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The 43rd WORKSHOP |
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Subject:
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Summary
Mr. Ganbold began his presentation by discussing the definition of a SME and the importance of SMEs in the economy. According to him, there was not a concrete and agreed definition of such a firm, and countries had different definitions depending on policy targets. However, the importance of SMEs in all countries could be broadly categorized into three main contributions, including promoting competition and entrepreneurship, boosting economic growth, and creating jobs. For instance, SMEs could create about 20 percent and 50 percent of jobs in low-income and middle-income countries, and contribute about 15 percent and 40 percent of GDP in these countries, respectively.
Going further with the main discussion, Mr. Ganbold mentioned about definition and measurement of accessibility to finance, and emphasized that they were also different in various countries. By reviewing previous studies on the topic, he provided general issues of SMEs in accessing to financial sources, in which such impacts as poverty reduction and promotion of financial services resulted from better access to finance were increasingly important. He also pointed out that SMEs in both developed and developing world had faced a variety of difficulties in accessing financial sources, but those in the latter had much more severe constraints. These problems could be elucidated in both theoretical studies and empirical evidences. For example, many studies indicated that inadequacies in access to finance were key obstacles to the firm growth, and SMEs usually found more difficult than their larger counterparts in obtaining finance. Moreover, Mr. Ganbold discussed international good practices in promoting accessibility to finance for SMEs at both micro and macro levels. Among these practices, he emphasized good policies from government in providing a good business environment to banking and information sectors, which were most important channels for SMEs to fill the financial gap for their business operation.
At the end of the presentation, Mr. Ganbold discussed the case of SMEs in Mongolia. According to him, these firms had also contributed significantly to employment creation and GDP growth since the early 1990s when the country started economic reforms. However, most of them had the same problems in accessing financial resources as those in other countries. Even though the SME Law was approved in 2007 to promote further development for these firms, policy packages were still general and needed to be more specifically formulated.
The discussion session was started with a number of questions on the Mongolian economy with important indicators, including labor market, financial and monetary policies, and economic structure. Prof. Kenichi Ohno (GRIPS & VDF) recommend a possibility that Mongolia set up a special bank for financing SMEs, so that their financial demand would be evaluated and managed appropriately. In addition, Prof. Ohno also said that increase in the number of SMEs along with economic transformation of the country was obvious, but the policies aiming to promote financial accessibility for SMEs should pay a great attention to specific characteristics of different sectors. Also, he said that financial and non-financial policies should be used flexibly and alternatively. In response, Mr. Ganbold said that a number of donor-based programs had been carried out in Mongolia, and the approval of the SME Law in 2007 was one of the further steps to facilitate both financial and non-financial promotion policies.
Prof. Seiwa Tanaka (Nagoya University) said that government would play critical role in promoting the development of SMEs, and he wondered how Mongolian government would do to pursue policy targets for SMEs development in the coming time. Mr. Ganbold answered that the government had considered numerous policy measures, including creation of a credit-guaranteed scheme and development of information system. He said that the SME Law in 2007 proved a strong commitment of the government in pursuing its targets.
The most common question from participants was about the targeted industries in promoting SMEs in Mongolia. As a former JICA expert working in Mongolia, Mr. Kyoshi Hara recommended that the country concentrate more on IT-related industries, and work closely with other countries in the region for mutual benefits in terms of production and labor. He suggested exchanging IT experts between Japan and Mongolia to get these objectives.
Regarding labor market, Mr. Dinh Quang Hop (University of Technology Sydney: UTS) asked about the role of migration in dealing with labor shortage. Also, Mr. Giang Thanh Long (GRIPS & VDF-Tokyo) questioned about quality of labors in general and in SMEs in particular. In his reply, Mr. Ganbold said that although people were able to move freely inside and outside Mongolia and the country had a good vocational training system, the government had paid attention in improving the quality of labor force, which was always considered as the most important issue in developing SMEs.
Gathering all the questions and comments from participants, Prof. Ohno said that policies promoting SMEs should follow some specific purposes, such as poverty reduction, job creation, or competitiveness improvement. As such, policies would be formulated using comprehensive analyses on the past, current, and future trends of the economy as a whole, and SMEs in particular. He thought that bringing informal sector to formal sector would be appropriate strategy for Mongolia in developing SMEs now and in the near future. In addition to this comment, Prof. Ohno also discussed about experiences of Thailand and Indonesia in promoting their supporting industries.
After the presentation section, as usual, we had an hour meeting to exchange information. Inflation, stock market, and social security issues in Vietnam and Mongolia were most discussed.
As the paper is under review of journal, please contact Mr. Bataa Ganbold to get the full paper. (By Giang Thanh Long) |
Policy
formulation for promoting the development of small and medium-scaled
enterprises (SMEs) in Vietnam has been one of the current topics on
industrial development that VDF is working on. To expand the research
network and share international experiences in doing such a research
activity, in this monthly workshop we invited Mr. Bataa Ganbold, a
visiting research fellow at the Institute of Developing Economies (IDE),
JETRO, Japan, and a former deputy director of the Financial Sector
Policy and Coordination Department, Ministry of Finance, Mongolia. The
main objectives of his presentation were to review international
experiences in making policies for the development of SMEs, and to
provide implications for Mongolia in particular and transitional
economies in general.