MINISTRY of INDUSTRY COMPETITIVENESS OF THE INDUSTRIAL SECTOR AND THE POLICY AND SMALL MEDIUM-SIZED ENTERPRISES ( SME ) BATTOGTOKH D., PhD General Director, Department of Strategy and Planning, Ministry of Industry Ulaanbaatar 2016.05.11

The new legal environment and reforms “Law on the Free Economic Zone / Revision / ”- endorsed by the Plenary Session of the Parliament on February 2nd, 2015 “State Policy on Industrialization” approved by the Parliament Resolution #62 on June 19th, 2015 “Law on Supporting the Industrialization”- endorsed by the Plenary Session of the Parliament on July 9nd, 2015 Agreement on Free Trade (AoFT) The Cabinet Meeting approved the ratification of the agreement on economic partnership between Mongolia and Japan. “Trade Law” draft was discussed and approved by the Government Session and was submitted to the Parliament on April 15th 2015 where it has been discussed. “Revision of the Law on Small, Medium Enterprises (SME) ” conception draft was discussed by the Cabinet meeting and was approved. In order to reform the legislation on the Industrial and Technological Parks the draft of the “Law on Industry and Technology Complexes” is being developed.

SMALL MEDIUM-SIZED ENTERPRISES ( SME ) 2/17/2019

Competitiveness of the Industrial sector and the policy SME SECTOR DEVELOPMENT 24 billion ₮ SDF 12 billion ₮ CGFM 2005 SME program (2005-2010) 50 billion ₮ Ml, Department of SME 2013 2012 150 billion ₮ 2011 SME Agency 2009 2007 SME legal 2008 SME fund 2006 (1999-2003) SME division 2014 1999 1993 (2014-2016) 100 30 billion ₮ Suмfond Competitiveness of the Industrial sector and the policy SME program /draft/ (2016-2020)

THE NUMBER OF ENTITIES Business registration database has 126560 registered entities, there have been 64301 companies. It depends 54237 /84.3 %/ enterprises of small and medium - sized enterprise sector.

54237 small and medium - sized industries are 1-9 GROUP OF STAFF NUMBER 54237 small and medium - sized industries are 1-9 employing 45425 industrialist 2/17/2019

MEANS TO SUPPORT SMALL MEDIUM ENTERPRISES Non financial Business Incubation Services ( rent deduction, training on business and entrepreneurship etc.) To train the work force through Vocational training centers in order to employ at the SME To involve into exhibitions and fair in order expand the market and support the sales network To provide for the SMEs the exemption from customs duties and VAT on their equipment To provide professional consulting services for the SMEs’ owners Financial To provide soft loans through the local government funds and the SME development funds To provide guarantor’ services for the business owners and SMEs having shortage of collateral for the banks To provide Financial leasing services To involve into public funds for the local (sum, district) development by providing discounted loans To provide with the small loans and interest deduction activities

New Program Objectives /2014-2016/ SME DEVELOPMENT PROGRAMME 2014 – 2016 New Program Objectives /2014-2016/ improve the legal environment for the development of small and medium - sized enterprises developing Clusters the development of research and developing innovation Empowering small and medium - sized enterprises provide access to increased financial resources support to expand markets

Legal and regulatory environment: SME DEVELOPMENT PROGRAMME 2014 – 2016 Legal and regulatory environment: SME equipment VAT and duty-free –Government decree 14 / 191 SME priorities - Government decree 15 / 336 Government support program for Utilities - Government decree 14/278 Imports of customs tax rates in some products - Government decree 16/185 Procurement: "Tsagaan sar”, "Made in Mongolia" and “National brand products" is a regular exhibition and trade in organized every year. Since 2015, China 2 , Japan 1 times exhibition made. Loans : 2012-2016: loans 1968 project 301,67 billion MNT. This preserved 8001 jobs, created 14617 jobs and 551 small businesses in the new operation . 2016: 330 sum of 46 billion have been granted loans amounted to promote household production.

Technology innovation loans POLICY LOANS: Industry of Minister order of the day on 05-April-2016 number 57 “Procedures to provide policy loans" Equipment loans Technology innovation loans Working capital loans Industrial building loans Policy loans

POLICY LOANS: Casting Industry - Steel balls - metal parts, base metal Metal processing Industry - all types of metal structures - Equipment - Machinery and mechanism assembly - Other metal factory Petrochemical industry - Plastic and rubber factory - Coal gasification and gas, packaging , shipping - Chemical fertilizers and other chemical products Wool , cashmere industry - Wool , cashmere yarn , fabric and garment factory - Wool , cashmere yarn , textile factory - Wool insulation materials , felt factory - Wool carpet factory Leather industry - Leather raw material preparation , quality preservation and maintenance of factory - Leather and solid waste recycling factory wastewater - All leathers of fur processing factory - All leathers of leather goods factory Textile products and garment industry - Various types of uniforms and kits Building materials industry - Lime , dry mix production - Building exterior facades factory Timber industry - Timber imports , imports of timber factory - Forestry all types of waste timber factory Pharmaceutical industry - Medicine factory - medical products factory

POLICY LOANS: Packaging Industry - Packaging , labels and label factory Recycling Industry - Food quality plastic packaging factory Food Production Industry - Meat and meat products - Milk and milk products - Fruit and vegetable products - Vegetables - Honey Creative industry - National historical and cultural features new products High technology and innovation industry - Information technology factory - Nano-technology factory Medicinal Industry - Providing pharmaceuticals factory/ GMP standards / - Drug and biologic and cosmetic products Tourism - Regional Tourism All the commercial networks - Supply and sales , and electronic retail chain stores

CONSTRAINTS TO SME DEVELOPMENT

Draft SME Development Programme 2016 – 2020

DRAFT SME DEVELOPMENT PROGRAMME 2016 – 2020 Objective: to facilitate an increased contribution of SMEs to gross domestic product (GDP) and employment by enhancing their competitiveness in local and international markets. Duration: The program covers the period 2016-2020 Specific Objectives: To improve SME-relevant laws and regulations To enhance entrepreneurship and skill levels To improve access to finance To foster innovation and technology adoption To promote access to markets To strengthen the institutional infrastructure

Thank you for your Attention 2/17/2019