sme survey in mongolia - first results finance, investment and taxation

SME Survey in Mongolia - First Results

Finance, Investment and Taxation

Mongolia SME Observatory Results

The following slides summarize the responses of 1511 SME interviews conducted by staff of the SME Department of the Ministry of Labour of Mongolia in September 2014. A large number of cross tabulations is possible, but for this presentation, we have chosen in most cases to provide two slides for each question asked:

• One which shows the variations for three “super regions” representing groups of regions (aimags) and districts of the capital city Ulaanbaatar;• One which show cross-tabulation based on education of the proprietor,

number of people employed/engaged in the SME, sector etc.


We asked SME owners how they financed their start-up. Was it self-financed? Did they access funding elsewhere (outside the family circle)? Do they have joint ownership?

We then asked if they have external financing for running costs and capital investment now, also, whether leasing is of interest.

After that, we looked at who is registered for tax – and who actually pays it.


As with many other jurisdictions, SMEs are usually financed by the owner at start-up, but with support rom family and friends. There are issues of access to seed/start-up capital, but many owners, in spite of these difficulties, managed to access debt finance and continue to use debt financing for coverage of both short-term/current needs, as well as long-term. However, much of this may be outside the formal banking sector: furthermore, there is little use of leasing at this stage.

In relation to taxation, a number of our respondents were not registered for tax and even those that are, do not always pay it. This is particularly true for VAT, the reform of which is a current priority for the Ministry of Finance.

South Region North Region Ulaanbaatar Total0%10%20%30%40%50%60%70%80%90%

100%

63%47%

59% 57%

37%53%

41% 43%

Did you finance the creation of the business wholly from your own money? Regional variations

1. Yes 2. No

Agriculture, forestry,fishingIndustry, construction

TradeHotels, restaurants, bank, transport, real estate

Health care, education and other servicesSole owner/proprietor

In a partnershipCompany

Limited CompanyCooperative

Permits - Very easyPermits - Fairly easy

Permits - Not so easyPermits - Hard

1-9 person10-19 person20-49 person

More than 50 personSecondary (11 years) or less

Special secondaryHigher or more

Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%58%61%

53%60%

55%64%

60%63%

49%45%

69%63%

56%51%

61%48%

36%54%

59%65%

52%57%

42%39%

47%40%

45%36%

40%37%

51%55%

31%37%

44%49%

39%52%

64%46%

41%35%

48%43%

Did you finance the creation of the business wholly from your own money?

Yes No


100%

31% 24% 20% 21%

69% 76% 80% 79%

If you did not finance the creation of the business wholly from your own resources was it easy to find other sources of finance? Regional

variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%24%26%

20%16%18%

21%18%

16%22%24%

51%21%

19%20%23%

16%25%

12%23%

21%21%21%

76%74%

80%84%82%

79%82%

84%78%76%

49%79%

81%80%77%

84%75%

88%77%

79%79%79%

If you did not finance the creation of the business wholly from the resources was it easy to find other sources of finance?

Yes No


100%

78% 77% 75% 75%

22% 23% 25% 25%

Did you borrow money from outside to start the business? Regional Variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%71%72%

78%76%78%

70%71%

81%80%

69%65%

68%80%

76%77%77%

61%70%71%

83%74%75%

29%28%

22%24%22%

30%29%

19%20%

31%35%

32%20%

24%23%23%

39%30%29%

17%26%25%

Did you borrow money from outside to start the business?

Yes No


100%

28% 33%42% 40%

72% 67%58% 60%

Did anyone else (other than family/friends) invest in the business and become part owners with you? Regional Variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%40%40%

38%43%

40%27%

54%42%42%

64%8%

38%39%

46%34%

46%48%

86%31%

28%47%

40%

60%60%

62%57%

60%73%

46%58%58%

36%92%

62%61%

54%66%

54%52%

14%69%

72%53%

60%

Did anyone else (other than family/friends) invest in the business and become part owners with you?

Yes No


100%

72% 76%59% 63%

28% 24%41% 37%

Do you currently borrow for any short-term expenditure? Regional Variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%69%

64%71%

54%50%

58%64%

52%67%

80%49%

64%66%

61%60%

70%75%

58%60%

66%63%63%

31%36%

29%46%

50%42%

36%48%

33%20%

51%36%34%

39%40%

30%25%

42%40%

34%37%37%

Do you currently borrow for any short-term expenditure?

Yes No


100%

77%62%

49% 53%

23%38%

51% 47%

Do you currently have any borrowings for any capital/long-term expenditure? Regional Variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%55%56%

53%48%50%

43%51%

61%61%

68%46%49%

54%57%

50%57%

79%57%

45%49%

58%53%

45%44%

47%52%50%

57%49%

39%39%

32%54%51%

46%43%

50%43%

21%43%

55%51%

42%47%

Do you currently have any borrowings for any capital/long-term expenditure?

Yes No

South Region North Region Ulaanbaatar Total0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

12% 7% 12% 12%

88% 93% 88% 88%

Do you currently lease any capital equipment? Regional Variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%11%

16%8%8%

13%9%

20%6%

11%21%

14%11%10%

14%10%

16%13%

10%16%

12%10%12%

89%84%

92%92%

87%91%

80%94%

89%79%

86%89%90%

86%90%

84%87%

90%84%

88%90%88%

Do you currently lease any capital equipment?

Yes No


100%

21% 26%40% 36%

79% 74%60% 64%

Do you plan to lease equipment within the next 3 years? Regional Variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%37%

44%37%

24%32%

36%40%

50%33%

47%21%

37%33%

44%37%37%36%

33%44%

36%34%36%

63%56%

63%76%

68%64%

60%50%

67%53%

79%63%

67%56%

63%63%64%

67%56%

64%66%64%

Do you plan to lease equipment within the next 3 years?

Yes No


10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

34%44%

36% 37%

66%56%

64% 63%

Are you interested in leasing as an option? Regional Variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%38%

47%37%

30%28%

36%39%

44%36%

63%27%

32%37%

45%36%38%

46%55%

38%37%37%37%

62%53%

63%70%

72%64%

61%56%

64%37%

73%68%

63%55%

64%62%

54%45%

62%63%63%63%

Are you interested in leasing as an option?

Yes No


10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

94% 93%

73% 78%

6% 7%

27% 22%

Are you registered for tax? Regional Variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%79%

73%81%

78%78%

58%77%

96%95%

84%68%

71%82%

79%72%

93%96%

92%69%69%

85%78%

21%27%

19%22%22%

42%23%

4%5%

16%32%

29%18%

21%28%

7%4%

8%31%31%

15%22%

Are you registered for tax?

Yes No


100%

94% 88% 89% 89%

6% 12% 11% 11%

If you are registered, do you pay income or profits tax? Regional Variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%89%

87%89%89%

95%76%

89%92%

97%98%

80%86%89%

94%87%

93%93%

99%78%

88%93%

89%

11%13%11%11%

5%24%

11%8%

3%2%

20%14%11%

6%13%

7%7%

1%22%

12%7%

11%

If you are registered, do you pay income or profits tax?

Yes No


10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

47%55% 52% 52%

53%45% 48% 48%

If you are registered, do you pay VAT? Regional Variations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%43%

50%56%

51%52%

35%43%

77%61%

56%47%

45%52%

59%44%

63%77%

96%33%

42%62%

52%

57%50%

44%49%48%

65%57%

23%39%

44%53%

55%48%

41%56%

37%23%

4%67%

58%38%

48%

If you are registered, do you pay VAT?

Yes No


100%

88%71% 75% 76%

12%29% 25% 24%

If you are registered, do you pay land or other taxes? Regional Vari-ations

1. Yes 2. No











Total

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%85%

70%82%

68%74%

72%73%

88%77%

74%58%

74%78%

76%74%

77%78%

89%72%

76%77%76%

15%30%

18%32%

26%28%27%

12%23%

26%42%

26%22%

24%26%

23%22%

11%28%

24%23%24%

If you are registered, do you pay land or other taxes?

Yes No

sme survey in mongolia - first results finance, investment and taxation

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