Daily News spoke to Member of Parliament J. Ganbaatar about amendments to the Law on Small and Medium-sized Enterprises (SMEs).
One of initiators of the amendments, J. Ganbaatar noted that out of 127,000 registered business entities in Mongolia, only 63,000 corporate entities currently carry out operations and pay taxes. Eighty-four percent of active entities are classified as SMEs. The Law on Small and Medium-sized Enterprises was approved ten years ago.
The Small and Medium-sized Enterprise Development Fund was established in 2009, and has financed 7,000 SMEs out of 26,000 proposed projects. The MP highlighted that amendments to the law on SMEs will help newly established entities gain access to business development loans.
According to MP J. Ganbaatar, the new amendments classify SMEs as
- micro (up to nine employees and an annual income of 50 million MNT),
- small (nine to 50 employees and an annual income of 250 million MNT), or
- medium-sized (up to 200 employees and an annual income of 1.5 billion MNT).
The classifications will be used to determine which SMEs can get soft loans from commercial banks. He noted that a state agency to support SMEs will be established and a council within the agency will grant loans to qualified borrowers, but medium-sized enterprises will have to get loans through commercial banks.
The interest rate for loans granted through the SME council will be three to four percent, and interest rates at commercial banks will be six to seven percent. He also noted that the benefits outlined in the amendments won’t be applied to larger enterprises.
The amended law will come into force on January 1, 2019.
Daily News spoke to Member of Parliament J. Ganbaatar about amendments to the Law on Small and Medium-sized Enterprises (SMEs).
One of initiators of the amendments, J. Ganbaatar noted that out of 127,000 registered business entities in Mongolia, only 63,000 corporate entities currently carry out operations and pay taxes. Eighty-four percent of active entities are classified as SMEs. The Law on Small and Medium-sized Enterprises was approved ten years ago.
The Small and Medium-sized Enterprise Development Fund was established in 2009, and has financed 7,000 SMEs out of 26,000 proposed projects. The MP highlighted that amendments to the law on SMEs will help newly established entities gain access to business development loans.
According to MP J. Ganbaatar, the new amendments classify SMEs as
- micro (up to nine employees and an annual income of 50 million MNT),
- small (nine to 50 employees and an annual income of 250 million MNT), or
- medium-sized (up to 200 employees and an annual income of 1.5 billion MNT).
The classifications will be used to determine which SMEs can get soft loans from commercial banks. He noted that a state agency to support SMEs will be established and a council within the agency will grant loans to qualified borrowers, but medium-sized enterprises will have to get loans through commercial banks.
The interest rate for loans granted through the SME council will be three to four percent, and interest rates at commercial banks will be six to seven percent. He also noted that the benefits outlined in the amendments won’t be applied to larger enterprises.
The amended law will come into force on January 1, 2019.