Mongolia strengthens business environment
Business Environment is to be strengthened with better access to credit for SMEs and movable collateral registry reforms: Doing Business.
It was said by WB in the World Bank Group’s latest Doing Business 2018 Reforming to Create Jobs report, which monitors the ease of doing business for small and medium enterprises around the world. Mongolia implemented substantive reforms to boost SME financing through Secured Transactions Reform project. Access to finance is a challenge faced by many Mongolian SMEs, which struggle to obtain bank loans as they do not own land or buildings that banks generally seek as collateral. To address this issue, the International Finance Corporation (IFC), a member of the World Bank Group, and the Ministry of Justice have partnered with the Bank of Mongolia, Mongolia Bankers’ Association, and other stakeholders since 2013 to help reform the country’s secured transactions system to unlock affordable financing for SMEs. As part of the reform, a web-based pledge-notice registry was launched in February 2017, enabling creditors to search for existing interests on movable assets that they intend to use as collateral and to file security interest on their approved collaterals. In addition, the IFC-supported Law on Tangible and Intangible Movable Property Pledge went into effect on March 1, 2017. The new law, along with the registry, allows SMEs to offer moveable assets such as accounts receivable, inventory, livestock, equipment, and future income as collateral to banks – a major move to improve access to finance for SMEs. The system also reduces the need for paper documents and notifies creation of pledge-rights to existing and prospective lenders.
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