Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus

Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
An Ulaanbaatar Railway (UBTZ) train hauling coal. The company is under scrutiny as it is thought laxity among some of its officials allowed the virus to spread from the north to the south of Mongolia.
By Anand Tumurtogoo in Ulaanbaatar November 23, 2020

Anxieties are mounting that Mongolia’s economy is set to pay a heavy price now that the country is dealing with community transmissions of the coronavirus (COVID-19). The nation went into lockdown 10 days ago after the confirmation of its first such infections.

In latest developments stemming from the change in Mongolia’s coronavirus status, Chinese border crossing patrols have requested Mongolian truck drivers hauling mineral exports hand in polymerase chain reaction (PCR) test results for coronavirus before entering China. Mining insiders noted that the biggest crossing on the Mongolia-Chinese border, Gahuunsukhaat in South Gobi, only has the capacity to access a very small amount of local PCR tests. The border customs agency in Gashuunsukhaat has sent a request to the government to immediately open a PCR testing lab near the crossing. It has also requested that Mongolian mining companies help with this matter. 

MEC, an Ulaanbaatar-based research and consulting firm, has issued early research on impacts of the virus lockdown on businesses. It interviewed over 660 businesses during November 17-19. The research determined that 92% of respondent businesses have lost profit while 1% have increased profit amid the lockdown.

Some 85% of survey participants said they would like government help, mainly in terms of relief grant financing and tax deferrals. Previously the government instituted coronavirus-crisis tax deferrals for businesses that applied from April to July. The government has yet to explain how it will protect businesses during the lockdown, presently set to run until early December.

Dire situation for self-employed

For self-employed workers, there are worries things could become rather dire. The government launched an Mongolian tughrik (MNT) 5.9tn ($2.65bn) relief programme in April to help overcome economic distress caused by the pandemic, but the relief mainly went to big corporations.

The Ulaanbaatar Chamber of Commerce examined whether the measure provided any real support for self-employed workers. The survey covered 1,652 self-employed people in the Songinokhairkhan, Bayangol, Bayanzurkh and Chingeltei districts of Ulaanbaatar, and in Khovd, Darkhan-Uul, Khuvsgul, Sukhbaatar and Southgobi provinces. Researchers noted the the government doesn't have a system to keep track of or recognise self-employed workers, the main flaw that blocked flows of relief to these people. The income of 17,677 self-employed people in Ulaanbaatar was down by MNT 1.3tn y/y, they observed. And this was the situation during only a ‘semi-lockdown’, prior to Mongolia verifying its first local transmissions of COVID-19.

Cases reach 640

The total number of confirmed cases of COVID-19 in Mongolia has reached 640, the health ministry briefed on November 23. Of the people involved in those cases, 340 have been cured. A total of 214 of the cases were listed as having resulted from community transmissions recorded since November 7.

Some 93 local-transmission cases have been reported in Selenge province in northern Mongolia bordering Russia. Seventeen have been logged in Orkhon province, home of Erdenet Mining Corporation, one of the biggest ore mining and ore processing operations in Asia.

A sharp fall in world commodity prices, including in copper prices by more than $500 per tonne below Erdenet's target, means that the company’s combined woes pose an imminent threat of a shutdown. However, Erdenet said on November 22 that it was working on a comprehensive programme and set of measures to prevent the spread of coronavirus at its mines and plants. 

The company said 60% of its workforce had been tested for coronavirus and all the results were negative.

The government is scrambling to contain the coronavirus having previously been focused on stopping the advent of local transmissions. Officials are under pressure to explain if administrative negligence, especially in Selenge province, has enabled the virus to get a grip. The national emergency committee has conceded that infections in Selenge spread to Zamiin Uud in southeastern Mongolia because administrators of Ulaanbaatar Railway (UBTZ), jointly owned by the Mongolian and Russian governments, disregarded COVID-19 prevention rules, allowing the virus outbreak to spread via the national railway network.

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