How is the stand of SME financing?

Small and medium enterprise is a main foundation for Mongolian business sector. Since the business environment has becoming better in Mongolia, the number of small and medium entrepreneurs has been increasing. However, they are facing financial problems and are lacking for qualified personnel. Ya.Sanjmyatav, Minister for Labour, highlighted that the New Government is planning to develop a significant policy against those problems” at the meeting called “Financing small and medium enterprises” at the Mongolian National Chamber of Commerce and Industry. About 150 representatives of small and medium entrepreneurs signed the memorandum of understanding between MNCCI and the Ministry of Labour during the meeting.

According to the memorandum, works such as to increase employment and to create new work places, especially to qualify more professional personnel and to improve professional educational schooling environment are considered to be important and urgently have to be done in the coming years.

Entrepreneurs talked about imminent problems and exchanged opinions on things which the minister has to pay attention.

We met Ya. Sanjmyatav, the Minister of Labour, and enquired about the financial problems. We also clarified some other problems that the entrepreneurs are facing now.

Ya. Sanjmyatav: Don’t lose the golden chance to become employed

How much money is the government planning for the budget of the small and medium entrepreneurs? In what form it will be spent?

-About MNT 150 billion is planned for the small and medium entrepreneurs this year. A total of MNT 87 billion out of MNT 150 billion will be spent within the network of a fund to develop small and medium entrepreneurs. To do so, MNT 150 million out of 1.5 billion will be granted for each soum, different amount of money.

MNT 80 billion will be provided for round subprograms through the project for small and medium enterprise development considering the sustainability and the result of the project.

Moreover, some parliament members are proposing to grant certain amount of “Chinggis bond” for small and medium entrepreneurs as loans.

The Government made a legislation to reduce customs taxes for equipments of 987 small and medium entrepreneurs that are constructing buildings and roads.

When will the Loan Guarantee Fund start its operation?

-The government is planning to provide collateral guarantee up to 60 percent to the entrepreneurs who would like to receive loans. Around MNT five billion will be budgeted for that. The government sees there is an opportunity to increase the budget 20-fold, which is equal to MNT 100 billion.

Procedures of loan guarantee fund has to be elaborated by the Financial Regulatory Commission and Mongolian Employers Federation and Ministry of Labour. It will allow the government to work actively for loan guarantee for small and medium enterprises.

What kind of reductions will be allowed on tax for small and medium enterprises?

-We are intending to give 90 percent of the tax back to the entities which have the income below MNT 1.5 billion in the end of the year. Around 90 percent of the domestic small and medium enterprises earn less than MNT 1.5 billion. So, the support is aiming the right target. Moreover, we will pay attention to providing each province with pavilion to advertise their own products. We will support the activity to supply domestic military and larger mining companies with overalls, working gloves, water, drinks and small equipments which are made by the small and medium enterprises. In other words, Mongolians don’t need to buy any foreign products since we can manufacture them domestically. In addition, it is important to prepare highly skilled personnel. In the network of this work, we signed a cooperation agreement with MNCCI on Wednesday.

How many workplaces will be created this year?

-We are aiming to create more than 47 thousand workplaces this year. We need labour force for construction and infrastructure, especially to construct railroad and asphalts. There are around 3200 entities which want to enlist staffs like constructors and sewers. However, there is less effort from the residents. Each course prepares around 3300 people. It requires about MNT five billion for each course and MNT two million for each person. Each person will receive MNT 190 thousand per month for five months. Moreover, there is a chance to be recommended to get employed. So I would say “Don’t lose your chance to have a job”.

M. Davaasuren /CEO of “Gankhiits” LC/

-Our company trained about 600 welders since 1988. At our training centre, experienced experts who established a joint Mongolian-German Vocational and Training Centre, teach lessons. Moreover, we have the full capacity for those who want to practice. However, the government doesn’t support it at all. So, why can’t you involve training centres like us which has a training base and qualified teachers, in that activity to prepare highly skilled personnel? If we could do so, it will be both beneficial for people and sparing for the government.

Ts. Tsend-Ayush /Director of the Cooperative Union ”Nooson zangilaa”/

-It is good to grant incentives for wool. However, we need to focus on producing final product and consider it as an important thing. Mongolian entrepreneurs produce wool and healthy clothes and goods by felt which are suitable for the use. This is a big advantage. Particularly, we registered our products in the World Heritage list. So, people can invest in this sector and there is employment opportunity for everyone open.

J. Olziibaatar /Director of ”Suun sondor” company/

-Loan interest rates are weighting on entrepreneurs. Our company is taking a loan with 24 percent of interest rate per year. The bank loan interest rates are relatively higher in practice. Moreover, companies need to improve the administrative management and the system of accounting. Otherwise, the entrepreneurs are lacking for management about how to spend the money, although people take lots of loan.