June 6, 2012 on: business, Economical, International

One of the major lessons of development is that the real business of development is not done by the government, but by businesses. Government is there to facilitate, protect and make things a bit smoother. This is how most of the developed countries succeeded in developing.

The main usefulness of government is in protection of the country, via the military, police and so forth. Firefighters and other “first responders” are also mainly a government responsibility. The government also should hold certain institutions that enforce proper regulations and laws with proper checks and balances across government agencies, departments and sectors. Checks and balances are key elements of balanced development. Without them, one part of the government could become all powerful and simply take over a country’s policies and prospects. If one were to look at “Doing Business 2012: Mongolia” by The World Bank, one could see some rather important sets of data. First off, out of 183 countries looked at Mongolia rates about 83 out of the 183, with 183 being the most difficult country to do business in. Mongolia is about average for the Asia and Pacific Region, a bit better than China, 91, and a lot better than Russia, which is at 120 out of 183. One can start a business in Mongolia a lot easier than in China or even in Japan. However, according to The World Bank, it is far easier to start a business in South Korea and Taiwan. Maybe there are some lessons there for Mongolia? However, over the last few years it has become cheaper and faster to start a business in Mongolia. In addition, according to The World Bank, handling construction permits is quite complex, expensive, and time consuming in Mongolia compared to many other countries in the region, but it still is a lot easier than in China, Russia and Kazakhstan. It is shocking how difficult it is to get electricity to a business in Mongolia. According to The World Bank, Mongolia is one of the hardest, most expensive and most complex places in the world to get an electricity hookup. Russia, once again, is much worse, but here China is better. However, this is not saying much given all three ratesover 100 out of 183, with Mongolia as 171. Surprisingly, registering property seems to be much easier in Mongolia than in many other countries in its region. Getting credit also, according to this World Bank Report, it about the level of Japan and much better than China, Russia and Kazakhstan. Investor protections also seem a lot better in Mongolia than for China and Russia. The ease of paying taxes is also a lot better in Mongolia than in Russia and China. It is even easier than in Japan. The documentation to trade across borders and the time to make such trades happen is not good for Mongolia. It is about 159 out of 183, but Russia and Kazakhstan seem a lot worse. Enforcement of contracts seems good in Mongolia compared to its neighbors, but resolving insolvency looks to be a complex, expensive and time-consuming mess in the country. A lot more work could be done on that. So compared with its neighbors Mongolia is doing fairly well as a place to do business, but compared to some of the most competitive and best places to do business in the world it is far behind in most categories. A lot of work could be done on that. Turning to The World Competitiveness Report of the World Economic Forum we can see another side to the issues facing Mongolia and its potential investors. When it comes to overall competitiveness in Mongolia is listed as country 96 out of the 142 listed. It is at about the level of Cambodia, Serbia, and Gambia. Of the companies and others asked most found the biggest problems of doing business in Mongolia to be the following. Inefficient government bureaucracy was number one. Close behind that was an inadequately educated work force. Then there was corruption and then inadequate infrastructure. About 53 percent of the respondents found these factors to be the most problematic issues facing business investments in Mongolia. Policy instability, access to financing, poor work ethic of the labor force, and inflation were seen as the most important problems of doing business in Mongolia by about 30 percent of the respondents. Tax regulations, poor health of the work force, government instability, crime and theft, foreign currency issues, and a few other things were given low scores on average by the rest of the respondents. Of course, these are surveys and the situation on the ground is always quite a bit more complex. However, Mongolia might want to focus on improving some of the problems found in The World Bank and World Economic Forum reports. Fixing some of these problems could go a long way in improving investments in the country, helping to diversify investments in the country, trying to reduce a sense of risk of investing in the country, and getting more Mongolians to work. Mongolia has huge potential to be a developed, prosperous and peaceful country if its development is done right and in a way that is considered fair and diversified by its people. If its development becomes too lopsided towards a few investments or a few groups of people, and the fairness of it all goes off the wire according to the people of the country then Mongolia could have many years of going backwards. It does not need that. Respectfully, I recommend that these issues presented and others be thoughtfully considered. It would be great if I were to be able to visit Mongolia in a couple of decades with my family and see a bustling, peaceful, healthy, well-educated, and prosperous people. It would also be very good to see balanced development and few political tensions. So far, Mongolia looks like it has the potential outdo many of its neighbors in how to do business and in competitiveness over the coming decades. However, that is not guaranteed. 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SOURCE OF THIS ARTICLE : UB Post

Please note that this article and / or its accompanying media (picture, video, sound files etc…) has not been written, created or taken by M.A.D. Investment Solutions staff. It is not copyrighted to M.A.D. Investment Solutions nor does the company claim any ownership or rights towards the content and its accompanying media. The above article does not in any case represent the views or opinions of M.A.D. Investment Solutions or any of its affiliate individuals or companies. The article above is purely meant as a source of information to readers and does not constitute a legal or biding agreement in any way, shape or form. Ownership of the content and its accompanying media remains with its legal owner or contributor but was sourced from Public Domain sources. If you are the owner of this content or its media and would like it replaced or taken out of our website, please contact us on: info@mad-mongolia.com. For contact and comments directly relating to the above article and or its accompanying media, please refer to the source as stated above.

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