Wool and cashmere production supported Bonds worth Tgs300 billion issued

Greater productivity is expected in the cashmere industry

Parliament authorized government to issue bonds worth Tgs300 billion with the purpose to support national producers and increase jobs.

Government first submitted a bill to parliament to issue bonds worth Tgs110 billion for supporting cashmere manufactures. During the discussion, it was decided to issue bonds worth Tgs300 billion by expanding its scope to not only involve cashmere but also wool and small and medium sized enterprises. On June 3, Parliament approved its resolution on some actions to support national producers and increase jobs.

The first Bill was stated to issue bonds worth Tgs110 billion and disburse loans to 12 cashmere companies. It was criticized by some MPs that it did not cover the entire cashmere production, is late, and has conflicts of interest. As T. Badamjunai, Minister of Food, Agriculture and Light Industry explained, citizens are interested in receiving loans with a purpose to manage small and medium-sized enterprises, but the resource for loans is lacking; therefore, government was working out a project on issuing loans not only for cashmere manufactures, but for other productions as well in order to circulate extra money in the banking and financial market. As MPs’ proposed, these two were combined.

Parliament resolved issuing loans worth Tgs100 billion from total bonds worth Tgs300 billion to producers of cashmere thread and cashmere endproducts and the remaining Tgs150 billion to small and medium-sized enterprisers. Remaining bonds worth Tgs50 billion will be spent on herders who prepared and sold sheep and camel wool to national industries as a bonus, and on national producers who process wool. It was considered necessary to give Tgs2,000 per kilogram of wool sold by herders to domestic industries. To do it, it was stated to give this bonus to herders who are members of a cooperative, with the added purpose to support cooperatives.

MP D. Gankhuyag said, “Good quality infrastructure, processing industries, tourism and construction sectors are priorities that need to be developed first. We need to improve their competitiveness when government supports it with relevant policies. Within these frames, the state needs to support those who are working. For this reason, loans worth Tgs100 billion will be disbursed to the cashmere sector. Although the loan will cover 12 manufacturers, threading enterprises will also be issued.

Therefore it will also support family production and small enterprises.” It will be an important impetus to support national industrialization. At the press conference, members of the Economic Standing Committee working group emphasized that the resolution aims to directly link animal husbandry sector with national producers by creating a mechanism for conveying raw materials from animal husbandry to industries. MPs believe that issuance of the bonds will support national producers and herders and it will also create 50,000-60,000 jobs. Within the last two years, loans for small and medium sized enterprises worth Tgs60 billion were issued to individuals and companies and it resulted in the creation of 12,000 jobs. Based on past performance, it estimated that each Tgs5 million creates one job. “Processing cashmere will bring Tgs300 million into the State Budget. Out of 60,000 jobs to be created thanks to issuance of Tgs300 billion, 35,000 jobs will be in Ulaanbaatar. Now we have a measure to raise the export duty on raw materials with the purpose to support national production,” said MP D. Gankhuyag.

MPs said that banks demand collateral that is worth more than the amount of the loans individuals request. By considering it makes trouble for people to build small and medium sized enterprises, the loan should be stated to be issued with collateral worth 30-40 percent of the loan amounts when the resolution is implemented. The loan is expected to have a term of 5 years and interest rate up to 7 percent. Within frames of the government project, the loan will be issued in integrity with a policy that determines

what industries will be established and in which aimags. MPs underlined that the resolution is in accord with the Mongolian Livestock Program and the Law on Exchange of Raw Materials.

Parliament intends to continue policy to support national industrialization stage by stage and issue a policy to support meat, milk and leather producers in the next stage
source: 'Mongol Messenger ' newspaper