same effort to raise the bar.

A recent story on gogo.mn on the origin of apples in Mongolian marketplaces perfectly illustrates how confusing a simple purchase can be. An interview was conducted with a senior inspector of the General Inspection Agency specializing in plants coming across the border about imported apples and their stated point of origin.

In his interview, the official cites an increased number of fruit being imported from Europe, suggesting that Mongolians have become “more concerned about their health” and are looking for an alternative to Chinese imports, which are considered to dominate the market. But information in the story refers to Chinese imports not necessarily being apples grown in China, but imports from the U.S. and Europe moving through China. The title of the article was “No American apples ever crossed the border”.

After reading the piece, I was left with even more questions about how well informed Mongolian consumers are. With so many confusing results from measures, inspection agencies, regulations, and complex systems in place to monitor the origin of imports, how will Mongolia be able to certify claims about domestic production?

An apple seller on the sidewalk in the 3rd and 4th khoroolol will tell you her apples are Mongolian to make a sale, but where are all these Mongolian apple orchards hiding? Unless you’re buying potatoes from the farmer who pulled the harvest from the ground, how do you know where your food is coming from?

An officer of a the NGO Daichin Mongol, B.Batbilguun, told reporters at a press conference last month, “We need to stop the use of un¬secured products when we are uncertain where the products were made. It is best to use hygienic domestic foods for our health.” This claim rests of the assumption that products made in Mongolia are under more scrutiny than imports, which is a dangerous assumption to make when you consider how understaffed, poorly regulated, and inconsistent state inspection agencies are.

In our reader poll, we asked people to rate their confidence as consumers in the Mongolian market place on a scale of one to five, one being “very confident” and five being “not confident at all”. A little more than four percent of our respondents identified themselves as very confident consumers. Just over eight percent identified as not confident at all, while 44 percent put themselves smack in the middle of that spectrum with another 25 percent leaning towards a lack of confidence.

Is that just the resilience of the Mongolian consumer shining through? Should we continue gambling on quality and safety control and accepting what we get, or do we decide with our dollars and demand more?

NEW IDEAS FOR THE NEW YEAR

The Tsagaan Sar – Made in Mongolia 2015 exhibition was reported to have generated one billion MNT in sales, over 500,000 USD. That’s an impressive accomplishment, but it represents sales for 800 exhibitors spread out over the course of one week.

Tsagaan Sar is a uniquely Mongolian holiday, and the best possible opportunity to market domestic goods and make a strong push to buy local. Supporting small businesses making locally produced food, apparel, and traditional gifts will help countless families stack boov and buuz on their Tsagaan Sar tables, but who will they sell to when the holiday is over?

As consumers, we can’t rely on the government’s ministries to help fill store shelves with locally made products. And the industrial development required to skyrocket exports and rebuild the economy is years away from producing results. In the meantime, we need to buy smart.

When you’re stocking up on tissues, take the time to spot the locally produced brands. Their prices are competitive. Picking up some vegetable oil for the pantry? Grab a bottle of local vegetable oil produced in Selenge Province- it stands up to the Russian and German alternatives.

Ask supermarkets and small market vendors to show you what items they’ve sourced locally. With increased demand and greater spending on local goods, trends will change: more variety will become available to consumers, local producers will benefit and be able to invest in sustaining and expanding their businesses, and the benefits to the local economy will spill over to the macro economy.

Change won’t happen overnight, but change will happen.

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