Export Fund Management (Mongolia)

Small and medium enterprises (SME) faced several institutional constraints in their everyday activities, this made them uncompetitive and unable to successfully penetrate export markets. The SME sector had difficult credit access, a discriminatory tax regime, poor registries offices, lack of transparency in government decision-making processes, lack of institutional coordination as well as a lack of comprehensive policy endeavor supporting SMEs.

Econlex was requested to develop a broad and demand driven spectrum of mostly technical SME development services with the objective of providing and environment for their successful development. Our purpose was to identify the need of the Government and the business community in Mongolia in order to assist the Ministry of Industry and Trade in the process of drafting the legal instruments needed for the promotion and development of the SME sector.

By the end of the mission Econlex presented two draft laws for the promotion of the SME sector. The “Law for the definition of Small and Medium Enterprises in Mongolia” which defined SMEs and registry procedures; and the “Law for the Support of Small and Medium Enterprises” which developed the optimal organizational framework for the full promotion of SMEs in Mongolia. The presentation of these two drafted laws brought about considerable changes, additions and new technical provisions to the fields of:
  • Definition of SMEs and their legal status.
  • The amount and scope of tax holidays and benefits.
  • The creation and the structure of the SME Development Fund and the allocation of funds.
  • Mandatory rules for the Government to develop a business friendly environment.
  • The creation of a National Council of SMEs.
  • Penalties for infringement of the law.