Comprehensive Policy on the Development of Manufacturing in Mongolia and SMEs

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Comprehensive Policy on the Development of
Manufacturing in Mongolia and SMEs
Ministry of Industry and Trade October, 2007
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Basic Socio-economic Indicators-2006
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Exports of Main Commodities in 2006
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(No Transcript)
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Government policy on Industrial development
State-level

• Industrial and Technological Complexes
• Business Incubator Center
• Business management trainings
• Low interest loans for SMEs
• Leasing Services
• Consultancy services in the marketing process
  (channels)
• One Village, One Product Program
• Development of brand products by soums One
  Soum One Product
• Domestic marketing as well as exports
• Provide loan guarantees and soft loans

Regional centers and aimags
Soum (village) -level
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Comprehensive Policy on Industrial Development

• Geology, Mining and Heavy Industry
• Light Industry
• Services
• Agriculture

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Comprehensive Industrialization Policy
Light Industry sector
Mining and Heavy Industry sector
Services sector
Agriculture Sector
Construction materials
Public utilities
Production of finished goods by developing
non-ferrous metallurgy and rare minerals
Ferrous metallurgy
Wood processing and manufacturing
Wool and cashmere production
Processing of hides and skins
Coal and production of chemicals
Uranium and nuclear energy
Communications
Educational services
Banking and financing
Healthcare, social welfare services
Tourism
Energy and transportation
Printing
Cultivation
Biotechnology
Foodstuff
Animal husbandry
S M Es clustered around a large plant
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Industrialization Policy of Mongolia
2. LIGHT INDUSTRY DEVELOPMENT project
1. MINING AND HEAVY INDUSTRY DEVELOPMENT project
Production of finished goods by developing
non-ferrous and rare metals
Ferrous metallurgy
Construction materials
Wood processing and products thereof
Processing of hides and skins
Coal and production of chemical
Uranium and nuclear energy
Wool and cashmere production
Printing
Public utilities
Biotechnology
S M Es clustered around a large plant
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SWOT ANALYSIS ON THE POTENTIAL TO DEVELOP
INDUSTRIES IN MONGOLIA
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Regions with Considerably Well Developed
Infrastructure
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Settlement of Mongolian Population
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GEOLOGY, MINING AND HEAVY INDUSTRIES
Coal
Poly metall
IRON
Uranium
Rare metalls
Precious metalls
Tavan Tolgoi, Shivee Ovoo, Nariin
Sukhait, Baganuur
Mushgia hudag
Tumurtei, Tumur Tolgoi, Bargilt
Oyu Tolgoi, Tsagaan Suvrag Erdenet, Dornod
group deposits
Boroo gold, Asgat, Tavt, Zaamar group deposits
Mardai, Dornod, Kharaat
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STRATEGIC COAL DEPOSITS WITH IDENTIFIED RESOURCES
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4
2
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Tavan Tolgoi 6 billion ton
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Nariin Sukhait 91 million ton
Projected resources 150 billion ton Identified
resources 175539,3 million ton
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Baganuur 512,8 million ton
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Shivee ovoo 564 million ton
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STRATEGIC COPPER DEPOSITS WITH IDENTIFIED
RESOURCES
Erdenet 3,2 million ton
Tsagaan Suvarga 1,3 million ton
Oyu Tolgoi 16 million ton
Projected resources - 1,2 billion ton Identified
resources - 23 million ton
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Iron Ore deposits occurrences in Mongolia
Tumurtei 229,3 mln. tn Bayangol 110,0 mln.
tn Khust 30 mln. tn
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1
3
5
4
8
7
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Projected resources 1,5 bln tn Identified
resources 229,3 mln. tn
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• North Choibalsan region 48573 tn
• Mardai 1104 tn
• Dornod 28868 tn
• Gurvanbulag 16073 tn
• Nemer 2528 tn

Distribution Map of Uranium Occurrences in
Mongolia
Kharaat Region 15000 tn
Sainshand Region
Projected resources 1,47 mln. tn. Identified
resources 63573 tn
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LIGHT INDUSTRY SECTOR
WOOD PROCESSING COMPLEX
WOOL AND CASH- MERE PROCESSING
MANUFACTURING COMPLEX
HIDE AND SKINS PROCESSING
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Volume of Livestock Originated Raw Materials in
2006
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15.4 million head of goats, 253.5 thousand
camels, 400 thousand yak
Cashmere and wool processing complex
Others -553/ 468 (1021.0)
Eermel - 310.0 1000.0
Gobi -375.0/456.0 (831.0)
Goyo -500/500 (500.0)
Buyan -340.0 (340.0)
Spin thread( í, ò/í) -67/154.0 (221.0)
Spin thread ( í, ò/í) -90/129 (196.0)
Spin thread( í, ò/í) -85/290 (370.0)
Spin thread (ò/í, õ/í) -37/25 (62.0)
Spin thread(ò/í, ñ/õ) -195/322 (517.0)
Textile Factory 475 ì
cotton
Knitwear Factory -300.0 (345.0) í knitted
Knitwear Factory -45.0 (415.0) íknitted
Knitwear Factory -65/215 (280.0) í knitted
Knitwear Factory -65/215 (95.0) knitted
Textile Factory 590.0 ñëæìýë
Textile Factory 274.0 ñëæìýë
Textile Factory 274.0 ñëæìýë
Textile Factory 274.0 ñëæìýë
Textile Factory 274.0 ñëæìýë
Knitting Factory 590.0
ñëæìýë
Textile Factory 200.0 ñëæìýë
Textile Factory 200.0 ñëæìýë
Knitting F 200.0 ñ
Textile Factory 125.0 ñëæìýë
Textile Factory 200.0 ñëæìýë
Textile Factory 200.0 ñëæìýë
Textile Factory 112.0 ñëæìýë
Textile Factory 200.0 ñëæìýë
Note - Present capacity /ton
Extending capacity /ton/ ( ) Capacity after the
extension thousand, unit -
knit Thousand, meter-knit
( í, ò/í ) cashmere, camel wool
(ñ/õ) - yak hair and cashmere -Gobi,
Buyay , and Eermel companiesl process the sheep
wool -Eermel Co.Ltd., specialize by camel wool
Individual Knitting Factory of Gobi
Company Individual Knitting Factory of
Buyan Company Individual Knitting Factory
of Goyo Company Individual Knitting
Factory of Eermel Company Individual
Knitting Factory of Monporte, Sor cashmere and
Erdenet cashmere New opened knitting
factory
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Favorable foreign trade Terms Conditions
Pullover
Scarf and hat
Foreign
Target market
Pants
Knitted Commodities
Costumer
Purchasing power of costumers and market capacity
Domestic
Gown
Knitted Commodities
Competitive with the products made by imported
thread
Cashmere Products
Renovation of equipment
Coat
Blanket
Fine cotton
Spin thread
Renovation of Technology
Costume
Overcoat
Dehaired cashmere
Training of staffs
Exports of unprocessed and processed cashmere
Scoured cashmere
Quality laboratory
Long and scaly surface of cashmere
Cashmere
Diameter of cashmere
Commodity exchange
Fund of raw materials
Services of livestock hospital
Goat herds
Structure of herds
Food
Fine the origin of livestock
Make livestock healthy
Mark on livestock
Meadow, crops and food
Environmental pasture
Water supply of pasture
Pasture load (capacity)
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• Improvement of the legal environment for the
  development of Industrial and Technological
  Complexes.
• Law on Small and Medium Enterprises
• Law on Financial Leasing
• Draft law on the legal status of Manufacturing
  and Technological parks
• Draft amendments to the Law on Imposition of
  Export Duties on Certain Produts
• Order project to make revision and changes in
  1999 27th order of State Great Khural About
  approving percentage and size of custom tax for
  importing products
• Bill for revision and addition to the law on
  foreign investment
• Bill for revision and addition to the technology
  introducing law

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Criteria for Small and Medium Enterprises
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REGIONAL DEVELOPMENT POLICY AND CLUSTERS GOBI
REGION
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GOBI REGIONS CURRENT STATUS, ECONOMIC CAPACITY

• Territory - 355,14 thousand sq.km.
• Population - 161,6 thousand
• Livestock - 3921,5 thousand
• Connection to the Central energy system
  Gobisumber province 100 connected, Dundgobi
  province - 80, Dornogobi province - 60,
  Umnugobi province - 23
• Shivee-ovoo,Tevshiin gobi, Tavantolgoi, Alag
  togoo, Nariin sukhait, Khashaat khudag coal mines
  meet regional coal needs and export
• Airag, Urguns fluorspar, Olon-Ovoot gold mining
  plants are operating
• Total length of public roads - 1289 km
• A major economic sector of the region is animal
  husbandry
• Manufacturing and construction sectors share in
  GDP is small Umnugobi province 23,4, Dornogobi
  province 6,7, Dundgobi province 0, Gobisumber
  province 36.

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POTENTIAL FOR INCREASING ECONOMIC CAPACITY

• Average index of National Development potential
  is 0,500. It is 0,754 in the Umnugobi province,
  0,811 in the Dundgobi, 0,607 in the Dornogobi. It
  shows that Gobi region has a great potential for
  development.
• Dozens of construction materials deposits are in
  the region.
• Dundgobi province has 58,8 of brown coal
  reserves of the country, and 32,3 of gypsum
  (alabaster) reserves,
• 29.7 of Mongolias fluorspar reserves are in
  Dornogobi province.
• Oil resources in Zuun bayan and Tsagaan els.

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COMPREHENSIVE PROGRAMME OF INDUSTRIAL DEVELOPMENT
IN GOBI REGION

• Development of natural resources, tourism, light
  industry and other production and services
  sectors are viewed to become the main economic
  drivers and the supporting pillars for
  development of Gobi region.
• Development of 5 clusters are being projected
  with the aim of increasing economic growth and
  improving the living standards in Gobi region
• Copper" cluster to be based on Oyu Tolgoi and
  Tsagaan suvarga deposits.
• Coal" cluster to be based on Tavan Tolgoi and
  Nariin Sukhait deposits
• Gobi" tourism cluster
• Wool Cashmere (camel wool) cluster based on
  Choir industrial park
• Establishment of construction materials cluster
  nearby Choir town to be supported by dozen of
  construction materials deposits of Gobi region

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CLUSTERS LOCATION IN GOBI REGION

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Proposals to cooperate with Japan

• Establishment of Industrial park (zone) near
  Hushigtiin hundii
• Co-operate within the framework of SMEs
  financing and management
• Establishment of Industrial and Technological
  park in Erdenet city
• Build the complex of Industrial and Technological
  Park of Nalaikh district or high technology park
  by the management of Japan

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ESTABLISHMENT OF A HIGH TECHNOLOGICAL PARK IN
NALAIKH DISTRICT
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Nalaikh districtLocated 45 km away from
Ulaanbaatar city.Economically active
population 16000 people from the total
population of 26000.Situated on the crossway of
the millennium road.Connected to the railway
system and paved road networkElectricity supply
runs through 110/35/10 kilowatt power line which
was fixed in1990.The source is based on 90.8
Gkall/hour capacity power plant
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Supplies by the water source of Ulaanbaatar city
which locates 10km away from Nalaikh district .
Water supply is 90000 m3/day Effluent treatment
capacity is 3500 m3/day. Constructing work of
connecting Nalaikh district with the centralized
effluent treatment is on operation. Has a
landing and departing site of heavy plane used by
Soviet Union before (older name of Russia).
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• Study the experience of Japan
• Training of personnel
• Build the SMEs technology transfer center
• Provide with financial and legal favorable
  environment /establish a fund of loan guarantee/
  /proposed to JICAs projects for 2009/

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Achieving outcomes

• There is full potential to achieve cluster-based
  industrial development utilizing mineral
  resources and raw materials.
• Companies with more efficiency will emerge.
  Skillful small and medium enterprises will be
  centralized. Supply-side network will be created.
• Opportunity of introducing innovation will be
  increased.
• Quality of goods will be improved based on the
  research.
• Small and medium enterprises will be established
  in clusters and will enjoy a relief condition
  within the business incubator.
• New working places will be created.

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Thank you for your attention