During a meeting of Parliament’s Economic Standing Committee, Minister of Food and Agriculture P.Sergelen reported on the implementation of the SME Development Fund law and developments in the agriculture and light industry sectors.
Minister P.Sergelen said, “Between 2009 and 2016, 745.5 billion MNT in discounted loans were issued through the SME Development Fund. Of the loans issued, 83.5 percent were used to increase cash flow and to buy equipment. This has resulted in an average 20 to 30 percent increase in the revenue of enterprises.”
He went on to report that discounted loans with interest rates of one to three percent and a maturity period of three years were issued to SMEs through the Soum Development Fund. He high- lighted that these loans helped establish 9,272 new factories, expanded 13,909 factories, created 32,900 jobs, and helped retain 20,700 jobs nationwide.
The Ministry of Food and Agriculture also reported that 2,000 factories are operating in the food manufacturing sector, employing 13,000 people. Production in the food production sector reached 941.1 billion MNT in November 2016. The Ministry highlighted that 78 percent of the nation’s eight primary food products are being produced domestically. In terms of light industry, there are a reported 2,000 factories employing 35,000 workers. Production in the light industry sector reached 1.1 trillion MNT in 2016, a 15.2 percent decrease compared to the same period in 2015.
After Minister P.Sergelen’s presentation, the Head of SME Policy Implementation at the Ministry of Food and Agriculture, M.Dondogdorj, answered a few questions regarding SMEs.
What is the current state of SMEs?
Sales are important. Some SMEs have large amounts of their product in storage. Some manufacturers have told us that they have reached a point where they have to sell their products at break-even prices. During the Economic Standing Committee meeting, we gave the committee members directions to promote cross-border trade. Mongolia has 14 border crossings, and we have discussed using these to promote crossborder trade. Secondly, a Mongolian-Chinese expo will be organized this coming fall. There is a need to increase the competitiveness of products. We are focusing on this.
Compared to other loans, SME loan repayment has reportedly been good. What is the repayment rate?
The repayment of the SME loans has been at 97 to 98 percent.
Has the number of SME owners increased?
In terms of numbers, there has not been a dramatic increase. The majority of the loans were issued to SMEs that employ one to nine workers.
Will the SME loans be continued? How much will be issued this year?
In the 2017 state budget, 24 billion MNT was allocated for SME loans. In 2016, 74 billion MNT was allocated for SME loans.